Exhibit 10.5
$25,000,000 AMENDED AND RESTATED
CREDIT AGREEMENT
by and among
WESTMORELAND MINING LLC
and
THE GUARANTORS PARTY HERETO
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent
Dated as of June 26, 2008

 

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TABLE OF CONTENTS

          Section   Page
1. CERTAIN DEFINITIONS
    1  
1.1 Certain Definitions
    1  
1.2 Construction
    29  
1.2.1 Number; Inclusion
    29  
1.2.2 Determination
    30  
1.2.3 Agent’s Discretion and Consent
    30  
1.2.4 Documents Taken as a Whole
    30  
1.2.5 Headings
    30  
1.2.6 Implied References to this Agreement
    30  
1.2.7 Persons
    30  
1.2.8 Modifications to Documents
    30  
1.2.9 From, To and Through
    30  
1.2.10 Shall; Will
    31  
1.3 Accounting Principles
    31  
 
       
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
    31  
2.1 Revolving Credit Commitments
    31  
2.1.1 Revolving Credit Loans
    31  
2.1.2 Swing Loan Commitment
    31  
2.2 Nature of Banks’ Obligations with Respect to Revolving Credit Loans
    32  
2.3 Commitment Fees
    32  
2.4 Intentionally Omitted
    32  
2.5 Revolving Credit Loan Requests; Swing Loan Requests
    32  
2.5.1 Revolving Credit Loan Requests
    32  
2.5.2 Swing Loan Requests
    33  
2.6 Making Revolving Credit Loans and Swing Loans; Swing Notes; Presumptions by
the Agent
    33  
2.6.1 Making Revolving Credit Loans
    33  
2.6.2 Making Swing Loans
    33  
2.6.3 Presumptions by the Agent
    34  
2.7 Revolving Credit Notes; Swing Line Notes
    34  
2.8 Use of Proceeds
    34  
2.9 Letter of Credit Subfacility
    34  
2.9.1 Issuance of Letters of Credit
    34  
2.9.2 Letter of Credit Fees
    35  
2.9.3 Disbursements, Reimbursement
    36  
2.9.4 Repayment of Participation Advances
    37  
2.9.5 Documentation
    37  
2.9.6 Determinations to Honor Drawing Requests
    37  
2.9.7 Nature of Participation and Reimbursement Obligations
    37  
2.9.8 Indemnity
    39  
2.9.9 Liability for Acts and Omissions
    39  
2.9.10 Cash Collateral Prior to the Expiration Date
    40  

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          Section   Page
2.9.11 Issuing Bank Reporting Requirements
    41  
2.10 Borrowings to Repay Swing Loans
    41  
2.11 Increase in Revolving Credit Commitments
    41  
 
       
3. INTENTIONALLY OMITTED
    43  
 
       
4. INTEREST RATES
    43  
4.1 Interest Rate Options
    43  
4.1.1 Revolving Credit Interest Rate Options
    43  
4.1.2 Intentionally Omitted
    43  
4.1.3 Rate Quotations
    43  
4.2 Interest Periods
    43  
4.2.1 Amount of Borrowing Tranche
    44  
4.2.2 Renewals
    44  
4.3 Interest After Default
    44  
4.3.1 Letter of Credit Fees, Interest Rate
    44  
4.3.2 Other Obligations
    44  
4.3.3 Acknowledgment
    44  
4.4 Libor-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available
    44  
4.4.1 Unascertainable
    44  
4.4.2 Illegality; Increased Costs; Deposits Not Available
    45  
4.4.3 Agent’s and Bank’s Rights
    45  
4.5 Selection of Interest Rate Options
    46  
 
       
5. PAYMENTS
    46  
5.1 Payments
    46  
5.2 Pro Rata Treatment of Banks
    46  
5.3 Interest Payment Dates
    47  
5.4 Voluntary Prepayments
    47  
5.4.1 Right to Prepay
    47  
5.4.2 Replacement of a Bank
    48  
5.4.3 Change of Lending Office
    48  
5.5 Mandatory Prepayments
    49  
5.6 Additional Compensation in Certain Circumstances
    50  
5.6.1 Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital
Adequacy Requirements, Expenses,     Etc.
    50  
5.6.2 Indemnity
    51  
5.6.3 Borrowing Base Exceeded
    51  
5.7 Settlement Date Procedures
    51  
5.8 Presumptions by Agent
    52  
5.9 Interest Payment Dates
    52  
 
       
6. REPRESENTATIONS AND WARRANTIES
    52  
6.1 Representations and Warranties
    52  
6.1.1 Organization and Qualification
    52  
6.1.2 Capitalization and Ownership
    53  
6.1.3 Subsidiaries
    53  

ii

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          Section   Page
6.1.4 Power and Authority
    53  
6.1.5 Validity and Binding Effect
    54  
6.1.6 No Conflict
    54  
6.1.7 Litigation
    54  
6.1.8 Title to Properties
    54  
6.1.9 Financial Statements
    55  
6.1.10 Use of Proceeds; Margin Stock
    56  
6.1.11 Full Disclosure
    56  
6.1.12 Taxes
    57  
6.1.13 Consents and Approvals
    57  
6.1.14 No Event of Default; Compliance with Instruments
    57  
6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.
    58  
6.1.16 Security Interests
    58  
6.1.17 Mortgage Liens
    58  
6.1.18 Status of the Pledged Collateral
    59  
6.1.19 Insurance
    59  
6.1.20 Compliance with Laws
    59  
6.1.21 Material Contracts; Burdensome Restrictions
    59  
6.1.22 Investment Companies; Regulated Entities
    60  
6.1.23 Intentionally Omitted
    60  
6.1.24 Plans and Benefit Arrangements
    60  
6.1.25 Employment Matters
    61  
6.1.26 Environmental Matters
    62  
6.1.27 Senior Debt Status
    64  
6.1.28 Transactions with Affiliates
    64  
6.1.29 Permit Blocks
    64  
6.1.30 Status under Certain Statutes
    64  
6.1.31 Coal Leases
    64  
6.1.32 Qualifications as Lessee, Coal Acreage Limitations
    64  
6.1.33 Single Purpose Entities
    65  
6.1.34 Surface Mine Reclamation Bonds
    67  
6.1.35 Foreign Assets Control Regulation, etc.
    67  
6.1.36 Pari Passu Collateral
    68  
6.1.37 Additional Representations and Warranties
    68  
6.1.38 Anti-Terrorism Laws
    68  
6.2 Updates to Schedules
    68  
 
       
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
    68  
7.1 First Loans and Letters of Credit
    69  
7.1.1 Officer’s Certificate
    69  
7.1.2 Secretary’s Certificate
    69  
7.1.3 Delivery of Loan Documents
    69  
7.1.4 Opinion of Counsel
    70  
7.1.5 Legal Details
    70  
7.1.6 Payment of Fees
    70  
7.1.7 Consents
    71  
7.1.8 Officer’s Certificate Regarding MACs
    71  
7.1.9 No Violation of Laws
    71  

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          Section   Page
7.1.10 No Actions or Proceedings
    71  
7.1.11 Insurance Policies; Certificates of Insurance; Endorsements
    71  
7.1.12 Title Insurance
    71  
7.1.13 Filing Receipts
    71  
7.1.14 Note Purchase Agreement
    72  
7.1.15 Management Agreement and Management Fee Subordination Agreement
    72  
7.1.16 Solvency Certificate
    72  
7.1.17 Lien Search
    72  
7.1.18 Intercreditor Agreement
    72  
7.1.19 Coal Reserves
    72  
7.1.20 Independent Director of Borrower and Subsidiaries
    73  
7.1.21 Bankruptcy Remote Entities, Separateness
    73  
7.1.22 Changes in Corporate Structure
    73  
7.1.23 NRGT Documents
    73  
7.2 Each Additional Loan or Letter of Credit
    73  
 
       
8. COVENANTS
    74  
8.1 Affirmative Covenants
    74  
8.1.1 Preservation of Existence, Etc.
    74  
8.1.2 Payment of Liabilities, Taxes, Etc.
    74  
8.1.3 Maintenance of Insurance
    74  
8.1.4 Maintenance of Properties and Leases
    76  
8.1.5 Maintenance of Patents, Trademarks, Etc.
    76  
8.1.6 Visitation Rights
    76  
8.1.7 Operation of Mines
    76  
8.1.8 Keeping of Records and Books of Account
    77  
8.1.9 Plans and Benefit Arrangements
    77  
8.1.10 Compliance with Laws
    77  
8.1.11 Use of Proceeds
    77  
8.1.12 Further Assurances
    78  
8.1.13 Subordination of Intercompany Loans
    78  
8.1.14 Compliance with Note Purchase Documents
    78  
8.1.15 Maintenance of Prior Security Interest
    78  
8.1.16 Single Purpose Entities
    78  
8.1.17 Maintenance of Permits
    81  
8.1.18 Debt Service Reserve Account
    81  
8.1.19 Retained Cash
    82  
8.1.20 Subordination of Management Fees; Payment of Management Fees
    82  
8.1.21 Maintenance of Coal Supply Contracts, Coal Leases
    83  
8.1.22 Collateral and Additional Collateral, Etc.
    83  
8.1.23 Payment of Indebtedness
    84  
8.2 Negative Covenants
    84  
8.2.1 Indebtedness
    85  
8.2.2 Liens
    86  
8.2.3 Guaranties
    86  
8.2.4 Loans and Investments
    86  
8.2.5 Dividends and Related Distributions
    87  
8.2.6 Liquidations, Mergers, Consolidations, Acquisitions
    88  

iv

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          Section   Page
8.2.7 Dispositions of Assets or Subsidiaries
    89  
8.2.8 Affiliate Transactions
    90  
8.2.9 Subsidiaries, Partnerships and Joint Ventures
    90  
8.2.10 Continuation of or Change in Business
    90  
8.2.11 Plans and Benefit Arrangements
    90  
8.2.12 Fiscal Year
    91  
8.2.13 Issuance of Stock
    91  
8.2.14 Changes in Organizational Documents
    91  
8.2.15 Changes in Material Contracts, Performance under Coal Supply Contracts
    92  
8.2.16 Capital Expenditures and Leases
    92  
8.2.17 Minimum Debt Service Coverage Ratio
    92  
8.2.18 Maximum Leverage Ratio
    92  
8.3 Reporting Requirements
    93  
8.3.1 Monthly Financial Statements, Borrowing Base Certificate
    93  
8.3.2 Quarterly Financial Statements
    93  
8.3.3 Annual Financial Statements
    94  
8.3.4 Certificate of the Borrower
    94  
8.3.5 Notices
    95  
8.3.6 Notice of Litigation
    95  
8.3.7 Certain Events
    96  
8.3.8 Budgets, Forecasts, Other Reports and Information
    96  
8.3.9 Notices Regarding Plans and Benefit Arrangements
    97  
8.3.10 Information as to certain Price Adjustments
    97  
8.3.11 Single Purpose Entity Status
    98  
 
       
9. DEFAULT
    98  
9.1 Events of Default
    98  
9.1.1 Payments Under Loan Documents
    98  
9.1.2 Breach of Warranty
    98  
9.1.3 Breach of Negative Covenants, Single Purpose Entity or Visitation Rights
    99  
9.1.4 Breach of Other Covenants
    99  
9.1.5 Defaults in Other Agreements or Indebtedness, or Material Contracts
    99  
9.1.6 Final Judgments or Orders
    100  
9.1.7 Events Relating to Plans and Benefit Arrangements
    100  
9.1.8 Change of Control
    100  
9.1.9 Involuntary Proceedings
    100  
9.1.10 Voluntary Proceedings
    101  
9.1.11 Default or Non-performance by Manager
    101  
9.1.12 Loss of Bonding Capacity
    101  
9.1.13 Loan Document Unenforceable
    101  
9.1.14 Liens
    101  
9.2 Consequences of Event of Default
    102  
9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings
    102  
9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings
    102  
9.2.3 Set-off
    102  
9.2.4 Suits, Actions, Proceedings
    103  
9.2.5 Application of Proceeds
    103  

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          Section   Page
9.2.6 Other Rights and Remedies
    104  
9.3 Notice of Sale
    104  
 
       
10. THE AGENT
    104  
10.1 Appointment
    104  
10.2 Delegation of Duties
    104  
10.3 Nature of Duties; Independent Credit Investigation
    104  
10.4 Actions in Discretion of Agent; Instructions From the Banks
    105  
10.5 Reimbursement and Indemnification of Agent by the Borrower
    105  
10.6 Exculpatory Provisions; Limitation of Liability
    106  
10.7 Reimbursement and Indemnification of Agent by Banks
    107  
10.8 Reliance by Agent
    107  
10.9 Notice of Default
    107  
10.10 Notices
    108  
10.11 Banks in Their Individual Capacities; Agent in its Individual Capacity
    108  
10.12 Holders of Notes
    108  
10.13 Equalization of Banks
    108  
10.14 Successor Agent
    109  
10.15 Availability of Funds
    109  
10.16 Calculations
    110  
10.17 Beneficiaries
    110  
 
       
11. MISCELLANEOUS
    110  
11.1 Modifications, Amendments or Waivers
    110  
11.1.1 Increase of Commitment; Extension of Expiration Date
    110  
11.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment
    111  
11.1.3 Release of Collateral or Guarantor
    111  
11.1.4 Miscellaneous
    111  
11.2 No Implied Waivers; Cumulative Remedies; Writing Required
    111  
11.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes
    112  
11.3.1 Payments Free of Taxes
    112  
11.3.2 Payment of Other Taxes by the Borrower
    112  
11.3.3 Indemnification by the Borrower
    112  
11.3.4 Reimbursement by Banks
    112  
11.3.5 Evidence of Payments
    112  
11.3.6 Status of Banks
    113  
11.3.7 Waiver of Consequential Damages, Etc.
    113  
11.4 Holidays
    114  
11.5 Funding by Branch, Subsidiary or Affiliate
    114  
11.5.1 Notional Funding
    114  
11.5.2 Actual Funding
    114  
11.6 Notices
    115  
11.6.1 Notices Generally
    115  
11.6.2 Electronic Communications
    115  
11.6.3 Change of Address, Etc.
    115  
11.7 Severability
    115  

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          Section   Page
11.8 Governing Law
    116  
11.8.1 Governing Law
    116  
11.8.2 SUBMISSION TO JURISDICTION
    116  
11.8.3 WAIVER OF VENUE
    116  
11.8.4 SERVICE OF PROCESS
    117  
11.8.5 WAIVER OF JURY TRIAL
    117  
11.9 Prior Understanding
    117  
11.10 Duration; Survival
    117  
11.11 Successors and Assigns
    118  
11.11.1 Successors and Assigns Generally
    118  
11.11.2 Assignments by Banks
    118  
11.11.3 Register
    119  
11.11.4 Participations
    120  
11.11.5 Limitations upon Participant Rights Successors and Assigns Generally
    120  
11.11.6 Certain Pledges; Successors and Assigns Generally
    120  
11.12 Confidentiality
    120  
11.12.1 General
    121  
11.12.2 Sharing Information With Affiliates of the Banks
    121  
11.13 Counterparts; Integration; Effectiveness
    121  
11.14 Agent’s or Bank’s Consent
    122  
11.15 Exceptions
    122  
11.16 Tax Withholding Clause
    122  
11.17 Joinder of Guarantors; Additional Security Arrangements
    123  
11.18 Environmental Indemnity
    123  
11.19 Finance Code Opt-Out
    124  
11.20 USA Patriot Act Notice
    124  

 vii

 

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LIST OF SCHEDULES AND EXHIBITS

         
SCHEDULES
       
SCHEDULE 1.1(B)
  -   COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(C)
  -   COAL SUPPLY CONTRACTS
SCHEDULE 1.1(L)
  -   COAL LEASES
SCHEDULE 1.1(Q)(1)
  -   QUALIFIED ACCOUNTS
SCHEDULE 1.1(Q)(2)
  -   QUALIFIED INVENTORY
SCHEDULE 2.9.1
  -   EXISTING LETTERS OF CREDIT
SCHEDULE 6.1.1
  -   ORGANIZATION AND QUALIFICATION
SCHEDULE 6.1.2
  -   CAPITALIZATION AND OWNERSHIP
SCHEDULE 6.1.3
  -   SUBSIDIARIES
SCHEDULE 6.1.7
  -   LITIGATION
SCHEDULE 6.1.8
  -   TITLE TO PROPERTIES
SCHEDULE 6.1.9
  -   FINANCIAL STATEMENTS
SCHEDULE 6.1.12
  -   TAXES
SCHEDULE 6.1.13
  -   CONSENTS AND APPROVALS
SCHEDULE 6.1.15
  -   PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 6.1.18
  -   STATUS OF THE PLEDGED COLLATERAL
SCHEDULE 6.1.19
  -   INSURANCE
SCHEDULE 6.1.21
  -   MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS
SCHEDULE 6.1.24
  -   PLANS AND BENEFIT ARRANGEMENTS
SCHEDULE 6.1.26
  -   ENVIRONMENTAL MATTERS
SCHEDULE 6.1.28
  -   TRANSACTIONS WITH AFFILIATES
SCHEDULE 6.1.31
  -   COAL LEASE ROYALTIES
SCHEDULE 6.1.32
  -   QUALIFICATIONS AS LESSEE, COAL ACREAGE LIMITATIONS
SCHEDULE 8.2.1
  -   INDEBTEDNESS
SCHEDULE 8.2.3
  -   TWCC GUARANTIES
SCHEDULE 8.2.16
  -   LIMITATIONS ON CAPITAL EXPENDITURES
 
       
EXHIBITS
       
EXHIBIT 1.1(A)
  -   ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(C)
  -   COLLATERAL ASSIGNMENT
EXHIBIT 1.1(G)(1)
  -   GUARANTOR JOINDER
EXHIBIT 1.1(G)(2)
  -   GUARANTY AGREEMENT
EXHIBIT 1.1(I)(2)
  -   INTERCOMPANY SUBORDINATION AGREEMENT
EXHIBIT 1.1(I)(3)
  -   INTERCREDITOR AGREEMENT
EXHIBIT 1.1(M)(1)
  -   MORTGAGE
EXHIBIT 1.1(M)(2)
  -   MANAGEMENT FEE SUBORDINATION AGREEMENT
EXHIBIT 1.1(P)(1)
  -   PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
EXHIBIT 1.1(P)(2)
  -   PLEDGE AGREEMENT
EXHIBIT 1.1(R)
  -   REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)(1)
  -   SECURITY AGREEMENT
EXHIBIT 1.1(S)(2)
  -   SWING LOAN NOTE
EXHIBIT 2.5.1
  -   LOAN REQUEST
EXHIBIT 2.5.2
  -   SWING LOAN REQUEST

viii

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EXHIBIT 2.11
  -   LENDER JOINDER
EXHIBIT 7.1.4
  -   OPINION OF COUNSEL
EXHIBIT 8.3.1
  -   BORROWING BASE CERTIFICATE
EXHIBIT 8.3.4
  -   QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 8.3.11
  -   SINGLE PURPOSE ENTITY STATUS

 ix

 

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AMENDED AND RESTATED CREDIT AGREEMENT
     THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 26, 2008 and
is made by and among WESTMORELAND MINING LLC, a Delaware limited liability
company (the “Borrower”), each of the GUARANTORS (as hereinafter defined), each
of the BANKS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in
its capacity as agent for the Banks under this Agreement (hereinafter referred
to in such capacity as the “Agent”).
WITNESSETH:
     WHEREAS, Agent, Banks and Borrower are each party to a Credit Agreement,
dated as of April 27, 2001, and amended on August 15, 2001, February 27, 2002,
March 8, 2004, December 21, 2005, January 9, 2008, April 28, 2008 and May 28,
2008 (as so amended, the “2001 Revolving Credit Agreement”);
     WHEREAS, the Borrower has requested that Agent and Banks amend the 2001
Revolving Credit Agreement (i) to increase the revolving loan facility to an
aggregate principal amount not to exceed $25,000,000, (ii) to extend the period
during which the Borrowers may borrow under the revolving loan facility through
June 26, 2013 and (iii) to reflect certain changes in the 2001 Revolving Credit
Agreement requested by Borrower as set forth herein;
     WHEREAS, the Banks are willing to provide such credit upon the terms and
conditions hereinafter set forth;
     WHEREAS, the revolving credit facility shall be used for working capital
and general corporate purposes; and
     WHEREAS, for purposes of convenience, the parties have agreed to restate in
its entirety the 2001 Revolving Credit Agreement, as amended;
     NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. CERTAIN DEFINITIONS
     1.1 Certain Definitions.
          In addition to words and terms defined elsewhere in this Agreement,
the following words and terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:
               Account shall mean any account, contract right, general
intangible, chattel paper, instrument or document representing any right to
payment for goods sold or services rendered (including, without limitation,
accounts related to as-extracted collateral), whether or not earned by
performance and whether or not evidenced by a contract, instrument or document,
which is now owned or hereafter acquired by the Borrower and the Guarantors. All
Accounts, whether Qualified Accounts or not, shall be subject to the Banks’
Prior Security Interest.

1

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               Adequately Funded shall mean a Plan’s assets-to-liabilities
relationship described herein. A Plan is Adequately Funded if, as of the last
day of the Plan Year which has most recently ended (the “Valuation Date”) and
based on an actuarial valuation made as of the first day of such Plan Year by
the Plan’s regular actuarial consultant, the value of the Plan’s assets as
determined under Section 412(c)(2) of the Internal Revenue Code, including any
contributions made to the Plan within eight and 1/2 months of the Valuation
Date, is not less than 90% of the Plan’s Current Liability, as determined under
Section 412(l)(7) of the Code using the maximum allowable interest rate under
such subsection, and recognizing over three years any plan change, such as any
plan amendment or required statutory change in benefits, (but not changes in
actuarial assumption or normal plan experience).
               Affiliate as to any Person shall mean any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds, directly or indirectly,
5% or more of any class of the voting or other equity interests of such Person,
or (iii) 5% or more of any class of voting interests or other equity interests
of which is beneficially owned or held, directly or indirectly, by such Person.
Control, as used in this definition, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, including the power to elect a majority of the directors
or trustees or individuals holding similar positions of a corporation or trust
or other Person, as the case may be.
               Agent shall mean PNC Bank, National Association, and its
successors and assigns.
               Agreement shall mean this Amended and Restated Credit Agreement,
as the same may be supplemented or amended from time to time, including all
schedules and exhibits.
               Annual Statements shall have the meaning assigned to that term in
Section 6.1.9(i).
               Anti-Terrorism Laws shall mean any Laws relating to terrorism or
money laundering, including Executive Order No. 13224, the USA Patriot Act, the
Laws comprising or implementing the Bank Secrecy Act, and the Laws administered
by the United States Treasury Department’s Office of Foreign Asset Control (as
any of the foregoing Laws may from time to time be amended, renewed, extended,
or replaced).
               Approved Parts Pool Program means (a) the 8750 Parts Pool and
(b) any national or regional parts pool arrangement among mine operators,
generally similar in nature to the 8750 Parts Pool, hereafter entered into by
the Borrower or any of its Subsidiaries with respect to long lead-time parts for
any walking draglines which (i) does not adversely affect in any material
respect, the value, or the rights of the Collateral Agent or the Banks in
respect of, the Collateral and (ii) is approved in writing by the Required
Banks.
               Assignment and Assumption Agreement shall mean an Assignment and
Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the
Agent, as Agent and on behalf of the remaining Banks, substantially in the form
of Exhibit 1.1(A).

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               Authorized Officer shall mean those individuals, designated by
written notice to the Agent from the Borrower, authorized to execute notices,
reports and other documents on behalf of the Loan Parties required hereunder.
The Borrower may amend such list of individuals from time to time by giving
written notice of such amendment to the Agent.
               Available Cash shall mean, on or as of any Payment Date, (a) the
sum of (1) Consolidated EBITDA for the fiscal quarter of the Borrower ended on
or closest to such Payment Date and (2) to the extent not included in such
Consolidated EBITDA, any amount representing an excess over the Debt Service
Reserve Requirement actually withdrawn from the Debt Service Reserve Account in
such quarter in compliance with Section 3.6 of the that certain collateral
agency agreement executed as of the Closing Date by and among the Collateral
Agent, the Loan Parties and the Noteholders in connection with the Note Purchase
Agreement minus (b) the sum of:
               (i) Unfinanced Capital Expenditures as at the end of such
quarter,
               (ii) the aggregate fees and expenses of the Collateral Agent due
and payable in such quarter,
               (iii) the aggregate amount of all interest on Consolidated Total
Indebtedness due and payable in such quarter,
               (iv) the aggregate amount of all scheduled and mandatory payments
of principal of Consolidated Total Indebtedness in such quarter,
               (v) the aggregate amount of letter of credit fees payable by the
Borrower and the Guarantors in such quarter,
               (vi) the aggregate amount of cash income taxes payable in such
quarter on behalf of the Loan Parties, and
               (vii) the amount of all deposits into the Debt Service Reserve
Account required in such quarter in order that the aggregate amount on deposit
therein shall equal the Debt Service Reserve Requirement.
               Banks shall mean the financial institutions named on
Schedule 1.1(B) and their respective successors and assigns as permitted
hereunder, each of which is referred to herein as a Bank.
               Base Rate shall mean the greater of (i) the interest rate per
annum announced from time to time by the Agent at its Principal Office as its
then prime rate, which rate may not be the lowest rate then being charged
commercial borrowers by the Agent, or (ii) the Federal Funds Rate plus 0.50% per
annum.
               Base Rate Option shall mean the Revolving Credit Base Rate
Option.
               Benefit Arrangement shall mean at any time an “employee benefit
plan,” within the meaning of Section 3(3) of ERISA, which is neither a Plan nor
a Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.

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               Borrower shall mean Westmoreland Mining LLC, a limited liability
company organized and existing under the laws of the State of Delaware.
               Borrowing Base shall mean at any time 85% of Qualified Accounts
plus the lesser of (i) 25% of Qualified Inventory or (ii) $5,000,000.
               Borrowing Date shall mean, with respect to any Loan, the date for
the making thereof or the renewal or conversion thereof at or to the same or a
different Interest Rate Option, which shall be a Business Day.
               Borrowing Tranche shall mean specified portions of Loans
outstanding as follows: (i) any Loans to which a Libor-Rate Option applies which
become subject to the same Interest Rate Option under the same Loan Request by
the Borrower and which have the same Interest Period shall constitute one
Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.
               Business Day shall mean any day other than a Saturday or Sunday
or a legal holiday on which commercial banks are authorized or required to be
closed for business in Pittsburgh, Pennsylvania, New York, New York and if the
applicable Business Day relates to any Loan to which the LIBOR Rate Option
applies, such day must also be a day on which dealings are carried on in the
London interbank market.
               CapEx Threshold means that amount determined as (i) the proceeds
to the Borrower of the sale of the Term Notes, minus (ii) the sum of (A) the
amount applied by the Borrower to the prepayment of the notes of the Borrower
outstanding under the 2001 Note Agreement immediately prior to the Closing Date
(B) $10,000,000, representing the portion of the proceeds of the Term Notes
applied or available for application by the Borrower to a distribution to Parent
and (C) the amount of costs and expenses incurred in connection with the
issuance of the Term Notes and the making of the Loans (collectively,
“Transaction Costs”), plus (iii) the aggregate amount released to the Borrower
from the debt service reserve account under, and the Series B Prepayment Account
referred to in, the 2001 Note Agreement (collectively, “Released Amounts”)). The
CapEx Threshold has been provisionally calculated by the Borrower to be (and
until finally determined as hereinafter provided shall be deemed for purposes of
this Agreement to equal) $59,000,000, such provisional calculation having been
made on the basis of assumptions reflecting information available to the
Borrower on the date hereof as to Transaction Costs and Released Amounts;
provided, however, that not later than the 45th day following the Closing Date,
the Borrower shall (i) recompute the CapEx Threshold giving effect to actual
Transaction Expenses and Released Amounts as determined on or prior to such 45th
day and (ii) furnish to each Bank an Officer’s Certificate specifying the CapEx
Threshold as so recomputed and containing calculations in reasonable detail
demonstrating the manner in which it was determined. The calculation of the
recomputed CapEx Threshold set forth in such Officer’s Certificate shall be
subject to verification by the Banks, but in the absence of error (upon the
demonstration of which by any such Bank will be promptly corrected by the
Borrower as set forth in a corrected Officer’s Certificate submitted to each
such holder), shall be presumed to be the CapEx Threshold for all purposes
hereof.
               Capital Expenditures means, with respect to the Loan Parties and
their Subsidiaries, for any period, the sum (without duplication) of all cash
expenditures by any Loan Party or any Subsidiary of an Loan Party during such
period for the purchase or lease of items

4

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that would be classified as “property, plant or equipment” or comparable items
on the consolidated balance sheet of the Borrower and its Subsidiaries,
including without limitation all transactional costs incurred in connection with
such expenditures provided the same are capitalized, all the foregoing as
determined in accordance with GAAP; excluding any Capital Expenditures by TWCC
from the funds advanced by the Borrower to TWCC pursuant to Section 8.2.4(v) of
this Agreement.
               Cash Collateral shall have the meaning assigned to such term in
the definition of “Cash Collateralize”.
               Cash Collateralize means to pledge and deposit with or deliver to
Agent, as collateral for any Obligations arising under any Letter of Credit,
cash or deposit account balances (“Cash Collateral”) pursuant to documentation
satisfactory to Agent. Such Cash Collateral shall be maintained in blocked
deposit accounts at the Agent.
               Closing Date shall mean June26, 2008.
               Coal Act shall mean Internal Revenue Code Sections 9701 through
9722, as amended from time to time.
               Coal Leases shall mean leases presently owned or hereafter
acquired by any Loan Party of mineral rights and real property interests related
to the right to mine or extract coal from the Coal Reserves (as identified by
the Borrower to the Collateral Agent from time to time as mineable reserves),
including without limitation, those leases set forth on Schedule 1.1(L).
               Coal Reserves shall mean all coal deposits which the Borrower by
virtue of a deed or lease has the right to mine.
               Coal Supply Contracts shall mean collectively and Coal Supply
Contract shall mean individually, all coal lignite supply or sales agreements
now or hereafter entered into by the Borrower or any Loan Party which provide
for the sale or provision of coal by Borrower or any Loan Party, including
without limitation, those agreements listed on Schedule 1.1(C) hereto.
               Collateral shall mean that portion of the UCC Collateral, the
Pledged Collateral, the Intellectual Property Collateral, Coal Supply Contracts
and the Real Property in or on which the Loan Parties have granted the
Collateral Agent for the benefit of the Banks a security interest in or lien on
pursuant to the Security Agreement, the Collateral Assignment, the Pledge
Agreement, the Patent, Trademark and Copyright Security Agreement and the
Mortgages respectively, such Collateral to include, to the extent provided in
the Security Documents, all Accounts, Inventory, coal reserves and related coal
lease rights, equipment, furniture, fixtures, real property, improvements and
general intangibles, leasehold interests, Coal Supply Contracts, and all limited
liability company interests in the Borrower held by Parent. Collateral shall not
include (i) the Debt Service Reserve Account, (ii) the Debt Service Letter of
Credit and (iii) any buildings or structures located on the Real Property.

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               Collateral Agency Agreement shall mean that certain Collateral
Agency Agreement among the Agent, the Collateral Agent and the Loan Parties
dated as of the Closing Date.
               Collateral Agent shall mean an institution which is holding the
Collateral on behalf of the Banks pursuant to the terms of the Collateral Agency
Agreement.
               Collateral Assignment shall mean the Collateral Assignment in the
form of Exhibit 1.1(C) collaterally assigning the Borrower’s or any Subsidiary’s
rights under Coal Supply Contracts.
               Commercial Letter of Credit shall mean any Letter of Credit which
is a commercial letter of credit issued in respect of the purchase of goods or
services by one or more of the Loan Parties in the ordinary course of their
business.
               Commitment shall mean as to any Bank the aggregate of its
Revolving Credit Commitment, and, in the case of the Agent, its Swing Loan
Commitment, and Commitments shall mean the aggregate of the Revolving Credit
Commitments and Swing Loan Commitments of all of the Banks.
               Commitment Fee shall have the meaning assigned to that term in
Section 2.3.
               Compliance Certificate shall have the meaning assigned to such
term in Section 8.3.4.
               Consolidated EBITDA shall mean for any period of determination
(i) the sum of net income, depreciation, amortization, other nonrecurring or
non-cash charges to net income, interest expense and income tax expense minus
(ii) nonrecurring or non-cash credits to net income, in each case of the
Borrower and its Subsidiaries for such period determined and consolidated in
accordance with GAAP; provided, however, that for this purpose there shall be
excluded from the consolidated net income of the Borrower and its Subsidiaries
any amounts that, contractually or pursuant to applicable law, the Borrower’s
Subsidiaries are restricted from distributing to the Borrower.
               Consolidated Net Indebtedness shall mean, on or as of any date,
Consolidated Total Indebtedness as of such date less, the sum of (i) the amount
of funds maintained in the Debt Service Reserve Account on such date (after
giving effect to any debits and credits thereto on such date), (ii) the Net
Financed CapEx Amount as of such date, and (without duplication of the amounts
specified in clauses (i) and (ii) of this definition), (iii) if such date shall
be on or prior to December 31, 2009, unrestricted cash and cash equivalents of
the Borrower on such day.
               Consolidated Total Indebtedness shall mean on or as of any date,
the principal balance of the Loans and Letters of Credit Outstanding and all
other Indebtedness of the Borrower and its Subsidiaries for borrowed money
(including without limitation, Indebtedness evidenced by the Term Notes,
capitalized leases and other Indebtedness permitted under Section 8.2.1, as
determined and consolidated in accordance with GAAP).

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               Contamination shall mean the presence or release or threat of
release of Regulated Substances in, on, under or emanating to or from the
Property, which pursuant to Environmental Laws requires notification or
reporting to an Official Body, or which pursuant to Environmental Laws requires
the investigation, cleanup, removal, remediation, containment, abatement of or
other response action or which otherwise constitutes a violation of
Environmental Laws.
               Control Event shall have the meaning assigned to that term in
Section 5.5(c).
               Cumulative Retained Cash Shortfall means, with respect to each
Payment Date, the greater of (a) zero and (b) the excess of:
               (i) the aggregate of the Retained Cash Shortfall Amounts for all
prior Payment Dates, if any, with respect to which there shall have been a
Retained Cash Shortfall Amount, minus
               (ii) the aggregate of the Retained Cash Makeup Amounts for all
prior Payment Dates, if any, with respect to which there shall have been a
Retained Cash Makeup Amount.
               Debt Service shall mean, for any period, as of any date of
determination, the sum of (i) the aggregate amount of interest and regularly
scheduled principal payable on Consolidated Total Indebtedness of the Loan
Parties during such period (exclusive, however, of the unamortized amount of
costs and expenses incurred and that will be expensed in connection with the
retirement of the Indebtedness outstanding under the 2001 Note Agreement on the
Closing Date, including make-whole expense associated with, and the amounts of
principal and interest paid with respect to, such Indebtedness) and (ii) fees
and expenses of the Collateral Agent payable during such period.
               Debt Service Coverage Ratio for any period shall mean as of any
date of determination, a fraction (i) the numerator of which is the amount of
Consolidated EBITDA less Unfinanced Capital Expenditures for such period and
(ii) the denominator of which is Debt Service for such period.
               Debt Service Letter of Credit shall have the meaning ascribed to
such term in Section 8.1.18.
               Debt Service Reserve Requirement shall have the meaning ascribed
to such term in Section 8.1.18.
               Disclosure Documents shall have the meaning assigned to such term
in Section 6.1.11.
               Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful
money of the United States of America.
               Drawing Date shall have the meaning assigned to that term in
Section 2.9.3.2.

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               8750 Parts Pool means the pooling arrangement among coal mine
operators, including TWCC, with respect to long lead-time emergency spare parts
for Marion 8750 walking draglines, as in affect on the date hereof, pursuant to
which NRGT owns the spare parts and provides the financial resources for
participation in such pool.
               Environmental Complaint shall mean any written complaint by any
Person or Official Body setting forth a cause of action for personal injury or
property damage, natural resource damage, contribution or indemnity for response
costs, civil or administrative penalties, criminal fines or penalties, or
declaratory or equitable relief arising under any Environmental Laws or any
order, notice of violation, citation, subpoena, request for information or other
written notice or demand of any type issued by an Official Body pursuant to any
Environmental Laws.
               Environmental Laws shall mean all federal, state, local and
foreign Laws and any consent decrees, settlement agreements, judgments, orders,
directives, policies or programs issued by or entered into with an Official
Body, which are applicable to the Borrower or any Loan Party, pertaining or
relating to: (i) pollution or pollution control; (ii) protection of human health
or the environment; (iii) employee safety in the workplace; (iv) the presence,
use, management, generation, manufacture, processing, extraction, treatment,
recycling, refining, reclamation, labeling, transport, storage, collection,
distribution, disposal or release or threat of release of Regulated Substances;
(v) the presence of Contamination; (vi) the protection of endangered or
threatened species; and (vii) the protection of Environmentally Sensitive Areas.
               Environmentally Sensitive Area shall mean (i) any wetland as
defined by applicable Environmental Laws; (ii) any area designated as a coastal
zone pursuant to applicable Laws, including Environmental Laws; (iii) any area
of historic or archeological significance or scenic area as defined or
designated by applicable Laws, including Environmental Laws; (iv) habitats of
endangered species or threatened species as designated by applicable Laws,
including Environmental Laws; or (v) a floodplain or other flood hazard area as
defined pursuant to any applicable Laws.
               Equity Interests shall mean, with respect to any Person, all of
the shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including shares or
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.
               ERISA shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
               ERISA Affiliate shall mean, at any time, any trade or business
(whether or not incorporated) under common control with the Borrower and are
treated as a single employer under Section 414 of the Code.

8

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               ERISA Event means (a) a reportable event (under Section 4043 of
ERISA and regulations thereunder) with respect to a Pension Plan; (b) a
withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan
or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a
termination under Sections 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.
               ERISA Group shall mean, at any time, the Borrower and all members
of a controlled group of corporations and all trades or businesses (whether or
not incorporated) under common control and all other entities which, together
with the Borrower, are treated as a single employer under Section 414 of the
Internal Revenue Code.
               Event of Default shall mean any of the events described in
Section 9.1 and referred to therein as an “Event of Default.”
               Excess Cash Flow shall mean, on or as of any Payment Date,
(i) Available Cash as of such Payment Date minus (ii) Retained Cash with respect
to such Payment Date.
               Excluded Taxes shall mean, with respect to the Agent, any Bank,
the Issuing Bank or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the Laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Bank, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender, any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party hereto (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure or inability (other than as a result of a Change in Law) to comply with
Section 11.3.6 [Status of Banks], except to the extent that such Foreign Lender
(or its assignor, if any) was entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from the Borrower
with respect to such withholding tax pursuant to Section 11.3.1 [Payment Free of
Taxes].
               Executive Order No. 13224 shall mean the Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has
been, or shall hereafter be, renewed, extended, amended or replaced.
               Existing Letters of Credit shall have the meaning assigned to
that term in Section 2.9.1.

