Exhibit 10.2

EXECUTION VERSION

 

THIRD AMENDED AND RESTATED FORBEARANCE AGREEMENT

 

This THIRD AMENDED AND RESTATED FORBEARANCE AGREEMENT, dated as of May 7, 2019
(this “Agreement”), is entered into among the undersigned in connection with the
AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of January 31,
2017 (as amended, supplemented and modified from time to time, the “RPA”) among
CLOUD PEAK ENERGY RECEIVABLES LLC, a Delaware limited liability company, as
seller (individually and in such capacity, the “Seller”), CLOUD PEAK ENERGY
RESOURCES LLC, a Delaware limited liability company (“Cloud Peak”), as initial
servicer (in such capacity, together with its successors and permitted assigns
in such capacity, the “Servicer”), the various Conduit Purchasers, Related
Committed Purchasers, LC Participants and Purchaser Agents from time to time
party hereto, and PNC BANK, NATIONAL ASSOCIATION, as Administrator (in such
capacity, together with its successors and assigns in such capacity, the
“Administrator”) and as issuer of Letters of Credit (in such capacity, together
with its successors and assigns in such capacity, the “LC Bank”).  This
Agreement amends and restates the Second Amended and Restated Forbearance
Agreement among the undersigned entered into on April 30, 2019, (“Second Amended
and Restated Forbearance Agreement”), which amended and restated the Amended and
Restated Forbearance Agreement among the undersigned entered into on April 12,
2019 (“Amended and Restated Forbearance Agreement”) which amended and restated
the Forbearance Agreement among the undersigned entered into on March 14, 2019
(the “Original Forbearance Agreement”).  Terms which are capitalized in this
Agreement and not otherwise defined herein shall have the meanings ascribed to
such terms in the RPA.

 

W I T N E S S E T H

 

WHEREAS, the Seller and Cloud Peak have each advised the Administrator that the
audited consolidated financial statements of Parent and its consolidated
Subsidiaries for fiscal year 2018 contained a “going concern” or like
qualification or exception by Parent’s auditors (such financial statements, the
“Specified Qualified Financial Statements”);

 

WHEREAS, the delivery by the Seller and Cloud Peak of such Subject Qualified
Financial Statements constituted a breach by the Seller of its covenants under
Section 1(a)(v) of Exhibit IV to the RPA and a breach by Cloud Peak of its
covenants under Section 7(a) of the Performance Guaranty (the “Original
Specified Breaches”), which resulted in the occurrence of a Termination Event
pursuant to under clause a(i) of Exhibit V to the RPA (such Termination Event
solely to the extent arising from the Original Specified Breaches, the “Original
Specified Termination Event”);

 

WHEREAS, the Seller and Cloud Peak have each advised the Administrator that
Cloud Peak did not make an interest payment due and owing on the 6.375%
unsecured notes due 2024 (the “Additional Specified Breach,” collectively with
the Original Specified Breaches, the “Specified Breaches”) which resulted in the
occurrence of a Termination Event pursuant to clause (j) of Exhibit V to the RPA
(such Termination Event solely to the extent arising from the Additional
Specified Breach, the “Additional Specified Termination Event,” collectively
with the Original Specified Termination Event, the “Specified Termination
Events”); and

 

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WHEREAS, the Seller and Cloud Peak now request that the Administrator, the
Purchasers and the Purchaser Agents (collectively, the “Forbearing Parties”),
for an additional limited period of time, forbear from exercising their
respective rights and remedies under the RPA and the other Transaction Documents
with respect to the Specified Termination Events, and each Forbearing Party is
willing to agree to such forbearance, on and subject to the terms and conditions
set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual provisions and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.             Acknowledgment of Specified Termination Events and Rights and
Remedies.  The Seller and Cloud Peak both acknowledge, confirm and agree that
the Specified Termination Events have occurred, and as a result thereof, the
Administrator has the right to exercise all such rights and remedies against the
Seller and Cloud Peak as available to it under the RPA, the other Transaction
Documents and under applicable law, with such notice as may be expressly
provided for in the RPA, the other Transaction Documents or required by
applicable law.  The Forbearing Parties hereby acknowledge and agree that the
Amended and Restated Forbearance Agreement constituted notice of the Specified
Breaches and Specified Termination Events pursuant to Sections 1(a) and 1(b) of
the RPA.

