Exhibit 10.45
Execution Copy
SECOND AMENDED AND RESTATED LOAN AGREEMENT
among
WESTMORELAND PARTNERS
(as Borrower)
and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(as Lender)
and
PRUDENTIAL INVESTMENT MANAGEMENT, INC.
(as Agent)
Dated as of February 11, 2008

 

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TABLE OF CONTENTS

                      Page  
ARTICLE 1
  DEFINITIONS     1  
 
           
ARTICLE 2
  LOANS     1  
2.1
  Senior Loans     1  
2.2
  Subordination     5  
2.3
  Funding and Yield Protection     7  
2.4
  Repayment     9  
2.5
  Prepayment     12  
2.6
  General Terms of Payment     13  
2.7
  Notes     14  
 
           
ARTICLE 3
  RESERVED     14  
 
           
ARTICLE 4
  CONDITIONS TO CLOSING     15  
4.1
  Conditions Precedent to Closing     15  
4.2
  Condition Precedent to Funding     18  
 
           
ARTICLE 5
  REPRESENTATIONS AND WARRANTIES     18  
5.1
  Organization and Existence     18  
5.2
  Authority; Enforceability     19  
5.3
  No Breach     19  
5.4
  No Default     19  
5.5
  Compliance with Laws; Governmental Requirements     20  
5.6
  No Litigation     20  
5.7
  Titles; Liens     20  
5.8
  Security Interests     20  
5.9
  Taxes     21  
5.10
  Documents     21  
5.11
  Financial Statements     21  
5.12
  Projections and Budgets     21  
5.13
  Disclosure     22  
5.14
  Transactions with Affiliates     22  
5.15
  Regulation of Parties     22  
5.16
  ERISA     23  
5.17
  Environmental Matters     23  
5.18
  Federal Reserve Regulations     24  
5.19
  Investment Company Act     24  
5.20
  Nature of Business     24  
5.21
  Foreign Assets Control Regulations, Etc     24  
 
           
ARTICLE 6
  COVENANTS OF BORROWER     24  
6.1
  The Accounts     24  
6.2
  Debt Service Coverage Ratio     25  

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TABLE OF CONTENTS
(continued)

                      Page  
 
           
6.3
  Maintenance of Existence, Privileges, Etc     25  
6.4
  Performance of Project Documents     25  
6.5
  Operation and Maintenance     26  
6.6
  Operating Logs     27  
6.7
  Compliance with Laws     28  
6.8
  Information     30  
6.9
  Borrower’s Bank Accounts     34  
6.10
  Maintenance of Records; Inspection     35  
6.11
  Liens     35  
6.12
  Other Debt; Conditional Sale Contracts     36  
6.13
  Mergers, Sales of Assets; Permitted Activities     37  
6.14
  Insurance     37  
6.15
  Obligations Upon Casualty     38  
6.16
  Taxes     40  
6.17
  Additional Provisions Regarding Project Documents     41  
6.18
  Other Contracts     43  
6.19
  Additional Documents; Filings and Recordings     43  
6.20
  Assignment by Borrower     44  
6.21
  Transactions with Affiliates and Others     44  
6.22
  Advertising; Press Releases     44  
6.23
  Costs and Expenses; Indemnity     44  
6.24
  FERC Compliance     45  
 
           
ARTICLE 7
  RIGHTS AND REMEDIES OF THE LENDERS     45  
7.1
  Events of Default     45  
7.2
  Remedies Upon Event of Default     50  
 
           
ARTICLE 8
  AGENT AND RELATIONS AMONG LENDERS     51  
8.1
  Appointment and Cessation     51  
8.2
  Majority Lenders     52  
8.3
  Liability and Credit Appraisal     52  
8.4
  Reliance     53  
8.5
  Other Banking     53  
8.6
  Notices and Determinations by Agent     53  
8.7
  Successor Agent     54  
 
           
ARTICLE 9
  GENERAL TERMS AND CONDITIONS     54  
9.1
  Notices     54  
9.2
  Assignments and Participations     55  
9.3
  Right of Set-off     57  
9.4
  Amendments and Waivers     57  
9.5
  Election of Remedies     58  
9.6
  Severability     58  

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TABLE OF CONTENTS
(continued)

                      Page  
 
           
9.7
  Form and Substance     58  
9.8
  Limitation on Interest     58  
9.9
  No Third Party Beneficiary; Integration     59  
9.10
  Borrower in Control     59  
9.11
  Number and Gender     59  
9.12
  Captions     59  
9.13
  Applicable Law and Jurisdiction     59  
9.14
  No Recourse     61  
9.15
  Absence of Fiduciary Relation     61  
9.16
  Agent as Administrator     61  
9.17
  Return of Accounts; Release of Liens     61  
9.18
  Counterparts     62  

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SCHEDULES:
   
 
   
2.6
  Lender Schedule
2.7
  Forms of Notes
2.7(c)
  Form of Commitment Transfer Supplement
4.1(o)
  Form of Borrower’s Closing Certificate
4.1(s)
  Form of Escrow Agreement
5.5
  Governmental Requirements
5.17
  Environmental Matters
6.8(c)
  Form of Project Summary Information Form
6.8(h)(i)
  Form of ROVA I Operating Budget
6.8(h)(ii)
  Form of ROVA II Operating Budget
6.8(h)(iii)
  Form of Monthly Net Operating Income Report
6.8(i)
  Form of Monthly Operating Report
6.12
  Subordination Provisions
6.14
  Insurance Policies
 
   
EXHIBITS:
   
 
   
X
  Definitions

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SECOND AMENDED AND RESTATED LOAN AGREEMENT
     This SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of February 11,
2008, is made by and among (i) WESTMORELAND PARTNERS, a Virginia general
partnership (“Borrower”), (ii) THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
(“Prudential”) and each Purchasing Lender (collectively, “Lenders”), and
(iii) PRUDENTIAL INVESTMENT MANAGEMENT, INC., as agent for the Lenders
(“Agent”).
WITNESSETH:
     WHEREAS, Borrower and certain parties are parties to the Amended and
Restated Construction and Term Loan Agreement, dated as of December 1, 1993, as
amended (the “Original Credit Agreement”), which provides for the financing of
the construction and operation of the Facilities (as hereinafter defined);
     WHEREAS, Borrower desires to issue and sell to Lenders, and Lenders desire
to purchase, Tranche C Senior Loans, Senior Subordinated Loans and Junior
Subordinated Loans, subject to the terms and conditions set forth herein; and
     WHEREAS, Borrower, Agent and Lenders desire to amend and restate the
Original Credit Agreement in its entirety.
     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree to amend and restate the Original Credit Agreement in
its entirety as follows:
ARTICLE 1
DEFINITIONS
     Terms used in this Agreement and not otherwise defined herein shall have
the meanings assigned to them in Exhibit X (such definitions to be equally
applicable to both singular and plural forms of the terms defined).
ARTICLE 2
LOANS
     2.1 Senior Loans.
     (a) Senior Loans. On the date hereof, and after giving effect to the
transactions contemplated hereby, the aggregate outstanding principal amount of
the Tranche A Institutional Term Loans (as defined in the Original Credit
Agreement) is $38,385,000 (the “Tranche A Senior Loans”) and the aggregate
outstanding principal amount of the Tranche B Institutional Term Loans (as
defined in the Original Credit Agreement) is $12,970,000 (the “Tranche B Senior
Loans”).

 

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     (b) Tranche C Senior Loans. Borrower will authorize the issue and sale of
$40,722,000 aggregate principal amount of its Tranche C Senior Loans (the
“Tranche C Senior Loans”). Subject to the terms and conditions of this
Agreement, Borrower will issue and sell to each Lender, and each Lender will
purchase from Borrower, its Pro Rata Share of Tranche C Senior Loans in the
principal amount of $40,722,000 at the purchase price of 100% of the original
amount thereof. The Tranche C Senior Loans shall be pari passu in right of
payment with the Tranche A Senior Loans and Tranche B Senior Loans.
     (c) Senior Subordinated Loans. Borrower will authorize the issue and sale
of $7,020,000 aggregate principal amount of its Tranche C Senior Subordinated
Loans (the “Tranche C Senior Subordinated Loans”). Subject to the terms and
conditions of this Agreement, Borrower will issue and sell to each Lender, and
each Lender will purchase from Borrower, its Pro Rata Share of Tranche C Senior
Subordinated Loans in the principal amount of $7,020,000 at the purchase price
of 100% of the original amount thereof. Borrower shall use the proceeds of the
sale of the Tranche C Senior Subordinated Loans to prepay on the date hereof
existing indebtedness of Borrower. The Tranche C Senior Subordinated Loans shall
be subordinated in right of payment to the Senior Obligations, as provided in
Section 2.2 of this Agreement.
     (d) Amendment to Existing Senior Loans. Borrower and the Lenders hereby
amend the terms of certain Tranche A Institutional Term Loans and Tranche B
Institutional Term Loans (as such terms are defined in the Original Credit
Agreement) as follows:
     (i) The fixed interest rate on $4,090,000 aggregate principal of Tranche A
Institutional Term Loans shall be increased to 11.42%, and the terms of
subordination set forth in Section 2.2 of this Agreement relating to Senior
Subordinated Obligations shall apply to such Loans on and after the date hereof
(as amended, the “Tranche A Senior Subordinated Loans”); and
     (ii) The fixed interest rate of $3,795,000 aggregate principal amount of
Tranche B Institutional Term Loans shall be increased to 9.33%, and the terms of
subordination set forth in Section 2.2 of this Agreement relating to Senior
Subordinated Obligations shall apply to such Loans on and after the date hereof
(as amended, the “Tranche B Senior Subordinated Loans”).
The Tranche A Senior Subordinated Loans, the Tranche B Senior Subordinated Loans
and the Tranche C Senior Subordinated Loans (collectively, the “Senior
Subordinated Loans”) are pari passu in right of payment, and subordinated in
right of payment to the Senior Obligations.
     (e) Junior Subordinated Floating Rate Loans. Borrower has authorized the
issue and sale of $11,500,000 principal amount of its Junior Subordinated
Floating Rate Loans (the “Junior Subordinated Loans”). Subject to the terms and
conditions of this Agreement, Borrower will issue and sell to each Lender, and
each Lender will purchase, its Pro Rata Share of the Junior Subordinated Loans
in the principal amount of $11,500,000 at the purchase price of 100% of the
amount thereof. The Junior Subordinated Loans shall be subordinated in right of
payment to the Senior Obligations and the Senior Subordinated Obligations, as
provided in Section 2.2.

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     (f) Senior Revolving Loans. Borrower will authorize the issue and sale of
$6,000,000 aggregate principal amount of its Senior Revolving Loans (the
“Revolving Loans”). Subject to the terms and conditions of this Agreement, each
Lender will purchase its Pro Rata Share of such Revolving Loans as Borrower may
request, from the date hereof through but not including April 30, 2015, provided
that the sum of the principal amount of all outstanding Revolving Loans (after
giving effect to purchases requested) shall not exceed $6,000,000. The Revolving
Loans shall be pari passu in right of payment with the Tranche A Senior Loans,
Tranche B Senior Loans and Tranche C Senior Loans.
     (i) Borrower shall deliver to Agent and Lenders a request for purchase of
Revolving Loans (each, a “Request for Purchase”), by telecopier or overnight
delivery service, and shall specify (i) the aggregate amount of Revolving Loans
covered thereby, (ii) that the use of the proceeds of such Notes is to pay Debt
Service on the Senior Obligations then due and owing because funds available in
the Accounts to be applied to such Debt Service are insufficient, (iii) the
proposed day of closing of the sale and purchase of the Revolving Loans (which
shall be at least three (3) Business Days following the date of delivery of the
Request for Purchase and shall be the Banking Day next preceding a Repayment
Date for Senior Obligations; each day so specified, a “Subsequent Closing
Date”), and (iv) certify that the representations and warranties of Borrower
contained in this Agreement are true and correct as of the date of such Request
for Purchase and that there exists on the date of such Request for Purchase no
Default or Event of Default.
     (ii) If on the proposed Subsequent Closing Date the conditions precedent
set forth in Section 2.1(f)(iii) are met, each Lender shall advance its Pro Rata
Share of the amount requested to the Debt Protection Account (Senior) on the
subsequent Closing Date.
     (iii) Each Lender’s obligation to purchase Revolving Loans under this
Section 2.1(f) shall be subject to the conditions that, on the applicable
Subsequent Closing Date, the representations and warranties of Borrower in this
Agreement are true and correct on such Subsequent Closing Date and there exists
no Default or Event of Default on such Subsequent Closing Date, and the Lenders
shall have received a certificate of an Authorized Officer of Borrower to such
effect.
     (iv) Borrower may elect to prepay the outstanding principal of all or any
part of any Revolving Loan, upon three (3) days’ prior written notice to Agent
of the amount to be prepaid using funds made available for prepayment of
Revolving Loans from the Project Control Account pursuant to Section 4.1 of the
Deposit Agreement, together with accrued interest thereon plus any losses or
expenses described in Section 2.3(e) incurred in connection therewith. The
Borrower shall be entitled to reborrow before April 30, 2015 such prepaid
amounts, upon the terms and subject to the conditions of this Agreement.

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     (g) Interest.
     (i) Not later than 12:00 noon (New York time) on each Quarterly Date,
Borrower shall pay to each Lender interest on the daily unpaid principal amount
of:
     (A) such Lender’s Tranche A Senior Loan outstanding in arrears at a rate
per annum equal to 10.42%,
     (B) such Lender’s Tranche B Senior Loan outstanding in arrears at a rate
per annum equal to 8.33%,
     (C) such Lender’s Tranche C Senior Loan outstanding in arrears at a rate
per annum equal to 6.00%,
     (D) such Lender’s Tranche A Senior Subordinated Loans in arrears at a rate
per annum equal to 11.42%,
     (E) such Lender’s Tranche B Senior Subordinated Loans in arrears at a rate
per annum equal to 9.33%, and
     (F) such Lender’s Tranche C Senior Subordinated Loans in arrears at a rate
per annum equal to 7.65%.
Such interest shall be computed on the basis of the actual number of days
elapsed and a year of 365 or 366 days, as applicable.
     (ii) Not later than 12:00 noon (New York time) on each Floating Rate
Interest Payment Date, Borrower shall pay to the Lenders interest on the daily
unpaid amount of any Revolving Loans outstanding during the preceding Floating
Rate Interest Period in arrears at the Revolving Loan Interest Rate then in
effect. Interest shall be computed on the basis of the actual number of days
elapsed and a year of 360 days.
     (iii) Not later than 12:00 noon (New York time) on each Floating Rate
Interest Payment Date, Borrower shall pay to the Lenders interest on the daily
unpaid principal amount of any Junior Subordinated Loans outstanding during the
preceding Floating Rate Interest Period in arrears at the Junior Subordinated
Loan Floating Rate then in effect. Interest shall be computed on the basis of
the actual number of days elapsed and a year of 360 days.
     (h) Default Interest. Upon the occurrence and during the continuance of an
Event of Default, Borrower shall pay interest on the principal amount of any
Loan then outstanding and shall pay Commitment Fees, in lieu of the otherwise
applicable Interest Rate or fees, from and including the date of the Event of
Default at the Default Interest Rate (or, in the case of Commitment Fees, such
fees plus 3% per annum) and continuing so long as the amount in respect of which
such interest or fees accrues remains unpaid or until such Event of Default is
remedied, whichever shall occur first, which interest and fees shall be due and
payable by

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Borrower on demand; provided that upon the occurrence of an Event of Default
specified in Section 7.1(i) or (j) with respect to Borrower, such interest and
fees shall be immediately due and payable without the making of a demand by any
Lender. In addition to the payment of such interest and fees, Borrower shall pay
to the Lenders funding and yield protection costs, as provided in Section 2.3
hereof, resulting from the failure of Borrower to pay any amounts under this
Agreement when due.
     (i) Fees. Borrower shall pay the following fees:
     (i) Structuring Fee: on the Funding Date to Agent, for its own account, a
non-refundable structuring fee as described in that certain letter agreement
dated the date hereof between Agent and Borrower; and
     (ii) Commitment Fees: in arrears on each Quarterly Date, commencing on the
first Quarterly Date after the Closing Date, to the Lenders, a fee calculated at
a rate per annum equal to 1.375% of the daily average difference between
$6,000,000 and the aggregate outstanding principal amount of Revolving Loans,
computed on the basis of the actual number of days elapsed and a year of
360 days (the “Commitment Fees”);
     2.2 Subordination. (a) The Senior Subordinated Obligations are subordinated
and subject in right of payment to the prior payment in full in cash or cash
equivalents of all of the Senior Obligations.
     (b) The Junior Subordinated Obligations are subordinated and subject in
right of payment to the prior payment in full in cash or cash equivalents of all
of the Senior Obligations and the Senior Subordinated Obligations.
     (c) The Liens of the Agent in the Collateral for the benefit of the Lenders
holding Senior Obligations, Senior Subordinated Obligations and, in the case
only of the Pledged Interests, Junior Subordinated Obligations, have the
following priorities, regardless of the order or time as to which any Liens
attached to the Collateral, the order or time of any UCC filings or any other
filings or recordings or the order or time of the granting of any Liens or the
physical possession of any Collateral. The Liens of the Agent for the Lenders
holding Senior Obligations are pari passu and first in priority; the Liens of
the Agent for the benefit of the Lenders holding Senior Subordinated Obligations
are pari passu and second in priority; and, with respect only to the Pledged
Interests, the Liens of the Agent for the benefit of the Lenders holding Junior
Subordinated Obligations are pari passu and third in priority.
     (d) Upon the occurrence of a default in payment of any Senior Obligations
and until such payment default has been remedied or waived, no Lender holding
any Senior Subordinated Obligations or Junior Subordinated Obligations shall
accept any payment (including without limitation principal, interest, fees or
other amounts) on account of any Senior Subordinated Obligations or Junior
Subordinated Obligations. Upon the occurrence of a payment default on any Senior
Subordinated Obligations and until such payment default has been remedied or
waived, no Lender holding any Junior Subordinated Obligations shall accept

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any payment (including without limitation principal, interest, fees or other
amounts) on account of any Junior Subordinated Obligations.
     (e) Upon the occurrence and during the continuation of an Event of Default,
no Lender holding Senior Subordinated Obligations or Junior Subordinated
Obligations may accelerate the maturity of its Notes or pursue any other remedy
or initiate any bankruptcy or insolvency proceeding relative to Borrower unless
and until the Lenders holding Senior Obligations accelerate the maturity of
their Notes, provided that nothing in this paragraph (e) affects the
subordination and payment priorities set forth in this Agreement.
     (f) In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith relating to Borrower, or any liquidation, dissolution or
other winding up of Borrower, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or any assignment for the benefit of
creditors or any other marshaling of assets and liabilities of Borrower, all of
the Senior Obligations due or to become due shall first be paid in full in cash
or cash equivalents before any payment on account of principal, premium or
interest or otherwise is made on account of the Senior Subordinated Obligations
or the Junior Subordinated Obligations, and all of the Senior Subordinated
Obligations due or to become due shall first be paid in full in cash or cash
equivalents before any payment on account of principal, premium or interest or
otherwise is made on account of the Junior Subordinated Obligations.
     (g) The subordination effected by these provisions, and the rights of the
Lenders holding the Senior Obligations, on the one hand, and the holders of the
Senior Subordinated Obligations and Junior Subordinated Obligations, on the
other hand, shall not be affected by (i) any amendment of, or addition or
supplement to, any of the Loan Instruments, (ii) any exercise or non-exercise of
any right, power or remedy under or with respect to any of the Loan Instruments
or any Senior Obligation, (iii) any waiver, consent, release, indulgence,
extension, renewal, modification, delay, nonperfection or other action or
inaction in respect of any of the Loan Instruments or the Senior Obligations, or
(iv) any increase in the amount, or extension, renewal, modification or
refunding, of the Senior Obligations.
     (h) The subordination effected by these provisions, and the rights of the
Lenders holding Senior Subordinated Obligations, on the one hand, and the
Lenders holding Junior Subordinated Obligations, on the other hand, shall not be
affected by (i) any amendment of, or addition or supplement to the Loan
Instruments, (ii) any exercise or non-exercise of any right, power or remedy
under or with respect to any of the Loan Instruments or any Senior Subordinated
Obligation, (iii) any waiver, consent, release, indulgence, extension, renewal,
modification, delay, nonperfection or other action or inaction in respect of any
of the Loan Instruments or the Senior Subordinated Obligations, or (iv) any
increase in the amount, or extension, renewal, modification or refunding, of the
Senior Subordinated Obligations.
The provisions hereof as to subordination are solely for the purpose of defining
the relative rights of the Lenders holding Senior Obligations, Senior
Subordinated Obligations and Junior Subordinated Obligations, and none of such
provisions shall excuse Borrower from its obligations to pay the Senior
Subordinated Obligations and the Junior Subordinated Obligations in accordance
with the terms of this Agreement and the other Loan Instruments.

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     2.3 Funding and Yield Protection.
     (a) Taxes. All payments made by Borrower to the Lenders hereunder or under
the Notes will be made free and clear of, and without deduction or withholding
for, any present or future Taxes and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Taxes and such additional amounts
as may be necessary so that every payment of all amounts due to the Lenders
hereunder or under the Notes, after withholding or deduction for or on account
of any Taxes, will not be less than the amount provided for herein or in the
Notes. Borrower will furnish to each Lender within 30 days after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by Borrower. Borrower will indemnify and hold
harmless each Lender, and reimburse such Lender upon its written request, for
the amount of any Taxes so levied or imposed and paid by such Lender. Each
Lender shall notify Borrower and Agent of any event or circumstances which will
entitle it to indemnification or compensation pursuant to this Section 2.3(a) as
promptly as practicable after it obtains knowledge thereof. Each Lender will
inform Borrower, in writing, of the basis and amount of each request for
indemnification or compensation under this Section 2.3(a). If Borrower shall
request, such Lender shall in good faith contest the governing body’s imposition
of or the amount of any such requested amount, keep Borrower fully informed in
respect thereof, consult in good faith with Borrower’s counsel regarding such
contest, and shall not compromise or otherwise settle such contest without
Borrower’s consent; provided that such Lender may in its sole discretion select
the forum for such contest and determine whether any such contest shall be by
resisting payment of such amount, paying such amount under protest or paying
such amount and seeking a refund thereof; provided, further, that such Lender
shall not be required to contest any claim unless (x) after request by such
Lender in the event the amount in question exceeds $200,000, Borrower has
delivered to such Lender an opinion of independent tax counsel selected by
Borrower and reasonably acceptable to such Lender to the effect that there is a
reasonable possibility of success, (y) such Lender shall have received from
Borrower, in such form as such Lender shall reasonably deem satisfactory,
indemnification and security for any and all actual or anticipated liability,
loss, cost or expense arising out of or relating to such amount or the contest
thereof, including, but not limited to, all legal and accountants’ fees and
expenses, penalties, interest and additions to tax, and (z) if the contest shall
be conducted in a manner requiring the payment of all or part of such amount,
Borrower shall have paid the amount required. If any Lender shall obtain a
refund of any amount which Borrower shall have paid for any Lender or for which
Borrower shall have reimbursed any Lender, such Lender shall pay Borrower an
amount which is equal to the sum of the amount of such refund, plus any interest
received on such refund fairly attributable to the amount paid by Borrower to or
for such Lender, less any taxes paid or incurred by such Lender by reason of the
receipt or accrual of such refund and interest. The obligations of Borrower
under this Section 2.3(a) shall survive the payment or prepayment of the Notes
and the transfer of the Notes.
     (b) Increased Costs. If, with respect to any Loan or any of the Loan
Instruments (including maintenance by any Lender of its proportionate share of
any Loan),
     (i) the compliance by any Lender with any direction, requirement or request
in respect of the Loans from any regulatory authority, whether or not having the
force of Law, with which such Lender must reasonably comply; or

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     (ii) any change in the interpretation or application of any Law or the
enactment of any Law in respect of the Loans imposing or modifying any reserve,
deposit, capital adequacy or similar requirement with respect to any class of
assets or liabilities of, deposits with or for the account of, or loans by any
Lender (or with respect to any change therein or in the amount thereof); or
     (iii) the occurrence in respect of the Loans of a change in any other
condition or circumstance with respect to this Agreement and/or the maintenance
by any Lender of its proportionate share of any Loan;
shall (A) result in any increase in cost to any Lender in connection with or
arising out of any Loan or any Loan Instrument, (B) result in any reduction in
the amount of any payment receivable by such Lender hereunder or thereunder or
(C) result in any reduction of the rate of the return on any Lender’s capital as
a consequence of its obligations hereunder below that which such Lender could
have achieved but for such circumstances, then in each such case Borrower shall
fully reimburse such Lender the amount of such increase in cost, reduction in
payment receivable or reduction in rate of return promptly after written
notification thereof to Borrower and Agent by such Lender. The Lenders shall
(consistent with their internal policies and legal and regulatory restrictions)
use their best efforts to avoid such increased costs by giving Borrower prompt
notice thereof and granting Borrower the opportunity to convert to an
alternative arrangement, provided that Borrower promptly pays when due all
reasonable fees and expenses of the Lenders incurred or to be incurred in
connection with such alternative arrangement.
     (c) Change of Law. After the date hereof if any change in applicable Law or
the interpretation thereof by any Governmental Authority makes it unlawful for
any Lender to make or continue its proportionate interest in any Loan, then such
Lender shall promptly give notice along with evidence thereof to Borrower and
Agent, and Borrower shall pay forthwith in the manner set forth below all
amounts outstanding, accrued or payable under this Agreement and the Note(s) to
such Lender.
     (d) Non-Availability.
     (i) If at any time dollar deposits in the principal amount of any Lender’s
proportionate interest in, or obligation under, any Loan are not available to
such Lender in the London interbank market for the next Floating Rate Interest
Period, such Lender shall so notify Agent, who shall so notify Borrower, and the
obligation of such affected Lender to advance or to continue its proportionate
interests in the Junior Subordinated Loans or Revolving Loans shall be
suspended.
     (ii) If at any time any Interest Rate then in effect based on LIBOR does
not serve as an accurate reference, in the reasonable judgment of any Lender,
for such Lender to determine the cost of advancing or maintaining its respective
proportionate interest in any Junior Subordinated Loan or Revolving Loan during
any Floating Rate Interest Period, then such Lender shall notify Agent, who
shall so notify Borrower, and interest on such Lender’s proportionate share of
such

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Loans shall for any subsequent Interest Period accrue at a rate per annum equal
to the Base Rate plus 4.50%.
     (e) Funding Costs. Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any actual loss (including loss of anticipated
profits), cost or out-of-pocket expense which such Lender determines is
attributable to (i) default by Borrower in payment when due of the principal
amount of or interest on any Loan (or portion thereof), (ii) default by Borrower
in making any prepayment of any Loan after Borrower has given any notice
required hereunder regarding such prepayment or (iii) the making of a prepayment
(including, without limitation, on acceleration) of any Loan on a day which is
not the last day of the applicable interest period with respect thereto,
including, without limitation, in each case, any such loss, cost or expense
arising from the reemployment of funds obtained by such Lender to maintain its
Loans or from fees payable to terminate the deposits from which such funds were
obtained.
     2.4 Repayment.
     (a) Repayment of Tranche A Senior Loans, Tranche B Senior Loans and Tranche
C Senior Loans.
     (i) Borrower shall pay on each “Tranche A Senior Loan Repayment Date”
indicated below to each Lender its pro rata share of the amount equal to the
dollar amounts indicated for such Tranche A Senior Loan Repayment Date:

          Tranche A Senior Loan     Repayment Date   Principal Amount
July 31, 2008
  $ 850,000.00  
January 31, 2010
  $ 4,100,000.00  
July 31, 2010
  $ 3,950,000.00  
January 31, 2011
  $ 3,600,000.00  
July 31, 2011
  $ 3,275,000.00  
January 31, 2012
  $ 3,450,000.00  
July 31, 2012
  $ 4,150,000.00  
January 31, 2013
  $ 3,200,000.00  
July 31, 2013
  $ 4,250,000.00  
January 31, 2014
  $ 3,780,000.00  
July 31, 2014
  $ 3,780,000.00  
Total:
  $ 38,385,000.00  

     (ii) Borrower shall pay on each “Tranche B Senior Loan Repayment Date”
indicated below to each Lender its pro rata share of the dollar amounts
indicated for such Tranche B Senior Loan Repayment Date:

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          Tranche B Senior Loan     Repayment Date   Principal Amount
July 31, 2008
  $ 1,330,000.00  
January 31, 2009
  $ 1,330,000.00  
July 31, 2009
  $ 1,155,000.00  
January 31, 2013
  $ 200,000.00  
July 31, 2013
  $ 125,000.00  
January 31, 2014
  $ 275,000.00  
January 31, 2015
  $ 2,045,000.00  
July 31, 2015
  $ 6,510,000.00  
Total:
  $ 12,970,000.00  

     (iii) Borrower shall pay on each “Tranche C Senior Loan Repayment Date”
indicated below to each Lender its pro rata share of the dollar amounts
indicated for such Tranche C Senior Loan Repayment Date:

          Tranche C Senior Loan     Repayment Date   Principal Amount
April 30, 2008
  $ 5,962,000.00  
July 31, 2008
  $ 5,750,000.00  
October 31, 2008
  $ 11,460,000.00  
January 31, 2009
  $ 3,325,000.00  
April 30, 2009
  $ 5,475,000.00  
July 31, 2009
  $ 5,475,000.00  
October 31, 2009
  $ 2,275,000.00  
January 31, 2013
  $ 150,000.00  
April 30, 2013
  $ 150,000.00  
July 31, 2013
  $ 100,000.00  
October 31, 2013
  $ 100,000.00  
January 31, 2014
  $ 75,000.00  
April 30, 2014
  $ 75,000.00  
July 31, 2014
  $ 75,000.00  
October 31, 2014
  $ 75,000.00  
January 31, 2015
  $ 200,000.00  
Total:
  $ 40,722,000.00  

     (b) Repayment of Senior Subordinated Loans
     Borrower shall pay on each “Tranche A Senior Subordinated Loan Repayment
Date” indicated below to each Lender its pro rata share of the dollar amount
indicated for such Tranche A Senior Subordinated Loan Repayment Date:

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          Tranche A Senior Subordinated     Loan Repayment Date   Principal
Amount
January 31, 2010
  $ 150,000.00  
January 31, 2011
  $ 575,000.00  
July 31, 2011
  $ 575,000.00  
January 31, 2012
  $ 800,000.00  
January 31, 2013
  $ 1,050,000.00  
January 31, 2014
  $ 470,000.00  
July 31, 2014
  $ 470,000.00  
Total:
  $ 4,090,000.00  

     Borrower shall pay on each “Tranche B Senior Subordinated Loan Repayment
Date” indicated below to each Lender its pro rata share of the dollar amount
indicated for such Tranche B Senior Subordinated Loan Repayment Date:

          Tranche B Senior Subordinated     Loan Repayment Date   Principal
Repayment
January 31, 2010
  $ 1,155,000.00  
July 31, 2012
  $ 420,000.00  
January 31, 2013
  $ 220,000.00  
July 31, 2013
  $ 100,000.00  
January 31, 2014
  $ 395,000.00  
January 31, 2015
  $ 1,505,000.00  
Total:
  $ 3,795,000.00  

     Borrower shall pay on each “Tranche C Senior Subordinated Loan Repayment
Date” indicated below to each Lender its pro rata share of the dollar amount
indicated for such Tranche C Senior Subordinated Loan Repayment Date:

          Tranche C Senior Subordinated     Loan Repayment Date   Principal
Repayment
April 30, 2008
  $ 2,120,000.00  
July 31, 2008
  $ 1,140,000.00  
October 31, 2008
  $ 510,000.00  
January 31, 2009
  $ 1,715,000.00  
April 30, 2009
  $ 460,000.00  
July 31, 2009
  $ 175,000.00  
October 31, 2009
  $ 900,000.00  
Total:
  $ 7,020,000.00  

     (c) Repayment of Junior Subordinated Loans. Borrower shall pay all
outstanding Junior Subordinated Loans on January 31, 2011.

