exv10w5






Exhibit 10.5




$25,000,000 AMENDED AND RESTATED



CREDIT AGREEMENT




by and among




WESTMORELAND MINING LLC




and




THE GUARANTORS PARTY HERETO




and




THE BANKS PARTY HERETO




and




PNC BANK, NATIONAL ASSOCIATION, As Agent




Dated as of June 26, 2008




 









 





TABLE OF CONTENTS




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






i









 






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






ii









 






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






iii









 






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






iv









 






	 	 	 	 	 
	Section	 	Page
	8.2.7 Dispositions of Assets or Subsidiaries
	 	 	89	 
	8.2.8 Affiliate Transactions
	 	 	90	 
	8.2.9 Subsidiaries, Partnerships and Joint Ventures
	 	 	90	 
	8.2.10 Continuation of or Change in Business
	 	 	90	 
	8.2.11 Plans and Benefit Arrangements
	 	 	90	 
	8.2.12 Fiscal Year
	 	 	91	 
	8.2.13 Issuance of Stock
	 	 	91	 
	8.2.14 Changes in Organizational Documents
	 	 	91	 
	8.2.15 Changes in Material Contracts, Performance under Coal Supply Contracts
	 	 	92	 
	8.2.16 Capital Expenditures and Leases
	 	 	92	 
	8.2.17 Minimum Debt Service Coverage Ratio
	 	 	92	 
	8.2.18 Maximum Leverage Ratio
	 	 	92	 
	8.3 Reporting Requirements
	 	 	93	 
	8.3.1 Monthly Financial Statements, Borrowing Base Certificate

	 	 	93	 
	8.3.2 Quarterly Financial Statements
	 	 	93	 
	8.3.3 Annual Financial Statements
	 	 	94	 
	8.3.4 Certificate of the Borrower
	 	 	94	 
	8.3.5 Notices
	 	 	95	 
	8.3.6 Notice of Litigation
	 	 	95	 
	8.3.7 Certain Events
	 	 	96	 
	8.3.8 Budgets, Forecasts, Other Reports and Information
	 	 	96	 
	8.3.9 Notices Regarding Plans and Benefit Arrangements
	 	 	97	 
	8.3.10 Information as to certain Price Adjustments
	 	 	97	 
	8.3.11 Single Purpose Entity Status
	 	 	98	 
	 
	 	 	 	 
	9. DEFAULT
	 	 	98	 
	9.1 Events of Default
	 	 	98	 
	9.1.1 Payments Under Loan Documents
	 	 	98	 
	9.1.2 Breach of Warranty
	 	 	98	 
	9.1.3 Breach of Negative Covenants, Single Purpose Entity or
Visitation Rights
	 	 	99	 
	9.1.4 Breach of Other Covenants
	 	 	99	 
	9.1.5 Defaults in Other Agreements or Indebtedness, or Material
Contracts
	 	 	99	 
	9.1.6 Final Judgments or Orders
	 	 	100	 
	9.1.7 Events Relating to Plans and Benefit Arrangements
	 	 	100	 
	9.1.8 Change of Control
	 	 	100	 
	9.1.9 Involuntary Proceedings
	 	 	100	 
	9.1.10 Voluntary Proceedings
	 	 	101	 
	9.1.11 Default or Non-performance by Manager
	 	 	101	 
	9.1.12 Loss of Bonding Capacity
	 	 	101	 
	9.1.13 Loan Document Unenforceable
	 	 	101	 
	9.1.14 Liens
	 	 	101	 
	9.2 Consequences of Event of Default
	 	 	102	 
	9.2.1 Events of Default Other Than Bankruptcy, Insolvency or
Reorganization Proceedings
	 	 	102	 
	9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings
	 	 	102	 
	9.2.3 Set-off
	 	 	102	 
	9.2.4 Suits, Actions, Proceedings
	 	 	103	 
	9.2.5 Application of Proceeds
	 	 	103	 






v









 






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






vi









 






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






 vii




 









 





LIST OF SCHEDULES AND EXHIBITS




	 	 	 	 	 
	SCHEDULES
	 	 	 	 
	SCHEDULE 1.1(B)

	 	-
	 	COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
	SCHEDULE 1.1(C)

	 	-
	 	COAL SUPPLY CONTRACTS
	SCHEDULE 1.1(L)

	 	-
	 	COAL LEASES
	SCHEDULE 1.1(Q)(1)

	 	-
	 	QUALIFIED ACCOUNTS
	SCHEDULE 1.1(Q)(2)

	 	-
	 	QUALIFIED INVENTORY
	SCHEDULE 2.9.1

	 	-
	 	EXISTING LETTERS OF CREDIT
	SCHEDULE 6.1.1

	 	-
	 	ORGANIZATION AND QUALIFICATION
	SCHEDULE 6.1.2

	 	-
	 	CAPITALIZATION AND OWNERSHIP
	SCHEDULE 6.1.3

	 	-
	 	SUBSIDIARIES
	SCHEDULE 6.1.7

	 	-
	 	LITIGATION
	SCHEDULE 6.1.8

	 	-
	 	TITLE TO PROPERTIES
	SCHEDULE 6.1.9

	 	-
	 	FINANCIAL STATEMENTS
	SCHEDULE 6.1.12

	 	-
	 	TAXES
	SCHEDULE 6.1.13

	 	-
	 	CONSENTS AND APPROVALS
	SCHEDULE 6.1.15

	 	-
	 	PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
	SCHEDULE 6.1.18

	 	-
	 	STATUS OF THE PLEDGED COLLATERAL
	SCHEDULE 6.1.19

	 	-
	 	INSURANCE
	SCHEDULE 6.1.21

	 	-
	 	MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS
	SCHEDULE 6.1.24

	 	-
	 	PLANS AND BENEFIT ARRANGEMENTS
	SCHEDULE 6.1.26

	 	-
	 	ENVIRONMENTAL MATTERS
	SCHEDULE 6.1.28

	 	-
	 	TRANSACTIONS WITH AFFILIATES
	SCHEDULE 6.1.31

	 	-
	 	COAL LEASE ROYALTIES
	SCHEDULE 6.1.32

	 	-
	 	QUALIFICATIONS AS LESSEE, COAL ACREAGE LIMITATIONS
	SCHEDULE 8.2.1

	 	-
	 	INDEBTEDNESS
	SCHEDULE 8.2.3

	 	-
	 	TWCC GUARANTIES
	SCHEDULE 8.2.16

	 	-
	 	LIMITATIONS ON CAPITAL EXPENDITURES
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	EXHIBIT 1.1(A)

	 	-
	 	ASSIGNMENT AND ASSUMPTION AGREEMENT
	EXHIBIT 1.1(C)

	 	-
	 	COLLATERAL ASSIGNMENT
	EXHIBIT 1.1(G)(1)

	 	-
	 	GUARANTOR JOINDER
	EXHIBIT 1.1(G)(2)

	 	-
	 	GUARANTY AGREEMENT
	EXHIBIT 1.1(I)(2)

	 	-
	 	INTERCOMPANY SUBORDINATION AGREEMENT
	EXHIBIT 1.1(I)(3)

	 	-
	 	INTERCREDITOR AGREEMENT
	EXHIBIT 1.1(M)(1)

	 	-
	 	MORTGAGE
	EXHIBIT 1.1(M)(2)

	 	-
	 	MANAGEMENT FEE SUBORDINATION AGREEMENT
	EXHIBIT 1.1(P)(1)

	 	-
	 	PATENT, TRADEMARK AND COPYRIGHT SECURITY AGREEMENT
	EXHIBIT 1.1(P)(2)

	 	-
	 	PLEDGE AGREEMENT
	EXHIBIT 1.1(R)

	 	-
	 	REVOLVING CREDIT NOTE
	EXHIBIT 1.1(S)(1)

	 	-
	 	SECURITY AGREEMENT
	EXHIBIT 1.1(S)(2)

	 	-
	 	SWING LOAN NOTE
	EXHIBIT 2.5.1

	 	-
	 	LOAN REQUEST
	EXHIBIT 2.5.2

	 	-
	 	SWING LOAN REQUEST






viii









 






	 	 	 	 	 
	EXHIBIT 2.11

	 	-
	 	LENDER JOINDER
	EXHIBIT 7.1.4

	 	-
	 	OPINION OF COUNSEL
	EXHIBIT 8.3.1

	 	-
	 	BORROWING BASE CERTIFICATE
	EXHIBIT 8.3.4

	 	-
	 	QUARTERLY COMPLIANCE CERTIFICATE
	EXHIBIT 8.3.11

	 	-
	 	SINGLE PURPOSE ENTITY STATUS






 ix





 









 








AMENDED AND RESTATED CREDIT AGREEMENT




     THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of June 26, 2008 and is made by and
among WESTMORELAND MINING LLC, a Delaware limited liability company (the “Borrower”), each
of the GUARANTORS (as hereinafter defined), each of the BANKS (as hereinafter defined), and PNC
BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Banks under this Agreement
(hereinafter referred to in such capacity as the “Agent”).



WITNESSETH:




     WHEREAS, Agent, Banks and Borrower are each party to a Credit Agreement, dated as of April 27,
2001, and amended on August 15, 2001, February 27, 2002, March 8, 2004, December 21, 2005, January
9, 2008, April 28, 2008 and May 28, 2008 (as so amended, the “2001 Revolving Credit
Agreement”);



     WHEREAS, the Borrower has requested that Agent and Banks amend the 2001 Revolving Credit
Agreement (i) to increase the revolving loan facility to an aggregate principal amount not to
exceed $25,000,000, (ii) to extend the period during which the Borrowers may borrow under the
revolving loan facility through June 26, 2013 and (iii) to reflect certain changes in the 2001
Revolving Credit Agreement requested by Borrower as set forth herein;



     WHEREAS, the Banks are willing to provide such credit upon the terms and conditions
hereinafter set forth;



     WHEREAS, the revolving credit facility shall be used for working capital and general corporate
purposes; and



     WHEREAS, for purposes of convenience, the parties have agreed to restate in its entirety the
2001 Revolving Credit Agreement, as amended;



     NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements
hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:



1. CERTAIN DEFINITIONS




     1.1 Certain Definitions.



          In addition to words and terms defined elsewhere in this Agreement, the following words and
terms shall have the following meanings, respectively, unless the context hereof clearly requires
otherwise:




               Account shall mean any account, contract right, general intangible, chattel paper,
instrument or document representing any right to payment for goods sold or services rendered
(including, without limitation, accounts related to as-extracted collateral), whether or not earned
by performance and whether or not evidenced by a contract, instrument or document, which is now
owned or hereafter acquired by the Borrower and the Guarantors. All Accounts, whether Qualified
Accounts or not, shall be subject to the Banks’ Prior Security Interest.



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               Adequately Funded shall mean a Plan’s assets-to-liabilities relationship described
herein. A Plan is Adequately Funded if, as of the last day of the Plan Year which has most
recently ended (the “Valuation Date”) and based on an actuarial valuation made as of the first day
of such Plan Year by the Plan’s regular actuarial consultant, the value of the Plan’s assets as
determined under Section 412(c)(2) of the Internal Revenue Code, including any contributions made
to the Plan within eight and 1/2 months of the Valuation Date, is not less than 90% of the Plan’s
Current Liability, as determined under Section 412(l)(7) of the Code using the maximum allowable
interest rate under such subsection, and recognizing over three years any plan change, such as any
plan amendment or required statutory change in benefits, (but not changes in actuarial assumption
or normal plan experience).



               Affiliate as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by, or is under common control with such Person, (ii) which
beneficially owns or holds, directly or indirectly, 5% or more of any class of the voting or other
equity interests of such Person, or (iii) 5% or more of any class of voting interests or other
equity interests of which is beneficially owned or held, directly or indirectly, by such Person.
Control, as used in this definition, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise, including the power to elect a
majority of the directors or trustees or individuals holding similar positions of a corporation or
trust or other Person, as the case may be.



               Agent shall mean PNC Bank, National Association, and its successors and assigns.



               Agreement shall mean this Amended and Restated Credit Agreement, as the same may be
supplemented or amended from time to time, including all schedules and exhibits.



               Annual Statements shall have the meaning assigned to that term in Section 6.1.9(i).



               Anti-Terrorism Laws shall mean any Laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the
Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of
Foreign Asset Control (as any of the foregoing Laws may from time to time be amended,
renewed, extended, or replaced).



               Approved Parts Pool Program means (a) the 8750 Parts Pool and (b) any national or
regional parts pool arrangement among mine operators, generally similar in nature to the 8750 Parts
Pool, hereafter entered into by the Borrower or any of its Subsidiaries with respect to long
lead-time parts for any walking draglines which (i) does not adversely affect in any material
respect, the value, or the rights of the Collateral Agent or the Banks in respect of, the
Collateral and (ii) is approved in writing by the Required Banks.



               Assignment and Assumption Agreement shall mean an Assignment and Assumption Agreement
by and among a Purchasing Bank, a Transferor Bank and the Agent, as Agent and on behalf of the
remaining Banks, substantially in the form of Exhibit 1.1(A).



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               Authorized Officer shall mean those individuals, designated by written notice to the
Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of
the Loan Parties required hereunder. The Borrower may amend such list of individuals from time to
time by giving written notice of such amendment to the Agent.



               Available Cash shall mean, on or as of any Payment Date, (a) the sum of (1)
Consolidated EBITDA for the fiscal quarter of the Borrower ended on or closest to such Payment Date
and (2) to the extent not included in such Consolidated EBITDA, any amount representing an excess
over the Debt Service Reserve Requirement actually withdrawn from the Debt Service Reserve Account
in such quarter in compliance with Section 3.6 of the that certain collateral agency agreement
executed as of the Closing Date by and among the Collateral Agent, the Loan Parties and the
Noteholders in connection with the Note Purchase Agreement minus (b) the sum of:



               (i) Unfinanced Capital Expenditures as at the end of such quarter,



               (ii) the aggregate fees and expenses of the Collateral Agent due and payable in such quarter,



               (iii) the aggregate amount of all interest on Consolidated Total Indebtedness due and payable
in such quarter,



               (iv) the aggregate amount of all scheduled and mandatory payments of principal of Consolidated
Total Indebtedness in such quarter,



               (v) the aggregate amount of letter of credit fees payable by the Borrower and the Guarantors
in such quarter,



               (vi) the aggregate amount of cash income taxes payable in such quarter on behalf of the Loan
Parties, and



               (vii) the amount of all deposits into the Debt Service Reserve Account required in such
quarter in order that the aggregate amount on deposit therein shall equal the Debt Service Reserve
Requirement.



               Banks shall mean the financial institutions named on Schedule 1.1(B) and their
respective successors and assigns as permitted hereunder, each of which is referred to herein as a
Bank.



               Base Rate shall mean the greater of (i) the interest rate per annum announced from
time to time by the Agent at its Principal Office as its then prime rate, which rate may not be the
lowest rate then being charged commercial borrowers by the Agent, or (ii) the Federal Funds Rate
plus 0.50% per annum.



               Base Rate Option shall mean the Revolving Credit Base Rate Option.



               Benefit Arrangement shall mean at any time an “employee benefit plan,” within the
meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer Plan and which is
maintained, sponsored or otherwise contributed to by any member of the ERISA Group.



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               Borrower shall mean Westmoreland Mining LLC, a limited liability company organized and
existing under the laws of the State of Delaware.



               Borrowing Base shall mean at any time 85% of Qualified Accounts plus the lesser of (i)
25% of Qualified Inventory or (ii) $5,000,000.



               Borrowing Date shall mean, with respect to any Loan, the date for the making thereof
or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which
shall be a Business Day.



               Borrowing Tranche shall mean specified portions of Loans outstanding as follows:
(i) any Loans to which a Libor-Rate Option applies which become subject to the same Interest Rate
Option under the same Loan Request by the Borrower and which have the same Interest Period shall
constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall
constitute one Borrowing Tranche.



               Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required to be closed for business in Pittsburgh,
Pennsylvania, New York, New York and if the applicable Business Day relates to any Loan to which
the LIBOR Rate Option applies, such day must also be a day on which dealings are carried on in the
London interbank market.



               CapEx Threshold means that amount determined as (i) the proceeds to the Borrower of
the sale of the Term Notes, minus (ii) the sum of (A) the amount applied by the Borrower to the
prepayment of the notes of the Borrower outstanding under the 2001 Note Agreement immediately prior
to the Closing Date (B) $10,000,000, representing the portion of the proceeds of the Term Notes
applied or available for application by the Borrower to a distribution to Parent and (C) the amount
of costs and expenses incurred in connection with the issuance of the Term Notes and the making of
the Loans (collectively, “Transaction Costs”), plus (iii) the aggregate amount released to the
Borrower from the debt service reserve account under, and the Series B Prepayment Account referred
to in, the 2001 Note Agreement (collectively, “Released Amounts”)). The CapEx Threshold has been
provisionally calculated by the Borrower to be (and until finally determined as hereinafter
provided shall be deemed for purposes of this Agreement to equal) $59,000,000, such provisional
calculation having been made on the basis of assumptions reflecting information available to the
Borrower on the date hereof as to Transaction Costs and Released Amounts; provided, however, that
not later than the 45th day following the Closing Date, the Borrower shall (i) recompute the CapEx
Threshold giving effect to actual Transaction Expenses and Released Amounts as determined on or
prior to such 45th day and (ii) furnish to each Bank an Officer’s Certificate specifying the CapEx
Threshold as so recomputed and containing calculations in reasonable detail demonstrating the
manner in which it was determined. The calculation of the recomputed CapEx Threshold set forth in
such Officer’s Certificate shall be subject to verification by the Banks, but in the absence of
error (upon the demonstration of which by any such Bank will be promptly corrected by the Borrower
as set forth in a corrected Officer’s Certificate submitted to each such holder), shall be presumed
to be the CapEx Threshold for all purposes hereof.



               Capital Expenditures means, with respect to the Loan Parties and their Subsidiaries,
for any period, the sum (without duplication) of all cash expenditures by any Loan Party or any
Subsidiary of an Loan Party during such period for the purchase or lease of items



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that would be classified as “property, plant or equipment” or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries, including without limitation all
transactional costs incurred in connection with such expenditures provided the same are
capitalized, all the foregoing as determined in accordance with GAAP; excluding any Capital
Expenditures by TWCC from the funds advanced by the Borrower to TWCC pursuant to Section 8.2.4(v)
of this Agreement.




               Cash Collateral shall have the meaning assigned to such term in the definition of
“Cash Collateralize”.



               Cash Collateralize means to pledge and deposit with or deliver to Agent, as collateral
for any Obligations arising under any Letter of Credit, cash or deposit account balances (“Cash
Collateral”) pursuant to documentation satisfactory to Agent. Such Cash Collateral shall be
maintained in blocked deposit accounts at the Agent.



               Closing Date shall mean June26, 2008.



               Coal Act shall mean Internal Revenue Code Sections 9701 through 9722, as amended from
time to time.



               Coal Leases shall mean leases presently owned or hereafter acquired by any Loan Party
of mineral rights and real property interests related to the right to mine or extract coal from the
Coal Reserves (as identified by the Borrower to the Collateral Agent from time to time as mineable
reserves), including without limitation, those leases set forth on Schedule 1.1(L).



               Coal Reserves shall mean all coal deposits which the Borrower by virtue of a deed or
lease has the right to mine.



               Coal Supply Contracts shall mean collectively and Coal Supply Contract shall
mean individually, all coal lignite supply or sales agreements now or hereafter entered into by the
Borrower or any Loan Party which provide for the sale or provision of coal by Borrower or any Loan
Party, including without limitation, those agreements listed on Schedule 1.1(C) hereto.



               Collateral shall mean that portion of the UCC Collateral, the Pledged Collateral, the
Intellectual Property Collateral, Coal Supply Contracts and the Real Property in or on which the
Loan Parties have granted the Collateral Agent for the benefit of the Banks a security interest in
or lien on pursuant to the Security Agreement, the Collateral Assignment, the Pledge Agreement, the
Patent, Trademark and Copyright Security Agreement and the Mortgages respectively, such Collateral
to include, to the extent provided in the Security Documents, all Accounts, Inventory, coal
reserves and related coal lease rights, equipment, furniture, fixtures, real property, improvements
and general intangibles, leasehold interests, Coal Supply Contracts, and all limited liability
company interests in the Borrower held by Parent. Collateral shall not include (i) the Debt
Service Reserve Account, (ii) the Debt Service Letter of Credit and (iii) any buildings or
structures located on the Real Property.



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               Collateral Agency Agreement shall mean that certain Collateral Agency Agreement among
the Agent, the Collateral Agent and the Loan Parties dated as of the Closing Date.



               Collateral Agent shall mean an institution which is holding the Collateral on behalf
of the Banks pursuant to the terms of the Collateral Agency Agreement.



               Collateral Assignment shall mean the Collateral Assignment in the form of Exhibit
1.1(C) collaterally assigning the Borrower’s or any Subsidiary’s rights under Coal Supply
Contracts.



               Commercial Letter of Credit shall mean any Letter of Credit which is a commercial
letter of credit issued in respect of the purchase of goods or services by one or more of the Loan
Parties in the ordinary course of their business.



               Commitment shall mean as to any Bank the aggregate of its Revolving Credit Commitment,
and, in the case of the Agent, its Swing Loan Commitment, and Commitments shall mean the
aggregate of the Revolving Credit Commitments and Swing Loan Commitments of all of the Banks.



               Commitment Fee shall have the meaning assigned to that term in Section 2.3.



               Compliance Certificate shall have the meaning assigned to such term in Section 8.3.4.



               Consolidated EBITDA shall mean for any period of determination (i) the sum of net
income, depreciation, amortization, other nonrecurring or non-cash charges to net income, interest
expense and income tax expense minus (ii) nonrecurring or non-cash credits to net income, in each
case of the Borrower and its Subsidiaries for such period determined and consolidated in accordance
with GAAP; provided, however, that for this purpose there shall be excluded from the consolidated
net income of the Borrower and its Subsidiaries any amounts that, contractually or pursuant to
applicable law, the Borrower’s Subsidiaries are restricted from distributing to the Borrower.



               Consolidated Net Indebtedness shall mean, on or as of any date, Consolidated Total
Indebtedness as of such date less, the sum of (i) the amount of funds maintained in the Debt
Service Reserve Account on such date (after giving effect to any debits and credits thereto on such
date), (ii) the Net Financed CapEx Amount as of such date, and (without duplication of the amounts
specified in clauses (i) and (ii) of this definition), (iii) if such date shall be on or prior to
December 31, 2009, unrestricted cash and cash equivalents of the Borrower on such day.



               Consolidated Total Indebtedness shall mean on or as of any date, the principal balance
of the Loans and Letters of Credit Outstanding and all other Indebtedness of the Borrower and its
Subsidiaries for borrowed money (including without limitation, Indebtedness evidenced by the Term
Notes, capitalized leases and other Indebtedness permitted under Section 8.2.1, as determined and
consolidated in accordance with GAAP).



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               Contamination shall mean the presence or release or threat of release of Regulated
Substances in, on, under or emanating to or from the Property, which pursuant to Environmental Laws
requires notification or reporting to an Official Body, or which pursuant to Environmental Laws
requires the investigation, cleanup, removal, remediation, containment, abatement of or other
response action or which otherwise constitutes a violation of Environmental Laws.



               Control Event shall have the meaning assigned to that term in Section 5.5(c).



               Cumulative Retained Cash Shortfall means, with respect to each Payment Date, the
greater of (a) zero and (b) the excess of:



               (i) the aggregate of the Retained Cash Shortfall Amounts for all prior Payment Dates, if any,
with respect to which there shall have been a Retained Cash Shortfall Amount, minus



               (ii) the aggregate of the Retained Cash Makeup Amounts for all prior Payment Dates, if any,
with respect to which there shall have been a Retained Cash Makeup Amount.



               Debt Service shall mean, for any period, as of any date of determination, the sum of
(i) the aggregate amount of interest and regularly scheduled principal payable on Consolidated
Total Indebtedness of the Loan Parties during such period (exclusive, however, of the unamortized
amount of costs and expenses incurred and that will be expensed in connection with the retirement
of the Indebtedness outstanding under the 2001 Note Agreement on the Closing Date, including
make-whole expense associated with, and the amounts of principal and interest paid with respect to,
such Indebtedness) and (ii) fees and expenses of the Collateral Agent payable during such period.



               Debt Service Coverage Ratio for any period shall mean as of any date of determination,
a fraction (i) the numerator of which is the amount of Consolidated EBITDA less Unfinanced Capital
Expenditures for such period and (ii) the denominator of which is Debt Service for such period.



               Debt Service Letter of Credit shall have the meaning ascribed to such term in Section
8.1.18.



               Debt Service Reserve Requirement shall have the meaning ascribed to such term in
Section 8.1.18.



               Disclosure Documents shall have the meaning assigned to such term in Section 6.1.11.



               Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United
States of America.



               Drawing Date shall have the meaning assigned to that term in Section 2.9.3.2.



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               8750 Parts Pool means the pooling arrangement among coal mine operators, including
TWCC, with respect to long lead-time emergency spare parts for Marion 8750 walking draglines, as in
affect on the date hereof, pursuant to which NRGT owns the spare parts and provides the financial
resources for participation in such pool.



               Environmental Complaint shall mean any written complaint by any Person or Official
Body setting forth a cause of action for personal injury or property damage, natural resource
damage, contribution or indemnity for response costs, civil or administrative penalties, criminal
fines or penalties, or declaratory or equitable relief arising under any Environmental Laws or any
order, notice of violation, citation, subpoena, request for information or other written notice or
demand of any type issued by an Official Body pursuant to any Environmental Laws.



               Environmental Laws shall mean all federal, state, local and foreign Laws and any
consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued
by or entered into with an Official Body, which are applicable to the Borrower or any Loan Party,
pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health or
the environment; (iii) employee safety in the workplace; (iv) the presence, use, management,
generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation,
labeling, transport, storage, collection, distribution, disposal or release or threat of release of
Regulated Substances; (v) the presence of Contamination; (vi) the protection of endangered or
threatened species; and (vii) the protection of Environmentally Sensitive Areas.



               Environmentally Sensitive Area shall mean (i) any wetland as defined by applicable
Environmental Laws; (ii) any area designated as a coastal zone pursuant to applicable Laws,
including Environmental Laws; (iii) any area of historic or archeological significance or scenic
area as defined or designated by applicable Laws, including Environmental Laws; (iv) habitats of
endangered species or threatened species as designated by applicable Laws, including Environmental
Laws; or (v) a floodplain or other flood hazard area as defined pursuant to any applicable Laws.



               Equity Interests shall mean, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person
or warrants, rights or options for the purchase or acquisition from such Person of such shares (or
such other interests), and all of the other ownership or profit interests in such Person (including
shares or partnership, member or trust interests therein), whether voting or nonvoting, and whether
or not such shares, warrants, options, rights or other interests are outstanding on any date of
determination.



               ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended or supplemented from time to time, and any successor statute of similar import, and the
rules and regulations thereunder, as from time to time in effect.



               ERISA Affiliate shall mean, at any time, any trade or business (whether or not
incorporated) under common control with the Borrower and are treated as a single employer under
Section 414 of the Code.



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               ERISA Event means (a) a reportable event (under Section 4043 of ERISA and regulations
thereunder) with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.



               ERISA Group shall mean, at any time, the Borrower and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated) under common
control and all other entities which, together with the Borrower, are treated as a single employer
under Section 414 of the Internal Revenue Code.



               Event of Default shall mean any of the events described in Section 9.1 and referred to
therein as an “Event of Default.”



