Exhibit 10.1
WESTMORELAND MINING LLC
2 North Cascade Avenue
2nd Floor
Colorado Springs, Colorado 80903
WAIVER AND CONSENT
October 7, 2009
To Each of the Banks
Ladies and Gentlemen:
Reference is made to the Amended and Restated Credit Agreement, dated as of
June 26, 2008 (the "Credit Agreement”), by and among Westmoreland Mining LLC, a
Delaware limited liability company (the “Company”), each of the Guarantors
referred to therein, each of the Banks referred to therein, and PNC Bank,
National Association, in its capacity as agent (the “Agent”). Capitalized terms
used and not otherwise defined in this letter (this “Waiver and Consent”) shall
have the respective meanings attributed thereto in the Credit Agreement.
Recitals.
A. The Company has heretofore advised the Agent 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 the Agent, 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 8.2.18 of the
Credit 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.
B. The Company has requested that each Bank, 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 8.2.18 of the Credit 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 8.2.5 of
the Credit Agreement). Each Guarantor has joined in such request and consents
and agrees to the terms and provisions of this Waiver and Consent.

 

 

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C. The further provisions of this Waiver and Consent set forth the understanding
of the Company and each Guarantor of their agreement with each Bank concerning
such requested waivers and consent.
Section 1. Waiver.
Each Bank, 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 8.2.18 of the Credit 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 the Agent, 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 8.3.2 of the Credit 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 the Agent, 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 8.3.2 of the Credit Agreement in respect of such Affected Quarter
(whether or not required to be delivered pursuant to Section 8.3.2 of the Credit
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

 

 

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(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 the
Agent, 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 8.3.2 of the
Credit 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 Note Purchase Agreement which shall not have been
effectively waived or cured under the terms of the Note Purchase Agreement.
Section 2. Consent.
Each Bank, 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 8.2.5 of the Credit 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 8.2.5 of the Credit 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);

 

 

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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, each of
the Loan Parties hereby represents and warrants to and for the benefit of the
Banks as follows (it being understood that such representations and warranties
shall be deemed made pursuant to and in connection with the Loan 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 A 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
“Note Purchase Agreement Waiver”) from the Noteholders (as such term is defined
in the Note Purchase Agreement) which shall be effective to (i) waive all
defaults or events of default, if any, which have occurred or may occur under
the Note Purchase 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. None of the Loan Parties shall be required, pursuant to the
Note Purchase Agreement, the Note Purchase Agreement Waiver or otherwise, or
will, directly or indirectly, pay or cause to be paid to the Noteholders or any
agents for the Noteholders, any remuneration of any character for or in
connection with the granting of the waivers and consents provided for in the
Note Purchase Agreement Waiver, except for fees which shall not exceed (in the
aggregate for all Noteholders and their agents) 0.25% of the principal balance
of the notes outstanding under the Note Purchase Agreement as of the date
hereof.

 

 

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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 Bank that:
(a) This Waiver and Consent shall have been executed and delivered by each of
the Loan Parties and the form of acceptance on one or more counterparts hereof
shall have been executed and delivered by Banks constituting the Required Banks.
(b) The Note Purchase Agreement Waiver shall have been executed and delivered by
the parties thereto in form reasonably satisfactory to the Required Holders (as
such term is defined in the Note Purchase Agreement) and shall have become
effective in accordance with its terms; and such Noteholder shall have received
a true and correct copy thereof.
(c) Each Bank 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
Bank (regardless of whether such Bank 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 Commitments. Each payment made by the Company to any Bank pursuant to the
preceding sentence shall be made to such Bank in the manner set forth in the
Credit Agreement for the payment to such Bank of interest and principal on the
Notes.
Section 6. Miscellaneous.
(a) In accordance with Section 10.5 of the Credit Agreement, the Company will
pay all costs and expenses incurred by each Bank in connection with this Waiver
and Consent, including the fees and disbursements of special counsel for the
Agent.
(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 Credit Agreement, the Security
Documents, the Notes or the other Loan 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 Loan Party contained in the Loan
Documents, or any Potential Default or Event of Default, or impair any right of
the Banks or the 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 Loan Party, on the one hand, and the Banks (or
any of them) and/or the Agent, on the other, which would require any Bank or the
Agent to waive or consent to any Potential Default or Event of Default or other
matter.

 

 

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(c) Except as otherwise expressly provided herein, the terms, covenants and
conditions contained in the Credit Agreement, the Security Documents, the Notes
and the other Loan 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 Loan 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 Credit Agreement and/or the Security Documents and/or the Notes
and/or any other Loan 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 Credit Agreement or any other
Loan 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 Commonwealth of Pennsylvania applicable to
contracts made and to be performed in said Commonwealth.
(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.]

 

 

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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.

            WESTMORELAND MINING LLC           By:   /s/ Douglas Kathol        
Name:   Douglas Kathol        Title:   Vice President        WESTERN ENERGY
COMPANY, as a Guarantor
      By:   /s/ Douglas Kathol         Name:   Douglas Kathol        Title:  
Vice President        DAKOTA WESTMORELAND CORPORATION, as a Guarantor
      By:   /s/ Douglas Kathol         Name:   Douglas Kathol        Title:  
Vice President        WESTMORELAND SAVAGE CORPORATION, as a Guarantor
      By:   /s/ Douglas Kathol         Name:   Douglas Kathol        Title:  
Vice President   

 

 

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ACCEPTED AND AGREED:

         
PNC
  BANK, NATIONAL ASSOCIATION,     individually as a Bank and as Agent      
By:
  /s/ Richard C. Munsick
 
Name: Richard C. Munsick    
 
  Title: Senior Vice President