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     (d) Repayment of Revolving Loans. Borrower shall pay all outstanding
Revolving Loans on April 30, 2015.
     2.5 Prepayment.
     (a) Optional Prepayments.
     (i) Borrower shall have the option, upon 30 days prior written notice to
Agent, to prepay to the Lenders, pro rata, on any applicable Repayment Date (in
whole or in part) the outstanding principal amount of Fixed Rate Loans, as
selected by Borrower, together with all accrued and unpaid interest thereon to
the date of prepayment plus the Yield-Maintenance Premium with respect to the
principal amount of the Loans being prepaid. All partial prepayments of the
Loans shall be applied in inverse order of maturities of the Loan to which the
prepayment is being applied (as selected by Borrower). Each notice from Borrower
to Agent pursuant to this Section 2.5(a)(i) shall specify the date and amount of
prepayment. Upon receipt of such notice Agent shall promptly notify each Lender
thereof. The payment amount specified in such notice shall be due and payable on
the date specified therein, together with all accrued and unpaid interest
thereon and the applicable amount of the Yield-Maintenance Premium. Partial
prepayments of the Loans under this Section 2.5(a)(i) shall be in an aggregate
principal amount of $1,000,000 or more in integral multiples of $1,000,000.
Prepayments made pursuant to this Section 2.5(a)(i) may not be reborrowed.
     (ii) Borrower shall have the option, upon 30 days prior written notice to
Agent, to prepay to the Lenders, pro rata, in whole or in part, on any date, the
outstanding principal amount of the Junior Subordinated Loans, together with all
accrued and unpaid interest thereon to the date of prepayment plus any losses or
expenses as described in Section 2.3(e) incurred in connection therewith. Each
notice from Borrower to Agent pursuant to this Section 2.5(a)(ii) shall specify
the date and amount of prepayment. Upon receipt of such notice, Agent shall
promptly notify each Lender thereof. The amount specified in such notice shall
be due and payable on the date specified therein. Partial prepayments of the
Junior Subordinated Loans under this Section 2.5(a)(ii) shall be in an aggregate
principal amount of $1,000,000 or more in integral multiples thereof.
Prepayments made pursuant to this Section 2.5(a)(ii) may not be reborrowed.
     (b) Mandatory Prepayments.
     (i) On any Tranche A Senior Loan Repayment Date, subject to the provisions
of this Section 2.5(b)(i) below, the Tranche A Senior Loan (without payment in
respect of the Yield-Maintenance Premium) shall be prepaid using funds then made
available for prepayment from the Rova I Contingency Account pursuant to
Section 4.6 of the Deposit Agreement, together with all accrued and unpaid
interest thereon. Each Lender shall have the option to accept its pro rata share
of the prepayments required pursuant to this Section 2.5(b) to be applied to

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the Tranche A Senior Loan; all such prepayments not accepted by the Lenders
shall be transferred to the Project Control Account. On any Tranche B Senior
Repayment Date, subject to the provisions of this Section 2.5(b)(i) below, the
Tranche B Senior Loan (without payment in respect of the Yield-Maintenance
Premium) shall be prepaid using funds then made available for prepayment from
the Rova II Contingency Account pursuant to Section 4.6 of the Deposit
Agreement, together with all accrued and unpaid interest thereon. Each Lender
shall have the option to accept its pro rata share of the prepayments required
pursuant to this Section 2.5(b)(i) to be applied to the Tranche B Senior Loan;
all such prepayments not accepted by the Lenders shall be transferred to the
Project Control Account. All partial prepayments are to be applied to remaining
repayments of principal in inverse order of maturities. No amount prepaid
pursuant to this Section 2.5(b)(i) may be reborrowed by Borrower.
     (ii) Junior Subordinated Loans shall be prepaid, pro rata, using funds made
available for prepayment from the Project Control Account pursuant to
Section 4.1 of the Deposit Agreement, together with accrued and unpaid interest
thereon plus any losses or expenses as described in Section 2.3(e) incurred in
connection therewith. Prepayments made pursuant to this Section 2.5(b)(ii) may
not be reborrowed.
     2.6 General Terms of Payment.
     (a) General. All sums payable to the Lenders hereunder shall be paid
without deduction, set-off or counterclaim in New York City in immediately
available funds not later than 12:00 noon (New York time) except as otherwise
set forth on the day due to the applicable account specified in the Lender
Schedule.
     (b) Priority of Application. Subject to the provisions of Section 2.2
hereof and of the Deposit Agreement, any payments made to the Lenders shall be
applied (pro rata within each of clauses (i) (A) and (i) (B) below, unless
otherwise specifically required pursuant to the terms hereof) as follows:
     (A) first against costs, expenses and indemnities due to such Lenders under
the Loan Instruments; and
     (B) then against (i) first, Debt Service due and payable in respect of the
Senior Obligations; (ii) second, Debt Service due and payable in respect of the
Senior Subordinated Obligations; and (iii) third, of all Debt Service in respect
of the Junior Subordinated Obligations payments of accrued and unpaid interest
on Loans held by such Lenders.
     (c) Non-Banking Day. Whenever any payment shall be due, or any calculation
shall be made, on a day which is not a Banking Day, the date for payment or
calculation, as the case may be, shall be extended to the next succeeding
Banking Day, and any interest on any payment shall be payable for such extended
time at the specified rate.

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     (d) Agent’s Calculations. All calculations of interest, fees, increased
costs, funding costs, gross-up costs or other amounts due hereunder calculated
by Agent shall be conclusive as to the amount thereof absent manifest error.
Agent shall, upon request by Borrower, promptly provide Borrower with a
certificate as to the calculation of any such amount, setting forth the method
of such calculation.
     2.7 Notes.
     (a) Notes. All Loans shall be evidenced by promissory notes of Borrower,
substantially in the form applicable to the tranche of Loans made, as set forth
in Schedule 2.7 hereto, with appropriate insertions as to payee, date and
principal amount payable to the order of each Lender and evidencing the
obligation of Borrower to pay a principal amount equal to the aggregate unpaid
principal amount of such tranche of Loans by such Lender under this Agreement,
plus interest thereon and Yield-Maintenance Premiums, if applicable, as provided
in this Agreement.
     (b) Certain Terms of the Notes. Each Lender is hereby authorized to record
on its Note (or a schedule or grid attached thereto) or on its regularly
maintained books and records the date and amount of each Loan made, and the date
and amount of each payment or prepayment of principal thereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded.
     (c) Registration, Transfer and Exchange of the Notes. Borrower will cause
to be kept at its principal executive office a register for the registration and
transfer of the Notes and shall provide to Agent a copy thereof on request. Any
Lender may at its option either in person or by its attorney duly authorized in
writing surrender its Notes at said office for exchange either duly endorsed or
if surrendered for registration of transfer accompanied by (i) a written
instrument of transfer duly executed by such Lender or such attorney and (ii) a
duly executed Commitment Transfer Supplement substantially in the form attached
as Schedule 2.7(c) herein. Borrower shall, without expense to such Lender,
deliver to or upon the order of such Lender one or more Notes in the same
aggregate unpaid principal amount as the Note transferred or exchanged, each
dated the date of transfer or exchange, or, if later, the date to which interest
has been paid on, such Note, and, subject to Section 9.2, registered in such
name or names as shall be specified by such Lender. Every Note so made and
delivered upon exchange for any other Note shall be in the applicable form set
forth in Schedule 2.7. Each Note delivered to Borrower for exchange or transfer
shall be canceled upon the issuance of a new Note in lieu thereof.
     Prior to due presentment of any Note for registration of transfer, Borrower
and Agent may deem and treat the registered holder thereof as the absolute owner
of such Note for the purpose of receiving payment of or on account of the
principal of and premium, if any, and interest on such Note, and for the purpose
of any notice, waiver or consent hereunder, and payment of such Note shall be
made only to such holder or its designees.
ARTICLE 3
RESERVED

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ARTICLE 4
CONDITIONS TO CLOSING
     4.1 Conditions Precedent to Closing.
     The obligations of the Lenders to enter into this Second Amended and
Restated Loan Agreement are subject to the fulfillment to the satisfaction of
Agent and the Lenders of the following conditions precedent on the date hereof
(the “Closing Date”):
     (a) Proof of Authorizing Action. Agent shall have received, in form and
substance satisfactory to Agent:
     (i) certified copies of the (A) certificate of incorporation, certificate
of limited partnership, by-laws, partnership agreement or other equivalent
organizational documents of Borrower and each Partner, and (B) resolutions of
the management committee of Borrower and board of directors (or other equivalent
body) of each Partner authorizing the execution, delivery and performance of
each Loan Instrument executed on the date hereof to which Borrower or such
Partner, as applicable, is a party and of all documents evidencing other
necessary action with respect thereto;
     (ii) certificates signed by an Authorized Officer of Borrower and each
Partner certifying the name, incumbency and signature of each individual
authorized to sign the Loan Instruments to which Borrower or such Partner, as
applicable, is a party and the other documents or certificates to be delivered
pursuant hereto or thereto, which may be conclusively relied upon until a
revised certificate is similarly so delivered; and
     (iii) good standing certificates and certificates of authority to transact
business as a foreign organization with respect to each such Person.
     (b) Loan Instruments. Each Loan Instrument to be executed on the date
hereof shall have been fully executed and delivered pursuant to the Escrow
Agreement by each Person which is a party thereto in accordance with the Escrow
Agreement.
     (c) Title Insurance. Agent shall have received a title report and one or
more title commitments and pro forma title policies and endorsements issued by
title insurers acceptable to Agent in favor of the Secured Parties and
committing to insure the Deed of Trust Trustee for the benefit of Agent as of
the Funding Date the Liens of the Original Deed of Trust (as modified as of the
Closing Date), the Additional Deed of Trust (as amended as of the Closing Date)
and the Additional Deed of Trust (2008) in an amount of $42,475,000 with respect
to the Original Deed of Trust, $16,765,000 with respect to the Additional Deed
of Trust and $65,242,000 with respect to the Additional Deed of Trust (2008), in
each case in form and substance satisfactory to Agent. The Agent shall be
satisfied that, upon the release from escrow in accordance with the Escrow
Agreement, and the recordings described in Section 4.1(d) below, Agent will
receive fully paid ALTA Lender’s title policies and endorsements in the agreed
pro forma forms without additional exception or change thereto.

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     (d) Perfected Interests. Agent shall be satisfied that, upon release from
escrow in accordance with the Escrow Agreement, the execution and delivery of
the Security Documents, the filing of the Financing Statements, the execution,
delivery and recordation of the Agreement of Second Modification to Future
Advance Deed of Trust and Security Agreement (relating to the Future Advance
Deed of Trust and Security Agreement, dated as of December 18, 1991, as
amended), the Agreement of Modification to Future Advance Deed of Trust and
Security Agreement (relating to the Future Advance Deed of Trust and Security
Agreement, dated as of December 1, 1993), the Assignment of Deed of Trust
(relating to the Original Deed of Trust), the Assignment of Deed of Trust
(relating to the Additional Deed of Trust), the Substitution of Trustee
(relating to each of the Original Deed of Trust and the Additional Deed of
Trust), and the Additional Deed of Trust (2008), and the delivery of
certificates evidencing the Pledged Interests) shall create (i) as security for
the Senior Obligations, valid and perfected first-priority security interests in
and liens on the collateral described therein with priority dating from no later
than (i) with respect to the Tranche A Senior Loans, the Original Closing Date,
(ii) with respect to the Tranche B Senior Loans, the Amendment Execution Date,
and (iii) with respect to the Tranche C Senior Loans and the Revolving Loans,
the Funding Date; as security for the Senior Subordinated Obligations, valid and
perfected second-priority security interests and liens on the collateral
described therein with priority dating from the Funding Date; and (iv) as
security for the Junior Subordinated Obligations, valid and perfected
third-priority security interests and liens on the Pledged Interests only with
priority from the Funding Date.
     (e) Insurance. Agent shall have received (i) a certified copy of, or binder
for, each of the insurance policies required by Section 6.14 hereof, together
with evidence satisfactory to Agent that such insurance complies with the
provisions of Section 6.14 hereof and with the provisions of each of the Project
Documents, and that all premiums then due with respect to such insurance have
been paid, and (ii) a written report of the Insurance Advisor describing the
insurance obtained by Borrower with respect to the Facilities and stating that
the insurance required is in full force and effect and provides reasonable and
adequate coverage for the Facilities.
     (f) EWG Status. Borrower shall have obtained and maintained MBR Authority
and status as an EWG.
     (g) Independent Engineer’s Report. Agent shall have received a report of
the Independent Engineer detailing, to the satisfaction of Agent, compliance by
Borrower with the provisions of Section 6.5(b) with respect to the primary
potential transformer explosion at the Facilities on October 27, 2007.
     (h) Projections. Agent shall have received from Borrower (i) projections
through August 1, 2015 demonstrating minimum Senior Debt Service Coverage Ratios
and Total Debt Service Coverage Ratios for Borrower of at least 1.40:1 and
1.20:1, respectively, and (ii) a certificate, satisfactory in form and substance
to Agent, of the chief financial officer of Borrower stating that such
projections and supporting documents were prepared in good faith by Borrower and
are based upon assumptions which Borrower considers to be reasonable.

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     (i) Opinions of Counsel. Legal opinions, in each case dated the date
hereof, of Borrower’s New York, North Carolina, Virginia and other counsel shall
have been executed and delivered to the Secured Parties, in form and substance
acceptable to the Secured Parties.
     (j) No Default. There shall exist no Default or Event of Default.
     (k) Representations. All representations and warranties contained in each
Loan Instrument by Borrower or any Partner shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the date hereof.
     (l) Continued Effectiveness of Project Documents. Each of the Project
Documents shall be in full force and effect and no default shall have occurred
thereunder which could have a material adverse effect on Borrower’s ability to
meet its obligations under any of the Loan Instruments in a timely manner. There
shall not have occurred any event of force majeure which would allow any party
to a Project Document to avoid or delay performance of all or any part of its
obligations under such Project Document.
     (m) No Violation of Law, Etc. No Law, regulation, ruling, guideline or
other governmental action or inaction of any Governmental Authority shall be in
effect or shall have occurred (or be proposed if such proposal has a reasonable
likelihood of being enacted, and if enacted would have a material effect), the
effect of which is to prevent, directly or indirectly, Agent, any Lender,
Borrower or any other party to any Loan Instrument or Project Document from
fulfilling its respective obligations hereunder or thereunder, or which would
subject any Lender to any unreimbursed liability by reason of the performance of
its obligations hereunder (other than taxes levied on the income of such
Lender). In addition, the Facilities, the Property, Borrower and each Partner,
with respect to the Facilities and the Property, Operator, shall each be in full
compliance with all Governmental Requirements including those pertaining to
environmental, pollution control and ecological matters, except where
noncompliance could not, in the judgment of Agent, have a material adverse
effect on Borrower, the Facilities, the Property, Borrower’s ability to perform
its obligations under the Loan Instruments or the Project Documents or the
rights or interests of the Secured Parties.
     (n) Material Adverse Change. No event or events shall have occurred which,
in the judgment of Agent, (i) materially adversely affect Borrower’s ability to
meet its obligations under any of the Loan Instruments or Project Documents,
(ii) materially adversely affect the condition (financial or otherwise) of any
Obligor which could reasonably be expected to have a material adverse effect on
such Obligor’s ability to meet its obligations in a timely manner under the
Project Documents to which it is a party or (iii) materially adversely affect
the security interest of any of the Secured Parties in the collateral subject to
the Security Documents, all as determined by Agent in the reasonable exercise of
its discretion.
     (o) Closing Certificate of Borrower. Agent shall have received a true and
correct certificate, signed by an Authorized Officer of Borrower, in the form of
Exhibit 4.1(o) hereto.

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     (p) Notices to Parties to Project Documents. Borrower and Agent shall have
delivered into escrow pursuant to the Escrow Agreement notices of new agent and
payment directions under each of the consents to assignment of Project
Documents, in each case in form and substance satisfactory to Agent.
     (q) Letters of Credit. The Letters of Credit and the other documents
described therein shall have been delivered into escrow in accordance with that
certain Williams Mullen Escrow Agreement dated the date hereof, an executed copy
of which shall have been delivered to Agent.
     (r) Outstanding Notes. All notes issued by Borrower under the Original
Credit Agreement (other than the notes evidencing the Tranche A Senior Loans and
Tranche B Senior Loans issued to The Prudential Insurance Company of America)
or, in lieu thereof, lost certificate affidavits, shall have been delivered in
escrow in accordance with the Escrow Agreement.
     (s) Escrow. Borrower and the other parties thereto shall have executed and
delivered an escrow agreement, in the form attached hereto as Schedule 4.1(s)
(the “Escrow Agreement”), all documents and other items required to be delivered
into escrow pursuant to the terms of the Escrow Agreement shall have been so
delivered, and escrow agent shall have acknowledged receipt thereof.
     (t) Other Information. Agent shall have received such other statements,
certificates, documents and information with respect to the Facility or matters
contemplated by this Agreement as Agent may reasonably request.
     4.2 Condition Precedent to Funding.
     The obligations of the Lenders to purchase the Tranche C Senior Loans, the
Revolving Loans, the Senior Subordinated Loans and the Junior Subordinated Loans
are subject to receipt by the Lender of the “Draw Request” from the “Payoff
Escrow Agent” (as such terms are defined in the Escrow Agreement) delivered in
accordance with the Escrow Agreement. The date of receipt of such Draw Request
is referred to herein as the “Funding Date”.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
     Borrower hereby represents and warrants to each of the Secured Parties that
each of the following representations and warranties is true and correct:
     5.1 Organization and Existence.
     Borrower is a general partnership duly formed and validly existing under
the laws of the Commonwealth of Virginia. The Partners are the sole general
partners of Borrower. Westmoreland-North Carolina Power LLC is a limited
liability company duly formed, validly existing and in good standing under the
laws of the Commonwealth of Virginia, and Westmoreland-Roanoke Valley, L.P. is a
limited partnership duly formed, validly existing and in

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good standing under the laws of the State of Delaware, and WEI-Roanoke Valley
Inc. is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and Westmoreland Energy LLC is a
limited liability company duly formed, validly existing and in good standing
under the laws of the State of Delaware. Borrower, Partners and Partner Parents
each has the organizational power and authority to own its property and to carry
on its business as now being conducted and as proposed to be conducted and is
duly qualified to do business and is in good standing in the state of its
organization and in each other jurisdiction in which the character of the
properties owned or leased by it or in which the transaction of its business as
presently conducted or proposed to be conducted makes such qualification
necessary or desirable (except, with respect to the Partner Parents only, to the
extent absence of such power and authority could not, singularly or in the
aggregate, in the reasonable judgment of Agent, have a materially adverse effect
on Borrower, the Facilities, the Property or Borrower’s ability to perform its
obligations under the Loan Instruments or Project Documents). None of Borrower
or any of the Partners has any subsidiaries, direct or indirect.
     5.2 Authority; Enforceability.
     Borrower has full power and authority to enter into and perform each Loan
Instrument and Project Document to which it us a party, and the entering into
and performance of each such agreement or document has been duly authorized by
all proper and necessary partnership action. Assuming due authorization by the
other parties hereto and thereto, each Loan Instrument and Project Document to
which Borrower is a party constitutes the valid and legally binding obligations
of Borrower and the other parties thereto, enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
(a) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors’ rights generally and
(b) general equitable principles, regardless of whether the issue of
enforceability us considered in a proceeding in equity or at law.
     5.3 No Breach.
     The execution, delivery and performance by Borrower of each Loan Instrument
and Project Document to which it is a party (including the placing of such Loan
Instruments into escrow and the subsequent release) do not and will not
(a) require any consent or approval of any Person which has not been obtained,
(b) violate the Partnership Agreement or any other organization document of
Borrower or any of the Partners, (c) contravene or violate any provision of any
Law applicable to Borrower, any of its assets or the Facilities or
(d) contravene, violate or result in any breach of any provision of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than Permitted Liens) on any of the assets of Borrower pursuant to the
provisions of, any mortgage, indenture, contract, agreement or other undertaking
to which Borrower is a party or which purports to be binding upon Borrower or
upon any of Borrower’s assets.
     5.4 No Default.
     Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of its obligations, covenants or conditions
contained in any Project Document or Loan Instrument. To the best knowledge of
Borrower, no other party to any

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Project Document (except for Project Documents requiring payments of less than
$50,000 per year and replaceable in the ordinary course of business) is in
default thereunder. No Default or Event of Default has occurred or is
continuing.
     5.5 Compliance with Laws; Governmental Requirements.
     Borrower has been and is in compliance with all Governmental Requirements,
including but not limited to all FERC requirements under the FPA applicable to a
holder of MBR Authority since the last compliance filing or application made by
Borrower prior to the effective date of this Agreement relative to such FERC
requirements. No Governmental Requirements are required in connection with the
performance by Borrower of its obligations hereunder or under any other Loan
Instrument or any Project Document or with respect to the participation by
Borrower in the use, occupancy, possession, operation, maintenance, alteration
or repair of the Rova I Facility, the Rova II Facility or the Property in
accordance with the Loan Instruments and Project Documents, except for the
Governmental Requirements set forth in Schedule 5.5 hereto, each of which has
been duly obtained or made and is in full force and effect, is final and is not
subject to appeal.
     5.6 No Litigation.
     There is no action, suit, investigation or proceeding by or before any
court, arbitrator, administrative agency or other Governmental Authority pending
or, to the best knowledge of Borrower, threatened against or affecting Borrower,
or any of its properties (a) which involves the Rova I Facility or the Rova II
Facility which is reasonably likely to have a material adverse effect on
Borrower’s ability to perform its obligations under the Loan Instruments or any
Project Document to which it is a party or (b) which is reasonably likely to
have a material adverse effect on the properties, business, operations,
prospects or financial condition of Borrower. Borrower is not in default with
respect to any order of any court, arbitrator, administrative agency or other
Governmental Authority.
     5.7 Titles; Liens.
     Borrower owns and has good and marketable fee simple title to its real
properties owned, good and marketable easements in all of the easements Borrower
holds and Borrower now owns and has good title to all of its other properties
and assets (other than properties and assets which it leases from others) in
each case, from and after the Funding Date, free and clear of all Liens other
than Permitted Liens. As of the Funding Date, no mortgage or financing statement
or other instrument or recordation covering all or any part of the property or
assets of Borrower is on file in any recording office, except such as may have
been filed in favor of Agent (or the trustee under the Deeds of Trust) and in
favor of Virginia Power under the Virginia Power Mortgage.
     5.8 Security Interests.
     As of the Funding Date, the security interests created in favor of Agent on
behalf of the Secured Parties under the Security Documents will be valid and
perfected, first-priority security interests, with respect to the Senior
Obligations, second-priority interests with respect to the Senior Subordinated
Obligations and, with respect to the Junior Subordinated Interests, third-

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priority security interests (subject only to Permitted Liens) superior and prior
to the rights of all persons, whether the property subject to the security
interests is now owned by Borrower or is hereafter acquired. As of the Funding
Date, the Security Documents and the Financing Statements will have been duly
filed, recorded and/or registered in each office and in each jurisdiction where
required to create and perfect the liens and security interests described above.
Borrower has not transacted any business under any name other than
“Westmoreland-Hadson Partners”, “Westmoreland-LG&E Partners” and “Westmoreland
Partners”. The Partners have not transacted any business under any name other
than “Hadson Roanoke Valley L.P.” and “Westmoreland-North Carolina Power, LLC”,
and “Westmoreland Roanoke Valley, L.P., respectively.
     5.9 Taxes.
     Borrower has filed or caused to be filed all tax returns which are required
to be filed by it, and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its assets and all other
taxes, fees or other charges imposed on it by any Governmental Authority (except
taxes, fees and charges which are being contested by Borrower in accordance with
the provisions of Section 6.16 hereof), and Borrower has no knowledge of any
actual or additional assessment in connection therewith for which adequate
provision is not made in the Approved Budget (without taking into account any
“contingency” in such budgets), and there is no assessment in connection
therewith which is delinquent, unless it is being contested in good faith by
appropriate proceedings and for which adequate reserves, bonds or other security
reasonably satisfactory to Agent has been provided. For federal income tax
purposes, Borrower is a partnership and not an association taxable as a
corporation. Neither the execution and delivery of this Agreement, the other
Loan Instruments or the Project Documents nor the consummation of the
transactions contemplated hereby or thereby shall affect such status.
     5.10 Documents.
     Agent has received a complete copy of each Project Document (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any). None of the Project Documents which has been executed
and delivered has been amended, modified or terminated, except as disclosed in
writing to Agent prior to the date hereof.
     5.11 Financial Statements.
     The Financial Statements of Borrower to be provided hereunder are or will
be true, correct and complete as of the dates specified therein and fully and
accurately present the financial condition of Borrower as of the dates and for
the periods specified.
     5.12 Projections and Budgets.
     All projections and budgets furnished to Agent by or on behalf of Borrower
and the summaries of significant assumptions related thereto (a) have been
prepared with due care, (b) fairly present, to the best of Borrower’s knowledge,
Borrower’s expectations as to the matters covered thereby as of their date,
(c) are based on reasonable assumptions as to all factual and

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legal matters material to the estimates therein (including interest rates and
Project Costs) and (d) are consistent with the provisions of the Loan
Instruments and applicable Project Documents.
     5.13 Disclosure.
     No representation, warranty or other statement made by Borrower in any Loan
Instrument or Project Document or in any other document furnished from time to
time by or on behalf of Borrower in connection herewith or therewith (including
the Rova I Operating Budget and the Rova II Operating Budget and any
projections), contains or will contain any untrue statement of a material fact
or omits or will omit to state (as of the date made or furnished) any material
fact necessary to make the statements herein or therein not misleading in light
of the circumstances under which they were made. There is no fact known to
Borrower on the date hereof which has not been disclosed in writing to Agent and
which materially adversely affects, or which could reasonably be expected in the
future to materially adversely affect, the properties, business, prospects or
financial condition of Borrower or the Facilities.
     5.14 Transactions with Affiliates.
     Borrower is not a party to any contract or agreement with, or any other
commitment to, whether or not in the ordinary course of business, any Affiliate
except for the Loan Instruments, the Rova I Coal Subcontract, the Rova II Coal
Subcontract, the Rova I Three Party Agreement, the Rova II Three Party
Agreement, the Rova I Coal Subcontract Guaranty, the Rova II Coal Subcontract
Guaranty and the Venture Management Agreement.
     5.15 Regulation of Parties.
     None of Borrower, its Affiliates nor any of the Secured Parties is or will
be, solely as a result of the participation by such parties separately or as a
group in the transactions contemplated hereby or by any other Loan Instrument or
any Project Document, or by the ownership, use or operation of the Facilities be
subject to regulation by any Governmental Authority as an “electric utility
company”, an “electric utility holding company”, a “public utility,” an
“electric utility” or an “electrical corporation” or a subsidiary or affiliate
of any of the foregoing under any Governmental Requirements (including, without
limitation, PUHCA and the FPA), except for the Borrower as a “public utility”
under any state Law or the FPA which holds, and which complies with, the
requirements for wholesale sales of capacity and energy or MBR Authority (or
both). Borrower was granted, on September 27, 1990, a certificate of public
convenience and necessity (the “Certificate”) pursuant to G.S. § 62-1101(f) and
Rule R1-37 of the North Carolina Utilities Commission (“NCUC”), On July 26, 1993
Borrower filed with the NCUC a notice of amended information relating to the
Borrower’s status as an EWG (“Notice”). Such Notice was accepted by the NCUC
without modification of the Certificate on October 13, 1993. Such Certificate
and the Notice complies in all respects with North Carolina law and regulations,
is final and is not subject to appeal, and is in all respects in full force and
effect and good standing. There is no complaint or administrative proceeding
pending as to such Certificate as of the date hereof, and Borrower is not aware
of any facts or circumstances which might give rise to a complaint or
administrative proceeding in the future. No other approval is required from the
NCUC in connection with any of the transactions contemplated hereby or by any
other Loan Instrument or by any Project Document or Bond Document, including as
a direct

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or indirect result of the aforesaid sale of the capital stock of WEI. None of
Borrower, its Affiliates nor any of the Secured Parties is or will be, solely as
a result of the participation by such parties separately or as a group in the
transactions contemplated hereby or by any other Loan Instrument or any Project
Document or Bond Document, or by the ownership, use or operation of the Rova I
Facility or the Rova II Facility, subject to the jurisdiction of the NCUC or
otherwise be subject to regulation, including without limitation, in respect of
rates or financial or organizational requirements of utilities, under the public
utility laws of North Carolina or Virginia. As of the date of this Agreement,
the Secured Parties are not subject to regulation under the FPA or PUHCA, or
subject to FERC jurisdiction, solely by virtue of their participation in the
transactions contemplated hereby.
     5.16 ERISA.
     No accumulated funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any Plan
(other than a Multiemployer Plan). No liability to the PBGC has been or is
expected by Borrower or any ERISA Affiliate to be incurred with respect to any
Plan (other than a Multiemployer Plan) by the Borrower or any ERISA Affiliate
which is or would be materially adverse to the business, condition (financial or
otherwise) or operations of Borrower. Neither Borrower nor any ERISA Affiliate
has incurred or currently expects to incur any withdrawal liability under Title
IV of ERISA with respect to any Multiemployer Plan which is or would be
materially adverse to the business, condition (financial or otherwise) or
operations of Borrower. The execution and delivery of this Agreement and the
issuance and sale of the Notes will be exempt from, or will not involve any
transaction which is subject to, the prohibitions of section 406 of ERISA and
will not involve any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code.
     5.17 Environmental Matters.
     Except as described in Schedule 5.17 attached hereto, no Hazardous Material
has been or is currently located at, in, on, under or about the Property (or any
other property with respect to which Borrower has or may have retained or
assumed liability either contractually or by operation of law) in a manner which
violates any Environmental Requirement, or for which cleanup or corrective
action of any kind is required or authorized under any Environmental
Requirement, no substantial risk to human health or the environment exists as a
result of any condition on the Property, no Release of any Hazardous Material
from the Property onto or into any other property or from any other property
onto or into the Property has occurred or is occurring in violation of any
Environmental Requirement except as described in Schedule 5.17 attached hereto,
or which could pose a substantial risk to human health or the environment, and
no notice of violation, Lien, complaint, suit, order or other notice with
respect to the environmental condition of the Property (or any other property
with respect to which Borrower has or may have retained or assumed liability
either contractually or by operation of law) is outstanding or anticipated, nor
has any such notice been issued which has not been fully satisfied and complied
with in a timely fashion so as to bring the Property (or any other property with
respect to which Borrower has or may have retained or assumed liability either
contractually or by operation of law) into full compliance with every
Environmental Requirement except as described in Schedule 5.17 attached hereto.