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               Expiration Date shall mean, with respect to the Revolving Credit
Commitments, June 26, 2013.
               Federal Funds Rate for any day shall mean the rate per annum
(based on a year of 360 days and actual days elapsed) which is the daily federal
funds open rate as quoted by ICAP North America, Inc. (or any successor) as set
forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or
on such other substitute Bloomberg Screen that displays such rate), or as set
forth on such other recognized electronic source used for the purpose of
displaying such rate as selected by the Bank (an “Alternate Source”) (or if such
rate for such day does not appear on the Bloomberg Screen BTMM (or any
substitute screen) or on any Alternate Source, or if there shall at any time,
for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Alternate Source, a comparable replacement rate determined by the
Agent at such time (which determination shall be conclusive absent manifest
error); provided however, that if such day is not a Business Day, the Federal
Funds Rate for such day shall be the “open” rate on the immediately preceding
Business Day. If and when the Federal Funds Rate changes, the rate of interest
with respect to any advance to which the Federal Funds Rate applies will change
automatically without notice to the Borrower, effective on the date of any such
change.
               Financial Projections shall have the meaning assigned to that
term in Section 6.1.9(ii).
               Foreign Lender shall mean any Bank that is organized under the
Laws of a jurisdiction other than that in which the Borrower is resident for tax
purposes. For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
               GAAP shall mean generally accepted accounting principles as are
in effect from time to time in the United States of America, subject to the
provisions of Section 1.3, and applied on a consistent basis both as to
classification of items and amounts.
               Governmental Acts shall have the meaning assigned to that term in
Section 2.9.8.
               Guarantor shall mean each of the parties to this Agreement which
is designated as a “Guarantor” on the signature page hereof and each other
Person which joins this Agreement as a Guarantor after the date hereof pursuant
to Section 11.17.
               Guarantor Joinder shall mean a joinder by a Person as a Guarantor
under this Agreement, the Guaranty Agreement and the other Loan Documents in the
form of Exhibit 1.1(G)(1).
               Guaranty of any Person shall mean any obligation of such Person
guaranteeing or in effect guaranteeing any liability or obligation of any other
Person in any manner, whether directly or indirectly, including any agreement to
indemnify or hold harmless any other Person, any performance bond or other
suretyship arrangement and any other form of assurance against loss, except
endorsement of negotiable or other instruments for deposit or collection in the
ordinary course of business.

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               Guaranty Agreement shall mean the Guaranty and Suretyship
Agreement in substantially the form of Exhibit 1.1(G)(2) executed and delivered
by each of the Guarantors to the Agent for the benefit of the Banks.
               Historical Statements shall have the meaning assigned to that
term in Section 6.1.9(i).
               Increasing Bank shall have the meaning assigned to that term in
Section 2.11.
               Indebtedness shall mean, as to any Person at any time, any and
all indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of: (i) borrowed money,
(ii) amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including forward sale or purchase agreements,
futures contracts or similar financial arrangements the value of which is
dependent upon commodity rates or indices (including without limitation, any of
the foregoing used to hedge the price of coal), capitalized leases and
conditional sales agreements) having the commercial effect of a borrowing of
money entered into by such Person to finance its operations or capital
requirements (but not including trade payables and accrued expenses incurred in
the ordinary course of business which are not represented by a promissory note
or other evidence of indebtedness and which are not more than thirty (30) days
past due or, if more than thirty (30) days past due, which are being contested
in good faith and adequate reserves are made for such debt), (v)  all
liabilities for borrowed money secured by any lien with respect to property
owned by such Person (whether or not it has assumed or otherwise become liable
for such liabilities), or (vi) any Guaranty by such Person of Indebtedness of
the type described in clauses (i) through (v) hereof of any other Person.
               Indemnified Taxes shall mean Taxes other than Excluded Taxes.
               Independent Director shall mean with respect to a Subsidiary a
member of the Board of Directors of the Subsidiary that is not at the time of
initial appointment to the Board of Directors or at any time while serving on
the Board of Directors or at any time within the preceding five (5) years, (a) a
stockholder, director (with the exception of serving as an independent director
of a Subsidiary or manager of the Borrower), officer, employee, member other
than as Special Member (as defined in the Borrower’s operating agreement),
partner, attorney or counsel of the Subsidiary or of a Loan Party or of any
member of the Parent Group (except that he or she may be or become an
independent director or manager of any other Single Purpose Entity formed in
connection with any financing by any member of the Parent Group or any of their
respective Affiliates); (b) a customer or supplier of the Subsidiary or any of
its Affiliates; or (c) any member of the immediate family of a Person described
in (a) or (b).
               Independent Manager shall mean with respect to the Borrower a
member of the Board of Directors or Managers of the Borrower that is not at the
time of initial appointment to the Board of Directors or Managers or at any time
while serving on the Board of Directors or Managers or at any time within the
preceding five (5) years, (a) a stockholder, director (with the exception of
serving as an independent manager or director of a Subsidiary or

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the Borrower), officer, employee, member other than as Special Member (as
defined in the Borrower’s operating agreement), partner, attorney or counsel of
the Borrower or of any Loan Party or of any member of the Parent Group (except
that he or she may be or become an independent director or manager of any Single
Purpose Entity formed in connection with any financing by any member of the
Parent Group or any of their respective Affiliates); (b) a customer or supplier
of the Borrower or any Loan Party or any member of the Parent Group or any
Affiliate of either of them; or (c) a member of the immediate family of any such
Person described in (a) or (b).
               Ineligible Security shall mean any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as
amended.
               Insolvency Proceeding shall mean, with respect to any Person,
(a) a case, action or proceeding with respect to such Person (i) before any
court or any other Official Body under any bankruptcy, insolvency,
reorganization or other similar Law now or hereafter in effect, or (ii) for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator, conservator (or similar official) of any Loan Party or otherwise
relating to the liquidation, dissolution, winding-up or relief of such Person,
or (b) any general assignment for the benefit of creditors, composition,
marshaling of assets for creditors, or other, similar arrangement in respect of
such Person’s creditors generally or any substantial portion of its creditors;
undertaken under any Law.
               Intellectual Property Collateral shall mean all of the property
described in the Patent, Trademark and Copyright Security Agreement.
               Intercompany Subordination Agreement shall mean an Intercompany
Subordination Agreement in the form of Exhibit 1.1(I)(2) hereto, which is to be
executed and delivered by the Loan Parties and any Subsidiaries.
               Intercreditor Agreement shall mean an Intercreditor Agreement in
the form of Exhibit 1.1(I)(3) hereto which is to be executed and delivered by
the Collateral Agent and the Note Purchase Collateral Agent.
               Interest Period shall mean the period of time selected by the
Borrower in connection with (and to apply to) any election permitted hereunder
by the Borrower to have Revolving Credit Loans bear interest under the
Libor-Rate Option. Subject to the last sentence of this definition, such period
shall be two weeks or one, two, three or six Months if Borrower selects the
Libor-Rate Option. Such Interest Period shall commence on the effective date of
such Interest Rate Option, which shall be (i) the Borrowing Date if the Borrower
is requesting new Loans, or (ii) the date of renewal of or conversion to the
Libor-Rate Option if the Borrower is renewing or converting to the Libor-Rate
Option applicable to outstanding Loans. Notwithstanding the second sentence
hereof: (A) any Interest Period which would otherwise end on a date which is not
a Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrower shall
not select, convert to or renew an Interest Period for any portion of the Loans
that would end after the Expiration Date.

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               Interest Rate Option shall mean any Libor-Rate Option or Base
Rate Option.
               Internal Revenue Code shall mean the Internal Revenue Code of
1986, as the same may be amended or supplemented from time to time, and any
successor statute of similar import, and the rules and regulations thereunder,
as from time to time in effect.
               Inventory shall mean any and all goods, merchandise and other
personal property, including, without limitation, goods in transit, wheresoever
located and whether now owned or hereafter acquired by the Borrower and the
Guarantors which are or may at any time be held as raw materials, as-extracted
collateral, finished goods, work-in-process, supplies or materials used or
consumed in Borrower’s or Guarantors’ business or held for sale or lease (but
excluding all Coal Reserves in place), including, without limitation, (a) all
such property the sale or other disposition of which has given rise to Accounts
and which has been returned to or repossessed or stopped in transit by the
Borrower or such Guarantor, as the case may be, and (b) all packing, shipping
and advertising materials relating to all or any such property.
               Issuing Bank means PNC Bank, in its individual capacity as issuer
of Letters of Credit hereunder, and any other Bank that Borrower, Agent and such
other Bank may agree may from time to time issue Letters of Credit hereunder.
               Labor Contracts shall mean all employment agreements, employment
contracts, collective bargaining agreements and other agreements among any Loan
Party or Subsidiary of a Loan Party and its employees.
               Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree, bond, judgment, authorization or approval, lien or
award of or settlement agreement with any Official Body.
               Letter of Credit shall have the meaning assigned to that term in
Section 2.9.1.
               Letter of Credit Borrowing shall have the meaning assigned to
such term in Section 2.9.3.4.
               Letter of Credit Fee shall have the meaning assigned to that term
in Section 2.9.2.
               Letters of Credit Outstanding shall mean at any time the sum of
(i) the aggregate undrawn face amount of outstanding Letters of Credit and
(ii) the aggregate amount of all unpaid and outstanding Reimbursement
Obligations and Letter of Credit Borrowings.
               LIBOR Rate shall mean, with respect to the Loans comprising any
Borrowing Tranche to which the LIBOR Rate Option applies for any Interest
Period, the interest rate per annum determined by the Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%
per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which US dollar deposits
are offered by leading banks in the London interbank deposit market), or the
rate which

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is quoted by another source selected by the Agent which has been approved by the
British Bankers’ Association as an authorized information vendor for the purpose
of displaying rates at which US dollar deposits are offered by leading banks in
the London interbank deposit market (an “Alternate Source”), at approximately
11:00 a.m., London time, two (2) Business Days prior to the commencement of such
Interest Period as the London interbank offered rate for U.S. Dollars for an
amount comparable to such Borrowing Tranche and having a borrowing date and a
maturity comparable to such Interest Period (or if there shall at any time, for
any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or
any Alternate Source, a comparable replacement rate determined by the Agent at
such time (which determination shall be conclusive absent manifest error)), by
(ii) a number equal to 1.00 minus the LIBOR Reserve Percentage. LIBOR may also
be expressed by the following formula:
          Average of London interbank offered rates quoted by Bloomberg or
appropriate successor as shown on

                 
 
  LIBOR =       Bloomberg Page BBAM1
 
          1.00 -   LIBOR Reserve Percentage

          The LIBOR Rate shall be adjusted with respect to any Loan to which the
LIBOR Rate Option applies that is outstanding on the effective date of any
change in the LIBOR Rate Reserve Percentage as of such effective date. The Agent
shall give prompt notice to the Borrower of the LIBOR Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.
               LIBOR Rate Option shall mean shall mean the option of the
Borrower to have Loans bear interest at the rate and under the terms set forth
in Section 4.1.1(ii) [Revolving Credit LIBOR Rate Option].
               LIBOR Rate Reserve Percentage shall mean as of any day the
maximum percentage in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”).
               Lien shall mean any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).
               LLC Interests shall have the meaning given to such term in
Section 6.1.3.
               Loan Documents shall mean this Agreement, the Collateral
Assignment, the Guaranty Agreement, the Intercompany Subordination Agreement,
the Intercreditor Agreement, the Mortgage, the Notes, the Patent, Trademark and
Copyright Security Agreement, the Pledge Agreement, the Security Agreement, and
any other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection

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herewith or therewith, as the same may be supplemented or amended from time to
time in accordance herewith or therewith, and Loan Document shall mean any of
the Loan Documents.
               Loan Parties shall mean the Borrower and the Guarantors and TWCC.
               Loan Request shall have the meaning given to such term in
Section 2.5.
               Loans shall mean collectively and Loan shall mean separately all
Revolving Credit Loans, Swing Loans or any Revolving Credit Loan or Swing Loan.
               Management Agreement shall mean that certain amended and restated
management agreement between Parent and the Borrower, dated as of the Closing
Date, pursuant to which Parent provides certain management services to the
Borrower.
               Management Fee shall mean the management fee under the terms of
the Management Agreement which amount shall not exceed $600,000.00 in the
aggregate in any fiscal quarter.
               Management Fee Subordination Agreement shall mean the Management
Fee Subordination Agreement in the form of Exhibit 1.1(M)(2) to be executed and
delivered by Parent and the Borrower, to the Collateral Agent for the benefit of
the Banks.
               Material Adverse Change shall mean any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Loan Parties taken as a whole,
(c) impairs materially or could reasonably be expected to impair materially the
ability of the Loan Parties taken as a whole to duly and punctually pay or
perform its Indebtedness, or (d) impairs materially or could reasonably be
expected to impair materially the ability of the Collateral Agent, the Agent or
any of the Banks, to the extent permitted, to enforce their legal remedies
pursuant to this Agreement or any other Loan Document.
               Member Interests shall have the meaning assigned to that term in
Section 6.1.2.
               Memorandum shall have the meaning assigned to that term in
Section 6.1.11.
               Month, with respect to an Interest Period under the Libor-Rate
Option, shall mean the interval between the days in consecutive calendar months
numerically corresponding to the first day of such Interest Period. If any
Libor-Rate Interest Period begins on a day of a calendar month for which there
is no numerically corresponding day in the month in which such Interest Period
is to end, the final month of such Interest Period shall be deemed to end on the
last Business Day of such final month.
               Moody’s shall mean Moody’s Investors Service, Inc.
               Mortgages shall mean collectively, and Mortgage shall mean
separately, the mortgage or deed of trust in substantially the form of
Exhibits 1.1(M)(1) with respect to the

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Real Property located in the States of Montana and North Dakota, respectively,
executed and delivered by certain of the respective Guarantors to the Collateral
Agent for the benefit of the Banks, encumbering the Real Property.
               Multiemployer Plan shall mean any employee benefit plan which is
a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to
which the Borrower or any member of the ERISA Group is then making or accruing
an obligation to make contributions or, within the preceding five Plan years,
has made or had an obligation to make such contributions.
               Multiple Employer Plan shall mean a Plan which has two or more
contributing sponsors (including the Borrower or any member of the ERISA Group)
at least two of whom are not under common control, as such a plan is described
in Sections 4063 and 4064 of ERISA.
               Net Financed CapEx Amount means, as of any date of determination,
the greater of (i) zero and (ii) the excess, if any, on such date of (x) the
CapEx Threshold over (y) cumulative Capital Expenditures made by the Loan
Parties and their Subsidiaries during the period from (and including) the
Closing Date to (and including) such date of determination.
               New Bank shall have the meaning assigned to that term in
Section 2.11.
               Non-Cash Income Tax Expense shall mean deferred income taxes
which are tax expenses of the Borrower and the Subsidiaries to any Person
(including without limitation, any member of the Parent Group) other than
payments due and payable to governmental tax agencies on behalf of the Borrower
or the Subsidiaries.
               Non-Complying Bank shall mean any Bank which has failed to fund
any Loan which it is required to fund, or pay any other amount which it is
required to pay to the Agent or any other Bank, within one day of the due date
therefor.
               Non-Consenting Bank shall have the meaning specified in
Section 11.1 [Modifications, Amendments or Waivers].
               Note Purchase Agreement shall mean that certain Note Purchase
Agreement by and among Borrower, the Guarantors, and the purchasers party
thereto, dated as of the Closing Date, as may be supplemented or amended from
time to time.
               Note Purchase Collateral shall mean that portion of the
Collateral, in which the Note Purchase Collateral Agent is granted a first
priority security interest for the benefit of the Purchasers.
               Note Purchase Collateral Agency Agreement shall mean that certain
Collateral Agency Agreement among the Purchasers and the Note Purchase
Collateral Agent and dated as of the Closing Date.
               Note Purchase Collateral Agent shall mean an institution which is
holding the Note Purchase Collateral on behalf of the Purchasers pursuant to the
terms of the Note Purchase Collateral Agency Agreement.

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               Note Purchase Documents shall mean the Note Purchase Agreement
and any other agreements, instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith, and Note Purchase Document shall mean any of
the Note Purchase Documents.
               Notes shall mean the Revolving Credit Notes and Swing Notes, if
any.
               Notices shall have the meaning assigned to that term in
Section 11.6.
               NRGT means NRG Texas Power, LLC, a Delaware limited liability
company.
               NRGT Documents shall have the meaning assigned to that term in
Section 7.1.23.
               NRGT Liens shall mean Liens in favor of NRGT with respect to
(i) the assets of TWCC (excluding the Coal Supply Agreement between NRGT and
TWCC), (ii) the Subsidiary Shares of TWCC, owned by the Borrower and (iii) the
products and proceeds of the property described in the foregoing clauses (i) and
(ii).
               NRGT Documents shall have the meaning assigned to that term in
Section 8.2.4(v).
               NRGT Supplemental Agreement means that certain First Amendment to
Amended and Restated Lignite Supply Agreement, dated as of the Closing Date,
2008, by and among Parent, the Borrower, TWCC and NRGT.
               Obligation shall mean all indebtedness, liabilities and
obligations of any nature of the Borrower or any other Loan Party, now or
hereafter existing under or pursuant to or arising out of or in connection with
the Notes, this Agreement, the Letters of Credit, the Agent’s Letter or any
other Loan Document, in the case of each thereof as the same may be amended,
supplemented, extended, renewed or replaced and in effect from time to time,
including without limitation, (i) the payment of the principal of and interest
(including interest which, but for the filing of a petition in bankruptcy with
respect to the Borrower or another Loan Party would accrue) on the Notes, and
(ii) the due performance and observance of, and compliance with, all covenants,
agreements, terms and conditions of the Notes, this Agreement, the Letters of
Credit, the Agent’s Letter and each other Loan Documents required to be
observed, performed or complied with by the Borrower or any other Loan Party.
               Official Body shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, board,
bureau, central bank, commission, department or instrumentality of either, or
any court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
               Organizational Documents shall mean, with respect to any Person,
such Person’s articles of incorporation, certificate of incorporation, charter,
bylaws, partnership agreement, certificate of limited partnership, limited
liability company operating agreement or

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member agreement, any similar organizational agreement, and any agreement among
the owners or holders of the Equity Interests in such Person.
               Other Taxes shall mean all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.
               Parent shall mean Westmoreland Coal Company, a Delaware
corporation, the sole member of the Borrower.
               Parent Change in Control shall be deemed to have occurred if
(i) any person or group of persons (within the meaning of Sections 13(d) or
14(d)(2) of the Exchange Act as in effect on the Closing Date) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated by
the Securities and Exchange Commission under said Act) of capital stock or other
securities of Parent which are entitled to cast more than 40% of the total votes
which may be cast in an election of directors of Parent; or (ii) at any time, a
majority of the board of directors of Parent shall be comprised of persons other
than individuals who were directors of Parent one year prior to such time
together with any individuals who were nominated for election as directors of
Parent by individuals who were directors of Parent who, at the time of such
individuals’ nominations, had been directors of Parent for at least one year.
               Parent Group shall mean the Parent and each entity in which the
Parent owns, directly or indirectly through one or more intermediaries, 5% or
more of any class of the voting or other equity interests of such Person,
including those entities now in existence and hereafter created, other than the
Loan Parties and all of their Subsidiaries.
               Participation Advance shall mean, with respect to any Bank, such
Bank’s payment in respect of its participation in a Letter of Credit Borrowing
according to its Ratable Share pursuant to Section 2.9.3.4.
               Partnership Interests shall have the meaning given to such term
in Section 6.1.3.
               Patent, Trademark and Copyright Security Agreement shall mean the
Amended and Restated Patent, Trademark and Copyright Security Agreement in
substantially the form of Exhibit 1.1(P)(1) executed and delivered by each of
the Loan Parties to the Collateral Agent for the benefit of the Banks.
               Payment Date shall mean each March 31, June 30, September 30 and
December 31 hereafter, provided that if such date is not a Business Day, then on
the Business Day immediately following such date.
               PBGC shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any successor.
               Pension Plan means any “employee pension benefit plan” (as such
term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that
is subject to Title IV of ERISA and is sponsored or maintained by Borrower or
any ERISA Affiliate or to which

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Borrower or any ERISA Affiliate contributes or has an obligation to contribute,
or in the case of a multiple employer or other plan described in Section 4064(a)
of ERISA, has made contributions at any times during the immediately preceding
five plan years.
               Permitted Affiliate Transactions means: (i) the services to be
provided and fees payable under the Management Agreement pursuant to
Section 8.1.20 of this Agreement, (ii) any sale, transfer or lease of assets by
an Loan Party or a Subsidiary of a Loan Party to (A) another Loan Party to the
extent such transaction is otherwise permitted by and effected in compliance
with Section 8.2.7(ii), or (B) another Loan Party (other than TWCC) to the
extent such transaction is otherwise permitted by and effected in compliance
with Section 8.2.7(iii), (iii) upon the occurrence and during the continuance of
a force majeure event (which arises through no fault of the Loan Parties) under
any Coal Supply Contract and which prevents the Loan Parties from supplying the
buyers with the requested amount of coal thereunder, sales of coal from any
member of the Parent Group to any of the Loan Parties to satisfy the requests of
the buyers under such Coal Supply Contract so long as the terms and conditions
of the transaction are commercially reasonable in all respects (including at a
price which enables the Loan Party to earn a reasonable profit from the
transaction and otherwise on terms and conditions no less favorable to the Loan
Party than those offered by independent third parties) and so long as such
supply by the member of the Parent Group is more favorable to the Borrower than
supply of such coal by any other Loan Party able to supply it, (iv) in the event
that any buyer of coal under a Coal Supply Contract increases its demands for
coal under such agreement beyond the ability of the Loan Party to the Coal
Supply Contract to satisfy such requirements, a member of the Parent Group shall
be permitted to bid on and supply coal to such buyer, provided that such action
in no way reduces the amount of coal that is to be supplied by the Loan Party
under the Coal Supply Contract at such time or in the future, (v) in the event
that the Loan Parties have excess coal production (beyond the needs of the
buyers under the Coal Supply Contracts) available for sale to non-Affiliate
third parties, a member of the Parent Group shall be permitted to act as a
broker for the Loan Parties in such sales and shall be entitled to a brokerage
fee which is typical in the marketplace for providing such services (such
brokerage fees at the time of Closing Date would be in the range of $0.25 to
$0.50 per ton of coal sold), (vi) to the extent that any Coal Supply Contract
permits the buyer of coal thereunder to require that coal be obtained from a
source other than the Loan Parties, a member of the Parent Group shall be
permitted to sell coal to such buyer so long as the buyer pays the fee
associated with such activity in accordance with the Coal Supply Contract,
(vii) participation by TWCC in the 8750 Parts Pool in a manner consistent with
its participation therein prior to the date hereof, and participation by the
Borrower or any of its Subsidiaries in any other Approved Parts Pool Program,
and (viii) participation by the Borrower, WECO and the other Guarantors in the
Shared Services Arrangement with WRI, but only to the extent that (A) the net
amount of aggregate charges to the Borrower and the Guarantors taken together
for services performed by WRI pursuant to such Agreement shall not exceed
$100,000 in any monthly period, (B) the net amount of charges to WRI for
services performed by the Borrower and the Guarantors pursuant to such
arrangements shall not exceed $250,000 in any monthly period, and (C) all such
net amounts are paid in full, no less frequently than on a monthly basis;
provided, however, that no transaction referred to in any of the foregoing
clauses (ii) through (vii) shall constitute a Permitted Affiliate Transaction
unless it is consummated on terms and conditions that are at fair market value
and generally similar to the terms and conditions that would apply in a
comparable arm’s length transaction with an unrelated third party.

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               Permitted Investments shall mean:
          (i) direct obligations of the United States of America or any agency
or instrumentality thereof or obligations backed by the full faith and credit of
the United States of America or obligations of state or local governments rated
not lower than AAA/Aaa by Standard & Poor’s or Moody’s maturing no later than
twelve months from the date of acquisition;
          (ii) commercial paper maturing in 270 days or less rated not lower
than A-1, by Standard & Poor’s or P-1 by Moody’s on the date of acquisition;
          (iii) demand deposits, time deposits or certificates of deposit
maturing within one year in commercial banks organized under the laws of the
United States or any state thereof have capital, surplus and undivided profits
aggregating at least $500,000,000 and whose obligations are rated A- or the
equivalent or better by Standard & Poor’s or A3 or better by Moody’s on the date
of acquisition, provided that the Loan Parties shall be permitted to maintain
their operating accounts for administrative purposes with First Interstate Bank
located in Billings, Montana;
          (iv) repurchase obligations entered into with a bank or trust
corporation meeting the standards set forth in clause (iii) above; provided that
such repurchase agreements require the physical delivery of the investments
securing the repurchase agreement, except these delivered through the Federal
Reserve Book Entry System; and
          (v) money market funds having assets in excess of $500,000,000 and
which are restricted by their respective charters to investing solely in
securities of the type permitted in clauses (i) through (iv) above;
               Permitted Liens shall mean:
          (i) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business and which are not yet due and payable;
          (ii) pledges or deposits made in the ordinary course of business to
secure payment of workmen’s compensation, or to participate in any fund in
connection with workmen’s compensation, unemployment insurance, old-age pensions
or other social security programs (exclusive, however, of Liens arising under
ERISA);
          (iii) Liens of mechanics, materialmen, warehousemen, carriers, or
other like Liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable and Liens of landlords securing
obligations to pay lease payments that are not yet due and payable or in
default;
          (iv) good-faith pledges or deposits made, or bonds given, in the
ordinary course of business to secure performance of bids, tenders, contracts
(including any reclamation bond funds) (other than for the repayment of borrowed
money) or leases or other ordinary course obligations, not in excess of the
aggregate amount due or which may become due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;

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          (v) encumbrances consisting of zoning restrictions, easements or other
restrictions on the use of real property, none of which materially impairs the
use of such property or the value thereof, and none of which is violated in any
material respect by existing or proposed structures or land use;
          (vi) Liens, security interests and mortgages in favor of the
Collateral Agent for the benefit of the Banks and Liens and security interests
and mortgages for the benefit of the Purchasers and which secure obligations
under the Note Purchase Agreement;
          (vii) Liens on property leased (or proceeds thereof) by any Loan Party
or Subsidiary of a Loan Party under capital and operating leases permitted in
Section 8.2.16 securing obligations of such Loan Party or Subsidiary to the
lessor under such leases;
          (viii) Purchase Money Security Interests securing Indebtedness
permitted by Section 8.2.1(iv);
          (ix) the NRGT Liens, so long as no such Lien shall at any time extend
to or cover any assets or properties of the Borrower or the Guarantors or any of
their respective Subsidiaries other than the Borrower’s right, title and
interest in and to the Subsidiary Shares of TWCC and TWCC’s right, title and
interest in and to the assets and properties of TWCC (other than the “Assigned
Proceeds” of the “TWCC Agreement”, as defined in the Collateral Assignment); and
          (x) the following (A) if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings diligently
conducted so long as levy and execution thereon have been stayed and continue to
be stayed or (B) if a final judgment is entered and such judgment is discharged
within forty-five (45) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of any Loan Party
to perform its Obligations hereunder or under the other Loan Documents:
     (1) claims or Liens for taxes, assessments or charges due and payable and
subject to interest or penalty, provided that the applicable Loan Party
maintains such reserves or other appropriate provisions as shall be required by
GAAP and pays all such taxes, assessments or charges forthwith upon the
commencement of proceedings to foreclose any such Lien;
     (2) claims, Liens or encumbrances upon, and defects of title to, real or
personal property other than the Collateral, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits;
     (3) claims or Liens of mechanics, materialmen, warehousemen, carriers, or
other statutory nonconsensual Liens; or
               Permitted Modifications shall mean amendments, modifications or
waivers of the Coal Supply Contracts or Coal Leases which are entered into in
the ordinary course of business (or, in the case of amendments or modifications
of the Coal Supply Agreement in effect on the date hereof between WECO and
Minnesota Power, whether or not entered into in the ordinary course of business)
by the Loan Parties from time to time so long as

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such action does not (i) negatively impact the economics of the agreement from
the Loan Party’s perspective (including changing any terms relating to price,
quantity or term), (ii) adversely affect the contemplated mining operations of
the Loan Parties or (iii) have any reasonable likelihood of resulting in a
Material Adverse Change.
               Person shall mean any individual, corporation, partnership,
limited liability company, association, joint-stock company, trust,
unincorporated organization, joint venture, government or political subdivision
or agency thereof, or any other entity.
               Plan shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.
               Pledge Agreement shall mean the Amended and Restated Pledge
Agreement in substantially the form of Exhibit 1.1(P)(2) executed and delivered
by the members of the Borrower, the Borrower and any Subsidiaries (other than
TWCC) to the Collateral Agent for the benefit of the Banks.
               Pledged Collateral shall mean the property and the rights of the
Loan Parties and the members of Borrower in which security interests are to be
granted under the Pledge Agreement.
               PNC Bank shall mean PNC Bank, National Association, its
successors and assigns.
               Potential Default shall mean an event or condition the occurrence
or existence of which with the mere notice, passage of time, or any combination
of the foregoing, would become an Event of Default.
               Principal Office shall mean the main banking office of the Agent
in Pittsburgh, Pennsylvania.
               Prior Security Interest shall mean a valid and enforceable
perfected (i) with respect to the Revolver Primary Collateral, first-priority
security interest under the Uniform Commercial Code in the Revolver Primary
Collateral which is subject only to Permitted Liens (other than Permitted Liens
of the types described in clauses (iv), (vii) and (viii) of the definition of
that term), and (ii) with respect to the Note Purchase Collateral, security
interest under the Uniform Commercial Code in the Note Purchase Collateral, the
Pledged Collateral and the Intellectual Property Collateral.
               Prohibited Transaction shall mean any prohibited transaction as
defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for
which neither an individual nor a class exemption has been issued by the United
States Department of Labor.

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               Property shall mean all real property, both owned and leased, of
any Loan Party or Subsidiary of a Loan Party.
               Purchase Money Security Interest shall mean Liens upon tangible
personal property and proceeds thereof securing loans to any Loan Party or
Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary
securing not more than 100% of the purchase price of such tangible personal
property, provided that (a) any such Lien attaches within 90 days of the
acquisition of such personal property and (b) such Lien attaches and is at all
times confined solely to such acquired personal property and proceeds thereof.
               Purchasers shall mean those purchasers party to the Note Purchase
Agreement from time to time.
               Purchasing Bank shall mean a Bank which becomes a party to this
Agreement by executing an Assignment and Assumption Agreement.
               Qualified Accounts shall mean any Accounts which the Agent in its
reasonable credit judgment determines to have met all of the minimum
requirements set forth on Schedule 1.1(Q)(1).
               Qualified Inventory shall mean any Inventory which the Agent in
its reasonable credit judgment determines to have met all of the minimum
requirements set forth on Schedule 1.1(Q)(2).
               Ratable Share shall mean the proportion that a Bank’s Commitment
(excluding the Swing Loan Commitment) bears to the Commitments (excluding the
Swing Loan Commitment) of all of the Banks. If the Commitments have terminated
or expired, the Ratable Shares shall be determined based upon the Commitments
most recently in effect, giving effect to any assignments.
               Real Property shall mean the real estate owned by any of the Loan
Parties, which, with respect to such real estate owned by the Guarantors, shall
be encumbered by the Mortgages and described on Schedule 6.1.8 hereto.
               Regulated Substances shall mean, without limitation, any
substance, material or waste, regardless of its form or nature, defined under
Environmental Laws as a “hazardous substance,” “pollutant,” “pollution,”
“contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,”
“toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special
handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal
waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical
waste,” or “regulated substance” or any other material, substance or waste,
regardless of its form or nature, which otherwise is regulated by Environmental
Laws, which is the subject of an Environmental Law applicable to the Borrower or
any Subsidiary of any Loan Party.
               Regulation U shall mean Regulation U, T or X as promulgated by
the Board of Governors of the Federal Reserve System, as amended from time to
time.
               Reimbursement Obligation shall have the meaning assigned to such
term in Section 2.9.3.2.

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               Reportable Event shall mean a reportable event described in
Section 4043 of ERISA and regulations thereunder with respect to a Plan or
Multiemployer Plan for which written notice thereof to the PBGC is required
under applicable regulations.
               Required Banks shall mean
          (xi) if there are no Loans, Reimbursement Obligations or Letter of
Credit Borrowings outstanding, Banks whose Commitments (excluding the Swing Loan
Commitments) aggregate at least 51% of the Commitments of all of the Banks, or
          (xii) if there are Loans, Reimbursement Obligations, or Letter of
Credit Borrowings outstanding, any Bank or group of Banks if the sum of the
Loans (excluding Swing Loans), Reimbursement Obligations and Letter of Credit
Borrowings of such Banks then outstanding aggregates at least 51% of the total
principal amount of all of the Loans (excluding Swing Loans), Reimbursement
Obligations and Letter of Credit Borrowings then outstanding. Reimbursement
Obligations and Letter of Credit Borrowings shall be deemed, for purposes of
this definition, to be in favor of the Agent and not a participating Bank if
such Bank has not made its Participation Advance in respect thereof and shall be
deemed to be in favor of such Bank to the extent of its Participation Advance if
it has made its Participation Advance in respect thereof.
               Required Environmental Notices shall mean all notices, reports,
plans, forms or other filings which pursuant to Environmental Laws, Required
Environmental Permits or at the request or direction of an Official Body either
must be submitted to an Official Body or which otherwise must be maintained.
               Required Environmental Permits shall mean all permits, licenses,
bonds, consents, programs, approvals or authorizations required under
Environmental Laws to own, occupy or maintain the Property or which otherwise
are required for the operations and business activities of the Borrower or the
other Loan Parties.
               Required Mining Permits shall mean all permits, licenses,
authorizations, plans, approvals and bonds necessary under the Environmental
Laws for the Loan Parties or any Subsidiary to continue to conduct coal mining
and related operations on, in or under the Real Property, the Property subject
to the Coal Leases and any and all other mining properties owned or leased by
any such Loan Party or Subsidiary (collectively “Mining Property”) substantially
in the manner as such operations had been authorized immediately prior to
Borrower’s or such Subsidiary’s acquisition of its interests in the Real
Property and as may be necessary for Borrower or such Subsidiary to conduct coal
mining and related operations on, in or under the Mining Property as described
in any plan of operation.
               Required Share shall have the meaning assigned to such term in
Section 5.7.
               Responsible Officer shall mean any Senior Financial Officer and
any other officer of the Borrower with responsibility for the administration of
the relevant portion of this Agreement.

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               Retained Cash shall mean, with respect to each Payment Date, an
amount equal to the lesser of:
                    (a) Available Cash as of such Payment Date, and
                    (b) the sum of (i) Targeted Retained Cash and (ii) the
Cumulative Retained Cash Shortfall, each as determined with respect to such
Payment Date.
               Retained Cash Limit shall mean, with respect to each Payment Date
occurring during the year 2011 or thereafter, an amount equal to the difference
between (i) $25,000,000 and (ii) the aggregate amount of cash and Permitted
Investments on deposit to the credit of the Debt Service Reserve Account on such
Payment Date (after giving effect to all deposits thereto and withdrawals
therefrom on such Payment Date).
               Retained Cash Makeup Amount shall mean, for any Payment Date as
to which Retained Cash shall exceed Targeted Retained Cash, the amount of such
excess.
               Retained Cash Shortfall Amount shall mean, for any Payment Date
as to which Targeted Retained Cash shall exceed Available Cash, the amount of
such excess.
               Revolver Primary Collateral shall mean that portion of the UCC
Collateral in which the Banks are granted a first priority security interest
pursuant to the Security Agreement which shall include Accounts and Inventory.
               Revolving Credit Base Rate Option shall mean the option of the
Borrower to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(i).
               Revolving Credit Commitment shall mean, as to any Bank at any
time, the amount initially set forth opposite its name on Schedule 1.1(B) in the
column labeled “Amount of Commitment for Revolving Credit Loans,” and thereafter
on Schedule I to the most recent Assignment and Assumption Agreement, and
Revolving Credit Commitments shall mean the aggregate Revolving Credit
Commitments of all of the Banks.
               Revolving Credit Libor-Rate Option shall mean the option of the
Borrower to have Revolving Credit Loans bear interest at the rate and under the
terms and conditions set forth in Section 4.1.1(ii).
               Revolving Credit Loans shall mean collectively and Revolving
Credit Loan shall mean separately all Revolving Credit Loans or any Revolving
Credit Loan made by the Banks or one of the Banks to the Borrower pursuant to
Section 2.1 or 2.9.3.
               Revolving Credit Notes shall mean collectively and Revolving
Credit Note shall mean separately all the Revolving Credit Notes of the Borrower
in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans together
with all amendments, extensions, renewals, replacements, refinancings or
refundings thereof in whole or in part.
               Revolving Facility Usage shall mean at any time the sum of the
Revolving Credit Loans outstanding and the Letters of Credit Outstanding.

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               Section 20 Subsidiary shall mean the Subsidiary of the bank
holding company controlling any Bank, which Subsidiary has been granted
authority by the Federal Reserve Board to underwrite and deal in certain
Ineligible Securities.
               Security Agreement shall mean the Security Agreement in
substantially the form of Exhibit 1.1(S)(1) executed and delivered by each of
the Loan Parties to the Collateral Agent for the benefit of the Banks.
               Security Documents shall mean (i) the Security Agreement,
(ii) the Pledge Agreement, (iii) the Guaranty Agreement, (iv) the Patent,
Trademark and Copyright Security Agreement, (v) the Mortgages and (vi) the
Collateral Assignment, (vii) the Collateral Agency Agreement, and (viii) from
and after the execution and delivery thereof, any additional security agreement,
pledge agreement, assignment, mortgage, deed of trust or other security document
entered into by the Borrower or any other Loan Party pursuant to Section 11.17.
               Senior Financial Officer shall mean the chief financial officer,
principal accounting officer, treasurer or comptroller of the Borrower.
               Settlement Date shall mean such day(s) of each week as determined
by PNC in its discretion (if such day is a Business Day and if not, the next
succeeding Business Day) and any other Business Day on which the Agent elects to
effect settlement pursuant to Section 5.7.
               Shared Services Arrangement means the agreement by and among the
Borrower, WECO, the other Guarantors and WRI (collectively, “Participants”)
relating to the provision of certain finance, engineering, clerical, procurement
and information technology services which:
               (a) entails part-time work by a total of no more than 12
employees of the Participants at any one time through December 31, 2008 who
perform finance, engineering, clerical, procurement and/or information
technology services, and no more than 3 employees of the Participants at any one
time thereafter who perform information technology services; and
               (b) is entered into and conducted by the Participants on terms
that reflect the actual cost of such services to the performing Participant,
plus a margin of 5%.
               Single Purpose Entity shall mean with respect to the Borrower, an
organization which is organized solely for the purposes of carrying out the
activities described in its operating agreement as of the Closing Date and which
does not engage in any business unrelated to such activities, does not have any
assets other than those related to its interest in the activities or any
indebtedness other than as permitted by this Agreement or the other Loan
Documents, has and maintains its own separate books and records and its own
accounts, in each case which are separate and apart from the books and records
and accounts of any other Person and holds itself out as being a Person separate
and apart from any other Person, the day to day operations of which are managed
principally by a President or comparable officer who is not employed by, does
not hold any position with, and does not provide any services to the Parent
Group, and the day to day human resources decisions of which are made by an
officer or employee who is not employed by, does not hold any position with, and
does not provide any services to the Parent Group.

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               Standard & Poor’s shall mean Standard & Poor’s Ratings Services,
a division of The McGraw-Hill Companies, Inc.
               Standby Letter of Credit shall mean a Letter of Credit issued to
support obligations of one or more of the Loan Parties, contingent or otherwise,
which finance the working capital and business needs of the Loan Parties
incurred in the ordinary course of business.
               Subsidiary of any Person at any time shall mean (i) any
corporation or trust of which 50% or more (by number of shares or number of
votes) of the outstanding capital stock or shares of beneficial interest
normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting
rights) is at such time owned directly or indirectly by such Person or one or
more of such Person’s Subsidiaries, (ii) any partnership of which such Person is
a general partner or of which 50% or more of the partnership interests is at the
time directly or indirectly owned by such Person or one or more of such Person’s
Subsidiaries, (iii) any limited liability company of which such Person is a
member or of which 50% or more of the limited liability company interests is at
the time directly or indirectly owned by such Person or one or more of such
Person’s Subsidiaries or (iv) any corporation, trust, partnership, limited
liability company or other entity which is controlled or capable of being
controlled by such Person or one or more of such Person’s Subsidiaries. Unless
the context otherwise clearly requires, any reference to a “Subsidiary” is a
reference to a Subsidiary of the Borrower.
               Subsidiary Shares shall have the meaning assigned to that term in
Section 6.1.3.
               Swap Obligations means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps, forward sale or
purchase agreements, futures contracts and similar obligations obligating such
Person to make payments, whether periodically or upon the happening of a
contingency (including without limitation, any obligations arising from any of
the foregoing used to hedge the price of coal or other commodities). For the
purposes of this Agreement, the amount of any Swap Obligation shall be the
amount determined in respect thereof as of the end of the most recently ended
fiscal quarter of such Person, based on the assumption that such Swap Obligation
had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap Obligation provides for
the netting of amounts payable by and to such Person thereunder or if any such
agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligation shall be the net
amount so determined.
               Swing Loan Commitment shall mean PNC Bank’s commitment to make
Swing Loans to the Borrower pursuant to Section 2.1.2 hereof in an aggregate
principal amount up to $10,000,000.00.
               Swing Loan Note shall mean the Swing Loan Note of the Borrower in
the form of Exhibit 1.1(S)(2) evidencing the Swing Loans, together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
               Swing Loan Request shall mean a request for Swing Loans made in
accordance with Section 2.5.2 hereof.

