WESTMORELAND MINING LLC
Exhibit 10.2
XXXXXXXXXXXX MINING LLC
0 Xxxxx Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
0xx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
October 7, 2009
To Each Noteholder Named On
The Signature Pages Hereof
The Signature Pages Hereof
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement, dated as of June 26, 2008 (the “Note
Purchase Agreement”), by and among Xxxxxxxxxxxx Mining LLC, a Delaware limited liability company
(the “Company”), each of the Guarantors referred to therein, and each of the institutional
investors identified in Schedule A thereto, providing, inter alia, for the issue and sale by the
Company and the purchase by such investors of the Company’s 8.02% Senior Guaranteed Secured Notes
due March 31, 2018 (the “Notes”) in the original aggregate principal amount of $125,000,000.
Capitalized terms used and not otherwise defined in this letter (this “Waiver and Consent”) shall
have the respective meanings attributed thereto in the Note Purchase Agreement.
Recitals.
A. On the date hereof, the Notes remain outstanding in the aggregate principal amount of
$125,000,000 and are registered in the names of the respective Institutional Investors (each a
“Noteholder” and, collectively, the “Noteholders”) identified on the signature pages hereof.
B. The Company has heretofore advised each of the Noteholders that, as a result of the
unexpected outage and subsequent shutdown of the Colstrip Unit 4 power plant (“Colstrip 4”) and for
the other reasons set forth in the Waiver and Amendment Request, dated August 25, 2009 (the
“Explanatory Memo”), delivered by or on behalf of the Company to each Noteholder, the Company has
failed to comply, as of the end of its fiscal quarter ended June 30, 2009 (“2009 Q2”), and will
fail to comply as of the end of each of its three fiscal quarters ending September 30, 2009,
December 31, 2009, and March 31, 2010, respectively (collectively, together with 2009 Q2, the
“Affected Quarters”), with Section 10.18 of the Note Purchase Agreement, pursuant to which the
Company covenants that it will not permit the ratio of Consolidated Net Indebtedness of the Company
and its Subsidiaries to Consolidated EBITDA, calculated as of the end of each such Affected
Quarter, to exceed 3.00 to 1.00.
C. The Company has requested that each Noteholder, by its execution of this Waiver and
Consent, (i) waive, in the manner and subject to the conditions hereinafter set forth, any
Potential Defaults or Events of Default consisting of or resulting from the Company’s failure (or,
as the case may be, anticipated failure) to comply with Section 10.18 of the Note Purchase
Agreement as of the end of each of the Affected Quarters; and (ii) consent, as hereinafter
provided, to the making by the Company to Parent of certain distributions and payments of
Management Fees hereafter described, notwithstanding any such waived Potential Default or Event of
Default (but otherwise subject to the applicable conditions to the making of such distributions and
payments of Management Fees set forth in Section 10.5 of the Note Purchase Agreement). Each
Guarantor has joined in such request and consents and agrees to the terms and provisions of this
Waiver and Consent.
D. The further provisions of this Waiver and Consent set forth the understanding of the
Company and each Guarantor of their agreement with each Noteholder concerning such requested
waivers and consent.
Section 1. Waiver.
