WESTMORELAND ENERGY LLC FIRST AMENDMENT, CONSENT AND RELEASE Dated As Of August 22, 2007 to NOTE PURCHASE AGREEMENT AND RELATED NOTE DOCUMENTS, Each Dated As Of June 29, 2006 Re: $30,000,000 Floating Rate Senior Notes
Exhibit 10.40
XXXXXXXXXXXX ENERGY LLC
FIRST AMENDMENT, CONSENT AND RELEASE
Dated As Of August 22, 2007
to
NOTE PURCHASE AGREEMENT AND RELATED NOTE DOCUMENTS,
Each Dated As Of June 29, 2006
Re: $30,000,000 Floating Rate Senior Notes
FIRST AMENDMENT, CONSENT AND RELEASE
This First Amendment, Consent and Release dated as of August 22, 2007 (the or this “First
Amendment”) to the Note Agreements each dated as of June 29, 2006 is among Xxxxxxxxxxxx Energy LLC,
a Delaware limited liability company (the “Company”), Xxxxxxxxxxxx Power, Inc., a Delaware
corporation (“WPI”), Xxxxxxxxxxxx Power Operations, LLC, a Virginia limited liability company
(“WPO”), and Xxxxxxxxxxxx Utility Operations, LLC, a Virginia limited liability company (“WUO”),
Xxxxxxxxxxxx — North Carolina Power, L.L.C., a Virginia limited liability company
(“Xxxxxxxxxxxx-NC”) and Xxxxxxxxxxxx-Roanoke Valley, L.P., a Delaware limited partnership
(“Xxxxxxxxxxxx-RV”, and together with the Company, WPI, WPO, WUO and Xxxxxxxxxxxx-NC, the
“Obligors”), SOF Investments, L.P., a Delaware limited partnership, as collateral agent (the
“Collateral Agent”) and each of the purchasers whose names appear at the end hereof (each, a
“Purchaser” and, collectively, the “Purchasers”).
RECITALS:
A. The Company and each of the Purchasers are parties to a Note Purchase Agreement dated as of
June 29, 2006 (collectively, the “Note Purchase Agreement”). The Company has issued pursuant to
the Note Purchase Agreement $30,000,000 aggregate principal amount of its Floating Rate Senior
Notes (the “Notes”, such term to include any such notes issued in substitution therefor pursuant to
Section 13 of the Note Purchase Agreement). The Purchasers are the holders of 100]% of the
outstanding principal amount of the Notes.
B. As security for the Note Purchase Agreement, the Company and the other Obligors have
entered into the following agreements: (i) a Pledge and Security Agreement, dated as of June 29,
2006 (the “Company Pledge Agreement”), by the Company, as pledgor and the Collateral Agent, as
collateral agent for its benefit and the benefit of the other Secured Parties (as defined therein),
(ii) a Guaranty, Pledge and Security Agreement, dated as of June 29, 2006 (the “WPO/WUO Pledge
Agreement”), by WPI, WPO, and WUO, each as pledgor and the Collateral Agent, as collateral agent
for its benefit and the benefit of the other Secured Parties (as defined therein), and (iii) a
Guaranty, Distribution Pledge, Collateral Assignment and Security Agreement, dated as of June 29,
2006 (the “WNC/WRV Pledge Agreement”), by and among Xxxxxxxxxxxx-NC and Xxxxxxxxxxxx-RV and the
Collateral Agent, as collateral agent for its benefit and the benefit of the other Secured Parties
(as defined therein).
C. The Company has advised the Collateral Agent and the Purchasers that the Company and the
other Obligors desire to (A) sell, transfer and assign to North American Energy Services Company
(“NAES”) their respective interests in (i) the Facility Operating Agreement, dated as of November
22, 2000, between Virginia Electric and Power Company (“VEPCO”) and LG&E Power Services LLC, a
Delaware limited liability company (“LPS” as predecessor in interest to WPO and WUO (by assignment
to, and assumption by, respectively) immediately following the Closing) with respect to VEPCO’s
power production facility located in or near Southampton, Virginia; (ii) the Facility Operating
Agreement, dated as of November 22, 2000, between VEPCO and LPS with respect to VEPCO’s power
production facility located in or near Altavista, Virginia; (iii) the Facility Operating Agreement,
dated as of November 22, 2000, between VEPCO and LPS with respect to VEPCO’s power production
facility located in or near Hopewell, Virginia, as amended pursuant to Amendment No. 1 dated March
4, 2002; (iv) the Operations and Maintenance Agreement, dated as of April 19, 2004, between VEPCO
and LPS with respect to VEPCO’s power production facility located in or near Gordonsville,
Virginia; and (B) terminate that certain the Amended and Restated Facility Operating Agreement,
dated as of December 1, 1993, between the Project Partnership and LPS (as successor in interest in
UC Operating Services) and concurrently with the termination thereof. LPS shall enter into a new
operating contract with NAES (the “New NAES Operating Contract”), all of the foregoing of which
constitute “O&M Agreements” under the Note
Purchase Agreement and the other Note Documents (the foregoing collectively being referred to
as the “Transactions”).