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               Swing Loans shall mean collectively and Swing Loan shall mean
separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrower
pursuant to Section 2.1.2 hereof.
               Targeted Retained Cash shall mean, with respect to each Payment
Date, the amount set forth or determined as provided in the following table as
to such Payment Date:

      Payment Dates   Amount
each Payment Date occurring during the years 2008 and 2009
   $1,000,000
each Payment Date occurring during the year 2010
   $750,000
each Payment Date occurring during the year 2011 and thereafter
   $1,000,000, or such lesser amount as shall cause the aggregate amount of
Retained Cash retained by the Borrower to equal the Retained Cash Limit with
respect to such Payment Date

               Term Loans shall mean collectively all of the advances made under
the notes issued by the Borrower pursuant to the Note Purchase Agreement.
               Term Notes shall mean the “Notes”, as defined in the Note
Purchase Agreement.
               Third Party Services Payments shall mean reimbursement of the
allocable share of the actual cost (without overhead) of the goods and services
procured by the Parent Group or any member thereof from a third-party (which is
not an Affiliate of the Parent) on behalf of the Borrower or any Loan Party for
services which are of a general administrative nature and not operating type
services.
               Transferor Bank shall mean the selling Bank pursuant to an
Assignment and Assumption Agreement.
               TWCC shall mean Texas Westmoreland Coal Co., a Montana
corporation.
               2001 Note Agreement shall mean the Term Loan Agreement, dated as
of April 27, 2001, as amended by amendments thereto dated as of August 15, 2001,
March 25, 2002 and March 8, 2004, respectively, between the Borrower, the
Guarantors, TWCC, and the institutional investors identified in Schedule A
thereto, pursuant to which the Borrower issued and sold, and such institutional
investors purchased, the Borrower’s (i) Floating Rate Senior Guaranteed Secured
Notes, Series A, due 2002, (ii) 9.39% Senior Guaranteed Secured Notes, Series B,
due 2008, (iii) 6.85% Senior Guaranteed Secured Notes, Series C, due 2011, and
(iv) Floating Rate Senior Guaranteed Secured Notes, Series D, due 2011.
               UCC Collateral shall mean the property of the Loan Parties in
which security interests are to be granted under the Security Agreement.

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               Unfinanced Capital Expenditures shall mean as of the last day of
any quarterly fiscal period of the Borrower (each such last day, a “Test Date”),
an amount in Dollars equal to:
          (xiii) if cumulative Capital Expenditures made by the Loan Parties and
their Subsidiaries during the CapEx Period applicable to such Test Date are not
in excess of the CapEx Threshold, $0;
          (xiv) if (x) cumulative Capital Expenditures made by the Loan Parties
and their Subsidiaries during the CapEx Period applicable to such Test Date are
in excess of the CapEx Threshold and (y) such cumulative Capital Expenditures
for the CapEx Period applicable to no prior Test Date shall have been in excess
of the CapEx Threshold, the amount of such excess over the CapEx Threshold; or
          (xv) if cumulative Capital Expenditures made by the Loan Parties and
their Subsidiaries during the CapEx Period applicable to such Test Date are in
excess of the CapEx Threshold and clause (ii) above shall not be applicable, the
aggregate amount of Capital Expenditures made by the Loan Parties and their
Subsidiaries during such fiscal period ended on such Test Date.
     For purposes of the foregoing definition, the “CapEx Period” applicable to
any Test Date means the period from and including the Closing Date to and
including such Test Date.
               Uniform Commercial Code shall have the meaning assigned to that
term in Section 6.1.16.
               USA Patriot Act shall mean the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, Public Law 107-56, as the same has been, or shall hereafter be,
renewed, extended, amended or replaced.
               WECO shall mean Western Energy Company, a Montana corporation.
               WRI shall mean Westmoreland Resources, Inc., a Delaware
corporation, the owner of the Absaloka Mine in Big Horn County, Montana, and a
Subsidiary of the Parent.
     1.2 Construction.
          Unless the context of this Agreement otherwise clearly requires, the
following rules of construction shall apply to this Agreement and each of the
other Loan Documents:
          1.2.1 Number; Inclusion.
               references to the plural include the singular, the plural, the
part and the whole; “or” has the inclusive meaning represented by the phrase
“and/or,” and “including” has the meaning represented by the phrase “including
without limitation”;

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          1.2.2 Determination.
               references to “determination” of or by the Agent or the Banks
shall be deemed to include good-faith estimates by the Agent or the Banks (in
the case of quantitative determinations) and good-faith beliefs by the Agent or
the Banks (in the case of qualitative determinations) and such determination
shall be conclusive absent manifest error;
          1.2.3 Agent’s Discretion and Consent.
               whenever the Agent or the Banks are granted the right herein to
act in its or their sole discretion or to grant or withhold consent such right
shall be exercised in good faith;
          1.2.4 Documents Taken as a Whole.
               the words “hereof,” “herein,” “hereunder,” “hereto” and similar
terms in this Agreement or any other Loan Document refer to this Agreement or
such other Loan Document as a whole and not to any particular provision of this
Agreement or such other Loan Document;
          1.2.5 Headings.
               the section and other headings contained in this Agreement or
such other Loan Document and the Table of Contents (if any), preceding this
Agreement or such other Loan Document are for reference purposes only and shall
not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;
          1.2.6 Implied References to this Agreement.
               article, section, subsection, clause, schedule and exhibit
references are to this Agreement or other Loan Document, as the case may be,
unless otherwise specified;
          1.2.7 Persons.
               reference to any Person includes such Person’s successors and
assigns but, if applicable, only if such successors and assigns are permitted by
this Agreement or such other Loan Document, as the case may be, and reference to
a Person in a particular capacity excludes such Person in any other capacity;
          1.2.8 Modifications to Documents.
               reference to any agreement (including this Agreement and any
other Loan Document together with the schedules and exhibits hereto or thereto),
document or instrument means such agreement, document or instrument as amended,
modified, replaced, substituted for, superseded or restated;
          1.2.9 From, To and Through.
               relative to the determination of any period of time, “from” means
“from and including,” “to” means “to but excluding,” and “through” means
“through and including”; and

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          1.2.10 Shall; Will.
               references to “shall” and “will” are intended to have the same
meaning.
     1.3 Accounting Principles.
          Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), and all accounting or financial terms shall have the meanings
ascribed to such terms by GAAP; provided, however, that all accounting terms
used in Section 8.2 [Negative Covenants] (and all defined terms used in the
definition of any accounting term used in Section 8.2 shall have the meaning
given to such terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the Annual
Statements referred to in Section 6.1.9(i) [Historical Statements]. In the event
of any change after the date hereof in GAAP, and if such change would result in
the inability to determine compliance with the financial covenants set forth in
Section 8.2 based upon the Borrower’s regularly prepared financial statements by
reason of the preceding sentence, then the parties hereto agree to endeavor, in
good faith, to agree upon an amendment to this Agreement that would adjust such
financial covenants in a manner that would not affect the substance thereof, but
would allow compliance therewith to be determined in accordance with the
Borrower’s financial statements at that time.
2. REVOLVING CREDIT AND SWING LOAN FACILITIES
     2.1 Revolving Credit Commitments.
          2.1.1 Revolving Credit Loans.
          Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, each Bank severally agrees to
make Revolving Credit Loans to the Borrower at any time or from time to time on
or after the date hereof to the Expiration Date provided that after giving
effect to such Loan the aggregate amount of Loans from such Bank shall not
exceed such Bank’s Revolving Credit Commitment minus such Bank’s Ratable Share
of the Letters of Credit Outstanding. All advances to the Borrower shall be made
against Qualified Accounts of the Loan Parties, based upon the ratios stated in
the definition of Borrowing Base in Section 1.1 [Certain Definitions], as then
in effect, and the Revolving Facility Usage shall at no time exceed the lesser
of the Revolving Credit Commitments or the Borrowing Base. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 2.1.
          2.1.2 Swing Loan Commitment.
               Subject to the terms and conditions hereof and relying upon the
representations and warranties herein set forth, and in order to facilitate
loans and repayments between Settlement Dates, PNC Bank may, at its option,
cancelable at any time for any reason whatsoever, make swing loans (the “Swing
Loans”) to the Borrower at any time or from time to time after the date hereof
to, but not including, the Expiration Date, in an aggregate outstanding
principal amount up to but not in excess of $10,000,000 (the “Swing Loan
Commitment”),

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provided that the aggregate principal amount of PNC Bank’s Swing Loans and the
Revolving Credit Loans of all the Banks and the Letters of Credit Outstanding at
any one time outstanding shall not exceed the lesser of the aggregate Revolving
Credit Commitments for all Banks or the Borrowing Base. Within such limits of
time and amount and subject to the other provisions of this Agreement, the
Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2.
     2.2 Nature of Banks’ Obligations with Respect to Revolving Credit Loans.
          Each Bank shall be obligated to participate in each request for
Revolving Credit Loans pursuant to Section 2.5.1 [Revolving Credit Loan
Requests] in accordance with its Ratable Share. The aggregate of each Bank’s
Revolving Credit Loans outstanding hereunder to the Borrower at any time shall
never exceed its Revolving Credit Commitment minus its Ratable Share of the
Letters of Credit Outstanding. The obligations of each Bank hereunder are
several. The failure of any Bank to perform its obligations hereunder shall not
affect the Obligations of the Borrower to any other party nor shall any other
party be liable for the failure of such Bank to perform its obligations
hereunder. The Banks shall have no obligation to make Revolving Credit Loans
hereunder on or after the Expiration Date.
     2.3 Commitment Fees.
          Accruing from the date hereof until the Expiration Date, the Borrower
agrees to pay to the Agent for the account of each Bank, as consideration for
such Bank’s Revolving Credit Commitment hereunder, a nonrefundable commitment
fee (the “Commitment Fee”) equal to 0.50% per annum (computed on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed) on the
average daily difference between the amount of (i) such Bank’s Revolving Credit
Commitment as the same may be constituted from time to time and the (ii) the sum
of such Bank’s Revolving Credit Loans outstanding (for purposes of this
computation, PNC Bank’s Swing Loans shall be deemed to be borrowed amounts under
its Revolving Credit Commitment) plus its Ratable Share of Letters of Credit
Outstanding. All Commitment Fees shall be payable in arrears on the last
Business Day of each June, September, December and March after the date hereof
and on the Expiration Date or upon acceleration of the Notes.
     2.4 Intentionally Omitted. 2.5 Revolving Credit Loan Requests; Swing Loan
Requests.
          2.5.1 Revolving Credit Loan Requests.
          Except as otherwise provided herein, the Borrower may from time to
time prior to the Expiration Date request the Banks to make Revolving Credit
Loans, or renew or convert the Interest Rate Option applicable to existing
Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering
to the Agent, not later than 12:00 noon, Pittsburgh time, (i) three (3) Business
Days prior to the proposed Borrowing Date with respect to the making of
Revolving Credit Loans to which the Libor-Rate Option applies or the conversion
to or the renewal of the Libor-Rate Option for any Loans; and (ii) on the
proposed Borrowing Date with respect to the making of a Revolving Credit Loan to
which the Base Rate Option applies or the last day of the preceding Interest
Period with respect to the conversion to the Base Rate Option for any Loan, of a
duly completed request therefor substantially in the form of Exhibit 2.5.1 or a
request by telephone immediately confirmed in writing by letter, facsimile or
telex in such form (each, a

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“Loan Request”), it being understood that the Agent may rely on the authority of
any individual making such a telephonic request without the necessity of receipt
of such written confirmation. Each Loan Request shall be irrevocable and shall
specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the
proposed Loans comprising each Borrowing Tranche, which shall be in integral
multiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche to
which the Libor-Rate Option applies and in integral multiples of $100,000 and
not less than the lesser of $500,000 or the maximum amount available for
Borrowing Tranches to which the Base Rate Option applies; (iii) whether the
Libor-Rate Option or Base Rate Option shall apply to the proposed Loans
comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing
Tranche to which the Libor-Rate Option applies, an appropriate Interest Period
for the Loans comprising such Borrowing Tranche.
          2.5.2 Swing Loan Requests.
               Except as otherwise provided herein, the Borrower may from time
to time prior to the Expiration Date request PNC Bank to make Swing Loans by
delivery to PNC Bank not later than 1:00 p.m. Pittsburgh time on the proposed
Borrowing Date of a duly completed request therefor substantially in the form of
Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing
by letter, facsimile or telex (each, a “Swing Loan Request”), it being
understood that the Agent may rely on the authority of any individual making
such a telephonic request without the necessity of receipt of such written
confirmation. Each Swing Loan Request shall be irrevocable and shall specify the
proposed Borrowing Date and the principal amount of such Swing Loan, which shall
be in integral multiples of $100,000 and not less than $100,000.
     2.6 Making Revolving Credit Loans and Swing Loans; Swing Notes;
Presumptions by the Agent.
          2.6.1 Making Revolving Credit Loans.
          The Agent shall, promptly after receipt by it of a Loan Request
pursuant to Section 2.5 [Revolving Credit Loan Requests], notify the Banks of
its receipt of such Loan Request specifying: (i) the proposed Borrowing Date and
the time and method of disbursement of the Revolving Credit Loans requested
thereby; (ii) the amount and type of each such Revolving Credit Loan and the
applicable Interest Period (if any); and (iii) the apportionment among the Banks
of such Revolving Credit Loans as determined by the Agent in accordance with
Section 2.2 [Nature of Banks’ Obligations]. Each Bank shall remit the principal
amount of each Revolving Credit Loan to the Agent such that the Agent is able
to, and the Agent shall, to the extent the Banks have made funds available to it
for such purpose and subject to Section 7.2 [Each Additional Loan], fund such
Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available
funds at the Principal Office prior to 2:00 p.m., Pittsburgh time, on the
applicable Borrowing Date, provided that if any Bank fails to remit such funds
to the Agent in a timely manner, the Agent may elect in its sole discretion to
fund with its own funds the Revolving Credit Loans of such Bank on such
Borrowing Date, and such Bank shall be subject to the repayment obligation in
Section 10.15 [Availability of Funds].
          2.6.2 Making Swing Loans.

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               So long as PNC Bank elects to make Swing Loans, PNC Bank shall,
after receipt by it of a Swing Loan Request pursuant to Section 2.5.2 [Swing
Loan Request], fund such Swing Loan to the Borrower in U.S. Dollars and
immediately available funds at the Principal Office prior to 4:00 p.m.
Pittsburgh time on the Borrowing Date.
          2.6.3 Presumptions by the Agent.
               Unless the Agent shall have received notice from a Bank prior to
the proposed date of any Loan that such Bank will not make available to the
Agent such Bank’s share of such Loan, the Agent may assume that such Bank has
made such share available on such date in accordance with Section 2.6.1 [Making
Revolving Credit Loans] and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event, if a Bank has
not in fact made its share of the applicable Loan available to the Agent, then
the applicable Bank and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to
but excluding the date of payment to the Agent, at (i) in the case of a payment
to be made by such Bank, the greater of the Federal Funds Effective Rate and a
rate determined by the Agent in accordance with banking industry rules on
interbank compensation and (ii) in the case of a payment to be made by the
Borrower, the interest rate applicable to Loans under the Base Rate Option or
LIBOR Rate Option, as applicable. If such Bank pays its share of the applicable
Loan to the Agent, then the amount so paid shall constitute such Bank’s Loan.
Any payment by the Borrower shall be without prejudice to any claim the Borrower
may have against a Bank that shall have failed to make such payment to the
Agent.
     2.7 Revolving Credit Notes; Swing Line Notes.
          The Obligation of the Borrower to repay the aggregate unpaid principal
amount of the Revolving Credit Loans made to it by each Bank, together with
interest thereon, shall be evidenced by a Revolving Credit Note dated the
Closing Date payable to the order of such Bank in a face amount equal to the
Revolving Credit Commitment of such Bank. The obligation of the Borrower to
repay the unpaid principal amount of the Swing Loans made to it by PNC Bank
together with interest thereon shall be evidenced by a demand promissory note of
the Borrower dated the Closing Date in substantially the form attached hereto as
Exhibit 1.1(S)(2) payable to the order of PNC Bank in a face amount equal to the
Swing Loan Commitment.
     2.8 Use of Proceeds.
          The proceeds of the Revolving Credit Loans shall be used for (i) the
refinancing of existing indebtedness, (ii) provide a one-time distribution to
Westmoreland Coal Company and (iii) working capital and general corporate
purposes and in accordance with Section 8.1.11 [Use of Proceeds].
     2.9 Letter of Credit Subfacility.
          2.9.1 Issuance of Letters of Credit.
               On the Closing Date, the outstanding Letters of Credit previously
issued by PNC Bank as an “Issuing Bank” under the Existing Credit Agreement that
are set forth on Schedule 2.9.1 (the “Existing Letters of Credit”) will
automatically, without any action on the

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part of any Person, be deemed to be Letters of Credit issued hereunder for the
account of the Borrower for all purposes of this Agreement and the other Loan
Documents. In addition, Borrower may request the issuance of a letter of credit
(each a “Letter of Credit”) on behalf of itself or another Loan Party by
delivering to the Agent a completed application and agreement for letters of
credit in such form as the Agent may specify from time to time by no later than
10:00 a.m., Pittsburgh time, at least five (5) Business Days, or such shorter
period as may be agreed to by the Agent, in advance of the proposed date of
issuance. Each Letter of Credit shall be a Standby Letter of Credit. Promptly
after receipt of any letter of credit application, the Issuing Bank shall
confirm with the Agent (by telephone or in writing) that the Agent has received
a copy of such Letter of Credit application and if not, such Issuing Bank will
provide Agent with a copy thereof. Unless the Issuing Bank has received notice
from any Bank, Agent or any Loan Party, at least one day prior to the requested
date of issuance, amendment or extension of the applicable Letter of Credit,
that one or more applicable conditions in Section 7 [Conditions of Lending and
Issuance of Letter of Credit] is not satisfied, then, so long as there is no
Event of Default or Potential Default, subject to compliance with all of the
terms and conditions set forth in this Agreement, any Letter of Credit may be
automatically renewable if such selection is made on the application for such
Letter of Credit. Subject to the terms and conditions hereof and in reliance on
the agreements of the other Banks set forth in this Section 2.9, the Agent will
issue a Letter of Credit or renew an existing Letter of Credit, provided that
each Letter of Credit shall (A) have a maximum maturity of twelve (12) months
from the date of issuance, and (B) in no event expire later than one (1) year
beyond the expiration date, provided that any Letter of Credit scheduled to
expire after the Expiration Date is subject to the requirements in
Section 2.9.10 [Cash Collateral Prior to the Expiration Date]. In no event shall
(i) the Letters of Credit Outstanding exceed, at any one time, $15,000,000 or
(ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit
Commitments or the Borrowing Base. Each request by the Borrower for the
issuance, amendment or extension of a Letter of Credit shall be deemed to be a
representation by the Borrower that it shall be in compliance with the preceding
sentence and with Section 7.2 [Each Additional Loan] after giving effect to the
requested issuance, amendment or extension of such Letter of Credit. Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to the beneficiary thereof, the applicable Issuing Bank will also deliver
to Borrower and Agent a true and complete copy of such Letter of Credit or
amendment.
          2.9.2 Letter of Credit Fees.
               The Borrower shall pay (i) to the Agent for the ratable account
of the Banks a fee (the “Letter of Credit Fee”) equal to the percentage per
annum equal to the Revolving Credit Libor Rate Option, and (ii) to the Agent for
its own account a fronting fee equal to 0.25% per annum (computed on the basis
of a year of 360 days and actual days elapsed), which fees shall be computed on
the daily average Letters of Credit Outstanding and shall be payable quarterly
in arrears commencing with the last Business Day of each June, September,
December and March following issuance of each Letter of Credit and on the
Expiration Date. The Borrower shall also pay to the Agent for the Agent’s sole
account the Agent’s then in effect customary fees and administrative expenses
payable with respect to the Letters of Credit as the Agent may generally charge
or incur from time to time in connection with the issuance, maintenance,
modification (if any), assignment or transfer (if any), negotiation, and
administration of Letters of Credit.

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          2.9.3 Disbursements, Reimbursement.
               2.9.3.1 Immediately upon the Issuance of each Letter of Credit,
each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees
to, purchase from the Agent a participation in such Letter of Credit (including
the Existing Letters of Credit) and each drawing thereunder in an amount equal
to such Bank’s Ratable Share of the maximum amount available to be drawn under
such Letter of Credit and the amount of such drawing, respectively.
               2.9.3.2 In the event of any request for a drawing under a Letter
of Credit by the beneficiary or transferee thereof, the Agent will promptly
notify the Borrower. Provided that it shall have received such notice, the
Borrower shall reimburse (such obligation to reimburse the Agent shall sometimes
be referred to as a “Reimbursement Obligation”) the Agent prior to 12:00 noon,
Pittsburgh time on each date that an amount is paid by the Agent under any
Letter of Credit (each such date, an “Drawing Date”) in an amount equal to the
amount so paid by the Agent. In the event the Borrower fails to reimburse the
Agent for the full amount of any drawing under any Letter of Credit by 12:00
noon, Pittsburgh time, on the Drawing Date, the Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that Revolving
Credit Loans be made by the Banks under the Base Rate Option to be disbursed on
the Drawing Date under such Letter of Credit, subject to the amount of the
unutilized portion of the Revolving Credit Commitment and subject to the
conditions set forth in Section 7.2 [Each Additional Loan] other than any notice
requirements. Any notice given by the Agent pursuant to this Section 2.9.3.2 may
be oral if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.
               2.9.3.3 Each Bank shall upon any notice pursuant to
Section 2.9.3.2 make available to the Agent an amount in immediately available
funds equal to its Ratable Share of the amount of the drawing, whereupon the
participating Banks shall (subject to Section 2.9.3.4) each be deemed to have
made a Revolving Credit Loan under the Base Rate Option to the Borrower in that
amount. If any Bank so notified fails to make available to the Agent for the
account of the Agent the amount of such Bank’s Ratable Share of such amount by
no later than 2:00 p.m., Pittsburgh time on the Drawing Date, then interest
shall accrue on such Bank’s obligation to make such payment, from the Drawing
Date to the date on which such Bank makes such payment (i) at a rate per annum
equal to the Federal Funds Effective Rate during the first three days following
the Drawing Date and (ii) at a rate per annum equal to the rate applicable to
Loans under the Revolving Credit Base Rate Option on and after the fourth day
following the Drawing Date. The Agent will promptly give notice of the
occurrence of the Drawing Date, but failure of the Agent to give any such notice
on the Drawing Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligation under this
Section 2.9.3.3.
               2.9.3.4 With respect to any unreimbursed drawing that is not
converted into Revolving Credit Loans under the Base Rate Option to the Borrower
in whole or in part as contemplated by Section 2.9.3.2, because of the
Borrower’s failure to satisfy the conditions set forth in Section 7.2 [Each
Additional Loan] other than any notice requirements or for any other reason, the
Borrower shall be deemed to have incurred from the Agent a borrowing (each a
“Letter of Credit Borrowing”) in the amount of such drawing. Such Letter of
Credit Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at the rate per annum applicable to the Revolving Credit
Loans under the Base Rate Option. Each Bank’s

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payment to the Agent pursuant to Section 2.9.3.3 shall be deemed to be a payment
in respect of its participation in such Letter of Credit Borrowing and shall
constitute a “Participation Advance” from such Bank in satisfaction of its
participation obligation under this Section 2.9.3.
          2.9.4 Repayment of Participation Advances.
               2.9.4.1 Upon (and only upon) receipt by the Agent for its account
of immediately available funds from the Borrower (i) in reimbursement of any
payment made by the Agent under the Letter of Credit with respect to which any
Bank has made a Participation Advance to the Agent, or (ii) in payment of
interest on such a payment made by the Agent under such a Letter of Credit, the
Agent will pay to each Bank, in the same funds as those received by the Agent,
the amount of such Bank’s Ratable Share of such funds, except the Agent shall
retain the amount of the Ratable Share of such funds of any Bank that did not
make a Participation Advance in respect of such payment by Agent.
               2.9.4.2 If the Agent is required at any time to return to any
Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by any Loan Party to
the Agent pursuant to Section 2.9.4.1 in reimbursement of a payment made under
the Letter of Credit or interest or fee thereon, each Bank shall, on demand of
the Agent, forthwith return to the Agent the amount of its Ratable Share of any
amounts so returned by the Agent plus interest thereon from the date such demand
is made to the date such amounts are returned by such Bank to the Agent, at a
rate per annum equal to the Federal Funds Effective Rate in effect from time to
time.
          2.9.5 Documentation.
               Each Loan Party agrees to be bound by the terms of the Agent’s
application and agreement for letters of credit and the Agent’s written
regulations and customary practices relating to letters of credit, though such
interpretation may be different from such Loan Party’s own. In the event of a
conflict between such application or agreement and this Agreement, this
Agreement shall govern. It is understood and agreed that, except in the case of
gross negligence or willful misconduct, the Agent shall not be liable for any
error, negligence and/or mistakes, whether of omission or commission, in
following any Loan Party’s instructions or those contained in the Letters of
Credit or any modifications, amendments or supplements thereto.
          2.9.6 Determinations to Honor Drawing Requests.
               In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Agent shall be responsible only
to determine that the documents and certificates required to be delivered under
such Letter of Credit have been delivered and that they comply on their face
with the requirements of such Letter of Credit.
          2.9.7 Nature of Participation and Reimbursement Obligations.
               Each Bank’s obligation in accordance with this Agreement to make
the Revolving Credit Loans or Participation Advances, as contemplated by
Section 2.9.3 [Disbursement, Reimbursement], as a result of a drawing under a
Letter of Credit, and the Obligations of the Borrower to reimburse the Agent
upon a draw under a Letter of Credit, shall

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be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Section 2.9 under all circumstances, including
the following circumstances:
          (i) any set-off, counterclaim, recoupment, defense or other right
which such Bank may have against the Issuing Bank or any of its Affiliates, the
Borrower or any other Person for any reason whatsoever, or which any Loan Party
may have against the Issuing Bank or any of its Affiliates, any Bank or any
other Person for any reason whatsoever;
          (ii) the failure of any Loan Party or any other Person to comply, in
connection with a Letter of Credit Borrowing, with the conditions set forth in
Section 2.1 [Revolving Credit Commitments], 2.5 [Revolving Credit Loan
Requests], 2.6 [Making Revolving Credit Loans] or 7.2 [Each Additional Loan] or
as otherwise set forth in this Agreement for the making of a Revolving Credit
Loan, it being acknowledged that such conditions are not required for the making
of a Letter of Credit Borrowing and the obligation of the Banks to make
Participation Advances under Section 2.9.3 [Disbursement, Reimbursement];
          (iii) any lack of validity or enforceability of any Letter of Credit;
          (iv) any claim of breach of warranty that might be made by any Loan
Party or any Bank against any beneficiary of a Letter of Credit, or the
existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense
or other right which any Loan Party or any Bank may have at any time against a
beneficiary, successor beneficiary any transferee or assignee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may
be acting), the Issuing Bank or its Affiliates or any Bank or any other Person,
whether in connection with this Agreement, the transactions contemplated herein
or any unrelated transaction (including any underlying transaction between any
Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any
Letter of Credit was procured);
          (v) the lack of power or authority of any signer of (or any defect in
or forgery of any signature or endorsement on) or the form of or lack of
validity, sufficiency, accuracy, enforceability or genuineness of any draft,
demand, instrument, certificate or other document presented under or in
connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or
provision of services relating to a Letter of Credit, in each case even if the
Issuing Bank or any of its Affiliates has been notified thereof;
          (vi) payment by the Agent under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
          (vii) the solvency of, or any acts or omissions by, any beneficiary of
any Letter of Credit, or any other Person having a role in any transaction or
obligation relating to a Letter of Credit, or the existence, nature, quality,
quantity, condition, value or other characteristic of any property or services
relating to a Letter of Credit;
          (viii) any failure by the Issuing Bank or any of its Affiliates to
issue any Letter of Credit in the form requested by any Loan Party, unless the
Issuing Bank has received written notice from such Loan Party of such failure
within three Business Days after the Issuing Bank

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shall have furnished such Loan Party and the Agent a copy of such Letter of
Credit and such error is material and no drawing has been made thereon prior to
receipt of such notice;
          (ix) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of any Loan Party or
Subsidiaries of a Loan Party;
          (x) any breach of this Agreement or any other Loan Document by any
party thereto;
          (xi) the occurrence or continuance of an Insolvency Proceeding with
respect to any Loan Party;
          (xii) the fact that an Event of Default or a Potential Default shall
have occurred and be continuing;
          (xiii) the fact that the Expiration Date shall have passed or this
Agreement or the Commitments hereunder shall have been terminated; and
          (xiv) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
          2.9.8 Indemnity.
               In addition to amounts payable as provided in Section 10.5
[Reimbursement of Agent by Borrower, Etc.], the Borrower hereby agrees to
protect, indemnify, pay and save harmless the Agent from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which the Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit, other
than as a result of (A) the gross negligence or willful misconduct of the Agent
as determined by a final judgment of a court of competent jurisdiction or
(B) the wrongful dishonor by the Agent of a proper demand for payment made under
any Letter of Credit, except if such dishonor resulted from any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
“Governmental Acts”).
          2.9.9 Liability for Acts and Omissions.
               As between any Loan Party and the Agent, such Loan Party assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the Agent shall not be responsible for: (i) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an
issuance of any such Letter of Credit, even if it should in fact prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged
(even if the Agent shall have been notified thereof); (ii) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) the failure of the beneficiary of
any such Letter of Credit, or any other party to which such Letter of

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Credit may be transferred, to comply fully with any conditions required in order
to draw upon such Letter of Credit or any other claim of any Loan Party against
any beneficiary of such Letter of Credit, or any such transferee, or any dispute
between or among any Loan Party and any beneficiary of any Letter of Credit or
any such transferee; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control of the Agent,
including any Governmental Acts, and none of the above shall affect or impair,
or prevent the vesting of, any of the Agent’s rights or powers hereunder.
Nothing in the preceding sentence shall relieve the Agent from liability for the
Agent’s gross negligence or willful misconduct in connection with actions or
omissions described in such clauses(i) through (viii) of such sentence.
               Without limiting the generality of the foregoing, the Issuing
Bank and each of its Affiliates (i) may rely on any oral or other communication
believed in good faith by the Issuing Bank or such Affiliate to have been
authorized or given by or on behalf of the applicant for a Letter of Credit,
(ii) may honor any presentation if the documents presented appear on their face
substantially to comply with the terms and conditions of the relevant Letter of
Credit; (iii) may honor a previously dishonored presentation under a Letter of
Credit, whether such dishonor was pursuant to a court order, to settle or
compromise any claim of wrongful dishonor, or otherwise, and shall be entitled
to reimbursement to the same extent as if such presentation had initially been
honored, together with any interest paid by the Issuing Bank or its Affiliate;
(iv) may honor any drawing that is payable upon presentation of a statement
advising negotiation or payment, upon receipt of such statement (even if such
statement indicates that a draft or other document is being delivered
separately), and shall not be liable for any failure of any such draft or other
document to arrive, or to conform in any way with the relevant Letter of Credit;
(v) may pay any paying or negotiating bank claiming that it rightfully honored
under the laws or practices of the place where such bank is located; and
(vi) may settle or adjust any claim or demand made on the Issuing Bank or its
Affiliate in any way related to any order issued at the applicant’s request to
an air carrier, a letter of guarantee or of indemnity issued to a carrier or any
similar document (each an “Order”) and honor any drawing in connection with any
Letter of Credit that is the subject of such Order, notwithstanding that any
drafts or other documents presented in connection with such Letter of Credit
fail to conform in any way with such Letter of Credit.
               In furtherance and extension and not in limitation of the
specific provisions set forth above, any action taken or omitted by the Agent
under or in connection with the Letters of Credit issued by it or any documents
and certificates delivered thereunder, if taken or omitted in good faith, shall
not put the Agent under any resulting liability to the Borrower or any Bank.
          2.9.10 Cash Collateral Prior to the Expiration Date.
               If any Letter of Credit is outstanding and such Letter of Credit
(as it may have previously been extended) has an expiration date which is after
the Expiration Date, then Borrower shall Cash Collateralize each such Letter of
Credit in an amount equal to 100% of the face value of such outstanding Letter
of Credit, on or before the date which is seven (7) days

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prior to the Expiration Date. Borrower hereby grants to Agent a security
interest in all Cash Collateral pledged pursuant to this Section 2.9 or
otherwise under this Agreement.
          2.9.11 Issuing Bank Reporting Requirements.
          Each Issuing Bank shall, on the first business day of each month,
provide to Agent and Borrower a schedule of the Letters of Credit issued by it,
in form and substance satisfactory to Agent, showing the date of issuance of
each Letter of Credit, the account party, the original face amount (if any), and
the expiration date of any Letter of Credit outstanding at any time during the
preceding month, and any other information relating to such Letter of Credit
that the Agent may request.
     2.10 Borrowings to Repay Swing Loans.
          PNC Bank may, at its option, exercisable at any time for any reason
whatsoever, demand repayment of the Swing Loans, and each Bank shall make a
Revolving Credit Loan in an amount equal to such Bank’s Ratable Share of the
aggregate principal amount of the outstanding Swing Loans, plus, if PNC Bank so
requests, accrued interest thereon, provided that no Bank shall be obligated in
any event to make Revolving Credit Loans in excess of its Revolving Credit
Commitment. Revolving Credit Loans made pursuant to the preceding sentence shall
bear interest at the Base Rate Option and shall be deemed to have been properly
requested in accordance with Section 2.5.1 [Revolving Credit Loan Requests]
without regard to any of the requirements of that provision. PNC Bank shall
provide notice to the Banks (which may be telephonic or written notice by
letter, facsimile or telex) that such Revolving Credit Loans are to be made
under this Section 2.10 and of the apportionment among the Banks, and the Banks
shall be unconditionally obligated to fund such Revolving Credit Loans (whether
or not the conditions specified in Section 2.5.1 [Revolving Credit Loan
Requests] are then satisfied) by the time PNC Bank so requests, which shall not
be earlier than 3:00 p.m. Pittsburgh time on the Business Day next after the
date the Banks receive such notice from PNC Bank.
     2.11 Increase in Revolving Credit Commitments.
          (i) Increasing Banks and New Banks. The Borrower may, at any time one
year prior to the Expiration Date, request that (1) the current Banks increase
their Revolving Credit Commitments (any current Bank which elects to increase
its Revolving Credit Commitment shall be referred to as an “Increasing Bank”) or
(2) one or more new banks (each a “New Bank”) join this Agreement and provide a
Revolving Credit Commitment hereunder, subject to the following terms and
conditions:
               (a) No Obligation to Increase. No current Bank shall be obligated
to increase its Revolving Credit Commitment and any increase in the Revolving
Credit Commitment by any current Bank shall be in the sole discretion of such
current Bank.
               (b) Defaults. There shall exist no Events of Default or Potential
Default on the effective date of such increase after giving effect to such
increase.
               (c) Aggregate Revolving Credit Commitments. After giving effect
to such increase, the total Revolving Credit Commitments shall not exceed
$35,000,000.00.

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               (d) Minimum Revolving Credit Commitments. After giving effect to
such increase, the amount of the Revolving Credit Commitments provided by each
of the New Banks and each of the Increasing Banks shall be at least $5,000,000.
               (e) Resolutions; Opinion. The Loan Parties shall deliver to the
Agent on or before the effective date of such increase the following documents
in a form reasonably acceptable to the Agent: (1) certifications of their
corporate secretaries with attached resolutions certifying that the increase in
the Revolving Credit Commitment has been approved by such Loan Parties, and
(2) an opinion of counsel addressed to the Agent and the Banks addressing the
authorization and execution of the Loan Documents by, and enforceability of the
Loan Documents against, the Loan Parties.
               (f) Notes. The Borrower shall execute and deliver (1) to each
Increasing Bank a replacement Revolving Credit Note reflecting the new amount of
such Increasing Bank’s Revolving Credit Commitment after giving effect to the
increase (and the prior Revolving Credit Note issued to such Increasing Bank
shall be deemed to be terminated) and (2) to each New Bank a revolving credit
Note reflecting the amount of such New Bank’s Revolving Credit Commitment.
               (g) Approval of New Banks. Any New Bank shall be subject to the
approval of the Agent.
               (h) Increasing Banks. Each Increasing Bank shall confirm its
agreement to increase its Revolving Credit Commitment pursuant to an
acknowledgement in a form acceptable to the Agent, signed by it and the Borrower
and delivered to the Agent at least five (5) days before the effective date of
such increase.
               (i) New Banks—Joinder. Each New Bank shall execute a lender
joinder in substantially the form of Exhibit 2.11 pursuant to which such New
Bank shall join and become a party to this Agreement and the other Loan
Documents with a Revolving Credit Commitment in the amount set forth in such
lender joinder.
          (ii) Treatment of Outstanding Loans and Letters of Credit.
               (a) Repayment of Outstanding Loans; Borrowing of New Loans. On
the effective date of such increase, the Borrower shall repay all Loans then
outstanding, subject to the Borrower’s indemnity obligations under Section 5.6.2
[Indemnity]; provided that it may borrow new Loans with a Borrowing Date on such
date. Each of the Banks shall participate in any new Loans made on or after such
date in accordance with their respective Ratable Shares after giving effect to
the increase in Revolving Credit Commitments contemplated by this Section.
               (b) Outstanding Letters of Credit. Repayment of Outstanding
Loans; Borrowing of New Loans. On the effective date of such increase, each
Increasing Bank and each New Bank (i) will be deemed to have purchased a
participation in each then outstanding Letter of Credit equal to its Ratable
Share of such Letter of Credit and the participation of each other Bank in such
Letter of Credit shall be adjusted accordingly and (ii) will acquire, (and will
pay to the Agent, for the account of each Bank, in immediately available funds,
an amount equal to) its Ratable Share of all outstanding Participation Advances.

