Exhibit 10.2
WESTMORELAND MINING LLC
2 North Cascade Avenue
2nd Floor
Colorado Springs, Colorado 80903
WAIVER AND CONSENT
October 7, 2009
To Each Noteholder Named On
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 Westmoreland 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.

 

 

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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

 

 

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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
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

 

 

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(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.

 

 

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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 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.

 

 

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(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]

 

 

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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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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/ Lisa M. Ferraro       By:  Principal Global
Investors, LLC    
 
                   
 
  Name: Lisa M. Ferraro           A Delaware limited liability    
 
  Title: Director           Company, its authorized signatory    
 
                    NEW YORK LIFE INSURANCE COMPANY       By:   /s/ Justin T.
Lange
 
Name: Justin T. Lange  
By:
  /s/ Kathleen A. Haberkern
 
Name: Kathleen A. Haberkern           Title: Counsel    
 
  Title: Vice President and Ass. G. C.       By:   /s/ Karen A. Pearston
 
Name: Karen A. Pearston    
 
              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/ Kathleen A. Haberkern
 
Name: Kathleen A. Haberkern       By:   /s/ John R. Endres
 
Name: John R. Endres    
 
  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/ John R. Endres
 
Name: John R. Endres    
 
              Title: Investment Officer    
 
                    NATIONWIDE LIFE INSURANCE COMPANY       MASSACHUSETTS MUTUAL
LIFE INSURANCE COMPANY       By:   /s/ Mary Beth Cadle       By:  Babson Capital
Management LLC    
 
 
 
Name: Mary Beth Cadle           As Investment Sub-Advisor    
 
  Title: Authorized Signatory                
 
                   
 
          By:   /s/ John Wheeler
 
Name: John Wheeler
Title: Managing Director    

 

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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/ John Wheeler              
 
  Name:   John Wheeler    
 
  Title:   Managing Director