D. The Collateral Agent and the Purchasers have agreed to consent to the Transactions and to
release any and all interests, including, without limitation, any security interests, which they
may have in or to such O&M Agreements, and to amendment the Note Documents or remove any further
obligations with respect to the O&M Agreements.
E. The Company, the other Obligors, the Collateral Agent and the Purchasers now desire to so
amend, modify and release the provisions of the Note Documents as of the date hereof (the
“Effective Date”) in the respects, but only in the respects, hereinafter set forth.
F. Capitalized terms used herein shall have the respective meanings ascribed thereto in the
Note Purchase Agreement unless herein defined or the context shall otherwise require.
G. All requirements of law have been fully complied with and all other acts and things
necessary to make this First Amendment a valid, legal and binding instrument according to its terms
for the purposes herein expressed have been done or performed.
NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the
effectiveness of the First Amendment set forth in Section 3.1 hereof, and in consideration of good
and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company
and the Noteholders do hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. Section 7.1(c)(iii) of the Note Purchase Agreement is hereby deleted and accordingly,
Section 7.1(c) of the Note Purchase Agreement is hereby amended in its entirety to read as follows:
“(c) Notice of Default or Event of Default — promptly, and in any event within five days
after a Responsible Officer becoming aware of (i) the existence of any Default or Event of Default
or that any Person has given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), and (ii) the existence of a “Default” or “Event
of Default” under the Credit Agreement, a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to take with respect thereto;”
1.2. The definition of “O&M Agreements” in Schedule B to the Note Purchase Agreement is hereby
deleted and replaced with the following:
““O&M Agreement” means that certain Operations and Maintenance Agreement, to be entered into
on or about August 22, 2007, by and between Xxxxxxxxxxxx Partners, a Virginia general
partnership, and North American Energy Services Company, a Washington corporation, with
respect to the Project.”
1.3. Exhibits X-0, X-0 and B-3 to the Note Purchase Agreement shall be and are hereby amended
in its entirety to reflect the modifications to such agreements described herein.
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1.4. The reference to the “Amended and Restated Facility Operating Agreement, dated as of
December 1, 1993, between the Xxxxxxxxxxxx-LG&E Partners, a Virginia partnership, and LG&E Power
Services LLC, a Delaware limited liability company (as successor in interest in UC Operating
Services)” in clause (ii) of the proviso of Section 2.2(b) of the WPO/WUO Pledge Agreement and the
reference to such agreement elsewhere in the Note Documents, is, in each instance, hereby amended
to read as follows: “the O&M Agreement” References to the Note Purchase Agreement, the WPO/WUO
Pledge Agreement, and any of the other Note Documents in any of the Note Documents, as hereby
amended to refer to such documents as amended hereby.
SECTION 2. CONSENTS AND RELEASES.
2.1. The Company hereby agrees to apply or cause to be applied the proceeds received from the
Transactions, which, as of the date hereof, as expected to be approximately, $804,000, against the
outstanding principal balance of the Notes which would otherwise be due and payable on the Maturity
Date, and upon receipt of such funds by the Collateral Agent or the applicable Purchaser, such
funds shall be so deemed to have been applied.
