2 North Cascade Avenue
2 nd
Floor
Colorado Springs, Colorado 80903
To Each
Noteholder Named On
The Signature Pages Hereof
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.
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.
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.
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 Manageme
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