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3. INTENTIONALLY OMITTED.
4. INTEREST RATES
     4.1 Interest Rate Options.
          The Borrower shall pay interest in respect of the outstanding unpaid
principal amount of the Loans as selected by it from the Base Rate Option or
Libor-Rate Option set forth below applicable to the Loans (provided that only
the Base Rate Option shall apply to the Swing Loans), it being understood that,
subject to the provisions of this Agreement, the Borrower may select different
Interest Rate Options and different Interest Periods to apply simultaneously to
the Loans comprising different Borrowing Tranches and may convert to or renew
one or more Interest Rate Options with respect to all or any portion of the
Loans comprising any Borrowing Tranche, provided that there shall not be at any
one time outstanding more than three (3) Borrowing Tranches in the aggregate
among all of the Loans and provided further that if an Event of Default or
Potential Default exists and is continuing, the Borrower may not request,
convert to, or renew the LIBOR Rate Option for any Loans and the Required Banks
may demand that all existing Borrowing Tranches bearing interest under the LIBOR
Rate Option shall be converted immediately to the Base Rate Option, subject to
the obligation of the Borrower to pay any indemnity under Section 5.6.2
[Indemnity] in connection with such conversion. If at any time the designated
rate applicable to any Loan made by any Bank exceeds such Bank’s highest lawful
rate, the rate of interest on such Bank’s Loan shall be limited to such Bank’s
highest lawful rate.
          4.1.1 Revolving Credit Interest Rate Options.
               The Borrower shall have the right to select from the following
Interest Rate Options applicable to the Revolving Credit Loans (subject to the
provisions above regarding Swing Loans):
          (i) Revolving Credit Base Rate Option: A fluctuating rate per annum
(computed on the basis of a year of 365 or 366 days, as the case may be, and
actual days elapsed) equal to the Base Rate plus 0.50%, such interest rate to
change automatically from time to time effective as of the effective date of
each change in the Base Rate; or
          (ii) Revolving Credit Libor-Rate Option: A rate per annum (computed on
the basis of a year of 360 days and actual days elapsed) equal to the Libor-Rate
plus 3.0%.
          4.1.2 Intentionally Omitted.
          4.1.3 Rate Quotations.
               The Borrower may call the Agent on or before the date on which a
Loan Request is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on the
Agent or the Banks nor affect the rate of interest which thereafter is actually
in effect when the election is made.
     4.2 Interest Periods.

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          At any time when the Borrower shall select, convert to or renew a
Libor-Rate Option, the Borrower shall notify the Agent thereof at least three
(3) Business Days prior to the effective date of such Libor-Rate Option by
delivering a Loan Request. The notice shall specify an Interest Period during
which such Interest Rate Option shall apply. Notwithstanding the preceding
sentence, the following provisions shall apply to any selection of, renewal of,
or conversion to a Libor-Rate Option:
          4.2.1 Amount of Borrowing Tranche.
               each Borrowing Tranche of Libor-Rate Loans shall be in integral
multiples of $500,000 and not less than $1,000,000;
          4.2.2 Renewals.
               in the case of the renewal of a Libor-Rate Option at the end of
an Interest Period, the first day of the new Interest Period shall be the last
day of the preceding Interest Period, without duplication in payment of interest
for such day.
     4.3 Interest After Default.
          To the extent permitted by Law, upon the occurrence of an Event of
Default and until such time such Event of Default shall have been cured or
waived:
          4.3.1 Letter of Credit Fees, Interest Rate.
               the Letter of Credit Fees and the rate of interest for each Loan
otherwise applicable pursuant to Section 2.9.2 [Letter of Credit Fees] or
Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0%
per annum; and
          4.3.2 Other Obligations.
               each other Obligation hereunder if not paid when due shall bear
interest at a rate per annum equal to the sum of the rate of interest applicable
under the Revolving Credit Base Rate Option plus an additional 2.0% per annum
from the time such Obligation becomes due and payable and until it is paid in
full.
          4.3.3 Acknowledgment.
               The Borrower acknowledges that the increase in rates referred to
in this Section 4.3 reflects, among other things, the fact that such Loans or
other amounts have become a substantially greater risk given their default
status and that the Banks are entitled to additional compensation for such risk;
and all such interest shall be payable by Borrower upon demand by Agent.
     4.4 Libor-Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
          4.4.1 Unascertainable.
               If on any date on which a Libor-Rate would otherwise be
determined, the Agent shall have determined that:

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          (i) adequate and reasonable means do not exist for ascertaining such
Libor-Rate, or
          (ii) a contingency has occurred which materially and adversely affects
the London interbank eurodollar market relating to the Libor-Rate, then the
Agent shall have the rights specified in Section 4.4.3 [Agent’s and Bank’s
Rights].
          4.4.2 Illegality; Increased Costs; Deposits Not Available.
               If at any time any Bank shall have determined that:
          (i) the making, maintenance or funding of any Loan to which a
Libor-Rate Option applies has been made impracticable or unlawful by compliance
by such Bank in good faith with any Law or any interpretation or application
thereof by any Official Body or with any request or directive of any such
Official Body (whether or not having the force of Law), or
          (ii) such Libor-Rate Option will not adequately and fairly reflect the
cost to such Bank of the establishment or maintenance of any such Loan, or
          (iii) after making all reasonable efforts, deposits of the relevant
amount in Dollars for the relevant Interest Period for a Loan, or to banks
generally, to which a Libor-Rate Option applies, respectively, are not available
to such Bank with respect to such Loan, or to banks generally, in the interbank
eurodollar market, then the Agent shall have the rights specified in
Section 4.4.3 [Agent’s and Bank’s Rights].
          4.4.3 Agent’s and Bank’s Rights.
               In the case of any event specified in Section 4.4.1
[Unascertainable] above, the Agent shall promptly so notify the Banks and the
Borrower thereof, and in the case of an event specified in Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available] above, such Bank shall
promptly so notify the Agent and endorse a certificate to such notice as to the
specific circumstances of such notice, and the Agent shall promptly send copies
of such notice and certificate to the other Banks and the Borrower. Upon such
date as shall be specified in such notice (which shall not be earlier than the
date such notice is given), the obligation of (A) the Banks, in the case of such
notice given by the Agent, or (B) such Bank, in the case of such notice given by
such Bank, to allow the Borrower to select, convert to or renew a Libor-Rate
Option shall be suspended until the Agent shall have later notified the
Borrower, or such Bank shall have later notified the Agent, of the Agent’s or
such Bank’s, as the case may be, determination that the circumstances giving
rise to such previous determination no longer exist. If at any time the Agent
makes a determination under Section 4.4.1 [Unascertainable] and the Borrower has
previously notified the Agent of its selection of, conversion to or renewal of a
Libor-Rate Option and such Interest Rate Option has not yet gone into effect,
such notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such Loans.
If any Bank notifies the Agent of a determination under Section 4.4.2
[Illegality; Increased Costs; Deposits Not Available], the Borrower shall,
subject to the Borrower’s indemnification Obligations under Section 5.6.2
[Indemnity], as to any Loan of the Bank to which a Libor-Rate Option applies, on
the date specified in such notice either convert such Loan to the Base Rate
Option otherwise available with respect to such Loan or prepay such Loan in
accordance with Section 5.4 [Voluntary Prepayments]. Absent due notice

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from the Borrower of conversion or prepayment, such Loan shall automatically be
converted to the Base Rate Option otherwise available with respect to such Loan
upon such specified date.
     4.5 Selection of Interest Rate Options.
          If the Borrower fails to select a new Interest Period to apply to any
Borrowing Tranche of Loans under the Libor-Rate Option at the expiration of an
existing Interest Period applicable to such Borrowing Tranche in accordance with
the provisions of Section 4.2 [Interest Periods], the Borrower shall be deemed
to have converted such Borrowing Tranche to the Base Rate Option, commencing
upon the last day of the existing Interest Period.
5. PAYMENTS
     5.1 Payments.
          All payments and prepayments to be made in respect of principal,
interest, Commitment Fees, Letter of Credit Fees, Agent’s Fee or other fees or
amounts due from the Borrower hereunder shall be payable prior to 11:00 a.m.,
Pittsburgh time, on the date when due without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Borrower,
and without set-off, counterclaim or other deduction of any nature, and an
action therefor shall immediately accrue. Such payments shall be made to the
Agent at the Principal Office for the account of PNC Bank with respect to Swing
Loans and for the ratable accounts of the Banks with respect to the Revolving
Credit Loans in U.S. Dollars and in immediately available funds, and the Agent
shall promptly distribute such amounts to the Banks in immediately available
funds, provided that in the event payments are received by 11:00 a.m.,
Pittsburgh time, by the Agent with respect to the Loans and such payments are
not distributed to the Banks on the same day received by the Agent, the Agent
shall pay the Banks the Federal Funds Effective Rate with respect to the amount
of such payments for each day held by the Agent and not distributed to the
Banks. The Agent’s and each Bank’s statement of account, ledger or other
relevant record shall, in the absence of manifest error, be conclusive as the
statement of the amount of principal of and interest on the Loans and other
amounts owing under this Agreement and shall be deemed an “account stated.”
     5.2 Pro Rata Treatment of Banks.
          Each borrowing shall be allocated to each Bank according to its
Ratable Share, and each selection of, conversion to or renewal of any Interest
Rate Option and each payment or prepayment by the Borrower with respect to
principal, interest, Commitment Fees, Letter of Credit Fees, or other fees
(except for the Agent’s Fee) or amounts due from the Borrower hereunder to the
Banks with respect to the Loans, shall (except as provided in Section 4.4.3
[Agent’s and Bank’s Rights] in the case of an event specified in Section 4.4
[Libor-Rate Unascertainable; Etc.], 5.4.2 [Replacement of a Bank] or 5.6
[Additional Compensation in Certain Circumstances]) be made in proportion to the
applicable Loans outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank. Notwithstanding
any of the foregoing, each borrowing or payment or prepayment by the Borrower of
principal, interest, fees or other amounts from the Borrower with respect to
Swing Loans shall be made by or to PNC Bank according to Section 2 [Revolving
Credit and Swing Loan Facilities].

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     5.3 Interest Payment Dates.
          Interest on Loans to which the Base Rate Option applies shall be due
and payable in arrears on the last Business Day of each June, September,
December and March after the date hereof and on the Expiration Date or upon
acceleration of the Notes. Interest on Loans to which the Libor-Rate Option
applies shall be due and payable on the last day of each Interest Period for
those Loans and, if such Interest Period is longer than three (3) Months, also
on the 90th day of such Interest Period. Interest on mandatory prepayments of
principal under Section 5.5 [Mandatory Prepayments] shall be due on the date
such mandatory prepayment is due. Interest on the principal amount of each Loan
or other monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and payable (whether
on the stated maturity date, upon acceleration or otherwise).
     5.4 Voluntary Prepayments.
          5.4.1 Right to Prepay.
               The Borrower shall have the right at its option from time to time
to prepay the Loans in whole or part without premium or penalty (except as
provided in Section 5.4.2 below or in Section 5.6 [Additional Compensation in
Certain Circumstances]):
          (i) at any time with respect to any Loan to which the Base Rate Option
applies,
          (ii) on the last day of the applicable Interest Period with respect to
Loans to which a Libor-Rate Option applies,
          (iii) on the date specified in a notice by any Bank pursuant to
Section 4.4 [Libor-Rate Unascertainable, Etc.] with respect to any Loan to which
a Libor-Rate Option applies.
               Whenever the Borrower desires to prepay any part of the Loans, it
shall provide a prepayment notice to the Agent by 1:00 p.m. on the date of
prepayment of the Revolving Credit Loans and no later than 2:00 p.m., Pittsburgh
time, on the date of prepayment of Swing Loans, setting forth the following
information:
          (x) the date, which shall be a Business Day, on which the proposed
prepayment is to be made;
          (y) a statement indicating the application of prepayment between Swing
Loans and Revolving Loans; and
          (z) the total principal amount of such prepayment, which shall not be
less than $100,000 for any Swing Loan or $500,000 for any Revolving Credit Loan;
provided however, such prepayment may be less than such amounts if such
prepayment pays in full all outstanding amounts under the Swing Loans or
Revolving Credit Loans, as applicable.
               All prepayment notices shall be irrevocable. The principal amount
of the Loans for which a prepayment notice is given, together with interest on
such principal amount except with respect to Loans to which the Base Rate Option
applies, shall be due and payable on

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the date specified in such prepayment notice as the date on which the proposed
prepayment is to be made. Except as provided in Section 4.4.3 [Agent’s and
Bank’s rights], if the Borrower prepays a Loan but fails to specify the
applicable Borrowing Tranche which the Borrower is prepaying, the prepayment
shall be applied first to Loans to which the Base Rate Option applies, then to
Loans to which the Libor-Rate Option applies. Any prepayment hereunder shall be
subject to the Borrower’s Obligation to indemnify the Banks under Section 5.6.2
[Indemnity].
          5.4.2 Replacement of a Bank.
          In the event any Bank (i) gives notice under Section 4.4 [LIBOR Rate
Unascertainable, Etc.], (ii) requests compensation under Section 4.4 [LIBOR Rate
Unascertainable, Etc.], or requires the Borrower to pay any additional amount to
any Bank or any Official Body for the account of any Bank pursuant to
Section 5.6 [Additional Compensation in Certain Circumstances], (iii) is a
Non-Complying Bank or otherwise, (iv) becomes subject to the control of an
Official Body (other than normal and customary supervision), or (v) is a
Non-Consenting Bank referred to in Section 11.1 [Modifications, Amendments or
Waivers] then in any such event the Borrower may, at its sole expense, upon
notice to such Bank and the Agent, require such Bank to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in, and consents required by, Section 11.11 [Successors and Assigns]), all of
its interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may
be another Bank, if a Bank accepts such assignment), provided that:
          (i) the Borrower shall have paid to the Agent the assignment fee
specified in Section 11.11 [Successors and Assigns];
          (ii) such Bank shall have received payment of an amount equal to the
outstanding principal of its Loans and Participation Advances, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder and under
the other Loan Documents (including any amounts under Section 5.6.2 [Indemnity])
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);
          (iii) in the case of any such assignment resulting from a claim for
compensation under Section 5.6.1 [Increased Costs Generally] or payments
required to be made pursuant to Section 11.3 [Taxes], such assignment will
result in a reduction in such compensation or payments thereafter; and
          (iv) such assignment does not conflict with applicable Law.
A Bank shall not be required to make any such assignment or delegation if, prior
thereto, as a result of a waiver by such Bank or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
          5.4.3 Change of Lending Office.
               Each Bank agrees that upon the occurrence of any event giving
rise to increased costs or other special payments under Section 4.4.2
[Illegality, Etc.] or 5.6.1 [Increased Costs, Etc.] with respect to such Bank,
it will if requested by the Borrower, use reasonable

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efforts (subject to overall policy considerations of such Bank) to designate
another lending office for any Loans or Letters of Credit affected by such
event, provided that such designation is made on such terms that such Bank and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section shall affect or postpone any of the
Obligations of the Borrower or any other Loan Party or the rights of the Agent
or any Bank provided in this Agreement.
     5.5 Mandatory Prepayments.
          (i) Promptly (and in any event within three Business Days) after any
officer of the Borrower obtains knowledge of any Prepayment Event or any action
of the Borrower or any other Person that may be reasonably likely to result in a
Prepayment Event, notice thereof in the form of an Officer’s Certificate
describing in reasonable detail the facts and circumstances giving rise to such
Prepayment Event or potential Prepayment Event, specifying the date such
Prepayment Event occurred or is expected to occur, and making reference to this
Section and the right of the Banks to require the prepayment of the Loans on the
terms and conditions provided for in said Section.
          (ii) Change in Control. At any time following the occurrence of a
Prepayment Event (subject to the penultimate sentence of this Section 5.5(ii)),
the Agent shall have the right at its option, exercisable by the giving of
notice to the Borrower (a “Prepayment Election Notice”), to elect to require the
prepayment by the Borrower of all Loans on the prepayment date specified by
Agent in such Prepayment Election Notice (which shall not in any event be less
than 30 days nor more than 60 days after the date on which such holder shall
have given such Prepayment Election Notice to the Borrower). On the prepayment
date specified in any Prepayment Election Notice given by Agent, the Borrower
will prepay all Loans. The right of the Agent to give a Prepayment Election
Notice for the prepayment of the Loans pursuant to this Section following a
Prepayment Event shall expire at the close of business in New York City on the
one hundred-twentieth day following the later of (x) the date of such Prepayment
Event and (y) actual receipt by Agent of notice of such Prepayment Event
pursuant to Section 5.5(i). Notwithstanding any provision hereof to the
contrary, no failure on the part of the Agent to exercise its right to require
the prepayment thereof by the Borrower pursuant to this Section 5.5(ii)
following a Prepayment Event shall be deemed a waiver of or otherwise impair the
rights of Agent pursuant to this Section 5.5(ii) in respect of any other events
or circumstances constituting a Prepayment Event.
          (a) “Prepayment Event” shall mean (i) any Loan Party’s Change in
Control, or (ii) any Control Event with respect to the Borrower or any of the
other Loan Parties or (iii) any Parent Change in Control with respect to the
Parent.
          (b) “Borrower’s’ Change in Control” shall be deemed to have occurred
if there is any change subsequent to the Closing Date in the Persons (as such
term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the Closing Date) who are direct owners of an equity interest in the
Borrower or any of the other Loan Parties.
          (c) “Control Event” means:

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          (i) the execution by the Parent or any of its Subsidiaries or
Affiliates, or the Borrower or any of its Subsidiaries or Affiliates, of any
agreement with respect to any proposed transaction or event or series of
transactions or events which, individually or in the aggregate, may reasonably
be expected to result in a Parent Change in Control or an Borrowers’ Change in
Control, or
          (ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Parent Change in Control or
a Loan Party’s Change in Control.
     5.6 Additional Compensation in Certain Circumstances.
          5.6.1 Increased Costs or Reduced Return Resulting from Taxes,
Reserves, Capital Adequacy Requirements, Expenses, Etc.
               If any Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application thereof by any Official Body charged
with the interpretation or administration thereof or compliance with any request
or directive (whether or not having the force of Law) of any central bank or
other Official Body:
          (i) subjects any Bank to any tax or changes the basis of taxation with
respect to this Agreement, the Notes, the Loans or payments by the Borrower of
principal, interest, Commitment Fees, or other amounts due from the Borrower
hereunder or under the Notes (except for taxes on the overall net income of such
Bank),
          (ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, any Bank, or
          (iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or letters of
credit, other credits or commitments to extend credit extended by, any Bank, or
(B) otherwise applicable to the obligations of any Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon any
Bank with respect to this Agreement, the Notes or the making, maintenance or
funding of any part of the Loans (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Bank’s capital, taking into consideration such Bank’s customary policies with
respect to capital adequacy) by an amount which such Bank in its sole discretion
deems to be material, such Bank shall from time to time notify the Borrower and
the Agent of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income, additional
expense or reduced rate of return. Such notice shall set forth in reasonable
detail the basis for such determination. Such amount shall be due and payable by
the Borrower to such Bank ten (10) Business Days after such notice is given.

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          5.6.2 Indemnity.
               In addition to the compensation required by Section 5.6.1
[Increased Costs, Etc.], the Borrower shall indemnify each Bank against all
liabilities, losses or expenses (including loss of margin, any loss or expense
incurred in liquidating or employing deposits from third parties and any loss or
expense incurred in connection with funds acquired by a Bank to fund or maintain
Loans subject to a Libor-Rate Option) which such Bank sustains or incurs as a
consequence of any
          (i) payment, prepayment, conversion or renewal of any Loan to which a
Libor-Rate Option applies on a day other than the last day of the corresponding
Interest Period (whether or not such payment or prepayment is mandatory,
voluntary or automatic and whether or not such payment or prepayment is then
due),
          (ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any Loan Requests under
Section 2.5 [Revolving Credit Loan Requests] or Section 4.2 [Interest Periods]
or notice relating to prepayments under Section 5.4 [Voluntary Prepayments], or
          (iii) default by the Borrower in the performance or observance of any
covenant or condition contained in this Agreement or any other Loan Document,
including any failure of the Borrower to pay when due (by acceleration or
otherwise) any principal, interest, Commitment Fee or any other amount due
hereunder.
          If any Bank sustains or incurs any such loss or expense, it shall from
time to time notify the Borrower of the amount determined in good faith by such
Bank (which determination may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Bank shall deem
reasonable) to be necessary to indemnify such Bank for such loss or expense.
Such notice shall set forth in reasonable detail the basis for such
determination. Such amount shall be due and payable by the Borrower to such Bank
ten (10) Business Days after such notice is given.
          5.6.3 Borrowing Base Exceeded.
          In the event that at any time the Revolving Facility Usage shall
exceed the Borrowing Base, the Borrower shall immediately make a mandatory
payment of principal to the Agent in an amount equal to or greater than such
amount as shall be necessary to cause the Revolving Facility Usage to be less
than the Borrowing Base, and the Agent shall apply such payment to the Revolving
Credit Loans of the Banks based upon their Revolving Credit Ratable Share.
     5.7 Settlement Date Procedures.
          In order to minimize the transfer of funds between the Banks and the
Agent, the Borrower may borrow, repay and reborrow Swing Loans and PNC Bank may
make Swing Loans as provided during the period between Settlement Dates. Not
later than 12:00 p.m. on each Settlement Date, the Agent shall notify each Bank
of its Ratable Share of the total of the Revolving Credit Loans and the Swing
Loans (each a “Required Share”). Prior to 3:00 p.m., Pittsburgh time, on such
Settlement Date, each Bank shall pay to the Agent the amount equal to

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the difference between its Required Share and its Revolving Credit Loans, and
the Agent shall pay to each Bank its Ratable Share of all payments made by the
Borrower to the Agent with respect to the Revolving Credit Loans. The Agent
shall also effect settlement in accordance with the foregoing sentence on the
proposed Borrowing Dates for Revolving Credit Loans and on the date any
mandatory prepayment is due under this Agreement and may at its option effect
settlement on any other Business Day. These settlement procedures are
established solely as a matter of administrative convenience, and nothing
contained in this Section 5.7 shall relieve the Banks of their obligations to
fund Revolving Credit Loans on dates other than a Settlement Date. The Agent may
at any time at its option for any reason whatsoever require each Bank to pay
immediately to the Agent such Bank’s Ratable Share of the outstanding Revolving
Credit Loans and each Bank may at any time require the Agent to pay immediately
to such Bank its Ratable Share of all payments made by the borrower to the Agent
with respect to the Revolving Credit Loans.
     5.8 Presumptions by Agent.
          Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Agent for the account of the Banks
or the Issuing Bank hereunder that the Borrower will not make such payment, the
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Banks or the Issuing Bank, as the case may be, the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Banks or the
Issuing Bank, as the case may be, severally agrees to repay to the Agent
forthwith on demand the amount so distributed to such Bank or the Issuing Bank,
with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the Agent
in accordance with banking industry rules on interbank compensation.
     5.9 Interest Payment Dates.
               Interest on Loans to which the Base Rate Option applies shall be
due and payable in arrears on each Payment Date. Interest on Loans to which the
LIBOR Rate Option applies shall be due and payable on the last day of each
Interest Period for those Loans and, if such Interest Period is longer than
three (3) Months, also on the 90th day of such Interest Period. Interest on
mandatory prepayments of principal under Section 5.5 [Mandatory Prepayments]
shall be due on the date such mandatory prepayment is due. Interest on the
principal amount of each Loan or other monetary Obligation shall be due and
payable on demand after such principal amount or other monetary Obligation
becomes due and payable (whether on the stated Expiration Date, upon
acceleration or otherwise).
6. REPRESENTATIONS AND WARRANTIES
     6.1 Representations and Warranties.
          The Borrower and each Guarantor, jointly and severally, represent and
warrant to the Agent and each of the Banks as follows:
          6.1.1 Organization and Qualification.

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               The Borrower is a limited liability company, and each other Loan
Party is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization. Each Loan Party has the
lawful power to own or lease its properties and to engage in the business it
presently conducts or proposes to conduct. Each Loan Party is duly licensed or
qualified and in good standing in each jurisdiction listed with respect to it on
Schedule 6.1.1 and in all other jurisdictions where the property owned or leased
by it or the nature of the business transacted by it or both makes such
licensing or qualification necessary; provided, however, no Loan Party shall be
in breach of this Section in the event that a Loan Party inadvertently failed to
obtain or maintain a qualification or license so long as such failure (i) either
alone or when considered together with all other such failures, has not resulted
and could not reasonably be expected to result in a Material Adverse Change,
(ii) is promptly remedied upon a Loan Party becoming aware of such failure and
(iii) does not adversely affect any material portion of the Collateral.
          6.1.2 Capitalization and Ownership.
               All of the member interests in the Borrower (the “Member
Interests”) are owned as indicated on Schedule 6.1.2. All of the Member
Interests have been validly issued and are fully paid and are nonassessable.
There are no options, warrants or other rights outstanding to purchase any such
Member Interests except as indicated on Schedule 6.1.2.
          6.1.3 Subsidiaries.
               Schedule 6.1.3 states (i) the name of each of the Borrower’s
Subsidiaries, (ii) each such Subsidiary’s jurisdiction of incorporation or
formation, (iii) its authorized capital stock, and the issued and outstanding
shares (referred to herein as the “Subsidiary Shares”) if it is a corporation,
its outstanding partnership interests (referred to herein as “Partnership
Interests”) if it is a partnership and its outstanding limited liability company
interests, interest assigned to managers thereof and voting rights associated
therewith (the “LLC Interests” and together with the Subsidiary Shares and the
Partnership Interests, the “Subsidiary Ownership Interests”) if it is a limited
liability company, and (iv) the owner of all such Subsidiary’s Ownership
Interests. The Borrower and each Subsidiary of the Borrower has good and
marketable title to all of the Subsidiary Ownership Interests it purports to
own, free and clear in each case of any Lien other than Permitted Liens. All
Subsidiary Ownership Interests have been validly issued, and all Subsidiary
Ownership Interests are fully paid and nonassessable. There are no options,
warrants or other rights outstanding to purchase any such Subsidiary Ownership
Interests. No Subsidiary is a party to, or otherwise subject to any legal,
regulatory, contractual or other restriction (other than (i) this Agreement,
(ii) customary limitations imposed by corporate law statutes and (iii) in the
case of TWCC, the NRGT Documents) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Borrower or any of its Subsidiaries that owns any Subsidiary Ownership
Interests of such Subsidiary.
          6.1.4 Power and Authority.
               Each Loan Party has full power to enter into, execute, deliver
and carry out this Agreement and the other Loan Documents to which it is a
party, to incur the Indebtedness contemplated by the Loan Documents and to
perform its Obligations under the Loan Documents to which it is a party, and all
such actions have been duly authorized by all

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necessary proceedings on its part (including all necessary action, if any, on
the part of the owners of its Subsidiary Ownership Interests).
          6.1.5 Validity and Binding Effect.
               This Agreement has been duly authorized and validly executed and
delivered by each Loan Party, and each other Loan Document which any Loan Party
is required to execute and deliver on or after the date hereof will have been
duly authorized, executed and delivered by such Loan Party on or prior to the
Closing Date. This Agreement and each other Loan Document constitutes, or will
constitute, a legal, valid and binding obligation of each Loan Party which is or
will be a party thereto on and after its date of delivery thereof, enforceable
against such Loan Party in accordance with its terms, except to the extent that
enforceability of this Agreement or any such other Loan Document may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors’ rights generally or by general
equitable principles limiting the availability of the right of specific
performance or other equitable remedies.
          6.1.6 No Conflict.
               Neither the execution and delivery of this Agreement or the other
Loan Documents by any Loan Party nor the consummation of the transactions herein
or therein contemplated nor compliance with the terms and provisions hereof or
thereof by any Loan Party will conflict with, constitute a default under or
result in any breach of (i) the terms and conditions of the Organizational
Documents of any Loan Party or (ii) any Law or any material Coal Supply
Contract, Coal Lease or other agreement or instrument or any order, writ,
judgment, injunction or decree to which any Loan Party or any of its
Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to
which it is subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or hereafter acquired)
of any Loan Party or any of its Subsidiaries (other than Liens granted under the
Loan Documents and Liens granted under the Note Purchase Documents).
          6.1.7 Litigation.
               There are no actions, suits, proceedings or investigations
pending or, to the knowledge of the Borrower or any Guarantors, threatened
against any Loan Party or any Subsidiary of such Loan Party at law or equity
before any Official Body, except those described on Schedule 6.1.7, none of
which individually or in the aggregate could be reasonably expected to result in
any Material Adverse Change. None of the Loan Parties or any Subsidiaries of any
Loan Party is in violation of any order, writ, injunction or decree of any
Official Body (including without limitation Environmental Laws or the USA
Patriot Act) which either individually or in the aggregate could reasonably be
expected to result in a Material Adverse Change.
          6.1.8 Title to Properties.
               Schedule 6.1.8 identifies all of the real property interests,
both owned and leased, of the Loan Parties and sets forth, with respect to each
such real property interest the name of the Loan Party which is the owner or
lessee thereof, as the case may be, and, if leased, the name of the owner and
lessor thereof. Each Loan Party and each Subsidiary of each Loan Party has good
and marketable title to all real estate owned by it and a valid leasehold
interest in

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all properties, assets and other rights which it purports to lease or which are
reflected as owned or leased on its books and records, free and clear of all
Liens and encumbrances except Permitted Liens, and subject to the terms and
conditions of the applicable leases; provided, however, a Loan Party shall not
be in breach of the foregoing in the event that (i) it fails to own a valid
leasehold interest which, either considered alone or together with all other
such valid leaseholds which it fails to own, is not material to the continued
operations of such Loan Party as contemplated by the Financial Projections or
its mining plan as in effect on the Closing Date or (ii) the Loan Party’s
interest in a leasehold is less than fully marketable because the consent of the
lessor to future assignments has not been obtained. All leases of property which
are material to the continued operations of each Loan Party as contemplated by
the Financial Projections and its mining plan as in effect on the Closing Date
are in full force and effect without the necessity for any consent which has not
previously been obtained.
          6.1.9 Financial Statements.
          (i) Historical Statements. The Borrower has delivered to each Bank
copies of (a) the audited consolidated year-end financial statements of the
Borrower and its Subsidiaries described in item 1 of Schedule 6.1.9 (the “Annual
Statements”), and (b) the unaudited consolidated interim financial statements of
the Borrower and its Subsidiaries described in item 2 of Schedule 6.1.9 (the
“Interim Statements” and, together with the Annual Statements, the “Historical
Statements”). The Historical Statements (including in each case the related
schedules and notes) fairly present in all material respects the consolidated
financial position of the Borrower and its Subsidiaries as of the respective
dates specified in Schedule 6.1.9 and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as specified in the notes thereto (subject, in the case of the
Interim Statements, to normal year-end adjustments and the absence of
footnotes). Neither the restatement by Parent of its consolidated financial
statements as at the end of and for the fiscal year ended December 31, 2006, as
set forth in Parent’s report on Form 10-K/A, Amendment No. 2 to Form 10-K, for
such fiscal year, or as at the end of and for the respective fiscal quarters
ended March 31, 2007 and June 30, 2007, as set forth in Parent’s reports on Form
10-Q/A, Amendment No. 1 to Form 10-Q, for such respective fiscal quarters, nor
the restatement by the Borrower of its consolidated financial statements as at
the end of and for the fiscal year of the Borrower ended December 31, 2006 nor
the events and circumstances necessitating any of such restatements, have
resulted or could reasonably be expected to result in a Material Adverse Change.
          (ii) Financial Projections. The Borrower has delivered to each Bank
copies of the Financial Projections. The Financial Projections represent a
reasonable range of possible results in light of the history of the business,
present and foreseeable conditions and the intentions of the Borrower’s
management. The Financial Projections represent the Borrower’s good faith
estimate of future performance based upon historical financial information and
upon assumptions which were reasonable at the time of the preparation thereof
and which remain reasonable as of the date hereof.
          (iii) Accuracy of Financial Statements; Material Liabilities. Except
for liabilities arising in the ordinary course of business and the Indebtedness
arising in connection with the Notes and the Note Purchase Documents since the
date of the last Historical Statement, neither the Borrower nor any Subsidiary
of the Borrower has incurred any liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the Historical

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Statements or in the notes thereto or on Schedule 6.1.9, and except as disclosed
therein there are no unrealized or anticipated losses from any commitments of
the Borrower or any Subsidiary of the Borrower which either individually or in
the aggregate could reasonably be expected to result in a Material Adverse
Change. Since December 31, 2007, no Material Adverse Change has occurred. As of
the Closing Date, the Borrower and its Subsidiaries do not have any material
liabilities that are not disclosed on the Historical Statements or in the other
Disclosure Documents.
          6.1.10 Use of Proceeds; Margin Stock.
               6.1.10.1 General.
                    The Loan Parties intend to use the proceeds of the Loans in
accordance with Sections 2.8 and 8.1.11.
               6.1.10.2 Margin Stock.
                    None of the Loan Parties or any Subsidiaries of any Loan
Party engages or intends to engage principally, or as one of its important
activities, in the business of extending credit for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying margin stock (within the
meaning of Regulation U). No part of the proceeds of any Loan or any sale of the
Term Notes under the Note Purchase Agreement has been or will be used,
immediately, incidentally or ultimately, to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock or to refund Indebtedness originally incurred for such purpose, or
for any purpose which entails a violation of or which is inconsistent with the
provisions of the regulations of the Board of Governors of the Federal Reserve
System. None of the Loan Parties or any Subsidiary of any Loan Party holds or
intends to hold margin stock in such amounts that more than 10% of the
reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party
are or will be represented by margin stock.
               6.1.10.3 Section 20 Subsidiaries.
                    The Loan Parties do not intend to use and shall not use any
portion of the proceeds of the Loans, directly or indirectly, to purchase during
the underwriting period, or for thirty (30) days thereafter, Ineligible
Securities being underwritten by a Section 20 Subsidiary.
          6.1.11 Full Disclosure.
               The Borrower, through its agent, PNC Capital Markets LLC, has
delivered to the Banks a copy of a Confidential Offering Memorandum, dated
February, 2008 (the “Memorandum”), relating to the transactions contemplated
hereby. The Memorandum fairly describes, in all material respects, the general
nature of the business and principal properties of the Borrower and its
Subsidiaries. This Agreement (including the schedules hereto), the Memorandum,
the documents, certificates or other writings delivered to the Banks by or on
behalf of any Loan Party in connection with the transactions contemplated hereby
(including, without limitation, a report entitled “Westmoreland Mining LLC
Business Plan Reasonableness Review”, dated February 14, 2008, prepared by
Norwest Corporation) and the financial

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statements listed in Schedule 6.1.9 (collectively the “Disclosure Documents”),
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Disclosure Documents, since December 31, 2007, there has been
no change in the financial condition, operations, business, properties or
prospects of the Borrower or any Subsidiary except changes which, neither
individually nor in the aggregate, constitute or could reasonably be expected to
constitute or give rise to a Material Adverse Change. There is no fact known to
any Loan Party that could reasonably be expected to constitute or give rise to a
Material Adverse Change that has not been set forth in the Disclosure Documents.
As of the Closing Date, the Borrower and its Subsidiaries do not have any
material liabilities that are not disclosed in this Agreement or in the
Disclosure Documents.
          6.1.12 Taxes.
               Except as described on Schedule 6.1.12, all federal, state, local
and other tax returns required to have been filed with respect to each Loan
Party and each Subsidiary of each Loan Party have been filed, and payment or
adequate provision for the payment of all taxes, fees, assessments and other
governmental charges which have or may become due pursuant to said returns or to
assessments received has been made, except to the extent that such taxes, fees,
assessments and other charges are being contested in good faith by appropriate
proceedings diligently conducted and for which such reserves or other
appropriate provision, if any, as shall be required by GAAP shall have been
made. As of the date hereof, there are no agreements or waivers extending the
statutory period of limitations applicable to any federal income tax return of
any Loan Party or Subsidiary of any Loan Party for any period.
          6.1.13 Consents and Approvals.
               Except for the filing of the financing statements and the
Mortgages (Noteholders) in the appropriate state and county filing offices, and
filings with the U.S. Patent and Trademark Office and the U.S. Copyright Office,
no consent, approval, exemption, order or authorization of, or a registration or
filing with, any Official Body or any other Person is required by any Law or any
agreement in connection with the execution, delivery and performance by any Loan
Party of this Agreement and the other Loan Documents, other than those which
shall have been obtained or made on or prior to the Closing Date, except as
listed on Schedule 6.1.13 Except for consents, approvals, exemptions, orders or
authorizations, and registrations or filings that are obtainable or may be made
in the ordinary course of business of the Loan Parties without significant
expense or delay, no consent, approval, exemption, order or authorization of, or
registration or filing with, any Official Body or any other Person is required
by any Law or any agreement material to the business of any Loan Party in
connection with the conduct by each Loan Party of its business.
          6.1.14 No Event of Default; Compliance with Instruments.
               No event has occurred and is continuing and no condition exists
or will exist after giving effect to the issue and sale of the Notes and the
incurrence of Indebtedness evidenced thereby pursuant to the Note Purchase
Agreement and the borrowings or other extensions of credit to be made on the
Closing Date under or pursuant to the Loan Documents and the Financing Documents
which constitutes an Event of Default or Potential Default. None of the Loan
Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of
its

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Organizational Documents or (ii) any material agreement or instrument to which
it is a party or by which it or any of its properties may be subject or bound
where such violation would, either alone or together with all other such
violations, constitute or be reasonably likely to constitute a Material Adverse
Change. No default or event of default or basis for acceleration exists or,
after giving effect to the borrowing or other extensions of credit made pursuant
hereto, will exist under any instrument or agreement evidencing, providing for
the issuance or securing of or otherwise relating to any Indebtedness of the
Borrower or of any other Loan Party.
          6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.
               Each Loan Party and each Subsidiary of each Loan Party owns or
possesses all material patents, trademarks, service marks, trade names,
copyrights, proprietary software, licenses, registrations, franchises, permits,
authorizations of Official Bodies and rights necessary to own and operate its
properties and to carry on its business as presently conducted and planned to be
conducted by such Loan Party or Subsidiary, without known possible, alleged or
actual conflict with the rights of others. All material patents, trademarks,
service marks, trade names, copyrights, proprietary software, licenses,
registrations and franchises of each Loan Party and each Subsidiary of each Loan
Party are listed and described on Schedule 6.1.15. To the best knowledge of each
Loan Party, there is no material violation by any Person of any right of any
loan Party with respect to any patent, copyright, proprietary software, service
mark, trademark, trade name or other right owned or used by any Loan Party.
          6.1.16 Security Interests.
               Upon (i) the due and proper filing of financing statements
relating to the security interests referred to below in each office and in each
jurisdiction where required in order to perfect such security interests,
(ii) the taking possession by the Collateral Agent of any stock certificates or
other certificates evidencing the Pledged Collateral and (iii) recordation of
the Patent, Trademark and Copyright Security Agreement in the United States
Patent and Trademark Office and the United States Copyright Office, as
applicable, the Liens and security interests granted to the Collateral Agent for
the benefit of the Banks pursuant to the Security Documents will constitute
Prior Security Interests under the Uniform Commercial Code as in effect in each
applicable jurisdiction (the “Uniform Commercial Code”) to the extent such Liens
and security interests can be perfected by such filings or possession entitled
to all the rights, benefits and priorities provided by the Uniform Commercial
Code except for the Prior Security Interest granted by the Loan Parties in their
assets other than Accounts and Inventory in favor of the Purchasers and except
for other Permitted Liens of the types described in clauses (i), (ii), (iii),
(v), (vi) and (ix) of the definition of that term. There will be upon execution
and delivery of the Security Documents, such filings and such taking of
possession, no necessity for any further action in order to preserve, protect
and continue such rights, except the filing of continuation statements with
respect to such financing statements within six months prior to each five-year
anniversary of the filing of such financing statements. All filing fees and
other expenses in connection with each such action have been or will be paid by
the Borrower.
          6.1.17 Mortgage Liens.
               The Liens granted to the Collateral Agent for the benefit of the
Banks pursuant to each Mortgage will constitute, upon due and proper recordation
of such Mortgage, a valid first priority Lien, subject only to the Lien in favor
of the Purchasers securing obligations

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under the Note Purchase Agreement and Permitted Liens of the types described in
clauses (i), (ii), (iii), (v), (vi) and (ix) of the definition of that term
under applicable law, but only to the extent that applicable law permits a
mortgage lien to attach thereto the right, title and interest of the Loan Party
party to such Mortgage in and to the real property described therein. All such
action as will be necessary or advisable to establish such Liens of the
Collateral Agent and the priority thereof as described in the preceding sentence
will be taken at or prior to the time required for such purpose, and there will
be as of the date of execution and delivery of the Mortgages no necessity for
any further action in order to protect, preserve and continue such Lien and such
priority.
          6.1.18 Status of the Pledged Collateral.
               All the Subsidiary Ownership Interests and LLC Interests included
in the Pledged Collateral to be pledged pursuant to the Pledge Agreement are
validly issued and nonassessable and owned beneficially and of record by the
pledgor free and clear of any Lien or restriction on transfer, except for
Permitted Liens of the types described in clauses (i) and (vi) of the definition
of that term or as otherwise provided by the Pledge Agreement and except as the
right of the Collateral Agent to dispose of the Subsidiary Ownership Interests
or LLC Interests may be limited by the Securities Act and the regulations
promulgated by the Securities and Exchange Commission thereunder and by
applicable state securities laws. There are no shareholder, partnership, limited
liability company or other agreements or understandings with respect to the
Subsidiary Ownership Interests or LLC Interests included in the Pledged
Collateral except for the partnership agreements and limited liability company
agreements described on Schedule 6.1.18. The Parent and the Loan Parties have
delivered true and correct copies of such partnership agreements and limited
liability company agreements to the Agent and each Bank.
          6.1.19 Insurance.
               Schedule 6.1.19 lists all insurance policies and other bonds to
which any Loan Party or Subsidiary of any Loan Party is a party, all of which
are valid and in full force and effect. No notice has been given or claim made
and no grounds exist to cancel or avoid any of such policies or bonds or to
reduce the coverage provided thereby. Such policies and bonds provide adequate
coverage from reputable and financially sound insurers in amounts sufficient to
insure the assets and risks of each Loan Party and each Subsidiary of each Loan
Party in accordance with prudent business practice in the industry of the Loan
Parties and their Subsidiaries.
          6.1.20 Compliance with Laws.
               The Loan Parties and their Subsidiaries are in compliance in all
material respects with all applicable Laws (other than Environmental Laws which
are specifically addressed in Section 6.1.26 [Environmental Matters]) in all
jurisdictions in which any Loan Party or Subsidiary of any Loan Party is
presently or will be doing business except where the failure to do so would not,
either alone or together with all other such failures, constitute or be
reasonably likely to result in a Material Adverse Change.
          6.1.21 Material Contracts; Burdensome Restrictions.