2.2. In consideration of the agreement the Company as provided in Section 2.1 hereof, the
Collateral Agent and the Purchasers hereby (i) consent to the sale, transfer and assignment to NAES
of O&M Agreements (for clarity, as defined in Recital C above), and (ii) hereby releases and
terminates, which shall be effective as of the Effective Date, all liens and other security
interests in the O&M Agreements (for clarity, as defined in Recital C above) which have been sold
to NAES or otherwise terminated as part of the Transactions, which security interests have been or
may have been granted to the Collateral Agent under or in connection with any of the Note
Documents; provided, however, that the foregoing consent is limited to the transactions described
in the foregoing subclause (i) and (ii) as provided in the O&M Agreement (as defined in section 1.2
above) and the Asset Purchase Agreement dated as of August 22, 2007 by and among NAES, WUO and
Xxxxxxxxxxxx Technical Services, Inc.
2.3. SOF Investments, L.P. in its capacity as holder (“Holder”) of the Warrant No. R-1 (the
“Warrant”) (A) acknowledges receipt of notice in that certain letter (the “July 18 Letter”), dated
July 18, 2007, of the Company’s intent to conduct a rights offering and related transactions and
its consideration of a possible exchange offer (each, an “Offering”), and (B) hereby waives the
requirement to provide, under Section 2(j) of the Warrant, at least twenty (20) business days
before the Offerings prior written notice of “the proposed transaction, the amount of the Fair
Market Value per share and the amount of the fair market value of any Non-Cash Consideration
involved in the transaction as determined by the Board of Directors of the Company (including the
basis therefor)” (as used and defined in the Warrant). Nothing in this First Amendment or the
receipt by Holder of the July 18 Letter shall be construed as the Holder’s consent to either
Offering or the terms thereof nor a waiver of any rights under the Warrant or the Note Purchase
Agreement in respect thereof. In connection with each Offering, the Company shall deliver its
calculation of the amount of the Fair Market Value per share and the amount of the fair market
value of any Non-Cash Consideration (as these terms are defined in the Warrant) involved in the
transaction, and deliver the certificate required under Section 2(i) of the Warrant within five (5)
business days following completion of each Offering, all as otherwise in accordance with the terms
and provisions of the Warrant.
SECTION 3. MISCELLANEOUS.
3.1. This First Amendment shall become effective and binding upon the Company, the other
Obligors, the Collateral Agent and the Purchasers on the Effective Date upon each of the following
conditions having occurred: (a) each of the parties hereto shall have executed and delivered to
the other
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parties their respective signature to this First Amendment; and (b) after giving effect to the
consents and releases set forth in Section 2 of this First Amendment, no Default or Event of
Default shall have occurred and be continuing.
3.2. This First Amendment shall be construed in connection with and as part of the Note
Purchase Agreement and the other Note Documents, and except as modified and expressly amended by
this First Amendment, all terms, conditions and covenants contained in the Note Purchase Agreement
and the other Note Documents are hereby ratified and shall be and remain in full force and effect.
3.3. Any and all notices, requests, certificates and other instruments executed and delivered
after the execution and delivery of this First Amendment may refer to the Note Purchase Agreement
or nay of the other Note Documents without making specific reference to this First Amendment but
nevertheless all such references shall include this First Amendment unless the context otherwise
requires.
3.4. The descriptive headings of the various Sections or parts of this First Amendment are for
convenience only and shall not affect the meaning or construction of any of the provisions hereof.
3.5. Any provision of this First Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, 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 shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction
3.6. This First Amendment may be executed in any number of counterparts, each of which shall
be an original but all of which together shall constitute one instrument. Each counterpart may
consist of a number of copies hereof, each signed by less than all, but together signed by all, of
the parties hereto.
3.7. This First Amendment shall be construed and enforced in accordance with, and the rights
of the parties shall be governed by, the law of the State of New York excluding choice of law
principles of the law of such State that would permit the application of the laws of a jurisdiction
other than such State.
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3.8. The execution hereof by you shall constitute a contract between us for the uses and purposes
hereinabove set forth, and this First Amendment may be executed in any number of counterparts, each
executed counterpart constituting an original, but all together only one agreement.
| XXXXXXXXXXXX ENERGY LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
| XXXXXXXXXXXX — NORTH CAROLINA POWER, L.L.C. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
| XXXXXXXXXXXX-ROANOKE VALLEY, L.P. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
| XXXXXXXXXXXX POWER, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
| XXXXXXXXXXXX POWER OPERATIONS, LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
| XXXXXXXXXXXX UTILITY OPERATIONS, LLC |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
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ACCEPTED AND AGREED TO:
| SOF INVESTMENTS, L.P., as Purchaser and as Collateral Agent |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | General Counsel | |||
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