               Excess Cash Flow shall mean, on or as of any Payment Date, (i) Available Cash as of
such Payment Date minus (ii) Retained Cash with respect to such Payment Date.



               Excluded Taxes shall mean, with respect to the Agent, any Bank, the Issuing Bank or
any other recipient of any payment to be made by or on account of any obligation of the Borrower
hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the Laws of which such recipient is organized or in which its principal
office is located or, in the case of any Bank, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which the Borrower is located and (c) in the case of a Foreign Lender,
any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to
such Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply
with Section 11.3.6 [Status of Banks], except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending office (or assignment),
to receive additional amounts from the Borrower with respect to such withholding tax pursuant to
Section 11.3.1 [Payment Free of Taxes].



               Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.



               Existing Letters of Credit shall have the meaning assigned to that term in Section
2.9.1.



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               Expiration Date shall mean, with respect to the Revolving Credit Commitments, June 26,
2013.



               Federal Funds Rate for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North
America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite
the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as
set forth on such other recognized electronic source used for the purpose of displaying such rate
as selected by the Bank (an “Alternate Source”) (or if such rate for such day does not appear on
the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there
shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute
screen) or any Alternate Source, a comparable replacement rate determined by the Agent at such time
(which determination shall be conclusive absent manifest error); provided however, that if such day
is not a Business Day, the Federal Funds Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Rate changes, the rate of
interest with respect to any advance to which the Federal Funds Rate applies will change
automatically without notice to the Borrower, effective on the date of any such change.



               Financial Projections shall have the meaning assigned to that term in
Section 6.1.9(ii).



               Foreign Lender shall mean any Bank that is organized under the Laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes of this
definition, the United States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.



               GAAP shall mean generally accepted accounting principles as are in effect from time to
time in the United States of America, subject to the provisions of Section 1.3, and applied on a
consistent basis both as to classification of items and amounts.



               Governmental Acts shall have the meaning assigned to that term in Section 2.9.8.



               Guarantor shall mean each of the parties to this Agreement which is designated as a
“Guarantor” on the signature page hereof and each other Person which joins this Agreement as a
Guarantor after the date hereof pursuant to Section 11.17.



               Guarantor Joinder shall mean a joinder by a Person as a Guarantor under this
Agreement, the Guaranty Agreement and the other Loan Documents in the form of
Exhibit 1.1(G)(1).



               Guaranty of any Person shall mean any obligation of such Person guaranteeing or in
effect guaranteeing any liability or obligation of any other Person in any manner, whether directly
or indirectly, including any agreement to indemnify or hold harmless any other Person, any
performance bond or other suretyship arrangement and any other form of assurance against loss,
except endorsement of negotiable or other instruments for deposit or collection in the ordinary
course of business.



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               Guaranty Agreement shall mean the Guaranty and Suretyship Agreement in substantially
the form of Exhibit 1.1(G)(2) executed and delivered by each of the Guarantors to the Agent
for the benefit of the Banks.



               Historical Statements shall have the meaning assigned to that term in
Section 6.1.9(i).



               Increasing Bank shall have the meaning assigned to that term in Section 2.11.



               Indebtedness shall mean, as to any Person at any time, any and all indebtedness,
obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or
indirect, absolute or contingent, or joint or several) of such Person for or in respect of:
(i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any
letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device, (iv) any other transaction (including forward sale or
purchase agreements, futures contracts or similar financial arrangements the value of which is
dependent upon commodity rates or indices (including without limitation, any of the foregoing used
to hedge the price of coal), capitalized leases and conditional sales agreements) having the
commercial effect of a borrowing of money entered into by such Person to finance its operations or
capital requirements (but not including trade payables and accrued expenses incurred in the
ordinary course of business which are not represented by a promissory note or other evidence of
indebtedness and which are not more than thirty (30) days past due or, if more than thirty (30)
days past due, which are being contested in good faith and adequate reserves are made for such
debt), (v)  all liabilities for borrowed money secured by any lien with respect to property owned
by such Person (whether or not it has assumed or otherwise become liable for such liabilities), or
(vi) any Guaranty by such Person of Indebtedness of the type described in clauses (i) through (v)
hereof of any other Person.



               Indemnified Taxes shall mean Taxes other than Excluded Taxes.



               Independent Director shall mean with respect to a Subsidiary a member of the Board of
Directors of the Subsidiary that is not at the time of initial appointment to the Board of
Directors or at any time while serving on the Board of Directors or at any time within the
preceding five (5) years, (a) a stockholder, director (with the exception of serving as an
independent director of a Subsidiary or manager of the Borrower), officer, employee, member other
than as Special Member (as defined in the Borrower’s operating agreement), partner, attorney or
counsel of the Subsidiary or of a Loan Party or of any member of the Parent Group (except that he
or she may be or become an independent director or manager of any other Single Purpose Entity
formed in connection with any financing by any member of the Parent Group or any of their
respective Affiliates); (b) a customer or supplier of the Subsidiary or any of its Affiliates; or
(c) any member of the immediate family of a Person described in (a) or (b).



               Independent Manager shall mean with respect to the Borrower a member of the Board of
Directors or Managers of the Borrower that is not at the time of initial appointment to the Board
of Directors or Managers or at any time while serving on the Board of Directors or Managers or at
any time within the preceding five (5) years, (a) a stockholder, director (with the exception of
serving as an independent manager or director of a Subsidiary or



11









 




the Borrower), officer, employee, member other than as Special Member (as defined in the
Borrower’s operating agreement), partner, attorney or counsel of the Borrower or of any Loan Party
or of any member of the Parent Group (except that he or she may be or become an independent
director or manager of any Single Purpose Entity formed in connection with any financing by any
member of the Parent Group or any of their respective Affiliates); (b) a customer or supplier of
the Borrower or any Loan Party or any member of the Parent Group or any Affiliate of either of
them; or (c) a member of the immediate family of any such Person described in (a) or (b).




               Ineligible Security shall mean any security which may not be underwritten or dealt in
by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.



               Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or
proceeding with respect to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for
the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution,
winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar arrangement in respect of such
Person’s creditors generally or any substantial portion of its creditors; undertaken under any Law.



               Intellectual Property Collateral shall mean all of the property described in the
Patent, Trademark and Copyright Security Agreement.



               Intercompany Subordination Agreement shall mean an Intercompany Subordination
Agreement in the form of Exhibit 1.1(I)(2) hereto, which is to be executed and delivered by
the Loan Parties and any Subsidiaries.



               Intercreditor Agreement shall mean an Intercreditor Agreement in the form of
Exhibit 1.1(I)(3) hereto which is to be executed and delivered by the Collateral Agent and
the Note Purchase Collateral Agent.



               Interest Period shall mean the period of time selected by the Borrower in connection
with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit
Loans bear interest under the Libor-Rate Option. Subject to the last sentence of this definition,
such period shall be two weeks or one, two, three or six Months if Borrower selects the Libor-Rate
Option. Such Interest Period shall commence on the effective date of such Interest Rate Option,
which shall be (i) the Borrowing Date if the Borrower is requesting new Loans, or (ii) the date of
renewal of or conversion to the Libor-Rate Option if the Borrower is renewing or converting to the
Libor-Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A)
any Interest Period which would otherwise end on a date which is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the
Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that
would end after the Expiration Date.



12









 





               Interest Rate Option shall mean any Libor-Rate Option or Base Rate Option.



               Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the same may be
amended or supplemented from time to time, and any successor statute of similar import, and the
rules and regulations thereunder, as from time to time in effect.



               Inventory shall mean any and all goods, merchandise and other personal property,
including, without limitation, goods in transit, wheresoever located and whether now owned or
hereafter acquired by the Borrower and the Guarantors which are or may at any time be held as raw
materials, as-extracted collateral, finished goods, work-in-process, supplies or materials used or
consumed in Borrower’s or Guarantors’ business or held for sale or lease (but excluding all Coal
Reserves in place), including, without limitation, (a) all such property the sale or other
disposition of which has given rise to Accounts and which has been returned to or repossessed or
stopped in transit by the Borrower or such Guarantor, as the case may be, and (b) all packing,
shipping and advertising materials relating to all or any such property.



               Issuing Bank means PNC Bank, in its individual capacity as issuer of Letters of Credit
hereunder, and any other Bank that Borrower, Agent and such other Bank may agree may from time to
time issue Letters of Credit hereunder.



               Labor Contracts shall mean all employment agreements, employment contracts, collective
bargaining agreements and other agreements among any Loan Party or Subsidiary of a Loan Party and
its employees.



               Law shall mean any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree, bond,
judgment, authorization or approval, lien or award of or settlement agreement with any Official
Body.



               Letter of Credit shall have the meaning assigned to that term in Section 2.9.1.



               Letter of Credit Borrowing shall have the meaning assigned to such term in Section
2.9.3.4.



               Letter of Credit Fee shall have the meaning assigned to that term in Section 2.9.2.



               Letters of Credit Outstanding shall mean at any time the sum of (i) the aggregate
undrawn face amount of outstanding Letters of Credit and (ii) the aggregate amount of all unpaid
and outstanding Reimbursement Obligations and Letter of Credit Borrowings.



               LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to
which the LIBOR Rate Option applies for any Interest Period, the interest rate per annum determined
by the Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest
1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other
substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading
banks in the London interbank deposit market), or the rate which



13









 




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





          Average of London interbank offered rates quoted
by Bloomberg or appropriate successor as shown on



	 	 	 	 	 	 	 	 	 
	 
	 	LIBOR =	 	 	 	Bloomberg Page BBAM1
	 
	 	 	 	 	 	1.00 -	 	LIBOR Reserve Percentage






          The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option
applies that is outstanding on the effective date of any change in the LIBOR Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to the Borrower of the
LIBOR Rate as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.




               LIBOR Rate Option shall mean shall mean the option of the Borrower to have Loans bear
interest at the rate and under the terms set forth in Section 4.1.1(ii) [Revolving Credit LIBOR
Rate Option].



               LIBOR Rate Reserve Percentage shall mean as of any day the maximum percentage in
effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental, marginal and emergency
reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).



               Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge
or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or
involuntarily given, including any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or not a lien or other
encumbrance is created or exists at the time of the filing).



               LLC Interests shall have the meaning given to such term in Section 6.1.3.



               Loan Documents shall mean this Agreement, the Collateral Assignment, the Guaranty
Agreement, the Intercompany Subordination Agreement, the Intercreditor Agreement, the Mortgage, the
Notes, the Patent, Trademark and Copyright Security Agreement, the Pledge Agreement, the Security
Agreement, and any other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection



14









 




herewith or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith, and Loan Document shall mean any of the Loan Documents.




               Loan Parties shall mean the Borrower and the Guarantors and TWCC.



               Loan Request shall have the meaning given to such term in Section 2.5.



               Loans shall mean collectively and Loan shall mean separately all Revolving Credit
Loans, Swing Loans or any Revolving Credit Loan or Swing Loan.



               Management Agreement shall mean that certain amended and restated management agreement
between Parent and the Borrower, dated as of the Closing Date, pursuant to which Parent provides
certain management services to the Borrower.



               Management Fee shall mean the management fee under the terms of the Management
Agreement which amount shall not exceed $600,000.00 in the aggregate in any fiscal quarter.



               Management Fee Subordination Agreement shall mean the Management Fee Subordination
Agreement in the form of Exhibit 1.1(M)(2) to be executed and delivered by Parent and the
Borrower, to the Collateral Agent for the benefit of the Banks.



               Material Adverse Change shall mean any set of circumstances or events which (a) has or
could reasonably be expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected
to be material and adverse to the business, properties, assets, financial condition, results of
operations or prospects of the Loan Parties taken as a whole, (c) impairs materially or could
reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to
duly and punctually pay or perform its Indebtedness, or (d) impairs materially or could reasonably
be expected to impair materially the ability of the Collateral Agent, the Agent or any of the
Banks, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any
other Loan Document.



               Member Interests shall have the meaning assigned to that term in Section 6.1.2.



               Memorandum shall have the meaning assigned to that term in Section 6.1.11.



               Month, with respect to an Interest Period under the Libor-Rate Option, shall mean the
interval between the days in consecutive calendar months numerically corresponding to the first day
of such Interest Period. If any Libor-Rate Interest Period begins on a day of a calendar month for
which there is no numerically corresponding day in the month in which such Interest Period is to
end, the final month of such Interest Period shall be deemed to end on the last Business Day of
such final month.



               Moody’s shall mean Moody’s Investors Service, Inc.



               Mortgages shall mean collectively, and Mortgage shall mean separately, the mortgage or
deed of trust in substantially the form of Exhibits 1.1(M)(1) with respect to the



15









 




Real Property located in the States of Montana and North Dakota, respectively, executed and
delivered by certain of the respective Guarantors to the Collateral Agent for the benefit of the
Banks, encumbering the Real Property.




               Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer
plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member of
the ERISA Group is then making or accruing an obligation to make contributions or, within the
preceding five Plan years, has made or had an obligation to make such contributions.



               Multiple Employer Plan shall mean a Plan which has two or more contributing sponsors
(including the Borrower or any member of the ERISA Group) at least two of whom are not under common
control, as such a plan is described in Sections 4063 and 4064 of ERISA.



               Net Financed CapEx Amount means, as of any date of determination, the greater of (i)
zero and (ii) the excess, if any, on such date of (x) the CapEx Threshold over (y) cumulative
Capital Expenditures made by the Loan Parties and their Subsidiaries during the period from (and
including) the Closing Date to (and including) such date of determination.



               New Bank shall have the meaning assigned to that term in Section 2.11.



               Non-Cash Income Tax Expense shall mean deferred income taxes which are tax expenses of
the Borrower and the Subsidiaries to any Person (including without limitation, any member of the
Parent Group) other than payments due and payable to governmental tax agencies on behalf of the
Borrower or the Subsidiaries.



               Non-Complying Bank shall mean any Bank which has failed to fund any Loan which it is
required to fund, or pay any other amount which it is required to pay to the Agent or any other
Bank, within one day of the due date therefor.



               Non-Consenting Bank shall have the meaning specified in Section 11.1 [Modifications,
Amendments or Waivers].



               Note Purchase Agreement shall mean that certain Note Purchase Agreement by and among
Borrower, the Guarantors, and the purchasers party thereto, dated as of the Closing Date, as may be
supplemented or amended from time to time.



               Note Purchase Collateral shall mean that portion of the Collateral, in which the Note
Purchase Collateral Agent is granted a first priority security interest for the benefit of the
Purchasers.



               Note Purchase Collateral Agency Agreement shall mean that certain Collateral Agency
Agreement among the Purchasers and the Note Purchase Collateral Agent and dated as of the Closing
Date.



               Note Purchase Collateral Agent shall mean an institution which is holding the Note
Purchase Collateral on behalf of the Purchasers pursuant to the terms of the Note Purchase
Collateral Agency Agreement.



16









 





               Note Purchase Documents shall mean the Note Purchase Agreement and any other
agreements, instruments, certificates or documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or
amended from time to time in accordance herewith or therewith, and Note Purchase Document
shall mean any of the Note Purchase Documents.



               Notes shall mean the Revolving Credit Notes and Swing Notes, if any.



               Notices shall have the meaning assigned to that term in Section 11.6.



               NRGT means NRG Texas Power, LLC, a Delaware limited liability company.



               NRGT Documents shall have the meaning assigned to that term in Section 7.1.23.



               NRGT Liens shall mean Liens in favor of NRGT with respect to (i) the assets of TWCC
(excluding the Coal Supply Agreement between NRGT and TWCC), (ii) the Subsidiary Shares of TWCC,
owned by the Borrower and (iii) the products and proceeds of the property described in the
foregoing clauses (i) and (ii).



               NRGT Documents shall have the meaning assigned to that term in Section 8.2.4(v).



               NRGT Supplemental Agreement means that certain First Amendment to Amended and Restated
Lignite Supply Agreement, dated as of the Closing Date, 2008, by and among Parent, the Borrower,
TWCC and NRGT.



               Obligation shall mean all indebtedness, liabilities and obligations of any nature of
the Borrower or any other Loan Party, now or hereafter existing under or pursuant to or arising out
of or in connection with the Notes, this Agreement, the Letters of Credit, the Agent’s Letter or
any other Loan Document, in the case of each thereof as the same may be amended, supplemented,
extended, renewed or replaced and in effect from time to time, including without limitation, (i)
the payment of the principal of and interest (including interest which, but for the filing of a
petition in bankruptcy with respect to the Borrower or another Loan Party would accrue) on the
Notes, and (ii) the due performance and observance of, and compliance with, all covenants,
agreements, terms and conditions of the Notes, this Agreement, the Letters of Credit, the Agent’s
Letter and each other Loan Documents required to be observed, performed or complied with by the
Borrower or any other Loan Party.



               Official Body shall mean any national, federal, state, local or other government or
political subdivision or any agency, authority, board, bureau, central bank, commission, department
or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case
whether foreign or domestic.



               Organizational Documents shall mean, with respect to any Person, such Person’s
articles of incorporation, certificate of incorporation, charter, bylaws, partnership agreement,
certificate of limited partnership, limited liability company operating agreement or



17









 




member agreement, any similar organizational agreement, and any agreement among the owners or
holders of the Equity Interests in such Person.




               Other Taxes shall mean all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.



               Parent shall mean Westmoreland Coal Company, a Delaware corporation, the sole member
of the Borrower.



               Parent Change in Control shall be deemed to have occurred if (i) any person or group
of persons (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act as in effect on
the Closing Date) shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of capital stock or other
securities of Parent which are entitled to cast more than 40% of the total votes which may be cast
in an election of directors of Parent; or (ii) at any time, a majority of the board of directors of
Parent shall be comprised of persons other than individuals who were directors of Parent one year
prior to such time together with any individuals who were nominated for election as directors of
Parent by individuals who were directors of Parent who, at the time of such individuals’
nominations, had been directors of Parent for at least one year.



               Parent Group shall mean the Parent and each entity in which the Parent owns, directly
or indirectly through one or more intermediaries, 5% or more of any class of the voting or other
equity interests of such Person, including those entities now in existence and hereafter created,
other than the Loan Parties and all of their Subsidiaries.



               Participation Advance shall mean, with respect to any Bank, such Bank’s payment in
respect of its participation in a Letter of Credit Borrowing according to its Ratable Share
pursuant to Section 2.9.3.4.



               Partnership Interests shall have the meaning given to such term in Section 6.1.3.



               Patent, Trademark and Copyright Security Agreement shall mean the Amended and Restated
Patent, Trademark and Copyright Security Agreement in substantially the form of Exhibit
1.1(P)(1) executed and delivered by each of the Loan Parties to the Collateral Agent for the
benefit of the Banks.



               Payment Date shall mean each March 31, June 30, September 30 and December 31
hereafter, provided that if such date is not a Business Day, then on the Business Day immediately
following such date.



               PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.



               Pension Plan means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by Borrower or any ERISA Affiliate or to which



18









 




Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case
of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions
at any times during the immediately preceding five plan years.




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



19









 





               Permitted Investments shall mean:



          (i) direct obligations of the United States of America or any agency or instrumentality
thereof or obligations backed by the full faith and credit of the United States of America or
obligations of state or local governments rated not lower than AAA/Aaa by Standard & Poor’s or
Moody’s maturing no later than twelve months from the date of acquisition;




          (ii) commercial paper maturing in 270 days or less rated not lower than A-1, by Standard &
Poor’s or P-1 by Moody’s on the date of acquisition;




          (iii) demand deposits, time deposits or certificates of deposit maturing within one year in
commercial banks organized under the laws of the United States or any state thereof have capital,
surplus and undivided profits aggregating at least $500,000,000 and whose obligations are rated A-
or the equivalent or better by Standard & Poor’s or A3 or better by Moody’s on the date of
acquisition, provided that the Loan Parties shall be permitted to maintain their operating accounts
for administrative purposes with First Interstate Bank located in Billings, Montana;




          (iv) repurchase obligations entered into with a bank or trust corporation meeting the
standards set forth in clause (iii) above; provided that such repurchase agreements require the
physical delivery of the investments securing the repurchase agreement, except these delivered
through the Federal Reserve Book Entry System; and




          (v) money market funds having assets in excess of $500,000,000 and which are restricted by
their respective charters to investing solely in securities of the type permitted in clauses (i)
through (iv) above;




               Permitted Liens shall mean:



          (i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable;




          (ii) pledges or deposits made in the ordinary course of business to secure payment of
workmen’s compensation, or to participate in any fund in connection with workmen’s compensation,
unemployment insurance, old-age pensions or other social security programs (exclusive, however, of
Liens arising under ERISA);




          (iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing
obligations incurred in the ordinary course of business that are not yet due and payable and Liens
of landlords securing obligations to pay lease payments that are not yet due and payable or in
default;




          (iv) good-faith pledges or deposits made, or bonds given, in the ordinary course of business
to secure performance of bids, tenders, contracts (including any reclamation bond funds) (other
than for the repayment of borrowed money) or leases or other ordinary course obligations, not in
excess of the aggregate amount due or which may become due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds required in the
ordinary course of business;




20









 








          (v) encumbrances consisting of zoning restrictions, easements or other restrictions on the use
of real property, none of which materially impairs the use of such property or the value thereof,
and none of which is violated in any material respect by existing or proposed structures or land
use;




          (vi) Liens, security interests and mortgages in favor of the Collateral Agent for the benefit
of the Banks and Liens and security interests and mortgages for the benefit of the Purchasers and
which secure obligations under the Note Purchase Agreement;




          (vii) Liens on property leased (or proceeds thereof) by any Loan Party or Subsidiary of a Loan
Party under capital and operating leases permitted in Section 8.2.16 securing obligations of such
Loan Party or Subsidiary to the lessor under such leases;




          (viii) Purchase Money Security Interests securing Indebtedness permitted by Section 8.2.1(iv);




          (ix) the NRGT Liens, so long as no such Lien shall at any time extend to or cover any assets
or properties of the Borrower or the Guarantors or any of their respective Subsidiaries other than
the Borrower’s right, title and interest in and to the Subsidiary Shares of TWCC and TWCC’s right,
title and interest in and to the assets and properties of TWCC (other than the “Assigned Proceeds”
of the “TWCC Agreement”, as defined in the Collateral Assignment); and




          (x) the following (A) if the validity or amount thereof is being contested in good faith by
appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have
been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is
discharged within forty-five (45) days of entry, and in either case they do not affect the
Collateral or, in the aggregate, materially impair the ability of any Loan Party to perform its
Obligations hereunder or under the other Loan Documents:





     (1) claims or Liens for taxes, assessments or charges due and payable and
subject to interest or penalty, provided that the applicable Loan Party maintains
such reserves or other appropriate provisions as shall be required by GAAP and pays
all such taxes, assessments or charges forthwith upon the commencement of
proceedings to foreclose any such Lien;




     (2) claims, Liens or encumbrances upon, and defects of title to, real or
personal property other than the Collateral, including any attachment of personal or
real property or other legal process prior to adjudication of a dispute on the
merits;




     (3) claims or Liens of mechanics, materialmen, warehousemen, carriers, or other
statutory nonconsensual Liens; or



               Permitted Modifications shall mean amendments, modifications or waivers of the Coal
Supply Contracts or Coal Leases which are entered into in the ordinary course of business (or, in
the case of amendments or modifications of the Coal Supply Agreement in effect on the date hereof
between WECO and Minnesota Power, whether or not entered into in the ordinary course of business)
by the Loan Parties from time to time so long as



21









 




such action does not (i) negatively impact the economics of the agreement from the Loan
Party’s perspective (including changing any terms relating to price, quantity or term), (ii)
adversely affect the contemplated mining operations of the Loan Parties or (iii) have any
reasonable likelihood of resulting in a Material Adverse Change.




               Person shall mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint venture, government or
political subdivision or agency thereof, or any other entity.



               Plan shall mean at any time an employee pension benefit plan (including a Multiple
Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is
maintained by any member of the ERISA Group for employees of any member of the ERISA Group or
(ii) has at any time within the preceding five years been maintained by any entity which was at
such time a member of the ERISA Group for employees of any entity which was at such time a member
of the ERISA Group.



               Pledge Agreement shall mean the Amended and Restated Pledge Agreement in substantially
the form of Exhibit 1.1(P)(2) executed and delivered by the members of the Borrower, the
Borrower and any Subsidiaries (other than TWCC) to the Collateral Agent for the benefit of the
Banks.



               Pledged Collateral shall mean the property and the rights of the Loan Parties and the
members of Borrower in which security interests are to be granted under the Pledge Agreement.



               PNC Bank shall mean PNC Bank, National Association, its successors and assigns.



               Potential Default shall mean an event or condition the occurrence or existence of
which with the mere notice, passage of time, or any combination of the foregoing, would become an
Event of Default.



               Principal Office shall mean the main banking office of the Agent in Pittsburgh,
Pennsylvania.



               Prior Security Interest shall mean a valid and enforceable perfected (i) with respect
to the Revolver Primary Collateral, first-priority security interest under the Uniform Commercial
Code in the Revolver Primary Collateral which is subject only to Permitted Liens (other than
Permitted Liens of the types described in clauses (iv), (vii) and (viii) of the definition of that
term), and (ii) with respect to the Note Purchase Collateral, security interest under the Uniform
Commercial Code in the Note Purchase Collateral, the Pledged Collateral and the Intellectual
Property Collateral.



               Prohibited Transaction shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual
nor a class exemption has been issued by the United States Department of Labor.



22









 





               Property shall mean all real property, both owned and leased, of any Loan Party or
Subsidiary of a Loan Party.



               Purchase Money Security Interest shall mean Liens upon tangible personal property and
proceeds thereof securing loans to any Loan Party or Subsidiary of a Loan Party or deferred
payments by such Loan Party or Subsidiary securing not more than 100% of the purchase price of such
tangible personal property, provided that (a) any such Lien attaches within 90 days of the
acquisition of such personal property and (b) such Lien attaches and is at all times confined
solely to such acquired personal property and proceeds thereof.



               Purchasers shall mean those purchasers party to the Note Purchase Agreement from time
to time.



               Purchasing Bank shall mean a Bank which becomes a party to this Agreement by executing
an Assignment and Assumption Agreement.



               Qualified Accounts shall mean any Accounts which the Agent in its reasonable credit
judgment determines to have met all of the minimum requirements set forth on Schedule
1.1(Q)(1).



               Qualified Inventory shall mean any Inventory which the Agent in its reasonable credit
judgment determines to have met all of the minimum requirements set forth on Schedule
1.1(Q)(2).



               Ratable Share shall mean the proportion that a Bank’s Commitment (excluding the Swing
Loan Commitment) bears to the Commitments (excluding the Swing Loan Commitment) of all of the
Banks. If the Commitments have terminated or expired, the Ratable Shares shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.



               Real Property shall mean the real estate owned by any of the Loan Parties, which, with
respect to such real estate owned by the Guarantors, shall be encumbered by the Mortgages and
described on Schedule 6.1.8 hereto.



               Regulated Substances shall mean, without limitation, any substance, material or waste,
regardless of its form or nature, defined under Environmental Laws as a “hazardous substance,”
“pollutant,” “pollution,” “contaminant,” “hazardous or toxic substance,” “extremely hazardous
substance,” “toxic chemical,” “toxic substance,” “toxic waste,” “hazardous waste,” “special
handling waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed
waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or “regulated substance” or
any other material, substance or waste, regardless of its form or nature, which otherwise is
regulated by Environmental Laws, which is the subject of an Environmental Law applicable to the
Borrower or any Subsidiary of any Loan Party.



               Regulation U shall mean Regulation U, T or X as promulgated by the Board of Governors
of the Federal Reserve System, as amended from time to time.