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               Schedule 6.1.21 lists all material contracts relating to the
business operations of each Loan Party and each Subsidiary of any Loan Party,
including, without limitation, all Coal Supply Contracts, and all employee
benefit plans and Labor Contracts. Except as set forth on Schedule 6.1.21, all
such material contracts are valid, binding and enforceable upon such Loan Party
or Subsidiary and each of the other parties thereto in accordance with their
respective terms, and there is no default thereunder on the part of any Loan
Party or Subsidiary of any Loan Party thereto, or to the Loan Parties’
knowledge, on the part of any other party thereto. None of the Loan Parties or
their Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law, which
could, either alone or together with all other such obligations, restriction and
requirements, could reasonably be expected to result in a Material Adverse
Change.
          6.1.22 Investment Companies; Regulated Entities.
               None of the Loan Parties or any Subsidiaries of any Loan Party is
an “investment company” registered or required to be registered under the
Investment Company Act of 1940 or under the “control” of an “investment company”
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an “investment company” or under such “control.” None of the Loan
Parties or any Subsidiaries of any Loan Party is subject to any other federal or
state statute or regulation limiting its ability to incur Indebtedness for
borrowed money.
          6.1.23 Intentionally Omitted.
          6.1.24 Plans and Benefit Arrangements.
               (i) The Borrower and each other member of the ERISA Group are in
compliance in all material respects with all applicable provisions of ERISA with
respect to all Benefit Arrangements, Plans and Multiemployer Plans, except as
set forth in subparagraph (a) of Schedule 6.1.24. There has been no Prohibited
Transaction with respect to any Benefit Arrangement or any Plan or, to the
Borrower’s knowledge, with respect to any Multiemployer Plan or Multiple
Employer Plan, which could reasonably be expected to result in any substantial
obligation on the part of the Borrower or any other member of the ERISA Group,
except as set forth in subparagraph (a) of Schedule 6.1.24. The matters set
forth in subparagraph (a) of Schedule 6.1.24 relate to members of the ERISA
Group other than the Borrower and the Loan Parties and will not result in a
Material Adverse Change. The Borrower and all other members of the ERISA Group
have made when due any and all payments required to be made under any agreement
relating to a Multiemployer Plan or a Multiple Employer Plan or any Law
pertaining thereto, except where the failure to make any such payment could not
reasonably be expected to result in any substantial obligation to the Borrower
or any member of the ERISA Group or otherwise result in a Material Adverse
Change. With respect to each Plan and Multiemployer Plan, the Borrower and each
other member of the ERISA Group (i) have fulfilled in all material respects
their obligations under the minimum funding standards of ERISA, (ii) have not
incurred any liability to the PBGC, and (iii) have not had asserted against them
any penalty for failure to fulfill the minimum funding requirements of ERISA.
               (ii) To the Borrower’s knowledge, each Multiemployer Plan and
Multiple Employer Plan is able to pay benefits thereunder when due.

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               (iii) Neither the Borrower nor any other member of the ERISA
Group has instituted or intends to institute proceedings to terminate any Plan
where such termination would result in any substantial obligation to the
Borrower or any member of the ERISA Group or otherwise result in a Material
Adverse Change.
               (iv) No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur
with respect to any Plan, except as set forth in subparagraph (d) of
Schedule 6.1.24, and no amendment with respect to which security is required
under Section 307 of ERISA has been made or is reasonably expected to be made to
any Plan.
               (v) Each Plan is Adequately Funded.
               (vi) Neither the Borrower nor any other member of the ERISA Group
has incurred or reasonably expects to incur any substantial withdrawal
obligation under ERISA to any Multiemployer Plan or Multiple Employer Plan
(other than the obligations of Parent, if any, described in subparagraph (f) of
Schedule 6.1.24, for which neither the Borrower nor any other Loan Party is
liable, or not liable in a manner or to an extent that has resulted or will
result in a Material Adverse Change). Neither the Borrower nor any other member
of the ERISA Group has been notified by any Multiemployer Plan or Multiple
Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been
terminated within the meaning of Title IV of ERISA and, to the Borrower’s
knowledge, no Multiemployer Plan or Multiple Employer Plan is reasonably
expected to be reorganized or terminated, within the meaning of Title IV of
ERISA.
               (vii) To the extent that any Benefit Arrangement is insured, the
Borrower and all other members of the ERISA Group have paid when due all
premiums required to be paid for all periods through the Closing Date, except
where the failure to do so could not reasonably be expected to result in any
substantial obligation on the part of the Borrower or any member of the ERISA
Group or otherwise result in a Material Adverse Change. To the extent that any
Benefit Arrangement is funded other than with insurance, the Borrower and all
other members of the ERISA Group have made when due all contributions required
to be paid for all periods through the Closing Date, except where the failure to
do so could not reasonably be expected to result in any substantial obligation
on the part of the Borrower or any member of the ERISA Group or otherwise result
in a Material Adverse Change.
               (viii) All Plans and Benefit Arrangements have been administered,
in all material respects, in accordance with their terms and applicable Law,
except as set forth in subparagraph (h) of Schedule 6.1.24. The matters set
forth in subparagraph (h) of Schedule 6.1.24 relate to members of the ERISA
Group other than the Borrower and the Loan Parties and will not result in a
Material Adverse Change.
               (ix) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of Section 406 of ERISA or in connection with
which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the
Internal Revenue Code.
          6.1.25 Employment Matters.

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               Each of the Loan Parties and each of their Subsidiaries is in
compliance with the Labor Contracts and all applicable federal, state and local
labor and employment Laws including those relating to equal employment
opportunity and affirmative action, labor relations, minimum wage, overtime,
child labor, medical insurance continuation, worker adjustment and relocation
notices, immigration controls and worker and unemployment compensation, where
the failure to comply would constitute or result in a Material Adverse Change.
There are no outstanding grievances, arbitration awards or appeals therefrom
arising out of the Labor Contracts or current or threatened strikes, picketing,
handbilling or other work stoppages or slowdowns at facilities of any of the
Loan Parties or any of their Subsidiaries which in any case would constitute a
Material Adverse Change. The Borrower has made available to the Agent true and
correct copies of each of the Labor Contracts.
          6.1.26 Environmental Matters.
               Except for the matters disclosed on Schedule 6.1.26:
          (i) Except for matters that, considered either individually or in the
aggregate, have no reasonable likelihood of (a) materially disrupting the
current or projected mining operations of the Loan Parties or resulting in any
substantial obligation on the part of the Loan Parties or (b) otherwise
resulting in a Material Adverse Change, none of the Loan Parties has received
any Environmental Complaint, whether directed or issued to any Loan Party or
relating or pertaining to any prior owner, operator or occupant of the Property,
or (c) has any reason to believe that it might receive an Environmental
Complaint.
          (ii) No activity of any Loan Party at the Property is being or has
been conducted in violation of any Environmental Law or Required Environmental
Permit and to the knowledge of any Loan Party no activity of any prior owner,
operator or occupant of the Property was conducted in violation of any
Environmental Law, except for activities that, considered either individually or
in the aggregate, have no reasonable likelihood of (a) materially disrupting the
current or projected mining operations of the Loan Parties or (b) resulting in
any substantial obligation on the part of the Loan Parties or (c) otherwise
resulting in a Material Adverse Change.
          (iii) There are no Regulated Substances present on, in, under, or
emanating from, or to any Loan Party’s knowledge emanating to, the Property or
any portion thereof which result in Contamination except for such Regulated
Substances that have no reasonable likelihood of (a) materially disrupting the
current or projected mining operations of the Loan Parties or (b) resulting in
any substantial obligation on the part of the Loan Parties or (c) otherwise
resulting in a Material Adverse Change.
          (iv) Each Loan Party has all Required Environmental Permits and all
such Required Environmental Permits are in full force and effect, except where
the failure to have any Required Environmental Permits, either in any one case
or considered together with other such failures, has no reasonable likelihood of
materially disrupting the projected mining operations of the Loan Parties or
resulting in any substantial obligation on the part of the Loan Parties or
otherwise resulting in a Material Adverse Change.
          (v) Each Loan Party has submitted to an Official Body and/or
maintains, as appropriate, all Required Environmental Notices, except for
instances or failure to so submit

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and/or maintain Required Environmental Notices that have no reasonable
likelihood of (a) materially disrupting the current or projected mining
operations of the Loan Parties or (b) resulting in any substantial obligation to
the Loan Parties or (c) otherwise resulting in a Material Adverse Change.
          (vi) No structures, improvements, equipment, fixtures, impoundments,
pits, lagoons or aboveground or underground storage tanks located on the
Property contain or use Regulated Substances except (1) in compliance with
Environmental Laws and Required Environmental Permits or (2) where the improper
presence or use of Regulated Substances has no reasonable likelihood (a) of
materially disrupting the current or projected mining operations of the Loan
Parties or (b) resulting in any substantial obligation on the part of the Loan
Parties or (c) otherwise resulting in a Material Adverse Change. To the
knowledge of each Loan Party, no structures, improvements, equipment, fixtures,
impoundments, pits, lagoons or aboveground or underground storage tanks of prior
owners, operators or occupants of the Property contained or used, except in
material compliance with Environmental Laws, Regulated Substances or otherwise
were operated or maintained by any such prior owner, operator or occupant except
in compliance in all material respects with Environmental Laws.
          (vii) To the knowledge of each Loan Party, no facility or site to
which any Loan Party, either directly or indirectly by a third party, has sent
Regulated Substances for storage, treatment, disposal or other management has
been or is being operated in violation of Environmental Laws or pursuant to
Environmental Laws is identified or proposed to be identified on any list of
contaminated properties or other properties which pursuant to Environmental Laws
are the subject of an investigation, cleanup, removal, remediation or other
response action by an Official Body except where such violation, either alone or
considered together with all other such violations, has no reasonable likelihood
of (a) materially disrupting the current or projected mining operations of the
Loan Parties or (b) resulting in any substantial obligation on the part of the
Loan Parties or (c) otherwise resulting in a Material Adverse Change.
          (viii) No portion of the Property is identified or to the knowledge of
any Loan Party proposed to be identified on any list of contaminated properties
or other properties which pursuant to Environmental Laws are the subject of an
investigation or remediation action by an Official Body, nor to the knowledge of
any Loan Party is any property adjoining or in the proximity of the Property
identified or proposed to be identified on any such list.
          (ix) No portion of the Property constitutes an Environmentally
Sensitive Area, except for portions of the Property that have no reasonable
likelihood, by reason of the use or occupancy thereof by any Loan Party or
otherwise, of (a) materially disrupting the current or projected mining
operations of the Loan Parties or (b) resulting in any substantial obligation on
the part of the Loan Parties or (c) otherwise resulting in a Material Adverse
Change.
          (x) No Lien or other encumbrance authorized by Environmental Laws
exists against the Property and none of the Loan Parties has any reason to
believe that such a Lien or encumbrance may be imposed.
          (xi) None of the matters disclosed on Schedule 6.1.26, considered
either alone or together with any or all such matters, has resulted or would be
reasonably expected to result in a Material Adverse Change.

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          6.1.27 Senior Debt Status.
               The Obligations of each Loan Party under this Agreement, the
Notes, the Guaranty Agreement and each of the other Loan Documents to which it
is a party do rank and will rank at least pari passu in priority of payment with
all other Indebtedness of such Loan Party except Indebtedness of such Loan Party
to the extent secured by Permitted Liens. There is no Lien upon or with respect
to any of the properties or income of any Loan Party or Subsidiary of any Loan
Party which secures Indebtedness or other obligations of any Person except for
Permitted Liens.
          6.1.28 Transactions with Affiliates.
               Except as set forth on Schedule 6.1.28 or as permitted in
Section 8.2.8 [Affiliate Transaction] herein, there are no loans, leases,
royalty agreements or other agreements, arrangements or other transactions
between any of the Loan Parties and any Affiliate.
          6.1.29 Permit Blocks.
               No Loan Party has been barred for a period in excess of fourteen
(14) consecutive days from receiving surface mining or underground mining
permits pursuant to the permit block provisions of the Surface Mining Control
and Reclamation Act, 30 U.S.C. § § 1201 et seq., and the regulations promulgated
with respect thereto, or any corresponding state laws or regulations.
          6.1.30 Status under Certain Statutes.
               Neither the Borrower nor any other Loan Party is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 2005, as amended, the ICC Termination Act of
1995, as amended, or the Federal Power Act, as amended.
          6.1.31 Coal Leases.
               The Coal Leases constitute all of the leases owned by the Loan
Parties pertaining to the extraction, mining or removal of coal. The Loan
Parties have made available to the Banks a true, correct and complete copy of
each of the Coal Leases, except for those to which TWCC is a party. Each of the
Coal Leases is in full force and effect, and has not been amended or modified
from the copy of the Coal Lease provided to the Banks (if so provided), except
for Permitted Modifications. None of the Loan Parties is in default of any of
its obligations under any of the material Coal Leases, and, to the best of each
Loan Party’s knowledge and belief, the lessors thereunder are not in default
under any such lessor’s obligations under the Coal Leases. Except as set forth
on Schedule 6.1.31, to the Borrower’s knowledge, no material amount of royalties
are currently past due under any of the Coal Leases.
          6.1.32 Qualifications as Lessee, Coal Acreage Limitations.
               Except as set forth on Schedule 6.1.32, each of the Loan Parties
are qualified in every material respect, including limitations and parameters
imposed in 43 C.F.R. Part 3400, to take, hold, own and control federal coal and
mineral leases, and is not in violation of any material limitations or
parameters imposed in 43 C.F.R. Part 3400.

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          6.1.33 Single Purpose Entities.
          (i) The Borrower has been at all times since its formation, and
currently is, a duly formed and existing limited liability company.
          (ii) The Borrower has been, at all times from and after April 27,
2001, and currently is a Single Purpose Entity.
          (iii) The Borrower at all times since its formation has been duly
qualified as a limited liability company, in each jurisdiction in which such
qualification was necessary for the conduct of its business.
          (iv) Each Subsidiary of the Borrower is duly qualified as a
corporation in each jurisdiction in which such qualification is necessary for
the conduct of its business.
          (v) The Borrower at all times since its formation has complied with
the provisions of its Organizational Documents and the laws of its jurisdiction
of formation relating to limited liability companies.
          (vi) Each Subsidiary of the Borrower is in compliance with the
provisions of its Organizational Documents and the laws of its jurisdiction of
formation relating to corporations or other business entities. All formalities
regarding the existence of Borrower have been observed since its formation.
          (vii) The Borrower did not engage in any business until April 27, 2001
except insofar as the acquisition of permits and other matters related to the
preparation for the acquisition of the Borrower’s Subsidiaries and obtaining
financing with respect thereto may be construed as engaging in business.
          (viii) The Borrower did not incur any Indebtedness until April 27,
2001.
          (ix) The Borrower has at all times since its formation maintained its
financial statements, accounting records and limited liability company
documents, separate from those of any other Person, and has maintained such
financial statements, records and documents accurately except as reflected in
the audited financial statements of the Borrower and its Subsidiaries as at the
end of and for the fiscal year ended December 31, 2007 (which include restated
financial statements of the Borrower and its Subsidiaries as at the end of and
for the fiscal year ended December 31, 2006). The Borrower has maintained
separate books, records, resolutions and agreements. The Borrower has not at any
time since its formation commingled its assets with those of any other Person.
The Borrower has at all times since its formation accurately maintained its own
bank accounts, payroll and separate books of account. The Borrower has not
commingled its funds or assets with those of any other entity, and has held and
will hold its funds and assets in its own name.
          (x) The Borrower is currently organized solely for the purpose
described in the definition of Single Purpose Entity and has not engaged in any
business unrelated to acting as the Borrower hereunder which is inconsistent
with or in violation of this Agreement or, from and after April 27, 2001 until
the Closing Date, the 2001 Revolving Credit Agreement.

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          (xi) No Subsidiary of the Borrower has any assets other than those
related to coal mining operations. The Borrower has not had any assets other
than those related to coal mining operations and its interests in the
Subsidiaries.
          (xii) The Borrower has not engaged in, sought or consented to any
dissolution, winding up, liquidation, consolidation, merger, transfer of
partnership interest, membership interest or stock of a Subsidiary, or amendment
of the operating agreement of the Borrower (except for the Amended and Restated
Limited Liability Company Agreement dated April 27, 2001, the amendment thereto
dated as of March 8, 2004, and the Second Amended and Restated Limited Liability
Company Agreement dated as of the Closing Date).
          (xiii) The Parent is the sole economic member of the Borrower.
          (xiv) The Borrower has at all times since its formation identified
itself in all dealings with the public, under the Borrower’s own name and as a
separate and distinct entity. The Borrower has not at any time since its
formation identified itself as being a division of any other entity. The
Borrower has not at any time since its formation identified any other Person as
being a division of the Borrower. The Borrower has not failed to correct any
known misunderstanding regarding the separate identity of such entity. The
Borrower has at all times conducted its business in its own name.
          (xv) The Borrower has at all times since its formation been adequately
capitalized in light of the nature of its business. The Subsidiaries of the
Borrower and the Borrower, taken as a whole, are presently adequately
capitalized in light of the nature of their business.
          (xvi) The Borrower has not at any time since its formation assumed or
guaranteed the liabilities of any other Person, except pursuant to Guaranties of
Indebtedness entered into by the Borrower as permitted by and in compliance with
the terms of this Agreement or, during the period from and after April 27, 2001
until the Closing Date, the terms of the 2001 Revolving Credit Agreement. The
Borrower has not at any time since its formation acquired obligations or
securities of any other Person except obligations and securities (including,
without limitation, obligations and securities of any Subsidiary) acquired by
the Borrower as permitted by and in compliance with the terms of this Agreement
or, during the period from and after April 27, 2001 until the Closing Date, the
terms of the 2001 Note Agreement. The Borrower has not at any time since its
formation made loans or advances to any Person except loans and advances made by
the Borrower as permitted by and in compliance with the terms of this Agreement
or, during the period from and after April 27, 2001 until the Closing Date, the
terms of the 2001 Revolving Credit Agreement. The Borrower has not granted a
Lien on any of its assets for the benefit of any other Person other than
(i) Liens granted by it in connection with the incurrence of, and in order to
secure, the Indebtedness of the Borrower identified in Schedule 8.2.1 as being
repaid with the proceeds of the Notes and of loans made under the Bank Credit
Agreement, (ii) Liens granted by it as permitted by and in compliance with the
terms of this Agreement, and (iii) Liens granted by it during the period from
and after April 27, 2001 until the Closing Date as permitted by and in
compliance with the terms of the 2001 Revolving Credit Agreement and which,
unless terminated on or prior to the Closing Date, are permitted to exist under
the terms of this Agreement.

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          (xvii) Neither the Borrower nor any Subsidiary of the Borrower has at
any time between the 2001 Closing and the date hereof entered into or been a
party to any transaction with any member of the Parent Group, except (i) as
contemplated by the Management Agreement (as defined in the 2001 Note
Agreement), (ii) other transactions permitted under the 2001 Note Agreement and
(iii) other transactions on terms that are at fair market value and are
generally similar to the terms and conditions that would apply in a comparable
arm’s length transaction with an unrelated third party. From and after the date
hereof, neither the Borrower nor any Subsidiary of the Borrower will enter into
or be a party to any transaction with any member of the Parent Group, except
(i) as contemplated by the Management Agreement, (ii) other transactions
permitted under Section 8.2.8 [Affiliate Transactions] and (iii) other
transactions in the ordinary course of business of the Borrower and each
Subsidiary of the Borrower which, when considered as a whole, are at fair market
value and are generally similar to the terms and conditions that would apply in
a comparable arm’s length transaction with an unrelated third party.
          (xviii) The Borrower has no Indebtedness other than the Indebtedness
to the Banks under the Loan Documents, to the Purchasers under the Note Purchase
Agreement, and as described in Schedule 8.2.1. Schedule 8.2.1 sets forth a
complete and correct list of all outstanding Indebtedness of the Borrower and
its Subsidiaries as of the date hereof (including a description of the obligors
and obligees, principal amount outstanding and collateral therefor, if any, and
Guaranty thereof, if any), since which date there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Indebtedness of the Borrower or its Subsidiaries. Neither the Borrower
nor any Subsidiary is in default in the payment of any principal or interest on
any Indebtedness of the Borrower or such Subsidiary (and no waiver of any such
default is currently in effect). After the application of the proceeds of the
Loans to the retirement of all items of Indebtedness of the Borrower and its
Subsidiaries which are described on Schedule 8.2.1 as being paid on the Closing
Date, no event or condition exists with respect to any Indebtedness of the
Borrower or any Subsidiary (other than as described in (i) that certain Waiver
No. 5 dated as of January 30, 2008, as amended by (a) that certain Amendment to
Waiver No. 5 dated March 31, 2008, and (b) that certain Amendment No. 2 to
Waiver dated as of May 14, 2008, each by and among the Loan Parties and the
holders of notes of the Borrower outstanding under the 2001 Note Agreement and
(ii) that certain Waiver, dated January 30, 2008, as amended by (a) that certain
Amendment to Waiver dated as of March 31, 2008, and (b) that certain Amendment
No. 2 to Waiver dated as of May 14, 2008, each by and among the Loan Parties and
the bank lenders under the 2001 Revolving Credit Agreement) that would permit
(or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Indebtedness to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
          (xix) The Borrower represents and warrants that the “assumptions of
fact” contained in the non-consolidation opinion of Wilmer Cutler Pickering Hale
and Dorr LLP of even date herewith are true and correct in all material respects
as of the date hereof.
          6.1.34 Surface Mine Reclamation Bonds.
               Each of the Loan Parties has a sufficient surface mining bonding
capacity to be able to maintain the bonds for all the Required Mining Permits.
          6.1.35 Foreign Assets Control Regulation, etc.

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               Neither the transactions made hereunder or the use of the
proceeds hereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
          6.1.36 Pari Passu Collateral.
               Each Loan Party represents and warrants that (excluding the
exercise of rights of set-off) no Guaranty, collateral, security or other credit
enhancement has been given, directly or indirectly, for the benefit of the
Purchasers under the Note Purchase Agreement or otherwise except for (i)
Guarantees from the Guarantors, (ii) the Note Purchase Documents, which provide
the Purchasers with a prior security interest in the Loan Parties assets (other
than Accounts and Inventory), and (iii) a subordinated security interest in and
Lien on Accounts and Inventory. Complete and correct copies of the Note Purchase
Documents have been delivered to the Banks.
          6.1.37 Additional Representations and Warranties.
               Each Loan Party represents and warrants that the representations
and warranties contained in the Note Purchase Documents are true and correct in
all material respects as of the date given.
          6.1.38 Anti-Terrorism Laws.
               None of the Loan Parties is or shall be (i) a Person with whom
any Bank is restricted from doing business under Executive Order No. 13224 or
any other Anti-Terrorism Law, (ii) engaged in any business involved in making or
receiving any contribution of funds, goods or services to or for the benefit of
such a Person or in any transaction that evades or avoids, or has the purpose of
evading or avoiding, the prohibitions set forth in any Anti-Terrorism Law, or
(iii) otherwise in violation of any Anti-Terrorism Law. The Loan Parties shall
provide to the Banks any certifications or information that a Bank requests to
confirm compliance by the Loan Parties with Anti-Terrorism Laws.
     6.2 Updates to Schedules.
               Should any of the information or disclosures provided on any of
the Schedules attached hereto become outdated or incorrect in any material
respect, the Borrower shall promptly provide the Agent in writing with such
revisions or updates to such Schedule as may be necessary or appropriate to
update or correct same; provided, however, that no Schedule shall be deemed to
have been amended, modified or superseded by any such correction or update, nor
shall any breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured thereby, unless
and until the Required Banks, in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule.
7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
     The obligation of each Bank to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder is subject to the performance by each of the Loan
Parties of its Obligations to

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be performed hereunder at or prior to the making of any such Loans or issuance
of such Letters of Credit and to the satisfaction of the following further
conditions:
     7.1 First Loans and Letters of Credit.
          On the Closing Date:
          7.1.1 Officer’s Certificate.
               The representations and warranties of each of the Loan Parties
contained in Section 6 [Representations and Warranties] and in each of the other
Loan Documents shall be true and accurate on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of such date (except representations and warranties which relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein), and each
of the Loan Parties shall have performed and complied with all covenants and
conditions hereof and thereof, no Event of Default or Potential Default shall
have occurred and be continuing or shall exist; and there shall be delivered to
the Agent for the benefit of each Bank a certificate of each of the Loan
Parties, dated the Closing Date and signed by the Chief Executive Officer,
President or Chief Financial Officer of each of the Loan Parties, to each such
effect.
          7.1.2 Secretary’s Certificate.
               There shall be delivered to the Agent for the benefit of each
Bank a certificate dated the Closing Date and signed by the Secretary or an
Assistant Secretary of each of the Loan Parties, certifying as appropriate as
to:
          (i) all action taken by each Loan Party in connection with this
Agreement and the other Loan Documents;
          (ii) the names of the officer or officers authorized to sign this
Agreement and the other Loan Documents and the true signatures of such officer
or officers and specifying the Authorized Officers permitted to act on behalf of
each Loan Party for purposes of this Agreement and the true signatures of such
officers, on which the Agent and each Bank may conclusively rely; and
          (iii) copies of its organizational documents, including its
certificate of incorporation, bylaws, certificate of limited partnership,
partnership agreement, certificate of formation, and limited liability company
agreement, as the case may be, as in effect on the Closing Date certified by the
appropriate state official where such documents are filed in a state office
together with certificates from the appropriate state officials as to the
continued existence and good standing of each Loan Party in each state where
organized or qualified to do business and a bring-down certificate by facsimile
dated the Closing Date.
          7.1.3 Delivery of Loan Documents.
               This Agreement, the Collateral Assignment, Guaranty Agreement,
Mortgage, Notes, Patent, Trademark and Copyright Security Agreement, Pledge
Agreement, Intercompany Subordination Agreement, Security Agreement, the
Management Agreement, and the Management Fee Subordination Agreement shall have
been duly executed and delivered to

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the Collateral Agent or Agent, as the case may be, for the benefit of the Banks,
together with all appropriate financing statements and appropriate stock powers
and certificates evidencing the Subsidiary Shares, the Partnership Interests and
the LLC Interests.
          7.1.4 Opinion of Counsel.
               There shall be delivered to the Agent for the benefit of each
Bank a written opinions of Wilmer Cutler Pickering Hale and Dorr LLP, as counsel
for the Loan Parties, and other counsel acceptable to the Agent (who may rely on
the opinions of such other counsel as may be acceptable to the Agent), dated the
Closing Date and in form and substance satisfactory to the Agent and its
counsel:
          (i) as to the matters set forth in Exhibit 7.1.4;
          (ii) as to substantive non-consolidation of the Borrower with any
member of the Parent Group;
          (iii) as to the enforceability and application by a bankruptcy court
of the provisions of the operating agreement of the Borrower and the
Organizational Documents of each Subsidiary, as the case may be, requiring the
vote of an Independent Manager or Director, as the case may be, to file a
voluntary bankruptcy petition;
          (iv) as to the enforceability of the provision of the operating
agreement of the Borrower that if the economic member of the Borrower ceases to
be a member, the Independent Manager becomes a member without further active
vote or approval;
          (v) as to the fact that the bankruptcy or insolvency of a member of
the borrower will not, by itself cause a dissolution or winding up of the
Borrower; and
          (vi) as to such other matters incident to the transactions
contemplated herein as the Agent may reasonably request.
               There shall also be delivered to the Agent for the benefit of
each Bank a written opinion of Crowell & Moring LLP, the Loan Parties’ Coal Act
counsel, dated as of the Closing Date and in form and substance satisfactory to
the Agent and its counsel, that any Coal Act liability of the Parent will not be
attributed to the Borrower or any Subsidiary of the Borrower.
          7.1.5 Legal Details.
               All legal details and proceedings in connection with the
transactions contemplated by this Agreement and the other Loan Documents shall
be in form and substance satisfactory to the Agent and counsel for the Agent,
and the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection with
such transactions, in form and substance satisfactory to the Agent and said
counsel, as the Agent or said counsel may reasonably request.
          7.1.6 Payment of Fees.

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               The Borrower shall have paid or caused to be paid to the Agent
for itself and for the account of the Banks to the extent not previously paid
the all commitment and other fees accrued through the Closing Date and the costs
and expenses for which the Agent and the Banks are entitled to be reimbursed.
          7.1.7 Consents.
               All material consents and governmental approvals required to
effectuate the transactions contemplated hereby as set forth on Schedule 6.1.13
shall have been obtained, in form and substance satisfactory to the Banks.
          7.1.8 Officer’s Certificate Regarding MACs.
               Since December 31, 2007, no Material Adverse Change shall have
occurred; and there shall have been delivered to the Agent for the benefit of
each Bank a certificate dated the Closing Date and signed by the Chief Executive
Officer, President or Chief Financial Officer of each Loan Party to each such
effect.
          7.1.9 No Violation of Laws.
               The making of the Loans and the issuance of the Letters of Credit
shall not contravene any Law applicable to any Loan Party or any of the Banks.
          7.1.10 No Actions or Proceedings.
               No action, proceeding, investigation, regulation or legislation
shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in the
Agent’s sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan Documents.
          7.1.11 Insurance Policies; Certificates of Insurance; Endorsements.
               The Loan Parties shall have delivered evidence acceptable to the
Agent that adequate insurance in compliance with Section 8.1.3 [Maintenance of
Insurance] is in full force and effect and that all premiums then due thereon
have been paid, together with a certified copy of each Loan Party’s casualty
insurance policy or policies evidencing coverage satisfactory to the Agent, with
additional insured, mortgagee and lender loss payable special endorsements
attached thereto in form and substance satisfactory to the Agent and its counsel
naming the Agent as additional insured, mortgagee and lender loss payee.
          7.1.12 Title Insurance.
               The Loan Parties shall deliver a title insurance policy or
policies or other evidence of title satisfactory to the Agent.
          7.1.13 Filing Receipts.

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               The Agent shall have received (1) copies of all filing receipts
and acknowledgments issued by any governmental authority to evidence any
recordation or filing necessary to perfect the Lien of the Banks on the
Collateral or other satisfactory evidence of such recordation and filing and
(2) evidence in a form acceptable to the Agent that such Lien constitutes a
Prior Security Interest in favor of the Banks and, in the case of the Mortgages,
a valid and perfected first priority Lien, subject only to the Lien in favor of
the Purchasers in connection with the Note Purchase Agreement.
          7.1.14 Note Purchase Agreement.
               The Loan Parties shall have delivered an executed Note Purchase
Agreement and shall have satisfied the conditions in Section 4.1 [Interest Rate
Option] of the Note Purchase Agreement to the satisfaction of the Agent.
          7.1.15 Management Agreement and Management Fee Subordination
Agreement.
               The Borrower and the Parent shall have entered into the
Management Agreement, in form and substance satisfactory to the Banks and the
Management Fee Subordination Agreement shall have been executed and delivered by
the Parent and the Borrower and shall be in full force and effect.
          7.1.16 Solvency Certificate.
               An Authorized Officer of the Borrower shall have delivered a
certificate in form and substance satisfactory to the Agent as to the capital
adequacy and solvency of the Borrower and its Subsidiaries after giving effect
to the transactions contemplated hereby.
          7.1.17 Lien Search.
               Bank shall have received a Lien search in acceptable scope and
with acceptable results from Borrower.
          7.1.18 Intercreditor Agreement.
               The Purchasers or Collateral Agent on behalf of the Purchasers
and the Borrower shall have executed and delivered to the Agent the
Intercreditor Agreement in form and substance acceptable to the Agent.
          7.1.19 Coal Reserves.
               The Borrower shall have made available to the Banks all existing
material geological data, reserve data, mine maps, core hole logs and associated
data, coal measurements, coal samples, lithologic data, coal reserve
calculations or reports, washability analyses or reports, mine plans, mining
feasibility studies or analyses, mining permit applications and supporting data,
preparation plant flowcharts, preparation plant efficiency reports or analyses,
engineering studies and all other information, maps, material, reports and data
in the possession or under the control of Borrower relating to or affecting the
coal reserves, coal ownership, coal leases, mining conditions, mines,
preparation plant(s) and mining plans of Borrower (collectively the “Mining
Data”). True, correct and complete copies of the Mining Data, together with all
exhibits, maps or supporting appendices thereto, have been provided to the
Banks.

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          7.1.20 Independent Director of Borrower and Subsidiaries.
               The Borrower and each Subsidiary shall have provided evidence
that its Organizational Documents provide for an Independent Manager or
Director, as the case may be, and require the vote of an Independent Manager or
Director, as the case may be, to file a voluntary bankruptcy petition.
          7.1.21 Bankruptcy Remote Entities, Separateness.
               The terms and conditions of the Borrower’s formation documents,
as well as the terms and conditions of each Subsidiary’s formation documents,
shall be effective to provide for appropriate protections from the commencement
of a bankruptcy based upon the bankruptcy of a member of the Parent Group. Each
of the Loan Parties shall satisfy the Agent that such entities are not
reasonably subject to substantive consolidation with any member of the Parent
Group. Additionally, the Agent shall be satisfied with the Independent Manager
and Director selected by each of the Loan Parties.
          7.1.22 Changes in Corporate Structure.
               The Loan Parties shall not have changed their respective
jurisdictions of incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any part of the liabilities of any other
entity, at any time following the date of the most recent financial statement
referred to in Section 6.1.9 [Financial Statements].
          7.1.23 NRGT Documents.
               The NRGT Supplemental Agreement, and the pledge agreement, the
security agreement and the deed of trust, in substantially the respective forms
attached as exhibits thereto (collectively, together with the NRGT Supplemental
Agreement, the “NRGT Documents”) shall be in form and substance satisfactory to
the Banks and their special counsel, shall have been executed and delivered by
NRGT and each other party thereto and shall be in full force and effect.
     7.2 Each Additional Loan or Letter of Credit.
          At the time of making any Loans or issuing any Letters of Credit other
than Loans made or Letters of Credit issued on the Closing Date and after giving
effect to the proposed extensions of credit: the representations and warranties
of the Loan Parties contained in Section 6 [Representations and Warranties] and
in the other Loan Documents shall be true on and as of the date of such
additional Loan or Letter of Credit with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier date
or time, which representations and warranties shall be true and correct on and
as of the specific dates or times referred to therein) and the Loan Parties
shall have performed and complied with all covenants and conditions hereof; no
Event of Default or Potential Default shall have occurred and be continuing or
shall exist; the making of the Loans or issuance of such Letter of Credit shall
not contravene any Law applicable to any Loan Party or Subsidiary of any Loan
Party or any of the Banks; and the Borrower shall have delivered to the Agent a
duly executed and completed Loan Request or application for a Letter of Credit
as the case may be.