 

2.             Acknowledgments.

 

(a)           Acknowledgment of Current Outstanding Obligations.  The Seller and
Cloud Peak hereby acknowledge that, as of the Effective Date (as defined below),
the Seller is indebted to the Forbearing Parties (as defined below) for all
amounts outstanding on the Effective Date in respect of the Aggregate Capital,
the LC Participation Amount and the aggregate amount of accrued and unpaid
Discount and Fees (the foregoing amounts are hereafter collectively referred to
as the “Current Outstanding Obligations”), all without offset, counterclaims or
defenses of any kind.  Except as specifically set forth herein, nothing shall
alter, amend, modify or extinguish the obligation of the Seller or Cloud Peak to
repay any Current Outstanding Obligations or any other obligations they have or
may have under the Transaction Documents.

 

(b)           Acknowledgment of Liens and Priority; Reaffirmation of Security
Interests.  The Seller hereby acknowledges, confirms and agrees that (i) the
Seller has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law in
order to perfect the sale of the Receivables and Related Security from each
Originator to the Seller pursuant to the Purchase and Sale Agreement, and the
sale and security interest therein from the Seller to the Administrator under
the RPA as required under the RPA, (ii) the RPA creates a valid and continuing
security interest (as defined in the applicable UCC) in the Receivables included
in the Receivables Pool in favor of the Administrator (for the benefit of the
Purchasers) and (iii) the Seller has taken all action necessary or desirable to
establish and maintain a valid and enforceable first priority perfected
undivided percentage ownership or security interest, to the extent of the
Purchased Interest, in the Pool Receivables, the Related Security and
Collections with respect thereto and a first priority perfected

 

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security interest in the Pool Assets, in each case, free and clear of any
Adverse Claim (other than Permitted Liens), in favor of the Administrator (on
behalf of the Purchasers), as required under the RPA.  The Seller hereby
reaffirms the Seller’s prior conveyance to the Administrator of a continuing
security interest in and lien on the Pool Assets which it granted to the
Administrator including a security interest in and lien upon any and all funds
and/or monies of the Seller.

 

(c)           Acknowledgement of Notice Received and Compliance Therewith.  The
Seller and the Servicer acknowledge their receipt on March 6, 2019 of the
Administrator’s notice that it will require the Seller and the Servicer to
deliver Daily Reports pursuant to Sections 1(a)(ii)(C) and 2(a)(i)(C) of
Exhibit IV to the RPA.  The Seller and the Servicer acknowledge and agree that
they began delivering such Daily Reports in accordance with such Sections on or
prior to March 22, 2019 and will continue to do so unless and until the
Administrator otherwise instructs the Seller and the Servicer in writing.

 

3.             No Waivers; Reservation of Rights.  The Forbearing Parties have
not waived, are not by this Agreement waiving, and have no intention of waiving,
any Specified Breach, the Specified Termination Events, any other breach of any
Transaction Document or any Termination Events which may be continuing on the
date hereof or any breach of any Transaction Document or any Termination Events
which may occur after the date hereof (whether the same or similar to the
Specified Breaches or the Specified Termination Events or otherwise).

 

4.             Limited Forbearance Period; Forbearance Termination.

 

(a)           At the Seller and Cloud Peak’s request and in reliance upon the
representations, warranties and covenants of the Seller and Cloud Peak contained
in this Agreement, and subject to the terms and conditions of this Agreement,
each Forbearing Party hereby agrees to forbear during the Forbearance Period (as
defined below) from exercising any of its rights and remedies with respect to
the Specified Breaches or the Specified Termination Events, whether arising
under the RPA, the other Transaction Documents or applicable law; provided that
the Forbearing Parties agree that during the Forbearance Period the “Alternate
Rate” and the “CP Rate” will be determined as if no Termination Event shall have
occurred under the RPA.  For the purposes of this Agreement, the “Forbearance
Period” means the period commencing on the Effective Date (as defined below) and
terminating on the earlier to occur of (i) May 10, 2019 and (ii) the date on
which any one or more of the following events has occurred and is continuing
(hereinafter referred to as an “Additional Event of Default”):  (1) the failure
by the Seller or Cloud Peak to perform or observe any of the covenants or
agreements contained in this Agreement or any Transaction Document to which it
is a party (other than a Specified Breach), (2) the occurrence of any
Termination Event or default under the RPA or any Transaction Document that is
not one of the Specified Termination Events or (3) the exercise of rights and/or
remedies by the unsecured noteholders and/or Trustee on account of the 6.375%
Senior Unsecured Notes due 2024 against any of Cloud Peak and/or any of its
respective affiliates.