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     5.18 Federal Reserve Regulations.
     Neither Borrower nor any of its Affiliates is engaged, directly or
indirectly, principally, or as one of its important activities, in the business
of extending, or arranging for the extension of, credit for the purposes of
purchasing or carrying any margin stock, within the meaning of Regulation T, U
or X of the Board of Governors of the Federal Reserve System.
     5.19 Investment Company Act.
     Borrower is not an “investment company” or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended.
     5.20 Nature of Business.
     None of Borrower or any Partner (a) has engaged in any material business
other than the development, construction and operation of the Facilities or
(b) is a party to any agreement other than the Project Documents.
     5.21 Foreign Assets Control Regulations, Etc.
     (a) Neither the sale of the Notes by Borrower hereunder not its use of the
proceeds thereof has violated 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.
     (b) Neither the Borrower nor any Partner (i) is a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or
(ii) engages in any dealings or transactions with any such Person. Borrower and
the Partners are in compliance, in all material respects, with the USA Patriot
Act.
     (c) No part of the proceeds from the sale of the Notes hereunder will be or
has been used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.
ARTICLE 6
COVENANTS OF BORROWER
     6.1 The Accounts. The Borrower shall maintain and fund the “Accounts”
created under the Deposit Agreement in accordance with the terms of the Deposit
Agreement.

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     6.2 Debt Service Coverage Ratio.
     On each Calculation Delivery Date, Borrower shall deliver to Agent (a) the
Senior Debt Service Coverage Ratio and the Total Debt Service Coverage Ratio, in
each case calculated for the 12-month period ending on, and for the 12-month
period commencing on, the Quarterly Date immediately preceding such Calculation
Delivery Date. Any projected ratio shall be based upon the assumptions made in
the Operating Budgets then in effect.
     6.3 Maintenance of Existence, Privileges, Etc.
     (a) Borrower. Borrower shall at all times (i) preserve and maintain in full
force and effect its existence as a partnership under the laws of the
Commonwealth of Virginia, its qualification to do business in North Carolina and
in each other jurisdiction in which the conduct of its business requires such
qualification (except where the failure to so qualify would not have a material
adverse effect on the financial condition, business, operations or prospects of
Borrower), and all of its rights, privileges and franchises necessary for the
construction, ownership, maintenance and operation of the Facilities and the
maintenance of its existence; and (ii) obtain and maintain in full force and
effect all Governmental Requirements and other consents and approvals required
in connection with the maintenance, ownership or operation of the Facilities,
including but not limited to EWG status and MBR Authority.
     (b) Partners. Borrower shall use its best efforts to cause each of the
Partners to preserve and maintain in full force and effect (i) such Partner’s
legal existence, (ii) all of the powers, rights, privileges and franchises
necessary for such Partner to own its property and to carry on such Partner’s
business as now being conducted and (iii) such Partner’s qualification to do
business and good standing in each jurisdiction in which the conduct of such
Partner’s business requires such qualification, except where the failure to so
qualify would not have a material adverse effect on such Partner’s or Borrower’s
financial condition, business, operations or prospects.
     6.4 Performance of Project Documents.
     (a) General. Borrower shall (i) perform and observe in all material
respects all of its covenants and agreements contained in any of the Project
Documents to which it is a party and (ii) maintain in full force and effect each
of the Project Documents and all contracts, permits and approvals relating
thereto.
     (b) Power Purchase Agreement. Without limiting the generality of
Section 6.4(a) hereof, Borrower shall (i) timely submit to Virginia Power all
documents, evidence and information required under the Rova I Power Purchase
Agreement and the Rova II Power Purchase Agreement, and (ii) fully and timely
comply with any and all of its other obligations under the Rova I Power Purchase
Agreement and the Rova II Power Purchase Agreement. In furtherance thereof
(x) Borrower shall post a conspicuous sign by each side of the Interconnection
Facilities instructing all employees, contractors and subcontractors not to
tamper with the Interconnection Facilities and shall establish or cause to be
established procedures to prevent any such tampering and inform its employees,
contractors and subcontractors of such procedures and (y) Borrower shall not
cause or allow (i) electric power to be at any time

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delivered to or received by the Rova II Facility from the Rova I Facility or
from any source other than either Virginia Power or the Rova II Facility, other
than in respect of the Common Systems (as defined in the Rova II Power Purchase
Agreement), (ii) any electrical connection to exist between the Rova II Facility
and the Rova I Facility or any other project or entity on Borrower’s side of the
Interconnection Point (as defined in the Rova II Power Purchase Agreement) other
than those required for operation of the Common Systems; and (iii) the Rova II
Facility to accept steam deliveries from the Rova I Facility or from any other
project or entity at any point upstream of the Rova II Facility’s meter.
     6.5 Operation and Maintenance.
     (a) Operations. Borrower shall use, maintain and operate the Facilities and
the Property in compliance with generally accepted Prudent Utility Practices (as
defined in the Rova I Power Purchase Agreement and the Rova II Power Purchase
Agreement), all Project Documents, this Agreement and, except where
non-compliance could not have a materially adverse effect on Borrower, the
Facilities, the Property, Borrower’s ability to perform its obligations under
the Loan Instruments or Project Documents or the rights or interests of the
Secured Parties, and all applicable Governmental Requirements (including but not
limited to all applicable FERC requirements and applicable mandatory reliability
standard obligations). Borrower shall use its best efforts to use, maintain and
operate the Facilities and the Property in accordance with the Rova I Operating
Budget and the Rova II Operating Budget. Borrower shall inspect, maintain,
service and repair the Rova I Facility and the Rova II Facility so as to keep
the Rova I Facility and the Rova II Facility (i) in as good operating condition
as upon Rova I Final Completion and Rova II Final Completion, respectively
(normal wear and tear excepted), (ii) in good order and repair in conformity
with prudent industry standards and commercial practice, (iii) in compliance
with all requirements under the Project Documents and (iv) in such condition
that the Rova I Facility and the Rova II Facility will have the capacity and
functional ability to perform, in normal commercial operation, the functions and
at the ratings set forth in the Project Documents for their remaining useful
life. Borrower shall cause the Rova I Facility and the Rova II Facility to be
operated so as to preserve and enforce all warranties and guaranties in respect
thereof and to which Borrower is a beneficiary. Borrower shall not contract and
shall not permit Operator to subcontract (except to the extent Borrower itself
could have contracted by means of a Permitted Contract) for any material work
without the prior written consent of Agent, which consent shall not unreasonably
be withheld. Borrower shall, immediately upon obtaining knowledge thereof,
notify Agent of any change in the identity of the Facility Manager (as defined
in Section 5.5 of the Operating Contract) or any delegation of Borrower’s
responsibilities to Operator as permitted or contemplated in Section 6.2 or 6.3
thereof. Borrower shall comply with such repair, service and maintenance
standards and schedules as are required to enforce warranty or guaranty claims
against Contractor, Operator or subcontractors and any standards imposed by any
Insurance Policies in effect with respect to the Rova I Facility, the Rova II
Facility or the Property. Borrower’s review of and comment on the manual of
“Facility Procedures” pursuant to Section 5.4 of the Operating Contract shall be
conducted subject to the Independent Engineer’s approval, which shall not be
unreasonably withheld. Borrower shall promptly inform the Independent Engineer
of any material amendment or modifications to “Facility Procedures” proposed by
Operator, or any material changes to such procedures proposed by Borrower, under
Section 5.4 of the Operating Contract, with updates as to the status thereof,
and shall report to the Independent Engineer the results of the annual review
made of

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such procedures as contemplated in said section. Until all of the Obligations
have been fully discharged, Borrower shall retain any information Operator need
no longer retain pursuant to Section 5.17 of the Operating Contract, or cause
Operator to continue to retain such information in a reasonable manner. Borrower
shall not approve any “Proposed Operating Budget” submitted for approval under
Section 7.1 of the Operating Contract until such time as all approvals required
under Section 6.8(h) hereof have been obtained for the Rova I Operating Budget
and the Rova II Operating Budget for the year (or portion thereof) that is the
same as the first year (or portion thereof) of such “Proposed Operating Budget”.
Borrower shall inform Agent and the Independent Engineer of any audit (and
results thereof) that is conducted at Borrower’s request under Section 7.6 of
the Operating Contract and, at Agent’s request, cause such audits to be
conducted to the full extent permitted to Borrower under said Section. Borrower
shall promptly notify Agent if it has the right to terminate the Operating
Contract under Section 18.3 thereof, and only upon the request of Agent, which
shall be made only upon instruction of the Majority Lenders, shall Borrower
exercise such right and shall then do so in the manner specified by Agent.
     (b) Repair and Replacement. In the event of any damage to or destruction of
the Rova I Facility, the Rova II Facility or the Property, or any part thereof,
by fire or other casualty, Borrower shall, at its own expense and whether or not
such damage or destruction is covered by an Insurance Policy, with reasonable
promptness, repair, restore, replace or rebuild the same so that upon the
completion of such repair, restoration, replacement or rebuilding, such Facility
and the Property shall be in the condition required by the foregoing provisions
of this Section 6.5 and so that the productive capacity, value, utility and
remaining useful life of each of the Rova I Facility and the Rova II Facility
shall be at least equal to the greater of (i) the actual productive capacity,
value, utility and remaining useful life of such Facility immediately prior to
the happening of such casualty or (ii) the productive capacity, value, utility
and remaining useful life such Facility would have had if it were used,
maintained and operated in accordance with the requirements of this Section 6.5.
     (c) Capital Expenditures. Borrower shall not, in respect of any single
fiscal year, make any capital expenditures in respect of the Rova I Facility and
the Rova II Facility, other than capital expenditures (i) of up to $300,000 per
event or up to $600,000 in the aggregate or (ii) which are set forth in the Rova
I Operating Budget or the Rova II Operating Budget, each as then in effect,
without the prior written consent of Agent, which shall not be withheld
unreasonably.
     6.6 Operating Logs.
     Borrower shall, at its sole cost and expense, (a) maintain at the Property
daily operating logs showing, among other things, the electrical output of the
Facilities, (b) keep maintenance and repair reports in sufficient detail to
indicate the nature and date of all work done, (c) maintain a current operating
manual and a complete set of plans, accounting records and specifications
reflecting all alterations and (d) maintain all other records, logs and other
materials required by the Operating Contract or any Governmental Requirements.

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     6.7 Compliance with Laws.
     (a) Generally. Borrower shall comply, and shall ensure that the Facilities
are constructed, operated and administered in compliance with, and shall make
such alterations to the Facilities and the Property as may be required for
compliance with, all applicable Governmental Requirements, except where
non-compliance could not have a materially adverse effect on Borrower, the
Facilities, the Property, Borrower’s ability to perform its obligations under
the Loan Instruments or the Project Documents or the rights or interests of the
Secured Parties; provided that Borrower may at its sole cost and expense contest
the applicability of any Governmental Requirements as may entail any such
obligations, if and so long as adequate reserves are maintained in accordance
with applicable accounting principles with respect to such obligations and if,
in the reasonable opinion of Agent and the Independent Engineer, failure to make
any required alterations does not adversely affect the productive capacity,
value, utility or remaining useful life of the Facilities or their output or
materially adversely affect the rights or interests of the Lenders or Agent.
Borrower shall take no affirmative action that could reasonably be expected to
result in the loss of MBR Authority or its EWG status as determined by FERC,
and, if there shall be any material change in the facts that were submitted with
Borrower’s original EWG application or application for MBR Authority or any
change in such facts which FERC might reasonably deem to be material, Borrower
shall immediately notify Agent in writing of such material change. Within
30 days of any notice to Agent, Borrower shall either (A) make a filing with
FERC stipulating a material change relied upon in the original EWG status
certification or file a certification of Borrower’s EWG status (or both) or
(B) make an alternative filing with FERC providing a written explanation of such
change and why Borrower does not believe such change to be material, but if it
is deemed material by FERC, Borrower alternately files for recertification of
its EWG status. In either instance (A) or (B), Borrower shall comply with all
applicable Governmental Requirements. Upon the request of Agent, Borrower shall
deliver to Agent evidence of Borrower’s compliance with all applicable
Governmental Requirements and, if such evidence is not available, certify to
Agent that Borrower is in full compliance.
     (b) Compliance with Margin Stock Rules. No part of the proceeds of the
Loans will be used to purchase “margin stock” (as defined in the regulations
referred to below) or for any other purpose which would result in a violation
(whether by Borrower, Agent or the Lenders) of Regulations T, U or X of the
Board of Governors of the Federal Reserve System or to extend credit to others
for any such purpose. None of Borrower nor any of its Affiliates is engaged in,
nor will any of them engage in, the business of extending credit for the purpose
of purchasing or carrying any “margin stock”.
     (c) Environmental Matters. Borrower shall comply, and shall cause all
tenants, licensees, invitees, contractors, Operator and occupants of the
Facilities or the Property to comply in all respects with all Environmental
Requirements. Borrower shall not, and shall not permit any such other party to,
generate, store, handle, process, transport, ship, dispose, or otherwise use
Hazardous Materials at, in, on, under or from the Facilities or the Property, or
onto any other property, in a manner that could lead or potentially lead to the
imposition on Borrower, any of the Secured Parties, the Deed of Trust Trustees,
the Facilities or the Property of any cleanup obligation, corrective action,
liability, judgment, order or Lien under any Environmental Requirement, or is
not in conformity with customary or prudent environmental and health

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standards. Borrower shall promptly notify Agent when it learns of any
information that would have resulted in a breach of Section 5.17 hereof if such
information had been known but not disclosed at the time such representation was
made, or when it becomes aware of any Release of any Hazardous Material at, in,
on, under or from the Facilities or the Property which is required to be
reported to a Governmental Authority, which could result in any cleanup
obligation, corrective action, liability, judgment, order or Lien under any
Environmental Requirement, or which is not in conformity with customary or
prudent environmental and health standards. Borrower shall immediately forward
to Agent copies of any notices, complaints or summonses received by Borrower
relating to alleged violations of any Environmental Requirement or potential
adverse actions in any way involving environmental or health matters. Borrower
will promptly pay when due any fine, penalty, judgment, or assessment arising
under any Environmental Requirement against Borrower, the Facilities or the
Property or against any of the Secured Parties or the Deed of Trust Trustees to
the extent the same arises in connection with the Facilities or the Property,
except to the extent any such fine, penalty, judgment or assessment is being
contested in good faith by appropriate proceedings, if the tendency of such
proceedings is not likely to interfere with the operation of the Facilities or
the Property by Borrower, does not involve a material risk that the Facilities,
the Property or any part thereof may be sold, lost or forfeited, and adequate
reserves in the judgment of Agent have been set aside with respect thereto to
satisfy any adverse determination. If at any time the condition, operation or
use of the Facilities or the Property violates or could result in liability
under any applicable Environmental Requirement, or there are Hazardous Materials
located at, in, on, under or from the Facilities or the Property for which
cleanup or corrective action of any kind as required under any Environmental
Requirement or, because of any Release of any Hazardous Material, cleanup of or
corrective action with respect to such Hazardous Material is authorized under
CERCLA or any similar state or local law or may be necessary to conform to
customary or prudent environmental and health standards, Borrower shall, within
ten days after discovering such condition, operation or use, notify Agent and
immediately initiate and thereafter diligently pursue, at its sole cost and
expense, such actions as shall expeditiously result in full compliance in all
respects with and elimination of any liability under all Environmental
Requirements and conformity to customary or prudent environmental and health
standards. If an Event of Default exists, Agent may cause an environmental audit
of the Property or any portion thereof to be conducted at Borrower’s expense,
and Borrower shall cooperate in all reasonable ways with any such audit. If the
Original Deed of Trust or the Additional Deed of Trust or the Additional Deed of
Trust (2008) is foreclosed or Borrower tenders a deed or assignment in lieu of
foreclosure, Borrower shall deliver the Property to the purchaser at foreclosure
or to Agent or the nominee of either, as the case may be, in a condition that
complies in all respects with all Environmental Requirements, and that does not
contain Hazardous Materials for which cleanup or corrective action is required
under any Environmental Requirements or, because of any spill or release of
Hazardous Material, cleanup of or corrective action with respect to such
Hazardous Material is authorized under CERCLA or any similar state or local law
or may be necessary to prevent or eliminate a material risk to human health or
the environment.
     (d) Changes in Environmental Laws. If, in order to comply with any federal,
state or local legislation pertaining to environmental matters or any
regulations promulgated thereunder, including, without limitation, any
regulations promulgated by U.S. Environmental Protection Agency and any state
implementing agency pursuant to the Clean Air Act Amendments of 1990, Borrower
is required to acquire pollution allowances, offsets or similar

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emission approvals, or is required to make other expenditures (including the
installation or modification of equipment or technologies) to comply with such
legislation or regulations (as determined by a third-party environmental
consultant chosen by Agent), then Borrower covenants and agrees to promptly
formulate a plan for acquiring such allowances, offsets, approvals or otherwise
for complying with such legislation or regulations, which shall be subject to
approval by Agent, and upon receipt of all such approvals Borrower shall
diligently implement such plan, notwithstanding the provisions of Section 6.5(c)
hereof. No funds shall be distributed pursuant to the last sentence of
Section 4.1 of the Deposit Agreement until Agent and Borrower agree as to the
amounts, if any, needed to be reserved to implement such plan and upon such
agreement Borrower shall, if required, establish a reserve account in such
amounts and in accordance with a schedule to be determined by the Secured
Parties, for the purpose of funding the anticipated cost of purchasing such
required allowances, offsets, approvals or making such other compliance
expenditures for the remaining term of this Agreement. Such reserve account
shall be funded from monies in the Project Control Account after making the
withdrawals specified in Section 4.1(a) through 4.1(i) of the Deposit Agreement.
     6.8 Information.
     Borrower will deliver to Agent the following information (and Agent shall
promptly deliver copies thereof to Lenders):
     (a) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year, a balance sheet of Borrower
as of the end of such fiscal year, the related statements of income, operations
(relating to each item of the approved Rova I Operating Budget and of the
approved Rova II Operating Budget and operating plans), equity and changes in
financial position for such fiscal year setting forth in each case in
comparative form the figures for the previous fiscal year, and prepared in
accordance with generally accepted United States accounting principles,
consistently applied, and, to be audited by, and to carry the unqualified report
(or qualified report reasonably acceptable to Agent) of, independent public
accountants of nationally recognized standing, with the foregoing financial
statements to be consolidated, if such person has consolidated reports;
     (b) Quarterly Financial Statements. As soon as available and in any event
within 60 days after the end of each of the first three quarters of each fiscal
year, a balance sheet of Borrower as of the end of such quarter and the related
statements of income, operations (relating to each item of the approved Rova I
Operating Budget and Rova II Operating Budget and operating plans), equity and
changes in financial position for such quarter and for the portion of the year
ended at the end of such quarter, setting forth in each case in comparative form
the figures for the corresponding portion of the previous year, all certified
(subject to normal year-end adjustments) as to fairness of presentation,
generally accepted United States accounting principles and consistency by the
chief financial officer, treasurer or chief accounting officer of such Person,
with the foregoing financial statements to be consolidated, if such Person has
consolidated reports;
     (c) Certificate of No Default; Project Summary. Simultaneously with the
delivery of each set of financial statements referred to in paragraphs (a) and
(b) above, a certificate of the chief financial officer, treasurer or chief
accounting officer of such Person

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stating that, to the best of such officer’s knowledge, no Default or Event of
Default with respect to such Person under any of the Loan Instruments or Project
Documents to which such Person is a party exists or is imminent on the date of
such certificate or has occurred since the date of the last such certificate,
and with the delivery of each set of financial statements of Borrower
(i) referred to in paragraph (a) above, if requested by Agent within 30 days
after the end of the relevant fiscal year, a certificate of the independent
public accountants making the report thereon stating that in making the
examination necessary for said report they did not discover any failure of
Borrower to fulfill or observe any of the covenants contained in this Article 6
except as specifically stated therein, and (ii) referred to in paragraphs
(a) and (b) above, a project summary information form, substantially in the form
of Schedule 6.8(c) attached hereto, for the quarter ended on the respective
dates of such financial statements;
     (d) Other Financial Statements. A copy of the annual and quarterly
Financial Statements of each of the Obligors (other than the Partners) other
than any Obligor whose Financial Statements are publicly available, consolidated
where any such party has subsidiaries, within 30 days of publication of such
statements, subject to the qualification in Section 6.8(p) hereof; provided,
that with respect to the Coal Supply Guarantor and the Coal Supplier such
quarterly financial statements shall only be provided to the extent available
and (x) within 60 days after the end of each of the first three fiscal quarters
of each fiscal year and within 120 days after the end of each fiscal year, a
certificate signed by an Authorized Officer of the Coal Supply Guarantor stating
that it is in compliance with its covenants set forth in Section 8 of each of
the Rova I Coal Supply Guaranty and the Rova II Coal Supply Guaranty as of such
quarter or year and setting forth the information (including reasonably detailed
calculations) required in order to establish such compliance or if
non-compliance is imminent on the date of such certificate or has occurred as of
such quarter or year setting forth the details thereof and the action which the
Coal Supply Guarantor is taking or proposes to take with respect thereto and
(y) within 30 days after a request by Agent, (no more often than quarterly) and
within 90 days after the end of each Contract Year, a certificate signed by Coal
Supplier’s president or vice president stating that Coal Supplier has fulfilled
its obligations under Section 5.2 of each Coal Supply Agreement and setting
forth the portion, if any, of Coal Supplier’s dedication requirement thereunder
that has been satisfied by KCCC;
     (e) Notice of Default. Promptly upon the occurrence of any Default or Event
of Default or any breach or default (or event that with the passage of time, the
giving of notice or both would constitute a breach or default) hereunder or
under any of the other Loan Instruments or Project Documents by Borrower or
(where Borrower is aware) by any other party thereto, a certificate of the chief
financial officer, treasurer or chief accounting officer of Borrower setting
forth the details thereof and the action which Borrower is taking or proposes to
take with respect thereto;
     (f) Notice of Material Adverse Change. Promptly upon Borrower becoming
aware of any information or knowledge of any adverse change in the business or
condition (financial or otherwise) of any party to any of the Loan Instruments
or Project Documents material to such party’s ability to perform thereunder or
material to the Rova I Facility or material to the Rova II Facility, notice
thereof;

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     (g) Reports Regarding Governmental Authorities. Promptly upon the filing by
Borrower, and promptly upon receipt by Borrower of knowledge of the filing by
any party to any Project Documents, of any material information or material
report with any Governmental Authority regarding the Rova I Facility, the Rova
II Facility, the Property, any of the Loan Instruments or Project Documents, or
any of such party’s obligations thereunder or regarding any material adverse
change in the condition (financial or otherwise) of such party, a copy of such
information or report, or if a copy is not available to Borrower, a written
summary of its knowledge regarding such information or report; promptly, copies
of each Governmental Requirement obtained by Borrower; and promptly, any
official notice or claim by any Governmental Authority received by or known to
Borrower or any Partner pertaining to the Property, the Rova I Facility, the
Rova II Facility, any of the Project Documents or Loan Instruments or any of the
parties thereto and having a material or substantial effect on any of the
foregoing;
     (h) Operating Budget. Not less than 30 days prior to the commencement of
each calendar year, the Rova I Operating Budget substantially in the form
attached hereto as Schedule 6.8(h)(i) and the Rova II Operating Budget
substantially in the form attached hereto as Schedule 6.8(h)(ii) and the
Facilities Operating Budget shall be prepared for the upcoming calendar year and
submitted to the Agent and the Independent Engineer. Each Rova I Operating
Budget shall specify the estimated power sales pursuant to the Rova I Power
Purchase Agreement, the estimated rates and revenues for each category of such
sales, a manpower forecast and a periodic inspection, maintenance and repair
schedule setting forth all material tasks necessary to comply with Borrower’s
obligations in respect of the Rova I Facility hereunder. Each Rova II Operating
Budget shall specify the estimated power sales pursuant to the Rova II Power
Purchase Agreement, the estimated rates and revenues for each category of such
sales, a manpower forecast and a periodic inspection, maintenance and repair
schedule setting forth all material tasks necessary to comply with Borrower’s
obligations in respect of the Rova II Facility hereunder. Each Rova I Operating
Budget and Rova II Operating Budget submitted by Borrower shall contain
complete, fair and accurate projections (by principal items) of the projected
Gross Revenues attributable to the Rova I Facility and to the Rova II Facility,
Projected Rova I Operating Costs and Projected Rova II Operating Costs,
respectively, and Debt Service projected for each month of such Operating
Budget. Agent and the Independent Engineer shall have 30 days from the date each
Operating Budget is submitted by Borrower to approve any such budget, which
approval shall not be unreasonably withheld. If Agent and the Independent
Engineer do not approve an Operating Budget, Agent shall notify Borrower
thereof. Until such Operating Budget is so approved, the Operating Budget most
recently in effect shall continue to apply, except that any items of the then
proposed Operating Budget that have been approved shall also be given effect.
From time to time, Borrower may propose one or more amendments to an Operating
Budget, and Agent and the Independent Engineer may reject such proposal within
ten days of it being made by Borrower, if such rejection is reasonable, and, if
no such rejection is made, such amendment(s) shall become effective. In
addition, Borrower shall report to Agent as soon as practicable each month (but
in no event later than 30 days after the end of each month) its net operating
income for the immediately preceding month in respect of the Rova I Facility,
the Rova II Facility and in the aggregate and whether such income was within 10%
of the projected level, such report to be in the form of Schedule 6.8(h)(iii)
hereto, which may be attached to, or the substance of which may be incorporated
in, the report required to be delivered pursuant to Section 6.8(i) hereof;