               Reimbursement Obligation shall have the meaning assigned to such term in
Section 2.9.3.2.



23









 





               Reportable Event shall mean a reportable event described in Section 4043 of ERISA and
regulations thereunder with respect to a Plan or Multiemployer Plan for which written notice
thereof to the PBGC is required under applicable regulations.



               Required Banks shall mean



          (xi) if there are no Loans, Reimbursement Obligations or Letter of Credit Borrowings
outstanding, Banks whose Commitments (excluding the Swing Loan Commitments) aggregate at least 51%
of the Commitments of all of the Banks, or




          (xii) if there are Loans, Reimbursement Obligations, or Letter of Credit Borrowings
outstanding, any Bank or group of Banks if the sum of the Loans (excluding Swing Loans),
Reimbursement Obligations and Letter of Credit Borrowings of such Banks then outstanding aggregates
at least 51% of the total principal amount of all of the Loans (excluding Swing Loans),
Reimbursement Obligations and Letter of Credit Borrowings then outstanding. Reimbursement
Obligations and Letter of Credit Borrowings shall be deemed, for purposes of this definition, to be
in favor of the Agent and not a participating Bank if such Bank has not made its Participation
Advance in respect thereof and shall be deemed to be in favor of such Bank to the extent of its
Participation Advance if it has made its Participation Advance in respect thereof.




               Required Environmental Notices shall mean all notices, reports, plans, forms or other
filings which pursuant to Environmental Laws, Required Environmental Permits or at the request or
direction of an Official Body either must be submitted to an Official Body or which otherwise must
be maintained.



               Required Environmental Permits shall mean all permits, licenses, bonds, consents,
programs, approvals or authorizations required under Environmental Laws to own, occupy or maintain
the Property or which otherwise are required for the operations and business activities of the
Borrower or the other Loan Parties.



               Required Mining Permits shall mean all permits, licenses, authorizations, plans,
approvals and bonds necessary under the Environmental Laws for the Loan Parties or any Subsidiary
to continue to conduct coal mining and related operations on, in or under the Real Property, the
Property subject to the Coal Leases and any and all other mining properties owned or leased by any
such Loan Party or Subsidiary (collectively “Mining Property”) substantially in the manner as such
operations had been authorized immediately prior to Borrower’s or such Subsidiary’s acquisition of
its interests in the Real Property and as may be necessary for Borrower or such Subsidiary to
conduct coal mining and related operations on, in or under the Mining Property as described in any
plan of operation.



               Required Share shall have the meaning assigned to such term in Section 5.7.



               Responsible Officer shall mean any Senior Financial Officer and any other officer of
the Borrower with responsibility for the administration of the relevant portion of this Agreement.



24









 





               Retained Cash shall mean, with respect to each Payment Date, an amount equal to the
lesser of:



                    (a) Available Cash as of such Payment Date, and



                    (b) the sum of (i) Targeted Retained Cash and (ii) the Cumulative Retained Cash Shortfall,
each as determined with respect to such Payment Date.



               Retained Cash Limit shall mean, with respect to each Payment Date occurring during the
year 2011 or thereafter, an amount equal to the difference between (i) $25,000,000 and (ii) the
aggregate amount of cash and Permitted Investments on deposit to the credit of the Debt Service
Reserve Account on such Payment Date (after giving effect to all deposits thereto and withdrawals
therefrom on such Payment Date).



               Retained Cash Makeup Amount shall mean, for any Payment Date as to which Retained Cash
shall exceed Targeted Retained Cash, the amount of such excess.



               Retained Cash Shortfall Amount shall mean, for any Payment Date as to which Targeted
Retained Cash shall exceed Available Cash, the amount of such excess.



               Revolver Primary Collateral shall mean that portion of the UCC Collateral in which the
Banks are granted a first priority security interest pursuant to the Security Agreement which shall
include Accounts and Inventory.



               Revolving Credit Base Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(i).



               Revolving Credit Commitment shall mean, as to any Bank at any time, the amount
initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of
Commitment for Revolving Credit Loans,” and thereafter on Schedule I to the most recent Assignment
and Assumption Agreement, and Revolving Credit Commitments shall mean the aggregate Revolving
Credit Commitments of all of the Banks.



               Revolving Credit Libor-Rate Option shall mean the option of the Borrower to have
Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in
Section 4.1.1(ii).



               Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall mean
separately all Revolving Credit Loans or any Revolving Credit Loan made by the Banks or one of the
Banks to the Borrower pursuant to Section 2.1 or 2.9.3.



               Revolving Credit Notes shall mean collectively and Revolving Credit Note shall mean
separately all the Revolving Credit Notes of the Borrower in the form of Exhibit 1.1(R)
evidencing the Revolving Credit Loans together with all amendments, extensions, renewals,
replacements, refinancings or refundings thereof in whole or in part.



               Revolving Facility Usage shall mean at any time the sum of the Revolving Credit Loans
outstanding and the Letters of Credit Outstanding.



25









 





               Section 20 Subsidiary shall mean the Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal Reserve Board to
underwrite and deal in certain Ineligible Securities.



               Security Agreement shall mean the Security Agreement in substantially the form of
Exhibit 1.1(S)(1) executed and delivered by each of the Loan Parties to the Collateral
Agent for the benefit of the Banks.



               Security Documents shall mean (i) the Security Agreement, (ii) the Pledge Agreement,
(iii) the Guaranty Agreement, (iv) the Patent, Trademark and Copyright Security Agreement, (v) the
Mortgages and (vi) the Collateral Assignment, (vii) the Collateral Agency Agreement, and (viii)
from and after the execution and delivery thereof, any additional security agreement, pledge
agreement, assignment, mortgage, deed of trust or other security document entered into by the
Borrower or any other Loan Party pursuant to Section 11.17.



               Senior Financial Officer shall mean the chief financial officer, principal accounting
officer, treasurer or comptroller of the Borrower.



               Settlement Date shall mean such day(s) of each week as determined by PNC in its
discretion (if such day is a Business Day and if not, the next succeeding Business Day) and any
other Business Day on which the Agent elects to effect settlement pursuant to Section 5.7.



               Shared Services Arrangement means the agreement by and among the Borrower, WECO, the
other Guarantors and WRI (collectively, “Participants”) relating to the provision of certain
finance, engineering, clerical, procurement and information technology services which:



               (a) entails part-time work by a total of no more than 12 employees of the Participants at any
one time through December 31, 2008 who perform finance, engineering, clerical, procurement and/or
information technology services, and no more than 3 employees of the Participants at any one time
thereafter who perform information technology services; and



               (b) is entered into and conducted by the Participants on terms that reflect the actual cost of
such services to the performing Participant, plus a margin of 5%.



               Single Purpose Entity shall mean with respect to the Borrower, an organization which
is organized solely for the purposes of carrying out the activities described in its operating
agreement as of the Closing Date and which does not engage in any business unrelated to such
activities, does not have any assets other than those related to its interest in the activities or
any indebtedness other than as permitted by this Agreement or the other Loan Documents, has and
maintains its own separate books and records and its own accounts, in each case which are separate
and apart from the books and records and accounts of any other Person and holds itself out as being
a Person separate and apart from any other Person, the day to day operations of which are managed
principally by a President or comparable officer who is not employed by, does not hold any position
with, and does not provide any services to the Parent Group, and the day to day human resources
decisions of which are made by an officer or employee who is not employed by, does not hold any
position with, and does not provide any services to the Parent Group.



26









 





               Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc.



               Standby Letter of Credit shall mean a Letter of Credit issued to support obligations
of one or more of the Loan Parties, contingent or otherwise, which finance the working capital and
business needs of the Loan Parties incurred in the ordinary course of business.



               Subsidiary of any Person at any time shall mean (i) any corporation or trust of which
50% or more (by number of shares or number of votes) of the outstanding capital stock or shares of
beneficial interest normally entitled to vote for the election of one or more directors or trustees
(regardless of any contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries,
(ii) any partnership of which such Person is a general partner or of which 50% or more of the
partnership interests is at the time directly or indirectly owned by such Person or one or more of
such Person’s Subsidiaries, (iii) any limited liability company of which such Person is a member or
of which 50% or more of the limited liability company interests is at the time directly or
indirectly owned by such Person or one or more of such Person’s Subsidiaries or (iv) any
corporation, trust, partnership, limited liability company or other entity which is controlled or
capable of being controlled by such Person or one or more of such Person’s Subsidiaries. Unless
the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a
Subsidiary of the Borrower.



               Subsidiary Shares shall have the meaning assigned to that term in Section 6.1.3.



               Swap Obligations means, with respect to any Person, payment obligations with respect
to interest rate swaps, currency swaps, forward sale or purchase agreements, futures contracts and
similar obligations obligating such Person to make payments, whether periodically or upon the
happening of a contingency (including without limitation, any obligations arising from any of the
foregoing used to hedge the price of coal or other commodities). For the purposes of this
Agreement, the amount of any Swap Obligation shall be the amount determined in respect thereof as
of the end of the most recently ended fiscal quarter of such Person, based on the assumption that
such Swap Obligation had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap Obligation provides for the netting of
amounts payable by and to such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.



               Swing Loan Commitment shall mean PNC Bank’s commitment to make Swing Loans to the
Borrower pursuant to Section 2.1.2 hereof in an aggregate principal amount up to $10,000,000.00.



               Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form of
Exhibit 1.1(S)(2) evidencing the Swing Loans, together with all amendments, extensions,
renewals, replacements, refinancings or refundings thereof in whole or in part.



               Swing Loan Request shall mean a request for Swing Loans made in accordance with
Section 2.5.2 hereof.



27









 





               Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing
Loans or any Swing Loan made by PNC Bank to the Borrower pursuant to Section 2.1.2 hereof.



               Targeted Retained Cash shall mean, with respect to each Payment Date, the amount set
forth or determined as provided in the following table as to such Payment Date:



	 	 	 
	Payment Dates	 	Amount
	each Payment Date occurring during
the years 2008 and 2009

	 	 $1,000,000
	each Payment Date occurring during
the year 2010

	 	 $750,000
	each Payment Date occurring during
the year 2011 and thereafter

	 	 $1,000,000, or such lesser amount as
shall cause the aggregate amount of
Retained Cash retained by the
Borrower to equal the Retained Cash
Limit with respect to such Payment
Date






               Term Loans shall mean collectively all of the advances made under the notes issued by
the Borrower pursuant to the Note Purchase Agreement.



               Term Notes shall mean the “Notes”, as defined in the Note Purchase Agreement.



               Third Party Services Payments shall mean reimbursement of the allocable share of the
actual cost (without overhead) of the goods and services procured by the Parent Group or any member
thereof from a third-party (which is not an Affiliate of the Parent) on behalf of the Borrower or
any Loan Party for services which are of a general administrative nature and not operating type
services.



               Transferor Bank shall mean the selling Bank pursuant to an Assignment and Assumption
Agreement.



               TWCC shall mean Texas Westmoreland Coal Co., a Montana corporation.



               2001 Note Agreement shall mean the Term Loan Agreement, dated as of April 27, 2001, as
amended by amendments thereto dated as of August 15, 2001, March 25, 2002 and March 8, 2004,
respectively, between the Borrower, the Guarantors, TWCC, and the institutional investors
identified in Schedule A thereto, pursuant to which the Borrower issued and sold, and such
institutional investors purchased, the Borrower’s (i) Floating Rate Senior Guaranteed Secured
Notes, Series A, due 2002, (ii) 9.39% Senior Guaranteed Secured Notes, Series B, due 2008, (iii)
6.85% Senior Guaranteed Secured Notes, Series C, due 2011, and (iv) Floating Rate Senior Guaranteed
Secured Notes, Series D, due 2011.



               UCC Collateral shall mean the property of the Loan Parties in which security interests
are to be granted under the Security Agreement.



28









 





               Unfinanced Capital Expenditures shall mean as of the last day of any quarterly fiscal
period of the Borrower (each such last day, a “Test Date”), an amount in Dollars equal to:



          (xiii) if cumulative Capital Expenditures made by the Loan Parties and their Subsidiaries
during the CapEx Period applicable to such Test Date are not in excess of the CapEx Threshold, $0;




          (xiv) if (x) cumulative Capital Expenditures made by the Loan Parties and their Subsidiaries
during the CapEx Period applicable to such Test Date are in excess of the CapEx Threshold and (y)
such cumulative Capital Expenditures for the CapEx Period applicable to no prior Test Date shall
have been in excess of the CapEx Threshold, the amount of such excess over the CapEx Threshold; or




          (xv) if cumulative Capital Expenditures made by the Loan Parties and their Subsidiaries during
the CapEx Period applicable to such Test Date are in excess of the CapEx Threshold and clause (ii)
above shall not be applicable, the aggregate amount of Capital Expenditures made by the Loan
Parties and their Subsidiaries during such fiscal period ended on such Test Date.




     For purposes of the foregoing definition, the “CapEx Period” applicable to any Test Date means
the period from and including the Closing Date to and including such Test Date.



               Uniform Commercial Code shall have the meaning assigned to that term in
Section 6.1.16.



               USA Patriot Act shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.



               WECO shall mean Western Energy Company, a Montana corporation.



               WRI shall mean Westmoreland Resources, Inc., a Delaware corporation, the owner of the
Absaloka Mine in Big Horn County, Montana, and a Subsidiary of the Parent.



     1.2 Construction.



          Unless the context of this Agreement otherwise clearly requires, the following rules of
construction shall apply to this Agreement and each of the other Loan Documents:




          1.2.1 Number; Inclusion.




               references to the plural include the singular, the plural, the part and the whole; “or” has
the inclusive meaning represented by the phrase “and/or,” and “including” has the meaning
represented by the phrase “including without limitation”;



29









 





          1.2.2 Determination.




               references to “determination” of or by the Agent or the Banks shall be deemed to include
good-faith estimates by the Agent or the Banks (in the case of quantitative determinations) and
good-faith beliefs by the Agent or the Banks (in the case of qualitative determinations) and such
determination shall be conclusive absent manifest error;



          1.2.3 Agent’s Discretion and Consent.




               whenever the Agent or the Banks are granted the right herein to act in its or their sole
discretion or to grant or withhold consent such right shall be exercised in good faith;



          1.2.4 Documents Taken as a Whole.




               the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document;



          1.2.5 Headings.




               the section and other headings contained in this Agreement or such other Loan Document and the
Table of Contents (if any), preceding this Agreement or such other Loan Document are for reference
purposes only and shall not control or affect the construction of this Agreement or such other Loan
Document or the interpretation thereof in any respect;



          1.2.6 Implied References to this Agreement.




               article, section, subsection, clause, schedule and exhibit references are to this Agreement or
other Loan Document, as the case may be, unless otherwise specified;



          1.2.7 Persons.




               reference to any Person includes such Person’s successors and assigns but, if applicable, only
if such successors and assigns are permitted by this Agreement or such other Loan Document, as the
case may be, and reference to a Person in a particular capacity excludes such Person in any other
capacity;



          1.2.8 Modifications to Documents.




               reference to any agreement (including this Agreement and any other Loan Document together with
the schedules and exhibits hereto or thereto), document or instrument means such agreement,
document or instrument as amended, modified, replaced, substituted for, superseded or restated;



          1.2.9 From, To and Through.




               relative to the determination of any period of time, “from” means “from and including,” “to”
means “to but excluding,” and “through” means “through and including”; and



30









 





          1.2.10 Shall; Will.




               references to “shall” and “will” are intended to have the same meaning.



     1.3 Accounting Principles.



          Except as otherwise provided in this Agreement, all computations and determinations as to
accounting or financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the meanings ascribed to such
terms by GAAP; provided, however, that all accounting terms used in Section 8.2 [Negative
Covenants] (and all defined terms used in the definition of any accounting term used in Section 8.2
shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date
hereof applied on a basis consistent with those used in preparing the Annual Statements referred to
in Section 6.1.9(i) [Historical Statements]. In the event of any change after the date hereof in
GAAP, and if such change would result in the inability to determine compliance with the financial
covenants set forth in Section 8.2 based upon the Borrower’s regularly prepared financial
statements by reason of the preceding sentence, then the parties hereto agree to endeavor, in good
faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a
manner that would not affect the substance thereof, but would allow compliance therewith to be
determined in accordance with the Borrower’s financial statements at that time.



2. REVOLVING CREDIT AND SWING LOAN FACILITIES




     2.1 Revolving Credit Commitments.



          2.1.1 Revolving Credit Loans.




          Subject to the terms and conditions hereof and relying upon the representations and warranties
herein set forth, each Bank severally agrees to make Revolving Credit Loans to the Borrower at any
time or from time to time on or after the date hereof to the Expiration Date provided that after
giving effect to such Loan the aggregate amount of Loans from such Bank shall not exceed such
Bank’s Revolving Credit Commitment minus such Bank’s Ratable Share of the Letters of Credit
Outstanding. All advances to the Borrower shall be made against Qualified Accounts of the Loan
Parties, based upon the ratios stated in the definition of Borrowing Base in Section 1.1 [Certain
Definitions], as then in effect, and the Revolving Facility Usage shall at no time exceed the
lesser of the Revolving Credit Commitments or the Borrowing Base. Within such limits of time and
amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and
reborrow pursuant to this Section 2.1.




          2.1.2 Swing Loan Commitment.




               Subject to the terms and conditions hereof and relying upon the representations and warranties
herein set forth, and in order to facilitate loans and repayments between Settlement Dates, PNC
Bank may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the
“Swing Loans”) to the Borrower at any time or from time to time after the date hereof to, but not
including, the Expiration Date, in an aggregate outstanding principal amount up to but not in
excess of $10,000,000 (the “Swing Loan Commitment”),



31









 




provided that the aggregate principal amount of PNC Bank’s Swing Loans and the Revolving
Credit Loans of all the Banks and the Letters of Credit Outstanding at any one time outstanding
shall not exceed the lesser of the aggregate Revolving Credit Commitments for all Banks or the
Borrowing Base. Within such limits of time and amount and subject to the other provisions of this
Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2.




     2.2 Nature of Banks’ Obligations with Respect to Revolving Credit Loans. 



          Each Bank shall be obligated to participate in each request for Revolving Credit Loans
pursuant to Section 2.5.1 [Revolving Credit Loan Requests] in accordance with its Ratable Share.
The aggregate of each Bank’s Revolving Credit Loans outstanding hereunder to the Borrower at any
time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the Letters of
Credit Outstanding. The obligations of each Bank hereunder are several. The failure of any Bank
to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other
party nor shall any other party be liable for the failure of such Bank to perform its obligations
hereunder. The Banks shall have no obligation to make Revolving Credit Loans hereunder on or after
the Expiration Date.




     2.3 Commitment Fees.



          Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the
Agent for the account of each Bank, as consideration for such Bank’s Revolving Credit Commitment
hereunder, a nonrefundable commitment fee (the “Commitment Fee”) equal to 0.50% per annum (computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the
average daily difference between the amount of (i) such Bank’s Revolving Credit Commitment as the
same may be constituted from time to time and the (ii) the sum of such Bank’s Revolving Credit
Loans outstanding (for purposes of this computation, PNC Bank’s Swing Loans shall be deemed to be
borrowed amounts under its Revolving Credit Commitment) plus its Ratable Share of Letters of Credit
Outstanding. All Commitment Fees shall be payable in arrears on the last Business Day of each
June, September, December and March after the date hereof and on the Expiration Date or upon
acceleration of the Notes.




     2.4 Intentionally Omitted.

2.5 Revolving Credit Loan Requests; Swing Loan Requests.



          2.5.1 Revolving Credit Loan Requests.




          Except as otherwise provided herein, the Borrower may from time to time prior to the
Expiration Date request the Banks to make Revolving Credit Loans, or renew or convert the Interest
Rate Option applicable to existing Revolving Credit Loans pursuant to Section 4.2 [Interest
Periods], by delivering to the Agent, not later than 12:00 noon, Pittsburgh time, (i) three (3)
Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit
Loans to which the Libor-Rate Option applies or the conversion to or the renewal of the Libor-Rate
Option for any Loans; and (ii) on the proposed Borrowing Date with respect to the making of a
Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding
Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly
completed request therefor substantially in the form of Exhibit 2.5.1 or a request by
telephone immediately confirmed in writing by letter, facsimile or telex in such form (each, a




32









 







“Loan Request”), it being understood that the Agent may rely on the authority of any
individual making such a telephonic request without the necessity of receipt of such written
confirmation. Each Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing
Date; (ii) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, which
shall be in integral multiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche
to which the Libor-Rate Option applies and in integral multiples of $100,000 and not less than the
lesser of $500,000 or the maximum amount available for Borrowing Tranches to which the Base Rate
Option applies; (iii) whether the Libor-Rate Option or Base Rate Option shall apply to the proposed
Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to
which the Libor-Rate Option applies, an appropriate Interest Period for the Loans comprising such
Borrowing Tranche.




          2.5.2 Swing Loan Requests.




               Except as otherwise provided herein, the Borrower may from time to time prior to the
Expiration Date request PNC Bank to make Swing Loans by delivery to PNC Bank not later than 1:00
p.m. Pittsburgh time on the proposed Borrowing Date of a duly completed request therefor
substantially in the form of Exhibit 2.5.2 hereto or a request by telephone immediately
confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being
understood that the Agent may rely on the authority of any individual making such a telephonic
request without the necessity of receipt of such written confirmation. Each Swing Loan Request
shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such
Swing Loan, which shall be in integral multiples of $100,000 and not less than $100,000.



     2.6 Making Revolving Credit Loans and Swing Loans; Swing Notes; Presumptions by the
Agent.



          2.6.1 Making Revolving Credit Loans.




          The Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.5
[Revolving Credit Loan Requests], notify the Banks of its receipt of such Loan Request specifying:
(i) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit
Loans requested thereby; (ii) the amount and type of each such Revolving Credit Loan and the
applicable Interest Period (if any); and (iii) the apportionment among the Banks of such Revolving
Credit Loans as determined by the Agent in accordance with Section 2.2 [Nature of Banks’
Obligations]. Each Bank shall remit the principal amount of each Revolving Credit Loan to the
Agent such that the Agent is able to, and the Agent shall, to the extent the Banks have made funds
available to it for such purpose and subject to Section 7.2 [Each Additional Loan], fund such
Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the
Principal Office prior to 2:00 p.m., Pittsburgh time, on the applicable Borrowing Date, provided
that if any Bank fails to remit such funds to the Agent in a timely manner, the Agent may elect in
its sole discretion to fund with its own funds the Revolving Credit Loans of such Bank on such
Borrowing Date, and such Bank shall be subject to the repayment obligation in Section 10.15
[Availability of Funds].




          2.6.2 Making Swing Loans.




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               So long as PNC Bank elects to make Swing Loans, PNC Bank shall, after receipt by it of a Swing
Loan Request pursuant to Section 2.5.2 [Swing Loan Request], fund such Swing Loan to the Borrower
in U.S. Dollars and immediately available funds at the Principal Office prior to 4:00 p.m.
Pittsburgh time on the Borrowing Date.



          2.6.3 Presumptions by the Agent.




               Unless the Agent shall have received notice from a Bank prior to the proposed date of any Loan
that such Bank will not make available to the Agent such Bank’s share of such Loan, the Agent may
assume that such Bank has made such share available on such date in accordance with Section 2.6.1
[Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Bank has not in fact made its share of the
applicable Loan available to the Agent, then the applicable Bank and the Borrower severally agree
to pay to the Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Agent, at (i) in the case of a payment to be made by such Bank, the greater
of the Federal Funds Effective Rate and a rate determined by the Agent in accordance with banking
industry rules on interbank compensation and (ii) in the case of a payment to be made by the
Borrower, the interest rate applicable to Loans under the Base Rate Option or LIBOR Rate Option, as
applicable. If such Bank pays its share of the applicable Loan to the Agent, then the amount so
paid shall constitute such Bank’s Loan. Any payment by the Borrower shall be without prejudice to
any claim the Borrower may have against a Bank that shall have failed to make such payment to the
Agent.



     2.7 Revolving Credit Notes; Swing Line Notes.



          The Obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving
Credit Loans made to it by each Bank, together with interest thereon, shall be evidenced by a
Revolving Credit Note dated the Closing Date payable to the order of such Bank in a face amount
equal to the Revolving Credit Commitment of such Bank. The obligation of the Borrower to repay the
unpaid principal amount of the Swing Loans made to it by PNC Bank together with interest thereon
shall be evidenced by a demand promissory note of the Borrower dated the Closing Date in
substantially the form attached hereto as Exhibit 1.1(S)(2) payable to the order of PNC
Bank in a face amount equal to the Swing Loan Commitment.




     2.8 Use of Proceeds.



          The proceeds of the Revolving Credit Loans shall be used for (i) the refinancing of existing
indebtedness, (ii) provide a one-time distribution to Westmoreland Coal Company and (iii) working
capital and general corporate purposes and in accordance with Section 8.1.11 [Use of Proceeds].




     2.9 Letter of Credit Subfacility.



          2.9.1 Issuance of Letters of Credit.




               On the Closing Date, the outstanding Letters of Credit previously issued by PNC Bank as an
“Issuing Bank” under the Existing Credit Agreement that are set forth on Schedule 2.9.1
(the “Existing Letters of Credit”) will automatically, without any action on the



34









 




part of any Person, be deemed to be Letters of Credit issued hereunder for the account of the
Borrower for all purposes of this Agreement and the other Loan Documents. In addition, Borrower
may request the issuance of a letter of credit (each a “Letter of Credit”) on behalf of itself or
another Loan Party by delivering to the Agent a completed application and agreement for letters of
credit in such form as the Agent may specify from time to time by no later than 10:00 a.m.,
Pittsburgh time, at least five (5) Business Days, or such shorter period as may be agreed to by the
Agent, in advance of the proposed date of issuance. Each Letter of Credit shall be a Standby
Letter of Credit. Promptly after receipt of any letter of credit application, the Issuing Bank
shall confirm with the Agent (by telephone or in writing) that the Agent has received a copy of
such Letter of Credit application and if not, such Issuing Bank will provide Agent with a copy
thereof. Unless the Issuing Bank has received notice from any Bank, Agent or any Loan Party, at
least one day prior to the requested date of issuance, amendment or extension of the applicable
Letter of Credit, that one or more applicable conditions in Section 7 [Conditions of Lending and
Issuance of Letter of Credit] is not satisfied, then, so long as there is no Event of Default or
Potential Default, subject to compliance with all of the terms and conditions set forth in this
Agreement, any Letter of Credit may be automatically renewable if such selection is made on the
application for such Letter of Credit. Subject to the terms and conditions hereof and in reliance
on the agreements of the other Banks set forth in this Section 2.9, the Agent will issue a Letter
of Credit or renew an existing Letter of Credit, provided that each Letter of Credit shall (A) have
a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire
later than one (1) year beyond the expiration date, provided that any Letter of Credit scheduled to
expire after the Expiration Date is subject to the requirements in Section 2.9.10 [Cash Collateral
Prior to the Expiration Date]. In no event shall (i) the Letters of Credit Outstanding exceed, at
any one time, $15,000,000 or (ii) the Revolving Facility Usage exceed, at any one time, the
Revolving Credit Commitments or the Borrowing Base. Each request by the Borrower for the issuance,
amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrower
that it shall be in compliance with the preceding sentence and with Section 7.2 [Each Additional
Loan] after giving effect to the requested issuance, amendment or extension of such Letter of
Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit
to the beneficiary thereof, the applicable Issuing Bank will also deliver to Borrower and Agent a
true and complete copy of such Letter of Credit or amendment.