 

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(b)           From and after the date on which the Forbearance Period terminates
or expires, whichever occurs first (said date is hereinafter referred to as the
“Forbearance Termination Date”), the Forbearing Parties’ respective agreements
hereunder to forbear shall automatically and without further notice or action
terminate and be of no further force and effect, and each Forbearing Party shall
have the immediate and unconditional right, in its discretion (subject to
applicable provisions of the RPA, the other Transaction Documents and applicable
law), to exercise any or all of its rights and remedies under the RPA, the other
Transaction Documents and applicable law with respect to the Specified
Termination Events, any Termination Event or default which may be continuing on
the date hereof or any Additional Event of Default which may occur after the
date hereof, including, without limitation, enforcement of the Liens upon the
Pool Assets or any portion thereof held by the Administrator or any other
Forbearing Party.  The Forbearing Parties have not waived any of such rights or
remedies, and nothing in this Agreement, nor any delay on any Forbearing Party’s
part after the Forbearance Termination Date in exercising any such rights or
remedies, can be construed as a waiver of any of such rights or remedies.

 

5.             Conditions Precedent to Effectiveness.

 

The effectiveness of this Agreement is subject to the receipt by the
Administrator, in form and substance reasonably acceptable to the Administrator,
of counterparts of this Agreement duly executed by the Seller and Cloud Peak
(the date of such satisfaction, the “Effective Date”).

 

6.             Fees and Expenses.

 

(a)           The Seller and Cloud Peak hereby jointly and severally agree to
pay all fees, costs and expenses incurred by the Administrator in connection
with this Agreement and any transactions contemplated hereby, including any and
all outstanding legal and consultant fees and expenses of the Administrator, as
set forth in invoices delivered to the Seller and Cloud Peak within two Business
Days of the later of (i) the date that any such invoice is received by the
Seller and Cloud Peak and (ii) the Effective Date.

 

(b)           The Seller and Cloud Peak hereby jointly and severally agree to
pay to the Administrator (for its own account) a forbearance fee in an aggregate
amount of $100,000, which forbearance fee shall be non-refundable and was earned
in full on the Effective Date of the Amended and Restated Forbearance
Agreement.(1)  Such forbearance fee will be payable upon the earliest to occur
of (i) the effectiveness of any amendment to the RPA after the date hereof,
(ii) the expiration or termination of the Forbearance Period, (iii) the Facility
Termination Date and (iv) the date on which the Aggregate Capital and the LC
Participation Amount have been reduced to zero ($0).

 

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(1)  For the avoidance of doubt, the fee set forth in this section 6(b) is the
same fee as the fee set forth in section 6(b) the Second Amended and Restated
Forbearance Agreement and the Amended and Restated Forbearance Agreement and not
an additional fee.

 

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7.             RELEASE.  THE SELLER AND CLOUD PEAK, ON BEHALF OF THEMSELVES,
RESPECTIVELY, AND ALL PERSONS AND ENTITIES CLAIMING BY, THROUGH, OR UNDER THEM,
HEREBY RELEASE, WAIVE AND FOREVER RELINQUISH AND DISCHARGE EACH FORBEARING PARTY
AND ITS RESPECTIVE OFFICERS, DIRECTORS, ATTORNEYS, AGENTS, AFFILIATES, AND
SUCCESSORS AND ASSIGNS (COLLECTIVELY THE “RELEASEES”), OF, FROM, AND WITH
RESPECT TO ANY AND ALL MANNER OF ACTION AND ACTIONS, DEMANDS, OBLIGATIONS, CAUSE
AND CAUSES OF ACTIONS, SUITS, DISPUTES, CLAIMS AND DEFENSES, COUNTERCLAIMS
AND/OR LIABILITIES, CROSS CLAIMS, AND DEFENSES, THAT ARE KNOWN OR UNKNOWN,
SUSPECTED OR UNSUSPECTED, PAST OR PRESENT, ASSERTED OR UNASSERTED, CONTINGENT OR
LIQUIDATED, WHETHER OR NOT WELL FOUNDED IN FACT OR LAW, WHETHER IN CONTRACT, IN
TORT OR OTHERWISE, AT LAW OR IN EQUITY, BASED UPON, RELATING TO, ARISING OUT OF,
BASED UPON OR IN ANY MANNER CONNECTED WITH (I) ANY TRANSACTION, EVENT,
CIRCUMSTANCE, ACTION, FAILURE TO ACT OR OCCURRENCE OF ANY SORT OR TYPE, WHETHER
KNOWN OR UNKNOWN, WITH RESPECT TO THE TRANSACTION DOCUMENTS AND/OR THE
ADMINISTRATION THEREOF OR THE OBLIGATIONS CREATED THEREBY; (II) ANY DISCUSSIONS,
COMMITMENTS, NEGOTIATIONS, CONVERSATIONS OR COMMUNICATIONS WITH RESPECT TO THE
REFINANCING, RESTRUCTURING OR COLLECTION OF ANY OBLIGATIONS RELATED TO THE
TRANSACTION DOCUMENTS AND/OR THE ADMINISTRATION THEREOF OR THE OBLIGATIONS
CREATED THEREBY, OR (III) ANY MATTER RELATED TO THE FOREGOING, IN EACH CASE,
PRIOR TO THE EFFECTIVE DATE.