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     (i) Reports from Operator. Promptly upon receipt thereof from Operator but
in no event later than 45 days after each month, a copy of each monthly report
provided by Operator pursuant to the Operating Contract, substantially in the
form of Schedule 6.8(i) attached hereto, and any other report as to significant
operating, maintenance and management events, pursuant to the Operating Contract
or otherwise;
     (j) Power Purchase Agreements. On or before the tenth day of each month, a
report (i) setting forth each Forced Outage and Scheduled Outage to occur under
(and as defined in) the Rova I Power Purchase Agreement and the Rova II Power
Purchase Agreement during the preceding month with an explanation of the cause
of each such outage (including whether such cause constitutes a Force Majeure
under (and as defined in) the Rova I Power Purchase Agreement and the Rova II
Power Purchase Agreement, respectively, (ii) keeping Agent currently informed
with regard to any tests conducted under the Rova I Power Purchase Agreement and
the Rova II Power Purchase Agreement, the likelihood of making any payments
(refunds of capacity payments or otherwise) to Virginia Power in the ensuing
12 month period, and the likelihood of attaining Dependable Capacity under and
(as defined in) the Rova I Power Purchase Agreement and the Rova II Power
Purchase Agreement, (iii) stating whether a Rova I Disallowance or a Rova II
Disallowance has occurred and, if so, all details pertaining thereto and, if
not, describing any action (of which Borrower or any of its Affiliates has
knowledge) by a government or regulatory authority to investigate whether there
should be a Rova I Disallowance or a Rova II Disallowance and the status of any
such action, (iv) stating whether the Borrower’s MBR Authority, EWG status, Rova
I Power Purchase Agreement or Rova II Power Purchase Agreement rates are set for
or as placed by FERC under public investigation or have been otherwise modified
by FERC, (v) describing Virginia Power’s dispatch of the Rova I Facility and the
Rova II Facility during the preceding month, and the schedule of operations
provided by Virginia Power pursuant to Section 7.6 of the Rova I Power Purchase
Agreement and pursuant to Section 7.5 of the Rova II Power Purchase Agreement
for such month, and (vi) stating the amount of steam delivered to the Steam Host
from the Rova I Facility and the amount of steam delivered to the Steam Host
from the Rova II Facility, in each case during the preceding month;
     (k) Cash Flow Projections. Not less than 30 days prior to the commencement
of each calendar year, a certificate of the chief financial officer of Borrower
to the effect that, based upon attached pro forma income statements (which shall
include estimated real estate and personal property tax liabilities) and annual
cash flow projection during its following fiscal year (i) Borrower should have
positive Discretionary Cash Flow; (ii) Borrower should be in compliance with the
covenants set forth in this Article 6; and (iii) Borrower should be able to pay
its Debts and other obligations as they become due;
     (l) Casualty or Condemnation. Promptly, notice of any fire or other
casualty or any notice of taking of eminent domain action or similar proceeding
affecting the Property, the Rova I Facility or the Rova II Facility;
     (m) Notices. Promptly after receipt thereof, a copy of each material
notice, demand or other communication delivered to Borrower pursuant to or
concerning any Project Document;

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     (n) Disputes and Litigation. Promptly, (i) notice of any material dispute
involving Borrower or any other party to any of the Project Documents or Loan
Instruments and relating to any of the transactions contemplated by any such
document or instrument and (ii) notice of any litigation, claim or controversy
involving Borrower, any Partner, the Property, the Rova I Facility, the Rova II
Facility or any litigation of which Borrower is aware involving any other party
to any of the Loan Instruments or Project Documents and which might have a
material adverse effect upon the condition of Borrower or affect the ability of
any other party to any of the Loan Instruments or Project Documents to perform
its respective obligations thereunder or which might cause an Event of Default;
     (o) ERISA Events. (i) promptly and in any event within 10 days after
Borrower knows or has reason to know of the occurrence of a Reportable Event
with respect to a Plan, a copy of any materials required to be filed with the
PBGC with respect to such Reportable Event, together with a statement of the
chief financial officer of Borrower setting forth details as to such Reportable
Event and the action which Borrower proposes to take with respect thereto;
(ii) at least 10 days prior to the filing by any plan administrator of a Plan of
a notice of intent to terminate such Plan, a copy of such notice; (iii) promptly
upon the reasonable request of Agent, and in no event more than 10 days after
such request, copies of each annual report on Form 5500 that is filed with the
Internal Revenue Service, together with certified financial statements for the
Plan (if any) as of the end of such year and actuarial statements on Schedule B
to such Form 5500; (iv) promptly and in any event within 10 days after Borrower
knows or has reason to know of any event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, a statement of the chief financial officer
of Borrower describing such event or condition; (v) promptly and in no event
more than 10 days after Borrower’s or any ERISA Affiliate’s receipt thereof, the
notice concerning the imposition of any withdrawal liability under section 4202
of ERISA; and (vi) promptly after receipt thereof, a copy of any notice Borrower
or any ERISA Affiliate may receive from the PBGC or the U.S. Department of Labor
or the Internal Revenue Service with respect to any Plan or Multiemployer Plan;
provided, however, that this Section 6.8(o) shall not apply to notices of
general application promulgated by the PBGC or the U.S. Department of Labor or
the Internal Revenue Service; and
     (p) Additional Information. Within a reasonable time after request
therefor, such additional information regarding the business, properties,
condition (financial or otherwise) and operations, present or prospective, of
Borrower, any Obligor and any other party to any Loan Instrument or Project
Document as Agent may reasonably request, including the provision from time to
time of “compliance certificates” described in Section 6.8(c) hereof, provided
that the failure of Borrower to provide information (including pursuant to
Section 6.8(d) hereof) from any party to a Loan Instrument or Project Document
which is not an Affiliate of Borrower, after use of commercially reasonable
efforts, shall not constitute an Event of Default as long as Borrower, at the
request of Agent, continues such efforts.
     6.9 Borrower’s Bank Accounts.
     Borrower shall maintain all its bank accounts with the Depositary, except
that Borrower may maintain (a) one or more bank accounts at a bank reasonably
acceptable to the Agent (upon the prior written approval of the Agent, without
further consent or approval by any

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Lender) which such bank accounts may be established, and may be terminated or
cancelled (upon the prior written consent of the Agent, without any further
consent or approval by any Lender) (the “Local Bank Accounts”) for the purpose
of paying Operating Costs, the balance on deposit in which shall not exceed
$1,000,000 in the aggregate at any time, provided that prior to depositing any
funds in the Local Bank Accounts Borrower and such banks shall have entered into
a blocked account agreement in form and substance reasonably satisfactory to
Agent; (b) the VEPCO Cash Collateral Account; and (c) one or more bank accounts
for the deposit of funds transferable by Borrower pursuant to the last sentence
of Section 4.1 of the Deposit Agreement.
     6.10 Maintenance of Records; Inspection.
     (a) Maintenance of Records. At all times Borrower shall maintain financial
records in accordance with generally accepted United States accounting
principles applied consistently with those reflected in the Borrower’s Financial
Statements referred to in Section 6.8 hereof.
     (b) Inspection. During normal business hours and upon reasonable notice, at
least annually and more often if the Independent Engineer or Agent shall
request, Borrower shall permit any authorized representative designated by Agent
or the Independent Engineer to visit and inspect the Property, the Rova I
Facility and the Rova II Facility, including Borrower’s books, and to make
extracts from such books and to discuss Borrower’s affairs, finances and
accounts with its officers and independent certified public accountants, or
other parties preparing statements for or on behalf of Borrower.
     6.11 Liens.
     Borrower shall not create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, including the Rova I Facility, the Rova
II Facility, the Property and any funds due to Borrower (including, without
limitation, Cash Revenues) except the following Liens (collectively, the
“Permitted Liens”):
     (a) Liens as contemplated in the Loan Instruments including without
limitation the Original Deed of Trust, the Additional Deed of Trust, the
Additional Deed of Trust (2008) and the Virginia Power Mortgage (as modified by
the Virginia Power Subordination Agreement);
     (b) Liens for current taxes, assessments and governmental charges which are
not delinquent and remain payable without penalty or are being contested in good
faith by appropriate proceedings and for which adequate reserves, bonds or other
security reasonably satisfactory to Agent have been provided;
     (c) purchase money security interests in real or personal property when the
obligation secured is incurred for the purchase of such property and does not
exceed 100% of the lesser of cost or fair market value thereof at the time of
acquisition, and the security interest does not extend beyond the property
involved, provided that such Liens shall not at any time exceed the maximum
aggregate amount of $750,000;

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     (d) mechanics’, materialmen’s and similar Liens; provided that, unless
bonded or otherwise secured to the reasonable satisfaction of Agent, such Liens
shall not at any time exceed the maximum aggregate amount of $300,000, provided,
that upon the commencement of any proceeding to foreclose or enforce any such
Permitted Lien, Agent may take such action as it deems necessary to protect its
interest in the Property, the Rova I Facility and the Rova II Facility,
including, without limitation, payment of amounts reasonably necessary to
release any such Lien, and in such event Borrower shall reimburse Agent upon
demand for the cost thereof together with interest thereon at a rate per annum
equal to the Default Interest Rate;
     (e) deposits or pledges to secure statutory obligations or appeals; release
of attachments, stay of execution or injunction; performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases; or for
purposes of like general nature in the ordinary course of its business, provided
that such Liens shall not at any time exceed the maximum aggregate amount of
$300,000;
     (f) exceptions to title contained in the Title Insurance and accepted by
Agent;
     (g) the Lien for the benefit of the issuing bank on the VEPCO Cash
Collateral Account; and
     (h) the creation, assumption or existence of any other Lien for which the
prior written consent of the Majority Lenders has been obtained.
     6.12 Other Debt; Conditional Sale Contracts.
     (a) Other Debt. Borrower shall not incur any Debt without the prior written
consent of Agent, except for the following:
     (i) Debt incurred pursuant to the Loan Instruments;
     (ii) Debt to the extent secured by Permitted Liens; and
     (iii) Debt to Partners or Affiliates of Partners incurred by Borrower in
order to pay Rova I Operating Costs or Rova II Operating Costs.
provided that (x) no such Debt may be incurred while any Event of Default exists
(except with regard to Debt described in clause (iii) immediately above) and
(y) no such Debt described in clause (iii) immediately above may be incurred
(or, once incurred in accordance with the provisions hereof, assigned) unless it
is fully subordinated, pursuant to documents in form and substance satisfactory
to Agent and containing the subordination provisions set forth in Schedule 6.12
hereto or such other subordination provisions satisfactory to the Majority
Lenders, to all of Borrower’s obligations under this Agreement and the other
Loan Instruments.
     (b) Conditional Sale Contracts. Except as otherwise provided in this
Agreement, no materials, equipment or fixtures shall be supplied or purchased
for the construction or operation of the Rova I Facility or the Rova II Facility
pursuant to security agreements, conditional sale contracts, lease agreements or
other arrangements or understandings whereby a security interest or title is
retained by any party or the right is reserved or accrues to

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any party to remove or repossess any materials, equipment or fixtures intended
to be utilized in the construction or operation of the Rova I Facility or the
Rova II Facility.
     (c) Guarantees. Borrower will not agree, contingently or otherwise, to
purchase or repurchase the Debt of, or assume, guaranty (directly or indirectly
or by instrument having the effect of assuring another’s payment or performance
of any obligation or capability of so doing, or otherwise), endorse or otherwise
become or remain liable, directly or indirectly, in connection with the
obligations, stock or dividends of any Person except (i) by endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (ii) indemnities to federal, state or local governmental agencies or
authorities relating to any expenses incurred that are incidental to obtaining
easements for the benefit of the Rova I Facility or the Rova II Facility, and
(iii) indemnities, guarantees or other similar obligations set forth in the Loan
Instruments, Project Documents or any Permitted Contract.
     6.13 Mergers, Sales of Assets; Permitted Activities.
     (a) Merger; Sales of Assets. Borrower shall not terminate, dissolve,
consolidate or merge with or into any other Person, materially amend its
Partnership Agreement or any organization document, issue any new partnership
interests, sell, lease or otherwise transfer any assets to any other Person
(except assets that are obsolete or no longer used by or useful to Borrower and
which are replaced by adequate substitutes of at least equal value and utility
to the replaced assets when new) or form any subsidiary without the prior
consent of the Majority Lenders. In addition, if Borrower amends or otherwise
modifies any organization document in any non-material manner, Borrower shall
provide prompt notice to Agent thereof.
     (b) Other Business. Borrower shall not engage in any business other than
the development, construction and operation of the Rova I Facility and the Rova
II Facility strictly in accordance with the Loan Instruments and Project
Documents.
     (c) Chief Executive Office, Place of Business. Borrower shall not change
its name or change the location of its chief executive office or principal place
of business without the prior written consent of Agent; provided that Borrower
may change its principal place of business and/or its chief executive office to
another location in the State of Colorado after giving Agent 60 days’ advance
notice of such change. Borrower shall not adopt or change any trade name or
fictitious business name without the prior written consent of Agent. Borrower
shall execute and deliver to Agent any additional documents or certificates
necessary or advisable to reflect any permitted adoption of or change in
principal place of business, trade name or fictitious business name.
     (d) Fiscal Year. Borrower’s fiscal year shall be the calendar year.
     6.14 Insurance.
     Borrower shall maintain or cause to be maintained the required Insurance
Policies from the dates indicated in, and in accordance with, Schedule 6.14
hereto, and such other insurance policies as Agent may reasonably require and
that are available on commercially reasonable terms to cover new, materially
different or increased risks or contingencies arising or occurring after the
Closing Date that are not covered to the reasonable satisfaction of Agent by

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existing policies. Borrower shall, upon the request of Agent, promptly provide a
schedule indicating the policies maintained by Borrower, coverage limits of
liability, effective dates of coverage, insurance carrier names and policy
numbers. Borrower shall cause Agent to be named as loss payee or as an
additional named insured, for the account of the Lenders and Agent itself as
their interests may appear, under said policies. All Insurance Policies shall
contain the standard New York mortgagee non-contribution clause endorsement or
its equivalent and shall provide for at least 30 days’ written notice to Agent
of cancellation, reduction in amount or material change in coverage. A
certificate of insurance evidencing the extension or continuation of Insurance
Policies shall be delivered to Agent prior to the expiration thereof and
Borrower shall deliver the Insurance Policies to Agent promptly upon its
request.
     6.15 Obligations Upon Casualty.
     In the event of a casualty loss affecting the Rova I Facility or the Rova
II Facility or a condemnation of the Rova I Facility, the Rova II Facility or
the Property, if the restoration of such Facility or Property is feasible, in
the reasonable opinion of the Independent Engineer and Agent, after deducting
from any such insurance or condemnation proceeds (the “Proceeds”) the reasonable
expenses incurred by Agent and Borrower in collecting and disbursing such
Proceeds or otherwise in connection therewith, the Proceeds shall be released to
Borrower from time to time in installments sufficient to pay for restoration as
it progresses upon the conditions set forth below (except that the following
provisions shall not apply to the extent such proceeds aggregating less than
$2,000,000 are released directly to Borrower pursuant to Section 4.6 of the
Deposit Agreement):
     (a) Agent shall have received satisfactory assurances that all payments
required to be made hereunder in connection with the Loan Instruments continue
to be made by Borrower in a timely manner and that no Event of Default shall
occur during or as a result of such restoration.
     (b) Agent, prior to the initial release of Proceeds, receives evidence
satisfactory to it and the Independent Engineer that:
     (i) the Proceeds are sufficient to complete within a reasonable period of
time the restoration of the Rova I Facility, the Rova II Facility and the
Property, as applicable, to the condition that existed immediately prior to the
casualty, or Borrower provides assurances reasonably acceptable to Agent and the
Independent Engineer that the amount of any deficiency will be available to
Borrower when needed for such completion;
     (ii) the capability of the Rova I Facility, the Rova II Facility and the
Property to operate in a manner so as to allow Borrower to fulfill its
obligations under the Project Documents, and the productive capacity, utility
and remaining useful life of the Rova I Facility and the Rova II Facility after
restoration (after taking into account relevant factors including without
limitation any cancellations, terminations or other consequences of such
casualty loss with respect to any Project Document)

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will not be materially less than such capability immediately prior to the
casualty; and
     (iii) a restoration budget and work plan satisfactory to Agent and the
Independent Engineer has been prepared for the complete restoration of the Rova
I Facility, the Rova II Facility and the Property, as applicable.
     (c) For each subsequent release of Proceeds, in addition to evidence and
certification required by paragraphs (a) and (d) hereof, Agent receives:
     (iv) a certificate in form and substance satisfactory to Agent and the
Independent Engineer (the “Certificate”) of Borrower dated not more than ten
days prior to the application for such release stating the progress of the work
up to the date of the Certificate and certifying that:
     (B) the sum then requested to be released either has been paid by Borrower
and/or is justly due to contractors, subcontractors, materialmen, engineers,
architects or other named persons who have rendered services or furnished
materials in connection with the approved restoration budget and work plan;
     (C) the sum then requested to be released, plus all sums previously
withdrawn, does not exceed the cost of the work actually finished up to the date
of the Certificate, and that the remainder of the funds then held by Agent will
be sufficient to pay in full for the completion of the work (or Borrower
provides assurances reasonably acceptable to Agent that the amount of any
deficiency will be available to Borrower when needed for such completion);
     (D) no part of the cost of the services and materials described in the
Certificate has been the basis for the release of any funds in any previous
application;
     (E) all materials and all property described in the Certificate are free
and clear of all Liens (other than Permitted Liens), except for Liens securing
indebtedness due to persons (the several amounts due them being stated)
specified in such Certificate and which will be discharged upon payment of such
indebtedness; and
     (F) there is no outstanding indebtedness known, after due inquiry, which is
then due and payable for work, labor, services or materials in connection with
the work which, if unpaid, might become the basis of a vendor’s, mechanic’s,
laborer’s or materialman’s statutory or other similar Lien upon either the Rova
I Facility, the Rova II Facility or the Property (other than Permitted Liens).

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     (v) evidence satisfactory to Agent and the Independent Engineer that
Borrower has fulfilled such additional conditions as Agent may reasonably impose
to provide assurance that the Proceeds will be used to restore the Rova I
Facility, the Rova II Facility and the Property, as applicable, to the same
condition as existed prior to the damage including, without limitation, Agent’s
and the Independent Engineer’s prior approval of plans, specifications and
construction contracts for such restoration and Agent’s and the Independent
Engineer’s periodic inspections of such restoration work as it progresses.
     (d) Prior to the final release (in addition to evidence and certification
required by paragraph (c) hereof) Agent receives:
     (vi) evidence satisfactory to Agent and the Independent Engineer that the
restoration has been completed and the Rova I Facility, the Rova II Facility and
the Property conform to all applicable Governmental Requirements; and
     (vii) a certification by the Independent Engineer that the restoration has
been completed in accordance with the budget and the work plan delivered
pursuant to Section 6.15(b)(iii) hereof (as such budget and work plan may have
been modified from time to time with the approval of Agent).
     (e) The release of Proceeds shall be made within ten days after Agent
receives a proper application therefor. All releases of Proceeds (except for
final payment) shall be subject to a 10% retainage.
     (f) If the amount of Proceeds exceeds the amount necessary to effect
restoration and reimburse Agent for its expenses, then such excess shall be paid
over to Borrower after such restoration is completed as follows:
     (viii) upon compliance with the foregoing provisions, Agent shall, at
Borrower’s request, pay out of the funds held by it, to the persons named in the
Certificate, the amounts stated in such Certificate to be due to them and/or
shall pay to Borrower the amount stated in said Certificate to have been paid by
Borrower; and
     (ix) all business interruption insurance proceeds, to the extent paid,
shall be jointly payable to Borrower and Agent and shall be deposited in the
Project Control Account.
     6.16 Taxes.
     Borrower shall pay and discharge all taxes, assessments and governmental
charges upon it, its income, if any, and properties prior to the date on which
penalties are attached thereto, and all lawful claims which, if unpaid, might
become a Lien upon the property of Borrower. Borrower shall have the right,
however, to contest in good faith the validity or

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amount of any such tax, assessment or governmental charge by proper proceedings,
timely instituted, and may permit the taxes, assessments or governmental charges
so contested to remain unpaid during the period of such contest if (a) Borrower
diligently prosecutes such contest, (b) adequate reserves, in the reasonable
determination of Agent, are maintained with respect thereto and (c) during the
period of such contest the enforcement of any contested item is effectively
stayed. Borrower will promptly pay or cause to be paid any valid, final judgment
enforcing any such tax, assessment and governmental charge and cause the same to
be satisfied of record.
     6.17 Additional Provisions Regarding Project Documents.
     (a) Step-In Rights. Borrower shall not exercise any Step-in rights under
the Rova I Coal Supply Agreement or the Rova II Coal Supply Agreement with
respect to the Rail Transportation Agreement or with respect to the Step-In
Rights Agreement without the prior written consent of the Majority Lenders, and
upon written instructions from the Majority Lenders shall exercise such rights,
and in each instance the duration of such step-in shall be subject to approval
by the Majority Lenders. In addition, all documents provided to Borrower
pursuant to Section 2 of the Rova I Three Party Agreement and Section 2 of the
Rova II Three Party Agreement shall be in form and substance, and shall be
accompanied by opinions of counsel reasonably satisfactory to Agent, and shall
contemplate an assignment by Borrower to the Secured Parties of all Borrower’s
rights under said documents.
     (b) Energy Services Agreement; Extension. Upon Agent’s request, Borrower
shall extend the term of the Energy Services Agreement pursuant to Section 2.2
thereof. In addition, Borrower shall immediately notify Agent and the Lenders
when it receives any notice pursuant to Section 10.3 of the Energy Services
Agreement.
     (c) Water Service Agreement. Borrower shall promptly provide copies to
Agent and the Independent Engineer of all information, reports and
certifications received by it pursuant to Section 2, 3 or 6 of the Water Service
Agreement, and shall not terminate nor take any action which shall allow the
Town of Weldon to terminate the Water Service Agreement, and shall not without
Agent’s and the Independent Engineer’s consent, not to be unreasonably withheld,
give any approval under said Section 2, 3 or 6.
     (d) Ash Disposal Agreement. Borrower shall promptly provide to the
Independent Engineer all materials received by Borrower or subject to its review
and comment under any of Sections 3(b), 4(b), 4(c), 4(e), 4(f) and 4(h) of the
Ash Disposal Agreement, and shall consult with the Independent Engineer in the
course of exercising its rights to review, comment, approve or request additions
or changes under such Sections.
     (e) Lime Supply and Transportation Agreements. At least 180 days prior to
the expiration of the term of each of the Rova I Lime Supply Agreement and the
Rova II Lime Supply Agreement, Borrower shall enter into a binding agreement, in
form and substance satisfactory to Agent, providing for the purchase by Borrower
and the sale and delivery by Lime Supplier of lime for the Rova I Facility and
for the Rova II Facility, respectively, for a term equal to at least two years
and in the quantities and of the qualities satisfactory to the Independent
Engineer and the Environmental Consultant. Such agreement shall be accompanied
by Lime Supplier’s consent to the assignment thereof by Borrower to Agent for
the benefit of the Secured

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Parties and with such opinions of counsel as may be reasonably requested by
Agent. At least 180 days prior to the expiration of the term of the Lime
Transportation Agreement Borrower shall enter unto a binding agreement in form
and substance satisfactory to Agent providing for the transportation by Railroad
of lime to the Rova I Facility and to the Rova II Facility for a term equal to
at least two years. Such agreement shall be accompanied by the Railroad’s
consent to the assignment thereof by Borrower to Agent for the benefit of the
Secured Parties and with such opinions of counsel as may be reasonably requested
by Agent. At least 180 days prior to the expiration of the term of the Rova I
Lime Railcar Lease Agreement, Borrower shall submit to Agent for its approval
(which shall not be unreasonably withheld) the new rates and terms which have
been mutually agreed to by the parties to the Rova I Lime Railcar Lease
Agreement for the renewal period. In the event the Agent approves such rates and
terms and the renewal of the Rova I Lime Railcar Lease Agreement, Borrower shall
exercise its right of first refusal to renew the Rova I Lime Railcar Lease
Agreement in accordance with Section 5 thereof. In the event Agent disapproves
the renewal of the Rova I Lime Railcar Lease Agreement or, if at any time during
the term of the Rova I Lime Railcar Lease Agreement the financial condition of
the lessor could, in Agent’s determination, reasonably be expected to cause
unavailability in whole or in part of the railcars being supplied thereunder or
other nonperformance by the lessor, then Borrower shall promptly (and in no
event later than the expiration of the term or such unavailability or
non-performance, as the case may be) enter into arrangements in form and
substance satisfactory to the Agent and Independent Engineer for the
transportation of lime to the Rova I Facility. If the Obligations have not been
fully discharged by the expiration of the term of any of said agreements,
replacement agreements shall continue to be provided by Borrower from time to
time in the manner contemplated in this Section 6.17(e) for similar durations
until all the Obligations have been discharged.
     (f) Rail Transportation Agreement. Borrower shall promptly give Agent
notice of Borrower’s receipt of any notice of default under Section 14.1 of the
Rail Transportation Agreement.
     (g) Coal Supply Agreements. Borrower shall promptly give Agent notice of
Borrower’s receipt of any shipment of Unacceptable Coal under the Rova I Coal
Supply Agreement and/or the Rova II Coal Supply Agreement and, prior to electing
to accept any such shipment of Unacceptable Coal, Borrower shall obtain the
approval of Agent and the Independent Engineer; provided that in the event the
Independent Engineer or Agent does not respond to such a request for approval
within the later of 48 hours or one Business Day after the request has been
received by the Agent and the Independent Engineer, then Borrower may elect to
accept such shipment of Unacceptable Coal without obtaining the approval of the
Person who did not respond to such request within such time period. Furthermore,
Borrower shall, promptly upon obtaining knowledge thereof, give the Agent notice
of the occurrence of any Subcontractor Default under (and as defined in) the
Rova I Coal Supply Agreement and/or the Rova II Coal Supply Agreement Borrower
shall, at all times after the Rova I Commercial Operations Date during the term
of the Agreement, maintain at least a 15-day inventory of Subject Coal at the
Rova I Facility and at the Rova II Facility.