Each Noteholder, by its execution and delivery of this Waiver and Consent, hereby waives any
and all Potential Defaults or Events of Default arising solely by reason or as a consequence of the
failure on the part of the Company to comply with the Company’s covenant set forth in Section 10.18
of the Note Purchase Agreement as of:
(a) the end of the Affected Quarter ended June 30, 2009;
(b) the end of the Affected Quarter ending September 30, 2009, so long as (and it shall
be a condition to the effectiveness of such waiver that) (i) the ratio of Consolidated Net
Indebtedness of the Company and its Subsidiaries to Consolidated EBITDA as of the end of
such Affected Quarter shall not exceed 3.75 to 1.00, (ii) Consolidated EBITDA of the Company
and its Subsidiaries for such Affected Quarter shall have been not less than $5,750,000, and
(iii) the Company shall have delivered to each Noteholder, no later than October 20, 2009,
the unaudited consolidated interim financial statements of the Company and its Subsidiaries
required to be so delivered in respect of such Affected Quarter pursuant to Section 7.1(b)
of the Note Purchase Agreement, and such financial statements shall demonstrate fulfillment
of each of the conditions set forth in clauses (i) and (ii) of this Section 1(b);
(c) the end of the Affected Quarter ending December 31, 2009, so long as (and it shall
be a condition to the effectiveness of such waiver that) (i) the waiver provided for in
Section 1(b) hereof shall have theretofore become effective upon satisfaction of the
conditions to such effectiveness set forth in such Section 1(b), (ii) the ratio of
Consolidated Net Indebtedness of the Company and its Subsidiaries to Consolidated EBITDA as
of the end of such Affected Quarter shall not exceed 3.75 to 1.00, (iii) Consolidated EBITDA
of the Company and its Subsidiaries for such Affected Quarter shall have been not less than
$9,200,000, (iv) Colstrip 4 shall have been continuously operating on a normalized basis at
all times from and after November 30, 2009 to and including the end of such Affected
Quarter, (v) the aggregate amount of coal sold by the Company during such Affected Quarter
shall have been not less than 4,500,000 tons, and (vi) the Company shall have delivered to each Noteholder, no later
than January 20, 2010, (A) the unaudited consolidated interim financial statements of the
Company and its Subsidiaries of the character required to be so delivered pursuant to
Section 7.1(b) of the Note Purchase Agreement in respect of such Affected Quarter (whether
or not required to be delivered pursuant to Section 7.1(b) of the Note Purchase Agreement
for such Affected Quarter), and such financial statements shall demonstrate fulfillment of
each of the conditions set forth in clauses (ii) and (iii) of this Section 1(c), and (B) an
Officer’s Certificate certifying that each of the conditions set forth in clauses (iv) and
(v) of this Section 1(c) have been fulfilled; and
(d) the end of the Affected Quarter ending March 31, 2010, so long as (and it shall be
a condition to the effectiveness of such waiver that) (i) the waiver provided for in Section
1(c) shall have theretofore become effective upon satisfaction of the conditions to such
effectiveness set forth in such Section 1(c), (ii) the ratio of Consolidated Net
Indebtedness of the Company and its Subsidiaries to Consolidated EBITDA as of the end of
such Affected Quarter shall not exceed 4.00 to 1.00, and (iii) the Company shall have
delivered to each Noteholder, no later than April 20, 2010, the unaudited consolidated
interim financial statements of the Company and its Subsidiaries required to be so delivered
in respect of such Affected Quarter pursuant to Section 7.1(b) of the Note Purchase
Agreement, and such financial statements shall demonstrate fulfillment of the condition set
forth in clause (ii) of this Section 1(d);
provided, however, that (1) no such waiver provided for in any of the foregoing Sections 1(a)
through 1(d) shall in any event be or become effective prior to the fulfillment of the conditions
to the effectiveness of this Waiver and Consent set forth in Section 4 hereof and (2) any waiver
which shall have become effective as provided in this Section 1 of any Potential Default or Event
of Default shall cease to be effective during any period that the events or circumstances
constituting or giving rise to such Potential Default or Event of Default shall constitute or
result in a default or event of default under and within the meaning of the Bank Credit Agreement
which shall not have been effectively waived or cured under the terms of the Bank Credit Agreement.
Section 2. Consent.