 

8.             Representations and Warranties of Borrower.  The Seller and Cloud
Peak make the following representations and warranties to the Forbearing Parties
as of each of the date hereof and the Effective Date:

 

(a)           each of the representations and warranties (other than (i) any
representation and warranty which would not be true by virtue of the Specified
Termination Events and Specified Breaches and (ii) with respect to Cloud Peak,
the representation and warranty set forth in Section 2(f) of Exhibit III to the
RPA) by the Seller and Cloud Peak set forth in the RPA and each other
Transaction Document to which it is a party are true and correct in all material
respects, except to the extent that such representations and warranties
specifically refer to an earlier date in which case they shall have been true
and correct in all material respects as of such earlier date;

 

(b)           other than the Specified Termination Events, no Termination Event
has occurred and is continuing, and other than as a result of the Specified
Breaches, no Unmatured Termination Event has occurred and is continuing;

 

(c)           the execution, delivery and performance by the Seller and Cloud
Peak of this Agreement and any other documents entered into in connection
therewith are (i) within their powers, (ii) have been duly authorized by all
necessary limited liability company action, respectively, (iii) do not
contravene any provision of their operating agreements, (iv) do not violate any
law or regulation, or any order or decree of any court

 

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or Governmental Authority, (v) do not conflict with or result in a material
breach or termination of, constitute a material default under or accelerate or
permit the acceleration of any performance required by any material indenture,
mortgage, deed of trust, lease, agreement or other instrument to which it is a
party or by which it or any of its property is bound, (vi) do not result in the
creation or imposition of any Lien upon any of its property other than those in
favor of the Administrator and (vii) do not require any material consent or
approval of any Governmental Authority or any other Person; and

 

(d)           each of this Agreement and any other documents entered into in
connection therewith constitutes a legal, valid and binding obligation of the
Seller and Cloud Peak enforceable against them in accordance with its terms,
except to the extent limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors’ rights generally,
and by general equitable principles (whether considered in a proceeding in
equity or at law).

 

9.             Acknowledgement.  Each party hereto acknowledges that the terms
of this Agreement shall not constitute a course of dealing among the parties
hereto.

 

10.          Counterparts.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Action.  Receipt by
telecopy or electronic copy of any executed signature page to this Agreement
shall constitute effective delivery of such signature page.

 

11.          Severability.  The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

 

12.          GOVERNING LAW; JURISDICTION; NOTICES.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (NOT INCLUDING SUCH STATE’S CONFLICTS OF
LAWS PROVISION OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW). SECTIONS 11.10 AND 11.11 OF THE CREDIT AGREEMENT ARE
INCORPORATED HEREIN BY REFERENCE, MUTATIS MUTANDIS.

 

13.          WAIVER OF JURY TRIAL.  THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN OR AMONG THE
ADMINISTRATOR, THE SELLER AND CLOUD PEAK ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH,
THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO.

 

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14.          Section Titles.  The Section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.

 

15.          Transaction Document.  The Agreement, the Second Amended and
Restated Forbearance Agreement, the Amended and Restated Forbearance Agreement
and the Original Forbearance Agreement shall be deemed to be Transaction
Documents for all purposes of the RPA and each other Transaction Document.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

 

 

CLOUD PEAK ENERGY RECEIVABLES LLC

 

 

 

 

 

 

By:

/s/ Heath A. Hill

 

Name: Heath A. Hill

 

Title: Executive V.P. and Chief Financial Officer

 

 

 

 

 

CLOUD PEAK ENERGY RESOURCES LLC

 

 

 

 

 

 

By:

/s/ Heath A. Hill

 

Name: Heath A. Hill

 

Title: Executive V.P. and Chief Financial Officer

 

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PNC BANK, NATIONAL ASSOCIATION, as the Administrator, a Purchaser, a Purchaser
Agent and the LC Bank

 

 

 

 

 

 

 

By:

/s/ Michael Brown

 

Name: Michael Brown

 

Title: Senior Vice President

 

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