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     6.18 Other Contracts.
     (a) Additional Contracts. Borrower shall become party to no contract,
agreement or commitment, except upon such terms and with such parties as shall
be approved in writing by the Agent (in consultation with the Independent
Engineer), other than (i) the agreements identified in the definition of the
terms Rova I Project Documents and Rova II Project Documents (excluding the last
item on such lists), (ii) the Standby Letter of Credit Agreement and (iii) any
Permitted Contract.
     (b) Project Document Amendment, Termination, Waiver, Etc. Without the prior
written consent of the Majority Lenders, Borrower (i) shall not waive any
material default or event of default of any party to any Project Document and
(ii) shall not agree or consent to (A) any amendment or modification of, or
supplement to, any of the Project Documents, in a manner that could, in the
opinion of Agent, have a material adverse effect on Borrower, the Property, the
Rova I Facility, the Rova II Facility or the ability of Borrower to perform its
obligations under the Loan Instruments or the ability of any party to perform
its respective obligations under any Project Document and (B) any termination or
cancellation of, or assignment (except as where Borrower has a right to consent
to an assignment and such consent is not to be unreasonably withheld, in which
instance the consent of the Majority Lenders shall not be unreasonably withheld)
of the rights or obligations of any party to, any Project Document or Loan
Instrument. Borrower shall not agree or consent to any amendment or modification
of, or supplement to, any of the Project Documents which does not require
consent of the Majority Lenders, without the prior written consent of Agent.
     (c) Acquisition of Property. If Borrower shall at any time acquire any real
property or leasehold or other interests therein not covered by the Original
Deed of Trust or the Additional Deed of Trust or the Additional Deed of Trust
(2008), Borrower shall, in addition to fulfilling the requirements set forth in
Section 6.18(a) hereof, promptly upon such acquisition notify Agent and promptly
upon the request of Agent execute, deliver and record a supplement to the
Original Deed of Trust each Additional Deed of Trust, satisfactory in form and
substance to Agent, subjecting such real property or leasehold or other
interests to the loan and security interest created by the Original Deed of
Trust, Additional Deed of Trust and the Additional Deed of Trust (2008).
     6.19 Additional Documents; Filings and Recordings.
     Borrower shall execute and deliver to Agent, from time to time as requested
by the Agent, such other documents as shall reasonably be necessary or advisable
in connection with the rights and remedies of the Secured Parties, granted or
provided for by the Loan Instruments or the Project Documents, as applicable,
and to consummate the transactions contemplated therein. Borrower shall, at its
own expense, take all reasonable actions that have been or shall be requested by
Agent or that Borrower knows are necessary to establish, maintain, protect,
perfect and continue the perfection of the first priority security interests of
the Secured Parties created by the Security Documents and shall furnish timely
notice of the necessity of any such action, together with such instruments, in
execution form, and such other information as may be required to enable Agent
and any other appropriate Secured Party to effect any such action. Without
limiting the generality of the foregoing, Borrower shall execute or cause to be

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executed and shall file or cause to be filed such financing statements,
continuation statements, fixture filings and mortgages or deeds of trust in all
places necessary or advisable (in the opinion of counsel for Agent) to
establish, maintain and perfect such security interests and in all other places
that Agent shall reasonably request.
     6.20 Assignment by Borrower.
     Borrower shall not assign any of its rights or obligations under any Loan
Instrument or Project Document without the prior written consent of the Majority
Lenders.
     6.21 Transactions with Affiliates and Others.
     Borrower shall not, directly or indirectly, purchase, acquire, exchange or
lease any property from, or sell, transfer or lease any property to, or borrow
any money from, or enter into any arrangement or series of arrangements with,
any Affiliate or any officer, director or employee of Borrower or any Affiliate
thereof, except for (a) the Rova I Coal Subcontract, the Rova II Coal
Subcontract, the Rova I Coal Subcontract Guaranty, the Rova II Coal Subcontract
Guaranty, the Rova I Three Party Agreement, and the transactions contemplated
thereby), the Rova II Three Party Agreement (and the transactions contemplated
thereby), the Step-In Rights Agreement and the Venture Management Agreement, and
(b) transactions in the ordinary course of business and upon fair and reasonable
terms no less favorable than Borrower could obtain, or could become entitled to,
in an arm’s length transaction with a Person which is not an Affiliate of
Borrower, provided that Borrower shall give Agent prompt notice of any such
transaction and the material terms thereof, without derogating from the
provisions of Section 6.18(a) hereof. In addition, Borrower shall not select any
arbitrator under any arbitration clause in any Project Document to which an
Affiliate of Borrower is party without the prior written consent of Agent, which
consent shall not be unreasonably withheld.
     6.22 Advertising; Press Releases.
     Neither Borrower nor any Affiliate of Borrower or any Secured Party shall
issue or consent to the issuance of any press release or other announcement or
advertisement that refers to the Rova I Facility or the Rova II Facility and to
the provision of financing by the Secured Parties without the prior written
consent of Borrower and Agent which shall not be unreasonably withheld.
     6.23 Costs and Expenses; Indemnity.
     (a) Costs and Expenses. Borrower shall pay to Agent (for the account of the
Secured Parties, as appropriate) when due, all costs and expenses in connection
with the maintenance and administration of the transactions contemplated by the
Loan Instruments (including any costs and expenses incurred in a bankruptcy
case), the negotiation, preparation, execution and delivery of the Loan
Instruments, the issuance of the Notes, any waiver or amendment of or supplement
or modification to any of the Loan Instruments or Project Documents, the review
of any of the other agreements, instruments or documents referred to in any Loan
Instrument or Project Document or relating to the transactions contemplated
hereby or thereby, the exercise or enforcement of any right, claim, power or
remedy under the Loan Instruments (including the Security Documents), the
enforcement of payment or other terms

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under the Loan Instruments, the curing by any of the Secured Parties of any
Default or Event of Default including, without limitation, (i) all fees for
filing or recording the Loan Instruments, (ii) all fees and expenses of counsel
to each of the Secured Parties, (iii) all fees and expenses of the Independent
Engineer, the Environmental Consultant and the Insurance Advisor and any other
special consultants engaged in connection with the transactions contemplated by
any Loan Instrument or Project Document or in connection with the review and
analysis of any issues, questions or problems that may arise in connection with
the construction or operation of the Rova I Facility or the Rova II Facility,
(iv) all title insurance and title examination charges, including premiums for
title insurance, (v) all survey costs and expenses, (vi) all premiums for the
Insurance Policies, (vii) telephone, telecopy, duplicating and travel expenses
and (viii) all other costs and expenses payable to third parties incurred by any
of the Secured Parties in connection with the consummation of the transactions
contemplated by the Loan Instruments, including, without limitation, all
renewals, extensions, modifications, increases, conversions or refinancings
thereof.
     (b) Indemnification. Borrower hereby agrees to indemnify and hold harmless
the Secured Parties and the Deed of Trust Trustees and, in their capacity as
such, their officers, directors, shareholders, controlling persons, employees,
agents (including, without limitation, the Independent Engineer and the
Environmental Consultant) and servants (each an “Indemnified Party”) from and
against any and all claims, damages, losses, liabilities, costs or expenses
(including without limitation reasonable attorneys’ and consultants’ fees and
expenses) whatsoever which any Indemnified Party may incur (or which may be
claimed against any Indemnified Party by any person or entity whatsoever) by
reason of, in connection with or in any way relating to any Loan Instrument or
Project Document, or the Rova I Facility, the Rova II Facility or the Property,
or any other documents or transactions in connection with or relating thereto,
unless due to the gross negligence or willful misconduct of such Indemnified
Party. No Indemnified Party shall compromise or settle any action for which
indemnification is or may be sought hereunder without the prior consent of
Borrower, which consent shall not be unreasonably withheld.
     (c) Survival. The provisions of this Section 6.23 shall survive the payment
in full of all amounts due under any Loan Instrument and the release of all
collateral under the Security Documents.
     6.24 FERC Compliance. Borrower shall maintain its EWG status and MBR
Authority in full force and effect.
ARTICLE 7
RIGHTS AND REMEDIES OF THE LENDERS
     7.1 Events of Default.
     Each of the following events and occurrences shall constitute an Event of
Default:
     (a) Non-Payment. (i) Any interest on any indebtedness of Borrower evidenced
by any of the Loan Instruments is not paid when due, whether by acceleration or

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otherwise, and remains outstanding for three or more Banking Days, or (ii) any
other indebtedness of Borrower evidenced by any of the Loan Instruments or any
other amount payable under any of the Loan Instruments is not paid when due,
whether by acceleration or otherwise.
     (b) Breach of Loan Covenants. (i) Borrower shall fail to perform or observe
the covenants set forth in 5.3(a)(i) (Maintenance of Existence), 5.8(e) (Notice
of Default), 5.10(b) (Inspection), 5.12 (Other Debt, Conditional Sale
Contracts), 5.13(a) (Merger, Sales of Assets), 5.16 (Taxes), 5.17 (Additional
Provisions Regarding Project Documents) and 5.18 (Other Contracts) hereof and
such failure shall not be remediable or, if remediable, shall continue
unremedied for a period terminating on the tenth day after Borrower knows or
ought to know of the occurrence thereof; (ii) Borrower shall fail to maintain or
cause to be maintained the insurance required pursuant to Section 6.14 hereof,
and such failure shall not be remediable or, if remediable, shall continue
unremedied for a period terminating on the 30th day after Borrower first knows
or ought to know that such insurance coverage is likely to be interrupted or
that Borrower otherwise is likely not to be in compliance with the covenants set
forth in Section 6.14 hereof.
     (c) Breach of Other Covenants. Borrower or any Partner shall fail to
perform or observe any covenant by it in any of the Loan Instruments or Project
Documents that is not referred to in another paragraph of this Section 7.1 and
such failure shall not be remediable or, if remediable, shall continue
unremedied for a period terminating on the 30th day after (i) the first day of
such failure, in the case of any material failure, or (ii) the earlier to occur
of (x) the first day on which Borrower or any Partner actually knows of the
occurrence thereof and (y) the first day on which Borrower or any Partner
receives notice of such occurrence from any Secured Party, in the case of any
other failure.
     (d) Misrepresentations. The representations and warranties of Borrower in
Article 5 shall be false, misleading or erroneous in any respect as of close of
business on the Closing Date or the Funding Date, or any other statement,
representation or warranty by Borrower or any Partner in any Loan Instrument,
Project Document, Financial Statement or any other writing delivered to any of
the Secured Parties in connection with any of the Loan Instruments and the
transactions contemplated thereby was false, misleading or erroneous in any
material respect as of close of business on the Funding Date.
     (e) Failures Under Project Documents, Etc. The Project Documents, any
applicable Governmental Requirements or the requirements of the Insurance
Policies are not fully and timely complied with in all material respects or are
the subject of a material breach or an event of default, in each case by any
party thereto and as determined by Agent in its reasonable discretion, and such
failure to comply, breach or default shall not be remediable or, if remediable,
shall continue unremedied for a period terminating on the last day of the
applicable cure period, if any, specified in the relevant Project Document,
Governmental Requirement or Insurance Policy, or shall not be waived by the
appropriate party (provided that Borrower, prior to waiving any failure to
comply, breach or default, shall have obtained the written consent of Agent), or
any material provision in any Project Document shall for any reason cease to be
valid and binding on any party thereto (or any such party shall so state in
writing) or shall be declared null and void, or the validity or enforceability
thereof shall be contested by any party thereto

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(other than any of the Secured Parties) or any Governmental Authority, or any
party thereto shall deny that it has any liability or obligation thereunder,
except upon fulfillment of its obligations thereunder.
     (f) Non-Maintenance of Governmental Requirements. Failure of Borrower to
obtain during the required period or to observe, comply with and maintain in
full force and effect thereafter all necessary permissions and authorizations
under applicable Governmental Requirements which are then necessary or to ensure
the continued rights of Borrower under the Project Documents or for the
construction and operation and use of the Rova I Facility or the Rova II
Facility, including Borrower’s MBR Authority and EWG status, or any breach or
violation of any Borrower obligation under FERC regulations that would have a
material adverse effect on Borrower or the Facilities.
     (g) Modifications of Governmental Requirements. Any modification not
previously approved by Agent (including, without limitation, establishment of
new requirements or revocation of any exemption or waiver) of any Governmental
Requirement which, in the judgment of Agent, might have a material adverse
effect on the continued availability to Borrower of the Rova I Facility, the
Rova II Facility, the Property or Borrower or on the compliance with such
requirements by the Rova I Facility, the Rova II Facility, the Property,
Borrower or any Obligor as a party to any of the Project Documents or Loan
Instruments; provided that for a period terminating 30 days after such
modification, an Event of Default shall not be declared under this paragraph so
long as Borrower and each Obligor that is a party to such Project Document or
Loan Instrument complies fully with all its other obligations under the Loan
Instruments and the Project Documents, and diligently seeks to revoke or to
comply with such modification, and, thereafter, Agent shall not declare an Event
of Default under this paragraph unless the modification has not been revoked and
such modification has a material adverse effect, in the determination of Agent,
on the Rova I Facility, the Rova II Facility, the Property, Borrower or the
ability of such Obligor to perform its obligations under such agreement.
     (h) Escrow. Any party entitled to receive any document under the Escrow
Agreement does not receive such document in accordance with the Escrow Agreement
on the Funding Date, or, on the Funding Date, after the delivery of documents
and funds in accordance with the Escrow Agreement, the representations and
warranties of the Borrower contained in this Agreement are incorrect or
incomplete in any respect.
     (i) Debtor Relief Events. Borrower, any Obligor or any other party to any
of the Project Documents (other than the Partner Parents):
     (i) does not pay its Debts as they become due or admits in writing its
inability to pay its Debts or makes a general assignment for the benefit of
creditors; or
     (ii) commences any case, proceeding or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution or composition of it or its
Debts under any Debtor Relief Law; or

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     (iii) in any involuntary case, proceeding or other action commenced against
it which seeks to have an order for relief (injunctive or otherwise) entered
against it, as debtor, or seeks reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its Debts under any Debtor
Relief Law, (A) fails to obtain a dismissal of such case, proceeding or other
action within 60 days of its commencement, (B) converts the case from one
chapter of the Bankruptcy Reform Act of 1978, as amended, to another chapter, or
(C) is the subject of an order for relief; or
     (iv) conceals, removes or permits to be concealed or removed, any part of
its property, with intent to hinder, delay or defraud its creditors or any of
them, or makes or suffers a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law; or makes
any transfer of its property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid, or suffers or permits
while insolvent any creditor to obtain a Lien upon any of its property through
legal proceedings which Lien is not vacated within 60 days from the date
thereof; or
     (v) has a trustee, receiver, custodian or other official appointed for or
take possession of all or any part of its property or has any court take
jurisdiction of any of its property, which action remains undismissed for a
period of 60 days;
provided that with respect to Section 7.1(i) (i) through (v) above, in
connection with any party to any of the Project Documents (other than Borrower
and the Partners), no Event of Default shall be declared under this
Section 7.1(i) if such party has fully complied and continues to fully comply
with all its obligations under such Project Document or Loan Instrument and
Borrower, within 90 days of such Event of Default, executes, with a party
reasonably acceptable to Agent, a replacement Project Document or Loan
Instrument, in form and substance acceptable to Agent.
     (j) Borrower, any Obligor or any party to any of the Project Documents
(other than the Partner Parents):
     (i) with respect to Borrower and each Partner only, fails to discharge (or
to post a bond or other security acceptable to Agent in its sole discretion)
within a period of 30 days any attachment, sequestration or similar writ levied
upon any property of such person; or
     (ii) fails to pay or to have stayed any money judgment within 21 days of
entry thereof (a) with respect to Borrower and each Partner in the amount of
$50,000 or more, or (b) with respect to any Obligor other than Borrower,
$1,000,000 or more, if, in the case of thus clause (b) any such failure, in the
judgment of Agent, could reasonably be expected to have a material adverse
effect on such Obligor’s ability to perform its obligations under the Project
Documents or Loan Instruments; or
     (iii) defaults under any agreement evidencing indebtedness for borrowed
money or deferred purchase prices or pursuant to which such

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indebtedness is issued shall have occurred, and shall have remained uncured or
unwaived for the lesser of 30 days and the applicable grace period, resulting in
such indebtedness becoming or being declared payable prior to its scheduled
maturity, and such indebtedness becoming or declared payable exceeds (a)
$100,000 with respect to Borrower or any Partner, or (b) with respect to any
Obligor other than Borrower, $1,000,000, if, in the case of this clause (b),
such indebtedness becoming or being declared due, in the judgment of Agent,
could reasonably be expected to have a material adverse effect on such Obligor’s
ability to perform its obligations under the Project Documents or Loan
Instruments.
     (k) Dissolution of Borrower; Others. The liquidation, dissolution,
termination, merger or consolidation of Borrower, any Obligor or any other party
to any of the Project Documents (and with respect to the Ash Disposer and each
such party that is not an Obligor, such action has a material adverse effect, in
the opinion of Agent, on such party’s ability to perform its obligations under
such Project Document or on the Property, the Rova I Facility or the Rova II
Facility), or the transfer of all or substantially all of the assets of Borrower
to any other person.
     (l) Transfer of Collateral. Title to or any right in all or any part of the
Property, the Rova I Facility, the Rova II Facility or any collateral purported
to be covered by the Security Documents (other than Permitted Liens, obsolete or
worn personal property replaced by adequate substitutes of equal or greater
value than the replaced items when new) shall become vested in any party other
than the party, named as owner and/or holder thereof in the applicable Security
Document, whether by operation of Law or otherwise.
     (m) Diminution of Property Rights. Without the prior written consent of
Agent, Borrower grants any easement or dedication, files any plat, declaration
or restriction or enters into any lease or sub-lease concerning the Property,
the Rova I Facility or the Rova II Facility and the effect thereof is determined
by Agent, in its reasonable discretion, to be material and adverse to the
Property, the Rova I Facility, the Rova II Facility or Borrower.
     (n) Impairment of Security Interests. Any provision in any Security
Document shall for any reason cease to be valid and binding on the Obligors
party thereto and the effect thereof is to materially impair the security
purported to be created thereby, or any such Obligor shall so state in writing,
or any Security Document shall cease to be in full force and effect, or shall
for any reason cease to create a valid security interest having the priority and
perfected in the manner contemplated by Section 5.8 hereof in any of the
collateral purported to be covered thereby, or Borrower shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to any of the Security Documents and the effect
thereof is to materially impair the security purported to be created thereby.
     (o) Partnership Legal Proceedings. Borrower or any Partner commences or
joins any case, proceeding or other action against Borrower or any Partner;
provided that an Event of Default shall not be declared under this
Section 7.1(o) if in any such action, Borrower or such Partner has limited its
claims for relief to specific performance and/or to monetary

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damages enforceable against only the revenues payable to Borrower pursuant to
the last sentence of Section 4.1 of the Deposit Agreement.
     (p) Maintenance of Agent. Borrower fails to maintain an agent for service
of process acceptable to Agent in the County of New York, State of New York.
     (q) Transfer of Interests. The transfer by any Partner or Partner Parent of
its respective direct or indirect interests in Borrower (or the permitting by
any such party of a Lien related to any such interest or Borrower) in violation
of any Security Document.
     (r) Breach or Default With Respect to Coal Supply Guarantor. The existence
at any time of an “Uncured Deficiency” pursuant to (and defined in)
Section 21.2(c) of either of the Rova I Coal Supply Agreement or the Rova II
Coal Supply Agreement.
     (s) VEPCO Letters of Credit. The failure of Borrower to provide at any time
to Virginia Power the Rova I Letter of Credit or the Rova II Letter of Credit in
accordance with the Rova I Power Purchase Agreement or the Rova II Power
Purchase Agreement, as applicable, or the occurrence of an “Event of Default”
under the Standby Letter of Credit Agreement.
     7.2 Remedies Upon Event of Default.
     (a) Right to Cure. If an Event of Default occurs and has not been remedied
during the applicable grace period, if any, subject to the provisions of
Section 2.2 hereof, Agent on behalf of the Secured Parties, upon receiving
consent of the Majority Lenders, may, and upon the request of the Majority
Lenders shall, (i) take all actions necessary to cure such Event of Default,
and/or declare an Event of Default, and (ii) by giving notice to Borrower,
declare the entire amount of Borrower’s Obligations (including with the
Yield-Maintenance Premium, if any, with respect to the Loans accelerated) to be
immediately due and payable, irrespective of any other provision of any Loan
Instrument (provided that if an Event of Default occurs pursuant to
Section 7.1(i) or 7.1(j) hereof, with respect to Borrower, the entire amount of
Borrower’s Obligations shall be immediately due and payable without any notice
from any of the Secured Parties to Borrower), without any presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived. If an event or occurrence constitutes an Event of Default or Default
under more than one of the provisions of Section 7.1 hereof, Agent on behalf of
the Secured Parties may take all actions and remedies provided in this
Section 7.2 upon expiration of the shortest grace period, if any, provided in
Section 7.1 hereof (subject to any consent of Majority Lenders required under
the first sentence of this Section 7.2(a)).
     (b) Foreclosure. In the event that Borrower’s Obligations shall become due
and payable by acceleration as provided in Section 7.2(a) hereof, all sums
payable shall become immediately due and payable without presentment, demand,
protest or notice of any kind other than the notice specifically required (if
any) by this Section 7.2, all other notice being expressly waived by Borrower,
and Agent and the other Secured Parties shall have the right to take all funds
in the Accounts and to otherwise enforce their security interests as provided
herein and in the Loan Instruments. The proceeds of any realization on the
Collateral or Pledged Collateral (as such terms are defined in the Security
Documents) or from any other foreclosure or similar action or exercise of rights
by Agent or any of the other Secured Parties shall be applied by

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Agent, on a pro rata basis for the account of the Lenders, in accordance with
the priority of application set forth in Section 2.6(b) hereof.
     (c) Agent Attorney-in-Fact. Borrower hereby appoints Agent as the
attorney-in-fact of Borrower, with full power of substitution, and in the name
of Borrower, if Agent elects to do so and upon direction of Majority Lenders,
upon and during the continuance of an Event of Default, to: (i) apply any monies
in the Accounts to the payment of Borrower’s Obligations to the Secured Parties
(whether or not then due and payable) under any of the Loan Instruments, in such
order of application as Agent may determine in its sole discretion, prompt
notification to be provided by Agent to Borrower of the exercise of any such
rights, (ii) advance and incur such expenses as Agent deems necessary to
preserve the Rova I Facility, the Rova II Facility and the Property, (iii)
operate the Rova I Facility and/or the Rova II Facility to the satisfaction of
the Governmental Authorities, (iv) execute all applications and certificates in
the name of Borrower which may be required for operation of the Rova I Facility
and/or the Rova II Facility, (v) endorse the name of Borrower on any checks or
drafts representing proceeds of the Insurance Policies, or other checks or
instruments payable to Borrower with respect to the Property, the Rova I
Facility and/or the Rova II Facility, (vi) do every act with respect to the
Project Documents and the operation of the Rova I Facility and/or the Rova II
Facility which Borrower may do, (vii) prosecute or defend any action or
proceeding incident to the Rova I Facility and/or the Rova II Facility and
(viii) select, for the account of Borrower, an operator to operate the Rova I
Facility and/or the Rova II Facility, on such terms and conditions as Agent
shall reasonably deem advisable. The power-of-attorney granted hereby is a power
coupled with an interest and irrevocable. None of the Secured Parties shall have
any obligation to undertake any of the foregoing actions, and if any of them
take any such action it shall have no liability to Borrower to continue the same
or for the sufficiency or adequacy thereof.
     (d) Enforcement Costs and Expenses. Any funds of any of the Secured Parties
used for any purpose referred to in this Article 7, whether or not in excess of
any commitment (without obligating any of the Secured Parties to fund any loans
in excess of commitments hereunder), shall be governed by the Loan Instruments,
constitute a part of the indebtedness secured by the Security Documents, shall
bear interest at the then applicable Default Interest Rate and be payable upon
demand by Agent to the extent permitted by applicable Law.
ARTICLE 8
AGENT AND RELATIONS AMONG LENDERS
     8.1 Appointment and Cessation.
     Each Lender hereby appoints Agent to act as its agent under this Agreement
and to act as collateral agent under the Security Documents as provided therein,
and irrevocably authorizes Agent to take such action on such Secured Party’s
behalf under the provisions of the Loan Instruments and any other agreements and
instruments referred to therein and to exercise such powers hereunder and
thereunder as are specifically delegated to Agent and such powers as are
reasonably incidental thereto. Agent shall exercise the same care hereunder as
it exercises in connection with similar transactions for its own account in
which no other lender participates. In

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performing its function and duties hereunder and under the Security Documents,
Agent shall act solely as the agent of the Secured Parties and does not assume
and shall not be deemed to have assumed any obligation towards or relationship
of agency or trust with or for Borrower or any other party to any Project
Document.
     8.2 Majority Lenders.
     Agent will, to the extent practicable under the circumstances, consult with
the Lenders prior to taking action (which shall include, for purposes of this
Section 8.2, the making of any determination under the Loan Instruments) on
their behalf under this Agreement or the other Loan Instruments and in acting as
their agent under the Security Documents. Agent will not take any action
contrary to the written direction of the Majority Lenders and will take any
lawful action in accordance with the provisions of this Agreement prescribed in
a written direction of the Majority Lenders. Agent may decline to take any
action except upon the written direction of the Majority Lenders, and Agent may
request a ratification by the Majority Lenders of any action taken by it under
this Agreement. Agent shall as soon as practicable, upon obtaining knowledge
thereof, provide written notice to each Lender of any such action taken by the
Majority Lenders. Agent shall have no liability to Borrower or any of the other
Secured Parties for any action taken by it upon the direction of the Majority
Lenders or if ratified by the Majority Lenders, nor shall Agent have any
liability for any failure to act unless Agent has been instructed to act by the
Majority Lenders. The action of the Majority Lenders shall bind all the Secured
Parties except as otherwise provided in Section 9.4 hereof. Notwithstanding
anything herein to the contrary, Agent need not take any action on behalf of the
Secured Parties unless and until it is indemnified to its satisfaction for any
and all consequences of such action; provided that if the Majority Lenders
direct Agent to take any such action and Agent refuses to do so because of the
absence of such indemnification, Agent’s refusal shall be deemed cause for
purposes of permitting removal of Agent in accordance with Section 8.7 hereof.
     8.3 Liability and Credit Appraisal.
     Agent, in its capacity as such, and its officers, directors, employees or
agents shall not be liable for any action taken or omitted by it or them under
any Loan Instrument, or in connection therewith, except for its or their gross
negligence or willful misconduct. Agent shall not be responsible for any
recitals, statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity or enforceability of the Loan Instruments
or the Project Documents or any other document executed in connection therewith,
or be required to make any inquiry concerning the performance or observance by
Borrower of any of the terms, provisions or conditions of the Loan Instruments
or the Project Documents. Each of the other Secured Parties represents and
warrants to Agent that it has independently and without reliance on Agent made
its own credit investigation and appraisal of Borrower and the transactions
contemplated by the Project Documents on the basis of such documents and
information as it has deemed appropriate and that it has entered into this
Agreement on the basis of such independent investigation and appraisal, and each
such Secured Party represents that it will continue to make its own
investigation and credit appraisal. Each Secured Party agrees to indemnify and
hold harmless, ratably based on the outstanding principal amount of its Loans,
Agent from and against any and all liabilities, damages, penalties, judgments,
suits, expenses and other costs of any kind

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or nature whatsoever imposed on, incurred by or asserted against Agent in
respect of its obligations under any Loan Instrument, except for its gross
negligence or willful misconduct.
     8.4 Reliance.
     Each Secured Party shall be entitled to rely upon any communication or
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and to act upon the advice of legal
counsel and other experts selected by it concerning all matters pertaining to
the Loan Instruments and its duties thereunder and shall not be liable to any of
the other parties hereto for any of the consequences of such reliance. Agent may
rely for the purposes of the giving of notice on the name and address of each
Secured Party and of Borrower set forth in Section 9.1 hereof or as notified to
Agent pursuant to Section 9.1 hereof.
     8.5 Other Banking.
     Agent, in its capacity as a Lender, shall have the same rights, powers and
obligations hereunder as any other Secured Party, specifically in each case
including the right to give or deny consent to any action requiring consent or
direction of the Majority Lenders. Each Secured Party and its respective
affiliates may, without liability to account to any other Secured Party, engage
in any kind of banking, trust or other business with Borrower as if it were not
a Secured Party or an affiliate thereof. In addition, Agent shall be entitled to
receive from Borrower any fee in connection with the transactions contemplated
hereunder without any liability to account therefor to any other Secured Party.
     8.6 Notices and Determinations by Agent.
     (a) Notice of Interest and Payments. Agent shall forthwith notify the
Lenders by, at Agent’s sole option, telecopy or electronic mail, of the date of
any expected payment and all other material notices and Project Documents
transmitted by Borrower. Determinations of amounts of interest (including at the
Default Interest Rate), and other sums due hereunder and contained in notices
from Agent shall be conclusive and binding on Borrower and the Secured Parties,
absent manifest error in computation or transmission.
     (b) Records as to Collateral. Agent will maintain all records as to amount,
type and value of collateral pledged and assigned under the Security Documents.
Upon request of any Secured Party, Agent will give a statement to such party
with respect to the types and amounts of collateral held pursuant to the
Security Documents, and Agent will give prompt notice to such parties of any
event of default under the Security Documents of which it obtains knowledge.
     (c) Agent’s Share of Collateral. It is understood that Agent, as a Lender,
may not have resort to more than its pro rata share of the collateral without
the consent in writing of all of the Secured Parties and, in any case, may have
no resort to the collateral except as provided in the Loan Instruments.

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     (d) Borrower’s Reliance. Borrower shall be entitled to rely upon any
communication or document reasonably and in good faith believed by it to be
genuine and correct and to have been signed, sent or made by Agent.
     8.7 Successor Agent.
     Subject to the appointment and acceptance of a successor Agent as provided
below, Agent may resign at any time either under this Agreement or under the
Security Documents by giving written notice thereof to the Secured Parties and
Borrower, and Agent may be removed at any time with cause by the Majority
Lenders. Borrower may request the Majority Lenders to remove Agent upon Agent’s
gross negligence or willful misconduct, and the Majority Lenders shall not
unreasonably avoid such course of action. Upon any such resignation or removal,
the Majority Lenders shall have the right to appoint a successor Agent, which
appointment shall be subject to the approval of Borrower if the appointee is not
a Lender, and such approval shall not be unreasonably withheld. If no successor
Agent shall have been so appointed by the Majority Lenders and shall have
accepted such appointment within 30 days after the retiring Agent’s notice of
resignation or the Majority Lenders’ removal of the retiring Agent, then the
retiring Agent may, on behalf of the Secured Parties, appoint a commercial bank
having a combined capital and surplus of at least $100,000,000 as successor
Agent. Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent’s resignation or removal hereunder as Agent, the
provisions of this Article 8 shall continue in effect for such Agent’s benefit
in respect of any actions taken or omitted by it while it served as Agent
hereunder.
ARTICLE 9
GENERAL TERMS AND CONDITIONS
     9.1 Notices.
     All notices, demands, requests and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been given
(a) when presented personally, (b) when transmitted by facsimile to the number
specified below and the receipt confirmed, (c) when sent by overnight courier
service, the Banking Day following the date of delivery to such courier service,
or such later day as demonstrated by a bona fide receipt therefor, or (d) when
sent by the United States Postal Service, postage prepaid, registered or
certified, return receipt requested, the date received, addressed to the
respective party, as the case may be, at the following address, or such other
address as any party may from time to time designate by written notice to the
others as herein required.