          2.9.2 Letter of Credit Fees.




               The Borrower shall pay (i) to the Agent for the ratable account of the Banks a fee (the
“Letter of Credit Fee”) equal to the percentage per annum equal to the Revolving Credit Libor Rate
Option, and (ii) to the Agent for its own account a fronting fee equal to 0.25% per annum (computed
on the basis of a year of 360 days and actual days elapsed), which fees shall be computed on the
daily average Letters of Credit Outstanding and shall be payable quarterly in arrears commencing
with the last Business Day of each June, September, December and March following issuance of each
Letter of Credit and on the Expiration Date. The Borrower shall also pay to the Agent for the
Agent’s sole account the Agent’s then in effect customary fees and administrative expenses payable
with respect to the Letters of Credit as the Agent may generally charge or incur from time to time
in connection with the issuance, maintenance, modification (if any), assignment or transfer (if
any), negotiation, and administration of Letters of Credit.



35









 





          2.9.3 Disbursements, Reimbursement.




               2.9.3.1 Immediately upon the Issuance of each Letter of Credit, each Bank shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the Agent a participation in
such Letter of Credit (including the Existing Letters of Credit) and each drawing thereunder in an
amount equal to such Bank’s Ratable Share of the maximum amount available to be drawn under such
Letter of Credit and the amount of such drawing, respectively.



               2.9.3.2 In the event of any request for a drawing under a Letter of Credit by the beneficiary
or transferee thereof, the Agent will promptly notify the Borrower. Provided that it shall have
received such notice, the Borrower shall reimburse (such obligation to reimburse the Agent shall
sometimes be referred to as a “Reimbursement Obligation”) the Agent prior to 12:00 noon, Pittsburgh
time on each date that an amount is paid by the Agent under any Letter of Credit (each such date,
an “Drawing Date”) in an amount equal to the amount so paid by the Agent. In the event the
Borrower fails to reimburse the Agent for the full amount of any drawing under any Letter of Credit
by 12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will promptly notify each Bank
thereof, and the Borrower shall be deemed to have requested that Revolving Credit Loans be made by
the Banks under the Base Rate Option to be disbursed on the Drawing Date under such Letter of
Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and
subject to the conditions set forth in Section 7.2 [Each Additional Loan] other than any notice
requirements. Any notice given by the Agent pursuant to this Section 2.9.3.2 may be oral if
immediately confirmed in writing; provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.



               2.9.3.3 Each Bank shall upon any notice pursuant to Section 2.9.3.2 make available to the
Agent an amount in immediately available funds equal to its Ratable Share of the amount of the
drawing, whereupon the participating Banks shall (subject to Section 2.9.3.4) each be deemed to
have made a Revolving Credit Loan under the Base Rate Option to the Borrower in that amount. If
any Bank so notified fails to make available to the Agent for the account of the Agent the amount
of such Bank’s Ratable Share of such amount by no later than 2:00 p.m., Pittsburgh time on the
Drawing Date, then interest shall accrue on such Bank’s obligation to make such payment, from the
Drawing Date to the date on which such Bank makes such payment (i) at a rate per annum equal to the
Federal Funds Effective Rate during the first three days following the Drawing Date and (ii) at a
rate per annum equal to the rate applicable to Loans under the Revolving Credit Base Rate Option on
and after the fourth day following the Drawing Date. The Agent will promptly give notice of the
occurrence of the Drawing Date, but failure of the Agent to give any such notice on the Drawing
Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve
such Bank from its obligation under this Section 2.9.3.3.



               2.9.3.4 With respect to any unreimbursed drawing that is not converted into Revolving Credit
Loans under the Base Rate Option to the Borrower in whole or in part as contemplated by
Section 2.9.3.2, because of the Borrower’s failure to satisfy the conditions set forth in
Section 7.2 [Each Additional Loan] other than any notice requirements or for any other reason, the
Borrower shall be deemed to have incurred from the Agent a borrowing (each a “Letter of Credit
Borrowing”) in the amount of such drawing. Such Letter of Credit Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the rate per annum applicable
to the Revolving Credit Loans under the Base Rate Option. Each Bank’s



36









 




payment to the Agent pursuant to Section 2.9.3.3 shall be deemed to be a payment in respect of
its participation in such Letter of Credit Borrowing and shall constitute a “Participation Advance”
from such Bank in satisfaction of its participation obligation under this Section 2.9.3.




          2.9.4 Repayment of Participation Advances.




               2.9.4.1 Upon (and only upon) receipt by the Agent for its account of immediately available
funds from the Borrower (i) in reimbursement of any payment made by the Agent under the Letter of
Credit with respect to which any Bank has made a Participation Advance to the Agent, or (ii) in
payment of interest on such a payment made by the Agent under such a Letter of Credit, the Agent
will pay to each Bank, in the same funds as those received by the Agent, the amount of such Bank’s
Ratable Share of such funds, except the Agent shall retain the amount of the Ratable Share of such
funds of any Bank that did not make a Participation Advance in respect of such payment by Agent.



               2.9.4.2 If the Agent is required at any time to return to any Loan Party, or to a trustee,
receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by any Loan Party to the Agent pursuant to Section 2.9.4.1 in reimbursement of a
payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of
the Agent, forthwith return to the Agent the amount of its Ratable Share of any amounts so returned
by the Agent plus interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent, at a rate per annum equal to the Federal Funds Effective Rate
in effect from time to time.



          2.9.5 Documentation.




               Each Loan Party agrees to be bound by the terms of the Agent’s application and agreement for
letters of credit and the Agent’s written regulations and customary practices relating to letters
of credit, though such interpretation may be different from such Loan Party’s own. In the event of
a conflict between such application or agreement and this Agreement, this Agreement shall govern.
It is understood and agreed that, except in the case of gross negligence or willful misconduct, the
Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or
commission, in following any Loan Party’s instructions or those contained in the Letters of Credit
or any modifications, amendments or supplements thereto.



          2.9.6 Determinations to Honor Drawing Requests.




               In determining whether to honor any request for drawing under any Letter of Credit by the
beneficiary thereof, the Agent shall be responsible only to determine that the documents and
certificates required to be delivered under such Letter of Credit have been delivered and that they
comply on their face with the requirements of such Letter of Credit.



          2.9.7 Nature of Participation and Reimbursement Obligations. 




               Each Bank’s obligation in accordance with this Agreement to make the Revolving Credit Loans or
Participation Advances, as contemplated by Section 2.9.3 [Disbursement, Reimbursement], as a result
of a drawing under a Letter of Credit, and the Obligations of the Borrower to reimburse the Agent
upon a draw under a Letter of Credit, shall



37









 




be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with
the terms of this Section 2.9 under all circumstances, including the following circumstances:




          (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have
against the Issuing Bank or any of its Affiliates, the Borrower or any other Person for any reason
whatsoever, or which any Loan Party may have against the Issuing Bank or any of its Affiliates, any
Bank or any other Person for any reason whatsoever;




          (ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter
of Credit Borrowing, with the conditions set forth in Section 2.1 [Revolving Credit Commitments],
2.5 [Revolving Credit Loan Requests], 2.6 [Making Revolving Credit Loans] or 7.2 [Each Additional
Loan] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it
being acknowledged that such conditions are not required for the making of a Letter of Credit
Borrowing and the obligation of the Banks to make Participation Advances under Section 2.9.3
[Disbursement, Reimbursement];




          (iii) any lack of validity or enforceability of any Letter of Credit;




          (iv) any claim of breach of warranty that might be made by any Loan Party or any Bank against
any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment,
counterclaim, crossclaim, defense or other right which any Loan Party or any Bank may have at any
time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of
Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the
Issuing Bank or its Affiliates or any Bank or any other Person, whether in connection with this
Agreement, the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary
for which any Letter of Credit was procured);




          (v) the lack of power or authority of any signer of (or any defect in or forgery of any
signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy,
enforceability or genuineness of any draft, demand, instrument, certificate or other document
presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in
connection with any Letter of Credit, or the transport of any property or provision of services
relating to a Letter of Credit, in each case even if the Issuing Bank or any of its Affiliates has
been notified thereof;




          (vi) payment by the Agent under any Letter of Credit against presentation of a demand, draft
or certificate or other document which does not comply with the terms of such Letter of Credit;




          (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit,
or any other Person having a role in any transaction or obligation relating to a Letter of Credit,
or the existence, nature, quality, quantity, condition, value or other characteristic of any
property or services relating to a Letter of Credit;




          (viii) any failure by the Issuing Bank or any of its Affiliates to issue any Letter of Credit
in the form requested by any Loan Party, unless the Issuing Bank has received written notice from
such Loan Party of such failure within three Business Days after the Issuing Bank





38









 







shall have furnished such Loan Party and the Agent a copy of such Letter of Credit and such
error is material and no drawing has been made thereon prior to receipt of such notice;




          (ix) any adverse change in the business, operations, properties, assets, condition (financial
or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;




          (x) any breach of this Agreement or any other Loan Document by any party thereto;




          (xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;




          (xii) the fact that an Event of Default or a Potential Default shall have occurred and be
continuing;




          (xiii) the fact that the Expiration Date shall have passed or this Agreement or the
Commitments hereunder shall have been terminated; and




          (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing.




          2.9.8 Indemnity.




               In addition to amounts payable as provided in Section 10.5 [Reimbursement of Agent by
Borrower, Etc.], the Borrower hereby agrees to protect, indemnify, pay and save harmless the Agent
from and against any and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of
internal counsel) which the Agent may incur or be subject to as a consequence, direct or indirect,
of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or
willful misconduct of the Agent as determined by a final judgment of a court of competent
jurisdiction or (B) the wrongful dishonor by the Agent of a proper demand for payment made under
any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or governmental authority (all
such acts or omissions herein called “Governmental Acts”).



          2.9.9 Liability for Acts and Omissions.




               As between any Loan Party and the Agent, such Loan Party assumes all risks of the acts and
omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the Agent shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for an issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged (even if the Agent shall have been notified
thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such
Letter of



39









 




Credit may be transferred, to comply fully with any conditions required in order to draw upon
such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter
of Credit, or any such transferee, or any dispute between or among any Loan Party and any
beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any document required in order to make a
drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the control of the Agent, including
any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any
of the Agent’s rights or powers hereunder. Nothing in the preceding sentence shall relieve the
Agent from liability for the Agent’s gross negligence or willful misconduct in connection with
actions or omissions described in such clauses(i) through (viii) of such sentence.




               Without limiting the generality of the foregoing, the Issuing Bank and each of its Affiliates
(i) may rely on any oral or other communication believed in good faith by the Issuing Bank or such
Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit,
(ii) may honor any presentation if the documents presented appear on their face substantially to
comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously
dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court
order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled
to reimbursement to the same extent as if such presentation had initially been honored, together
with any interest paid by the Issuing Bank or its Affiliate; (iv) may honor any drawing that is
payable upon presentation of a statement advising negotiation or payment, upon receipt of such
statement (even if such statement indicates that a draft or other document is being delivered
separately), and shall not be liable for any failure of any such draft or other document to arrive,
or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating
bank claiming that it rightfully honored under the laws or practices of the place where such bank
is located; and (vi) may settle or adjust any claim or demand made on the Issuing Bank or its
Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a
letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”)
and honor any drawing in connection with any Letter of Credit that is the subject of such Order,
notwithstanding that any drafts or other documents presented in connection with such Letter of
Credit fail to conform in any way with such Letter of Credit.



               In furtherance and extension and not in limitation of the specific provisions set forth above,
any action taken or omitted by the Agent under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or omitted in good faith,
shall not put the Agent under any resulting liability to the Borrower or any Bank.



          2.9.10 Cash Collateral Prior to the Expiration Date. 




               If any Letter of Credit is outstanding and such Letter of Credit (as it may have previously
been extended) has an expiration date which is after the Expiration Date, then Borrower shall Cash
Collateralize each such Letter of Credit in an amount equal to 100% of the face value of such
outstanding Letter of Credit, on or before the date which is seven (7) days



40









 




prior to the Expiration Date. Borrower hereby grants to Agent a security interest in all Cash
Collateral pledged pursuant to this Section 2.9 or otherwise under this Agreement.




          2.9.11 Issuing Bank Reporting Requirements.




          Each Issuing Bank shall, on the first business day of each month, provide to Agent and
Borrower a schedule of the Letters of Credit issued by it, in form and substance satisfactory to
Agent, showing the date of issuance of each Letter of Credit, the account party, the original face
amount (if any), and the expiration date of any Letter of Credit outstanding at any time during the
preceding month, and any other information relating to such Letter of Credit that the Agent may
request.




     2.10 Borrowings to Repay Swing Loans.



          PNC Bank may, at its option, exercisable at any time for any reason whatsoever, demand
repayment of the Swing Loans, and each Bank shall make a Revolving Credit Loan in an amount equal
to such Bank’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans,
plus, if PNC Bank so requests, accrued interest thereon, provided that no Bank shall be obligated
in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment.
Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate
Option and shall be deemed to have been properly requested in accordance with Section 2.5.1
[Revolving Credit Loan Requests] without regard to any of the requirements of that provision. PNC
Bank shall provide notice to the Banks (which may be telephonic or written notice by letter,
facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.10 and of
the apportionment among the Banks, and the Banks shall be unconditionally obligated to fund such
Revolving Credit Loans (whether or not the conditions specified in Section 2.5.1 [Revolving Credit
Loan Requests] are then satisfied) by the time PNC Bank so requests, which shall not be earlier
than 3:00 p.m. Pittsburgh time on the Business Day next after the date the Banks receive such
notice from PNC Bank.




     2.11 Increase in Revolving Credit Commitments.



          (i) Increasing Banks and New Banks. The Borrower may, at any time one year prior to the
Expiration Date, request that (1) the current Banks increase their Revolving Credit Commitments
(any current Bank which elects to increase its Revolving Credit Commitment shall be referred to as
an “Increasing Bank”) or (2) one or more new banks (each a “New Bank”) join this Agreement and
provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions:




               (a) No Obligation to Increase. No current Bank shall be obligated to increase its Revolving
Credit Commitment and any increase in the Revolving Credit Commitment by any current Bank shall be
in the sole discretion of such current Bank.



               (b) Defaults. There shall exist no Events of Default or Potential Default on the effective
date of such increase after giving effect to such increase.



               (c) Aggregate Revolving Credit Commitments. After giving effect to such increase, the total
Revolving Credit Commitments shall not exceed $35,000,000.00.



41









 





               (d) Minimum Revolving Credit Commitments. After giving effect to such increase, the amount of
the Revolving Credit Commitments provided by each of the New Banks and each of the Increasing Banks
shall be at least $5,000,000.



               (e) Resolutions; Opinion. The Loan Parties shall deliver to the Agent on or before the
effective date of such increase the following documents in a form reasonably acceptable to the
Agent: (1) certifications of their corporate secretaries with attached resolutions certifying that
the increase in the Revolving Credit Commitment has been approved by such Loan Parties, and (2) an
opinion of counsel addressed to the Agent and the Banks addressing the authorization and execution
of the Loan Documents by, and enforceability of the Loan Documents against, the Loan Parties.



               (f) Notes. The Borrower shall execute and deliver (1) to each Increasing Bank a replacement
Revolving Credit Note reflecting the new amount of such Increasing Bank’s Revolving Credit
Commitment after giving effect to the increase (and the prior Revolving Credit Note issued to such
Increasing Bank shall be deemed to be terminated) and (2) to each New Bank a revolving credit Note
reflecting the amount of such New Bank’s Revolving Credit Commitment.



               (g) Approval of New Banks. Any New Bank shall be subject to the approval of the Agent.



               (h) Increasing Banks. Each Increasing Bank shall confirm its agreement to increase its
Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the Agent,
signed by it and the Borrower and delivered to the Agent at least five (5) days before the
effective date of such increase.



               (i) New Banks—Joinder. Each New Bank shall execute a lender joinder in substantially the
form of Exhibit 2.11 pursuant to which such New Bank shall join and become a party to this
Agreement and the other Loan Documents with a Revolving Credit Commitment in the amount set forth
in such lender joinder.



          (ii) Treatment of Outstanding Loans and Letters of Credit.




               (a) Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such
increase, the Borrower shall repay all Loans then outstanding, subject to the Borrower’s indemnity
obligations under Section 5.6.2 [Indemnity]; provided that it may borrow new Loans with a Borrowing
Date on such date. Each of the Banks shall participate in any new Loans made on or after such date
in accordance with their respective Ratable Shares after giving effect to the increase in Revolving
Credit Commitments contemplated by this Section.



               (b) Outstanding Letters of Credit. Repayment of Outstanding Loans; Borrowing of New Loans. On
the effective date of such increase, each Increasing Bank and each New Bank (i) will be deemed to
have purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share
of such Letter of Credit and the participation of each other Bank in such Letter of Credit shall be
adjusted accordingly and (ii) will acquire, (and will pay to the Agent, for the account of each
Bank, in immediately available funds, an amount equal to) its Ratable Share of all outstanding
Participation Advances.



42









 





3. INTENTIONALLY OMITTED.




4. INTEREST RATES




     4.1 Interest Rate Options.



          The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the
Loans as selected by it from the Base Rate Option or Libor-Rate Option set forth below applicable
to the Loans (provided that only the Base Rate Option shall apply to the Swing Loans), it being
understood that, subject to the provisions of this Agreement, the Borrower may select different
Interest Rate Options and different Interest Periods to apply simultaneously to the Loans
comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate
Options with respect to all or any portion of the Loans comprising any Borrowing Tranche, provided
that there shall not be at any one time outstanding more than three (3) Borrowing Tranches in the
aggregate among all of the Loans and provided further that if an Event of Default or Potential
Default exists and is continuing, the Borrower may not request, convert to, or renew the LIBOR Rate
Option for any Loans and the Required Banks may demand that all existing Borrowing Tranches bearing
interest under the LIBOR Rate Option shall be converted immediately to the Base Rate Option,
subject to the obligation of the Borrower to pay any indemnity under Section 5.6.2 [Indemnity] in
connection with such conversion. If at any time the designated rate applicable to any Loan made by
any Bank exceeds such Bank’s highest lawful rate, the rate of interest on such Bank’s Loan shall be
limited to such Bank’s highest lawful rate.




          4.1.1 Revolving Credit Interest Rate Options.




               The Borrower shall have the right to select from the following Interest Rate Options
applicable to the Revolving Credit Loans (subject to the provisions above regarding Swing Loans):



          (i) Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the basis of
a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus
0.50%, such interest rate to change automatically from time to time effective as of the effective
date of each change in the Base Rate; or




          (ii) Revolving Credit Libor-Rate Option: A rate per annum (computed on the basis of a year of
360 days and actual days elapsed) equal to the Libor-Rate plus 3.0%.




          4.1.2 Intentionally Omitted.




          4.1.3 Rate Quotations.




               The Borrower may call the Agent on or before the date on which a Loan Request is to be
delivered to receive an indication of the rates then in effect, but it is acknowledged that such
projection shall not be binding on the Agent or the Banks nor affect the rate of interest which
thereafter is actually in effect when the election is made.



     4.2 Interest Periods.



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          At any time when the Borrower shall select, convert to or renew a Libor-Rate Option, the
Borrower shall notify the Agent thereof at least three (3) Business Days prior to the effective
date of such Libor-Rate Option by delivering a Loan Request. The notice shall specify an Interest
Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence,
the following provisions shall apply to any selection of, renewal of, or conversion to a Libor-Rate
Option:




          4.2.1 Amount of Borrowing Tranche.




               each Borrowing Tranche of Libor-Rate Loans shall be in integral multiples of $500,000 and not
less than $1,000,000;



          4.2.2 Renewals.




               in the case of the renewal of a Libor-Rate Option at the end of an Interest Period, the first
day of the new Interest Period shall be the last day of the preceding Interest Period, without
duplication in payment of interest for such day.



     4.3 Interest After Default.



          To the extent permitted by Law, upon the occurrence of an Event of Default and until such time
such Event of Default shall have been cured or waived:




          4.3.1 Letter of Credit Fees, Interest Rate.




               the Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuant
to Section 2.9.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively,
shall be increased by 2.0% per annum; and



          4.3.2 Other Obligations.




               each other Obligation hereunder if not paid when due shall bear interest at a rate per annum
equal to the sum of the rate of interest applicable under the Revolving Credit Base Rate Option
plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until
it is paid in full.



          4.3.3 Acknowledgment.




               The Borrower acknowledges that the increase in rates referred to in this Section 4.3 reflects,
among other things, the fact that such Loans or other amounts have become a substantially greater
risk given their default status and that the Banks are entitled to additional compensation for such
risk; and all such interest shall be payable by Borrower upon demand by Agent.



     4.4 Libor-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.



          4.4.1 Unascertainable.




               If on any date on which a Libor-Rate would otherwise be determined, the Agent shall have
determined that:



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          (i) adequate and reasonable means do not exist for ascertaining such Libor-Rate, or




          (ii) a contingency has occurred which materially and adversely affects the London interbank
eurodollar market relating to the Libor-Rate, then the Agent shall have the rights specified in
Section 4.4.3 [Agent’s and Bank’s Rights].




          4.4.2 Illegality; Increased Costs; Deposits Not Available.




               If at any time any Bank shall have determined that:



          (i) the making, maintenance or funding of any Loan to which a Libor-Rate Option applies has
been made impracticable or unlawful by compliance by such Bank in good faith with any Law or any
interpretation or application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law), or




          (ii) such Libor-Rate Option will not adequately and fairly reflect the cost to such Bank of
the establishment or maintenance of any such Loan, or




          (iii) after making all reasonable efforts, deposits of the relevant amount in Dollars for the
relevant Interest Period for a Loan, or to banks generally, to which a Libor-Rate Option applies,
respectively, are not available to such Bank with respect to such Loan, or to banks generally, in
the interbank eurodollar market, then the Agent shall have the rights specified in Section 4.4.3
[Agent’s and Bank’s Rights].




          4.4.3 Agent’s and Bank’s Rights.




               In the case of any event specified in Section 4.4.1 [Unascertainable] above, the Agent shall
promptly so notify the Banks and the Borrower thereof, and in the case of an event specified in
Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available] above, such Bank shall promptly
so notify the Agent and endorse a certificate to such notice as to the specific circumstances of
such notice, and the Agent shall promptly send copies of such notice and certificate to the other
Banks and the Borrower. Upon such date as shall be specified in such notice (which shall not be
earlier than the date such notice is given), the obligation of (A) the Banks, in the case of such
notice given by the Agent, or (B) such Bank, in the case of such notice given by such Bank, to
allow the Borrower to select, convert to or renew a Libor-Rate Option shall be suspended until the
Agent shall have later notified the Borrower, or such Bank shall have later notified the Agent, of
the Agent’s or such Bank’s, as the case may be, determination that the circumstances giving rise to
such previous determination no longer exist. If at any time the Agent makes a determination under
Section 4.4.1 [Unascertainable] and the Borrower has previously notified the Agent of its selection
of, conversion to or renewal of a Libor-Rate Option and such Interest Rate Option has not yet gone
into effect, such notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such Loans. If any Bank
notifies the Agent of a determination under Section 4.4.2 [Illegality; Increased Costs; Deposits
Not Available], the Borrower shall, subject to the Borrower’s indemnification Obligations under
Section 5.6.2 [Indemnity], as to any Loan of the Bank to which a Libor-Rate Option applies, on the
date specified in such notice either convert such Loan to the Base Rate Option otherwise available
with respect to such Loan or prepay such Loan in accordance with Section 5.4 [Voluntary
Prepayments]. Absent due notice



45









 




from the Borrower of conversion or prepayment, such Loan shall automatically be converted to
the Base Rate Option otherwise available with respect to such Loan upon such specified date.




     4.5 Selection of Interest Rate Options.



          If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of
Loans under the Libor-Rate Option at the expiration of an existing Interest Period applicable to
such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the
Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option,
commencing upon the last day of the existing Interest Period.




5. PAYMENTS




     5.1 Payments.



          All payments and prepayments to be made in respect of principal, interest, Commitment Fees,
Letter of Credit Fees, Agent’s Fee or other fees or amounts due from the Borrower hereunder shall
be payable prior to 11:00 a.m., Pittsburgh time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and
without set-off, counterclaim or other deduction of any nature, and an action therefor shall
immediately accrue. Such payments shall be made to the Agent at the Principal Office for the
account of PNC Bank with respect to Swing Loans and for the ratable accounts of the Banks with
respect to the Revolving Credit Loans in U.S. Dollars and in immediately available funds, and the
Agent shall promptly distribute such amounts to the Banks in immediately available funds, provided
that in the event payments are received by 11:00 a.m., Pittsburgh time, by the Agent with respect
to the Loans and such payments are not distributed to the Banks on the same day received by the
Agent, the Agent shall pay the Banks the Federal Funds Effective Rate with respect to the amount of
such payments for each day held by the Agent and not distributed to the Banks. The Agent’s and
each Bank’s statement of account, ledger or other relevant record shall, in the absence of manifest
error, be conclusive as the statement of the amount of principal of and interest on the Loans and
other amounts owing under this Agreement and shall be deemed an “account stated.”




     5.2 Pro Rata Treatment of Banks.



          Each borrowing shall be allocated to each Bank according to its Ratable Share, and each
selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment
by the Borrower with respect to principal, interest, Commitment Fees, Letter of Credit Fees, or
other fees (except for the Agent’s Fee) or amounts due from the Borrower hereunder to the Banks
with respect to the Loans, shall (except as provided in Section 4.4.3 [Agent’s and Bank’s Rights]
in the case of an event specified in Section 4.4 [Libor-Rate Unascertainable; Etc.], 5.4.2
[Replacement of a Bank] or 5.6 [Additional Compensation in Certain Circumstances]) be made in
proportion to the applicable Loans outstanding from each Bank and, if no such Loans are then
outstanding, in proportion to the Ratable Share of each Bank. Notwithstanding any of the
foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or
other amounts from the Borrower with respect to Swing Loans shall be made by or to PNC Bank
according to Section 2 [Revolving Credit and Swing Loan Facilities].




46









 








     5.3 Interest Payment Dates.



          Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on
the last Business Day of each June, September, December and March after the date hereof and on the
Expiration Date or upon acceleration of the Notes. Interest on Loans to which the Libor-Rate
Option applies shall be due and payable on the last day of each Interest Period for those Loans
and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest
Period. Interest on mandatory prepayments of principal under Section 5.5 [Mandatory Prepayments]
shall be due on the date such mandatory prepayment is due. Interest on the principal amount of
each Loan or other monetary Obligation shall be due and payable on demand after such principal
amount or other monetary Obligation becomes due and payable (whether on the stated maturity date,
upon acceleration or otherwise).




     5.4 Voluntary Prepayments.



          5.4.1 Right to Prepay.




               The Borrower shall have the right at its option from time to time to prepay the Loans in whole
or part without premium or penalty (except as provided in Section 5.4.2 below or in Section 5.6
[Additional Compensation in Certain Circumstances]):



          (i) at any time with respect to any Loan to which the Base Rate Option applies,




          (ii) on the last day of the applicable Interest Period with respect to Loans to which a
Libor-Rate Option applies,




          (iii) on the date specified in a notice by any Bank pursuant to Section 4.4 [Libor-Rate
Unascertainable, Etc.] with respect to any Loan to which a Libor-Rate Option applies.




               Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment
notice to the Agent by 1:00 p.m. on the date of prepayment of the Revolving Credit Loans and no
later than 2:00 p.m., Pittsburgh time, on the date of prepayment of Swing Loans, setting forth the
following information:



          (x) the date, which shall be a Business Day, on which the proposed prepayment is to be made;




          (y) a statement indicating the application of prepayment between Swing Loans and Revolving
Loans; and




          (z) the total principal amount of such prepayment, which shall not be less than $100,000 for
any Swing Loan or $500,000 for any Revolving Credit Loan; provided however, such prepayment may be
less than such amounts if such prepayment pays in full all outstanding amounts under the Swing
Loans or Revolving Credit Loans, as applicable.