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8. COVENANTS
     8.1 Affirmative Covenants.
          The Borrower and the Guarantors, jointly and severally, covenant and
agree that until payment in full of the Loans, Reimbursement Obligations and
Letter of Credit Borrowings, and interest thereon, expiration or termination of
all Letters of Credit, satisfaction of all of the Loan Parties’ other
Obligations under the Loan Documents and termination of the Commitments, the
Loan Parties shall comply at all times with the following affirmative covenants:
          8.1.1 Preservation of Existence, Etc.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, maintain its legal existence as a corporation, limited partnership or
limited liability company, as the case may be, and its license or qualification
and good standing in each jurisdiction in which its ownership or lease of
property or the nature of its business makes such license or qualification
necessary, except as otherwise expressly permitted in Section 8.2.6
[Liquidations, Mergers, Etc.] or where a Loan Party shall be in breach of this
Section inadvertently because it failed to obtain or maintain a qualification or
license provided that such failure is promptly remedied upon the Loan Party
becoming aware of such failure and the failure does not adversely affect the
rights of the Loan Parties or, either alone or together with all such failures,
constitute or be reasonably likely to result in a Material Adverse Change.
          8.1.2 Payment of Liabilities, Taxes, Etc.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, duly pay and discharge all liabilities to which it is subject or which are
asserted against it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which penalties
attach thereto, except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by appropriate and
lawful proceedings diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made, but only to the extent that failure to discharge any such liabilities
shall not result in any additional liability which would adversely affect to a
material extent the financial condition of any Loan Party or Subsidiary of any
Loan Party or affect a material portion of the Collateral, provided that the
Loan Parties and their Subsidiaries will pay all such liabilities forthwith upon
the commencement of proceedings to foreclose any Lien which may have attached as
security therefor.
          8.1.3 Maintenance of Insurance.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, insure its properties and assets against loss or damage by fire and such
other insurable hazards against which such assets are commonly insured
(including fire, extended coverage, property damage, workers’ compensation,
public liability and business interruption insurance) and against other risks,
and in such amounts, as similar properties and assets are insured by prudent
companies in similar circumstances carrying on similar businesses, and with
reputable and financially sound insurers, including self-insurance to the extent
customary, all as shall be reasonably satisfactory to the Agent. For policies
which cover insured entities in addition to the Borrower and the other

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Loan Parties, the policies shall provide that the required limits per occurrence
will continue to be in effect for the Borrower and the other Loan Parties
notwithstanding losses which may occur with respect to such other Persons. The
Loan Parties shall deliver to the Agent (x) on the Closing Date and annually
thereafter an original certificate of insurance signed by the Loan Parties’
independent insurance broker describing and certifying as to the existence of
all insurance on the Collateral required to be maintained by this Agreement and
the other Loan Documents, including business interruption insurance in an amount
of $50,000,000 or more in the aggregate among all Loan Parties, together with a
copy of the endorsements described in the next sentence attached to such
certificate and (y) at the request of the Agent, from time to time a summary
schedule indicating all insurance then in force with respect to each of the Loan
Parties. Such policies of insurance shall contain special endorsements, in form
and substance reasonably acceptable to the Agent, which shall (i) specify the
Agent as an additional insured, mortgagee and lender loss payee as its interests
may appear, with the understanding that any obligation imposed upon the insured
(including the liability to pay premiums) shall be the sole obligation of the
applicable Loan Parties and not that of the insured, (ii) provide that the
interest of the Banks shall be insured regardless of any breach or violation by
the applicable Loan Parties of any warranties, declarations or conditions
contained in such policies or any action or inaction of the applicable Loan
Parties or others insured under such policies, (iii) provide a waiver of any
right of the insurers to set off or counterclaim or any other deduction, whether
by attachment or otherwise, (iv) provide that any and all rights of subrogation
which the insurers may have or acquire shall be, at all times and in all
respects, junior and subordinate to the prior payment in full of the
Indebtedness hereunder, including the Indebtedness evidenced by the Notes, and
that no insurer shall exercise or assert any right of subrogation until such
time as the Indebtedness hereunder has been paid in full, (v) include effective
waivers by the insurer of all claims for insurance premiums against the Agent,
(vi) provide that no cancellation of such policies for any reason (other than
non-payment of premium) nor any change therein shall be effective until at least
thirty (30) days after receipt by the Agent of written notice of such
cancellation or change, and that no cancellation of such policies for nonpayment
of premium shall be effective until at least ten (10) days after receipt by the
Collateral Agent of written notice of such cancellation, (vii) be primary
without right of contribution of any other insurance carried by or on behalf of
any additional insureds with respect to their respective interests in the
Collateral, and (viii) provide that inasmuch as the policy covers more than one
insured, all terms, conditions, insuring agreements and endorsements (except
limits of liability) shall operate as if there were a separate policy covering
each insured. The contingent business interruption insurance required hereunder
shall include without limitation coverage in respect of outages at power plants
serviced under any material Coal Supply Contract, so long as such outage is the
result of an insured event. The applicable Loan Parties shall notify the Agent
and each Bank promptly of any occurrence causing a material loss or decline in
value of the Collateral and the estimated (or actual, if available) amount of
such loss or decline. With respect to any casualty or property insurance for
damage or destruction of any Collateral, such losses may be adjusted by and be
payable to the Loan Parties if no Event of Default shall have occurred and be
continuing and either (i) the Loan Parties promptly certify in writing to the
Agent and Bank that the proceeds shall be used for the repair, restoration
and/or replacement of property in respect of which such proceeds were received
and continue such course of action or (ii) the amount of the proceeds from the
losses is $500,000 or less. Any and all proceeds for losses not addressed in the
preceding sentence shall be, at the option of the Agent, and upon notice thereof
to the Borrower, adjusted by and payable to the Agent. Any monies received by
the Agent in accordance with the preceding sentence constituting insurance
proceeds or condemnation proceeds (pursuant to any

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of the Mortgages) may, at the option of the Agent, (i) be applied to the pro
rata payment of the Notes, or (ii) be disbursed to the applicable Loan Parties
on such terms as are deemed appropriate by the Agent for the repair, restoration
and/or replacement of property in respect of which such proceeds were received
          8.1.4 Maintenance of Properties and Leases.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, maintain in good repair, working order and condition (ordinary wear and tear
excepted) in accordance with the general practice of other businesses of similar
character and size, all of those properties useful or necessary to its business,
and from time to time, such Loan Party will make or cause to be made all
appropriate repairs, renewals or replacements thereof.
          8.1.5 Maintenance of Patents, Trademarks, Etc.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, maintain in full force and effect all patents, trademarks, service marks,
trade names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute or be reasonably likely to
result in a Material Adverse Change.
          8.1.6 Visitation Rights.
     The Loan Parties shall permit the representatives of each of the Banks:
               No Default — if no Potential Default or Event of Default then
exists, at the expense of such Bank and upon reasonable prior notice to the
Borrower, to visit and inspect any of the offices or properties (including,
without limitation, any field examination of Accounts and Inventory) of the
Borrower or any Subsidiaries, to discuss the affairs, finances and accounts of
the Borrower and its Subsidiaries with the Borrower’s officers, and (with the
consent of the Borrower, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Borrower, which
consent will not be unreasonably withheld) to visit the other offices and
properties of the Borrower and each Subsidiary, all at such reasonable times
(which shall be normal business hours) and as often as may be reasonably
requested; and
               Default — if a Potential Default or Event of Default then exists,
at the expense of the Borrower to visit and inspect any of the offices or
properties (including, without limitation, any field examination of Accounts and
Inventory) of the Borrower or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Borrower authorizes said accountants to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries), all at such times
and as often as may be requested.
          8.1.7 Operation of Mines.
               The Loan Parties shall, and shall cause each of its Subsidiaries
engaged in mining operations on any of the Real Property to, obtain at all times
and maintain in effect all Required Mining Permits, surface mining reclamation
bonds, and such other consents and

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approvals as are necessary for conducting uninterrupted coal mining and related
operations on, in or under the Real Property or such other property, sufficient
to discharge in all material respects the obligations of the Loan Parties under
the Coal Supply Contracts, substantially in the manner as such operations have
heretofore been authorized and conducted on those portions of the Real Property
or such other property on which any of the Loan Parties or any of their
Subsidiaries have previously engaged in mining.
          8.1.8 Keeping of Records and Books of Account.
               The Borrower shall, and shall cause each Subsidiary of the
Borrower to, maintain and keep proper books of record and account which enable
the Borrower and its Subsidiaries to issue financial statements in accordance
with GAAP and as otherwise required by applicable Laws of any Official Body
having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in
which full, true and correct entries shall be made in all material respects of
all its dealings and business and financial affairs.
          8.1.9 Plans and Benefit Arrangements.
               After the Closing Date, the Borrower shall, and shall cause each
other member of the ERISA Group to, comply with ERISA, the Internal Revenue Code
and other applicable Laws applicable to Plans and Benefit Arrangements except
where the failure to comply herewith, alone or together with all other such
failures, would not result in any substantial obligation to the Borrower or any
of its Subsidiaries or otherwise result in a Material Adverse Change. Without
limiting the generality of the foregoing, the Borrower shall cause all of its
Plans and all Plans maintained by any member of the ERISA Group to be funded in
accordance with at least the minimum funding requirements of ERISA and to be and
remain Adequately Funded, and shall make, and cause each member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit
Arrangements and Multiemployer Plans, except where any failure to do so, alone
or together with all other such failures, would not result in a substantial
obligation to the Borrower or any of its Subsidiaries or otherwise result in a
Material Adverse Change.
          8.1.10 Compliance with Laws.
               Each Loan Party shall, and shall cause each of its Subsidiaries
to, comply with all applicable Laws, including all Environmental Laws, in all
respects, provided that it shall not be deemed to be a violation of this
Section 8.1.10 if there occurs a failure to comply with any Law which would not,
either alone or together with all other such failures, constitute, or be
reasonably likely to result in a Material Adverse Change, including without
limitation, if such failure to comply would result in fines, penalties,
remediation costs, other similar liabilities or injunctive relief which in the
aggregate would not constitute a Material Adverse Change.
          8.1.11 Use of Proceeds.
               The Loan Parties will use the Letters of Credit and the proceeds
of the Loans only for (i) the refinancing of existing indebtedness, (ii) to
provide a one-time distribution of $10,000,000 to Westmoreland Coal Company and
(iii) general corporate purposes and for working capital. The Loan Parties shall
not use the Letters of Credit or the proceeds of the Loans for any purposes
which contravenes any applicable Law or any provision hereof.

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          8.1.12 Further Assurances.
               Each Loan Party shall, from time to time, at its expense,
faithfully preserve and protect the Agent’s Lien on and Prior Security Interest
in the Collateral, and any additional collateral granted to the Collateral Agent
as contemplated this Agreement, as a continuing (i) first priority perfected
Lien with respect to the Collateral now or hereafter granted, if any, and
(ii) junior priority perfected Lien with respect to the Note Purchase
Collateral, in each case subject only to Permitted Liens, and shall do such
other acts and things as the Agent in its sole discretion may deem necessary or
advisable from time to time in order to preserve, perfect and protect the Liens
granted under the Loan Documents and the rights and remedies of the Collateral
Agent and the Purchasers thereunder with respect to the Collateral, if any.
          8.1.13 Subordination of Intercompany Loans.
               Except as otherwise provided in the Intercompany Subordination
Agreement, each Loan Party agrees that any and all Indebtedness, loans or
advances now owed or hereafter incurred by any Loan Party to any other Loan
Party is subordinated to the prior payment in full of the Loans and that all
rights to receive any payments on such Indebtedness in bankruptcy or otherwise
shall constitute collateral security for the Loans and the Banks shall be
entitled to vote any and all rights associated with such Indebtedness.
          8.1.14 Compliance with Note Purchase Documents.
               The Loan Parties shall comply with each of the terms of the Note
Purchase Documents.
          8.1.15 Maintenance of Prior Security Interest.
               The Loan Parties shall cause the Collateral Agent for the benefit
of the Banks to have a first priority security interest in all of the Collateral
of each Loan Party, subject only to Permitted Liens and cooperate with the Banks
and perform all acts reasonably requested by the Banks to maintain and perfect
such first priority security interest subject only to Permitted Liens.
          8.1.16 Single Purpose Entities.
          (i) The Borrower will continue to be a duly formed and existing
limited liability company and a Single Purpose Entity. The Borrower will
continue to be, duly qualified as a limited liability company, in each
jurisdiction in which such qualification may be necessary for the conduct of its
business. Each Subsidiary of the Borrower at all times will continue to be duly
qualified as a limited liability company, partnership or corporation in each
jurisdiction in which such qualification is necessary for the conduct of its
business.
          (ii) The Borrower will continue to comply and each other Loan Party
will comply with the provisions of its Organizational Documents and the laws of
its jurisdiction of formation relating to limited liability companies (or other
business entities).
          (iii) All formalities regarding the existence of the Borrower as a
Single Purpose Entity will be observed and all formalities regarding the
existence of each other Loan Party will be observed.

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          (iv) The Borrower will accurately maintain, and each other Loan Party
will accurately maintain, its financial statements (provided, however, that the
Borrower and the Loan Party shall be permitted to prepare and deliver
consolidated financial statements), accounting records and limited liability
company documents, separate from those of any other Person. The Borrower and the
other Loan Parties, taken as a whole, will maintain separate books, records,
resolutions and agreements. The Borrower will, and each other Loan Party will,
continue to accurately maintain its own bank accounts, payroll and separate
books of account. Neither the Borrower nor any other Loan Party will commingle
its funds or assets with those of any other Person; provided, however, that the
Borrower and its Subsidiaries may maintain a centralized cash management system
pursuant to which the funds and financial assets of the Borrower and its
Subsidiaries are collected and aggregated to the extent (i) incident to the
conduct of the business of the Borrower and its Subsidiaries in the ordinary
course of business, as such business has been conducted prior to the date hereof
and (ii) not in contravention of the covenants and agreements of the Borrower
and the other Loan Parties set forth elsewhere in this Agreement and the other
Note Purchase Documents. Each Loan Party will in any event continue to at all
times hold its assets in its own name.
          (v) The Borrower and the other Loan Parties, taken as a whole, will
continue to pay, their own liabilities from their own separate assets.
          (vi) The Borrower will not engage in any business unrelated to acting
as the Borrower hereunder which is inconsistent with or in violation of this
Agreement.
          (vii) No Loan Party other than the Borrower will have any assets other
than those related to coal mining operations. The Borrower will not have any
assets other than those related to coal mining operations and its interests in
the Subsidiaries. The Borrower and each other Loan Party will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger (other than as contemplated in this Agreement), asset sale (other than as
contemplated in this Agreement), transfer of membership interest of the Borrower
or transfer partnership interest, membership interest or stock of a Loan Party,
or amendment of the Organizational Documents of the Borrower or any other Loan
Party (other than as expressly permitted by this Agreement).
          (viii) Parent shall remain the sole economic member of the Borrower.
          (ix) The Borrower, without the unanimous consent of all holders of all
limited liability company membership interests in the Borrower and all members
of the board of managers of the Borrower including the Independent Manager,
shall not file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which it
has a direct or indirect legal or beneficial ownership interest, dissolve,
liquidate, consolidate, merge, or sell all or substantially all of its assets or
any other entity in which it has a direct or indirect legal or beneficial
ownership interest, engage in any other business activity, or amend its
Organizational Documents
          (x) No Loan Party other than the Borrower, without the unanimous
consent of all directors (including at least one Independent Director) of such
Loan Party, shall file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings with respect to itself or to any other entity
in which it has a direct or indirect legal or beneficial ownership interest,
dissolve, liquidate, consolidate, merge, or sell all or substantially all of its
assets or any

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other entity in which it has a direct or indirect legal or beneficial ownership
interest, engage in any business activity other than its mining-related
business, or amend its Organizational Documents.
          (xi) The Borrower and each other Loan Party will identify itself, in
all dealings with the public, under the Borrower’s or such other Loan Party’s
own name and as a separate and distinct entity other than in connection with any
other Loan Party. The Borrower and each other Loan Party will not identify
itself, as being a division of any member of the Parent Group. The Borrower and
each of the other Loan Parties will not identify, any member of the Parent Group
as being a division of the Borrower or such other Loan Party. The Borrower and
each other Loan Party will not fail to correct any known misunderstanding
regarding the separate identity of such entity. The Borrower and each other Loan
Party will conduct its business in its own name.
          (xii) The Borrower and the Loan Parties, taken as a whole, will
continue to be adequately capitalized in light of the nature of their business.
          (xiii) Except as expressly permitted by Section 8.2.1 [Indebtedness]
and 8.2.3 [Guaranties], neither the Borrower nor any other Loan Party will
assume or guarantee, the liabilities of any other Persons, except Guaranties of
the Indebtedness hereunder and under the Note Purchase Agreement. Neither the
Borrower nor any other Loan Party will acquire obligations or securities of any
other Persons except the obligations and/or securities of (a) any Subsidiary of
the Borrower or (b) any entity merged with the Borrower or any Subsidiary of the
Borrower. Except as expressly permitted by Section 8.2.4 [Loans and
Investments], neither the Borrower nor any other Loan Party will make, loans or
advances to any Person. The Borrower will not pledge its assets for the benefit
of any other Person or entity, except (i) in favor of the Collateral Agent for
the benefit of the Banks and the Purchasers and (ii) Permitted Liens.
          (xiv) Except as contemplated by the Management Agreement and as
expressly permitted by Section 8.2.8 [Affiliate Transactions], neither the
Borrower nor any other Loan Party will enter into or be a party to any other
transaction with any member of the Parent Group.
          (xv) Except as expressly permitted by Sections 8.2.1 [Indebtedness]
and 8.2.3 [Guaranties], the Borrower will not incur any Indebtedness other than
the Indebtedness to the Agent and the Banks under the Loan Documents and to the
Purchasers under the Note Purchase Documents.
          (xvi) The Borrower will and each other Loan Party will allocate fairly
and reasonably any overhead for shared office space and use separate stationery,
invoices and checks.
          (xvii) The Borrower and each other Loan Party will act and refrain
from acting in such a way that each of the “assumptions of fact” made in the
non-consolidation opinion of Wilmer, Cutler, Pickering, Hale and Dorr LLP of
even date herewith will continue to be true and correct in all material
respects.
          (xviii) The Borrower and each of its Subsidiaries will continue to be
have their respective day to day operations managed principally by a President
or a comparable officer who is not employed by, does not hold any position with
and does not provide any services to the Parent Group, and the Borrower’s and
each of its Subsidiaries’ day to day human resources

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decisions will continue to be made by an officer or employee who is not employed
by, does not hold any position with, and does not provide any services to the
Parent Group.
          8.1.17 Maintenance of Permits.
          The Borrower and the Guarantors shall maintain all Required Mining
Permits in full force and effect in accordance with their terms.
          8.1.18 Debt Service Reserve Account.
          In order to provide additional collateral security for the payment and
performance of the Obligations, the Borrower shall (i) establish with the Note
Purchase Collateral Agent, not later than the Closing Date, and at all times
thereafter cause the Note Purchase Collateral Agent to maintain, the Debt
Service Reserve Account for the benefit of the holders from time to time of the
Term Notes and (ii) from time to time deposit or cause to be deposited to the
credit of the Debt Service Reserve Account, in accordance with this Section,
cash and investments of the type described in paragraphs (i) through (v) of the
definition of the term “Permitted Investments”, (valued as provided in the
Collateral Agency Agreement) in amounts sufficient to assure that the aggregate
amount credited thereto (inclusive of the undrawn face amount of any Debt
Service Letter of Credit then held by the Note Purchase Collateral Agent for
credit to the Debt Service Reserve Account) shall at all times be at least equal
to the Debt Service Reserve Requirement as the same may change from time to
time. For purposes hereof, the “Debt Service Reserve Requirement” shall mean, as
of any Payment Date, the sum of:
               (A) scheduled payments and prepayments on the Term Notes to
become due during the period of six months next following such Payment Date;
               (B) scheduled payments of interest on the Term Notes to become
due during such period of six months; and
               (C) fees and expenses of the Note Purchase Collateral Agent then
payable or anticipated to be payable during such period of six months.
          So long as no Event of Default shall have occurred and be continuing,
the Borrower shall be entitled to deliver or cause to be delivered to the Note
Purchase Collateral Agent, in full or partial satisfaction of the Borrower’s
obligation to fund the Debt Service Reserve Account, an irrevocable,
transferable, unconditional standby letter of credit which shall be reasonably
satisfactory in form and substance to the Required Holders (as defined in the
Note Purchase Agreement), name the Note Purchase Collateral Agent as
beneficiary, and satisfy the further conditions with respect thereto set forth
in the next following sentence (each such letter of credit, a “Debt Service
Letter of Credit”). Each Debt Service Letter of Credit shall (w) be issued by a
financial institution reasonably satisfactory to the Required Holders and having
combined capital and surplus of not less than $500,000,000 and a long-term debt
rating of ‘A2’ or better from Moody’s or ‘A’ or better from S&P (an “Eligible
Issuer”) for the account of a Person (which may be Parent or another member of
the Parent Group) other than the Borrower or any of its Subsidiaries (it being
understood that neither the Borrower nor any of its Subsidiaries shall be an
account party or be or become directly or indirectly liable to the issuer
thereof for any reimbursement obligation in respect of any Debt Service Reserve
Letter of Credit); (x) be in a face amount equal to that portion of the amount
of cash and Permitted Investments required to be

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maintained in the Debt Service Account for which it is to be substituted;
(y) have a term of at least 364 days; and (z) be subject to a drawing in full by
the Note Purchase Collateral Agent (1) if, at least ninety days prior to its
stated expiration, it is not replaced with a further Debt Service Letter of
Credit delivered to the Note Purchase Collateral Agent in a face amount, or by
cash or Permitted Investments deposited to the credit of the Debt Service
Reserve Account in an aggregate amount, sufficient to assure that the aggregate
amount deposited in or credited to the Debt Service Reserve Account shall be at
least equal to the Debt Service Reserve Requirement as at the time of such
replacement, (2) upon the occurrence of an Event of Default, and (3) if on any
date the Note Purchase Collateral Agent receives notice from the Borrower or any
holder of the Term Notes that the issuer of such Debt Service Letter of Credit
is not or has ceased to be an Eligible Issuer.
          The proceeds from any drawing under a Debt Service Letter of Credit
shall be deposited into the Debt Service Reserve Account and be held and applied
by the Note Purchase Collateral Agent in accordance with the applicable
provisions of the Note Purchase Agreement and the Note Purchase Collateral
Agency Agreement. Upon the written request of the Borrower furnished to the Note
Purchase Collateral Agent (with a copy to the Agent), the Note Purchase
Collateral Agent shall return any Debt Service Letter of Credit to the named
account party thereof if, after giving effect to such return, (x) the cash and
Permitted Investments remaining on deposit to the credit of the Debt Service
Reserve Account would be at least equal to the Debt Service Reserve Requirement
and (y) no Event of Default shall have occurred and be continuing, and (z) such
request shall be accompanied by an Officer’s Certificate to the effects set
forth in clauses (x) and (y) of this sentence (upon which Officer’s Certificate
the Note Purchase Collateral Agent shall be conclusively entitled to rely).
Amounts, if any, credited to the Debt Service Reserve Account in excess of the
Debt Service Reserve Requirement applicable from time to time may be withdrawn
therefrom upon the request of the Borrower in the manner and subject to the
conditions specified in Section 3.5 of the Note Purchase Collateral Agency
Agreement.
          8.1.19 Retained Cash.
          The Borrower will use and apply Retained Cash only in connection with
the ordinary conduct of the business of the Borrower, as such business is
permitted to be conducted in accordance with the terms of this Agreement,
including for use as working capital, the payment of budgeted Capital
Expenditures, and other purposes incident to the conduct of such business;
provided, however, that Retained Cash shall not in any event be applied to the
making of distributions or dividends to Parent or any other member of the Parent
Group or to pay Management Fees to the Parent.
          8.1.20 Subordination of Management Fees; Payment of Management Fees.
          The Borrower shall cause any fees or charges, of whatever nature,
payable by the Loan Parties to any member of the Parent Group, including without
limitation, the Non-Cash Income Tax Expense and all fees and charges in
connection with the management of the operations of the Borrower, to be
subordinated to the payment of the Notes and other Obligations, with the
subordination in the case of payments to the Parent to be pursuant to the
Management Fee Subordination Agreement and the subordination in the case of
payments to any other Affiliate of the Borrower to be on terms satisfactory to,
and set forth in writing approved by, the Required Banks. The Loan Parties agree
that the payment of any fees or charges to the

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Parent or any other member of the Parent Group, all of which are subordinated in
accordance with the preceding sentence, may be made by the Loan Parties only if
such payments are in accordance with the following: (i) prior to and after
giving effect to the payment thereof, no Event of Default or Potential Default
is in existence; (ii) the payments consist solely of the Management Fee, plus
Third Party Services Payments; and (iii) such payments shall be otherwise
permitted by and in accordance with the Management Fee Subordination Agreement;
provided that, notwithstanding anything contained in this Subsection or the
Management Fee Subordination Agreement to the contrary, in the event that the
Borrower is permitted to make a dividend or distribution in accordance with
Section 8.2.5 [Dividends and Related Distributions], the Borrower shall be
permitted, in lieu of making such permitted distribution or dividend, to apply
the amount available for such permitted dividend or distribution to reduce the
payable arising from the Non-Cash Income Tax Expense.
          8.1.21 Maintenance of Coal Supply Contracts, Coal Leases.
          Except for Permitted Modifications, the Borrower and each Guarantor
shall maintain and be in compliance at all times with the Coal Supply Contracts
and the Coal Leases which are in effect from time to time and shall (i) perform
all of its obligations under the Coal Supply Contracts and the Coal Leases and
enforce the performance by the other parties thereto of all of their obligations
under the Coal Supply Contracts and Coal Leases and under any other document or
agreement related thereto and (ii) not terminate, amend, or modify, or waive
compliance with the terms and conditions of, any of the Coal Supply Contracts or
Coal Leases. All Permitted Modifications shall be disclosed in writing to the
Banks promptly upon the occurrence thereof.
          8.1.22 Collateral and Additional Collateral, Etc.
          (i) Pursuant to the Loan Documents, the Borrower and the Guarantors
shall grant, or cause to be granted, to the Agent, for the benefit of the Banks,
a first priority security interest in and Lien on, subject only to Permitted
Liens, (1) all Collateral, (2)  all equity interests of the Loan Parties, and
(3) all other assets of the Borrower and the Guarantors or any Subsidiary of any
the Borrower or the Guarantors (other than TWCC), whether owned on the Closing
Date or subsequently acquired except those assets subject to capitalized leases
or Purchase Money Security Interests.
          (ii) Without limiting the generality of clause (i) of this
Section 8.1.22 [Additional Collateral], with respect to any Property acquired
after the Closing Date by the Borrower, any other Guarantor or any of their
Subsidiaries (other than TWCC) as to which the Agent, for the benefit of the
Banks, does not have a perfected Lien, promptly and, in any event, within five
(5) Business Days of the acquisition thereof, the Borrower, such Guarantor or
such Subsidiary, as applicable, shall, at its expense: (1) execute and deliver
to the Agent such Security Documents or such amendments to such Security
Documents as the Agent deems necessary or advisable to grant to the Agent, for
the benefit of the Banks, a first priority Lien in such Property, subject only
to Permitted Liens, (2) take all actions necessary or advisable to grant to the
Agent, for the benefit of the Lenders, a perfected first priority Lien and
security interest on such Property (subject only to Permitted Liens), including
the filing of Mortgages and Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Security Documents or by Law or as may
be requested by the Agent and (3) deliver to the Agent such legal opinions
relating to the matters described in clauses (1) and (2) immediately above,

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which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
          Without limiting the generality of clause (i) of this Section (i),
with respect to any new Subsidiary created or acquired after the Closing Date by
the Borrower, any Guarantor or any of their Subsidiaries (other than TWCC),
concurrently with such creation or acquisition, the Borrower, such Guarantor
and/or such Subsidiary, as applicable, shall: (1) execute and deliver to the
Agent such amendments to the Security Documents as the Agent deems necessary or
advisable to grant to the Agent, for the benefit of the Banks, a perfected first
priority Lien in the stock or other ownership interests in such new Subsidiary,
(2) deliver to the Agent: (A) the certificates (if any) representing such stock
or other ownership interests, together with undated powers, in blank, executed
and delivered by a duly authorized officer of the Borrower, any Guarantor or
such Subsidiary, as the case may be, and (B) in the case of a Subsidiary whose
stock or other ownership interests is a security that is not evidenced by a
certificate, an Acknowledgment and Consent, substantially in the form of Annex I
to the applicable Pledge Agreement, duly executed by any issuer of such stock or
other ownership interests pledged pursuant to such Pledge Agreement, (3) cause
such new Subsidiary: (A) to become a party to the applicable Security Documents
and (B) to take such actions necessary or advisable to grant to the Agent for
the benefit of the Banks a perfected first priority Lien on the Collateral
described in the applicable Pledge Agreement and applicable Security Agreement
and pursuant to a duly executed Mortgage, such Lien on all Properties of such
new Subsidiary, subject in each case to Permitted Liens, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the applicable Pledge Agreement and applicable Security Agreement,
the filing of any Mortgages in appropriate filing offices and other filings
required by Law or as may be requested by the Agent, and (4) if requested by the
Agent, deliver to the Agent such legal opinions, relating to the matters
described above as the Agent may request, which opinions shall be in form and
substance, and from counsel, satisfactory to the Agent.
          8.1.23 Payment of Indebtedness.
          The Borrower will (i) pay or cause to be paid the principal of and
interest on all Indebtedness at any time incurred or assumed by it when and as
the same shall become due and payable (subject to any subordination provisions
governing such Indebtedness), and (ii) in all material respects perform, observe
and comply with to the extent necessary to assure that no event described in
clause (ii), (iii) or (iv) of Section 9.1.5 shall occur with respect to such
Indebtedness all covenants, conditions and obligations imposed on it pursuant to
all agreements and instruments securing or evidencing such Indebtedness or
pursuant to which such Indebtedness is issued; provided, however, that the
Borrower shall not be required by reason of this Section to make any payment or
take any other action with respect to any Indebtedness (other than the
Indebtedness evidenced by the Notes or otherwise included in the Obligations) at
any time it shall be contesting in good faith by appropriate proceedings its
obligation to do so, if it shall have set aside on its books reserves deemed by
it to be adequate with respect thereto.
     8.2 Negative Covenants.
          The Borrower and the Guarantors, jointly and severally, covenant and
agree that until payment in full of the Loans, Reimbursement Obligations and
Letter of Credit Borrowings and interest thereon, expiration or termination of
all Letters of Credit, satisfaction of all of the

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Loan Parties’ other Obligations hereunder and termination of the Commitments,
the Loan Parties shall comply with the following negative covenants:
          8.2.1 Indebtedness.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Indebtedness, except:
          (i) Indebtedness under the Loan Documents;
          (ii) Indebtedness evidenced by the Term Notes issued pursuant to the
Note Purchase Agreement, provided that the maximum principal amount of loans and
extensions of credit provided therein shall not be increased from the amount
contemplated by the Note Purchase Agreement dated the Closing Date;
          (iii) Existing Indebtedness as set forth on Schedule 8.2.1 (including
any extensions or renewals thereof but excluding items of Indebtedness which are
described on such Schedule as being repaid on the Closing Date), provided there
is no increase in the amount thereof or other significant change in the terms
thereof unless otherwise specified on Schedule 8.2.1;
          (iv) Indebtedness of the Loan Parties (a) secured by Purchase Money
Security Interests or (b) consisting of capital leases, provided that the
maximum amount of Indebtedness under this subclause (iv) shall not exceed at one
time outstanding the aggregate principal amount of $25,000,000 through the
period ending December 31, 2012; $30,000,000 through the period ending
December 31, 2014; and $35,000,000 thereafter;
          (v) Indebtedness of any Subsidiary wholly-owned by the Borrower to the
Borrower or to any other Subsidiary (other than TWCC) which is wholly owned by
the Borrower, and Indebtedness of the Borrower to any Subsidiary (other than
TWCC) of the Borrower; provided, however, that TWCC shall not at any time be
permitted pursuant to this Section 8.2.1(v) to incur or permit to remain
outstanding any Indebtedness of TWCC to the Borrower or any Subsidiary of the
Borrower unless, at the time of the incurrence of such Indebtedness, the
Borrower or TWCC, as the case may be, shall be permitted pursuant to
Section 8.2.4 [Loans and Investments] to make the loan, advance or other
investment in TWCC represented by such Indebtedness;
          (vi) Guaranties by the Borrower or any Subsidiary of the Borrower
permitted pursuant to Section 8.2.3 [Guaranties] hereof;
          (vii) Indebtedness secured by Permitted Liens;
          (viii) Indebtedness with respect to deposits or reclamation or other
bonds incurred in the ordinary course; and
          (ix) Indebtedness of any Loan Party consisting of Swap Obligations
requiring payments by such Loan Party contingent upon interest rates, commodity
rates or indices, incurred by such Loan Party in the ordinary course of business
for the purpose of mitigating risks associated with liabilities of such Loan
Party and not in any event for purposes of speculation or

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taking a “market view”; provided, that the Indebtedness permitted by this
Section 8.2.1(ix) shall not exceed $1,500,000 at any one time outstanding.
          8.2.2 Liens.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, at any time create, incur, assume or suffer to exist any
Lien on any of its property or assets, tangible or intangible, now owned or
hereafter acquired, or agree or become liable to do so, except Permitted Liens.
          8.2.3 Guaranties.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, at any time, directly or indirectly, become or be liable in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise be or agree to become or remain directly or contingently liable upon
or with respect to, any obligation or liability of any other Person, except for
(a) Guaranties of Indebtedness of the Loan Parties permitted hereunder,
including Guaranties by the Guarantors of Indebtedness arising under the Note
Purchase Documents and (b) Guaranties by the Borrower existing on the Closing
Date of operating lease obligations of TWCC described on Schedule 8.2.3;
provided, that, except for the Guaranties by the Borrower referred to in clause
(b) of this Section 8.2.3, neither the Borrower nor any other Loan Party (other
than TWCC) shall guaranty, assume or otherwise be or become liable for any
Indebtedness or other obligations of TWCC; but provided further, that nothing in
this Section 8.2.3 shall prevent the Borrower from making the pledge by it of
the Subsidiary Shares of TWCC included in the NRGT Liens.
          8.2.4 Loans and Investments.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, at any time make or suffer to remain outstanding any loan
or advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain liable
to do any of the foregoing, except:
          (i) trade credit extended on usual and customary terms in the ordinary
course of such Loan Party’s or such Subsidiary’s business;
          (ii) advances to employees to meet expenses incurred by such employees
in the ordinary course of business;
          (iii) Permitted Investments;
          (iv) loans, advances and investments in or to other Loan Parties
(other than TWCC);
          (v) an advance of $1,500,000 to TWCC on the Closing Date, provided
that NRGT shall be obligated to reimburse such amount to TWCC within 100 days of
the Closing Date pursuant to the NRGT Documents, subject to the terms and
conditions of the NRGT Documents (the “NRGT Reimbursement”); and

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          (vi) loans and advances by the Borrower to TWCC in addition to the
advance permitted by Section 8.2.4(v); provided that the amount of such loans
and advances which may at any time be made by the Borrower pursuant to this
Section 8.2.4(vi) shall not cause the aggregate amount of all such loans and
advances outstanding to exceed $3,000,000.
          8.2.5 Dividends and Related Distributions.
                    (a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, make or pay, or agree to become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account or in respect of its shares of
capital stock, partnership interests or limited liability company interests or
on account of the purchase, redemption, retirement or acquisition of its shares
of capital stock, partnership interests or limited liability company interests
(or warrants, options or rights therefor) or make any Management Fee payment,
except that:
               (i) so long as (A) no Potential Default or Event of Default is in
existence or would result therefrom and (B) the amount at the time credited to
the Debt Service Reserve Account shall be at least equal to the Debt Service
Reserve Requirement at such time the Borrower may (1) on the Closing Date, make
a distribution of $8,500,000 to Parent from the proceeds of the sale of the Term
Notes, (2) upon receipt by the Borrower of the NRGT Reimbursement in an amount
equal to or greater than $1,500,000, make a distribution of $1,500,000 to Parent
and (3) during the period of 15 Business Days next following each Payment Date,
make a distribution to Parent and make the Management Fee payment payable in
respect of the quarterly fiscal period ended on or closest to such Payment Date
(including accrued Management Fee payments, if any, for prior fiscal quarterly
periods which remain unpaid), in an amount not exceeding, in the aggregate for
such distribution and Management Fee payment (including accrued Management Fee
payments for prior periods), Excess Cash Flow as of such Payment Date; provided,
that the amount of Excess Cash Flow as of each Payment Date, and the amount so
distributable pursuant to this sub-clause (2) on the basis of the computation of
such Excess Cash Flow, shall be subject to adjustment pursuant to
Section 8.2.5(b); and
               (ii) any Subsidiary of the Borrower may make dividends and
distributions to the Borrower or to any other Subsidiary in respect of Equity
Interests of such Subsidiary owned by the Borrower or such other Subsidiary, as
the case may be.
The Borrower shall not and shall not permit any of its Subsidiaries to enter
into any contract or agreement which restricts in any manner the payment by any
Subsidiary of the Borrower of dividends or distributions to the Borrower or any
other Subsidiary which shall own Equity Interests of such Subsidiary; provided,
however, that the Borrower and TWCC may enter into the NRGT Documents,
notwithstanding the potential restrictive effects thereof on the payment of
dividends and distributions by TWCC.
                    (b) The distributions and Management Fee payments made by
the Borrower to the Parent pursuant to sub-clause (i)(2) of Section 8.2.5(a)
from Excess Cash Flow as of each Payment Date in any fiscal year shall be
subject to adjustment in accordance with the further provisions of this
Section 8.2.5(b). Following the completion of each fiscal year of the Borrower,
the amount of Excess Cash Flow as of each Payment Date in such fiscal year shall
be recalculated based upon the annual audited financial statements of the Loan
Parties for such fiscal year. For this purpose, Available Cash and Excess Cash
Flow as of

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each such Payment Date shall be recomputed in accordance with the definitions of
“Available Cash” and “Excess Cash Flow” set forth in Schedule B of the Note
Purchase Agreement, in each case using the actual numbers for the applicable
quarterly period derived from such audited financial statements. Based on such
recomputations, as promptly as practicable, but in any event not later than
contemporaneously with the Borrower’s delivery to the Banks of its audited
financial statements for such fiscal year pursuant to Section 8.3.3 [Annual
Financial Statements], the Borrower shall furnish to each such holder an
Officer’s Certificate (which may be combined with the Officer’s Certificate
required to be delivered for such fiscal year pursuant to Section 8.3.4
[Certificate of the Borrower]), (i) showing all such recomputations in respect
of each fiscal quarter in such fiscal year and demonstrating the manner in which
the same were made, and (ii) setting forth the amount of each adjustment
required in accordance with this Section 8.2.5(b) by reason of such
recomputations in the amount of any distribution or Management Fee payment made
in such fiscal year. All such adjustments based on audited financial information
shall be made as follows:
               (i) in the event that the audited financial information
demonstrates that Parent received monies in excess of that which it should have
received for such annual fiscal period, the Borrower shall cause an amount equal
to such excess monies to be paid by Parent to the Borrower; provided, however,
that if Parent shall not have paid the amount of any such excess monies to the
Borrower in full, the amount of such excess monies (or the portion thereof not
so paid) shall be deducted from the amounts which would otherwise be available
for distribution to Parent pursuant to this Section 8.2.5 in succeeding fiscal
quarters until the full amount of such unpaid excess monies shall have been so
deducted; and
               (ii) in the event that the audited financial information
demonstrates that the Borrower should have been permitted to make distributions
or Management Fee payments exceeding the amounts thereof actually distributed
and paid in such fiscal year (the amount of any such excess, the “Underpaid
Amount”), then so long as (x) no Potential Default or Event of Default is in
existence or would result therefrom and (y) the amount at the time credited to
the Debt Service Reserve Account shall be at least equal to the Debt Service
Reserve Requirement at such time, the Borrower may make a further distribution
to Parent and/or make a payment in respect of Management Fees, in an amount not
exceeding, in the aggregate for such further distribution and payment in respect
of Management Fees, the Underpaid Amount.
All recomputations and adjustments pursuant to this Section 8.2.5(b) in respect
of any fiscal year shall be made within ten Business Days of the Borrower’s
delivery to the Banks of the audited financial statements for such fiscal year.
          8.2.6 Liquidations, Mergers, Consolidations, Acquisitions.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a
party to any merger or consolidation, or acquire by purchase, lease or otherwise
all or substantially all of the assets or capital stock of any other Person
without the prior written consent of the Agent, provided that any Loan Party may
consolidate or merge with any other Person or convey, transfer or lease all or
substantially all of its assets in a single transaction or a series of
transactions to any Person if:
                    (a) the successor formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance, transfer or
lease all or

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substantially all of the assets of such Loan Party as an entirety, as the case
may be, shall be a solvent corporation or limited liability company organized
and existing under the laws of the United States or any State thereof (including
the District of Columbia), and, if such Loan Party is not such a corporation or
limited liability company, (i) such corporation or limited liability company
shall have executed and delivered to Agent, an agreement, reasonably
satisfactory in form and substance to the Agent, providing for its assumption of
the due and punctual performance and observance of each covenant and condition
of the Loan Documents to which such Loan Party is a party and (ii) such
corporation or limited liability company shall have caused to be delivered to
Agent an opinion of nationally recognized independent counsel, or other
independent counsel reasonably satisfactory to the Banks, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof , and covering such
other matters relating to such corporation or limited liability company and such
assumption as the Banks may reasonably request;
                    (b) if such consolidation, merger, conveyance, transfer or
lease shall constitute or result in a Prepayment Event, the Borrower shall have
complied with Section 5.5 [Mandatory Prepayment] in respect thereof and shall
have prepaid the Loans and;
                    (c) immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have occurred and be
continuing.
No such conveyance, transfer or lease of substantially all of the assets of a
Loan Party shall have the effect of releasing such Loan Party or any successor
corporation or limited liability company that shall theretofore have become such
in the manner prescribed in this Section from its liability under the Loan
Documents.
          8.2.7 Dispositions of Assets or Subsidiaries.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer
or dispose of, voluntarily or involuntarily, any of its properties or assets,
tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares of beneficial
interest, partnership interests or limited liability company interests of a
Subsidiary of such Loan Party), except:
          (i) transactions involving the sale of inventory in the ordinary
course of business;
          (ii) any sale, transfer or lease of assets in the ordinary course of
business which are not necessary or required in the conduct of such Loan Party’s
or such Subsidiary’s business and so long as such assets do not comprise more
than 5% in any calendar year of the assets of the Borrower and its Subsidiaries
taken as a whole;
          (iii) any sale, transfer or lease of assets by any Loan Party or
Subsidiary of such Loan Party to another Loan Party (other than TWCC);
          (iv) transactions permitted pursuant to Section 8.2.6 [Liquidations,
Mergers, etc.];

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          (v) any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired or leased within the
parameters of Section 8.2.16 [Capital Expenditures and Leases], provided such
substitute assets are subject to the Banks’ Prior Security Interest;
          (vi) participation by TWCC in the 8750 Parts Pool and Participation by
the Borrower or any of its Subsidiaries in any other Approved Parts Pool
Program; or
          (vii) any sale, transfer or lease of assets, other than those
specifically permitted pursuant to clauses (i) through (vi) above, which is
approved by the Required Banks if such assets are not subject to a first
priority Lien in favor of the Purchasers.
          8.2.8 Affiliate Transactions.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, enter into or carry out any transaction with an Affiliate
of any Loan Party (including purchasing property or services from or selling
property or services to any Affiliate of any Loan Party or other Person) without
the prior written consent of the Required Banks, unless such transaction (i) is
not otherwise prohibited by this Agreement, (ii) constitutes a Permitted
Affiliate Transaction, and (iii) is in accordance with all applicable Law.
          8.2.9 Subsidiaries, Partnerships and Joint Ventures.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, own or create directly or indirectly any Subsidiaries other
than (a) any Subsidiary of the Borrower which is a party to this Agreement on
the Closing Date as a Guarantor; (b) TWCC (which may continue to be a Subsidiary
of the Borrower); and (c) any Subsidiary (other than a Subsidiary of TWCC)
formed after the Closing Date which shall have become a party to this Agreement
as a Guarantor pursuant to a Guarantor Joinder Agreement, provided that the
Required Banks shall have consented to such formation and joinder and such
Subsidiary and the Loan Parties, as applicable, shall have granted and caused to
be perfected first priority Liens in favor of the Collateral Agent for the
benefit of the Banks in the assets held by, and stock of or other ownership
interests in, such Subsidiary, and otherwise complied with the provisions of
Section 11.18 [Governing Law] with respect to such Subsidiary. No Loan Party
shall become or agree to become (i) a general or limited partner in any general
or limited partnership, except that the Loan Parties may be general or limited
partners in other Loan Parties, (ii) a member or manager of, or hold a limited
liability company interest in, a limited liability company, except that the Loan
Parties may be members or managers of, or hold limited liability company
interests in, other Loan Parties, or (iii) a joint venturer or hold a joint
venture interest in any joint venture.
          8.2.10 Continuation of or Change in Business.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, engage in any material business other than its business of
owning and operating coal mine facilities associated with the Coal Reserves (as
the same may be extended or expanded or changes from time to time).
          8.2.11 Plans and Benefit Arrangements.

