Document:

WHEN RECORDED RETURN TO: Private Capital Group, Inc

WHEN RECORDED
RETURN TO:

 Private
Capital Group, Inc. 486 West 

50th North American Fork, Utah 84003

 

SECOND AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FINANCING STATEMENT 

 

(Interline -file in Niobrara County, Wyoming)

 

THIS SECOND AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS AND
LEASES, SECURITY AGREEMENT AND FINANCING STATEMENT ("Amendment") is made and
entered into as of October 27,2008, by and between INTERLINE RESOURCES
CORPORATION, a Utah corporation, whose address for notice is 160 West Canyon
Crest, Alpine, Utah 84004 ("Grantor") and PRIVATE CAPITAL GROUP, INC., a Utah
corporation, serving as agent for Participants, whose address for notice is 486
West 50th North, American Fork, Utah 84003, as "Grantee,"
beneficiary, assignee and secured party (together with successors and assigns
"Lender" or "Grantee"), for the purpose of amending in part the Deed of Trust,
Assignment of Rents and Leases, Security Agreement and Financing Statement (the
"Original Deed of Trust") dated as of September 7, 2007 and the First Amendment
thereto dated as of April 29, 2008 ("First Amendment") by and between Grantor
and Lender for the purpose of securing a loan from Lender to NORTHCUT REFINING
LLC, a Wyoming, limited liability company ("Borrower"). The Deed of Trust was
recorded with the Niobrara County, Wyoming Recorder on September 20, 2007, as
Entry No. 396883, in Book 434, at page 0084, of the Official Records of the
Niobrara County, Wyoming Clerk and Recorder's office. The First Amendment was
recorded on May 20, 2008 as Entry No. 399631, in Book 437, at page 0425, of the
Official Records of the Niobrara County, Wyoming Clerk and Recorder's Office.

 

FOR
GOOD AND VALUABLE CONSIDEATION, Guarantor, Lender and Borrower agree that the
Deed of Trust is hereby amended as follows: 

 

1.
Defined Terms. Except as otherwise specifically provided in this Amendment, all
capitalized terms used in this Amendment shall have the meaning assigned to such
terms in the Original Deed of Trust, as amended by this Amendment. 

 

2. Increase in
Principal Secured. Section 1.1 titled "Principal Secured" is deleted and the
following sections substituted: 

Section 1.1 Principal Secured. This Deed of Trust secures the
aggregate principal amount of 

    Sixteen Million Two Hundred Thousand Dollars
($16,200,000) plus such additional amounts as

    Lender may from time to time advance pursuant to
the terms and conditions of this Deed of 

 
  Trust for advances for the protection of the lien of this Deed of Trust,
together with interest

    thereon. 

3.
Increase in Amount of Secured Obligations. The definition of the word
"Promissory Note" in Section 1.2, "Definitions", is deleted and the following
definition is substituted as of the date of this Amendment. 

   "Amended Promissory Note" means that Amended
Promissory Note dated on or about the date 

    hereof, which amends the original Promissory
Note to increase the amount payable to the order

   of Lender from the original principal face
amount of Eleven Million Five Hundred

   Thousand  Dollars ($11,500,000) to Sixteen
Million Two Hundred Thousand Dollars

   ($16,200,000) bearing interest as provided in the
Promissory Note, as amended, contained in

   provision for among other things payment of interest
and attorneys' fees. 

 

Additionally, wherever in the original Deed of Trust it mentions
the Promissory Note those

words will be amended as of the date hereof to include the words
"Amended Promissory Note." 

4.
Ratification. Grantor, Lender and Borrower expressly acknowledge and agree that,
except as expressly set forth herein, this Amendment shall not alter, amend,
modify or otherwise affect the terms, provisions and conditions of the Loan
Documents, and Grantor, Lender and Borrower hereby ratify, confirm and agree
that the Loan Documents and all liens, security interests, assignments, powers,
indemnities, waivers and other rights created for Lender's benefit there under,
including, without limitation, the lien created by the original Deed of Trust,
as amended by. this Amendment, shall continue to secure, in the same manner, in
the same priority and to the same extent set forth therein, the payment and
performance of Trustor's Obligations, and all of same are hereby renewed,
extended, carried forward, ratified and confirmed and shall be deemed for all
purposes in full force and effect. 

 

5.
No Waiver. Grantor, Lender and Borrower acknowledge and agree that the execution
and/or acceptance of this Amendment by Grantor and Borrower shall not be deemed
or construed as a (a) novation or an accord and satisfaction of any of Grantor's
or Borrower's duties, obligations and liabilities contained in the Loan
Documents, as amended; (b) waiver, modification, restriction or limitation of
any and all of Grantor's and Lender's rights and benefits arising under the Loan
Documents by operation of law, or otherwise, to demand full, complete and strict
performance of the duties, obligations and liabilities contained in the Loan
Documents, as amended; or (c) Lender shall be under no obligation, to grant
Grantor or Borrower any future or further modification, renewal, extension
and/or amendment to the original Deed of Trust, as amended hereby or any or all
of the other Loan Documents, except as expressly provided therein. 