Each Noteholder, by its execution and delivery of this Waiver and Consent, hereby consents to:
(a) the (i) making of distributions by the Company to Parent of up to $5,400,000 in the
aggregate and (ii) the payment of Management Fees by the Company to Parent of up to
$1,200,000 in the aggregate each in respect of the Affected Quarter ended September 30,
2009, so long as at the time of any such action set forth in clauses (i) and (ii) of this
Section 2(a), the Company shall be permitted to make such distribution or pay such
Management Fee pursuant to and in compliance with Section 10.5 of the Note Purchase
Agreement (it being understood that, for this purpose, (x) no Potential Default or Event of
Default, the conditions to the waiver of which set forth in Section 1(a) or 1(b) hereof
shall have been fulfilled, shall be deemed to be continuing at such time and (y) it shall in
any event be a condition to the making of any such distribution or payment of such
Management Fee that no other Potential Default or Event of Default shall have occurred and
be continuing); and
(b) the making of distributions and the payment of Management Fees by the Company to
Parent in respect of the Affected Quarters ending December 31, 2009 and March 31, 2010,
respectively, so long as at the time of any such action, the Company shall be permitted to
make such payment or distribution, as the case may be, pursuant to and in compliance with
Section 10.5 of the Note Purchase Agreement (it being understood that, for this purpose, (x)
no Potential Default or Event of Default the conditions to the waiver of which set forth in
Section 1(c) or Section 1(d) hereof shall have been fulfilled, shall be deemed to be
continuing at such time and (y) it shall in any event be a condition to the making of any
such distribution or payment of such Management Fee that no other Potential Default or Event
of Default shall have occurred and be continuing);
provided, however, that no such consent provided for in either of the foregoing Sections 2(a) and
2(b) shall in any event be or become effective prior to the fulfillment of the conditions to the
effectiveness of this Waiver and Consent set forth in Section 4 hereof.
Section 3. Representation and Warranties.
In connection with the matters contemplated by this Waiver and Consent, the Company and each
Guarantor hereby represents and warrants to and for the benefit of the Noteholders as follows (it
being understood that such representations and warranties shall be deemed made pursuant to and in
connection with the Financing Documents for all purposes and shall survive the execution and
delivery of this Waiver and Consent and the effectiveness of the waivers and consents provided for
herein):
(a) As of the date hereof, no Potential Default or Event of Default has occurred and is
continuing, other than as described in Recital B above and, after giving effect to the
waivers provided for in Section 1 hereof (assuming fulfillment of the conditions to such
respective waivers), no Potential Default or Event of Default shall have occurred and be
continuing.
(b) The information set forth in the Explanatory Memorandum (other than the financial
results projected for the periods after June 30, 2009 set forth therein) is true and correct
in all material respects, and the financial results projected for the periods after June 30,
2009 set forth therein represent a reasonable range of possible results in light of the
history of the business, present and foreseeable conditions (including those identified in
the Explanatory Memorandum), and the intentions of the Company’s management. The statements
set forth in the Recitals to this Waiver and Consent are true and correct in all material
respects.
(c) The Company has obtained or will obtain a written consent and waiver (the “Credit
Agreement Waiver”) from the Bank Lenders which shall be effective to (i) waive all defaults
or events of default, if any, which have occurred or may occur under the Bank Credit
Agreement by reason of any one or more of the events or circumstances described or referred
to in the Explanatory Memo or which are otherwise the subject of the waivers set forth in
Section 1 hereof and (ii) consent to the distributions which are the subject of the consents
set forth in Section 2 hereof. Neither the Company nor any other
Obligor shall be required, pursuant to the Bank Credit Agreement, the Credit Agreement
Waiver or otherwise, or will, directly or indirectly, pay or cause to be paid to the Bank
Lenders or any agents for the Bank Lenders, any remuneration of any character for or in
connection with the granting of the waivers and consents provided for in the Credit
Agreement Waiver, except for fees which shall not exceed (in the aggregate for all Bank
Lenders and their agents) 0.25% of the Commitments (as such term is defined in the Bank
Credit Agreement) available under the Bank Credit Agreement as of the date hereof.
Section 4. Effectiveness.