               All prepayment notices shall be irrevocable. The principal amount of the Loans for which a
prepayment notice is given, together with interest on such principal amount except with respect to
Loans to which the Base Rate Option applies, shall be due and payable on



47









 




the date specified in such prepayment notice as the date on which the proposed prepayment is
to be made. Except as provided in Section 4.4.3 [Agent’s and Bank’s rights], if the Borrower
prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is
prepaying, the prepayment shall be applied first to Loans to which the Base Rate Option applies,
then to Loans to which the Libor-Rate Option applies. Any prepayment hereunder shall be subject to
the Borrower’s Obligation to indemnify the Banks under Section 5.6.2 [Indemnity].




          5.4.2 Replacement of a Bank.




          In the event any Bank (i) gives notice under Section 4.4 [LIBOR Rate Unascertainable, Etc.],
(ii) requests compensation under Section 4.4 [LIBOR Rate Unascertainable, Etc.], or requires the
Borrower to pay any additional amount to any Bank or any Official Body for the account of any Bank
pursuant to Section 5.6 [Additional Compensation in Certain Circumstances], (iii) is a
Non-Complying Bank or otherwise, (iv) becomes subject to the control of an Official Body (other
than normal and customary supervision), or (v) is a Non-Consenting Bank referred to in Section 11.1
[Modifications, Amendments or Waivers] then in any such event the Borrower may, at its sole
expense, upon notice to such Bank and the Agent, require such Bank to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in, and consents required
by, Section 11.11 [Successors and Assigns]), all of its interests, rights and obligations under
this Agreement and the related Loan Documents to an assignee that shall assume such obligations
(which assignee may be another Bank, if a Bank accepts such assignment), provided that:




          (i) the Borrower shall have paid to the Agent the assignment fee specified in Section 11.11
[Successors and Assigns];




          (ii) such Bank shall have received payment of an amount equal to the outstanding principal of
its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder and under the other Loan Documents (including any amounts under Section
5.6.2 [Indemnity]) from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);




          (iii) in the case of any such assignment resulting from a claim for compensation under
Section 5.6.1 [Increased Costs Generally] or payments required to be made pursuant to Section 11.3
[Taxes], such assignment will result in a reduction in such compensation or payments thereafter;
and




          (iv) such assignment does not conflict with applicable Law.



A Bank shall not be required to make any such assignment or delegation if, prior thereto, as a
result of a waiver by such Bank or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.




          5.4.3 Change of Lending Office.




               Each Bank agrees that upon the occurrence of any event giving rise to increased costs or other
special payments under Section 4.4.2 [Illegality, Etc.] or 5.6.1 [Increased Costs, Etc.] with
respect to such Bank, it will if requested by the Borrower, use reasonable



48









 




efforts (subject to overall policy considerations of such Bank) to designate another lending
office for any Loans or Letters of Credit affected by such event, provided that such designation is
made on such terms that such Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving rise to the operation
of such Section. Nothing in this Section shall affect or postpone any of the Obligations of the
Borrower or any other Loan Party or the rights of the Agent or any Bank provided in this Agreement.




     5.5 Mandatory Prepayments.



          (i) Promptly (and in any event within three Business Days) after any officer of the Borrower
obtains knowledge of any Prepayment Event or any action of the Borrower or any other Person that
may be reasonably likely to result in a Prepayment Event, notice thereof in the form of an
Officer’s Certificate describing in reasonable detail the facts and circumstances giving rise to
such Prepayment Event or potential Prepayment Event, specifying the date such Prepayment Event
occurred or is expected to occur, and making reference to this Section and the right of the Banks
to require the prepayment of the Loans on the terms and conditions provided for in said Section.




          (ii) Change in Control. At any time following the occurrence of a Prepayment Event (subject
to the penultimate sentence of this Section 5.5(ii)), the Agent shall have the right at its option,
exercisable by the giving of notice to the Borrower (a “Prepayment Election Notice”), to elect to
require the prepayment by the Borrower of all Loans on the prepayment date specified by Agent in
such Prepayment Election Notice (which shall not in any event be less than 30 days nor more than 60
days after the date on which such holder shall have given such Prepayment Election Notice to the
Borrower). On the prepayment date specified in any Prepayment Election Notice given by Agent, the
Borrower will prepay all Loans. The right of the Agent to give a Prepayment Election Notice for
the prepayment of the Loans pursuant to this Section following a Prepayment Event shall expire at
the close of business in New York City on the one hundred-twentieth day following the later of (x)
the date of such Prepayment Event and (y) actual receipt by Agent of notice of such Prepayment
Event pursuant to Section 5.5(i). Notwithstanding any provision hereof to the contrary, no failure
on the part of the Agent to exercise its right to require the prepayment thereof by the Borrower
pursuant to this Section 5.5(ii) following a Prepayment Event shall be deemed a waiver of or
otherwise impair the rights of Agent pursuant to this Section 5.5(ii) in respect of any other
events or circumstances constituting a Prepayment Event.





          (a) “Prepayment Event” shall mean (i) any Loan Party’s Change in Control, or (ii) any
Control Event with respect to the Borrower or any of the other Loan Parties or (iii) any
Parent Change in Control with respect to the Parent.




          (b) “Borrower’s’ Change in Control” shall be deemed to have occurred if there is any
change subsequent to the Closing Date in the Persons (as such term is used in Section 13(d)
and Section 14(d)(2) of the Exchange Act as in effect on the Closing Date) who are direct
owners of an equity interest in the Borrower or any of the other Loan Parties.




          (c) “Control Event” means:



49









 






          (i) the execution by the Parent or any of its Subsidiaries or Affiliates, or
the Borrower or any of its Subsidiaries or Affiliates, of any agreement with
respect to any proposed transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be expected to result in a
Parent Change in Control or an Borrowers’ Change in Control, or




          (ii) the execution of any written agreement which, when fully performed by the
parties thereto, would result in a Parent Change in Control or a Loan Party’s Change
in Control.



     5.6 Additional Compensation in Certain Circumstances.



          5.6.1 Increased Costs or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.




               If any Law, guideline or interpretation or any change in any Law, guideline or interpretation
or application thereof by any Official Body charged with the interpretation or administration
thereof or compliance with any request or directive (whether or not having the force of Law) of any
central bank or other Official Body:



          (i) subjects any Bank to any tax or changes the basis of taxation with respect to this
Agreement, the Notes, the Loans or payments by the Borrower of principal, interest, Commitment
Fees, or other amounts due from the Borrower hereunder or under the Notes (except for taxes on the
overall net income of such Bank),




          (ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirement
against credits or commitments to extend credit extended by, or assets (funded or contingent) of,
deposits with or for the account of, or other acquisitions of funds by, any Bank, or




          (iii) imposes, modifies or deems applicable any capital adequacy or similar requirement
(A) against assets (funded or contingent) of, or letters of credit, other credits or commitments to
extend credit extended by, any Bank, or (B) otherwise applicable to the obligations of any Bank
under this Agreement,



and the result of any of the foregoing is to increase the cost to, reduce the income receivable by,
or impose any expense (including loss of margin) upon any Bank with respect to this Agreement, the
Notes or the making, maintenance or funding of any part of the Loans (or, in the case of any
capital adequacy or similar requirement, to have the effect of reducing the rate of return on any
Bank’s capital, taking into consideration such Bank’s customary policies with respect to capital
adequacy) by an amount which such Bank in its sole discretion deems to be material, such Bank shall
from time to time notify the Borrower and the Agent of the amount determined in good faith (using
any averaging and attribution methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income, additional expense or reduced
rate of return. Such notice shall set forth in reasonable detail the basis for such determination.
Such amount shall be due and payable by the Borrower to such Bank ten (10) Business Days after
such notice is given.




50









 








          5.6.2 Indemnity.




               In addition to the compensation required by Section 5.6.1 [Increased Costs, Etc.], the
Borrower shall indemnify each Bank against all liabilities, losses or expenses (including loss of
margin, any loss or expense incurred in liquidating or employing deposits from third parties and
any loss or expense incurred in connection with funds acquired by a Bank to fund or maintain Loans
subject to a Libor-Rate Option) which such Bank sustains or incurs as a consequence of any



          (i) payment, prepayment, conversion or renewal of any Loan to which a Libor-Rate Option
applies on a day other than the last day of the corresponding Interest Period (whether or not such
payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or
prepayment is then due),




          (ii) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise)
in whole or part any Loan Requests under Section 2.5 [Revolving Credit Loan Requests] or
Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.4 [Voluntary
Prepayments], or




          (iii) default by the Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure of the Borrower to
pay when due (by acceleration or otherwise) any principal, interest, Commitment Fee or any other
amount due hereunder.




          If any Bank sustains or incurs any such loss or expense, it shall from time to time notify the
Borrower of the amount determined in good faith by such Bank (which determination may include such
assumptions, allocations of costs and expenses and averaging or attribution methods as such Bank
shall deem reasonable) to be necessary to indemnify such Bank for such loss or expense. Such
notice shall set forth in reasonable detail the basis for such determination. Such amount shall be
due and payable by the Borrower to such Bank ten (10) Business Days after such notice is given.




          5.6.3 Borrowing Base Exceeded.




          In the event that at any time the Revolving Facility Usage shall exceed the Borrowing Base,
the Borrower shall immediately make a mandatory payment of principal to the Agent in an amount
equal to or greater than such amount as shall be necessary to cause the Revolving Facility Usage to
be less than the Borrowing Base, and the Agent shall apply such payment to the Revolving Credit
Loans of the Banks based upon their Revolving Credit Ratable Share.




     5.7 Settlement Date Procedures.



          In order to minimize the transfer of funds between the Banks and the Agent, the Borrower may
borrow, repay and reborrow Swing Loans and PNC Bank may make Swing Loans as provided during the
period between Settlement Dates. Not later than 12:00 p.m. on each Settlement Date, the Agent
shall notify each Bank of its Ratable Share of the total of the Revolving Credit Loans and the
Swing Loans (each a “Required Share”). Prior to 3:00 p.m., Pittsburgh time, on such Settlement
Date, each Bank shall pay to the Agent the amount equal to




51









 




the difference between its Required Share and its Revolving Credit Loans, and the Agent shall
pay to each Bank its Ratable Share of all payments made by the Borrower to the Agent with respect
to the Revolving Credit Loans. The Agent shall also effect settlement in accordance with the
foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on the date any
mandatory prepayment is due under this Agreement and may at its option effect settlement on any
other Business Day. These settlement procedures are established solely as a matter of
administrative convenience, and nothing contained in this Section 5.7 shall relieve the Banks of
their obligations to fund Revolving Credit Loans on dates other than a Settlement Date. The Agent
may at any time at its option for any reason whatsoever require each Bank to pay immediately to the
Agent such Bank’s Ratable Share of the outstanding Revolving Credit Loans and each Bank may at any
time require the Agent to pay immediately to such Bank its Ratable Share of all payments made by
the borrower to the Agent with respect to the Revolving Credit Loans.




     5.8 Presumptions by Agent.



          Unless the Agent shall have received notice from the Borrower prior to the date on which any
payment is due to the Agent for the account of the Banks or the Issuing Bank hereunder that the
Borrower will not make such payment, the Agent may assume that the Borrower has made such payment
on such date in accordance herewith and may, in reliance upon such assumption, distribute to the
Banks or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has
not in fact made such payment, then each of the Banks or the Issuing Bank, as the case may be,
severally agrees to repay to the Agent forthwith on demand the amount so distributed to such Bank
or the Issuing Bank, with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Agent, at the greater of the Federal
Funds Effective Rate and a rate determined by the Agent in accordance with banking industry rules
on interbank compensation.




     5.9 Interest Payment Dates. 



               Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on
each Payment Date. Interest on Loans to which the LIBOR Rate Option applies shall be due and
payable on the last day of each Interest Period for those Loans and, if such Interest Period is
longer than three (3) Months, also on the 90th day of such Interest Period. Interest on mandatory
prepayments of principal under Section 5.5 [Mandatory Prepayments] shall be due on the date such
mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary
Obligation shall be due and payable on demand after such principal amount or other monetary
Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or
otherwise).



6. REPRESENTATIONS AND WARRANTIES




     6.1 Representations and Warranties.



          The Borrower and each Guarantor, jointly and severally, represent and warrant to the Agent and
each of the Banks as follows:




          6.1.1 Organization and Qualification.




52









 








               The Borrower is a limited liability company, and each other Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its jurisdiction of
organization. Each Loan Party has the lawful power to own or lease its properties and to engage in
the business it presently conducts or proposes to conduct. Each Loan Party is duly licensed or
qualified and in good standing in each jurisdiction listed with respect to it on Schedule
6.1.1 and in all other jurisdictions where the property owned or leased by it or the nature of
the business transacted by it or both makes such licensing or qualification necessary; provided,
however, no Loan Party shall be in breach of this Section in the event that a Loan Party
inadvertently failed to obtain or maintain a qualification or license so long as such failure (i)
either alone or when considered together with all other such failures, has not resulted and could
not reasonably be expected to result in a Material Adverse Change, (ii) is promptly remedied upon a
Loan Party becoming aware of such failure and (iii) does not adversely affect any material portion
of the Collateral.



          6.1.2 Capitalization and Ownership.




               All of the member interests in the Borrower (the “Member Interests”) are owned as indicated on
Schedule 6.1.2. All of the Member Interests have been validly issued and are fully paid
and are nonassessable. There are no options, warrants or other rights outstanding to purchase any
such Member Interests except as indicated on Schedule 6.1.2.



          6.1.3 Subsidiaries.




               Schedule 6.1.3 states (i) the name of each of the Borrower’s Subsidiaries, (ii) each
such Subsidiary’s jurisdiction of incorporation or formation, (iii) its authorized capital stock,
and the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) if it is a
corporation, its outstanding partnership interests (referred to herein as “Partnership Interests”)
if it is a partnership and its outstanding limited liability company interests, interest assigned
to managers thereof and voting rights associated therewith (the “LLC Interests” and together with
the Subsidiary Shares and the Partnership Interests, the “Subsidiary Ownership Interests”) if it is
a limited liability company, and (iv) the owner of all such Subsidiary’s Ownership Interests. The
Borrower and each Subsidiary of the Borrower has good and marketable title to all of the Subsidiary
Ownership Interests it purports to own, free and clear in each case of any Lien other than
Permitted Liens. All Subsidiary Ownership Interests have been validly issued, and all Subsidiary
Ownership Interests are fully paid and nonassessable. There are no options, warrants or other
rights outstanding to purchase any such Subsidiary Ownership Interests. No Subsidiary is a party
to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than (i)
this Agreement, (ii) customary limitations imposed by corporate law statutes and (iii) in the case
of TWCC, the NRGT Documents) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Borrower or any of its
Subsidiaries that owns any Subsidiary Ownership Interests of such Subsidiary.



          6.1.4 Power and Authority.




               Each Loan Party has full power to enter into, execute, deliver and carry out this Agreement
and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and
all such actions have been duly authorized by all



53









 




necessary proceedings on its part (including all necessary action, if any, on the part of the
owners of its Subsidiary Ownership Interests).




          6.1.5 Validity and Binding Effect.




               This Agreement has been duly authorized and validly executed and delivered by each Loan Party,
and each other Loan Document which any Loan Party is required to execute and deliver on or after
the date hereof will have been duly authorized, executed and delivered by such Loan Party on or
prior to the Closing Date. This Agreement and each other Loan Document constitutes, or will
constitute, a legal, valid and binding obligation of each Loan Party which is or will be a party
thereto on and after its date of delivery thereof, enforceable against such Loan Party in
accordance with its terms, except to the extent that enforceability of this Agreement or any such
other Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditors’ rights generally or by general equitable
principles limiting the availability of the right of specific performance or other equitable
remedies.



          6.1.6 No Conflict.




               Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan
Party nor the consummation of the transactions herein or therein contemplated nor compliance with
the terms and provisions hereof or thereof by any Loan Party will conflict with, constitute a
default under or result in any breach of (i) the terms and conditions of the Organizational
Documents of any Loan Party or (ii) any Law or any material Coal Supply Contract, Coal Lease or
other agreement or instrument or any order, writ, judgment, injunction or decree to which any Loan
Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or
to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance
whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its
Subsidiaries (other than Liens granted under the Loan Documents and Liens granted under the Note
Purchase Documents).



          6.1.7 Litigation.




               There are no actions, suits, proceedings or investigations pending or, to the knowledge of the
Borrower or any Guarantors, threatened against any Loan Party or any Subsidiary of such Loan Party
at law or equity before any Official Body, except those described on Schedule 6.1.7, none
of which individually or in the aggregate could be reasonably expected to result in any Material
Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of
any order, writ, injunction or decree of any Official Body (including without limitation
Environmental Laws or the USA Patriot Act) which either individually or in the aggregate could
reasonably be expected to result in a Material Adverse Change.



          6.1.8 Title to Properties.




               Schedule 6.1.8 identifies all of the real property interests, both owned and leased,
of the Loan Parties and sets forth, with respect to each such real property interest the name of
the Loan Party which is the owner or lessee thereof, as the case may be, and, if leased, the name
of the owner and lessor thereof. Each Loan Party and each Subsidiary of each Loan Party has good
and marketable title to all real estate owned by it and a valid leasehold interest in



54









 




all properties, assets and other rights which it purports to lease or which are reflected as
owned or leased on its books and records, free and clear of all Liens and encumbrances except
Permitted Liens, and subject to the terms and conditions of the applicable leases; provided,
however, a Loan Party shall not be in breach of the foregoing in the event that (i) it fails to own
a valid leasehold interest which, either considered alone or together with all other such valid
leaseholds which it fails to own, is not material to the continued operations of such Loan Party
as contemplated by the Financial Projections or its mining plan as in effect on the Closing Date or
(ii) the Loan Party’s interest in a leasehold is less than fully marketable because the consent of
the lessor to future assignments has not been obtained. All leases of property which are material
to the continued operations of each Loan Party as contemplated by the Financial Projections and its
mining plan as in effect on the Closing Date are in full force and effect without the necessity for
any consent which has not previously been obtained.




          6.1.9 Financial Statements.




          (i) Historical Statements. The Borrower has delivered to each Bank copies of (a) the audited
consolidated year-end financial statements of the Borrower and its Subsidiaries described in item 1
of Schedule 6.1.9 (the “Annual Statements”), and (b) the unaudited consolidated interim
financial statements of the Borrower and its Subsidiaries described in item 2 of Schedule
6.1.9 (the “Interim Statements” and, together with the Annual Statements, the “Historical
Statements”). The Historical Statements (including in each case the related schedules and notes)
fairly present in all material respects the consolidated financial position of the Borrower and its
Subsidiaries as of the respective dates specified in Schedule 6.1.9 and the consolidated
results of their operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods involved except as
specified in the notes thereto (subject, in the case of the Interim Statements, to normal year-end
adjustments and the absence of footnotes). Neither the restatement by Parent of its consolidated
financial statements as at the end of and for the fiscal year ended December 31, 2006, as set forth
in Parent’s report on Form 10-K/A, Amendment No. 2 to Form 10-K, for such fiscal year, or as at the
end of and for the respective fiscal quarters ended March 31, 2007 and June 30, 2007, as set forth
in Parent’s reports on Form 10-Q/A, Amendment No. 1 to Form 10-Q, for such respective fiscal
quarters, nor the restatement by the Borrower of its consolidated financial statements as at the
end of and for the fiscal year of the Borrower ended December 31, 2006 nor the events and
circumstances necessitating any of such restatements, have resulted or could reasonably be expected
to result in a Material Adverse Change.




          (ii) Financial Projections. The Borrower has delivered to each Bank copies of the Financial
Projections. The Financial Projections represent a reasonable range of possible results in light
of the history of the business, present and foreseeable conditions and the intentions of the
Borrower’s management. The Financial Projections represent the Borrower’s good faith estimate of
future performance based upon historical financial information and upon assumptions which were
reasonable at the time of the preparation thereof and which remain reasonable as of the date
hereof.




          (iii) Accuracy of Financial Statements; Material Liabilities. Except for liabilities arising
in the ordinary course of business and the Indebtedness arising in connection with the Notes and
the Note Purchase Documents since the date of the last Historical Statement, neither the Borrower
nor any Subsidiary of the Borrower has incurred any liabilities, contingent or otherwise, or
forward or long-term commitments that are not disclosed in the Historical





55









 







Statements or in the notes thereto or on Schedule 6.1.9, and except as disclosed
therein there are no unrealized or anticipated losses from any commitments of the Borrower or any
Subsidiary of the Borrower which either individually or in the aggregate could reasonably be
expected to result in a Material Adverse Change. Since December 31, 2007, no Material Adverse
Change has occurred. As of the Closing Date, the Borrower and its Subsidiaries do not have any
material liabilities that are not disclosed on the Historical Statements or in the other Disclosure
Documents.




          6.1.10 Use of Proceeds; Margin Stock.




               6.1.10.1 General.



                    The Loan Parties intend to use the proceeds of the Loans in accordance with Sections 2.8 and
8.1.11.



               6.1.10.2 Margin Stock.



                    None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage
principally, or as one of its important activities, in the business of extending credit for the
purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within
the meaning of Regulation U). No part of the proceeds of any Loan or any sale of the Term Notes
under the Note Purchase Agreement has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such
purpose, or for any purpose which entails a violation of or which is inconsistent with the
provisions of the regulations of the Board of Governors of the Federal Reserve System. None of the
Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such
amounts that more than 10% of the reasonable value of the assets of any Loan Party or Subsidiary of
any Loan Party are or will be represented by margin stock.



               6.1.10.3 Section 20 Subsidiaries.



                    The Loan Parties do not intend to use and shall not use any portion of the proceeds of the
Loans, directly or indirectly, to purchase during the underwriting period, or for thirty (30) days
thereafter, Ineligible Securities being underwritten by a Section 20 Subsidiary.



          6.1.11 Full Disclosure.




               The Borrower, through its agent, PNC Capital Markets LLC, has delivered to the Banks a copy of
a Confidential Offering Memorandum, dated February, 2008 (the “Memorandum”), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the
general nature of the business and principal properties of the Borrower and its Subsidiaries. This
Agreement (including the schedules hereto), the Memorandum, the documents, certificates or other
writings delivered to the Banks by or on behalf of any Loan Party in connection with the
transactions contemplated hereby (including, without limitation, a report entitled “Westmoreland
Mining LLC Business Plan Reasonableness Review”, dated February 14, 2008, prepared by Norwest
Corporation) and the financial



56









 




statements listed in Schedule 6.1.9 (collectively the “Disclosure Documents”), taken
as a whole, do not contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading in light of the circumstances under
which they were made. Except as disclosed in the Disclosure Documents, since December 31, 2007,
there has been no change in the financial condition, operations, business, properties or prospects
of the Borrower or any Subsidiary except changes which, neither individually nor in the aggregate,
constitute or could reasonably be expected to constitute or give rise to a Material Adverse Change.
There is no fact known to any Loan Party that could reasonably be expected to constitute or give
rise to a Material Adverse Change that has not been set forth in the Disclosure Documents. As of
the Closing Date, the Borrower and its Subsidiaries do not have any material liabilities that are
not disclosed in this Agreement or in the Disclosure Documents.




          6.1.12 Taxes.




               Except as described on Schedule 6.1.12, all federal, state, local and other tax
returns required to have been filed with respect to each Loan Party and each Subsidiary of each
Loan Party have been filed, and payment or adequate provision for the payment of all taxes, fees,
assessments and other governmental charges which have or may become due pursuant to said returns or
to assessments received has been made, except to the extent that such taxes, fees, assessments and
other charges are being contested in good faith by appropriate proceedings diligently conducted and
for which such reserves or other appropriate provision, if any, as shall be required by GAAP shall
have been made. As of the date hereof, there are no agreements or waivers extending the statutory
period of limitations applicable to any federal income tax return of any Loan Party or Subsidiary
of any Loan Party for any period.



          6.1.13 Consents and Approvals.




               Except for the filing of the financing statements and the Mortgages (Noteholders) in the
appropriate state and county filing offices, and filings with the U.S. Patent and Trademark Office
and the U.S. Copyright Office, no consent, approval, exemption, order or authorization of, or a
registration or filing with, any Official Body or any other Person is required by any Law or any
agreement in connection with the execution, delivery and performance by any Loan Party of this
Agreement and the other Loan Documents, other than those which shall have been obtained or made on
or prior to the Closing Date, except as listed on Schedule 6.1.13 Except for consents,
approvals, exemptions, orders or authorizations, and registrations or filings that are obtainable
or may be made in the ordinary course of business of the Loan Parties without significant expense
or delay, no consent, approval, exemption, order or authorization of, or registration or filing
with, any Official Body or any other Person is required by any Law or any agreement material to the
business of any Loan Party in connection with the conduct by each Loan Party of its business.



          6.1.14 No Event of Default; Compliance with Instruments.




               No event has occurred and is continuing and no condition exists or will exist after giving
effect to the issue and sale of the Notes and the incurrence of Indebtedness evidenced thereby
pursuant to the Note Purchase Agreement and the borrowings or other extensions of credit to be made
on the Closing Date under or pursuant to the Loan Documents and the Financing Documents which
constitutes an Event of Default or Potential Default. None of the Loan Parties or any Subsidiaries
of any Loan Party is in violation of (i) any term of its



57









 




Organizational Documents or (ii) any material agreement or instrument to which it is a party
or by which it or any of its properties may be subject or bound where such violation would, either
alone or together with all other such violations, constitute or be reasonably likely to constitute
a Material Adverse Change. No default or event of default or basis for acceleration exists or,
after giving effect to the borrowing or other extensions of credit made pursuant hereto, will exist
under any instrument or agreement evidencing, providing for the issuance or securing of or
otherwise relating to any Indebtedness of the Borrower or of any other Loan Party.




          6.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.




               Each Loan Party and each Subsidiary of each Loan Party owns or possesses all material patents,
trademarks, service marks, trade names, copyrights, proprietary software, licenses, registrations,
franchises, permits, authorizations of Official Bodies and rights necessary to own and operate its
properties and to carry on its business as presently conducted and planned to be conducted by such
Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of
others. All material patents, trademarks, service marks, trade names, copyrights, proprietary
software, licenses, registrations and franchises of each Loan Party and each Subsidiary of each
Loan Party are listed and described on Schedule 6.1.15. To the best knowledge of each Loan
Party, there is no material violation by any Person of any right of any loan Party with respect to
any patent, copyright, proprietary software, service mark, trademark, trade name or other right
owned or used by any Loan Party.



          6.1.16 Security Interests.




               Upon (i) the due and proper filing of financing statements relating to the security interests
referred to below in each office and in each jurisdiction where required in order to perfect such
security interests, (ii) the taking possession by the Collateral Agent of any stock certificates or
other certificates evidencing the Pledged Collateral and (iii) recordation of the Patent, Trademark
and Copyright Security Agreement in the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, the Liens and security interests granted to the Collateral
Agent for the benefit of the Banks pursuant to the Security Documents will constitute Prior
Security Interests under the Uniform Commercial Code as in effect in each applicable jurisdiction
(the “Uniform Commercial Code”) to the extent such Liens and security interests can be perfected by
such filings or possession entitled to all the rights, benefits and priorities provided by the
Uniform Commercial Code except for the Prior Security Interest granted by the Loan Parties in their
assets other than Accounts and Inventory in favor of the Purchasers and except for other Permitted
Liens of the types described in clauses (i), (ii), (iii), (v), (vi) and (ix) of the definition of
that term. There will be upon execution and delivery of the Security Documents, such filings and
such taking of possession, no necessity for any further action in order to preserve, protect and
continue such rights, except the filing of continuation statements with respect to such financing
statements within six months prior to each five-year anniversary of the filing of such financing
statements. All filing fees and other expenses in connection with each such action have been or
will be paid by the Borrower.