 

6.
Counterparts. This Amendment may be executed by one or more of the parties to
this Amendment on any number of separate counterparts with the same effect as if
the signature thereto and hereto were upon the same instrument, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. 

 

7.
Binding Effect. This Amendment shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
successors and assigns. 

 

8.
Severability. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction or court shall, as to such jurisdiction or
court, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction or court shall not invalidate or render
unenforceable such provision in any other jurisdiction or court. 

 

9.
Entire Agreement. This Amendment and the Loan Documents as amended in writing and signed by the parties represent
the entire agreement of the parties with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by any
party relative to subject matter hereof not expressly set forth or referred to
herein or therein. 

 

10.
Further Amendment. Neither this Amendment nor any terms hereof may be amended,
supplemented or modified except by a written instrument executed by the parties.
This Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. 

 

11.
Authority. Each of the parties hereto, and the respective representatives
thereof executing this Amendment on their respective behalves, represents that
such representative has full power, authority and legal right to execute and
deliver this Amendment and that the same constitutes a valid and binding
obligation of such party. 

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment the day and
year first above written. 

GRANTOR: 

INTERLINE RESOURCES CORPORATION, a Utah corporation 

By: /s/ Michael R. Williams

 

Name: Michael R. Williams, Its President 

LENDER: 

PRIVATE CAPITAL GROUP, INC., a Utah corporation 

BORROWER:

NORTHCUT REFINING
LLC, a Wyoming limited liability company By: Interline Resources Corporation,
its Manager 

By:  /s/ Michael
R. WilliamsFIRST AMENDMENT TO OPERATING AGREEMENT OF NORTHCUT REFINING, LLC

FIRST AMENDMENT TO OPERATING AGREEMENT OF NORTHCUT REFINING, LLC

 

This FIRST AMENDMENT ("Amendment") to the OPERATING AGREEMENT of
NORTHCUT REFINING, LLC, a Wyoming limited liability company (the "Company")
is made effective this 14th day of October, 2008 (the "Effective
Date") by and among Interline Resources Corporation, a Utah corporation, in its
capacity as Manager and a Member ("Interline"), PCG Midstream, LLC, a Utah
limited liability company in its capacity as Co-Interim Manager and a Member
("PCG"), and Northcut Holdings, LLC, a Utah limited liability company in its
capacity as Co-Interim Manager and a Member ("Northcut Holdings").

 

RECITALS

 

A. 

The parties entered into an Operating Agreement for the Company
dated September 13, 2007 (the "Original Agreement"). 

 

B. 

The Company requires additional funding and has arranged to borrow
$3.5 MM from parties that have a relationship with PCG. In connection with the
additional funding, the parties have agreed to certain changes to the Company's
structure. To reflect this, the parties wish to amend the Operating Agreement to
(i) amend defined terms to encompass additional loans and advances to the
Company; (ii) change the respective
Membership Interest and Percentage Interest of the Members; (iii) provide for
amended allocations of Profits and Losses and distributions of the Available
Cash to the Members and to repay the Company's indebtedness; and (iv) to make
other changes on which the Managers and Members agree.

 

NOW THEREFORE in consideration of the foregoing premises, the
Original Agreement is hereby amended and certain other agreements are made as
follows:

 

1.

 Amendment to Defined Terms. Except as specifically
amended by this Amendment, all capitalized terms used herein shall have the same
meaning ascribed to such terms in the Original Agreement. The definition of Loan
Obligation set forth in Article 1.2(m) in the Operating Agreement is hereby
amended to read as follows:

 

(s) Loan Obligation. "Loan Obligation" means the collective
reference to all indebtedness and other liabilities and obligations of every
kind and description owed by the Company to any lender under any of (i) the Construction Loan
Agreement dated September 13, 2007; (ii) the First Amendment to Construction
Loan Agreement dated April 29, 2008, and (iii) the Second Amendment to
Construction Loan Agreement dated October 14, 2008, including any promissory
notes, security documents, and other loan documents or instruments executed and
delivered pursuant thereto or in connection therewith, however evidenced,
created, or incurred, fixed or contingent, now or hereafter existing, due or to
become due, and including any subsequent extensions of credit, additional
advances, or additional charges in relation to any ofthe foregoing.

 

2. 

Amendment of Extraordinary Matters. Article 3.4(m) of the
Operating Agreement, is hereby amended in its entirety to provide as follows:

(m)
Voluntary dissolve the Company or take any action, directly through any of the
Managers or indirectly through any of the Managers or any Member, to institute
or seek to have instituted any Bankruptcy proceeding. 

 

3. 