It shall be a condition to the effectiveness of the waivers and consents provided for in
Sections 1 and 2, respectively, hereof by each Noteholder that:
(a) This Waiver and Consent shall have been executed and delivered by the Company and
each Guarantor and the form of acceptance on one or more counterparts hereof shall have been
executed and delivered by Noteholders constituting the Required Holders.
(b) The Credit Agreement Waiver shall have been executed and delivered by the parties
thereto in form reasonably satisfactory to the Required Holders and shall have become
effective in accordance with its terms; and such Noteholder shall have received a true and
correct copy thereof.
(c) Each Noteholder shall have received the fee payable to it pursuant to Section 5
hereof.
Section 5. Waiver and Consent Fee.
In connection with, and in consideration of, the waivers and consents provided for in Sections
1 and 2, respectively, hereof, the Company shall pay to each Noteholder (regardless of whether such
Noteholder shall have joined in the execution and delivery of this Waiver and Consent and given
such waivers and consents), as a condition to the effectiveness of this Waiver and Consent, a fee
equal to 0.25% of the outstanding principal balance of each Note held by such Noteholder as of the
date hereof. Each payment made by the Company to any Noteholder pursuant to the preceding sentence
in respect of the Notes held by such Noteholder shall be made to such Noteholder in the manner set
forth in the Note Purchase Agreement for the payment to such Noteholder of interest and principal
on such Notes.
Section 6. Miscellaneous.
(a) In accordance with Section 15.1 of the Note Purchase Agreement, the Company will
pay all costs and expenses incurred by each Noteholder in connection with this Waiver and
Consent, including the fees and disbursements of special counsel for the Noteholders.
(b) The waivers and consents provided for in this Waiver and Consent are limited as
expressly provided by the terms hereof, and no other consents, waivers, amendments or other
modifications of or under the Note Purchase Agreement, the Security Documents, the Notes or
the other Financing Documents shall be inferred from the terms hereof. Except as expressly
provided by the terms hereof, no waiver or consent provided for herein shall in any event
extend to or affect any obligation, covenant or agreement of any Obligor contained in the
Financing Documents, or any Potential Default or Event of Default, or impair any right of
the Noteholders or the Collateral Agent consequent upon any such Potential Default or Event
of Default, or be deemed to have established or to constitute a course of dealing between
the Company or any other Obligor, on the one hand, and the Noteholders (or any of them)
and/or the Collateral Agent, on the other, which would require any Noteholder or the
Collateral Agent to waive or consent to any Potential Default or Event of Default or other
matter.
(c) Except as otherwise expressly provided herein, the terms, covenants and conditions
contained in the Note Purchase Agreement, the Security Documents, the Notes and the other
Financing Documents (including, without limitation, the terms of the Guaranty Agreement) are
hereby ratified and confirmed in all respects, and the Note Agreements, the Security
Documents, the Notes and the other Financing Documents are and shall remain in full force
and effect.
(d) Any and all notices, requests, certificates, and other instruments executed and
delivered subsequent to the effectiveness of this Waiver and Consent may refer to the Note
Purchase Agreement and/or the Security Documents and/or the Notes and/or any other Financing
Document, as appropriate, without making specific reference to this Waiver and Consent or to
any prior waiver, amendment of or other modification to or consent given under the Note
Purchase Agreement or any other Financing Document, and all such references nevertheless
shall be deemed to include, unless the context otherwise requires, this Waiver and Consent
and all such previously-effective waivers, amendments and other modifications and consents,
if any.
(e) The descriptive headings of the Sections and other subdivisions of this Waiver and
Consent shall not affect the meaning or construction of any of the provisions hereof.
Except as otherwise expressly provided, references herein to any section or other
subdivision shall be deemed a reference to such section or other subdivision of this Waiver
and Consent.
(f) This Waiver and Consent shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to contracts made and to be
performed in said State.