          6.1.17 Mortgage Liens.




               The Liens granted to the Collateral Agent for the benefit of the Banks pursuant to each
Mortgage will constitute, upon due and proper recordation of such Mortgage, a valid first priority
Lien, subject only to the Lien in favor of the Purchasers securing obligations



58









 




under the Note Purchase Agreement and Permitted Liens of the types described in clauses (i),
(ii), (iii), (v), (vi) and (ix) of the definition of that term under applicable law, but only to
the extent that applicable law permits a mortgage lien to attach thereto the right, title and
interest of the Loan Party party to such Mortgage in and to the real property described therein.
All such action as will be necessary or advisable to establish such Liens of the Collateral Agent
and the priority thereof as described in the preceding sentence will be taken at or prior to the
time required for such purpose, and there will be as of the date of execution and delivery of the
Mortgages no necessity for any further action in order to protect, preserve and continue such Lien
and such priority.




          6.1.18 Status of the Pledged Collateral.




               All the Subsidiary Ownership Interests and LLC Interests included in the Pledged Collateral to
be pledged pursuant to the Pledge Agreement are validly issued and nonassessable and owned
beneficially and of record by the pledgor free and clear of any Lien or restriction on transfer,
except for Permitted Liens of the types described in clauses (i) and (vi) of the definition of that
term or as otherwise provided by the Pledge Agreement and except as the right of the Collateral
Agent to dispose of the Subsidiary Ownership Interests or LLC Interests may be limited by the
Securities Act and the regulations promulgated by the Securities and Exchange Commission thereunder
and by applicable state securities laws. There are no shareholder, partnership, limited liability
company or other agreements or understandings with respect to the Subsidiary Ownership Interests or
LLC Interests included in the Pledged Collateral except for the partnership agreements and limited
liability company agreements described on Schedule 6.1.18. The Parent and the Loan Parties
have delivered true and correct copies of such partnership agreements and limited liability company
agreements to the Agent and each Bank.



          6.1.19 Insurance.




               Schedule 6.1.19 lists all insurance policies and other bonds to which any Loan Party
or Subsidiary of any Loan Party is a party, all of which are valid and in full force and effect.
No notice has been given or claim made and no grounds exist to cancel or avoid any of such policies
or bonds or to reduce the coverage provided thereby. Such policies and bonds provide adequate
coverage from reputable and financially sound insurers in amounts sufficient to insure the assets
and risks of each Loan Party and each Subsidiary of each Loan Party in accordance with prudent
business practice in the industry of the Loan Parties and their Subsidiaries.



          6.1.20 Compliance with Laws.




               The Loan Parties and their Subsidiaries are in compliance in all material respects with all
applicable Laws (other than Environmental Laws which are specifically addressed in
Section 6.1.26 [Environmental Matters]) in all jurisdictions in which any Loan Party or
Subsidiary of any Loan Party is presently or will be doing business except where the failure to do
so would not, either alone or together with all other such failures, constitute or be reasonably
likely to result in a Material Adverse Change.



          6.1.21 Material Contracts; Burdensome Restrictions.




59









 








               Schedule 6.1.21 lists all material contracts relating to the business operations of
each Loan Party and each Subsidiary of any Loan Party, including, without limitation, all Coal
Supply Contracts, and all employee benefit plans and Labor Contracts. Except as set forth on
Schedule 6.1.21, all such material contracts are valid, binding and enforceable upon such
Loan Party or Subsidiary and each of the other parties thereto in accordance with their respective
terms, and there is no default thereunder on the part of any Loan Party or Subsidiary of any Loan
Party thereto, or to the Loan Parties’ knowledge, on the part of any other party thereto. None of
the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law, which could, either alone or
together with all other such obligations, restriction and requirements, could reasonably be
expected to result in a Material Adverse Change.



          6.1.22 Investment Companies; Regulated Entities.




               None of the Loan Parties or any Subsidiaries of any Loan Party is an “investment company”
registered or required to be registered under the Investment Company Act of 1940 or under the
“control” of an “investment company” as such terms are defined in the Investment Company Act of
1940 and shall not become such an “investment company” or under such “control.” None of the Loan
Parties or any Subsidiaries of any Loan Party is subject to any other federal or state statute or
regulation limiting its ability to incur Indebtedness for borrowed money.



          6.1.23 Intentionally Omitted.




          6.1.24 Plans and Benefit Arrangements. 




               (i) The Borrower and each other member of the ERISA Group are in compliance in all material
respects with all applicable provisions of ERISA with respect to all Benefit Arrangements, Plans
and Multiemployer Plans, except as set forth in subparagraph (a) of Schedule 6.1.24. There
has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the
Borrower’s knowledge, with respect to any Multiemployer Plan or Multiple Employer Plan, which could
reasonably be expected to result in any substantial obligation on the part of the Borrower or any
other member of the ERISA Group, except as set forth in subparagraph (a) of Schedule
6.1.24. The matters set forth in subparagraph (a) of Schedule 6.1.24 relate to members
of the ERISA Group other than the Borrower and the Loan Parties and will not result in a Material
Adverse Change. The Borrower and all other members of the ERISA Group have made when due any and
all payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple
Employer Plan or any Law pertaining thereto, except where the failure to make any such payment
could not reasonably be expected to result in any substantial obligation to the Borrower or any
member of the ERISA Group or otherwise result in a Material Adverse Change. With respect to each
Plan and Multiemployer Plan, the Borrower and each other member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding standards of ERISA,
(ii) have not incurred any liability to the PBGC, and (iii) have not had asserted against them any
penalty for failure to fulfill the minimum funding requirements of ERISA.



               (ii) To the Borrower’s knowledge, each Multiemployer Plan and Multiple Employer Plan is able
to pay benefits thereunder when due.



60









 





               (iii) Neither the Borrower nor any other member of the ERISA Group has instituted or intends
to institute proceedings to terminate any Plan where such termination would result in any
substantial obligation to the Borrower or any member of the ERISA Group or otherwise result in a
Material Adverse Change.



               (iv) No event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has occurred or
is reasonably expected to occur with respect to any Plan, except as set forth in subparagraph (d)
of Schedule 6.1.24, and no amendment with respect to which security is required under
Section 307 of ERISA has been made or is reasonably expected to be made to any Plan.



               (v) Each Plan is Adequately Funded.



               (vi) Neither the Borrower nor any other member of the ERISA Group has incurred or reasonably
expects to incur any substantial withdrawal obligation under ERISA to any Multiemployer Plan or
Multiple Employer Plan (other than the obligations of Parent, if any, described in subparagraph (f)
of Schedule 6.1.24, for which neither the Borrower nor any other Loan Party is liable, or
not liable in a manner or to an extent that has resulted or will result in a Material Adverse
Change). Neither the Borrower nor any other member of the ERISA Group has been notified by any
Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan
has been terminated within the meaning of Title IV of ERISA and, to the Borrower’s knowledge, no
Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or
terminated, within the meaning of Title IV of ERISA.



               (vii) To the extent that any Benefit Arrangement is insured, the Borrower and all other
members of the ERISA Group have paid when due all premiums required to be paid for all periods
through the Closing Date, except where the failure to do so could not reasonably be expected to
result in any substantial obligation on the part of the Borrower or any member of the ERISA Group
or otherwise result in a Material Adverse Change. To the extent that any Benefit Arrangement is
funded other than with insurance, the Borrower and all other members of the ERISA Group have made
when due all contributions required to be paid for all periods through the Closing Date, except
where the failure to do so could not reasonably be expected to result in any substantial obligation
on the part of the Borrower or any member of the ERISA Group or otherwise result in a Material
Adverse Change.



               (viii) All Plans and Benefit Arrangements have been administered, in all material respects, in
accordance with their terms and applicable Law, except as set forth in subparagraph (h) of
Schedule 6.1.24. The matters set forth in subparagraph (h) of Schedule 6.1.24
relate to members of the ERISA Group other than the Borrower and the Loan Parties and will not
result in a Material Adverse Change.



               (ix) The execution and delivery of this Agreement and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of
the Internal Revenue Code.



          6.1.25 Employment Matters.




61









 








               Each of the Loan Parties and each of their Subsidiaries is in compliance with the Labor
Contracts and all applicable federal, state and local labor and employment Laws including those
relating to equal employment opportunity and affirmative action, labor relations, minimum wage,
overtime, child labor, medical insurance continuation, worker adjustment and relocation notices,
immigration controls and worker and unemployment compensation, where the failure to comply would
constitute or result in a Material Adverse Change. There are no outstanding grievances,
arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened
strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of any of the
Loan Parties or any of their Subsidiaries which in any case would constitute a Material Adverse
Change. The Borrower has made available to the Agent true and correct copies of each of the Labor
Contracts.



          6.1.26 Environmental Matters.




               Except for the matters disclosed on Schedule 6.1.26:



          (i) Except for matters that, considered either individually or in the aggregate, have no
reasonable likelihood of (a) materially disrupting the current or projected mining operations of
the Loan Parties or resulting in any substantial obligation on the part of the Loan Parties or (b)
otherwise resulting in a Material Adverse Change, none of the Loan Parties has received any
Environmental Complaint, whether directed or issued to any Loan Party or relating or pertaining to
any prior owner, operator or occupant of the Property, or (c) has any reason to believe that it
might receive an Environmental Complaint.




          (ii) No activity of any Loan Party at the Property is being or has been conducted in violation
of any Environmental Law or Required Environmental Permit and to the knowledge of any Loan Party no
activity of any prior owner, operator or occupant of the Property was conducted in violation of any
Environmental Law, except for activities that, considered either individually or in the aggregate,
have no reasonable likelihood of (a) materially disrupting the current or projected mining
operations of the Loan Parties or (b) resulting in any substantial obligation on the part of the
Loan Parties or (c) otherwise resulting in a Material Adverse Change.




          (iii) There are no Regulated Substances present on, in, under, or emanating from, or to any
Loan Party’s knowledge emanating to, the Property or any portion thereof which result in
Contamination except for such Regulated Substances that have no reasonable likelihood of (a)
materially disrupting the current or projected mining operations of the Loan Parties or (b)
resulting in any substantial obligation on the part of the Loan Parties or (c) otherwise resulting
in a Material Adverse Change.




          (iv) Each Loan Party has all Required Environmental Permits and all such Required
Environmental Permits are in full force and effect, except where the failure to have any Required
Environmental Permits, either in any one case or considered together with other such failures, has
no reasonable likelihood of materially disrupting the projected mining operations of the Loan
Parties or resulting in any substantial obligation on the part of the Loan Parties or otherwise
resulting in a Material Adverse Change.




          (v) Each Loan Party has submitted to an Official Body and/or maintains, as appropriate, all
Required Environmental Notices, except for instances or failure to so submit





62









 







and/or maintain Required Environmental Notices that have no reasonable likelihood of (a)
materially disrupting the current or projected mining operations of the Loan Parties or (b)
resulting in any substantial obligation to the Loan Parties or (c) otherwise resulting in a
Material Adverse Change.




          (vi) No structures, improvements, equipment, fixtures, impoundments, pits, lagoons or
aboveground or underground storage tanks located on the Property contain or use Regulated
Substances except (1) in compliance with Environmental Laws and Required Environmental Permits or
(2) where the improper presence or use of Regulated Substances has no reasonable likelihood (a) of
materially disrupting the current or projected mining operations of the Loan Parties or (b)
resulting in any substantial obligation on the part of the Loan Parties or (c) otherwise resulting
in a Material Adverse Change. To the knowledge of each Loan Party, no structures, improvements,
equipment, fixtures, impoundments, pits, lagoons or aboveground or underground storage tanks of
prior owners, operators or occupants of the Property contained or used, except in material
compliance with Environmental Laws, Regulated Substances or otherwise were operated or maintained
by any such prior owner, operator or occupant except in compliance in all material respects with
Environmental Laws.




          (vii) To the knowledge of each Loan Party, no facility or site to which any Loan Party, either
directly or indirectly by a third party, has sent Regulated Substances for storage, treatment,
disposal or other management has been or is being operated in violation of Environmental Laws or
pursuant to Environmental Laws is identified or proposed to be identified on any list of
contaminated properties or other properties which pursuant to Environmental Laws are the subject of
an investigation, cleanup, removal, remediation or other response action by an Official Body except
where such violation, either alone or considered together with all other such violations, has no
reasonable likelihood of (a) materially disrupting the current or projected mining operations of
the Loan Parties or (b) resulting in any substantial obligation on the part of the Loan Parties or
(c) otherwise resulting in a Material Adverse Change.




          (viii) No portion of the Property is identified or to the knowledge of any Loan Party proposed
to be identified on any list of contaminated properties or other properties which pursuant to
Environmental Laws are the subject of an investigation or remediation action by an Official Body,
nor to the knowledge of any Loan Party is any property adjoining or in the proximity of the
Property identified or proposed to be identified on any such list.




          (ix) No portion of the Property constitutes an Environmentally Sensitive Area, except for
portions of the Property that have no reasonable likelihood, by reason of the use or occupancy
thereof by any Loan Party or otherwise, of (a) materially disrupting the current or projected
mining operations of the Loan Parties or (b) resulting in any substantial obligation on the part of
the Loan Parties or (c) otherwise resulting in a Material Adverse Change.




          (x) No Lien or other encumbrance authorized by Environmental Laws exists against the Property
and none of the Loan Parties has any reason to believe that such a Lien or encumbrance may be
imposed.




          (xi) None of the matters disclosed on Schedule 6.1.26, considered either alone or
together with any or all such matters, has resulted or would be reasonably expected to result in a
Material Adverse Change.




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          6.1.27 Senior Debt Status.




               The Obligations of each Loan Party under this Agreement, the Notes, the Guaranty Agreement and
each of the other Loan Documents to which it is a party do rank and will rank at least pari passu
in priority of payment with all other Indebtedness of such Loan Party except Indebtedness of such
Loan Party to the extent secured by Permitted Liens. There is no Lien upon or with respect to any
of the properties or income of any Loan Party or Subsidiary of any Loan Party which secures
Indebtedness or other obligations of any Person except for Permitted Liens.



          6.1.28 Transactions with Affiliates.




               Except as set forth on Schedule 6.1.28 or as permitted in Section 8.2.8 [Affiliate
Transaction] herein, there are no loans, leases, royalty agreements or other agreements,
arrangements or other transactions between any of the Loan Parties and any Affiliate.



          6.1.29 Permit Blocks.




               No Loan Party has been barred for a period in excess of fourteen (14) consecutive days from
receiving surface mining or underground mining permits pursuant to the permit block provisions of
the Surface Mining Control and Reclamation Act, 30 U.S.C. § § 1201 et seq., and the regulations
promulgated with respect thereto, or any corresponding state laws or regulations.



          6.1.30 Status under Certain Statutes.




               Neither the Borrower nor any other Loan Party is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the
ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.



          6.1.31 Coal Leases.




               The Coal Leases constitute all of the leases owned by the Loan Parties pertaining to the
extraction, mining or removal of coal. The Loan Parties have made available to the Banks a true,
correct and complete copy of each of the Coal Leases, except for those to which TWCC is a party.
Each of the Coal Leases is in full force and effect, and has not been amended or modified from the
copy of the Coal Lease provided to the Banks (if so provided), except for Permitted Modifications.
None of the Loan Parties is in default of any of its obligations under any of the material Coal
Leases, and, to the best of each Loan Party’s knowledge and belief, the lessors thereunder are not
in default under any such lessor’s obligations under the Coal Leases. Except as set forth on
Schedule 6.1.31, to the Borrower’s knowledge, no material amount of royalties are currently
past due under any of the Coal Leases.



          6.1.32 Qualifications as Lessee, Coal Acreage Limitations.




               Except as set forth on Schedule 6.1.32, each of the Loan Parties are qualified in
every material respect, including limitations and parameters imposed in 43 C.F.R. Part 3400, to
take, hold, own and control federal coal and mineral leases, and is not in violation of any
material limitations or parameters imposed in 43 C.F.R. Part 3400.



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          6.1.33 Single Purpose Entities.




          (i) The Borrower has been at all times since its formation, and currently is, a duly formed
and existing limited liability company.




          (ii) The Borrower has been, at all times from and after April 27, 2001, and currently is a
Single Purpose Entity.




          (iii) The Borrower at all times since its formation has been duly qualified as a limited
liability company, in each jurisdiction in which such qualification was necessary for the conduct
of its business.




          (iv) Each Subsidiary of the Borrower is duly qualified as a corporation in each jurisdiction
in which such qualification is necessary for the conduct of its business.




          (v) The Borrower at all times since its formation has complied with the provisions of its
Organizational Documents and the laws of its jurisdiction of formation relating to limited
liability companies.




          (vi) Each Subsidiary of the Borrower is in compliance with the provisions of its
Organizational Documents and the laws of its jurisdiction of formation relating to corporations or
other business entities. All formalities regarding the existence of Borrower have been observed
since its formation.




          (vii) The Borrower did not engage in any business until April 27, 2001 except insofar as the
acquisition of permits and other matters related to the preparation for the acquisition of the
Borrower’s Subsidiaries and obtaining financing with respect thereto may be construed as engaging
in business.




          (viii) The Borrower did not incur any Indebtedness until April 27, 2001.




          (ix) The Borrower has at all times since its formation maintained its financial statements,
accounting records and limited liability company documents, separate from those of any other
Person, and has maintained such financial statements, records and documents accurately except as
reflected in the audited financial statements of the Borrower and its Subsidiaries as at the end of
and for the fiscal year ended December 31, 2007 (which include restated financial statements of the
Borrower and its Subsidiaries as at the end of and for the fiscal year ended December 31, 2006).
The Borrower has maintained separate books, records, resolutions and agreements. The Borrower has
not at any time since its formation commingled its assets with those of any other Person. The
Borrower has at all times since its formation accurately maintained its own bank accounts, payroll
and separate books of account. The Borrower has not commingled its funds or assets with those of
any other entity, and has held and will hold its funds and assets in its own name.




          (x) The Borrower is currently organized solely for the purpose described in the definition of
Single Purpose Entity and has not engaged in any business unrelated to acting as the Borrower
hereunder which is inconsistent with or in violation of this Agreement or, from and after April 27,
2001 until the Closing Date, the 2001 Revolving Credit Agreement.




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          (xi) No Subsidiary of the Borrower has any assets other than those related to coal mining
operations. The Borrower has not had any assets other than those related to coal mining operations
and its interests in the Subsidiaries.




          (xii) The Borrower has not engaged in, sought or consented to any dissolution, winding up,
liquidation, consolidation, merger, transfer of partnership interest, membership interest or stock
of a Subsidiary, or amendment of the operating agreement of the Borrower (except for the Amended
and Restated Limited Liability Company Agreement dated April 27, 2001, the amendment thereto dated
as of March 8, 2004, and the Second Amended and Restated Limited Liability Company Agreement dated
as of the Closing Date).




          (xiii) The Parent is the sole economic member of the Borrower.




          (xiv) The Borrower has at all times since its formation identified itself in all dealings with
the public, under the Borrower’s own name and as a separate and distinct entity. The Borrower has
not at any time since its formation identified itself as being a division of any other entity. The
Borrower has not at any time since its formation identified any other Person as being a division of
the Borrower. The Borrower has not failed to correct any known misunderstanding regarding the
separate identity of such entity. The Borrower has at all times conducted its business in its own
name.




          (xv) The Borrower has at all times since its formation been adequately capitalized in light of
the nature of its business. The Subsidiaries of the Borrower and the Borrower, taken as a whole,
are presently adequately capitalized in light of the nature of their business.




          (xvi) The Borrower has not at any time since its formation assumed or guaranteed the
liabilities of any other Person, except pursuant to Guaranties of Indebtedness entered into by the
Borrower as permitted by and in compliance with the terms of this Agreement or, during the period
from and after April 27, 2001 until the Closing Date, the terms of the 2001 Revolving Credit
Agreement. The Borrower has not at any time since its formation acquired obligations or securities
of any other Person except obligations and securities (including, without limitation, obligations
and securities of any Subsidiary) acquired by the Borrower as permitted by and in compliance with
the terms of this Agreement or, during the period from and after April 27, 2001 until the Closing
Date, the terms of the 2001 Note Agreement. The Borrower has not at any time since its formation
made loans or advances to any Person except loans and advances made by the Borrower as permitted by
and in compliance with the terms of this Agreement or, during the period from and after April 27,
2001 until the Closing Date, the terms of the 2001 Revolving Credit Agreement. The Borrower has
not granted a Lien on any of its assets for the benefit of any other Person other than (i) Liens
granted by it in connection with the incurrence of, and in order to secure, the Indebtedness of the
Borrower identified in Schedule 8.2.1 as being repaid with the proceeds of the Notes and of
loans made under the Bank Credit Agreement, (ii) Liens granted by it as permitted by and in
compliance with the terms of this Agreement, and (iii) Liens granted by it during the period from
and after April 27, 2001 until the Closing Date as permitted by and in compliance with the terms of
the 2001 Revolving Credit Agreement and which, unless terminated on or prior to the Closing Date,
are permitted to exist under the terms of this Agreement.




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          (xvii) Neither the Borrower nor any Subsidiary of the Borrower has at any time between the
2001 Closing and the date hereof entered into or been a party to any transaction with any member of
the Parent Group, except (i) as contemplated by the Management Agreement (as defined in the 2001
Note Agreement), (ii) other transactions permitted under the 2001 Note Agreement and (iii) other
transactions on terms that are at fair market value and are generally similar to the terms and
conditions that would apply in a comparable arm’s length transaction with an unrelated third party.
From and after the date hereof, neither the Borrower nor any Subsidiary of the Borrower will enter
into or be a party to any transaction with any member of the Parent Group, except (i) as
contemplated by the Management Agreement, (ii) other transactions permitted under Section 8.2.8
[Affiliate Transactions] and (iii) other transactions in the ordinary course of business of the
Borrower and each Subsidiary of the Borrower which, when considered as a whole, are at fair market
value and are generally similar to the terms and conditions that would apply in a comparable arm’s
length transaction with an unrelated third party.




          (xviii) The Borrower has no Indebtedness other than the Indebtedness to the Banks under the
Loan Documents, to the Purchasers under the Note Purchase Agreement, and as described in
Schedule 8.2.1. Schedule 8.2.1 sets forth a complete and correct list of all
outstanding Indebtedness of the Borrower and its Subsidiaries as of the date hereof (including a
description of the obligors and obligees, principal amount outstanding and collateral therefor, if
any, and Guaranty thereof, if any), since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of
the Borrower or its Subsidiaries. Neither the Borrower nor any Subsidiary is in default in the
payment of any principal or interest on any Indebtedness of the Borrower or such Subsidiary (and no
waiver of any such default is currently in effect). After the application of the proceeds of the
Loans to the retirement of all items of Indebtedness of the Borrower and its Subsidiaries which are
described on Schedule 8.2.1 as being paid on the Closing Date, no event or condition exists
with respect to any Indebtedness of the Borrower or any Subsidiary (other than as described in
(i) that certain Waiver No. 5 dated as of January 30, 2008, as amended by (a) that certain
Amendment to Waiver No. 5 dated March 31, 2008, and (b) that certain Amendment No. 2 to Waiver
dated as of May 14, 2008, each by and among the Loan Parties and the holders of notes of the
Borrower outstanding under the 2001 Note Agreement and (ii) that certain Waiver, dated January 30,
2008, as amended by (a) that certain Amendment to Waiver dated as of March 31, 2008, and (b) that
certain Amendment No. 2 to Waiver dated as of May 14, 2008, each by and among the Loan Parties and
the bank lenders under the 2001 Revolving Credit Agreement) that would permit (or that with notice
or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to
become due and payable before its stated maturity or before its regularly scheduled dates of
payment.




          (xix) The Borrower represents and warrants that the “assumptions of fact” contained in the
non-consolidation opinion of Wilmer Cutler Pickering Hale and Dorr LLP of even date herewith are
true and correct in all material respects as of the date hereof.




          6.1.34 Surface Mine Reclamation Bonds.




               Each of the Loan Parties has a sufficient surface mining bonding capacity to be able to
maintain the bonds for all the Required Mining Permits.



          6.1.35 Foreign Assets Control Regulation, etc.




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               Neither the transactions made hereunder or the use of the proceeds hereof will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.



          6.1.36 Pari Passu Collateral.




               Each Loan Party represents and warrants that (excluding the exercise of rights of set-off) no
Guaranty, collateral, security or other credit enhancement has been given, directly or indirectly,
for the benefit of the Purchasers under the Note Purchase Agreement or otherwise except for (i)
Guarantees from the Guarantors, (ii) the Note Purchase Documents, which provide the Purchasers with
a prior security interest in the Loan Parties assets (other than Accounts and Inventory), and (iii)
a subordinated security interest in and Lien on Accounts and Inventory. Complete and correct
copies of the Note Purchase Documents have been delivered to the Banks.



          6.1.37 Additional Representations and Warranties.




               Each Loan Party represents and warrants that the representations and warranties contained in
the Note Purchase Documents are true and correct in all material respects as of the date given.



          6.1.38 Anti-Terrorism Laws.




               None of the Loan Parties is or shall be (i) a Person with whom any Bank is restricted from
doing business under Executive Order No. 13224 or any other Anti-Terrorism Law, (ii) engaged in any
business involved in making or receiving any contribution of funds, goods or services to or for the
benefit of such a Person or in any transaction that evades or avoids, or has the purpose of evading
or avoiding, the prohibitions set forth in any Anti-Terrorism Law, or (iii) otherwise in violation
of any Anti-Terrorism Law. The Loan Parties shall provide to the Banks any certifications or
information that a Bank requests to confirm compliance by the Loan Parties with Anti-Terrorism
Laws.



     6.2 Updates to Schedules.



               Should any of the information or disclosures provided on any of the Schedules attached hereto
become outdated or incorrect in any material respect, the Borrower shall promptly provide the Agent
in writing with such revisions or updates to such Schedule as may be necessary or appropriate to
update or correct same; provided, however, that no Schedule shall be deemed to have been amended,
modified or superseded by any such correction or update, nor shall any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed to
have been cured thereby, unless and until the Required Banks, in their sole and absolute
discretion, shall have accepted in writing such revisions or updates to such Schedule.



7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT




     The obligation of each Bank to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder is subject to the performance by each of the Loan Parties of its Obligations to



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be performed hereunder at or prior to the making of any such Loans or issuance of such Letters
of Credit and to the satisfaction of the following further conditions:




     7.1 First Loans and Letters of Credit.



          On the Closing Date:




          7.1.1 Officer’s Certificate.




               The representations and warranties of each of the Loan Parties contained in Section 6
[Representations and Warranties] and in each of the other Loan Documents shall be true and accurate
on and as of the Closing Date with the same effect as though such representations and warranties
had been made on and as of such date (except representations and warranties which relate solely to
an earlier date or time, which representations and warranties shall be true and correct on and as
of the specific dates or times referred to therein), and each of the Loan Parties shall have
performed and complied with all covenants and conditions hereof and thereof, no Event of Default or
Potential Default shall have occurred and be continuing or shall exist; and there shall be
delivered to the Agent for the benefit of each Bank a certificate of each of the Loan Parties,
dated the Closing Date and signed by the Chief Executive Officer, President or Chief Financial
Officer of each of the Loan Parties, to each such effect.