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     If to Borrower:
Westmoreland Partners
c/o Westmoreland Energy LLC
2 North Cascade Avenue
Colorado Springs, Colorado 80903
Attention: Chief Financial Officer and Treasurer
Facsimile: (719) 488-8098
     with a copy to:
Westmoreland Partners
c/o Westmoreland Energy LLC
2 North Cascade Avenue
Colorado Springs, Colorado 80903
Attn: General Counsel
Facsimile: (719) 448-8097
     If to Agent:
Prudential Investment Management, Inc.
c/o Prudential Capital Group
2200 Ross Avenue, Suite 4200E
Dallas, TX 75201
Attention: Managing Director, Electric Finance Group
Telephone: (214) 720-6272
Facsimile: (214) 720-6297
Agent shall use its best efforts to provide copies of notices as set forth
above; provided that the provision of such copies, or the failure to provide
such copies, shall not affect the validity or the timing of the notice to
Borrower.
     9.2 Assignments and Participations.
     (a) Additional Lenders. Any Lender may at any time sell to one or more
first-class financial institutions, with the consent of Agent and with the
consent of Borrower, such consent not to be unreasonably withheld (a “Purchasing
Lender”), all or any part of its rights and obligations under this Agreement and
the Notes pursuant to a Commitment Transfer Supplement, executed by such
Purchasing Lender, such transferor Lender, Agent and, in the case of a
Purchasing Lender that is not then a Lender or an affiliate thereof, by
Borrower; provided that, except in connection with foreclosure or other exercise
of remedies under the Security Documents, such Person is not, at the time of
such sale, an Ineligible Assignee. Upon (x) such execution of such Commitment
Transfer Supplement, and (y) delivery of an executed copy thereof to Borrower
and payment of the amount of its participation to the Transferor Lender, such
Purchasing Lender shall for all purposes be a Lender party to this Agreement and
shall have all the rights and obligations of a Lender under this Agreement, to
the same extent as if it were an original party hereto. This Agreement
(including the Lender Schedule) shall be deemed amended to the extent, and only
to the extent, necessary to reflect the addition of such

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Purchasing Lender and the purchase by such Purchasing Lender of all or a portion
of the rights and obligations of such transferor Lender under this Agreement and
the Notes. Upon the consummation of any transfer pursuant to this
Section 9.2(a), the transferor Lender, Agent and Borrower shall make appropriate
arrangements so that, if required, replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are
issued to such Purchasing Lender. Notwithstanding anything to the contrary
herein, nothing in this Section shall prevent or prohibit any Lender from
transferring, pledging or assigning its rights under this Agreement, its Loans
and Notes to a Federal Reserve Bank.
     (b) Participations. Any Lender may, from time to time, sell or offer to
sell any Loans owing to such Lender, any Notes held by such Lender, any
commitment of such Lender or any other interests and obligations of such Lender
hereunder, to one or more participants (each, a “Participant”), on such terms
and conditions as may be determined by the selling party, without the consent of
or notice to Borrower (provided that such Participant is not an Ineligible
Assignee) or any other Secured Party, and the grant of such participation shall
not relieve any Lender of its obligations, or impair the rights of any Lender
hereunder. Notwithstanding the foregoing, any agreement pursuant to which any
Lender may grant a participation shall provide that such Lender shall retain the
sole right and responsibility to exercise the rights of such Lender, and enforce
the Obligations of Borrower including, without limitation, the right to approve
any amendment, modification, supplement or waiver of any provision of any other
Loan Instrument and the right to take action under Article 7 hereof (provided
that such participation agreement may provide that such Lender will not agree to
any modification, amendment or waiver of this Agreement, without the consent of
the Participant, that would alter the principal of or interest on the Loans,
postpone the date fixed for any payment of principal of or interest thereon,
release any collateral or extend the term of any commitment). No Participant
shall have any rights under this Agreement other than to receive payment of
principal of and interest through such Lender. Borrower also agrees that each
Participant shall be entitled to the benefits of Sections 2.3(a), (b) and
(c) hereof with respect to its participation granted hereunder; provided that no
Participant shall be entitled to receive any greater amount pursuant to such
Sections than the Lender transferring such participation would have been
entitled to receive in respect of the amount of the participation transferred to
such Participant had no such transfer occurred. Notwithstanding anything to the
contrary herein, nothing in this Section shall prevent or prohibit any Lender
from transferring, pledging or assigning its rights under this Agreement, its
Loans and Notes to a Federal Reserve Bank.
     (c) Confidentiality. Borrower authorizes each Lender to disclose to (i) any
Purchasing Lender, prospective Purchasing Lender, Participant or prospective
Participant, (ii) any such party’s directors, officers, employees, agents and
professional consultants, (iii) any other Lender, (iv) any Governmental
Authority having jurisdiction over such Lender, (v) the National Association of
Insurance Commissioners or any similar organization, (vi) any other Person to
whom such disclosure may be appropriate (A) in compliance with any law, rule,
regulation or order, (B) in response to any subpoena or other legal process,
(C) in connection with any litigation or (D) in order to protect such Lender’s
investment in any Note or (vii) any Affiliate of such Lender any information
such Lender possesses pertaining to the Property, the Rova I Facility, the Rova
II Facility, the Loan Instruments and the Project Documents, including, without
limitation, complete and current credit information on Borrower and on any of
the other parties to any Loan Instrument or Project Document, without the
consent of or notice to

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Borrower or any other Lender; provided that any recipient of information
referred to in clauses (i), (ii), (iii), (vi) (D) or (vii) above first agrees in
writing to keep confidential, on the same terms as set forth above in this
Section 9.2(c), all proprietary information provided to it regarding Borrower,
the transactions contemplated by this Agreement, the Rova I Facility and the
Rova II Facility; and provided, further that in respect of disclosure of such
proprietary information to any recipient referred to in clauses (vi) (A),
(B) and (C) above, reasonable efforts are used to protect the confidentiality of
such proprietary information through applicable legal process. Borrower agrees
to supply certain reasonably requested information, and to execute and deliver
all such instruments and take all such further action as Agent or the Lenders
may from time to time reasonably request in connection with such Purchasing
Lender or participation arrangements.
     9.3 Right of Set-off.
     Borrower hereby authorizes each Secured Party, upon the occurrence and
during the continuance of any Default, at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Secured Party to or for the credit
or the account of Borrower against any and all of the Obligations of Borrower
now or hereafter existing under any Loan Instrument or Project Document,
irrespective of whether or not any Secured Party shall have made any demand
hereunder or thereunder and although such Obligations may be contingent or
unmatured. In the event that any Secured Party shall at any time receive any
monies through exercise of its set-off rights as provided herein, such Secured
Party shall be deemed to have received such payment as agent for and on behalf
of all the Secured Parties, and shall immediately advise Agent of the receipt of
such funds and promptly transmit the full amount thereof to Agent for prompt
distribution to all the Secured Parties in accordance with their respective
interests, as provided in this Agreement; provided that such Secured Party shall
be deemed not to have received, and Borrower shall be deemed not to have made to
such party, any payment transmitted to Agent by such party pursuant to this
Section 9.3.
     9.4 Amendments and Waivers.
     Neither this Agreement nor any other Loan Instrument may be amended,
modified, supplemented, canceled or terminated, and no provision of this
Agreement or any other Loan Instrument may be waived, except by a written
instrument signed by Borrower and Agent with the written consent of the Majority
Lenders; provided that no such action shall be taken if the effect thereof is to
(i) extend the maturity of any Note or any installment thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce the principal
amount thereof, or reduce any fee payable to the Lenders hereunder or
thereunder, without the prior written consent of each Lender, (ii) release any
collateral purported to be covered by any of the Security Documents, or amend,
modify or waive any provision of this Section 9.4 or the definition of “Majority
Lenders”, or change the manner of funding of the Debt Protection Account, the
Additional Collateral Account or the Disallowance Reserve Account or the amount
of any required balance to be held therein pursuant to this Agreement, without
the prior written consent of each Lender, (iii) affect the rights or obligations
of the Agent without the consent of such person, or (iv) approve a rate
redetermination under the Rova I Power Purchase Agreement without the prior
written consent of each Lender. Any such consent shall be effective only in the
specific instance and for the specific purpose for which given. Any such
amendment,

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modification, supplement, cancellation or termination and any such waiver,
properly consented to in accordance with the foregoing shall apply equally to
each of the Lenders and Agent (to the extent applicable to such party) and shall
be binding upon Borrower and each of the Secured Parties and all future holders
of the Notes. In the case of any waiver, Borrower and the Secured Parties shall
be restored to their former position and rights hereunder and under the
outstanding Notes, and any Default or Event of Default waived shall be deemed to
be cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default, or impair any such right consequent
thereon. No failure on the part of the Secured Parties or any of them to
exercise, and no delay in exercising, any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege.
     9.5 Election of Remedies.
     The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. Agent, acting on behalf of all the Secured Parties,
shall have all of the rights and remedies granted in the Loan Instruments and
available at law or in equity, and these same rights and remedies may be pursued
separately, successively or concurrently against Borrower, or any collateral
under the Loan Instruments, at the sole discretion of Agent.
     9.6 Severability.
     Any provision of this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization, without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction.
     9.7 Form and Substance.
     All documents, certificates, insurance policies and other items required
under this Agreement to be executed and/or delivered to any of the Secured
Parties shall be in form and substance reasonably satisfactory to such party or
parties.
     9.8 Limitation on Interest.
     All agreements between Borrower and the Secured Parties whether now
existing or hereafter arising and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of the maturity of any
indebtedness governed hereby or otherwise, shall the interest contracted for or
charged or received by the Secured Parties exceed the maximum amount permissible
under applicable Law. If, from any circumstance whatsoever, interest would
otherwise be payable to the Secured Parties in excess of the maximum lawful
amount, the interest payable to the Secured Parties shall be reduced to the
maximum amount permitted under applicable Law, and the amount of interest for
any subsequent period, to the extent less than that permitted by applicable Law,
shall to that extent be increased by the amount of such reduction. If from any
circumstance the Secured Parties shall ever receive anything of value deemed
interest by applicable Law in excess of the maximum lawful amount, an amount

58

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equal to any excessive interest shall be applied to the reduction of the
principal of the Loans or satisfaction of other Obligations and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
principal of the loans made hereunder or unsatisfied amounts of remaining
Obligations, such excess shall be refunded to Borrower. All interest paid or
agreed to be paid to the Secured Parties shall, to the extent permitted by
applicable Law, be amortized, prorated, allocated and spread throughout the full
period until payment in full of the Obligations (including the period of any
renewal or extension thereof) so that interest thereon for such full period
shall not exceed the maximum amount permitted by applicable Law. This paragraph
shall control all agreements between Borrower and the Secured Parties. In
determining whether or not any interest payable under the Loan Instruments
exceeds the maximum rate permitted by applicable Law, any non-principal payment,
except payments specifically stated to be “interest”, shall be deemed, to the
extent permitted by applicable Law, to be a fee, expense, reimbursement or
penalty rather than interest.
     9.9 No Third Party Beneficiary; Integration.
     This Agreement is for the sole benefit of each of the Secured Parties,
Borrower and, solely to the extent set forth in Section 9.2(b) hereof, any
Participant and is not for the benefit of any third party. This Agreement
supersedes all prior agreements among the parties with respect to the matters
addressed herein.
     9.10 Borrower in Control.
     In no event shall rights and interests of any Secured Party under the Loan
Instruments be construed to give any such party or be deemed to indicate that
any such party has control of the business, management or properties of Borrower
or power over the daily management functions and operating decisions made by
Borrower.
     9.11 Number and Gender.
     Whenever used herein, the singular number shall include the plural and the
plural the singular, and the use of any gender shall be applicable to all
genders.
     9.12 Captions.
     The captions (including the reference to captions in Section 7.1(b)
hereof), headings, table of contents and arrangements used in this Agreement are
for convenience only and do not and shall not be deemed to affect, limit,
amplify or modify the terms and provisions hereof.
     9.13 Applicable Law and Jurisdiction.
     (a) Applicable Law. This Agreement shall be governed by and construed and
interpreted in accordance with the internal laws of the State of New York.
     (b) New York. (i) Borrower hereby expressly and irrevocably agrees and
consents that any suit, action or proceeding arising out of or relating to the
Loan Instruments and the transactions contemplated therein may be instituted by
any of the Secured Parties in any State

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or Federal court sitting in the County of New York, State of New York, United
States of America and, by the execution and delivery of this Agreement, Borrower
expressly waives any objection which it may have now or hereafter to the laying
of the venue or to the jurisdiction of any such suit, action or proceeding, and
irrevocably submits generally and unconditionally to the jurisdiction of any
such court in any such suit, action or proceeding.
     (ii) In the case of the courts of the State of New York or of the United
States sitting in New York, Borrower hereby irrevocably designates, appoints and
empowers, C T Corporation System (the “Process Agent”, which has consented
thereto), with offices on the date hereof at 111 Eighth Avenue, New York, New
York 10011 as agent to receive for and on behalf of Borrower service of process
in the State of New York. Borrower further agrees that such service of process
may be made on Process Agent by personal service on Process Agent of a copy of
the summons and complaint or other legal process in any such suit, action or
proceeding, or by any other method of service provided for under the applicable
laws in effect in the State of New York, and Process Agent is hereby authorized
to accept such service for and on behalf of Borrower, and to admit service with
respect thereto.
     (iii) Upon service of process being made on Process Agent as aforesaid, a
copy of the summons and complaint or other legal process served shall be mailed
by the Process Agent to Borrower by registered mail, return receipt requested,
at its address referred to in Section 9.1 hereof, or to such other address as
Borrower may notify Process Agent in writing. Service upon Process Agent as
aforesaid shall be deemed to be personal service on Borrower and shall be legal
and binding upon Borrower for all purposes, notwithstanding any failure of
Process Agent to mail a copy of such legal process to Borrower, or any failure
on the part of Borrower to receive the same.
     (iv) Borrower agrees that it will at all times continuously maintain an
agent to receive service of process in the County of New York on its behalf with
respect to this Agreement. In the event that for any reason Process Agent or any
successor thereto shall no longer serve as agent for Borrower to receive service
of process in the County of New York, or shall have changed its address without
notification thereof to Agent, Borrower will immediately after having knowledge
thereof, irrevocably designate and appoint a substitute agent acceptable to
Agent and advise Agent thereof.
     (c) Other Jurisdictions. Nothing contained in Section 9.13(b) hereof shall
preclude Agent, for the account of the Secured Parties, from bringing any suit,
action or proceeding arising out of or relating to the Loan Instruments in the
courts of any place where Borrower or any of its property or assets may be found
or located. To the extent permitted by the applicable Laws of any such
jurisdiction, Borrower hereby irrevocably submits to the jurisdiction of any
such court and expressly waives, in respect of any such suit, action or
proceeding, the jurisdiction of any other court or courts which now or
hereafter, by reason of its present or future domicile, or otherwise, may be
available to it.

60

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     (d) Waiver of Trial by Jury. WITH REGARD TO EACH LOAN INSTRUMENT TO WHICH
IT IS A PARTY, EACH OF BORROWER, THE LENDERS AND AGENT HEREBY WAIVES THE RIGHT
TO A TRIAL BY JURY.
     9.14 No Recourse.
     Anything herein to the contrary notwithstanding, the Obligations of
Borrower under the Loan Instruments are special obligations of Borrower and do
not constitute a debt or obligation of (and no recourse shall be had with
respect thereto to) any Partner or Affiliate of Borrower, or any shareholder,
partner, officer or director of any thereof as such, and any judicial
proceedings any of the Secured Parties may institute against Borrower shall be
limited to seeking the preservation, enforcement, foreclosure or other sale or
disposition of the liens and security interests now or at any time hereafter
securing the repayment of the loans made hereunder and performance by Borrower
of its other covenants and Obligations under the Loan Instruments; no judgment
for any deficiency upon the Obligations under the Loan Instruments shall be
obtainable by any of the Secured Parties against any Partner or Affiliate of
Borrower or any shareholder, partner, officer or director of any thereof, absent
fraud or willful misconduct on the part of such Person, provided that this
Section 9.14 shall not limit the respective obligations of any of the Partners
or any Affiliate thereof under any Loan Instrument or Project Document to which
such Person is a party.
     9.15 Absence of Fiduciary Relation.
     Each Secured Party undertakes to perform or to observe only such of its
agreements and obligations as are specifically set forth in the Loan
Instruments, and no implied agreements, covenants or obligations with respect to
Borrower, any Affiliate of Borrower, any other party to any of the Project
Documents otherwise shall be read into any of the Loan Instruments against any
Secured Party. None of the Secured Parties is a fiduciary of and shall not owe
or be deemed to owe any fiduciary duty to Borrower, any Affiliate of Borrower or
any other party to any of the Project Documents.
     9.16 Agent as Administrator.
     Whenever this Agreement requires Borrower to obtain the consent or approval
of any of the Secured Parties, Borrower, as an administrative matter, need
contact only Agent with Borrower’s request for such consent or approval; this
Section 9.16 shall have no effect on (a) the substantive provisions of any such
consent or approval requirement, including, without limitation, the designation
of the Secured Party or Secured Parties entitled to give or withhold consent or
approval or (b) any requirement hereunder for the delivery of copies of notices
or other documents to any Secured Party.
     9.17 Return of Accounts; Release of Liens.
     Upon (i) the indefeasible payment in full of all Obligations due and
delivery to Agent of an indemnification agreement in favor of the Secured
Parties reasonably satisfactory to the Secured Parties indemnifying the Secured
Parties against any and all claims, losses, liabilities, damages, obligations,
costs, expenses, assessments, fines, penalties, judgment or deficiencies of any
kind or character incurred by or against the Secured Parties in any way

61

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directly or indirectly resulting from, occurring incident to, arising out of or
in connection with the Obligations under the Loan Instruments, the Secured
Parties shall (A) take all action and execute all documents reasonably requested
by Borrower to release and terminate the Liens of the Security Documents and
(B) transfer to Borrower all amounts in the Accounts.
     9.18 Counterparts.
     This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
[Remainder of page left blank intentionally.]

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

            PRUDENTIAL INVESTMENT MANAGEMENT, INC., as Agent
      By:   /s/ Timothy M. Laczkowski   WHB     Name:   Timothy M. Laczkowski   
    Title:   Vice President        THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
as Lender
      By:   /s/ Timothy M. Laczkowski   WHB     Name:   Timothy M. Laczkowski   
    Title:   Vice President        WESTMORELAND PARTNERS,
as Borrower         By: Westmoreland-Roanoke Valley, L.P.,
       as general partner         By: WEI-Roanoke Valley, Inc.,
       as general partner
      By:   /s/ David J. Blair         Name:   David J. Blair        Title:  
Chief Financial Officer   

63

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SCHEDULE 2.7
WESTMORELAND PARTNERS
10.42% TRANCHE A SENIOR NOTE DUE JULY 31, 2014

No.                        [Date] $                         

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                          , or registered assigns, the
principal sum of                                          DOLLARS on July 31,
2014, with interest (computed on the basis of the actual number of days elapsed
and a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 10.42% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of any Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche A Senior Notes (the “Notes”) issued
pursuant to an Amended and Restated Loan Agreement, dated as of ___, 2008 (the
“Agreement”), among the Borrower, the lenders party thereto and Prudential
Investment Management, Inc., as Agent, and is entitled to the benefits thereof.
Capitalized terms used and not otherwise defined herein have the meanings
specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.
     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.

 

--------------------------------------------------------------------------------

 

     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     This Note is issued in replacement of [ ] and, notwithstanding the date of
this Note, this Note carries all of the rights to unpaid interest which were
carried by such replaced Note(s) so that neither gain nor loss of interest shall
result from any such replacement.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P. as general partner            
By:   WEI-ROANOKE VALLEY, INC., as general partner         By:           Name:  
David J. Blair        Title:   Chief Financial Officer   

2

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SCHEDULE 2.7
WESTMORELAND PARTNERS
8.33% TRANCHE B SENIOR NOTE DUE JULY 31, 2015

No.                        [Date] $                         

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                         , or registered assigns, the
principal sum of                                          DOLLARS on July 31,
2015, with interest (computed on the basis of the actual number of days elapsed
and a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 8.33% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of any Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche B Senior Notes (the “Notes”) issued
pursuant to an Amended and Restated Loan Agreement, dated as of ___, 2008 (the
“Agreement”), among the Borrower, the lenders party thereto and Prudential
Investment Management, Inc., as Agent, and is entitled to the benefits thereof.
Capitalized terms used and not otherwise defined herein have the meanings
specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.
     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.

 

--------------------------------------------------------------------------------

 

     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     This Note is issued in replacement of [     ] and, notwithstanding the date
of this Note, this Note carries all of the rights to unpaid interest which were
carried by such replaced Note(s) so that neither gain nor loss of interest shall
result from any such replacement.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P. as general partner         By:  
WEI-ROANOKE VALLEY, INC., as general partner         By:           Name:   David
J. Blair        Title:   Chief Financial Officer   

2

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SCHEDULE 2.7
WESTMORELAND PARTNERS
6.00% TRANCHE C SENIOR NOTE DUE JANUARY 31, 2015

No.                        [Date] $                         

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                         , or registered assigns, the
principal sum of                                          DOLLARS on January 31,
2015, with interest (computed on the basis of the actual number of days elapsed
and a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 6.00% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of any Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche C Senior Notes (the “Notes”) issued
pursuant to an Amended and Restated Loan Agreement, dated as of ___, 2008 (the
“Agreement”), among the Borrower, the lenders party thereto and Prudential
Investment Management, Inc., as Agent, and is entitled to the benefits thereof.
Capitalized terms used and not otherwise defined herein have the meanings
specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.
     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.

 

--------------------------------------------------------------------------------

 

     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P. as general partner         By:  
WEI-ROANOKE VALLEY, INC.,
as general partner         By:           Name:   David J. Blair        Title:  
Chief Financial Officer   

2

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SCHEDULE 2.7
WESTMORELAND PARTNERS
11.42% TRANCHE A SENIOR SUBORDINATED NOTE DUE JULY 31, 2014

No.                        [Date] $                         

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                         , or registered assigns, the
principal sum of                                          DOLLARS on July 31,
2014, with interest (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 11.42% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of any Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche A Senior Subordinated Notes (the
“Notes”) issued pursuant to an Amended and Restated Loan Agreement, dated as of
___, 2008 (the “Agreement”), among the Borrower, the lenders party thereto and
Prudential Investment Management, Inc., as Agent, and is entitled to the
benefits thereof and is subject to the subordination provisions set forth in
Section 2.2 thereof. Capitalized terms used and not otherwise defined herein
have the meanings specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.

 

--------------------------------------------------------------------------------

 

     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P. as general partner         By:  
WEI-ROANOKE VALLEY, INC.,
as general partner             By:           Name:   David J. Blair       
Title:   Chief Financial Officer   

2

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SCHEDULE 2.7
WESTMORELAND PARTNERS
9.33% TRANCHE B SENIOR SUBORDINATED NOTE DUE JANUARY 31, 2015

No.                     
$                        [Date]

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                         , or registered assigns, the
principal sum of                                          DOLLARS on January 31,
2015, with interest (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 9.33% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of any Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche B Senior Subordinated Notes (the
“Notes”) issued pursuant to an Amended and Restated Loan Agreement, dated as of
___, 2008 (the “Agreement”), among the Borrower, the lenders party thereto and
Prudential Investment Management, Inc., as Agent, and is entitled to the
benefits thereof and is subject to the subordination provisions set forth in
Section 2.2 thereof. Capitalized terms used and not otherwise defined herein
have the meanings specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.

 

--------------------------------------------------------------------------------

 

     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P.
as general partner         By:   WEI-ROANOKE VALLEY, INC.,
as general partner         By:           Name:   David J. Blair        Title:  
Chief Financial Officer   

2 

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SCHEDULE 2.7
WESTMORELAND PARTNERS
7.65% TRANCHE C SENIOR SUBORDINATED NOTE DUE OCTOBER 31, 2009

No.                        [Date] $                        

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                         , or registered assigns, the
principal sum of                                          DOLLARS on October 31,
2009, with interest (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as applicable) (a) on the unpaid balance hereof
at the rate of 7.65% per annum, payable quarterly on the last day of January,
April, July and October in each year, commencing with the January, April, July
or October next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment of interest and,
during the continuation of an Event of Default, on the principal balance hereof
and any overdue payment of Yield-Maintenance Premium at the Default Interest
Rate, payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand).
     Payments of principal of, interest on and any Yield-Maintenance Premium
payable with respect to this Note are to be made at the main office of JPMorgan
Chase Bank, National Association in New York City or at such other place as the
holder hereof shall designate to the Borrower in writing, in lawful money of the
United States of America.
     This Note is one of a series of Tranche C Senior Subordinated Notes (the
“Notes”) issued pursuant to an Amended and Restated Loan Agreement, dated as of
___, 2008 (the “Agreement”), among the Borrower, the lenders party thereto and
Prudential Investment Management, Inc., as Agent, and is entitled to the
benefits thereof and is subject to the subordination provisions set forth in
Section 2.2 thereof. Capitalized terms used and not otherwise defined herein
have the meanings specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.

 

--------------------------------------------------------------------------------

 

     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P.
as general partner         By:   WEI-ROANOKE VALLEY, INC., as general partner  
      By:           Name:   David J. Blair        Title:   Chief Financial
Officer   

2 

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SCHEDULE 2.7
WESTMORELAND PARTNERS
SENIOR SECURED REVOLVER NOTE DUE APRIL 30, 2015

No.                          $                       [Date]

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay to The Prudential Insurance
Company of America, or registered assigns, the principal sum of SIX MILLION
THOUSAND DOLLARS or, if less, the aggregate unpaid principal amount of all
Revolving Loans advanced by the holder hereof pursuant to the Agreement (as
defined below), on April 30, 2015, with interest (computed on the basis of the
actual number of days elapsed and a year of 360 days) (a) on the unpaid balance
hereof at the Revolving Loan Interest Rate (as defined in the Agreement referred
to below), payable on each Floating Rate Interest Payment Date (as defined in
the Agreement), until the principal hereof shall have become due and payable,
and (b) on any overdue payment of interest and, during the continuation of an
Event of Default, on the principal balance hereof at the Default Interest Rate,
payable on each Floating Rate Interest Payment Date (or, at the option of the
registered holder hereof, on demand).
     Payments of principal and interest on this Note are to be made at the main
office of JPMorgan Chase Bank, National Association in New York City or at such
other place as the holder hereof shall designate to the Borrower in writing, in
lawful money of the United States of America.
     This Note is one of a series of Senior Revolving Notes (the “Notes”) issued
pursuant to an Amended and Restated Loan Agreement, dated as of ___, 2008 (the
“Agreement”), among the Borrower, the Lenders party thereto and Prudential
Investment Management, Inc., as Agent, and is entitled to the benefits thereof.
Capitalized terms used and not otherwise defined herein have the meanings
specified in the Agreement.
     The Borrower irrevocably authorizes the holder hereof to make or cause to
be made, at or about the time of the Subsequent Closing Date of any Revolving
Loan or at the time of receipt of any payment of principal of this Note, an
appropriate notation on the grid attached to this Note, or the continuation of
such grid, or any other similar record, including computer records, reflecting
the making of such Revolving Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the holder hereof with respect
to any Revolving Credit Loans shall be prima facie evidence of the principal
amount thereof owing and unpaid to the holder, but the failure to record, or any
error in so recording, any such amount on any such grid, continuation or other
record shall not limit or otherwise affect the obligation of the Borrower
hereunder or under the Agreement to make payments of principal of and interest
on this Note when due.

 

--------------------------------------------------------------------------------

 

     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.
     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.
     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.

4

--------------------------------------------------------------------------------

 

     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P.
as general partner         By:   WEI-ROANOKE VALLEY, INC., as general partner  
      By:           Name:   David J. Blair        Title:   Chief Financial
Officer   

5

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                          Amount of Principal             Amount   Paid  
Balance of Principal   Notation Date   of Loan   or Prepaid   Unpaid   Made By:
 
               

 

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SCHEDULE 2.7
WESTMORELAND PARTNERS
JUNIOR SUBORDINATED NOTE DUE JANUARY 31, 2011

     
No.                     
  [Date]
$                    
   

     FOR VALUE RECEIVED, the undersigned, Westmoreland Partners (the
“Borrower”), a general partnership organized and existing under the laws of the
Commonwealth of Virginia, hereby promises to pay
to                                          , or registered assigns, the
principal sum of                                          DOLLARS on January 31,
2011, with interest (computed on the basis of the actual number of days elapsed
and a year of 360 days) (a) on the unpaid balance hereof at the Junior
Subordinated Loan Floating Rate (as defined in the Agreement referred to below),
payable on each Floating Rate Interest Payment Date (as defined in the
Agreement), until the principal hereof shall have become due and payable, and
(b) on any overdue payment of interest and, during the continuation of an Event
of Default, on the principal balance hereof at the Default Interest Rate,
payable on each Floating Rate Interest Payment Date (or, at the option of the
registered holder hereof, on demand).
     Payments of principal and interest on this Note are to be made at the main
office of JPMorgan Chase Bank, National Association in New York City or at such
other place as the holder hereof shall designate to the Borrower in writing, in
lawful money of the United States of America.
     This Note is one of a series of Junior Subordinated Notes (the “Notes”)
issued pursuant to an Amended and Restated Loan Agreement, dated as of ___, 2008
(the “Agreement”), among the Borrower, the lenders party thereto and Prudential
Investment Management, Inc., as Agent, and is entitled to the benefits thereof.
Capitalized terms used and not otherwise defined herein have the meanings
specified in the Agreement.
     This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Borrower may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Borrower shall not be affected by any notice to the contrary.
     The Borrower agrees to make required prepayments of principal on the dates
and in the amounts specified in the Agreement. This Note is also subject to
optional prepayment, in whole or from time to time in part, on the terms
specified in the Agreement.

 

--------------------------------------------------------------------------------

 

     Recourse pursuant to this Note shall be limited as set forth in
Section 9.14 of the Loan Agreement.
     Borrower hereby waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
     If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
     Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Borrower agrees to pay, in addition
to the principal, premium, if any, and interest due and payable hereon, all
costs of collecting or attempting to collect this Note, including reasonable
attorneys’ fees and expenses (including those incurred in connection with any
appeal).
     The Borrower and the holder of this Note specifically intend and agree to
limit contractually the amount of interest payable under this Note to the
maximum amount of interest lawfully permitted to be charged under applicable
law. Therefore, none of the terms of this Note shall ever be construed to create
a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and neither the Borrower nor any other party
liable or to become liable hereunder shall ever be liable for interest in excess
of the amount determined at such maximum rate.
     THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF SUCH STATE.