(g) This Waiver and Consent may be executed in any number of counterparts, each of
which shall constitute an original but all of which together shall constitute one and the
same instrument. Each such counterpart may consist of a number of copies hereof, each
signed by one or more of the parties hereto. Delivery of an executed counterpart of this
Waiver and Consent by facsimile or transmitted electronically in either Tagged Image File
Format (“TIFF”) or Portable Document Format (“PDF”) shall be equally effective as delivery
of a manually executed counterpart hereof. Any party delivering an executed counterpart of
this Waiver and Consent by facsimile, TIFF or PDF shall also deliver a manually executed
counterpart hereof, but failure to do so shall not effect the validity, enforceability, or
binding effect of this Waiver and Consent.
[Signature pages follow]
If you are in agreement with the foregoing, please sign the appropriate signature block on the
accompanying counterparts of this Waiver and Consent and return one of the same to the Company.
| XXXXXXXXXXXX MINING LLC |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Vice President | |||
| WESTERN ENERGY COMPANY, as a Guarantor |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Vice President | |||
| DAKOTA XXXXXXXXXXXX CORPORATION, as a Guarantor |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Vice President | |||
| XXXXXXXXXXXX XXXXXX CORPORATION, as a Guarantor |
||||
| By: | /s/ Xxxxxxx Xxxxxx | |||
| Name: | Xxxxxxx Xxxxxx | |||
| Title: | Vice President | |||
NOTEHOLDER SIGNATURE PAGE 1 OF 2 TO WAIVER AND CONSENT DATED OCTOBER 7, 2009
ACCEPTED AND AGREED:
| TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA |
PRINCIPAL LIFE INSURANCE COMPANY | |||||||||
| By: | /s/ Xxxx X. Xxxxxxx | By: Principal Global Investors, LLC | ||||||||
| Name: Xxxx X. Xxxxxxx | A Delaware limited liability | |||||||||
| Title: Director | Company, its authorized signatory | |||||||||
| NEW YORK LIFE INSURANCE COMPANY | By: | /s/ Xxxxxx X. Xxxxx
|
||||||||
By:
|
/s/ Xxxxxxxx X. Xxxxxxxxx
|
Title: Counsel | ||||||||
| Title: Vice President and Ass. G. C. | By: | /s/ Xxxxx X. Xxxxxxxx
|
||||||||
| Title: Corporate Vice President | ||||||||||
| NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION | GENWORTH LIFE AND ANNUITY INSURANCE COMPANY | |||||||||
| By: New York Life Investment Management | ||||||||||
| LLC, Its Investment Manager | ||||||||||
By:
|
/s/ Xxxxxxxx X. Xxxxxxxxx
|
By: | /s/ Xxxx X. Xxxxxx
|
|||||||
| Title: Director | Title: Investment Officer | |||||||||
| NATIONWIDE MUTUAL FIRE INSURANCE COMPANY | GENWORTH LIFE INSURANCE COMPANY OF NEW YORK | |||||||||
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
|
By: | /s/ Xxxx X. Xxxxxx
|
||||||||
| Title: Investment Officer | ||||||||||
| NATIONWIDE LIFE INSURANCE COMPANY | MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY | |||||||||
| By: | /s/ Xxxx Xxxx Xxxxx | By: Babson Capital Management LLC | ||||||||
| As Investment Sub-Advisor | ||||||||||
| Title: Authorized Signatory | ||||||||||
| By: | /s/ Xxxx Xxxxxxx
Title: Managing Director |
|||||||||
NOTEHOLDER SIGNATURE PAGE 2 OF 2 TO WAIVER AND CONSENT DATED OCTOBER 7, 2009
ACCEPTED AND AGREED:
| C.M. LIFE INSURANCE COMPANY | ||||||
| By: | Babson Capital Management LLC | |||||
| As Investment Sub-Advisor | ||||||
| By: | /s/ Xxxx Xxxxxxx | |||||
| Name: | Xxxx Xxxxxxx | |||||
| Title: | Managing Director | |||||