          7.1.2 Secretary’s Certificate.




               There shall be delivered to the Agent for the benefit of each Bank a certificate dated the
Closing Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties,
certifying as appropriate as to:



          (i) all action taken by each Loan Party in connection with this Agreement and the other Loan
Documents;




          (ii) the names of the officer or officers authorized to sign this Agreement and the other Loan
Documents and the true signatures of such officer or officers and specifying the Authorized
Officers permitted to act on behalf of each Loan Party for purposes of this Agreement and the true
signatures of such officers, on which the Agent and each Bank may conclusively rely; and




          (iii) copies of its organizational documents, including its certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and
limited liability company agreement, as the case may be, as in effect on the Closing Date certified
by the appropriate state official where such documents are filed in a state office together with
certificates from the appropriate state officials as to the continued existence and good standing
of each Loan Party in each state where organized or qualified to do business and a bring-down
certificate by facsimile dated the Closing Date.




          7.1.3 Delivery of Loan Documents.




               This Agreement, the Collateral Assignment, Guaranty Agreement, Mortgage, Notes, Patent,
Trademark and Copyright Security Agreement, Pledge Agreement, Intercompany Subordination Agreement,
Security Agreement, the Management Agreement, and the Management Fee Subordination Agreement shall
have been duly executed and delivered to



69









 




the Collateral Agent or Agent, as the case may be, for the benefit of the Banks, together with
all appropriate financing statements and appropriate stock powers and certificates evidencing the
Subsidiary Shares, the Partnership Interests and the LLC Interests.




          7.1.4 Opinion of Counsel.




               There shall be delivered to the Agent for the benefit of each Bank a written opinions of
Wilmer Cutler Pickering Hale and Dorr LLP, as counsel for the Loan Parties, and other counsel
acceptable to the Agent (who may rely on the opinions of such other counsel as may be acceptable to
the Agent), dated the Closing Date and in form and substance satisfactory to the Agent and its
counsel:



          (i) as to the matters set forth in Exhibit 7.1.4;




          (ii) as to substantive non-consolidation of the Borrower with any member of the Parent Group;




          (iii) as to the enforceability and application by a bankruptcy court of the provisions of the
operating agreement of the Borrower and the Organizational Documents of each Subsidiary, as the
case may be, requiring the vote of an Independent Manager or Director, as the case may be, to file
a voluntary bankruptcy petition;




          (iv) as to the enforceability of the provision of the operating agreement of the Borrower that
if the economic member of the Borrower ceases to be a member, the Independent Manager becomes a
member without further active vote or approval;




          (v) as to the fact that the bankruptcy or insolvency of a member of the borrower will not, by
itself cause a dissolution or winding up of the Borrower; and




          (vi) as to such other matters incident to the transactions contemplated herein as the Agent
may reasonably request.




               There shall also be delivered to the Agent for the benefit of each Bank a written opinion of
Crowell & Moring LLP, the Loan Parties’ Coal Act counsel, dated as of the Closing Date and in form
and substance satisfactory to the Agent and its counsel, that any Coal Act liability of the Parent
will not be attributed to the Borrower or any Subsidiary of the Borrower.



          7.1.5 Legal Details.




               All legal details and proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be in form and substance satisfactory to the Agent and
counsel for the Agent, and the Agent shall have received all such other counterpart originals or
certified or other copies of such documents and proceedings in connection with such transactions,
in form and substance satisfactory to the Agent and said counsel, as the Agent or said counsel may
reasonably request.



          7.1.6 Payment of Fees.




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               The Borrower shall have paid or caused to be paid to the Agent for itself and for the account
of the Banks to the extent not previously paid the all commitment and other fees accrued through
the Closing Date and the costs and expenses for which the Agent and the Banks are entitled to be
reimbursed.



          7.1.7 Consents.




               All material consents and governmental approvals required to effectuate the transactions
contemplated hereby as set forth on Schedule 6.1.13 shall have been obtained, in form and
substance satisfactory to the Banks.



          7.1.8 Officer’s Certificate Regarding MACs.




               Since December 31, 2007, no Material Adverse Change shall have occurred; and there shall have
been delivered to the Agent for the benefit of each Bank a certificate dated the Closing Date and
signed by the Chief Executive Officer, President or Chief Financial Officer of each Loan Party to
each such effect.



          7.1.9 No Violation of Laws.




               The making of the Loans and the issuance of the Letters of Credit shall not contravene any Law
applicable to any Loan Party or any of the Banks.



          7.1.10 No Actions or Proceedings.




               No action, proceeding, investigation, regulation or legislation shall have been instituted,
threatened or proposed before any court, governmental agency or legislative body to enjoin,
restrain or prohibit, or to obtain damages in respect of, this Agreement, the other Loan Documents
or the consummation of the transactions contemplated hereby or thereby or which, in the Agent’s
sole discretion, would make it inadvisable to consummate the transactions contemplated by this
Agreement or any of the other Loan Documents.



          7.1.11 Insurance Policies; Certificates of Insurance; Endorsements.




               The Loan Parties shall have delivered evidence acceptable to the Agent that adequate insurance
in compliance with Section 8.1.3 [Maintenance of Insurance] is in full force and effect and that
all premiums then due thereon have been paid, together with a certified copy of each Loan Party’s
casualty insurance policy or policies evidencing coverage satisfactory to the Agent, with
additional insured, mortgagee and lender loss payable special endorsements attached thereto in form
and substance satisfactory to the Agent and its counsel naming the Agent as additional insured,
mortgagee and lender loss payee.



          7.1.12 Title Insurance.




               The Loan Parties shall deliver a title insurance policy or policies or other evidence of title
satisfactory to the Agent.



          7.1.13 Filing Receipts.




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               The Agent shall have received (1) copies of all filing receipts and acknowledgments issued by
any governmental authority to evidence any recordation or filing necessary to perfect the Lien of
the Banks on the Collateral or other satisfactory evidence of such recordation and filing and
(2) evidence in a form acceptable to the Agent that such Lien constitutes a Prior Security Interest
in favor of the Banks and, in the case of the Mortgages, a valid and perfected first priority Lien,
subject only to the Lien in favor of the Purchasers in connection with the Note Purchase Agreement.



          7.1.14 Note Purchase Agreement.




               The Loan Parties shall have delivered an executed Note Purchase Agreement and shall have
satisfied the conditions in Section 4.1 [Interest Rate Option] of the Note Purchase Agreement to
the satisfaction of the Agent.



          7.1.15 Management Agreement and Management Fee Subordination Agreement.




               The Borrower and the Parent shall have entered into the Management Agreement, in form and
substance satisfactory to the Banks and the Management Fee Subordination Agreement shall have been
executed and delivered by the Parent and the Borrower and shall be in full force and effect.



          7.1.16 Solvency Certificate.




               An Authorized Officer of the Borrower shall have delivered a certificate in form and substance
satisfactory to the Agent as to the capital adequacy and solvency of the Borrower and its
Subsidiaries after giving effect to the transactions contemplated hereby.



          7.1.17 Lien Search.




               Bank shall have received a Lien search in acceptable scope and with acceptable results from
Borrower.



          7.1.18 Intercreditor Agreement.




               The Purchasers or Collateral Agent on behalf of the Purchasers and the Borrower shall have
executed and delivered to the Agent the Intercreditor Agreement in form and substance acceptable to
the Agent.



          7.1.19 Coal Reserves.




               The Borrower shall have made available to the Banks all existing material geological data,
reserve data, mine maps, core hole logs and associated data, coal measurements, coal samples,
lithologic data, coal reserve calculations or reports, washability analyses or reports, mine plans,
mining feasibility studies or analyses, mining permit applications and supporting data, preparation
plant flowcharts, preparation plant efficiency reports or analyses, engineering studies and all
other information, maps, material, reports and data in the possession or under the control of
Borrower relating to or affecting the coal reserves, coal ownership, coal leases, mining
conditions, mines, preparation plant(s) and mining plans of Borrower (collectively the “Mining
Data”). True, correct and complete copies of the Mining Data, together with all exhibits, maps or
supporting appendices thereto, have been provided to the Banks.



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          7.1.20 Independent Director of Borrower and Subsidiaries.




               The Borrower and each Subsidiary shall have provided evidence that its Organizational
Documents provide for an Independent Manager or Director, as the case may be, and require the vote
of an Independent Manager or Director, as the case may be, to file a voluntary bankruptcy petition.



          7.1.21 Bankruptcy Remote Entities, Separateness.




               The terms and conditions of the Borrower’s formation documents, as well as the terms and
conditions of each Subsidiary’s formation documents, shall be effective to provide for appropriate
protections from the commencement of a bankruptcy based upon the bankruptcy of a member of the
Parent Group. Each of the Loan Parties shall satisfy the Agent that such entities are not
reasonably subject to substantive consolidation with any member of the Parent Group. Additionally,
the Agent shall be satisfied with the Independent Manager and Director selected by each of the Loan
Parties.



          7.1.22 Changes in Corporate Structure.




               The Loan Parties shall not have changed their respective jurisdictions of incorporation or
been a party to any merger or consolidation and shall not have succeeded to all or any part of the
liabilities of any other entity, at any time following the date of the most recent financial
statement referred to in Section 6.1.9 [Financial Statements].



          7.1.23 NRGT Documents.




               The NRGT Supplemental Agreement, and the pledge agreement, the security agreement and the deed
of trust, in substantially the respective forms attached as exhibits thereto (collectively,
together with the NRGT Supplemental Agreement, the “NRGT Documents”) shall be in form and substance
satisfactory to the Banks and their special counsel, shall have been executed and delivered by NRGT
and each other party thereto and shall be in full force and effect.



     7.2 Each Additional Loan or Letter of Credit.



          At the time of making any Loans or issuing any Letters of Credit other than Loans made or
Letters of Credit issued on the Closing Date and after giving effect to the proposed extensions of
credit: the representations and warranties of the Loan Parties contained in Section 6
[Representations and Warranties] and in the other Loan Documents shall be true on and as of the
date of such additional Loan or Letter of Credit with the same effect as though such
representations and warranties had been made on and as of such date (except representations and
warranties which expressly relate solely to an earlier date or time, which representations and
warranties shall be true and correct on and as of the specific dates or times referred to therein)
and the Loan Parties shall have performed and complied with all covenants and conditions hereof; no
Event of Default or Potential Default shall have occurred and be continuing or shall exist; the
making of the Loans or issuance of such Letter of Credit shall not contravene any Law applicable to
any Loan Party or Subsidiary of any Loan Party or any of the Banks; and the Borrower shall have
delivered to the Agent a duly executed and completed Loan Request or application for a Letter of
Credit as the case may be.




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8. COVENANTS




     8.1 Affirmative Covenants.



          The Borrower and the Guarantors, jointly and severally, covenant and agree that until payment
in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest
thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan
Parties’ other Obligations under the Loan Documents and termination of the Commitments, the Loan
Parties shall comply at all times with the following affirmative covenants:




          8.1.1 Preservation of Existence, Etc.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal
existence as a corporation, limited partnership or limited liability company, as the case may be,
and its license or qualification and good standing in each jurisdiction in which its ownership or
lease of property or the nature of its business makes such license or qualification necessary,
except as otherwise expressly permitted in Section 8.2.6 [Liquidations, Mergers, Etc.] or where a
Loan Party shall be in breach of this Section inadvertently because it failed to obtain or maintain
a qualification or license provided that such failure is promptly remedied upon the Loan Party
becoming aware of such failure and the failure does not adversely affect the rights of the Loan
Parties or, either alone or together with all such failures, constitute or be reasonably likely to
result in a Material Adverse Change.



          8.1.2 Payment of Liabilities, Taxes, Etc.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all
liabilities to which it is subject or which are asserted against it, promptly as and when the same
shall become due and payable, including all taxes, assessments and governmental charges upon it or
any of its properties, assets, income or profits, prior to the date on which penalties attach
thereto, except to the extent that such liabilities, including taxes, assessments or charges, are
being contested in good faith and by appropriate and lawful proceedings diligently conducted and
for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall
have been made, but only to the extent that failure to discharge any such liabilities shall not
result in any additional liability which would adversely affect to a material extent the financial
condition of any Loan Party or Subsidiary of any Loan Party or affect a material portion of the
Collateral, provided that the Loan Parties and their Subsidiaries will pay all such liabilities
forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as
security therefor.



          8.1.3 Maintenance of Insurance.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and
assets against loss or damage by fire and such other insurable hazards against which such assets
are commonly insured (including fire, extended coverage, property damage, workers’ compensation,
public liability and business interruption insurance) and against other risks, and in such amounts,
as similar properties and assets are insured by prudent companies in similar circumstances carrying
on similar businesses, and with reputable and financially sound insurers, including self-insurance
to the extent customary, all as shall be reasonably satisfactory to the Agent. For policies which
cover insured entities in addition to the Borrower and the other



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





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of the Mortgages) may, at the option of the Agent, (i) be applied to the pro rata payment of
the Notes, or (ii) be disbursed to the applicable Loan Parties on such terms as are deemed
appropriate by the Agent for the repair, restoration and/or replacement of property in respect of
which such proceeds were received




          8.1.4 Maintenance of Properties and Leases.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair,
working order and condition (ordinary wear and tear excepted) in accordance with the general
practice of other businesses of similar character and size, all of those properties useful or
necessary to its business, and from time to time, such Loan Party will make or cause to be made all
appropriate repairs, renewals or replacements thereof.



          8.1.5 Maintenance of Patents, Trademarks, Etc.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in full force and
effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises,
permits and other authorizations necessary for the ownership and operation of its properties and
business if the failure so to maintain the same would constitute or be reasonably likely to result
in a Material Adverse Change.



          8.1.6 Visitation Rights.




     The Loan Parties shall permit the representatives of each of the Banks:



               No Default — if no Potential Default or Event of Default then exists, at the expense of such
Bank and upon reasonable prior notice to the Borrower, to visit and inspect any of the offices or
properties (including, without limitation, any field examination of Accounts and Inventory) of the
Borrower or any Subsidiaries, to discuss the affairs, finances and accounts of the Borrower and its
Subsidiaries with the Borrower’s officers, and (with the consent of the Borrower, which consent
will not be unreasonably withheld) its independent public accountants, and (with the consent of the
Borrower, which consent will not be unreasonably withheld) to visit the other offices and
properties of the Borrower and each Subsidiary, all at such reasonable times (which shall be normal
business hours) and as often as may be reasonably requested; and



               Default — if a Potential Default or Event of Default then exists, at the expense of the
Borrower to visit and inspect any of the offices or properties (including, without limitation, any
field examination of Accounts and Inventory) of the Borrower or any Subsidiary, to examine all
their respective books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Borrower authorizes said
accountants to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries),
all at such times and as often as may be requested.



          8.1.7 Operation of Mines.




               The Loan Parties shall, and shall cause each of its Subsidiaries engaged in mining operations
on any of the Real Property to, obtain at all times and maintain in effect all Required Mining
Permits, surface mining reclamation bonds, and such other consents and



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approvals as are necessary for conducting uninterrupted coal mining and related operations on,
in or under the Real Property or such other property, sufficient to discharge in all material
respects the obligations of the Loan Parties under the Coal Supply Contracts, substantially in the
manner as such operations have heretofore been authorized and conducted on those portions of the
Real Property or such other property on which any of the Loan Parties or any of their Subsidiaries
have previously engaged in mining.



          8.1.8 Keeping of Records and Books of Account.




               The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintain and keep
proper books of record and account which enable the Borrower and its Subsidiaries to issue
financial statements in accordance with GAAP and as otherwise required by applicable Laws of any
Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which
full, true and correct entries shall be made in all material respects of all its dealings and
business and financial affairs.



          8.1.9 Plans and Benefit Arrangements.




               After the Closing Date, the Borrower shall, and shall cause each other member of the ERISA
Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to
Plans and Benefit Arrangements except where the failure to comply herewith, alone or together with
all other such failures, would not result in any substantial obligation to the Borrower or any of
its Subsidiaries or otherwise result in a Material Adverse Change. Without limiting the generality
of the foregoing, the Borrower shall cause all of its Plans and all Plans maintained by any member
of the ERISA Group to be funded in accordance with at least the minimum funding requirements of
ERISA and to be and remain Adequately Funded, and shall make, and cause each member of the ERISA
Group to make, in a timely manner, all contributions due to Plans, Benefit Arrangements and
Multiemployer Plans, except where any failure to do so, alone or together with all other such
failures, would not result in a substantial obligation to the Borrower or any of its Subsidiaries
or otherwise result in a Material Adverse Change.



          8.1.10 Compliance with Laws.




               Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable
Laws, including all Environmental Laws, in all respects, provided that it shall not be deemed to be
a violation of this Section 8.1.10 if there occurs a failure to comply with any Law which would
not, either alone or together with all other such failures, constitute, or be reasonably likely to
result in a Material Adverse Change, including without limitation, if such failure to comply would
result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which
in the aggregate would not constitute a Material Adverse Change.



          8.1.11 Use of Proceeds.




               The Loan Parties will use the Letters of Credit and the proceeds of the Loans only for (i) the
refinancing of existing indebtedness, (ii) to provide a one-time distribution of $10,000,000 to
Westmoreland Coal Company and (iii) general corporate purposes and for working capital. The Loan
Parties shall not use the Letters of Credit or the proceeds of the Loans for any purposes which
contravenes any applicable Law or any provision hereof.



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          8.1.12 Further Assurances.




               Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the
Agent’s Lien on and Prior Security Interest in the Collateral, and any additional collateral
granted to the Collateral Agent as contemplated this Agreement, as a continuing (i) first priority
perfected Lien with respect to the Collateral now or hereafter granted, if any, and (ii) junior
priority perfected Lien with respect to the Note Purchase Collateral, in each case subject only to
Permitted Liens, and shall do such other acts and things as the Agent in its sole discretion may
deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens
granted under the Loan Documents and the rights and remedies of the Collateral Agent and the
Purchasers thereunder with respect to the Collateral, if any.



          8.1.13 Subordination of Intercompany Loans.




               Except as otherwise provided in the Intercompany Subordination Agreement, each Loan Party
agrees that any and all Indebtedness, loans or advances now owed or hereafter incurred by any Loan
Party to any other Loan Party is subordinated to the prior payment in full of the Loans and that
all rights to receive any payments on such Indebtedness in bankruptcy or otherwise shall constitute
collateral security for the Loans and the Banks shall be entitled to vote any and all rights
associated with such Indebtedness.



          8.1.14 Compliance with Note Purchase Documents.




               The Loan Parties shall comply with each of the terms of the Note Purchase Documents.



          8.1.15 Maintenance of Prior Security Interest.




               The Loan Parties shall cause the Collateral Agent for the benefit of the Banks to have a first
priority security interest in all of the Collateral of each Loan Party, subject only to Permitted
Liens and cooperate with the Banks and perform all acts reasonably requested by the Banks to
maintain and perfect such first priority security interest subject only to Permitted Liens.



          8.1.16 Single Purpose Entities.




          (i) The Borrower will continue to be a duly formed and existing limited liability company and
a Single Purpose Entity. The Borrower will continue to be, duly qualified as a limited liability
company, in each jurisdiction in which such qualification may be necessary for the conduct of its
business. Each Subsidiary of the Borrower at all times will continue to be duly qualified as a
limited liability company, partnership or corporation in each jurisdiction in which such
qualification is necessary for the conduct of its business.




          (ii) The Borrower will continue to comply and each other Loan Party will comply with the
provisions of its Organizational Documents and the laws of its jurisdiction of formation relating
to limited liability companies (or other business entities).




          (iii) All formalities regarding the existence of the Borrower as a Single Purpose Entity will
be observed and all formalities regarding the existence of each other Loan Party will be observed.




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          (iv) The Borrower will accurately maintain, and each other Loan Party will accurately
maintain, its financial statements (provided, however, that the Borrower and the Loan Party shall
be permitted to prepare and deliver consolidated financial statements), accounting records and
limited liability company documents, separate from those of any other Person. The Borrower and the
other Loan Parties, taken as a whole, will maintain separate books, records, resolutions and
agreements. The Borrower will, and each other Loan Party will, continue to accurately maintain its
own bank accounts, payroll and separate books of account. Neither the Borrower nor any other Loan
Party will commingle its funds or assets with those of any other Person; provided, however, that
the Borrower and its Subsidiaries may maintain a centralized cash management system pursuant to
which the funds and financial assets of the Borrower and its Subsidiaries are collected and
aggregated to the extent (i) incident to the conduct of the business of the Borrower and its
Subsidiaries in the ordinary course of business, as such business has been conducted prior to the
date hereof and (ii) not in contravention of the covenants and agreements of the Borrower and the
other Loan Parties set forth elsewhere in this Agreement and the other Note Purchase Documents.
Each Loan Party will in any event continue to at all times hold its assets in its own name.




          (v) The Borrower and the other Loan Parties, taken as a whole, will continue to pay, their own
liabilities from their own separate assets.




          (vi) The Borrower will not engage in any business unrelated to acting as the Borrower
hereunder which is inconsistent with or in violation of this Agreement.




          (vii) No Loan Party other than the Borrower will have any assets other than those related to
coal mining operations. The Borrower will not have any assets other than those related to coal
mining operations and its interests in the Subsidiaries. The Borrower and each other Loan Party
will not engage in, seek or consent to any dissolution, winding up, liquidation, consolidation,
merger (other than as contemplated in this Agreement), asset sale (other than as contemplated in
this Agreement), transfer of membership interest of the Borrower or transfer partnership interest,
membership interest or stock of a Loan Party, or amendment of the Organizational Documents of the
Borrower or any other Loan Party (other than as expressly permitted by this Agreement).




          (viii) Parent shall remain the sole economic member of the Borrower.




          (ix) The Borrower, without the unanimous consent of all holders of all limited liability
company membership interests in the Borrower and all members of the board of managers of the
Borrower including the Independent Manager, shall not file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or to any other entity in which
it has a direct or indirect legal or beneficial ownership interest, dissolve, liquidate,
consolidate, merge, or sell all or substantially all of its assets or any other entity in which it
has a direct or indirect legal or beneficial ownership interest, engage in any other business
activity, or amend its Organizational Documents




          (x) No Loan Party other than the Borrower, without the unanimous consent of all directors
(including at least one Independent Director) of such Loan Party, shall file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect to itself or to any
other entity in which it has a direct or indirect legal or beneficial ownership interest, dissolve,
liquidate, consolidate, merge, or sell all or substantially all of its assets or any



79









 






other entity in which it has a direct or indirect legal or beneficial ownership interest,
engage in any business activity other than its mining-related business, or amend its Organizational
Documents.




          (xi) The Borrower and each other Loan Party will identify itself, in all dealings with the
public, under the Borrower’s or such other Loan Party’s own name and as a separate and distinct
entity other than in connection with any other Loan Party. The Borrower and each other Loan Party
will not identify itself, as being a division of any member of the Parent Group. The Borrower and
each of the other Loan Parties will not identify, any member of the Parent Group as being a
division of the Borrower or such other Loan Party. The Borrower and each other Loan Party will not
fail to correct any known misunderstanding regarding the separate identity of such entity. The
Borrower and each other Loan Party will conduct its business in its own name.




          (xii) The Borrower and the Loan Parties, taken as a whole, will continue to be adequately
capitalized in light of the nature of their business.




          (xiii) Except as expressly permitted by Section 8.2.1 [Indebtedness] and 8.2.3 [Guaranties],
neither the Borrower nor any other Loan Party will assume or guarantee, the liabilities of any
other Persons, except Guaranties of the Indebtedness hereunder and under the Note Purchase
Agreement. Neither the Borrower nor any other Loan Party will acquire obligations or securities of
any other Persons except the obligations and/or securities of (a) any Subsidiary of the Borrower or
(b) any entity merged with the Borrower or any Subsidiary of the Borrower. Except as expressly
permitted by Section 8.2.4 [Loans and Investments], neither the Borrower nor any other Loan Party
will make, loans or advances to any Person. The Borrower will not pledge its assets for the benefit
of any other Person or entity, except (i) in favor of the Collateral Agent for the benefit of the
Banks and the Purchasers and (ii) Permitted Liens.




          (xiv) Except as contemplated by the Management Agreement and as expressly permitted by Section
8.2.8 [Affiliate Transactions], neither the Borrower nor any other Loan Party will enter into or be
a party to any other transaction with any member of the Parent Group.




          (xv) Except as expressly permitted by Sections 8.2.1 [Indebtedness] and 8.2.3 [Guaranties],
the Borrower will not incur any Indebtedness other than the Indebtedness to the Agent and the Banks
under the Loan Documents and to the Purchasers under the Note Purchase Documents.




          (xvi) The Borrower will and each other Loan Party will allocate fairly and reasonably any
overhead for shared office space and use separate stationery, invoices and checks.




          (xvii) The Borrower and each other Loan Party will act and refrain from acting in such a way
that each of the “assumptions of fact” made in the non-consolidation opinion of Wilmer, Cutler,
Pickering, Hale and Dorr LLP of even date herewith will continue to be true and correct in all
material respects.




          (xviii) The Borrower and each of its Subsidiaries will continue to be have their respective
day to day operations managed principally by a President or a comparable officer who is not
employed by, does not hold any position with and does not provide any services to the Parent Group,
and the Borrower’s and each of its Subsidiaries’ day to day human resources



80









 






decisions will continue to be made by an officer or employee who is not employed by, does not
hold any position with, and does not provide any services to the Parent Group.




          8.1.17 Maintenance of Permits.




          The Borrower and the Guarantors shall maintain all Required Mining Permits in full force and
effect in accordance with their terms.



          8.1.18 Debt Service Reserve Account.




          In order to provide additional collateral security for the payment and performance of the
Obligations, the Borrower shall (i) establish with the Note Purchase Collateral Agent, not later
than the Closing Date, and at all times thereafter cause the Note Purchase Collateral Agent to
maintain, the Debt Service Reserve Account for the benefit of the holders from time to time of the
Term Notes and (ii) from time to time deposit or cause to be deposited to the credit of the Debt
Service Reserve Account, in accordance with this Section, cash and investments of the type
described in paragraphs (i) through (v) of the definition of the term “Permitted Investments”,
(valued as provided in the Collateral Agency Agreement) in amounts sufficient to assure that the
aggregate amount credited thereto (inclusive of the undrawn face amount of any Debt Service Letter
of Credit then held by the Note Purchase Collateral Agent for credit to the Debt Service Reserve
Account) shall at all times be at least equal to the Debt Service Reserve Requirement as the same
may change from time to time. For purposes hereof, the “Debt Service Reserve Requirement” shall
mean, as of any Payment Date, the sum of:




               (A) scheduled payments and prepayments on the Term Notes to become due during the period of
six months next following such Payment Date;



               (B) scheduled payments of interest on the Term Notes to become due during such period of six
months; and



               (C) fees and expenses of the Note Purchase Collateral Agent then payable or anticipated to be
payable during such period of six months.