            WESTMORELAND PARTNERS
      By:   WESTMORELAND-ROANOKE VALLEY, L.P.
as general partner         By:   WEI-ROANOKE VALLEY, INC., as general partner  
      By:           Name:   David J. Blair        Title:   Chief Financial
Officer     

2 

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EXHIBIT X — DEFINITIONS
     “Accounts” means the Project Control Account, the Rova I Contingency
Account, the Rova II Contingency Account, the Debt Protection Accounts, the
Disallowance Reserve Account, the Local Bank Account, the Ash Reserve Account
and the Repair and Maintenance Account.
     “Additional Deed of Trust” means that certain Future Advance Deed of Trust
and Security Agreement, dated as of December 1, 1993, between Borrower and Terri
T. McGaughey, Esq., as trustee for the use and benefit of Agent on behalf of the
Secured Parties, as assigned to the Agent hereunder pursuant to an Assignment of
Deed of Trust dated February 11, 2008, as affected by Substitution of Trustee
dated February 11, 2008 appointing Jeffrey A. Bandini, Esq. as substitute
trustee, and as amended by Agreement of Modification to Future Advance Deed of
Trust and Security Agreement dated February 11, 2008 as the same may be further
amended, modified, supplemented or re-recorded from time to time.
     “Additional Deed of Trust (2008)” means that certain Future Advance Deed of
Trust and Security Agreement, dated as of February 11, 2008, between Borrower
and Jeffrey A. Bandini, Esq., as trustee for the use and benefit of Agent on
behalf of the Secured Parties, as the same may be amended, modified,
supplemented or re-recorded from time to time.
     “Affiliate” means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such first Person. The term
“control” means 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.
     “Agent” means the party named Agent in the preamble of the Agreement, or
any successor Agent selected pursuant to Section 8.7 of the Agreement.
     “Agreement” means the Second Amended and Restated Loan Agreement among
Borrower and the Secured Parties, as the same may be further amended, modified
or supplemented from time to time.
     “Amendment Execution Date” means December 1, 1993.
     “Ash Disposal Agreement” means the Roanoke Valley Project Ash Disposal
Services Agreement, dated as of March 4, 1991, between the Ash Disposer and
Borrower, as amended by Amendment No. 1 to Ash Disposal Services Agreement,
dated as of September 25, 1991, between Borrower and the Ash Disposer, as
amended by Amendment No. 2 to Ash Disposal Services Agreement, dated as of
December 1, 1993, between Borrower and the Ash Disposer, as amended by the
Amended and Restated Consent to Assignment of Agreement, dated as of December 1,
1993, between Agent and the Ash Disposer, as amended by the Halifax County Ash
Disposer Letter regarding Stock Piling of Ash dated October 13, 1993, and as the
same may be further amended, modified or supplemented from time to time.

 

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     “Ash Disposer” means Halifax County, North Carolina, a body politic and
corporate constituted under the laws of the State of North Carolina, and its
successors and permitted assigns under the Ash Disposal Agreement.
     “Ash Reserve Account” has the meaning set forth in Section 2.1 of the
Deposit Agreement.
     “Assumption Agreement” means the Assumption Agreement dated as of
December 16, 1994, by Consol Kentucky in favor of Westmoreland Coal Company and
certain of its affiliates.
     “Authority” means The Halifax County Industrial Facilities and Pollution
Control Financing Authority, and its successors and assigns.
     “Authorized Officer” means the President, Chief Financial Officer, Vice
President, Treasurer or Assistant Treasurer of a corporation or, in the case of
Borrower or any other general or limited partnership or limited liability
company, any such officer of the managing general partner, member or manager (or
other Person responsible for managing such partnership or limited liability
company); provided that for any of the foregoing, such officer’s name appears on
a certificate of incumbency delivered to the Agent, on any amendment of such
certificate made from time to time.
     “Banking Day” means any day that (a) is not a Saturday, Sunday or legal
holiday in the State of New York or the State of North Carolina, and (b) is not
a day on which banking institutions chartered by the State of New York, the
State of North Carolina or the United States are legally required or authorized
to close, is a day on which dealings in United States Treasury obligations are
carried out in the United States market and is also a day for trading by and
between banks in U.S. dollar deposits in the London interbank market.
     “Base Rate” means, as of any date, a rate per annum equal to the greater of
(a) the Federal Funds Rate as in effect at such time plus 0.5% and (b) the per
ex. annum rate of interest from time to time publicly announced by The Bank of
New York at its principal office in the United States as its base lending rate
for domestic (United States) commercial loans, the Base Rate to change when and
as such rates change. The Base Rate may not be the lowest rate of interest
charged by The Bank of New York in connection with extensions of credit to its
other customers.
     “Borrower” means the party named Borrower in the preamble of the Agreement.
     “Calculation Delivery Date” means the 15th day of the calendar month
immediately preceding the applicable Repayment Date, provided that if any such
date is not a Banking Day, the relevant Calculation Delivery Date shall be the
next succeeding Banking Day.
     “Called Principal” means with respect to Fixed Rate Loans, the principal
amount that is to be prepaid pursuant to Section 2.5(a) of the Agreement or is
declared to be or shall become immediately due and payable pursuant to
Section 7.2(a) of the Agreement, as the case may be.

2

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     “Capacity Charges” has the meaning set forth in Section 6(b) of the Ash
Disposal Agreement.
     “Cash Expenses” means, for any period, Rova I Cash Expenses and/or Rova II
Cash Expenses, as applicable.
     “Cash Revenues” means, for any period, Borrower’s revenues or income
actually received, pursuant to the terms of the Project Documents or otherwise,
and including, without limitation, (a) interest and other income earned on the
amounts in the Project Control Account, (b) interest and other income earned on
the amounts in the Accounts (other than the Project Control Account) which are
deposited in the Project Control Account, and (c) amounts paid by the Steam Host
pursuant to Section 6.3 of the Energy Services Agreement.
     “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. § 9601 et seq.), as it has been or may be
amended from time to time.
     “Certificate” shall have the meaning set forth in Section 5.15 of the
Agreement.
     “Closing Date” has the meaning set forth in Section 4.1 of the Agreement.
     “Coal Supplier” means Teco Coal Corporation, a Florida corporation, and its
successors and permitted assigns, as coal supplier and transporter under the
Rova I Coal Supply Agreement and the Rova II Coal Supply Agreement.
     “Coal Supply Guarantor” means Teco Diversified, Inc., a Florida
corporation, as guarantor of the Coal Supplier’s performance under the Rova I
Coal Supply Agreement and the Rova II Coal Supply Agreement.
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Collateral” means all of the collateral described in the Security
Documents.
     “Commitment Fees” shall have the meaning set forth in Section 2.1(h)(ii) of
the Agreement.
     “Commitment Transfer Supplement” means a commitment transfer supplement
substantially in the form of Schedule 2.7(c) to the Agreement.
     “Consol Energy” means Consol Energy Inc., a Delaware corporation.
     “Consol Kentucky” means Consol of Kentucky Inc., a Delaware corporation.
     “Contingency Account” has the meaning set forth in Section 2.1 of the
Deposit Agreement.
     “Debt” of any Person means, at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds,

3

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debentures, notes or other similar instruments (excluding “deposit only”
endorsements on checks payable to the order of such Person), (c) all obligations
of such Person to pay the deferred purchase price of property or services
(except for trade accounts payable arising in the ordinary course of business
which are not more than 90 days past due), (d) all obligations of such Person as
lessee under capital leases, (e) all obligations of others guaranteed, directly
or indirectly, by such Person, whether or not secured by a Lien or other
security interest on any asset of such Person, and (f) liabilities of such
Person in respect of unfunded vested benefits under plans covered by Title IV of
ERISA.
     “Debt Protection Accounts” has the meaning set forth in Section 1.1 of the
Deposit Agreement.
     “Debt Protection Letter of Credit” shall have the meaning set forth in
Section 4.4.2 of the Deposit Agreement.
     “Debt Service” means, for any period, an amount equal to the aggregate of,
without duplication, principal and interest on outstanding Loans due and any
other amounts Borrower is obligated to pay during such period to the Secured
Parties pursuant to the Agreement and the other Loan Instruments.
     “Debtor Relief Law” means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
laws affecting the rights or remedies of creditors generally, as in effect from
time to time.
     “Deed of Trust Trustee” means Jeffrey A. Bandini, Esq. (as successor
trustee to Terri T. McGaughey, Esq.), as trustee for the use and benefit of
Agent, as trustee under the Original Deed of Trust and the Additional Deed of
Trust, as applicable, and the successors and assigns thereof, or Jeffrey A.
Bandini, Esq., as trustee for the use and benefit of Agent under the Additional
Deed of Trust (2008), and the successors and assigns thereof.
     “Deeds of Trust” means, collectively, the Original Deed of Trust, the
Additional Deed of Trust and the Additional Deed of Trust (2008).
     “Default” means an event which with the giving of notice or lapse of time
or both as specified in Section 7.1 of the Agreement would become an Event of
Default.
     “Default Interest Rate” means, with respect to any Loan, the higher of
(a) the Interest Rate otherwise applicable to such Loan, plus 2% per annum, and
(b) the Base Rate plus 3% per annum.
     “Deposit Agreement” means the Amended and Restated Security Accounts
Deposit and Control Agreement dated as of                      among Borrower,
Agent and the Depositary, concerning the Accounts (other than the Local Bank
Account), as the same may be further amended, supplemented or modified from time
to time.
     “Depositary” means The Bank of New York Trust Company, N.A., in its
capacity as depositary under the Deposit Agreement and its successors and
assignees in such capacity.

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     “Disallowance” means a Rova I Disallowance and/or a Rova II Disallowance,
as applicable.
     “Disallowance Reserve Account” has the meaning set forth in Section 2.1 of
the Deposit Agreement.
     “Discounted Value” means with respect to the Called Principal of any Fixed
Rate Loan, the amount calculated by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal in accordance with
accepted financial practice and at a discount factor (applied on a quarterly
basis) equal to the Reinvestment Yield with respect to such Called Principal.
     “Discretionary Cash Flow” means, as of any Repayment Date, all funds
remaining in the Project Control Account on such date after the withdrawals
specified in Section 4.1(a) through (e) of the Deposit Agreement are made.
     “Easement Agreements” means, collectively, all easements, licenses,
franchises, rights-of-way and spur track agreements to which Borrower is now or
hereafter a party or beneficiary, affecting construction on, or the use or
operation, or constituting a part, of the Property, as the same may be amended,
modified or supplemented from time to time.
     “Eligible Facility” has the meaning set forth in Section 32(a) (ii) of
PUHCA, as amended.
     “Energy Services Agreement” means the Energy Services Agreement, dated as
of March 16, 1990, between Borrower and the Steam Host, as amended by Amendment
No. 1 to Energy Services Agreement, dated as of September 25, 1991, between
Borrower and the Steam Host, as amended by Amendment No. 2 to Energy Services
Agreement, dated as of December 1, 1993, between Borrower and the Steam Host, as
amended by the Amended and Restated Consent to Assignment of Agreement, dated as
of December 1, 1993, between the Steam Host and Agent, and as the same may be
further amended, modified or supplemented from time to time.
     “Environmental Consultant” means a widely recognized engineering firm
appointed as environmental consultant by Agent.
     “Environmental Requirements” means any Governmental Requirement in effect
from time to time relating to the protection of the environment or otherwise
addressing environmental, health or safety issues or requirements of or by any
Governmental Authority, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, release or handling
of Hazardous Materials including but not limited to CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. § 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Toxic Substances
Control Act (15 U.S.C. § 2601 et seq.), the Clean Air Act (42 U.S.C. § 7401 et
seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.) and
the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), all as presently in
effect and as the same may hereafter be amended, and any regulation pursuant
thereto, and also including, but not limited to, any obligations, duties or
requirements arising from or related to hazardous materials under common law.

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     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “ERISA Affiliate” means (a) a corporation which is a member of a controlled
group of corporations with Borrower within the meaning of Section 414(b) of the
Code, (b) a trade or business (including a sole proprietorship, partnership,
trust, estate or corporation) which is under common control with Borrower within
the meaning of Section 414(c) of the Code, (c) a member of an affiliated service
group with Borrower within the meaning of Section 414(m) of the Code or (d) an
entity described in Section 414(o) of the Code.
     “Escrow Agreement” has the meaning set forth in Section 4.1(s) of the
Agreement.
     “Event of Default” means the occurrence of any of the events set forth in
Section 7.1 of the Agreement.
     “EWG” means an Exempt Wholesale Generator as defined under the regulations
of the FERC, which implement PUHCA.
     “Facilities” means, collectively, the Rova I Facility and the Rova II
Facility.
     “Facilities Operating Budget” means an annual budget in the form of
Schedule 6.8(h)(i) or Schedule 6.8(h)(ii), as applicable, to the Agreement,
prepared by Borrower in conformity with Section 6.8(h) of the Agreement.
     “Federal Funds Rate” means, as of any date, with respect to any amount, the
rate determined by Agent to be the prevailing rate per annum (rounded upward, if
necessary, to the next higher 1/100 of 1%) bid at approximately 11:00 a.m. (New
York time) (or as soon thereafter as is practicable) on such day based on
quotations by two or more New York Federal Funds dealers of recognized standing,
selected by Agent, for the purchase at face value of Federal Funds in the
secondary market in an amount comparable to such amount.
     “FERC” means the Federal Energy Regulatory Authority, an agency of the
United States government, or any successor thereof.
     “Financial Statements” means the information which Borrower is required to
furnish pursuant to Section 6.8 of the Agreement and such additional financial
information as shall be reasonably required by Agent from time to time
including, without limitation, operating statements with respect to the
Property, the Rova I Facility and the Rova II Facility and other reasonable
financial information regarding Borrower, the Partners, and such other parties
to the Project Documents as Borrower may reasonably be able to obtain.
     “Financing Statements” means the form UCC-1 financing statements and form
UCC-3 financing statements and such other documents, instruments or certificates
required to be filed with the appropriate offices of Governmental Authorities in
connection with the perfection of the security interests granted under the
Agreement and under the Security Documents.

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     “Fixed Rate Loans” means, as applicable, Tranche A Senior Loans, Tranche B
Senior Loans, Tranche C Senior Loans, Tranche A Senior Subordinated Loans,
Tranche B Senior Subordinated Loans and Tranche C Senior Subordinated Loans.
     “Floating Rate Interest Payment Date” means the last day of each Floating
Rate Interest Period.
     “Floating Rate Interest Period” shall mean a period of three months,
beginning on and including the first day thereof (which must be a Banking Day),
and ending on (but not including, for the purpose of computing the number of
days in such period) the date which corresponds numerically to such beginning
date three calendar months thereafter (or, in the event such month has no such
numerically corresponding date, on the last Banking Day of such month).
     “FPA” means the Federal Power Act, as amended, and the regulations of the
FERC thereunder.
     “Funding Date” has the meaning set forth in Section 4.2 of the Agreement.
     “General Partner Security Agreement” means the Third Amended and Restated
General Partner Security and Limited Guaranty Agreement, dated as of
                    , among the Partners and Agent, providing for, among other
things, the grant to Agent for the benefit of the Secured Parties of a pledge of
all the partnership interests in Borrower, as the same may be amended, modified
or supplemented from time to time.
     “GNP Deflator” means the Gross National Product Implicit Price Deflator for
a calendar year as currently published in the United States Department of
Commerce, Bureau of Economic Analysis publication entitled “Survey of Current
Business”. If the GNP Deflator ceases to exist or becomes unavailable, Borrower
and Agent shall agree to a substitute index that reasonably measures inflation
for all goods and services within the United States.
     “Governmental Authority” means the government of any federal, state,
municipal or other political subdivision in which the Property, the Rova I
Facility or the Rova II Facility is located, and any other government or
political subdivision thereof exercising jurisdiction over the Property, the
Rova I Facility or the Rova II Facility (including ownership, construction or
operation thereof), Borrower or any other party to any of the Project Documents
or Loan Instruments, including all agencies, courts and instrumentalities of
such governments and political subdivisions exercising executive, legislative,
judicial, regulatory or administrative functions.
     “Governmental Requirements” means all Laws, ordinances, statutes, codes,
rules, regulations (including zoning and subdivision regulations), orders,
directives and decrees of any Governmental Authority, including, without
limitation, all authorizations, consents, approvals, registrations, exemptions,
permits and licenses with or from any Governmental Authority, applicable to the
Property, the Rova I Facility, the Rova II Facility (including ownership,
construction or operation thereof), Borrower or, with respect to any other party
to any of the Project Documents or Loan Instruments, applicable to such party’s
ability to perform its respective obligations under such document or instrument,
but not including any (a) such actions

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as in the reasonable judgment of Agent, are immaterial in nature, (b) tax
waivers, exemptions, returns, reports, filings or declarations or (c) title and
deed of trust recordings (or any and all other filings or recordings of any of
the Project Documents, financing statements, continuation statements, memoranda
of leases or other like documents) and all other Uniform Commercial Code or real
property filings necessary for the performance of any obligations under or in
connection with any of the transactions contemplated by the Agreement or the
other Loan Instruments or the Project Documents.
     “Gross Revenues” means, for any period, Borrower’s revenues received or
interest income earned, or projected to be received or earned (as applicable),
including interest income earned or projected to be earned on the amounts in the
Accounts; provided that, with respect only to any prior period, (i) any accrued
capacity payments related to forced outages not received by Borrower during such
period shall not be deemed part of Gross Revenues for such period, (ii) the
reversal of any accrual for such capacity payments not received during such
period shall not be a payment from Gross Revenues for such period, and (iii) the
payment of any such accrued capacity payments received by Borrower during such
period shall be deemed part of the Gross Revenues for such period.
     “Hazardous Material” means any material or substance that, whether by its
nature or use, is at any relevant time subject to regulation under any
Environmental Requirement.
     “Independent Engineer” means R.W. Beck, or another widely recognized
engineering firm appointed as independent engineer by Agent.
     “Ineligible Assignee” means any Person that is, in the ordinary course,
directly engaged in, and that derives a majority of its gross revenues from, the
business of owning majority interests in, or, operating, managing or
constructing, power generating facilities of technology similar to that of the
Rova I Facility or the Rova II Facility in competition with Borrower or its
Affiliates.
     “Insurance Advisor” means Moore-McNeil, LLC, or another widely recognized
insurance advisory firm appointed as insurance advisor by Agent.
     “Insurance Policies” means the insurance policies required pursuant to
Section 6.14 of the Agreement.
     “Interest Payment Date” means, with respect to Fixed Rate Loans, each
Quarterly Date, and, with respect to Revolving Loans and Junior Subordinated
Loans, each Floating Rate Interest Payment Date.
     “Interest Rate” means, with respect to (i) Tranche A Senior Loans, 10.42%;
(ii) Tranche B Senior Loans, 8.33%; (iii) Tranche C Senior Loans, 6.00%;
(iv) Tranche A Senior Subordinated Loans, 11.42%; (v) Tranche B Senior
Subordinated Loans, 9.33%; (vi) Tranche C Senior Subordinated Loans, 7.65%;
(vii) Junior Subordinated Loans, the Junior Subordinated Loan Floating Rate; and
(viii) Revolving Loans, the Revolving Loan Interest Rate.
     “Junior Subordinated Loans” has the meaning set forth in Section 2.1(e) of
the Agreement.

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     “Junior Subordinated Obligations” means all Obligations relating to Junior
Subordinated Loans.
     “Junior Subordinated Loan Floating Rate” means, for any Floating Rate
Interest Period, a rate per annum equal to LIBOR for such Floating Rate Interest
Period plus 4.50%.
     “KCCC” means Kentucky Criterion Coal Company, a Delaware corporation.
     “Law” means any constitution or treaty, any law, statute, code, ordinance,
decree, regulation, order, rule, judicial or arbitral decision and any voluntary
restraint, policy or guideline not having the force of law, with which such
party must reasonably comply, or any of the provisions of such Laws binding on
or affecting the party referred to in the context in which the term is used.
     “Lender Schedule” means the Lender Schedule attached to the Agreement as
Schedule 2.6, as amended from time to time.
     “Lenders” means the Lender named in the preamble of the Agreement and any
Purchasing Lenders.
     “Letters of Credit” means the Rova I Letter of Credit and/or the Rova II
Letter of Credit, as applicable.
     “LIBOR” means the rate of interest per annum determined by Prudential to be
representative of the rates at which deposits of U.S. dollars are being offered
in the London interbank Eurocurrency market, in an amount comparable to the
amount of the applicable Junior Subordinated Loans or Revolving Loans then
outstanding and for a period of time equal to the Floating Rate Interest Period.
LIBOR shall be determined as of the date hereof and hereafter as of the last day
of each subsequently ending Floating Rate Interest Period.
     “Lien” means any security interest, deed of trust, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same effect as any of the foregoing, and any filing of any
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
     “Lime Supplier” means the Oglebay Norton Minerals Corporation, an Ohio
corporation, and its successors and permitted assigns in its capacity as lime
supplier under the Rova I Lime Supply Agreement and/or the Rova II Lime Supply
Agreement, as applicable.
     “Lime Transportation Agreement” means the Railroad Transportation Contract
# CSXT-C4376, dated as of December 1, 1993, between the Railroad and Borrower,
as amended by Amendment to Rail Transportation Agreement CSXT-C4376, dated
April 26, 1994, as amended by Amendment to Rail Car Lease Agreement, by and
between ACF Industries and Borrower, dated April 16, 2004, as amended by
Amendment No. 3 to Contract CSXT-C4376,

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dated July 11, 2005, as the same may be further amended, modified or
supplemented from time to time.
     “Loan Instruments” means this Agreement, the Security Documents, the Notes,
and such other instruments evidencing or securing the Loans, as shall from time
to time be executed and delivered to the Secured Parties by Borrower or any
other party, pursuant to or as contemplated by this Agreement.
     “Loans” means the Tranche A Senior Loans, the Tranche B Senior Loans, the
Tranche C Senior Loans, the Tranche A Senior Subordinated Loans, the Tranche B
Senior Subordinated Loans, the Tranche C Senior Subordinated Loans, the Junior
Subordinated Loans and the Revolving Loans, as applicable.
     “Local Bank Accounts” has the meaning set forth in Section 6.9 of the
Agreement.
     “Majority Lenders” means on any date, those Lenders holding more than 66
2/3% of the outstanding principal amount of Senior Loans or, if all Senior
Obligations have been paid in full, of the Senior Subordinated Obligations.
     “Maturity Date” means, with respect to: (i) Tranche A Senior Loans,
July 31, 2014; (ii) Tranche B Senior Loans, July 31, 2015; (iii) Tranche C
Senior Loans, January 31, 2015; (iv) Tranche A Senior Subordinated Loans,
July 31, 2014; (v) Tranche B Senior Subordinated Loans, January 31, 2015;
(vi) Tranche C Senior Subordinated Loans, October 31, 2009; and (vii) Revolving
Loans, April 30, 2015.
     “MBR Authority” means the authority conferred by FERC under the FPA, to
sell electric capacity and energy at wholesale at negotiated rates, together
with the waivers of and blanket authorizations and compliance requirement under
the FERC’s regulations supplementing the FPA, including any subsequent
modifications or additions to such FERC regulations.
     “Moody’s” means Moody’s Investors Service, Inc., a Delaware corporation,
and its successors and assigns and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, “Moody’s” shall be deemed to refer to any other nationally recognized
statistical rating organization designated by Borrower.
     “Multiemployer Plan” shall mean any Plan which is a “multiemployer plan”
(as such term is defined in section 4001(a)(3) of ERISA).
     “Net Revenues” means the Rova I Net Revenues and/or the Rova II Net
Revenues, as applicable.
     “NFCC” shall mean Nations Financial Capital Corporation, a Delaware
corporation.
     “Notes” means the promissory notes evidencing the Loans, as described in
Section 2.7 of the Agreement.

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     “Obligations” means all principal, premium (including Yield Maintenance
Premium), interest (including interest which would accrue but for the filing of
a petition in bankruptcy), fees, expenses and liabilities and obligations of any
kind, whether monetary or nonmonetary, owing from Borrower to Agent or any
Lender or due to be performed by Borrower for the benefit of Agent or any Lender
under or in connection with any Loan Instrument.
     “Obligor” means Borrower, each Partner, Virginia Power, the Steam Host, the
Steam Host Guarantor, the Coal Supplier, the Coal Supply Guarantor, the
Railroad, the Operator and the Ash Disposer (until, in the reasonable judgment
of Majority Lenders, the continued disposal obligations under the Ash Disposal
Agreements are no longer material to the ability of the Rova I Facility and the
Rova II Facility to dispose of ash in a manner satisfactory to the Majority
Lenders).
     “Operating Budget” means the Rova I Operating Budget and/or the Rova II
Operating Budget, as applicable.
     “Operating Contract” means the Operating & Maintenance Agreement, dated as
of August 22, 2007, between Borrower and Operator, as the same may be amended,
modified or supplemented from time to time.
     “Operating Costs” means, for any period, Rova I Operating Costs and/or Rova
II Operating Costs, as applicable.
     “Operator” means North American Energy Services Company, a Washington
corporation, and its successors and permitted assigns, as operator pursuant to
the Rova I Operating Contract and/or the Rova II Operating Contract, as
applicable.
     “Original Closing Date” means December 20, 1991.
     “Original Deed of Trust” means that certain Amended and Restated Future
Advance Deed of Trust and Security Agreement, dated as of December 18, 1991
between Borrower and Terri T. McGaughey, as trustee for the use and benefit of
Agent on behalf of the Secured Parties, as amended by Agreement of Modification
to Future Advance Deed of Trust and Security Agreement dated December 1, 1993,
as assigned to the Agent hereunder pursuant to an Assignment of Deed of Trust
dated February 11, 2008, as affected by Substitution of Trustee dated February
11, 2008 appointing Jeffrey A. Bandini, Esq., as substitute trustee, and as
amended by Agreement of Second Modification to Future Advance Deed of Trust and
Security Agreement dated February 11, 2008, as the same may be further amended,
modified, supplemented or re-recorded from time to time.
     “Participant” has the meaning set forth in Section 9.2(b) of the Agreement.
     “Partner Parents” means Westmoreland Energy, LLC, a Delaware limited
liability company, and WEI-Roanoke Valley, Inc., a Delaware corporation.
     “Partners” means Westmoreland-Roanoke Valley, L.P. and Westmoreland-North
Carolina Power, LLC, and their respective successors and permitted assigns.

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     “Partnership Agreement” means the Amended and Restated General Partnership
Agreement dated as of December 1, 1993, as amended by Amendment No. 1 to the
Amended and Restated Partnership Agreement dated as of June 29, 2006, between
the Partners providing for the formation of Borrower, as the same may be
amended, modified or supplemented from time to time.
     “PBGC” shall mean the Pension Benefit Guaranty Corporation, or any
successor or replacement entity thereto.
     “Permitted Contract” means (a) any agreement of Borrower entered into after
the Closing Date with respect to the operation, maintenance, repair or
renovation of the Rova I Facility and/or the Rova II Facility, as applicable,
other than those agreements referred to in clause (b) hereto, requiring payments
(including contingent payments such as indemnities, guaranties or similar
obligations) by any party thereto of not more than $900,000 per year; provided
that at no time shall all payments (including any such contingent payments)
required to be made by all parties under all Permitted Contracts specified in
this clause (a) then in effect in the aggregate exceed $1,500,000 per year
without the consent of Agent; and provided, further, that Agent shall receive
notice of the execution of any such agreements, shall receive a copy thereof
and, upon the reasonable request of Agent, shall be granted a security interest
therein (with the consent of the non-assigning party, if reasonably obtainable),
and (b) all purchase orders or other agreements entered into pursuant to the
Operating Agreement to the extent such obligations are reflected in the then
current Rova I Operating Budget and/or the Rova II Operating Budget; provided
that in the case of any such purchase orders or other agreements requiring
payments (including any contingent payments set forth above) of more than
$300,000, Agent shall receive notice of the execution of any such purchase
orders or other agreements, shall receive a copy thereof and, upon the
reasonable request of Agent, shall be granted a security interest therein (with
the consent of the non-assigning party, if reasonably obtainable). The aforesaid
dollar limits shall be increased or decreased from time to time by the same
percentage as the “Fuel Compensation Price” (as defined in the Rova I Power
Purchase Agreement) is then increased or decreased pursuant to Section 10.3
through 10.7 of the Rova I Power Purchase Agreement; provided that no decrease
shall cause an existing Permitted Contract to cease being a Permitted Contract
under the Agreement.
     “Permitted Investments” means (a) obligations of, or guaranteed as to
interest and principal by, the United States Government or any agency thereof,
(b) open market commercial paper, with a maturity of not longer than 90 days, of
any corporation incorporated under the laws of the United States or any state
thereof rated “Prime-1” or its equivalent by Moody’s or “A-1” or its equivalent
by S&P, (c) bankers acceptances or certificates of deposit issued by any bank
rated “Aal” or better by Moody’s or “AA” or better by S&P, and having a maximum
maturity of one year, (d) any repurchase agreement with any Lender or any other
bank rated “Aal” or better by Moody’s or “AA” or better by S&P, which agreement
is secured by any one or more certificates of deposit of the type described in
clause (c) hereof, which certificates of deposit shall at all times have a
market value (exclusive of accrued interest) not less than 103% of the full
amount of the repurchase agreement and provided, that such repurchase
obligations shall be transferred to and segregated from other obligations owned
by Lenders or any such bank, (e) time deposits with banks rated “Aa1” or better
by Moody’s or “AA” or better by S&P and having capital, surplus and undivided
profits or at least $1,000,000,000, including but not limited

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to Eurodollar time deposits, provided that any Eurodollar time deposits shall be
held only by Depositary, and any such time deposits shall have a maturity of not
longer than 90 days; or (f) federally insured demand deposit accounts with banks
having capital, surplus and undivided profits of at least $1,000,000,000 that
are members of the Federal Reserve System of the United States, provided that
all funds in any one Account shall not at any time be invested in Permitted
Investments with a maturity of greater than one year or with an average
maturity, calculated on a weighted average basis, of more than six months; and
provided, further, that with respect to the credit ratings specified above, if
neither Moody’s nor S&P is in the business of rating the relevant Permitted
Investment, such Permitted Investment shall have received a rating equivalent to
that specified above for such Permitted Investment by another nationally
recognized credit rating agency of similar standing.
     “Permitted Liens” means the Liens permitted to be incurred by Borrower
pursuant to Section 6.11 of the Agreement.
     “Person” means any individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or political
subdivision thereof.
     “Plan” shall mean any “employee pension benefit plan” (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by Borrower or any ERISA
Affiliate.
     “Plant Aging Allowance Amount” means, for any calendar year, the amount set
forth below under the column “Allowance for Plant Aging” opposite such calendar
year:

          Calendar Year   Allowance for Plant Aging
Through 1998
  $ 0  
1999
  $ 366,000  
2000
  $ 57,000  
2001
  $ 89,000  
2002
  $ 123,000  
2003
  $ 160,000  
2004
  $ 295,000  
2005
  $ 242,000  
2006
  $ 288,000  
2007
  $ 338,000  
2008
  $ 389,000  
2009
  $ 1,746,000  
2010
  $ 764,000  
2011
  $ 1,103,000  
2012
  $ 1,472,000  
2013
  $ 1,866,000  
2014
  $ 0  
2015
  $ 0  

     “Pledged Interests” means the “Collateral” are defined in the General
Partner Security Agreement.

