WESTMORELAND MINING
LLC
2 North Cascade Avenue
2nd Floor
Colorado Springs, Colorado 80903
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.
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.
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.
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
(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.
Each Bank, by its execution and delivery of this
Waiver a
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