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     Each of the Loan Parties shall not, and shall not permit any of its
Subsidiaries to, do any of the following if the same could reasonably be
expected to result in any substantial obligation to the Borrower or any of its
Subsidiaries or otherwise result in a Material Adverse Change:
          (i) fail to satisfy the minimum funding requirements of ERISA and the
Internal Revenue Code with respect to any Plan;
          (ii) request a minimum funding waiver from the Internal Revenue
Service with respect to any Plan;
          (iii) engage in a Prohibited Transaction with any Plan, Benefit
Arrangement or Multiemployer Plan;
          (iv) permit any Plan to be less than Adequately Funded;
          (v) fail to make when due any contribution to any Multiemployer Plan
that the Borrower or any member of the ERISA Group may be required to make under
any agreement relating to such Multiemployer Plan, or any Law pertaining
thereto;
          (vi) withdraw (completely or partially) from any Multiemployer Plan or
withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any
Multiple Employer Plan;
          (vii) terminate, or institute proceedings to terminate, any Plan;
          (viii) make any amendment to any Plan with respect to which security
is required under Section 307 of ERISA; or
          (ix) fail to give any and all notices and make all disclosures and
governmental filings required under ERISA or the Internal Revenue Code.
          8.2.12 Fiscal Year.
               The Borrower shall not, and shall not permit any Subsidiary of
the Borrower to, change its fiscal year from the twelve-month period beginning
January 1 and ending December 31.
          8.2.13 Issuance of Stock.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, issue any additional shares of its capital stock, shares of
beneficial interest, partnership interests, limited liability company interests
or similar ownership interests, or any options, warrants or other rights in
respect thereof.
          8.2.14 Changes in Organizational Documents.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, amend in any respect its Organizational Documents
(including any provisions or resolutions relating to capital stock or other
equity interest), without providing at least twenty 20 calendar days’ prior
written notice to the Agent and the Banks and, in the event such change

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would be material and adverse to the Banks as determined by the Agent in its
sole discretion, obtaining the prior written consent of the Banks.
          8.2.15 Changes in Material Contracts, Performance under Coal Supply
Contracts.
               Each of the Loan Parties shall not, and shall not permit any of
its Subsidiaries to, materially amend (except for Permitted Modifications),
cancel, terminate, waive or give any consent to any material violation of or
release any party from its obligations under any of the Coal Supply Contracts or
any of the other material contracts to which it is a party. Each of the Loan
Parties shall supply coal under its respective Coal Supply Contracts solely with
coal mined from the Obligors’ coal mines and shall not purchase coal or permit
any other Person to supply coal under or service its Coal Supply Contracts,
except for (i) Permitted Affiliate Transactions, (ii) the procurement of coal at
the request of a buyer in accordance with the explicit provisions of the Coal
Supply Contract for Colstrip 3 & 4 and (iii) for the procurement of coal by a
Loan Party if (a) the price paid for such substitute coal is less than the cost
that would otherwise be incurred by such Loan Party’s mine in supplying such
coal, (b) such Loan Party is permitted to deliver such substitute coal under a
Coal Supply Contract for its mines and (c) the substitute coal provides a
benefit to such Loan Party’s mine (for example, by providing a higher quality
coal to blend with such Loan Party’s mine coal) thereby enhancing the customer
plant’s operations and overall fuel blend.
          8.2.16 Capital Expenditures and Leases.
               No Loan Party shall make, or permit any of its Subsidiaries to
make, any Capital Expenditures in any fiscal year, other than Capital
Expenditures made (i) in the ordinary course of business and on terms (whether
of purchase or lease) which are usual and customary and (ii) in amounts which,
when taken together with all other Capital Expenditures made by the Loan Parties
and their Subsidiaries in such fiscal year, shall not exceed in the aggregate
the amount set forth for such fiscal year on Schedule 8.2.16; provided, that if
the amount set forth on Schedule 8.2.16 for any fiscal year shall exceed the
aggregate amount of Capital Expenditures made by the Loan Parties and their
Subsidiaries in such fiscal year, the amount of such excess may be carried
forward and utilized for Capital Expenditures in subsequent fiscal years.
          8.2.17 Minimum Debt Service Coverage Ratio.
               The Loan Parties shall not permit the Debt Service Coverage Ratio
to be less than 1.30 to 1.00, calculated as of the end of each fiscal quarter
after the Closing Date based upon the immediately preceding four fiscal
quarters.
          8.2.18 Maximum Leverage Ratio.
               The Loan Parties shall not permit the ratio of Consolidated Net
Indebtedness of the Borrower and its Subsidiaries to Consolidated EBITDA to
exceed the ratio set forth below for such period, calculated as of the end of
each fiscal quarter during each such period based upon the immediately preceding
four fiscal quarters:

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Period
  Ratio
Closing Date through June 30, 2010
  3.00 to 1.00
July 1, 2010 through December 31, 2010
  2.75 to 1.00
January 1, 2011 through December 31, 2011
  2.50 to 1.00
January 1, 2012 through December 31, 2012
  2.25 to 1.00
January 1, 2013 and thereafter
  1.50 to 1.00

     8.3 Reporting Requirements.
          The Loan Parties, jointly and severally, covenant and agree that until
payment in full of the Loans, Reimbursement Obligations and Letter of Credit
Borrowings and interest thereon, expiration or termination of all Letters of
Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and
under the other Loan Documents and termination of the Commitments, the Loan
Parties will furnish or cause to be furnished to the Agent and each of the
Banks:
          8.3.1 Monthly Financial Statements, Borrowing Base Certificate.
               As soon as available and in any event within thirty (30) calendar
days after the end of each calendar month, the Borrower’s financial statements,
consisting of a consolidated and consolidating balance sheet as of the end of
such month and related consolidated and consolidating statements of income,
member’s equity and cash flows for the month then ended and the fiscal year
through that date, all in reasonable detail and certified (subject to normal
year-end adjustments) by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower as having been prepared in accordance with
GAAP (provided that the failure to provide footnotes shall not be violative of
this Section), consistently applied, and setting forth in comparative form on a
consolidated basis the respective financial statements for the corresponding
date and period in the previous fiscal year. Within twenty (20) calendar days
after the end of each month, a Borrowing Base Certificate as of the end of the
immediately preceding month in the form of Exhibit 8.3.1 hereto, appropriately
completed, executed and delivered by an Authorized Officer.
          8.3.2 Quarterly Financial Statements.
               As soon as available and in any event within fifty (50) calendar
days after the end of each of the first three fiscal quarters in each fiscal
year of the Borrower, financial statements of the Borrower, consisting of a
consolidated and consolidating balance sheet as of the end of such fiscal
quarter and related consolidated and consolidating statements of income, changes
in member’s equity and cash flows for the fiscal quarter and the portion of the
fiscal year ending with such quarter, setting forth in each case in comparative
form the figures for the corresponding date and period in the previous fiscal
year, all in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally (provided that the failure to provide
footnotes shall not be violative of this Section), and certified by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower as
fairly presenting, in

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all material respects, the financial position of the companies being reported on
and their results of operations and cash flows, subject to changes resulting
from year-end adjustments.
          8.3.3 Annual Financial Statements.
               As soon as available and in any event within one hundred
thirty-five (135) days after the end of each fiscal year of the Borrower,
financial statements of the Borrower consisting of a consolidated and
consolidating balance sheet as of the end of such fiscal year, and related
consolidated and consolidating statements of income, changes in member’s equity
and cash flows for the fiscal year then ended, all in reasonable detail and
setting forth in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by
(i) in the case of such consolidated financial statements, an opinion thereon of
independent certified public accountants of nationally recognized standing
stating that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in accordance with GAAP, and
that the examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion in
the circumstances (such report to be free of qualifications (other than any
consistency qualification that may result from a change in the method used to
prepare the financial statements as to which such accountants concur) and not
indicate the occurrence or existence of any event, condition or contingency
which would materially impair the prospect of payment or performance of any
covenant, agreement or duty of any Loan Party under any of the Loan Documents);
(ii) a certificate of such accountants stating that they have reviewed this
Agreement and the other Loan Documents and stating further (A) whether, in
making their audit, they have become aware of any condition or event that then
constitutes a Potential Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature and period
of existence thereof (it being understood that such accountants shall not be
liable, directly or indirectly, for any failure to obtain knowledge of any
Potential Default or Event of Default unless such accountants should have
obtained actual knowledge thereof in making an audit in accordance with
generally accepted auditing standards or did not make such an audit), (B) that
they have reviewed the certificate of the Borrower required to be delivered with
respect to such financial statements pursuant to Section 8.3.4 [Certificate of
the Borrower] and, based upon their audit examination, nothing has come to their
attention which causes them to believe that Borrower’s calculation set forth in
such certificate are not correct or not properly made in accordance with the
terms of this Agreement, and (C) that the Banks are permitted to rely upon such
accountants’ certificates and report on such annual financial statements and
that such accountants authorized the Loan Parties to deliver such certificate
and report to the Banks on such accountants’ behalf; and (iii) in the case of
such consolidating financial statements, a certificate of the Chief Executive
Officer, President or Chief Financial Officer of the Borrower to the effect that
such financial statements are complete and correct in all material respects.
          8.3.4 Certificate of the Borrower.
               Concurrently with the financial statements of the Borrower
furnished to the Agent and to the Banks pursuant to Sections 8.3.2 [Quarterly
Financial Statements] and 8.3.3 [Annual Financial Statements], a certificate
(each a “Compliance Certificate”) of the Borrower signed by the Chief Executive
Officer, President or Chief Financial Officer or other responsible officer
(whose position shall be reasonably satisfactory to the Banks) of the Borrower,
in the

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form of Exhibit 8.3.4, to the effect that, except as described pursuant to
Section 8.3.5 [Notice of Default], (i) the representations and warranties of the
Borrower contained in Section 6 and in the other Loan Documents are true in all
material respects on and as of the date of such certificate with the same effect
as though such representations and warranties had been made on and as of such
date (except representations and warranties which expressly relate solely to an
earlier date or time) and the Loan Parties have performed and complied with all
covenants and conditions hereof, (ii) no Event of Default or Potential Default
exists and is continuing on the date of such certificate, and (iii) containing
(w) calculations in sufficient detail to demonstrate compliance as of the date
of such financial statements with all financial covenants contained in
Section 8.2 [Negative Covenants] and with Section 8.2.5 [Dividends and Related
Distributions], (x) a brief summary of applications made during the period
covered by such financial statements of Retained Cash as of the Payment Date
most recently preceding such period and, in the case of the Officer’s
Certificate accompanying any financial statements furnished pursuant to
Sections 8.3.2 [Quarterly Financial Statements] and 8.3.3 [Annual Financial
Statements], Retained Cash as of each other Payment Date occurring during such
period, (y) a statement of the aggregate amount paid by the Borrower and the
Guarantors to WRI and the aggregate amount received by them from WRI, pursuant
to the Shared Services Arrangements during each month included in the period
covered by such financial statements, and (z) a written discussion of management
comparing the financial performance of the Loan Parties against both the annual
budget and the results of operations from the corresponding fiscal quarter in
the immediately preceding fiscal year. Each such certificate delivered with the
financial statements pursuant to Sections 8.3.2 [Quarterly Financial Statements]
and 8.3.3 [Annual Financial Statements] shall include a determination in
reasonable detail of (1) the Available Cash and Retained Cash and (2) the
Unfinanced Capital Expenditures, as adjusted each fiscal quarter.
          8.3.5 Notices.
               8.3.5.1 Default. Promptly after any officer of any Loan Party has
learned of the occurrence of an Event of Default or Potential Default, a
certificate signed by an Authorized Officer setting forth the details of such
Event of Default or Potential Default and the action which such Loan Party
proposes to take with respect thereto.
               8.3.5.2 Organizational Documents. Within the time limits set
forth in Section 8.2.14 [Changes in Organizational Documents], any amendment to
the organizational documents of any Loan Party.
               8.3.5.3 Erroneous Financial Information. Immediately in the event
that the Borrower or its accountants conclude or advise that any previously
issued financial statement, audit report or interim review should no longer be
relied upon or that disclosure should be made or action should be taken to
prevent future reliance.
               8.3.5.4 ERISA Event. Immediately upon the occurrence of any ERISA
Event.
          8.3.6 Notice of Litigation.
               Promptly after the commencement thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any other
Person against any Loan Party or Subsidiary of any Loan Party which relate to
the Collateral, involve a claim or

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series of claims in excess of $1,000,000.00 or which if adversely determined
would constitute a Material Adverse Change; and promptly after any Loan Party
becoming aware of, notice of the enactment, promulgation, adoption or existence
of any Law, or any construction or application of any Law by any official body,
which could reasonably be expected to result in a Material Adverse Change.
          8.3.7 Certain Events.
               Written notice to the Agent:
          (i) at least thirty (30) calendar days prior thereto, with respect to
any change in any Loan Party’s location of its assets or principal office from
the states and locations set forth in Schedule A to the Security Agreement.
          8.3.8 Budgets, Forecasts, Other Reports and Information.
               Promptly upon their becoming available to the Borrower, but in no
event later than the specific time period specified below, if any:
          (i) the budget and annual forecasts or projections of the Borrower and
its Subsidiaries for each fiscal year, to be supplied not later than January 1
of such fiscal year to which any of the foregoing may be applicable,
          (ii) all reports including management letters submitted to the
Borrower by independent accountants in connection with any annual, interim or
special audit,
          (iii) all reports, notices or proxy statements generally distributed
by the Borrower to its members on a date no later than the date supplied to such
members,
          (iv) all regular, periodic and other reports, including Forms 10-K,
10-Q and 8-K, registration statements and prospectuses, filed by the Parent or
the Borrower with the Securities and Exchange Commission,
          (v) a copy of any order in any proceeding to which the Borrower or any
of its Subsidiaries is a party issued by any Official Body, except for orders of
the type that are typically received by mining companies with respect to
violations of the Law occurring in connection with mining activities which have
no reasonable likelihood of materially disrupting the projected mining
operations of the Loan Parties or resulting in any substantial obligation to the
Loan Parties or of otherwise constituting or giving rise to a Material Adverse
Change,
          (vi) within 10 Business Days of the end of each calendar month, a
report signed by an Authorized Officer which discloses for each Loan Party for
such immediately preceding calendar month (a) the volume of coal produced (in
tons) by such Loan Party, (b) the volume of coal sold by such Loan Party, and
(c) the price per ton obtained for such coal sold, and
          (vii) such other reports and information as any of the Banks may from
time to time reasonably request. The Borrower shall also notify the Banks
promptly of the enactment or adoption of any Law which could reasonably be
expected to result in a Material Adverse Change.

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          8.3.9 Notices Regarding Plans and Benefit Arrangements.
               8.3.9.1 Certain Events.
                    Promptly after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature of the event; when
known, any action taken or threatened by a governmental agency or other adverse
party; and the action, if any, that the Borrower or an other member of the ERISA
Group proposes to take with respect thereto:
          (i) with respect to any Plan, any Reportable Event; or
          (ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan, or
the receipt by the Borrower or any member of the ERISA Group of a notice from a
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
          (iii) any event, transaction or condition that could reasonably be
expected to result in the incurrence of any liability by the Borrower or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Internal Revenue Code relating to employee benefit plans, or
in the imposition of any Lien on any of the rights, properties or assets of the
Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or such
penalty or excise tax provisions, if such liability or Lien, taken together with
any other such liabilities or Liens then existing, could reasonably be expected
to constitute or result in a substantial obligation to the Borrower or other
member of the ERISA Group or otherwise result in a Material Adverse Change.
               8.3.9.2 Annual Reports
                    Promptly after receipt thereof, at the request of the Agent
or any Bank, copies of each annual report (IRS Form 5500 series) and all
accompanying schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each Plan administered
or maintained by the Borrower or any other member of the ERISA Group, and
schedules showing the amounts contributed to each such Plan by or on behalf of
the Borrower or any other member of the ERISA Group in which any of their
personnel participate or from which such personnel may derive a benefit, and
each Schedule B (Actuarial Information) to the annual report filed by the
Borrower or any other member of the ERISA Group with the Internal Revenue
Service with respect to each such Plan.
               8.3.9.3 Notice of Voluntary Termination.
                    Promptly upon the filing thereof, copies of any Form 5310,
or any successor or equivalent form to Form 5310, filed with the PBGC in
connection with the termination of any Plan.
          8.3.10 Information as to certain Price Adjustments.
               If any Price Determination Event shall arise under any material
Coal Supply Contract, the Borrower or the relevant Loan Party shall provide
(i) notice thereof at least 30 days prior to the effectiveness of any adjustment
or potential adjustment under such contract

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to each holder, identifying such contract and setting forth the price currently
payable thereunder and the basis on which such adjustment is or may be made,
(ii) such pertinent information as any such holder may reasonably request as to
the computation of such price adjustment or potential price adjustment and the
impact thereof on the business and cash flows of the Borrower and the other Loan
Parties, and (iii) not later than the third Business Day following the
effectiveness of any such adjustment, confirmation of the amount thereof and the
manner in which it was determined; provided, however that nominal price
adjustments in the ordinary course of business based on cost and inflation
indices or the quality of the coal furnished pursuant to such contracts need not
be disclosed under this Section. The term “Price Determination Event” shall
mean, with respect to any Coal Supply Contract, (i) any scheduled “re-opener” of
the price payable under such contract (other than the quarterly price adjustment
under the Coyote Plant coal sales contract), (ii) any amendment to or
interpretation of such contract that could reasonably be expected to alter
negatively, from the Loan Party’s perspective, and materially the price payable
to the Loan Party thereunder, and (iii) any arbitration or judicial proceeding
involving the price payable under such contract.
          8.3.11 Single Purpose Entity Status.
               Concurrently with the annual financial statements required to be
furnished pursuant to Section 8.3.3 [Indebtedness] in respect of each fiscal
year, a written report substantially in the format of Exhibit 8.3.11 hereto,
signed by the Secretary and a Senior Financial Officer of the Borrower,
discussing the actions taken by the Borrower and its Subsidiaries during such
fiscal year in order to assure compliance with Section 8.1.16 [Single Purpose
Entities], setting forth, with respect to each of subdivisions (i) through
(xvii) of such Section, that its and their businesses, affairs, books and
records have been conducted and maintained during such fiscal year in compliance
with the separateness covenants, agreements, terms and conditions set forth in
each such subdivision, and, in the event of any failure to have complied with
any such covenant, agreement, term or condition, specifying in reasonable detail
the control imposed or other actions taken or to be taken by the Borrower with
respect thereto.
9. DEFAULT
     9.1 Events of Default.
          An Event of Default shall mean the occurrence or existence of any one
or more of the following events or conditions (whatever the reason therefor and
whether voluntary, involuntary or effected by operation of Law):
          9.1.1 Payments Under Loan Documents.
               The Borrower (i) shall fail to pay any principal of any Loan
(including scheduled installments, mandatory prepayments or the payment due at
maturity), Reimbursement Obligation or Letter of Credit Borrowing after such
principal amount becomes due or (ii) shall fail to pay for more than five
(5) Business Days any interest on any Loan, Reimbursement Obligation or Letter
of Credit Borrowing or any other amount owing hereunder or under the other Loan
Documents after such interest or other amount becomes due in accordance with the
terms hereof or thereof;
          9.1.2 Breach of Warranty.

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               Any representation or warranty made in writing by or on behalf of
a Loan Party or by any officer of a Loan Party in any Loan Document or in any
writing furnished in connection with the transactions contemplated hereby proves
to have been false or incorrect in any material respect on the date as of which
made;
          9.1.3 Breach of Negative Covenants, Single Purpose Entity or
Visitation Rights.
               Any of the Loan Parties shall default in the compliance with or
performance of any covenant contained in Section 8.1.6 [Visitation Rights] or
Section 8.2 [Negative Covenants] or shall fail to comply with the covenants
contained in Section 8.1.16 [Single Purpose Entity]; provided, that, with
respect to the covenants contained in Section 8.1.16, such violation or failure
to comply shall not constitute an Event of Default so long as (A) such violation
or failure to comply was immaterial to the covenants contained in Section 8.1.16
taken as a whole, and (B) if such violation or failure to comply is curable, the
Loan Parties shall cure such violation or failure to comply within thirty
(30) calendar days following a Responsible Officer obtaining actual knowledge of
the violation or failure to comply;
          9.1.4 Breach of Other Covenants.
               A Loan Party defaults in the performance of or compliance with
any term contained herein (other than those referred to in Sections 9.1.1
[Payment Under Loan Documents], 9.1.2 [Breach of Warranty] and 9.1.3 [Visitation
Rights] of this Section 9) or in any other term of any Loan Documents and such
default is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default or (ii) the Borrower
receiving written notice of such default from any holder of a Note (any such
written notice to be identified as a “notice of default” and to refer
specifically to this paragraph (d) of Section 11 [Miscellaneous]), or the
Guaranty Agreement or any other Security Document fails to be in full force and
effect;
          9.1.5 Defaults in Other Agreements or Indebtedness, or Material
Contracts.
          (i) (i) any “Event of Default” shall occur or exist under the Term
Agreement or any of the other Note Purchase Documents, or (ii) the Borrower or
any Subsidiary of the Borrower is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount
or interest on any Indebtedness that is outstanding in an aggregate principal
amount of at least $500,000 beyond any period of grace provided with respect
thereto, or (iii) the Borrower or any Subsidiary of the Borrower is in default
in the performance of or compliance with any term of any evidence of any
Indebtedness in an aggregate outstanding principal amount of at least $500,000
or of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness described in clauses (ii) and (iii) has been declared due and
payable (or one or more Persons are entitled to declare such Indebtedness to be
due and payable) before its stated maturity or before its regularly scheduled
dates of payment, or (iv) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of the
holder of Indebtedness to convert such Indebtedness into equity interests), the
Borrower or any Subsidiary of the Borrower has become obligated to purchase or
repay Indebtedness before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at least
$500,000, or (v) the earlier to occur of (1) a default or event of default (or
right to cancel or terminate such agreement prior to its stated

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term) by any of the Loan Parties shall occur at any time under the terms of any
Coal Supply Contract (upon occurrence of any such event, a “Defaulted
Agreement”) and such breach, default or event of default could result in
cancellation or termination of the Defaulted Agreement prior to its stated term,
or (2) the cancellation or termination of any Defaulted Agreement or (vi) a
default or event of default (or a right to cancel or terminate such agreement
prior to its stated term) shall occur at any time under the terms of any one or
more of the Coal Leases which is reasonably likely to cause a Material Adverse
Change;
          9.1.6 Final Judgments or Orders.
               A final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 (net of insurance coverage, provided, that
(i) the insurance carrier has acknowledged in writing its obligation to satisfy
such judgment or judgments and (ii) such insurance carrier is solvent and has a
long term debt rating which is at least “A2” by Moody’s or Standard & Poor’s)
are rendered against one or more of the Borrower and its Subsidiaries and which
judgments are not, within 45 days after entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 45 days after the expiration
of such stay, or, notwithstanding any such bonding, stay or discharge thereof,
such judgment or judgments affect the Collateral in any material respect or, in
the aggregate, materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Note Purchase Documents; or
          9.1.7 Events Relating to Plans and Benefit Arrangements.
               Any of the following events occur, involving the Borrower or any
member of the ERISA Group, which event, alone or together with any other such
event(s), would, or would reasonably be expected to, result in a substantial
obligation to the Borrower or any of its Subsidiaries or otherwise result in a
Material Adverse Change: (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Internal Revenue Code for any plan year or part
thereof or a waiver of such standards or extension of any amortization period is
sought to be granted under section 430 of the Internal Revenue Code; (ii) the
Plans, considered in the aggregate, shall cease to be Adequately Funded;
(iii) failure to make any contribution when due to a Multiemployer Plan; (iv) a
notice of intent to terminate shall have been or is reasonably expected to be
filed with the PBGC with respect to any Plan; (v) a Reportable Event on the
basis of which the PBGC is reasonably expected to terminate a Plan; (vi) the
PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have given notice
that a Plan may become the subject of such proceedings; (vii) adoption of an
amendment to a Plan with respect to which security is required under ERISA
section 307; (viii) partial or complete withdrawal under ERISA section 4062(e),
from a Multiple Employer Plan or (ix) partial or complete withdrawal from a
Multiemployer Plan.
          9.1.8 Change of Control.
               There shall have occurred (a) any Loan Parties’ Change in Control
or Control Event with respect to the Borrower or any of the Loan Parties or
(b) any Parent Change in Control with respect to the Parent (as such terms are
defined in Section 5.5 [Mandatory Prepayments] of this Agreement).
          9.1.9 Involuntary Proceedings.

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               a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Borrower or any of its
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Borrower or any of
its Subsidiaries, or any such petition shall be filed against the Borrower or
any of its Subsidiaries and such order or petition shall not be dismissed within
60 days; or
          9.1.10 Voluntary Proceedings.
               the Borrower or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing.
          9.1.11 Default or Non-performance by Manager.
               The manager shall default under or otherwise fail to perform any
of its obligations or duties under the Management Agreement.
          9.1.12 Loss of Bonding Capacity.
               Any of the Loan Parties shall fail to maintain sufficient mine
bonding capacity to be able to conduct its operations substantially as
contemplated by the mining plans used in preparing the Financial Projections
provided to the Agent, or (ii) any of the Loan Parties shall default in the
compliance with or the performance of its surety bonding agreements and
obligations (including, but not limited to any default in the payment of
outstanding reimbursement claims owing in connection with any of the bonds
outstanding) and in either case, such default is not remedied within 30 days.
          9.1.13 Loan Document Unenforceable.
               Any of the material provisions of the Loan Documents shall cease
to be legal, valid and binding agreements enforceable against the Loan Party
executing the same or such Loan Party’s successors and assigns (as permitted
under the Loan Documents) in accordance with the respective terms thereof or the
enforceability shall in any way be terminated (except in accordance with its
terms) or become or be declared ineffective or inoperative or shall in any way
be challenged or contested or cease to give or provide the respective Liens,
security interests, or other material rights, titles, interests, remedies,
powers or privileges intended to be created thereby;
          9.1.14 Liens. Any Lien purported to be created by any Security
Document shall fail or cease to be a valid and perfected Lien on material
Collateral intended to be subject thereto

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subject to no other Lien (whether ranking on a parity therewith or prior or
junior thereto) not expressly permitted by such Security Document or the
Intercreditor Agreement.
     9.2 Consequences of Event of Default.
          9.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings.
               If an Event of Default specified under Sections 9.1.1 [Payments
Under Loan Documents] through 9.1.8 [Change of Control] shall occur and be
continuing, the Banks and the Agent shall be under no further obligation to make
Loans or issue Letters of Credit, as the case may be, and the Agent may, and
upon the request of the Required Banks, shall (i) by written notice to the
Borrower, declare the unpaid principal amount of the Notes then outstanding and
all interest accrued thereon, any unpaid fees and all other Indebtedness of the
Borrower to the Banks hereunder and thereunder to be forthwith due and payable,
and the same shall thereupon become and be immediately due and payable to the
Agent for the benefit of each Bank without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived, and
(ii) require the Borrower to, and the Borrower shall thereupon, deposit in a
non-interest-bearing account with the Agent, as cash Collateral for its
Obligations under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all outstanding
Letters of Credit, and the Borrower hereby pledges to the Agent and the Banks,
and grants to the Agent and the Banks a security interest in, all such cash as
security for such Obligations. Upon the curing of all existing Events of Default
to the satisfaction of the Required Banks, the Agent shall return such cash
Collateral to the Borrower; and
          9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.
               If an Event of Default specified under Section 9.1.9 [Involuntary
Proceedings] or 9.1.10 [Voluntary Proceedings] shall occur, the Banks shall be
under no further obligations to make Loans hereunder and the unpaid principal
amount of the Loans then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly waived;
and
          9.2.3 Set-off.
               If an Event of Default shall occur and be continuing, any Bank to
whom any Obligation is owed by any Loan Party hereunder or under any other Loan
Document or any participant of such Bank which has agreed in writing to be bound
by the provisions of Section 10.13 [Equalization of Banks] and any branch,
Subsidiary or Affiliate of such Bank or participant anywhere in the world shall
have the right, in addition to all other rights and remedies available to it,
without notice to such Loan Party, to set-off against and apply to the then
unpaid balance of all the Loans and all other Obligations of the Borrower and
the other Loan Parties hereunder or under any other Loan Document any debt owing
to, and any other funds held in any manner for the account of, the Borrower or
such other Loan Party (other than TWCC) by such Bank or participant or by such
branch, Subsidiary or Affiliate, including all funds in all deposit accounts
(whether time or demand, general or special, provisionally credited or finally
credited,

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or otherwise) now or hereafter maintained by the Borrower or such other Loan
Party (other than TWCC) for its own account (but not including funds held in
custodian or trust accounts) with such Bank or participant or such branch,
Subsidiary or Affiliate. Such right shall exist whether or not any Bank or the
Agent shall have made any demand under this Agreement or any other Loan
Document, whether or not such debt owing to or funds held for the account of the
Borrower or such other Loan Party (other than TWCC) is or are matured or
unmatured and regardless of the existence or adequacy of any Collateral,
Guaranty or any other security, right or remedy available to any Bank or the
Agent. Notwithstanding anything contained in this Section 9.2.3 to the contrary,
to the extent that Borrower maintains a deposit account with any Bank, which
Borrower has identified to the Agent as containing monies solely for the payment
of black lung trust fund obligations (the “Black Lung Trust Account”), the Banks
agree that they will not set-off against any monies contained in such Black Lung
Trust Account; and
          9.2.4 Suits, Actions, Proceedings.
               If an Event of Default shall occur and be continuing, and whether
or not the Agent shall have accelerated the maturity of Loans pursuant to any of
the foregoing provisions of this Section 9.2, the Agent or any Bank, if owed any
amount with respect to the Loans, may proceed to protect and enforce its rights
by suit in equity, action at law and/or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this
Agreement or the other Loan Documents, including as permitted by applicable Law
the obtaining of the ex parte appointment of a receiver, and, if such amount
shall have become due, by declaration or otherwise, proceed to enforce the
payment thereof or any other legal or equitable right of the Agent or such Bank;
and
          9.2.5 Application of Proceeds.
               From and after the date on which the Agent has taken any action
pursuant to this Section 9.2 and until all Obligations of the Borrower and the
Guarantors have been paid in full, any and all proceeds received by the Agent
from any sale or other disposition of the Collateral, or any part thereof, or
the exercise of any other remedy by the Agent, shall be applied as follows:
          (i) first, to reimburse the Agent and the Banks for out-of-pocket
costs, expenses and disbursements, including reasonable attorneys’ and
paralegals’ fees and legal expenses, incurred by the Agent or the Banks in
connection with realizing on the Collateral or collection of any Obligations of
any of the Loan Parties under any of the Loan Documents, including advances made
by the Banks or any one of them or the Agent for the reasonable maintenance,
preservation, protection or enforcement of, or realization upon, the Collateral,
including advances for taxes, insurance, repairs and the like and reasonable
expenses incurred to sell or otherwise realize on, or prepare for sale or other
realization on, any of the Collateral;
          (ii) second, to the repayment of all Indebtedness then due and unpaid
of the Loan Parties to the Banks incurred under this Agreement or any of the
other Loan Documents, whether of principal, interest, fees, expenses or
otherwise, in such manner as the Agent may determine in its discretion; and
          (iii) the balance, if any, as required by Law.

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          9.2.6 Other Rights and Remedies.
               In addition to all of the rights and remedies contained in this
Agreement or in any of the other Loan Documents (including the Mortgage), the
Agent shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable Law, all of which rights and
remedies shall be cumulative and non-exclusive, to the extent permitted by Law.
The Agent may, and upon the request of the Required Banks shall, exercise all
post-default rights granted to the Agent and the Banks under the Loan Documents
or applicable Law.
     9.3 Notice of Sale.
          Any notice required to be given by the Agent of a sale, lease, or
other disposition of the Collateral or any other intended action by the Agent,
if given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrower.
10. THE AGENT
     10.1 Appointment.
          Each Bank hereby irrevocably designates, appoints and authorizes PNC
Bank to act as Agent for such Bank under this Agreement and to execute and
deliver or accept on behalf of each of the Banks the other Loan Documents. Each
Bank hereby irrevocably authorizes, and each holder of any Note by the
acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and any other instruments and agreements referred to herein, and
to exercise such powers and to perform such duties hereunder as are specifically
delegated to or required of the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. PNC Bank agrees to act as the Agent
on behalf of the Banks to the extent provided in this Agreement.
     10.2 Delegation of Duties.
          The Agent may perform any of its duties hereunder by or through agents
or employees (provided such delegation does not constitute a relinquishment of
its duties as Agent) and, subject to Sections 10.5 [Reimbursement of Agent by
Borrower, Etc.] and 10.6, shall be entitled to engage and pay for the advice or
services of any attorneys, accountants or other experts concerning all matters
pertaining to its duties hereunder and to rely upon any advice so obtained.
     10.3 Nature of Duties; Independent Credit Investigation.
          The Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or otherwise exist. The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
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respect of this Agreement except as expressly set forth herein. Without limiting
the generality of the foregoing, the use of the term “agent” in this Agreement
with reference to the Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
Law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties. Each Bank expressly acknowledges (i) that the
Agent has not made any representations or warranties to it and that no act by
the Agent hereafter taken, including any review of the affairs of any of the
Loan Parties, shall be deemed to constitute any representation or warranty by
the Agent to any Bank; (ii) that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of each of
the Loan Parties in connection with this Agreement and the making and
continuance of the Loans hereunder; and (iii) except as expressly provided
herein, that the Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Bank with any credit or other information
with respect thereto, whether coming into its possession before the making of
any Loan or at any time or times thereafter.
     10.4 Actions in Discretion of Agent; Instructions From the Banks.
          The Agent agrees, upon the written request of the Required Banks, to
take or refrain from taking any action of the type specified as being within the
Agent’s rights, powers or discretion herein, provided that the Agent shall not
be required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have
authority, in its sole discretion, to take or not to take any such action,
unless this Agreement specifically requires the consent of the Required Banks or
all of the Banks. Any action taken or failure to act pursuant to such
instructions or discretion shall be binding on the Banks, subject to
Section 10.6 [Exculpatory Provisions, Etc.]. Subject to the provisions of
Section 10.6 [Exculpatory Provisions], no Bank shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting hereunder in accordance with the instructions of the Required Banks, or
in the absence of such instructions, in the absolute discretion of the Agent.
     10.5 Reimbursement and Indemnification of Agent by the Borrower.
          The Borrower shall indemnify the Agent (and any sub-agent thereof),
each Bank and the Issuing Bank, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from
all fees and time charges and disbursements for attorneys who may be employees
of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by the Borrower or any other Loan Party arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective
obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the Issuing
Bank to honor a demand for payment under a Letter of Credit if the documents
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not strictly comply with the terms of such Letter of Credit), (iii) breach of
representations, warranties or covenants of the Borrower under the Loan
Documents, or (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, including any such items or losses
relating to or arising under Environmental Laws or pertaining to environmental
matters, whether based on contract, tort or any other theory, whether brought by
a third party or by the Borrower or any other Loan Party, and regardless of
whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee or (y) result from
a claim brought by the Borrower or any other Loan Party against an Indemnitee
for breach in bad faith of such Indemnitee’s obligations hereunder or under any
other Loan Document, if the Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.
          To the extent that the Borrower for any reason fails to indefeasibly
pay any amount required under Sections 5.6.1 [Costs and Expenses] or this
Section 10.5 [Indemnification by the Borrower] to be paid by it to the Agent (or
any sub-agent thereof), the Issuing Bank or any Related Party of any of the
foregoing, each Bank severally agrees to pay to the Agent (or any such
sub-agent), the Issuing Bank or such Related Party, as the case may be, such
Bank’s Ratable Share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent (or
any such sub-agent) or the Issuing Bank in its capacity as such, or against any
Related Party of any of the foregoing acting for the Agent (or any such
sub-agent) or Issuing Bank in connection with such capacity.
     10.6 Exculpatory Provisions; Limitation of Liability.
          Neither the Agent nor any of its directors, officers, employees,
agents, attorneys or Affiliates shall (a) be liable to any Bank for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith
including pursuant to any Loan Document, unless caused by its or their own gross
negligence or willful misconduct, (b) be responsible in any manner to any of the
Banks for the effectiveness, enforceability, genuineness, validity or the due
execution of this Agreement or any other Loan Documents or for any recital,
representation, warranty, document, certificate, report or statement herein or
made or furnished under or in connection with this Agreement or any other Loan
Documents, or (c) be under any obligation to any of the Banks to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Loan Parties, or the financial
condition of the Loan Parties, or the existence or possible existence of any
Event of Default or Potential Default. No claim may be made by any of the Loan
Parties, any Bank, the Agent or any of their respective Subsidiaries against the
Agent, any Bank or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special, indirect or
consequential damages or, to the fullest extent permitted by Law, for any
punitive damages in respect of any claim or cause of action (whether based on
contract, tort, statutory liability, or any other ground) based on, arising out
of or related to any Loan Document or the transactions contemplated hereby or
any act, omission or event occurring in connection therewith, including the
negotiation, documentation, administration or collection of the Loans, and each
of the Loan

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Parties, (for itself and on behalf of each of its Subsidiaries), the Agent and
each Bank hereby waive, releases and agree never to sue upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether or
not it is now known or suspected to exist in its favor. Each Bank agrees that,
except for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder or given to the Agent for the
account of or with copies for the Banks, the Agent and each of its directors,
officers, employees, agents, attorneys or Affiliates shall not have any duty or
responsibility to provide any Bank with an credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
     10.7 Reimbursement and Indemnification of Agent by Banks.
          Each Bank agrees to reimburse and indemnify the Agent (to the extent
not reimbursed by the Borrower and without limiting the Obligation of the
Borrower to do so) in proportion to its Ratable Share from and against all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements, including attorneys’ fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and
environmental consultants, of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in any
way relating to or arising out of this Agreement or any other Loan Documents or
any action taken or omitted by the Agent hereunder or thereunder, provided that
no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (a) if the same results from the Agent’s gross negligence or
willful misconduct, or (b) if such Bank was not given notice of the subject
claim and the opportunity to participate in the defense thereof, at its expense
(except that such Bank shall remain liable to the extent such failure to give
notice does not result in a loss to the Bank), or (c) if the same results from a
compromise and settlement agreement entered into without the consent of such
Bank, which shall not be unreasonably withheld. In addition, each Bank agrees
promptly upon demand to reimburse the Agent (to the extent not reimbursed by the
Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrower
to the Agent in connection with the Agent’s periodic audit of the Loan Parties’
books, records and business properties.
     10.8 Reliance by Agent.
          The Agent shall be entitled to rely upon any writing, telegram, telex
or teletype message, resolution, notice, consent, certificate, letter,
cablegram, statement, order or other document or conversation by telephone or
otherwise believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon the advice and opinions of
counsel and other professional advisers selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action hereunder unless it
shall first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
     10.9 Notice of Default.