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     “Project Control Account” has the meaning provided in Section 2.1 of the
Deposit Agreement.
     “Project Documents” means the Rova I Project Documents and the Rova II
Project Documents.
     “Property” means the real property described in the Original Deed of Trust,
the Additional Deed of Trust and the Additional Deed of Trust (2008) and all
tenements, hereditaments, easements, rights-of-way, rights, privileges and
appurtenances relating thereto, together with the interest held in such Property
by Borrower, together with the Rova I Facility, the Rova II Facility and all
other property, rights and interests constituting the Trust Property as defined
and used in the Original Deed of Trust, the Additional Deed of Trust and the
Additional Deed of Trust (2008).
     “Pro Rata Share” means, for Prudential, 100%.
     “Prudential” means The Prudential Insurance Company of America.
     “PUHCA” means the Public Utility Holding Company Act of 2005, and the
implementing regulations of the FERC thereunder; including any subsequent
modifications, additions or successor Laws thereto.
     “Purchasing Lender” has the meaning set forth in Section 9.2(a) of the
Agreement.
     “PURPA” means the Public Utility Regulatory Policies Act of 1978, as
amended from time to time, and all rules and regulations adopted thereunder.
     “Quarterly Date” means the last Banking Day of each April, July, October
and January.
     “Rail Transportation Agreement” means the Rail Transportation Agreement,
dated as of May 17, 1991, between WCSC and the Railroad, as amended by Amendment
No. 1 to Rail Transportation Agreement, effective as of October 10, 1991,
between WCSC and the Railroad and by Amendment No. 2 to Rail Transportation
Agreement, effective as of March 12, 1993, between WCSC and the Railroad and by
Amendment No. 3 to Rail Transportation Agreement, dated as of June 21, 1993,
among WCSC, the Coal Supplier and the Railroad and by the Amended and Restated
Consent to Assignment of Agreement, dated as of December 1, 1993, among the
Railroad, WCSC and Agent, and by the Amended and Restated Consent to Assignment
of Agreements, dated as of December 1, 1993, between WCSC and Agent, as assigned
to and assumed by Consol Kentucky pursuant to the Assumption Agreement, and as
the same may be further amended, modified or supplemented from time to time.
     “Railroad” means CSX Transportation, Inc., a Virginia corporation, and its
successors and permitted assigns, as provider of transportation services under
the Rail Transportation Agreement.

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     “Rate Sub-Account” shall have the meaning specified in Section 2.1 of the
Deposit Agreement.
     “Reinvestment Yield” means, with respect to the Called Principal of Fixed
Rate Notes, the yield to maturity implied by (a) the yields reported, as of
10:00 a.m. (New York time) on the date which is two Banking Days preceding the
Settlement Date with respect to such Called Principal, on the display designated
as “Page PX1” (or such other page as may replace Page PX1) on Bloomberg
Financial Markets for the most recently issued actively traded United States
Treasury obligations having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall not be
ascertainable, (b) the Treasury Constant Maturity Series yields reported as of
the Banking Day next preceding the Settlement Date with respect to such Called
Principal) in Federal Reserve Statistical Release H. 15 (519) (or any comparable
successor publication) for actively traded United States Treasury obligations
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (i) converting United States Treasury bill quotations to
bond-equivalent yields in accordance with accepted financial practice and
(ii) interpolating linearly between reported yields.
     “Release” means any “release” as such term is defined in 42 U.S.C. §
9601(22), as such statute has been or may be amended from time to time.
     “Remaining Average Life” means, with respect to the Called Principal of
Fixed Rate Notes, the number of years (calculated to the nearest 1/100th year)
obtained by dividing (a) such Called Principal into (b) the sum of the products
obtained by multiplying (i) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (ii) the number of years (calculated
to the nearest 1/100th year) which will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.
     “Remaining Cash Flow” has the meaning set forth in Section 4.1(h) of the
Deposit Agreement.
     “Remaining Scheduled Payments” means, with respect to the Called Principal
of Fixed Rate Notes, all payments of such Called Principal and interest thereon
that would be due on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date.
     “Repair and Maintenance Account” has the meaning set forth in Section 2.1
of the Deposit Agreement.
     “Repayment Date” means, with respect to each tranche of Loans hereunder,
the repayment dates for such tranche specified in Section 2.4 of the Agreement
and the Maturity Date for such tranche, provided that if any such date is not a
Banking Day, the relevant Repayment Date shall be the next succeeding Banking
Day.

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     “Reportable Event” shall mean any of the events set forth in section
4043(b) of ERISA or the regulation thereunder, a withdrawal from a plan
described in section 4063 of ERISA, or a cessation of operations described in
section 4062(e) or ERISA.
     “Request for Purchase” has the meaning set forth in Section 2.1(f)(i) of
the Agreement.
     “Required Ash Reserve Balance has the meanings set forth in Section 1.1 of
the Deposit Agreement.
     “Required Debt Protection Balance has the meaning set forth in Section 1.1
of the Deposit Agreement.
     “Required Disallowance Balance” has the meaning set forth in Section 4.5 of
the Deposit Agreement.
     “Required Disallowance Funding” has the meaning set forth in Section 4.5 of
the Deposit Agreement.
     “Required Maintenance Balance” has the meaning set forth in Section 4.3 of
the Deposit Agreement.
     “Revolving Loan Interest Rate” means, for any Floating Rate Interest
Period, a rate per annum equal to LIBOR for such Floating Rate Period plus
1.375%.
     “Revolving Loans” has the meaning set forth in Section 2.1(f) of the
Agreement.
     “Rova I Cash Expenses” means, for any period, the amounts actually paid or
projected to be paid (as applicable) by Borrower during such period for the
operation and maintenance of the Rova I Facility (but excluding, without
limitation, income taxes and non-cash items such as depreciation and
amortization), including, without limitation, premiums for Insurance Policies
allocated to the Rova I Facility, fuel costs and payments under the Operating
Contract. Rova I Cash Expenses do not include, inter alia, Debt Service.
     “Rova I Coal Subcontract” means, collectively, the Coal Supply and
Transportation Subcontract among the Coal Supplier, Westmoreland Coal Company,
WCSC and KCCC, dated as of June 21, 1993, as amended by First Amendment to Rova
I Coal Supply and Transportation Subcontract, dated as of December 1, 1993, and
the Rova I Letter Agreement, as assigned to and assumed by Consol Kentucky
pursuant to the Assumption Agreement, dated June 21, 1993, as amended by First
Amendment to Coal Supply Agreement, dated May 16, 1996, in each case as the same
may be further amended, modified or supplemented from time to time.
     “Rova I Coal Subcontract Guaranty” means the Guaranty Agreement, dated as
of December 21, 1994, by Consol Energy for the benefit of Borrower guaranteeing
Consol Kentucky’s performance under the Rova I Coal Subcontract, as the same may
be amended, modified or supplemented from time to time.

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     “Rova I Coal Supply Agreement” means, collectively, the Coal Supply
Agreement, dated as of June 21, 1993, among Borrower and the Coal Supplier, as
amended by the Amended and Restated Consent to Assignment of Agreement, dated as
of December 1, 1993, between the Coal Supplier and Agent, and the Rova I Three
Party Agreement, dated June 21, 1993, as amended by First Amendment to Coal
Supply Agreement, dated May 16, 1996, in each case as the same may be amended,
modified or supplemented from to time.
     “Rova I Coal Supply Guaranty” means the Guaranty, dated as of June 21,
1993, by the Coal Supply Guarantor for the benefit of Borrower guaranteeing the
Coal Supplier’s performance under the Rova I Coal Supply Agreement, as amended
by the Amended and Restated Consent to Assignment of Agreement, dated as of
December 1, 1993, between the Coal Supply Guarantor and Agent, and as the same
may be amended, modified or supplemented from time to time.
     “Rova I Contingency Account” has the meaning set forth in Section 2.1 of
the Deposit Agreement.
     “Rova I Disallowance” means a “Disallowance”, as defined in Article 18 of
the Rova I Power Purchase Agreement.
     “Rova I Facility” means the 165 megawatt (net) coal-fired generating
facility in Halifax County, North Carolina owned, operated and maintained by
Borrower, together with all appurtenant structures, equipment, piping, wiring,
controls, interconnection facilities, transmission lines, associated materials
handling and environmental control equipment and all additions and replacements
thereto, for the purpose of supplying electric energy and capacity to Virginia
Power, pursuant to, and as more fully described in, the Rova I Project
Documents.
     “Rova I Letter Agreement” means that certain letter agreement, dated
December 16, 1993, between the Coal Supplier and Agent relating to the Rova I
Coal Subcontract.
     “Rova I Letter of Credit” means a letter of credit for the benefit of VEPCO
in the amount of $4,500,000 delivered to VEPCO under, and meeting the
requirements of, the Rova I Power Purchase Agreement.
     “Rova I Lime Railcar Lease Agreement” means the Railcar Lease Agreement,
dated as of July 31, 1993, by and between Northbrook Rail Corporation, an
Illinois close corporation and Borrower, as the same may be amended, modified or
supplemented from time to time.
     “Rova I Lime Supply Agreement” means the Agreement between
Westmoreland-LG&E Partners and Global Stone Chemstone Corporation for the Sale
and Purchase of Lime, Roanoke Valley I, dated as of August 23, 2000, between
Borrower and Lime Supplier, and any renewal or replacement thereof entered into
pursuant to Section 6.17 of the Agreement, in each case, as amended, modified or
supplemented from time to time.
     “Rova I Net Revenues” means, for any period, Gross Revenues attributable to
the Rova I Facility for such period less Rova I Operating Costs for such period.

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     “Rova I Operating Budget” means an annual budget, in the form of
Schedule 6.8(h)(i) to the Agreement, prepared by Borrower in conformity with
Section 6.8(h) of the Agreement.
     “Rova I Operating Costs” means, for any period, the amounts expensed or
projected to be expensed (as applicable) by Borrower during such period for
operation and maintenance of the Rova I Facility and calculated in accordance
with generally accepted United States accounting principles (but excluding
income taxes and non-cash items such as depreciation and amortization),
including, without limitation, premiums for Insurance Policies, fuel costs and
payments under the Rova I Operating Contract. Rova I Operating Costs do not
include, inter alia, Debt Service or capital expenditures.
     “Rova I Power Purchase Agreement” means the Third Amendment and Restatement
of the Power Purchase and Operating Agreement, effective as of December 1, 2000,
between Borrower and Virginia Power, and as the same may be further amended,
modified or supplemented from time to time.
     “Rova I Project Documents” means all of the following, including all
exhibits and attachments thereto, as any of them may be amended, modified or
supplemented from time to time: (a) Rova I Power Purchase Agreement, (b) Energy
Services Agreement (as it relates to the Rova I Facility), (c) Steam Host
Guaranty (as it relates to the Rova I Facility), (d) Rova I Coal Supply
Agreement, (e) Rova I Coal Supply Guaranty, (f) Rova I Coal Subcontract,
(g) Rova I Coal Subcontract Guaranty, (h) Rail Transportation Agreement (as it
relates to the Rova I Facility), (i) Operating Contract (as it relates to the
Rova I Facility), (j) Rova I Lime Supply Agreement, (k) Rova I Lime Railcar
Lease Agreement, (l) Lime Transportation Agreement (as it relates to the Rova I
Facility), (m) Step-In Rights Agreement (as it relates to the Rova I Facility),
(n) Ash Disposal Agreement (as it relates to the Rova I Facility), (o) Water
Service Agreement, (p) Easement Agreements that are reasonably required for the
construction, use or operation of the Rova I Facility, (q) the consent of each
party (other than Borrower) to each of the Rova I Project Documents, where
applicable, to the assignment thereof by Borrower to Agent for the benefit of
the Secured Parties, (r) Insurance Policies (as they relate to the Rova I
Facility), (s) all authorizations, consents, approvals, registrations,
exemptions, permits and licenses from Governmental Authorities, (t) Partnership
Agreement, (u) Venture Management Agreement and (v) any other agreement, except
for all Permitted Contracts (other than Easement Agreements specified in clause
(p) above), executed by or on behalf of Borrower in connection with the Rova I
Facility or any of the Rova I Project Documents and classified as a Rova I
Project Document by Agent, in its sole discretion, with notice to Borrower.
     “Rova I Subcontractor Default” shall have the meaning set forth in the Rova
I Coal Supply Agreement.
     “Rova I Three Party Agreement” means that certain Letter Agreement, dated
as of June 21, 1993, among Borrower, Westmoreland Coal Company, WCSC, KCCC and
the Coal Supplier, as amended by the Second Amended and Restated Consent to
Assignment of Agreement, dated as of December 23, 1993, between Coal Supplier
and Agent, and as the same may be amended, modified or supplemented from time to
time.

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     “Rova II Cash Expenses” means, for any period, the amounts actually paid or
projected to be paid (as applicable) by Borrower during such period for the
operation and maintenance of the Rova II Facility (but excluding, without
limitation, income taxes and non-cash items such as depreciation and
amortization), including, without limitation, premiums for Insurance Policies
allocated to the Rova II Facility, fuel costs and payments under the Rova I
Operating Contract. Rova II Cash Expenses do not include, inter alia, Debt
Service.
     “Rova II Coal Subcontract” means the Coal Supply and Transportation
Subcontract among the Coal Supplier, Westmoreland Coal Company, WCSC and KCCC,
as assigned to and assumed by Consol Kentucky pursuant to the Assumption
Agreement, dated as of December 1, 1993, as the same may be amended, modified or
supplemented from time to time.
     “Rova II Coal Subcontract Guaranty” means the Guaranty Agreement, dated as
of December 21, 1994 by Consol Energy for the benefit of Borrower guaranteeing
Consol Kentucky’s performance under the Rova II Coal Subcontract, as the same
may be amended, modified or supplemented from time to time.
     “Rova II Coal Supply Agreement” means, collectively, the Rova II Coal
Supply Agreement dated as of December 1, 1993 among Borrower and the Coal
Supplier, as amended by the Amended and Restated Consent to Assignment of
Agreement, dated as of December 1, 1993, between the Coal Supplier and Agent and
the Rova II Three Party Agreement, in each case as the same may be amended,
modified or supplemented from time to time.
     “Rova II Coal Supply Guaranty” means the Guaranty, dated as of December 1,
1993, by the Coal Supply Guarantor for the benefit of Borrower guaranteeing the
Coal Supplier’s performance under the Rova II Coal Supply Agreement, as amended
by the Amended and Restated Consent to Assignment of Agreement, dated as of
December 1, 1993, between the Coal Supply Guarantor and Agent, and as the same
may be amended, modified or supplemented from time to time.
     “Rova II Contingency Account” has the meaning set forth in Section 2.1 of
the Deposit Agreement.
     “Rova II Disallowance” means a “Disallowance”, as defined in Article 18 of
the Rova II Power Purchase Agreement.
     “Rova II Facility” means the 44 megawatt (net) coal-fired cogeneration
facility in Halifax County, North Carolina owned, operated and maintained by
Borrower, together with all appurtenant structures, equipment, piping, wiring,
controls, interconnection facilities, transmission lines, associated materials
handling and environmental control equipment and all additions and replacements
thereto, for the purpose of supplying electric energy and capacity to Virginia
Power and steam to the Steam Host, pursuant to, and as more fully described in,
the Rova II Project Documents.
     “Rova II Letter of Credit” means a letter of credit for the benefit of
VEPCO in the amount of $1,476,000 delivered to VEPCO under, and meeting the
requirements of, the Rova II Power Purchase Agreement.

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     “Rova II Lime Supply Agreement” means the Agreement between
Westmoreland-LG&E Partners and Oglebay Norton Minerals Corporation for the Sale
and Purchase of Lime, Roanoke Valley II, dated as of August 23, 2000, between
Borrower and Lime Supplier, and any renewal or replacement thereof entered into
pursuant to Section 6.17 of the Agreement, in each case, as amended, modified or
supplemented from time to time.
     “Rova II Net Revenues” means, for any period, Gross Revenues attributable
to the Rova II Facility for such period, less Rova II Operating Costs for such
period.
     “Rova II Operating Budget” means an annual budget, in the form of
Schedule 6.8(h)(ii) to the Agreement, prepared by Borrower in conformity with
Section 6.8(h) of the Agreement.
     “Rova II Operating Costs” means, for any period, the amounts expensed or
projected to be expensed (as appropriate) by Borrower during such period for
operation and maintenance of the Rova II Facility and calculated in accordance
with generally accepted United States accounting principles (but excluding
income taxes and non-cash items such as depreciation and amortization),
including, without limitation, premiums for Insurance Policies, fuel costs and
payments under the Rova II Operating Contract. Rova II Operating Costs do not
include, inter alia, Debt Service or capital expenditures.
     “Rova II Power Purchase Agreement” means the Second Amendment and First
Restatement of the Power Purchase and Operating Agreement, dated as of April 28,
1993, between Borrower and Virginia Power and as amended by the Consent to
Assignment of Agreement, dated as of December 23, 1993, among Virginia Power,
the Borrower and Agent, and as amended by the Virginia Power Mortgage, and as
amended by the Virginia Power Subordination Agreement, and as amended by the
First Refusal Agreement, dated as of December 1, 1993 between Borrower and
Virginia Power, and as the same may be further amended, modified or supplemented
from time to time.
     “Rova II Project Documents” means all of the following, including all
exhibits and attachments thereto, as any of them may be amended, modified or
supplemented from time to time: (a) Rova II Power Purchase Agreement, (b) Energy
Services Agreement (as it relates to the Rova II Facility), (c) Steam Host
Guaranty (as it relates to the Rova II Facility), (d) Rova II Coal Supply
Agreement, (e) Rova II Coal Supply Guaranty, (f) Rova II Coal Subcontract,
(g) Rova II Coal Subcontract Guaranty, (h) Rail Transportation Agreement (as it
relates to the Rova II Facility), (i) Operating Contract (as it relates to the
Rova II Facility), (j) Rova II Lime Supply Agreement, (k) Lime Transportation
Agreement (as it relates to the Rova II Facility), (l) Step-In Rights Agreement
(as it relates to the Rova II Facility), (m) Ash Disposal Agreement (as it
relates to the Rova II Facility), (n) Water Service Agreement (as it relates to
the Rova II Facility), (o) Easement Agreements that are reasonably required for
the construction, use or operation of the Rova II Facility, (p) the consent of
each party (other than Borrower) to each of the Rova II Project Documents, where
applicable, to the assignment thereof by Borrower to Agent for the benefit of
the Secured Parties, (q) Insurance Policies (as they relate to the Rova II
Facility), (r) all authorizations, consents, approvals, registrations,
exemptions, permits and licenses from Governmental Authorities, (s) Partnership
Agreement, (t) Venture Management Agreement and (u) any other agreement, except
for all Permitted Contracts (other than Easement

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Agreements specified in clause (u) above), executed by or on behalf of Borrower
in connection with the Rova II Facility or any of the Rova II Project Documents
and classified as a Rova II Project Document by Agent, in its sole discretion,
with notice to Borrower.
     “S&P” means Standard & Poor’s Corporation, a New York corporation, and its
successors and assigns, and if such corporation shall be dissolved or liquidated
or shall no longer perform the functions of a securities rating agency, “S&P”
shall be deemed to refer to any other nationally recognized statistical rating
organization designated to the Trustee by Borrower.
     “Secured Parties” means Agent, the Lenders and the Depositary.
     “Security Agreement” means the Second Amended and Restated Assignment and
Security Agreement, dated as of                     , between Borrower and
Agent, providing for, among other things, the grant to Agent for the benefit of
the Secured Parties of a security interest in the collateral subject thereto, as
the same may be amended, modified or supplemented from time to time.
     “Security Documents” means all of the following, as any of them may be
amended, modified or supplemented from time to time: (a) Original Deed of Trust,
(b) Additional Deed of Trust, (c) the Additional Deed of Trust (2008)
(d) Security Agreement, (e) General Partner Security Agreement, (f) Financing
Statements, (g) the consents to assignment referred to the definitions of Rova I
Project Documents and Rova II Project Documents, (h) the Deposit Agreement, and
(i) any other agreement executed in connection with the security interests
granted under the Agreement or under the other Loan Instruments or to secure any
Loan or any other Obligation.
     “Senior Debt Service Coverage Ratio” means, for any period, the ratio of
(a) the sum of Rova I Net Revenues for such period plus Rova II Net Revenues for
such period to (b) the sum for such period of Debt Service with respect to all
Senior Obligations, as calculated by Borrower and approved by the Agent.
     “Senior Loans” means the Tranche A Senior Loans, the Tranche B Senior
Loans, the Tranche C Senior Loans and the Revolving Loans.
     “Senior Obligations” means all Obligations relating to the Senior Loans.
     “Senior Subordinated Loans” has the meaning set forth in Section 2.1(d) of
the Agreement.
     “Senior Subordinated Obligations” means all Obligations relating to the
Senior Subordinated Loans.
     “Settlement Date” means, with respect to the Called Principal of Fixed Rate
Notes, the date on which such Called Principal is to be prepaid pursuant to
Section 2.5(a) of the Agreement, or is declared to be or shall become
immediately due and payable pursuant to Section 7.2(a) of the Agreement, as the
case may be.

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     “Standby Letter of Credit Agreement” means the Standby Letter of Credit
Agreement, dated ___, 2008, between Borrower, as applicant, and the issuing bank
specified therein, pursuant to which the Letters of Credit will be issued.
     “Steam Host” means Patch Rubber Company, a North Carolina corporation, and
its successors and permitted assigns, as “Host” under the Energy Services
Agreement.
     “Steam Host Guarantor” means Myers Industries, Inc., an Ohio corporation,
as guarantor of the Steam Host’s performance under the Energy Services
Agreement.
     “Steam Host Guaranty” means the Amended and Restated Corporate Guarantee
dated as of December 1, 1993 given by the Steam Host Guarantor, for the benefit
of Borrower, guaranteeing the Steam Host’s performance under the Energy Services
Agreement, as the same may be amended, modified or supplemented from time to
time.
     “Step-In Rights Agreement” means, collectively, (i) the Lease Agreement,
dated as of December 27, 1991, including Lease Supplement No. 1, between Keycorp
Leasing Ltd. and Westmoreland Coal Company; (ii) Step-In Rights Agreement and
Assignment of Lease, dated as of December 21, 1994, by Consol Kentucky in favor
of Borrower; and (iii) the Consent to Assignment of Agreement, dated as of
December 1, 1993, among Keycorp Leasing Ltd., Hitachi Credit America Corp.,
Borrower, Coal Supplier and Agent, as the same may be amended, modified or
supplemented from time to time.
     “Subject Coal” has the meaning set forth in Section 1.36 of the Rova I Coal
Supply Agreement and in Section 1.36 of the Rova II Coal Supply Agreement.
     “Subsequent Closing Date” has the meaning set forth in Section 2.1(e)(ii)
of the Agreement.
     “Taxes” means all taxes imposed on any of the Secured Parties or on
payments to be made to or received by any of them from Borrower including,
without limitation, stamp, transfer, withholding and turnover taxes, duties,
penalties, fees and other charges, except for (a) taxes on or measured by income
or assets imposed by the country or jurisdiction of the principal office of such
Secured Party and (b) taxes on or measured by income or assets imposed by the
country or jurisdiction of the office of any Lender maintaining any Loan, or of
Agent rendering services as Agent under the Agreement.
     “Title Company” means First American Title Insurance Company or any
successors thereto, whether as co-insurers, reinsurers or otherwise.
     “Title Insurance” means (i) a 2006 ALTA lender’s title policy (and related
endorsements thereto) issued by the Title Company in the amount of $65,242,000
insuring, as of the Funding Date, the Lien of the Additional Deed of Trust
(2008), (ii) a 2006 ALTA lender’s title policy (and related endorsements
thereto) issued by the Title Company in the amount of $42,475,000 insuring, as
of the Funding Date, the Lien of the Original Deed of Trust, and (iii) a 2006
ALTA lender’s title policy (and related endorsements thereto) issued by the
Title Company in the amount of $16,765,000 insuring, as of the Funding Date, the
Lien of the Additional Deed of Trust, in each case in form and substance
satisfactory to the Agent.

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     “Total Debt Service Coverage Ratio” means, for any period, the ratio
(a) the sum of Rova I Net Revenues for such period plus Rova II Net Revenues for
such period to (b) the sum for such period of Debt Service with respect to all
Senior Obligations, Senior Subordinated Obligations and Junior Subordinated
Obligations, as calculated by Borrower and approved by the Agent.
     “Tranche A Senior Loans” has the meaning set forth in Section 2.1(a) of the
Agreement.
     “Tranche B Senior Loans” has the meaning set forth in Section 2.1(a) of the
Agreement.
     “Tranche C Senior Loans” has the meaning set forth in Section 2.1(b) of the
Agreement.
     “Tranche A Senior Subordinated Loans” has the meaning set forth in
Section 2.1(c) of the Agreement.
     “Tranche B Senior Subordinated Loans” has the meaning set forth in
Section 2.1.(d)(i) of the Agreement.
     “Tranche C Senior Subordinated Loans” has the meaning set forth in
Section 2.1(d)(ii) of the Agreement.
     “Transfer/Withdrawal Instructions” shall have the meaning specified in
Section 4.1 of the Deposit Agreement.
     “Unacceptable Coal” has the meaning set forth in Section 7.2 of the Rova I
Coal Supply Agreement and in Section 7.2 of the Rova II Coal Supply Agreement.
     “Venture Management Agreement” means the Amended and Restated Venture
Management Agreement dated as of December 1, 1993 among LG&E Power, Westmoreland
Energy and Borrower, as the same may be amended, modified or supplemented from
time to time.
     “VEPCO Cash Collateral Account” means an account of Borrower maintained by
the bank issuing the Letters of Credit, the balance of which shall not exceed
$6,000,000.
     “Virginia Power” means Virginia Electric and Power Company, a Virginia
corporation, operating in North Carolina as North Carolina Power, and its
successors and permitted assigns, as purchaser of energy and capacity under the
Rova I Power Purchase Agreement and the Rova II Power Purchase Agreement.
     “Virginia Power Mortgage” means that certain Mortgage, dated as of
December 1, 1993, between Borrower and Virginia Power, as the same may be
amended, modified, supplement or re-recorded from time to time.

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     “Virginia Power Subordination Agreement” means that certain Subordination
Agreement dated as of December 1, 1993 among Agent on behalf of the Secured
Parties, Borrower and Virginia Power, as the same may be amended, modified,
supplemented or re-recorded from time to time.
     “Water Project” means the capital improvements to the Town of Weldon’s
water supply system and waste water transportation and treatment system to
provide water supply and waste water transportation and treatment services for
the Facilities as described in the Water Service Agreement.
     “Water Service Agreement” means the Water Service Agreement, dated as of
January 29, 1991, between Borrower and the Town of Weldon, as amended by
Amendment No. 1 to Water Services Agreement, dated as of October 7, 1991,
between Borrower and the Town of Weldon, and by Amendment No. 2 to Water
Services Agreement, dated as of December 1, 1993 between the Borrower and the
Town of Weldon as the same may be further amended, modified or supplemented from
time to time.
     “WCSC” means Westmoreland Coal Sales Company, a Delaware corporation.
     “Westmoreland Energy” means Westmoreland Energy LLC, a Delaware limited
liability company.
     “Yield-Maintenance Premium” means, with respect to any Fixed Rate Loans, a
premium equal to the excess, if any, of the Discounted Value of the Called
Principal of such Loans over the sum of such Called Principal plus interest
accrued thereon to and including the Settlement Date with respect to such Loans.
The Yield-Maintenance Premium shall in no event be less than zero.

24