Amendment to Article 4.4. The first paragraph of Article
4.4 of the Operating Agreement is hereby amended to read as follows: 

 

4.4

 Loan
Obligation Payment/ Distributions. "Pre-Debt Service Cash" means the gross
cash proceeds of the Company realized from and after the Operating Date less the
portion thereof used to pay or establish reserves for all Company expenses, debt
payments (including any payments on the Loan Obligation not provided for in this Article 4.4, but excluding any
payments on the Loan Obligation made under the provisions of this Article 4.4),
capital improvements, replacements, and contingencies, all as determined by the
Managers, but not reduced by depreciation, amortization, cost recovery
deductions or similar allowances, but increased by any reduction of reserves
previously established by the Managers. Commencing with the first full calendar
month following the Operating Date (the "Commencement Month") and for each
calendar month thereafter through the end of the Payoff Month (the "Loan
Period"), the Managers shall apply within 30 days following the end of each such
calendar month to repayment of all amounts owing under the Loan Obligation an
amount equal to the difference between eighty percent (80%) of the cumulative
Pre-Debt Service Cash for the period beginning with the Commencement Month
through the end of the current calendar month in the Loan Period in respect of
which the payment is being made, and the amount of Pre ­Debt Service Cash
previously paid on the Loan Obligation under this Article 4.4. For example, if
Pre-Debt Service Cash for the Commencement Month is $200,000, within 30 days the
Company would pay on the Loan Obligation a total of $160,000, and if cumulative
Pre-Debt Service Cash for the Commencement Month and the following month totals
$360,000, the Company would pay on the Loan Obligation within 30 days after the
end of the second month a total of $128,000 ($288,000-$160,000). The Managers
and Members acknowledge that this paragraph is their agreement regarding the
application of the Company's cash to repayment of the Loan Obligation and is not
intended to modify, amend, limit or otherwise affect the timing or amount of any
payment obligations arising under the written agreements, instruments, and other
documents establishing the Loan Obligation, or any of the rights of the holders
of the Loan Obligation to declare defaults and enforce any remedies contemplated
thereby. 

 

"Available Cash" means, until the end of the Loan Period, the
difference between Pre-Debt Service Cash and the amount paid on the Loan
Obligation under the preceding paragraph of this Article 4.4, and after the Loan
Period "Available Cash" means the gross cash proceeds of the Company realized
from its operations less the portion thereof used to payor establish reserves
for all Company expenses, debt payments, capital improvements, replacements, and
contingencies, all as determined by the Managers, but not reduced by
depreciation, amortization, cost recovery deductions or similar allowances, but
increased by any reduction of reserves previously established by the Managers.

 

3. 

Amendment to Article 4.4(a). Article 4.4(a) of the
Operating Agreement is hereby amended to read as follows: 

 

(a) 

During the Loan Period, the Managers shall distribute Available
Cash 75% to Interline, 13.65% to Northcut Holdings, and 11.35% to PCG, within 30
days following the end of each calendar month in an amount equal to the
difference between the cumulative Available Cash for the period beginning with
the Commencement Month through the end of the current calendar month in the Loan
Period in respect of which the distribution is being made, and the total amount
of Available Cash previously distributed to Interline, Northcut Holdings and
PCG. For example, if Available Cash for the Commencement Month is $100,000,
within 30 days the Company would distribute to Interline $75,000, to Northcut
Holdings $13,650, and to PCG $11,350, and if cumulative Available Cash for the
Commencement Month and the following month is $180,000, the Company would
distribute to Interline within 30 days after the end of the second month $60,000
($135,000-$75,000), to Northcut Holdings $10,920 ($24,570-$13,650), and to PCG
$9,080 ($20,430-$11,350). No other Distributions shall be made during the Loan
Period without the unanimous approval of the Managers. 

 

4. 

Amendment to Membership Interest and Percentage Interest of the
Members. Exhibit A is amended to provide that, effective as of the date of
this Amendment, (a) Interline Resources Corporation has a 68% Membership
Interest and 68% Percentage Interest; 

(b)
PCG has a 15% Membership Interest and 15% Percentage Interest; and (c) Northcut
Holdings has a 17% Membership Interest and 17% Percentage Interest. 

 

5. 

No Other Changes. Except as otherwise explicitly set forth
herein the Original Agreement shall remain in full force and effect without
other modification or amendment. 

 

(SIGNATURE PAGE TO FOLLOW) 

 

SIGNED by the Members to be effective as of
the Effective Date. 

Interline
Resources Corporation 

160
West Canyon Crest Road

Alpine,
Utah 84004

By: /s/
Michael Williams__________

Title: Michael
Williams

PCG
Midstream, LLC

486
West 50 North

American
Fork, Utah 84003

By: /s/
Michael R. Burke__________

Title: Michael R.
Burke

Northcut
Holdings,LLC

486
West 50 North

American
Fork, Utah 84003

By: /s/
Michael R. Burke__________

Title: Michael R.
Burke

AGREED
and accepted as of the Effective Date by the Manager and Co-Interim

Managers.

Interline
Resources Corporation

160
West Canyon Crest Road

Alpine,
Utah 84404

By: /s/
Michael Williams

Title: Michael
Williams

PCG
Midstream, LLC

486
West 50 North

American
Fork, Utah 84003 

By: /s/
Michael R. Burke

Title: Michael R.
Burke

Northcut
Holdings, LLC

486
West 50 North

American
Fork, Utah 84003

By: /s/
Michael R. Burke

Title: Michael R.
Burke

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