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          The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Default or Event of Default unless the Agent has
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Potential Default or Event of Default and stating that such
notice is a “notice of default.”
     10.10 Notices.
          The Agent shall promptly send to each Bank a copy of all notices
received from the Borrower pursuant to the provisions of this Agreement or the
other Loan Documents promptly upon receipt thereof. The Agent shall promptly
notify the Borrower and the other Banks of each change in the Base Rate and the
effective date thereof.
     10.11 Banks in Their Individual Capacities; Agent in its Individual
Capacity.
          With respect to its Revolving Credit Commitment, and the Revolving
Credit Loans made by it and any other rights and powers given to it as a Bank
hereunder or under any of the other Loan Documents, the Agent shall have the
same rights and powers hereunder as any other Bank and may exercise the same as
though it were not the Agent, and the term “Bank” and “Banks” shall, unless the
context otherwise indicates, include the Agent in its individual capacity. PNC
Bank and its Affiliates and each of the Banks and their respective Affiliates
may, without liability to account, except as prohibited herein, make loans to,
issue letters of credit for the account of, acquire equity interests in, accept
deposits from, discount drafts for, act as trustee under indentures of, and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with, the Loan Parties and their Affiliates, in the case of
the Agent, as though it were not acting as Agent hereunder and in the case of
each Bank, as though such Bank were not a Bank hereunder, in each case without
notice to or consent of the other Banks. The Banks acknowledge that, pursuant to
such activities, the Agent or its Affiliates may (i) receive information
regarding the Loan Parties or any of their Subsidiaries or Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Loan Parties or such Subsidiary or Affiliate) and acknowledge that the Agent
shall be under no obligation to provide such information to them, and
(ii) accept fees and other consideration from the Loan Parties for services in
connection with this Agreement and otherwise without having to account for the
same to the Banks.
     10.12 Holders of Notes.
          The Agent may deem and treat any payee of any Note as the owner
thereof for all purposes hereof unless and until written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or Notes issued in exchange therefor.
     10.13 Equalization of Banks.
          The Banks and the holders of any participations in any Notes agree
among themselves that, with respect to all amounts received by any Bank or any
such holder for application on any Obligation hereunder or under any Note or
under any such participation, whether received by voluntary payment, by
realization upon security, by the exercise of the right

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of set-off or banker’s lien, by counterclaim or by any other non-pro rata
source, equitable adjustment will be made in the manner stated in the following
sentence so that, in effect, all such excess amounts will be shared ratably
among the Banks and such holders in proportion to their interests in payments
under the Notes, except as otherwise provided in Section 4.4.3 [Agent’s and
Bank’s Rights], 5.4.2 [Replacement of a Bank] or 5.6 [Additional Compensation in
Certain Circumstances]. The Banks or any such holder receiving any such amount
shall purchase for cash from each of the other Banks an interest in such Bank’s
Loans in such amount as shall result in a ratable participation by the Banks and
each such holder in the aggregate unpaid amount under the Notes, provided that
if all or any portion of such excess amount is thereafter recovered from the
Bank or the holder making such purchase, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, together with
interest or other amounts, if any, required by law (including court order) to be
paid by the Bank or the holder making such purchase.
     10.14 Successor Agent.
          The Agent (i) may resign as Agent or (ii) shall resign if such
resignation is requested by the Required Banks (if the Agent is a Bank, the
Agent’s Loans and its Commitment shall be considered in determining whether the
Required Banks have requested such resignation) or required by Section 5.4.2
[Replacement of a Bank], in either case of (i) or (ii) by giving not less than
thirty (30) days’ prior written notice to the Borrower. If the Agent shall
resign under this Agreement, then either (a) the Required Banks shall appoint
from among the Banks a successor agent for the Banks, subject to the consent of
the Borrower, such consent not to be unreasonably withheld, or (b) if a
successor agent shall not be so appointed and approved within the thirty
(30) day period following the Agent’s notice to the Banks of its resignation,
then the Agent shall appoint, with the consent of the Borrower, such consent not
to be unreasonably withheld, a successor agent who shall serve as Agent until
such time as the Required Banks appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant to either clause
(a) or (b) above, such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term “Agent” shall mean such successor agent,
effective upon its appointment, and the former Agent’s rights, powers and duties
as Agent shall be terminated without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement. After the
resignation of any Agent hereunder, the provisions of this Section 10 shall
inure to the benefit of such former Agent and such former Agent shall not by
reason of such resignation be deemed to be released from liability for any
actions taken or not taken by it while it was an Agent under this Agreement.
     10.15 Availability of Funds.
          The Agent may assume that each Bank has made or will make the proceeds
of a Loan available to the Agent unless the Agent shall have been notified by
such Bank on or before the later of (1) the close of Business on the Business
Day preceding the Borrowing Date with respect to such Loan or two (2) hours
before the time on which the Agent actually funds the proceeds of such Loan to
the Borrower (whether using its own funds pursuant to this Section 10.15 or
using proceeds deposited with the Agent by the Banks and whether such funding
occurs before or after the time on which Banks are required to deposit the
proceeds of such Loan with the Agent). The Agent may, in reliance upon such
assumption (but shall not be required to), make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank, the Agent shall be entitled to

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recover such amount on demand from such Bank (or, if such Bank fails to pay such
amount forthwith upon such demand from the Borrower) together with interest
thereon, in respect of each day during the period commencing on the date such
amount was made available to the Borrower and ending on the date the Agent
recovers such amount, at a rate per annum equal to (i) the Federal Funds
Effective Rate during the first three (3) days after such interest shall begin
to accrue and (ii) the applicable interest rate in respect of such Loan after
the end of such three-day period.
     10.16 Calculations.
          In the absence of gross negligence or willful misconduct, the Agent
shall not be liable for any error in computing the amount payable to any Bank
whether in respect of the Loans, fees or any other amounts due to the Banks
under this Agreement. In the event an error in computing any amount payable to
any Bank is made, the Agent, the Borrower and each affected Bank shall,
forthwith upon discovery of such error, make such adjustments as shall be
required to correct such error, and any compensation therefor will be calculated
at the Federal Funds Effective Rate.
     10.17 Beneficiaries.
          Except as expressly provided herein, the provisions of this Section 10
are solely for the benefit of the Agent and the Banks, and the Loan Parties
shall not have any rights to rely on or enforce any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for any
of the Loan Parties.
11. MISCELLANEOUS
     11.1 Modifications, Amendments or Waivers.
          With the written consent of the Required Banks, the Agent, acting on
behalf of all the Banks, and the Borrower, on behalf of the Loan Parties, may
from time to time enter into written agreements amending or changing any
provision of this Agreement or any other Loan Document or the rights of the
Banks or the Loan Parties hereunder or thereunder, or may grant written waivers
or consents to a departure from the due performance of the Obligations of the
Loan Parties hereunder or thereunder. Any such agreement, waiver or consent made
with such written consent shall be effective to bind all the Banks and the Loan
Parties; provided, that, without the written consent of all the Banks, no such
agreement, waiver or consent may be made which will:
          11.1.1 Increase of Commitment; Extension of Expiration Date.
               Increase the amount of the Revolving Credit Commitment of any
Bank hereunder or extend the Expiration Date;

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          11.1.2 Extension of Payment; Reduction of Principal Interest or Fees;
Modification of Terms of Payment.
               Whether or not any Loans are outstanding, extend the time for
payment of principal or interest of any Loan (excluding the due date of any
mandatory prepayment of a Loan or any mandatory Commitment reduction in
connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any
other fee payable to any Bank, or reduce the principal amount of or the rate of
interest borne by any Loan or reduce the Commitment Fee or any other fee payable
to any Bank, or otherwise affect the terms of payment of the principal of or
interest of any Loan, the Commitment Fee or any other fee payable to any Bank;
          11.1.3 Release of Collateral or Guarantor.
               Except for sales of assets permitted by Section 8.2.7
[Disposition of Assets or Subsidiaries], release any Collateral consisting of
capital stock or other ownership interests of any Loan Party or its Subsidiary
or substantially all of the assets of any Loan Party, any Guarantor from its
Obligations under the Guaranty Agreement or any other security for any of the
Loan Parties’ Obligations; or
          11.1.4 Miscellaneous.
               Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6
[Exculpatory Provisions, Etc.] or 10.13 [Equalization of Banks] or this
Section 11.1, alter any provision regarding the pro rata treatment of the Banks,
change the definition of Required Banks, or change any requirement providing for
the Banks or the Required Banks to authorize the taking of any action hereunder;
provided that no agreement, waiver or consent which would modify the interests,
rights or obligations of the Agent or the Issuing Bank without the written
consent of such Agent or Issuing Bank, as applicable, and provided, further
that, if in connection with any proposed waiver, amendment or modification
referred to in Sections 11.1.1 through 11.1.4 above, the consent of the Required
Banks is obtained but the consent of one or more of such other Banks whose
consent is required is not obtained (each a “Non-Consenting Bank”), then the
Borrower shall have the right to replace any such Non-Consenting Bank with one
or more replacement Banks pursuant to Section 5.4.2 [Replacement of a Bank].
     11.2 No Implied Waivers; Cumulative Remedies; Writing Required.
          No course of dealing and no delay or failure of the Agent or any Bank
in exercising any right, power, remedy or privilege under this Agreement or any
other Loan Document shall affect any other or future exercise thereof or operate
as a waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege. The rights and remedies of the Agent and the Banks under
this Agreement and any other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. Any waiver, permit,
consent or approval of any kind or character on the part of any Bank of any
breach or default under this Agreement or

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any such waiver of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing.
     11.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes.
          11.3.1 Payments Free of Taxes. Any and all payments by or on account
of any obligation of the Borrower hereunder or under any other Loan Document
shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required by applicable Law to deduct any Indemnified Taxes (including any Other
Taxes) from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Agent, Bank or
Issuing Bank, as the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall timely pay the full amount deducted
to the relevant Official Body in accordance with applicable Law.
          11.3.2 Payment of Other Taxes by the Borrower. Without limiting the
provisions of Section 11.3.1 [Payments Free of Taxes] above, the Borrower shall
timely pay any Other Taxes to the relevant Official Body in accordance with
applicable Law.
          11.3.3 Indemnification by the Borrower. The Borrower shall indemnify
the Agent, each Bank and the Issuing Bank, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Agent, such Bank or the Issuing
Bank, as the case may be, and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Official Body. A certificate as to the amount of such payment or liability, with
appropriate back up documentation, delivered to the Borrower by a Bank or the
Issuing Bank (with a copy to the Agent), or by the Agent on its own behalf or on
behalf of a Bank or the Issuing Bank, shall be conclusive absent manifest error.
          11.3.4 Reimbursement by Banks. To the extent that the Borrower for any
reason fails to indefeasibly pay any amount required under Sections 5.6.1 [Costs
and Expenses] or 11.3.3 [Indemnification by the Borrower] to be paid by it to
the Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of
any of the foregoing, each Bank severally agrees to pay to the Agent (or any
such sub-agent), the Issuing Bank or such Related Party, as the case may be,
such Bank’s Ratable Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Agent (or any such sub-agent) or the Issuing Bank in its capacity as
such, or against any Related Party of any of the foregoing acting for the Agent
(or any such sub-agent) or Issuing Bank in connection with such capacity.
          11.3.5 Evidence of Payments. As soon as practicable after any payment
of Indemnified Taxes or Other Taxes by the Borrower to a Official Body, the
Borrower shall deliver to the Agent the original or a certified copy of a
receipt issued by such Official Body

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evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Agent.
          11.3.6 Status of Banks. Any Foreign Bank that is entitled to an
exemption from or reduction of withholding tax under the Law of the jurisdiction
in which the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Loan Document shall deliver to the Borrower (with a copy to the Agent), at the
time or times prescribed by applicable Law or reasonably requested by the
Borrower or the Agent, such properly completed and executed documentation
prescribed by applicable Law as will permit such payments to be made without
withholding or at a reduced rate of withholding. Notwithstanding the submission
of a such documentation claiming a reduced rate of or exemption from U.S.
withholding tax, the Agent shall be entitled to withhold United States federal
income taxes at the full 30% withholding rate if in its reasonable judgment it
is required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the United States Income Tax
Regulations. Further, the Agent is indemnified under § 1.1461-1(e) of the United
States Income Tax Regulations against any claims and demands of any Bank or
assignee or participant of a Bank for the amount of any tax it deducts and
withholds in accordance with regulations under § 1441 of the Internal Revenue
Code. In addition, any Bank, if requested by the Borrower or the Agent, shall
deliver such other documentation prescribed by applicable Law or reasonably
requested by the Borrower or the Agent as will enable the Borrower or the Agent
to determine whether or not such Bank is subject to backup withholding or
information reporting requirements.
               Without limiting the generality of the foregoing, in the event
that the Borrower is resident for tax purposes in the United States of America,
any Foreign Bank shall deliver to the Borrower and the Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Bank becomes a Bank under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Agent, but only if such
Foreign Bank is legally entitled to do so), whichever of the following is
applicable:
          (i) duly completed copies of IRS Form W-8BEN claiming eligibility for
benefits of an income tax treaty to which the United States of America is a
party,
          (ii) duly completed copies of IRS Form W-8ECI,
          (iii) in the case of a Foreign Bank claiming the benefits of the
exemption for portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Bank is not (A) a “bank” within the
meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of
the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a
“controlled foreign corporation” described in section 881(c)(3)(C) of the Code
and (y) duly completed copies of IRS Form W-8BEN, or
          (iv) any other form prescribed by applicable Law as a basis for
claiming exemption from or a reduction in United States Federal withholding tax
duly completed together with such supplementary documentation as may be
prescribed by applicable Law to permit the Borrower to determine the withholding
or deduction required to be made.
          11.3.7 Waiver of Consequential Damages, Etc. To the fullest extent
permitted by applicable Law, the Borrower shall not assert, and hereby waives,
any claim against any

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Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof. No Indemnitee referred to in Section 11.3.3 [Indemnification by
Borrower] shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby.
     11.4 Holidays.
          Whenever payment of a Loan to be made or taken hereunder shall be due
on a day which is not a Business Day such payment shall be due on the next
Business Day (except as provided in Section 4.2 [Interest Periods] with respect
to Interest Periods under the Libor-Rate Option) and such extension of time
shall be included in computing interest and fees, except that the Loans shall be
due on the Business Day preceding the Expiration Date if the Expiration Date is
not a Business Day. Whenever any payment or action to be made or taken hereunder
(other than payment of the Loans) shall be stated to be due on a day which is
not a Business Day, such payment or action shall be made or taken on the next
following Business Day, and such extension of time shall not be included in
computing interest or fees, if any, in connection with such payment or action.
     11.5 Funding by Branch, Subsidiary or Affiliate.
          11.5.1 Notional Funding.
               Each Bank shall have the right from time to time, without notice
to the Borrower, to deem any branch, Subsidiary or Affiliate (which for the
purposes of this Section 11.5 shall mean any corporation or association which is
directly or indirectly controlled by or is under direct or indirect common
control with any corporation or association which directly or indirectly
controls such Bank) of such Bank to have made, maintained or funded any Loan to
which the Libor-Rate Option applies at any time, provided that immediately
following (on the assumption that a payment were then due from the Borrower to
such other office), and as a result of such change, the Borrower would not be
under any greater financial obligation pursuant to Section 5.6 [Additional
Compensation in Certain Circumstances] or for Additional Taxes than it would
have been in the absence of such change. Notional funding offices may be
selected by each Bank without regard to such Bank’s actual methods of making,
maintaining or funding the Loans or any sources of funding actually used by or
available to such Bank.
          11.5.2 Actual Funding.
               Each Bank shall have the right from time to time to make or
maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such
Bank to make or maintain such Loan subject to the last sentence of this
Section 11.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or
maintain any part of the Loans hereunder, all terms and conditions of this
Agreement shall, except where the context clearly requires otherwise, be
applicable to such part of the Loans to the same extent as if such Loans were
made or maintained by such Bank, but in no event shall any Bank’s use of such a
branch, Subsidiary or Affiliate to make or maintain any

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part of the Loans hereunder cause such Bank or such branch, Subsidiary or
Affiliate to incur any cost or expenses payable by the Borrower hereunder or
require the Borrower to pay any other compensation to any Bank (including any
expenses incurred or payable pursuant to Section 5.6 [Additional Compensation in
Certain Circumstances]) which would otherwise not be incurred.
     11.6 Notices.
          11.6.1 Notices Generally. Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in Section 11.6.2 [Electronic Communications]), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier (i) if to a Bank, to it at its address set forth in its
administrative questionnaire, (ii) if to the Collateral Agent, at the address
set forth in the Collateral Agency Agreement or (iii) if to any other Person, to
it at its address set forth on Schedule 1.1(B).
               Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received;
notices sent by telecopier shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the
extent provided in Section 11.6.2 [Electronic Communications], shall be
effective as provided in such Section.
          11.6.2 Electronic Communications. Notices and other communications to
the Banks and the Issuing Bank hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Agent; provided that the foregoing shall
not apply to notices to any Bank or the Issuing Bank if such Bank or the Issuing
Bank, as applicable, has notified the Agent that it is incapable of receiving
notices under such Article by electronic communication. The Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. Unless the Agent otherwise
prescribes, (i) notices and other communications sent to an e-mail address shall
be deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided that if
such notice or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent
at the opening of business on the next Business Day for the recipient, and
(ii) notices or communications posted to an Internet or intranet website shall
be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that
such notice or communication is available and identifying the website address
therefor.
          11.6.3 Change of Address, Etc. Any party hereto may change its address
or telecopier number for notices and other communications hereunder by notice to
the other parties hereto.
     11.7 Severability.

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          The provisions of this Agreement are intended to be severable. If any
provision of this Agreement shall be held invalid or unenforceable in whole or
in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any
manner affecting the validity or enforceability thereof in any other
jurisdiction or the remaining provisions hereof in any jurisdiction.
     11.8 Governing Law.
          11.8.1 Governing Law. This Agreement shall be deemed to be a contract
under the Laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles. Each standby Letter of Credit issued under this
Agreement shall be subject either to the rules of the Uniform Customs and
Practice for Documentary Credits, as most recently published by the
International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or
the rules of the International Standby Practices (ICC Publication Number 590)
(“ISP98”), as determined by the Issuing Bank, and each trade Letter of Credit
shall be subject to UCP, and in each case to the extent not inconsistent
therewith, the Laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.
          11.8.2 SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN
PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF (1) THE COMMONWEALTH OF
PENNSYLVANIA SITTING IN ALLEGHENY COUNTY AND OF THE UNITED STATES DISTRICT COURT
OF THE WESTERN DISTRICT OF PENNSYLVANIA AND ANY APPELLATE COURT FROM ANY THEREOF
AND (2) THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT OF THE
SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
PENNSYLVANIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE AGENT, ANY BANK OR THE ISSUING BANK MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.
          11.8.3 WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION. EACH

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OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH
DEFENSE.
          11.8.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.6 [NOTICES].
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
          11.8.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     11.9 Prior Understanding.
          This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto and thereto relating to the transactions provided for herein and therein,
including any prior confidentiality agreements and commitments.
     11.10 Duration; Survival.
          All representations and warranties of the Loan Parties contained
herein or made in connection herewith shall survive the making of Loans and
issuance of Letters of Credit and shall not be waived by the execution and
delivery of this Agreement, any investigation by the Agent or the Banks, the
making of Loans, issuance of Letters of Credit, or payment in full of the Loans.
All covenants and agreements of the Loan Parties contained in Sections 8.1
[Affirmative Covenants], 8.2 [Negative Covenants] and 8.3 [Reporting
Requirements] herein shall continue in full force and effect from and after the
date hereof so long as the Borrower may borrow or request Letters of Credit
hereunder and until termination of the Commitments and payment in full of the
Loans and expiration or termination of all Letters of Credit. All covenants and
agreements of the Borrower contained herein relating to the payment of
principal, interest, premiums, additional compensation or expenses and
indemnification, including those set forth in the Notes, Section 5 [Payments]
and Sections 10.5 [Reimbursement of Agent by Borrower,

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Etc.], 10.7 [Reimbursement of Agent by Banks, Etc.] and 11.3 [Reimbursement of
Banks by Borrower; Etc.], shall survive payment in full of the Loans, expiration
or termination of the Letters of Credit and termination of the Commitments.
     11.11 Successors and Assigns.
          11.11.1 Successors and Assigns Generally. The provisions of this
Agreement shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors and assigns permitted hereby, except that
neither the Borrower nor any other Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
the Agent and each Bank and no Bank may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of Section 11.11.2 [Assignments by Banks], (ii) by way of
participation in accordance with the provisions of Section 11.11.4
[Participations], or (iii) by way of pledge or assignment of a security interest
subject to the restrictions of Section 11.11.6 [Certain Pledges; Successors and
Assigns Generally] (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the
extent provided in Section 11.11.4 [Participations] and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agent and the Banks) any
legal or equitable right, remedy or claim under or by reason of this Agreement.
          11.11.2 Assignments by Banks. Any Bank may at any time assign to one
or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided that any such assignment shall be subject to the
following conditions:
          (i) Minimum Amounts.
                    (A) in the case of an assignment of the entire remaining
amount of the assigning Bank’s Commitment and the Loans at the time owing to it
or in the case of an assignment to a Bank, an Affiliate of a Bank or an Approved
Fund, no minimum amount need be assigned; and
                    (B) in any case not described in clause (i)(A) of this
Section 11.11.2, the aggregate amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Bank subject to each such assignment (determined as of the date the Assignment
and Assumption Agreement with respect to such assignment is delivered to the
Agent or, if “Trade Date” is specified in the Assignment and Assumption
Agreement, as of the Trade Date) shall not be less than $2,500,000, in the case
of any assignment in respect of the Revolving Credit Commitment of the assigning
Bank, unless each of the Agent and, so long as no Event of Default has occurred
and is continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed).
          (ii) Proportionate Amounts. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Bank’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned.

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          (iii) Required Consents. No consent shall be required for any
assignment except for the consent of the Agent (which shall not be unreasonably
withheld or delayed) and:
                    (A) the consent of the Borrower (such consent not to be
unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or
(y) such assignment is to a Bank, an Affiliate of a Bank or an Approved Fund;
                    (B) the consent of the Issuing Bank (such consent not to be
unreasonably withheld or delayed) shall be required for any assignment that
increases the obligation of the assignee to participate in exposure under one or
more Letters of Credit (whether or not then outstanding).
          (iv) Assignment and Assumption Agreement. The parties to each
assignment shall execute and deliver to the Agent an Assignment and Assumption
Agreement, together with a processing and recordation fee of $3,500, and the
assignee, if it is not a Bank, shall deliver to the Agent an administrative
questionnaire provided by the Agent.
          (v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.
          (vi) No Assignment to Natural Persons. No such assignment shall be
made to a natural person.
Subject to acceptance and recording thereof by the Agent pursuant to
Section 11.11.3 [Register], from and after the effective date specified in each
Assignment and Assumption Agreement, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption Agreement, have the rights and obligations of a Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption Agreement, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption Agreement covering all of the assigning Bank’s rights and obligations
under this Agreement, such Bank shall cease to be a party hereto) but shall
continue to be entitled to the benefits of Sections 4.4 [LIBOR Rate
Unascertainable; Illegality; Increased Costs; Deposits Not Available], 5.6
[Additional Compensation in Certain Circumstances], and 11.3 [Reimbursements and
Indemnification of the Banks by the Borrower; Taxes] with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any
assignment or transfer by a Bank of rights or obligations under this Agreement
that does not comply with this Section 11.11.2 shall be treated for purposes of
this Agreement as a sale by such Bank of a participation in such rights and
obligations in accordance with Section 11.11.4 [Participations].
          11.11.3 Register. The Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain a record of the names and addresses of the
Banks, and the Commitments of, and principal amounts of the Loans owing to, each
Bank pursuant to the terms hereof from time to time. Such register shall be
conclusive, and the Borrower, the Agent and the Banks may treat each Person
whose name is in such register pursuant to the terms hereof as a Bank hereunder
for all purposes of this Agreement, notwithstanding notice to the contrary. Such
register shall be available for inspection by the Borrower and any Bank, at any
reasonable time and from time to time upon reasonable prior notice.

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          11.11.4 Participations. Any Bank may at any time, without the consent
of, or notice to, the Borrower or the Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Bank’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Bank’s
obligations under this Agreement shall remain unchanged, (ii) such Bank shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Agent and the Banks, Issuing Bank
shall continue to deal solely and directly with such Bank in connection with
such Bank’s rights and obligations under this Agreement.
               Any agreement or instrument pursuant to which a Bank sells such a
participation shall provide that such Bank shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Bank will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to Sections 11.1.1
[Increase of Commitment, Etc.], 11.1.2 [Extension of Payment, Etc.], or 11.1.3
[Release of Collateral or Guarantor]). Subject to Section 11.11.5 [Limitations
upon Participant Rights Successors and Assigns Generally], the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 4.4 [LIBOR
Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available] and
5.6 [Additional Compensation in Certain Circumstances] and 11.3 [Reimbursement
and Indemnification of the Banks by the Borrower; Taxes] to the same extent as
if it were a Bank and had acquired its interest by assignment pursuant to
Section 11.11.2 [Assignments by Banks]. To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 9.2.3 [Setoff] as
though it were a Bank; provided such Participant agrees to be subject to
Section 5.2 [Pro-Rata Treatment of Banks] as though it were a Bank.
          11.11.5 Limitations upon Participant Rights Successors and Assigns
Generally. A Participant shall not be entitled to receive any greater payment
under Sections 5.6 [Additional Compensation in Certain Circumstances], 4.4
[LIBOR Rate Unascertainable; Illegality; Increased Costs; Persons Not Available]
and 11.3 [Reimbursement and Indemnification of the Banks by the Borrower; Taxes]
than the applicable Bank would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent. A
Participant that would be a Foreign Bank if it were a Bank shall not be entitled
to the benefits of Section 11.3 [Reimbursement and Indemnification of the Banks
by the Borrower; Taxes] unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 11.3.6 [Status of Banks] as though it were a
Bank.
          11.11.6 Certain Pledges; Successors and Assigns Generally. Any Bank
may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Bank, including
any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Bank from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Bank as a party hereto.
     11.12 Confidentiality.

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          11.12.1 General.
               The Agent and the Banks each agree to keep confidential all
information obtained from any Loan Party or its Subsidiaries which is nonpublic
and confidential or proprietary in nature (including any information the
Borrower specifically designates as confidential), except as provided below, and
to use such information only in connection with their respective capacities
under this Agreement and for the purposes contemplated hereby. The Agent and the
Banks shall be permitted to disclose such information (i) to outside legal
counsel, accountants and other professional advisors who need to know such
information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality,
(ii) to assignees and participants as contemplated by Section 11.11, and
prospective assignees and participants, (iii) to the extent requested by any
bank regulatory authority or, with notice to the Borrower, as otherwise required
by applicable Law or by any subpoena or similar legal process, or in connection
with any investigation or proceeding arising out of the transactions
contemplated by this Agreement, (iv) if it becomes publicly available other than
as a result of a breach of this Agreement or becomes available from a source not
known to be subject to confidentiality restrictions, or (v) if the Borrower
shall have consented to such disclosure. Notwithstanding anything herein to the
contrary, the information subject to this Section 11.12.1 shall not include, and
the Agent and each Bank may disclose without limitation of any kind, any
information with respect to the “tax treatment” and “tax structure” (in each
case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Agent or such Bank
relating to such tax treatment and tax structure; provided that, with respect to
any document or similar item that, in either case, contains information
concerning the tax treatment or tax structure of the transaction, as well as
other information, this sentence shall only apply to such portions of the
document or similar items that relate to the tax treatment or tax structure of
the Loans, Letters of Credit and transactions contemplated hereby.
          11.12.2 Sharing Information With Affiliates of the Banks.
               Each Loan Party acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Borrower or one or more of its Affiliates (in connection with this Agreement
or otherwise) by any Bank or by one or more Subsidiaries or Affiliates of such
Bank and each of the Loan Parties hereby authorizes each Bank to share any
information delivered to such Bank by such Loan Party and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Bank to
enter into this Agreement, to any such Subsidiary or Affiliate of such Bank, it
being understood that any such Subsidiary or affiliate of any Bank receiving
such information shall be bound by the provisions of Section 11.12.1 as if it
were a Bank hereunder. Such Authorization shall survive the repayment of the
Loans and other Obligations and the termination of the Commitments.
     11.13 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents, and any separate letter agreements with respect to fees payable
to the Agent, constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof including
any prior confidentiality agreements and

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commitments. Except as provided in Section 7 [Letters of Credit], this Agreement
shall become effective when it shall have been executed by the Agent and when
the Agent shall have received counterparts hereof that, when taken together,
bear the signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
     11.14 Agent’s or Bank’s Consent.
          Whenever the Agent’s or any Bank’s consent is required to be obtained
under this Agreement or any of the other Loan Documents as a condition to any
action, inaction, condition or event, the Agent and each Bank shall be
authorized to give or withhold such consent in its sole and absolute discretion
and to condition its consent upon the giving of additional Collateral, the
payment of money or any other matter.
     11.15 Exceptions.
          The representations, warranties and covenants contained herein shall
be independent of each other, and no exception to any representation, warranty
or covenant shall be deemed to be an exception to any other representation,
warranty or covenant contained herein unless expressly provided, nor shall any
such exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
     11.16 Tax Withholding Clause.
          Each Bank or assignee or participant of a Bank that is not
incorporated under the Laws of the United States of America or a state thereof
agrees that it will deliver to each of the Borrower and the Agent two (2) duly
completed copies of the following: (i) if any lending office of such Bank is
located in the United States,  Internal Revenue Service Form W-8ECI
(“Form W-8ECI”), and Internal Revenue Service Form W-9 (“Form W-9”), or other
applicable form prescribed by the Internal Revenue Service, and/or (ii)  if any
lending office of such Bank is located outside the United States Internal
Revenue Service Form W-8BEN (“Form W-8BEN”) and Internal Revenue Service Form
W-8 or any successor thereto, certifying that such Bank, assignee or participant
is entitled to receive payments under this Agreement and the other Loan
Documents without deduction or withholding of any United States federal income
taxes, or is subject to such tax at a reduced rate under an applicable tax
treaty or indicating that no such exemption or reduced rate is allowable with
respect to such payments. Each Bank, assignee or participant required to deliver
to the Borrower and the Agent a form or certificate pursuant to the preceding
sentence shall deliver such form or certificate as follows: (A) each Bank which
is a party hereto on the Closing Date shall deliver such form or certificate at
least five (5) Business Days prior to the first date on which any interest or
fees are payable by the Borrower hereunder for the account of such Bank;
(B) each assignee or participant shall deliver such form or certificate at least
five (5) Business Days before the effective date of such assignment or
participation (unless the Agent in its sole discretion shall permit such
assignee or participant to deliver such form or certificate less than five
(5) Business Days before such date in which case it shall be due on the date
specified by the Agent). Each Bank, assignee or participant which so delivers a
Form W-8ECI, Form W-9, Form W-8BEN or Form W-8 or any applicable successor
thereto further undertakes to deliver to each of the Borrower and the Agent two
(2) additional copies of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form

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so delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, either
certifying that such Bank, assignee or participant is entitled to receive
payments under this Agreement and the other Loan Documents without deduction or
withholding of any United States federal income taxes or is subject to such tax
at a reduced rate under an applicable tax treaty or stating that no such
exemption or reduced rate is allowable. The Agent shall be entitled to withhold
United States federal income taxes at the full withholding rate unless the Bank,
assignee or participant establishes an exemption or that it is subject to a
reduced rate as established pursuant to the above provisions.
     11.17 Joinder of Guarantors; Additional Security Arrangements.
          Any Subsidiary of the Borrower which is required to join this
Agreement as a Guarantor pursuant to Section 8.2.9 [Subsidiaries, Partnerships
and Joint Ventures] shall execute and deliver to the Agent (i) a Guarantor
Joinder in substantially the form attached hereto as Exhibit 1.1(G)(1) pursuant
to which it shall join as a Guarantor each of the documents to which the
Guarantors are parties; (ii) documents in the forms described in Section 7.1
[First Loans] modified as appropriate to relate to such Subsidiary; and
(iii) documents necessary to grant and perfect Prior Security Interests to the
Agent for the benefit of the Banks in all Collateral held by such Subsidiary.
The Loan Parties shall deliver such Guarantor Joinder and related documents to
the Agent within five (5) Business Days after the date of the filing of such
Subsidiary’s articles of incorporation if the Subsidiary is a corporation, the
date of the filing of its certificate of limited partnership if it is a limited
partnership or the date of its organization if it is an entity other than a
limited partnership or corporation. In addition to and not in limitation of the
foregoing, the Loan Parties will not deliver any Guaranty, collateral, security
or other credit enhancement in respect of the Note Purchase Agreement (excluding
Note Purchase Collateral) unless, concurrently therewith, such credit
enhancement is also delivered to or for the benefit of the Banks on a pari passu
basis.
     11.18 Environmental Indemnity.
          The Loan Parties (other than TWCC), jointly and severally, will
indemnify, protect, hold harmless and defend each Bank and the Collateral Agent
and their respective officers, directors, trustees, employees and agents
(collectively, “Indemnitees”), from and against any and all liabilities, costs
(including, without limitation, reasonable fees and disbursements of attorneys,
consultants and experts, and costs of investigation, clean up, response,
removal, remediation, containment, restoration, treatment and disposal), claims,
damages, demands, litigation, suits, proceedings, actions, losses, obligations,
penalties, fines, judgments, sums paid in settlement of any of the above, and
reasonable disbursements actually incurred by any Indemnitee arising from or out
of, or in any way connected with, (i) any failure of any representation or
warranty set forth in Section 6.1.26 [Environmental Matters] to be true and
correct when made or any failure by the Loan Parties (or any of them) to comply
with any of the covenants, agreements, terms and conditions set forth in
Section 8.1.10 [Compliance with Laws] or to comply with any Environmental Law,
(ii) the manufacture, generation, refining, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport, arranging for transport or
handling, or the emission, discharge, release or threatened release into the
environment, of any Regulated Substance at any time on, in, under or above the
Property or any part thereof, (iii) the presence or suspected presence of any
Regulated Substances manufactured, generated, refined, processed, distributed,
sold, treated, received, stored, disposed of, transported, arranged to be
transported or handled by the Loan Parties (or any of them) or any of their
respective

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Subsidiaries, or (iv) the migration, leaking, leaching, flowing, emitting or
other movement of any Regulated Substance from the Property, or any location
containing Regulated Substances manufactured, generated, refined, processed,
distributed, sold, treated, received, stored, disposed of, transported, arranged
to be transported or handled by the Loan Parties (or any of them) or any of
their respective Subsidiaries to any other property; provided, however, that any
obligation of any of the Loan Parties under this Section 11.19 to any Indemnitee
shall not apply to and no obligation shall exist with respect to, any of the
forgoing which arises: (x) from and after the exercise by any of the Indemnitees
(or any of their agents) of any foreclosure right or control with respect to the
Collateral, but only to the extent of obligations arising from the activities of
the successor or its agent or (y) from the gross negligence or willful
misconduct of any of the Indemnitees (or any of their agents). If at any time a
responsible officer of any Indemnitee shall have actual knowledge of an asserted
liability for which such Indemnitee would be entitled to indemnification
hereunder, such Indemnitee shall give written notice thereof to the Loan Parties
; provided, however, that no failure to give any such notice shall relieve the
Loan Parties (or any of them) of the obligation to provide indemnification
hereunder to such Indemnitee except to the extent that the Loan Parties shall
have been prevented as a consequence from assuming responsibility for the
defense against or settlement of such liability as hereinafter required. Upon
receipt of such notice, the Loan Parties shall assume full responsibility for
the defense against or settlement of any such liability, and shall consult with
such Indemnitee and advise such Indemnitee of significant developments in
connection therewith; provided, however, that (A) such Indemnitee shall be
consulted as to the legal counsel and other consultants to be employed in
respect thereof and may in its reasonable judgment veto the employment of any
legal counsel or consultant not reasonably acceptable to it and (B) if such
Indemnitee shall give to the Loan Parties notice that in its good faith judgment
an important general interest of such Indemnitee is involved in any such
liability or potential liability, such Indemnitee shall have the right to
control, in consultation with the Loan Parties, the defense against such
liability. The obligations of the Loan Parties under this Section shall survive
payment of any Notes and transfer of any Notes and shall be enforceable by each
Indemnitee hereunder separately or together, without necessity of accelerating
the maturity of any Notes; and any such Indemnitee seeking to enforce the
indemnification provided for hereunder may initially proceed directly against
the Loan Parties (or any of them) without first resorting to any other rights of
indemnification or otherwise that it may have.
     11.19 Finance Code Opt-Out.
          Each of the Loan Parties and the Banks each hereby agree that
Chapter 346 of the Texas Finance Code does not apply to this Credit Agreement,
to the Notes issued pursuant to this Credit Agreement, or to the account or
arrangement evidenced by or provided for in this Credit Agreement.
     11.20 USA Patriot Act Notice.
          Each Bank that is subject to the USA Patriot Act and the Agent (for
itself and not on behalf of any Bank) hereby notifies Loan Parties that pursuant
to the requirements of the USA Patriot Act, it is required to obtain, verify and
record information that identifies the Loan Parties, which information includes
the name and address of Loan Parties and other information that will allow such
Bank or Agent, as applicable, to identify the Loan Parties in accordance with
the USA Patriot Act.

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[SIGNATURE PAGES FOLLOW]

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[SIGNATURE PAGE 1 OF 2 TO CREDIT AGREEMENT]
     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Agreement as of the day and year first above
written.
BORROWER:

              ATTEST:   WESTMORELAND MINING LLC
 
           
/s/ Morris W. Kegley
  By:   /s/ Douglas P. Kathol   (Seal)
 
           
 
  Name:   Douglas P. Kathol    
 
  Title:   Vice President    

GUARANTORS:

              ATTEST:   WESTERN ENERGY COMPANY
 
           
/s/ Morris W. Kegley
  By:   /s/ Douglas P. Kathol   (Seal)
 
           
 
  Name:   Douglas P. Kathol    
 
  Title:   Vice President    
 
            ATTEST:   DAKOTA WESTMORELAND CORPORATION
 
           
/s/ Morris W. Kegley
  By:   /s/ Douglas P. Kathol   (Seal)
 
           
 
  Name:   Douglas P. Kathol    
 
  Title:   Vice President    
 
            ATTEST:   WESTMORELAND SAVAGE CORPORATION
 
           
/s/ Morris W. Kegley
  By:   /s/ Douglas P. Kathol   (Seal)
 
           
 
  Name:   Douglas P. Kathol    
 
  Title:   Vice President    

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[SIGNATURE PAGE 2 OF 2 TO CREDIT AGREEMENT]
BANK:

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