          So long as no Event of Default shall have occurred and be continuing, the Borrower shall be
entitled to deliver or cause to be delivered to the Note Purchase Collateral Agent, in full or
partial satisfaction of the Borrower’s obligation to fund the Debt Service Reserve Account, an
irrevocable, transferable, unconditional standby letter of credit which shall be reasonably
satisfactory in form and substance to the Required Holders (as defined in the Note Purchase
Agreement), name the Note Purchase Collateral Agent as beneficiary, and satisfy the further
conditions with respect thereto set forth in the next following sentence (each such letter of
credit, a “Debt Service Letter of Credit”). Each Debt Service Letter of Credit shall (w) be issued
by a financial institution reasonably satisfactory to the Required Holders and having combined
capital and surplus of not less than $500,000,000 and a long-term debt rating of ‘A2’ or better
from Moody’s or ‘A’ or better from S&P (an “Eligible Issuer”) for the account of a Person (which
may be Parent or another member of the Parent Group) other than the Borrower or any of its
Subsidiaries (it being understood that neither the Borrower nor any of its Subsidiaries shall be an
account party or be or become directly or indirectly liable to the issuer thereof for any
reimbursement obligation in respect of any Debt Service Reserve Letter of Credit); (x) be in a face
amount equal to that portion of the amount of cash and Permitted Investments required to be



81









 






maintained in the Debt Service Account for which it is to be substituted; (y) have a term of
at least 364 days; and (z) be subject to a drawing in full by the Note Purchase Collateral Agent
(1) if, at least ninety days prior to its stated expiration, it is not replaced with a further Debt
Service Letter of Credit delivered to the Note Purchase Collateral Agent in a face amount, or by
cash or Permitted Investments deposited to the credit of the Debt Service Reserve Account in an
aggregate amount, sufficient to assure that the aggregate amount deposited in or credited to the
Debt Service Reserve Account shall be at least equal to the Debt Service Reserve Requirement as at
the time of such replacement, (2) upon the occurrence of an Event of Default, and (3) if on any
date the Note Purchase Collateral Agent receives notice from the Borrower or any holder of the Term
Notes that the issuer of such Debt Service Letter of Credit is not or has ceased to be an Eligible
Issuer.




          The proceeds from any drawing under a Debt Service Letter of Credit shall be deposited into
the Debt Service Reserve Account and be held and applied by the Note Purchase Collateral Agent in
accordance with the applicable provisions of the Note Purchase Agreement and the Note Purchase
Collateral Agency Agreement. Upon the written request of the Borrower furnished to the Note
Purchase Collateral Agent (with a copy to the Agent), the Note Purchase Collateral Agent shall
return any Debt Service Letter of Credit to the named account party thereof if, after giving effect
to such return, (x) the cash and Permitted Investments remaining on deposit to the credit of the
Debt Service Reserve Account would be at least equal to the Debt Service Reserve Requirement and
(y) no Event of Default shall have occurred and be continuing, and (z) such request shall be
accompanied by an Officer’s Certificate to the effects set forth in clauses (x) and (y) of this
sentence (upon which Officer’s Certificate the Note Purchase Collateral Agent shall be conclusively
entitled to rely). Amounts, if any, credited to the Debt Service Reserve Account in excess of the
Debt Service Reserve Requirement applicable from time to time may be withdrawn therefrom upon the
request of the Borrower in the manner and subject to the conditions specified in Section 3.5 of the
Note Purchase Collateral Agency Agreement.




          8.1.19 Retained Cash.




          The Borrower will use and apply Retained Cash only in connection with the ordinary conduct of
the business of the Borrower, as such business is permitted to be conducted in accordance with the
terms of this Agreement, including for use as working capital, the payment of budgeted Capital
Expenditures, and other purposes incident to the conduct of such business; provided, however, that
Retained Cash shall not in any event be applied to the making of distributions or dividends to
Parent or any other member of the Parent Group or to pay Management Fees to the Parent.




          8.1.20 Subordination of Management Fees; Payment of Management Fees.




          The Borrower shall cause any fees or charges, of whatever nature, payable by the Loan Parties
to any member of the Parent Group, including without limitation, the Non-Cash Income Tax Expense
and all fees and charges in connection with the management of the operations of the Borrower, to be
subordinated to the payment of the Notes and other Obligations, with the subordination in the case
of payments to the Parent to be pursuant to the Management Fee Subordination Agreement and the
subordination in the case of payments to any other Affiliate of the Borrower to be on terms
satisfactory to, and set forth in writing approved by, the Required Banks. The Loan Parties agree
that the payment of any fees or charges to the



82









 






Parent or any other member of the Parent Group, all of which are subordinated in accordance
with the preceding sentence, may be made by the Loan Parties only if such payments are in
accordance with the following: (i) prior to and after giving effect to the payment thereof, no
Event of Default or Potential Default is in existence; (ii) the payments consist solely of the
Management Fee, plus Third Party Services Payments; and (iii) such payments shall be otherwise
permitted by and in accordance with the Management Fee Subordination Agreement; provided that,
notwithstanding anything contained in this Subsection or the Management Fee Subordination Agreement
to the contrary, in the event that the Borrower is permitted to make a dividend or distribution in
accordance with Section 8.2.5 [Dividends and Related Distributions], the Borrower shall be
permitted, in lieu of making such permitted distribution or dividend, to apply the amount available
for such permitted dividend or distribution to reduce the payable arising from the Non-Cash Income
Tax Expense.




          8.1.21 Maintenance of Coal Supply Contracts, Coal Leases.




          Except for Permitted Modifications, the Borrower and each Guarantor shall maintain and be in
compliance at all times with the Coal Supply Contracts and the Coal Leases which are in effect from
time to time and shall (i) perform all of its obligations under the Coal Supply Contracts and the
Coal Leases and enforce the performance by the other parties thereto of all of their obligations
under the Coal Supply Contracts and Coal Leases and under any other document or agreement related
thereto and (ii) not terminate, amend, or modify, or waive compliance with the terms and conditions
of, any of the Coal Supply Contracts or Coal Leases. All Permitted Modifications shall be
disclosed in writing to the Banks promptly upon the occurrence thereof.




          8.1.22 Collateral and Additional Collateral, Etc.




          (i) Pursuant to the Loan Documents, the Borrower and the Guarantors shall grant, or cause to
be granted, to the Agent, for the benefit of the Banks, a first priority security interest in and
Lien on, subject only to Permitted Liens, (1) all Collateral, (2)  all equity interests of the Loan
Parties, and (3) all other assets of the Borrower and the Guarantors or any Subsidiary of any the
Borrower or the Guarantors (other than TWCC), whether owned on the Closing Date or subsequently
acquired except those assets subject to capitalized leases or Purchase Money Security Interests.




          (ii) Without limiting the generality of clause (i) of this Section 8.1.22 [Additional
Collateral], with respect to any Property acquired after the Closing Date by the Borrower, any
other Guarantor or any of their Subsidiaries (other than TWCC) as to which the Agent, for the
benefit of the Banks, does not have a perfected Lien, promptly and, in any event, within five (5)
Business Days of the acquisition thereof, the Borrower, such Guarantor or such Subsidiary, as
applicable, shall, at its expense: (1) execute and deliver to the Agent such Security Documents or
such amendments to such Security Documents as the Agent deems necessary or advisable to grant to
the Agent, for the benefit of the Banks, a first priority Lien in such Property, subject only to
Permitted Liens, (2) take all actions necessary or advisable to grant to the Agent, for the benefit
of the Lenders, a perfected first priority Lien and security interest on such Property (subject
only to Permitted Liens), including the filing of Mortgages and Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Security Documents or by Law or as may
be requested by the Agent and (3) deliver to the Agent such legal opinions relating to the matters
described in clauses (1) and (2) immediately above,



83









 






which opinions shall be in form and substance, and from counsel, reasonably satisfactory to
the Agent.




          Without limiting the generality of clause (i) of this Section (i), with respect to any new
Subsidiary created or acquired after the Closing Date by the Borrower, any Guarantor or any of
their Subsidiaries (other than TWCC), concurrently with such creation or acquisition, the Borrower,
such Guarantor and/or such Subsidiary, as applicable, shall: (1) execute and deliver to the Agent
such amendments to the Security Documents as the Agent deems necessary or advisable to grant to the
Agent, for the benefit of the Banks, a perfected first priority Lien in the stock or other
ownership interests in such new Subsidiary, (2) deliver to the Agent: (A) the certificates (if
any) representing such stock or other ownership interests, together with undated powers, in blank,
executed and delivered by a duly authorized officer of the Borrower, any Guarantor or such
Subsidiary, as the case may be, and (B) in the case of a Subsidiary whose stock or other ownership
interests is a security that is not evidenced by a certificate, an Acknowledgment and Consent,
substantially in the form of Annex I to the applicable Pledge Agreement, duly executed by any
issuer of such stock or other ownership interests pledged pursuant to such Pledge Agreement,
(3) cause such new Subsidiary: (A) to become a party to the applicable Security Documents and
(B) to take such actions necessary or advisable to grant to the Agent for the benefit of the Banks
a perfected first priority Lien on the Collateral described in the applicable Pledge Agreement and
applicable Security Agreement and pursuant to a duly executed Mortgage, such Lien on all Properties
of such new Subsidiary, subject in each case to Permitted Liens, including the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by the applicable
Pledge Agreement and applicable Security Agreement, the filing of any Mortgages in appropriate
filing offices and other filings required by Law or as may be requested by the Agent, and (4) if
requested by the Agent, deliver to the Agent such legal opinions, relating to the matters described
above as the Agent may request, which opinions shall be in form and substance, and from counsel,
satisfactory to the Agent.




          8.1.23 Payment of Indebtedness.




          The Borrower will (i) pay or cause to be paid the principal of and interest on all
Indebtedness at any time incurred or assumed by it when and as the same shall become due and
payable (subject to any subordination provisions governing such Indebtedness), and (ii) in all
material respects perform, observe and comply with to the extent necessary to assure that no event
described in clause (ii), (iii) or (iv) of Section 9.1.5 shall occur with respect to such
Indebtedness all covenants, conditions and obligations imposed on it pursuant to all agreements and
instruments securing or evidencing such Indebtedness or pursuant to which such Indebtedness is
issued; provided, however, that the Borrower shall not be required by reason of this Section to
make any payment or take any other action with respect to any Indebtedness (other than the
Indebtedness evidenced by the Notes or otherwise included in the Obligations) at any time it shall
be contesting in good faith by appropriate proceedings its obligation to do so, if it shall have
set aside on its books reserves deemed by it to be adequate with respect thereto.




     8.2 Negative Covenants.



          The Borrower and the Guarantors, jointly and severally, covenant and agree that until payment
in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest
thereon, expiration or termination of all Letters of Credit, satisfaction of all of the



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Loan Parties’ other Obligations hereunder and termination of the Commitments, the Loan Parties
shall comply with the following negative covenants:




          8.2.1 Indebtedness.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any
time create, incur, assume or suffer to exist any Indebtedness, except:



          (i) Indebtedness under the Loan Documents;




          (ii) Indebtedness evidenced by the Term Notes issued pursuant to the Note Purchase Agreement,
provided that the maximum principal amount of loans and extensions of credit provided therein shall
not be increased from the amount contemplated by the Note Purchase Agreement dated the Closing
Date;




          (iii) Existing Indebtedness as set forth on Schedule 8.2.1 (including any extensions
or renewals thereof but excluding items of Indebtedness which are described on such Schedule as
being repaid on the Closing Date), provided there is no increase in the amount thereof or
other significant change in the terms thereof unless otherwise specified on Schedule 8.2.1;




          (iv) Indebtedness of the Loan Parties (a) secured by Purchase Money Security Interests or (b)
consisting of capital leases, provided that the maximum amount of Indebtedness under this subclause
(iv) shall not exceed at one time outstanding the aggregate principal amount of $25,000,000 through
the period ending December 31, 2012; $30,000,000 through the period ending December 31, 2014; and
$35,000,000 thereafter;




          (v) Indebtedness of any Subsidiary wholly-owned by the Borrower to the Borrower or to any
other Subsidiary (other than TWCC) which is wholly owned by the Borrower, and Indebtedness of the
Borrower to any Subsidiary (other than TWCC) of the Borrower; provided, however, that TWCC shall
not at any time be permitted pursuant to this Section 8.2.1(v) to incur or permit to remain
outstanding any Indebtedness of TWCC to the Borrower or any Subsidiary of the Borrower unless, at
the time of the incurrence of such Indebtedness, the Borrower or TWCC, as the case may be, shall be
permitted pursuant to Section 8.2.4 [Loans and Investments] to make the loan, advance or other
investment in TWCC represented by such Indebtedness;




          (vi) Guaranties by the Borrower or any Subsidiary of the Borrower permitted pursuant to
Section 8.2.3 [Guaranties] hereof;




          (vii) Indebtedness secured by Permitted Liens;




          (viii) Indebtedness with respect to deposits or reclamation or other bonds incurred in the
ordinary course; and




          (ix) Indebtedness of any Loan Party consisting of Swap Obligations requiring payments by such
Loan Party contingent upon interest rates, commodity rates or indices, incurred by such Loan Party
in the ordinary course of business for the purpose of mitigating risks associated with liabilities
of such Loan Party and not in any event for purposes of speculation or



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taking a “market view”; provided, that the Indebtedness permitted by this Section 8.2.1(ix)
shall not exceed $1,500,000 at any one time outstanding.




          8.2.2 Liens.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any
time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible
or intangible, now owned or hereafter acquired, or agree or become liable to do so, except
Permitted Liens.



          8.2.3 Guaranties.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any
time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee,
become surety for, endorse or otherwise be or agree to become or remain directly or contingently
liable upon or with respect to, any obligation or liability of any other Person, except for (a)
Guaranties of Indebtedness of the Loan Parties permitted hereunder, including Guaranties by the
Guarantors of Indebtedness arising under the Note Purchase Documents and (b) Guaranties by the
Borrower existing on the Closing Date of operating lease obligations of TWCC described on
Schedule 8.2.3; provided, that, except for the Guaranties by the Borrower referred to in
clause (b) of this Section 8.2.3, neither the Borrower nor any other Loan Party (other than TWCC)
shall guaranty, assume or otherwise be or become liable for any Indebtedness or other obligations
of TWCC; but provided further, that nothing in this Section 8.2.3 shall prevent the Borrower from
making the pledge by it of the Subsidiary Shares of TWCC included in the NRGT Liens.



          8.2.4 Loans and Investments.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any
time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any
stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or
limited liability company interest in, or any other investment or interest in, or make any capital
contribution to, any other Person, or agree, become or remain liable to do any of the foregoing,
except:



          (i) trade credit extended on usual and customary terms in the ordinary course of such Loan
Party’s or such Subsidiary’s business;




          (ii) advances to employees to meet expenses incurred by such employees in the ordinary course
of business;




          (iii) Permitted Investments;




          (iv) loans, advances and investments in or to other Loan Parties (other than TWCC);




          (v) an advance of $1,500,000 to TWCC on the Closing Date, provided that NRGT shall be
obligated to reimburse such amount to TWCC within 100 days of the Closing Date pursuant to the NRGT
Documents, subject to the terms and conditions of the NRGT Documents (the “NRGT Reimbursement”);
and




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          (vi) loans and advances by the Borrower to TWCC in addition to the advance permitted by
Section 8.2.4(v); provided that the amount of such loans and advances which may at any time be made
by the Borrower pursuant to this Section 8.2.4(vi) shall not cause the aggregate amount of all such
loans and advances outstanding to exceed $3,000,000.




          8.2.5 Dividends and Related Distributions.




                    (a) The Borrower shall not, and shall not permit any of its Subsidiaries to, make or pay, or
agree to become or remain liable to make or pay, any dividend or other distribution of any nature
(whether in cash, property, securities or otherwise) on account or in respect of its shares of
capital stock, partnership interests or limited liability company interests or on account of the
purchase, redemption, retirement or acquisition of its shares of capital stock, partnership
interests or limited liability company interests (or warrants, options or rights therefor) or make
any Management Fee payment, except that:



               (i) so long as (A) no Potential Default or Event of Default is in existence or would result
therefrom and (B) the amount at the time credited to the Debt Service Reserve Account shall be at
least equal to the Debt Service Reserve Requirement at such time the Borrower may (1) on the
Closing Date, make a distribution of $8,500,000 to Parent from the proceeds of the sale of the Term
Notes, (2) upon receipt by the Borrower of the NRGT Reimbursement in an amount equal to or greater
than $1,500,000, make a distribution of $1,500,000 to Parent and (3) during the period of 15
Business Days next following each Payment Date, make a distribution to Parent and make the
Management Fee payment payable in respect of the quarterly fiscal period ended on or closest to
such Payment Date (including accrued Management Fee payments, if any, for prior fiscal quarterly
periods which remain unpaid), in an amount not exceeding, in the aggregate for such distribution
and Management Fee payment (including accrued Management Fee payments for prior periods), Excess
Cash Flow as of such Payment Date; provided, that the amount of Excess Cash Flow as of each Payment
Date, and the amount so distributable pursuant to this sub-clause (2) on the basis of the
computation of such Excess Cash Flow, shall be subject to adjustment pursuant to Section 8.2.5(b);
and



               (ii) any Subsidiary of the Borrower may make dividends and distributions to the Borrower or to
any other Subsidiary in respect of Equity Interests of such Subsidiary owned by the Borrower or
such other Subsidiary, as the case may be.


The Borrower shall not and shall not permit any of its Subsidiaries to enter into any contract or
agreement which restricts in any manner the payment by any Subsidiary of the Borrower of dividends
or distributions to the Borrower or any other Subsidiary which shall own Equity Interests of such
Subsidiary; provided, however, that the Borrower and TWCC may enter into the NRGT Documents,
notwithstanding the potential restrictive effects thereof on the payment of dividends and
distributions by TWCC.




                    (b) The distributions and Management Fee payments made by the Borrower to the Parent pursuant
to sub-clause (i)(2) of Section 8.2.5(a) from Excess Cash Flow as of each Payment Date in any
fiscal year shall be subject to adjustment in accordance with the further provisions of this
Section 8.2.5(b). Following the completion of each fiscal year of the Borrower, the amount of
Excess Cash Flow as of each Payment Date in such fiscal year shall be recalculated based upon the
annual audited financial statements of the Loan Parties for such fiscal year. For this purpose,
Available Cash and Excess Cash Flow as of



87









 







each such Payment Date shall be recomputed in accordance with the definitions of “Available
Cash” and “Excess Cash Flow” set forth in Schedule B of the Note Purchase Agreement, in each case
using the actual numbers for the applicable quarterly period derived from such audited financial
statements. Based on such recomputations, as promptly as practicable, but in any event not later
than contemporaneously with the Borrower’s delivery to the Banks of its audited financial
statements for such fiscal year pursuant to Section 8.3.3 [Annual Financial Statements], the
Borrower shall furnish to each such holder an Officer’s Certificate (which may be combined with the
Officer’s Certificate required to be delivered for such fiscal year pursuant to Section 8.3.4
[Certificate of the Borrower]), (i) showing all such recomputations in respect of each fiscal
quarter in such fiscal year and demonstrating the manner in which the same were made, and (ii)
setting forth the amount of each adjustment required in accordance with this Section 8.2.5(b) by
reason of such recomputations in the amount of any distribution or Management Fee payment made in
such fiscal year. All such adjustments based on audited financial information shall be made as
follows:



               (i) in the event that the audited financial information demonstrates that Parent received
monies in excess of that which it should have received for such annual fiscal period, the Borrower
shall cause an amount equal to such excess monies to be paid by Parent to the Borrower; provided,
however, that if Parent shall not have paid the amount of any such excess monies to the Borrower in
full, the amount of such excess monies (or the portion thereof not so paid) shall be deducted from
the amounts which would otherwise be available for distribution to Parent pursuant to this Section
8.2.5 in succeeding fiscal quarters until the full amount of such unpaid excess monies shall have
been so deducted; and



               (ii) in the event that the audited financial information demonstrates that the Borrower should
have been permitted to make distributions or Management Fee payments exceeding the amounts thereof
actually distributed and paid in such fiscal year (the amount of any such excess, the “Underpaid
Amount”), then so long as (x) no Potential Default or Event of Default is in existence or would
result therefrom and (y) the amount at the time credited to the Debt Service Reserve Account shall
be at least equal to the Debt Service Reserve Requirement at such time, the Borrower may make a
further distribution to Parent and/or make a payment in respect of Management Fees, in an amount
not exceeding, in the aggregate for such further distribution and payment in respect of Management
Fees, the Underpaid Amount.


All recomputations and adjustments pursuant to this Section 8.2.5(b) in respect of any fiscal year
shall be made within ten Business Days of the Borrower’s delivery to the Banks of the audited
financial statements for such fiscal year.




          8.2.6 Liquidations, Mergers, Consolidations, Acquisitions.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, dissolve,
liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by
purchase, lease or otherwise all or substantially all of the assets or capital stock of any other
Person without the prior written consent of the Agent, provided that any Loan Party may consolidate
or merge with any other Person or convey, transfer or lease all or substantially all of its assets
in a single transaction or a series of transactions to any Person if:



                    (a) the successor formed by such consolidation or the survivor of such merger or the Person
that acquires by conveyance, transfer or lease all or



88









 







substantially all of the assets of such Loan Party as an entirety, as the case may be, shall
be a solvent corporation or limited liability company organized and existing under the laws of the
United States or any State thereof (including the District of Columbia), and, if such Loan Party is
not such a corporation or limited liability company, (i) such corporation or limited liability
company shall have executed and delivered to Agent, an agreement, reasonably satisfactory in form
and substance to the Agent, providing for its assumption of the due and punctual performance and
observance of each covenant and condition of the Loan Documents to which such Loan Party is a party
and (ii) such corporation or limited liability company shall have caused to be delivered to Agent
an opinion of nationally recognized independent counsel, or other independent counsel reasonably
satisfactory to the Banks, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with the terms hereof , and
covering such other matters relating to such corporation or limited liability company and such
assumption as the Banks may reasonably request;



                    (b) if such consolidation, merger, conveyance, transfer or lease shall constitute or result in
a Prepayment Event, the Borrower shall have complied with Section 5.5 [Mandatory Prepayment] in
respect thereof and shall have prepaid the Loans and;



                    (c) immediately before and immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing.


No such conveyance, transfer or lease of substantially all of the assets of a Loan Party shall have
the effect of releasing such Loan Party or any successor corporation or limited liability company
that shall theretofore have become such in the manner prescribed in this Section from its liability
under the Loan Documents.




          8.2.7 Dispositions of Assets or Subsidiaries.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell,
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily,
any of its properties or assets, tangible or intangible (including sale, assignment, discount or
other disposition of accounts, contract rights, chattel paper, equipment or general intangibles
with or without recourse or of capital stock, shares of beneficial interest, partnership interests
or limited liability company interests of a Subsidiary of such Loan Party), except:



          (i) transactions involving the sale of inventory in the ordinary course of business;




          (ii) any sale, transfer or lease of assets in the ordinary course of business which are not
necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business and so long
as such assets do not comprise more than 5% in any calendar year of the assets of the Borrower and
its Subsidiaries taken as a whole;




          (iii) any sale, transfer or lease of assets by any Loan Party or Subsidiary of such Loan Party
to another Loan Party (other than TWCC);




          (iv) transactions permitted pursuant to Section 8.2.6 [Liquidations, Mergers, etc.];




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          (v) any sale, transfer or lease of assets in the ordinary course of business which are
replaced by substitute assets acquired or leased within the parameters of Section 8.2.16 [Capital
Expenditures and Leases], provided such substitute assets are subject to the Banks’ Prior Security
Interest;




          (vi) participation by TWCC in the 8750 Parts Pool and Participation by the Borrower or any of
its Subsidiaries in any other Approved Parts Pool Program; or




          (vii) any sale, transfer or lease of assets, other than those specifically permitted pursuant
to clauses (i) through (vi) above, which is approved by the Required Banks if such assets are not
subject to a first priority Lien in favor of the Purchasers.




          8.2.8 Affiliate Transactions.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter
into or carry out any transaction with an Affiliate of any Loan Party (including purchasing
property or services from or selling property or services to any Affiliate of any Loan Party or
other Person) without the prior written consent of the Required Banks, unless such transaction (i)
is not otherwise prohibited by this Agreement, (ii) constitutes a Permitted Affiliate Transaction,
and (iii) is in accordance with all applicable Law.



          8.2.9 Subsidiaries, Partnerships and Joint Ventures.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, own or
create directly or indirectly any Subsidiaries other than (a) any Subsidiary of the Borrower which
is a party to this Agreement on the Closing Date as a Guarantor; (b) TWCC (which may continue to be
a Subsidiary of the Borrower); and (c) any Subsidiary (other than a Subsidiary of TWCC) formed
after the Closing Date which shall have become a party to this Agreement as a Guarantor pursuant to
a Guarantor Joinder Agreement, provided that the Required Banks shall have consented to such
formation and joinder and such Subsidiary and the Loan Parties, as applicable, shall have granted
and caused to be perfected first priority Liens in favor of the Collateral Agent for the benefit of
the Banks in the assets held by, and stock of or other ownership interests in, such Subsidiary, and
otherwise complied with the provisions of Section 11.18 [Governing Law] with respect to such
Subsidiary. No Loan Party shall become or agree to become (i) a general or limited partner in any
general or limited partnership, except that the Loan Parties may be general or limited partners in
other Loan Parties, (ii) a member or manager of, or hold a limited liability company interest in, a
limited liability company, except that the Loan Parties may be members or managers of, or hold
limited liability company interests in, other Loan Parties, or (iii) a joint venturer or hold a
joint venture interest in any joint venture.



          8.2.10 Continuation of or Change in Business.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in
any material business other than its business of owning and operating coal mine facilities
associated with the Coal Reserves (as the same may be extended or expanded or changes from time to
time).



          8.2.11 Plans and Benefit Arrangements.




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     Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, do any of
the following if the same could reasonably be expected to result in any substantial obligation to
the Borrower or any of its Subsidiaries or otherwise result in a Material Adverse Change:



          (i) fail to satisfy the minimum funding requirements of ERISA and the Internal Revenue Code
with respect to any Plan;




          (ii) request a minimum funding waiver from the Internal Revenue Service with respect to any
Plan;




          (iii) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer
Plan;




          (iv) permit any Plan to be less than Adequately Funded;




          (v) fail to make when due any contribution to any Multiemployer Plan that the Borrower or any
member of the ERISA Group may be required to make under any agreement relating to such
Multiemployer Plan, or any Law pertaining thereto;




          (vi) withdraw (completely or partially) from any Multiemployer Plan or withdraw (or be deemed
under Section 4062(e) of ERISA to withdraw) from any Multiple Employer Plan;




          (vii) terminate, or institute proceedings to terminate, any Plan;




          (viii) make any amendment to any Plan with respect to which security is required under
Section 307 of ERISA; or




          (ix) fail to give any and all notices and make all disclosures and governmental filings
required under ERISA or the Internal Revenue Code.




          8.2.12 Fiscal Year.




               The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its
fiscal year from the twelve-month period beginning January 1 and ending December 31.



          8.2.13 Issuance of Stock.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, issue any
additional shares of its capital stock, shares of beneficial interest, partnership interests,
limited liability company interests or similar ownership interests, or any options, warrants or
other rights in respect thereof.



          8.2.14 Changes in Organizational Documents.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in
any respect its Organizational Documents (including any provisions or resolutions relating to
capital stock or other equity interest), without providing at least twenty 20 calendar days’ prior
written notice to the Agent and the Banks and, in the event such change



91









 







would be material and adverse to the Banks as determined by the Agent in its sole discretion,
obtaining the prior written consent of the Banks.



          8.2.15 Changes in Material Contracts, Performance under Coal Supply Contracts.




               Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to,
materially amend (except for Permitted Modifications), cancel, terminate, waive or give any consent
to any material violation of or release any party from its obligations under any of the Coal Supply
Contracts or any of the other material contracts to which it is a party. Each of the Loan Parties
shall supply coal under its respective Coal Supply Contracts solely with coal mined from the
Obligors’ coal mines and shall not purchase coal or permit any other Person to supply coal under or
service its Coal Supply Contracts, except for (i) Permitted Affiliate Transactions, (ii) the
procurement of coal at the request of a buyer in accordance with the explicit provisions of the
Coal Supply Contract for Colstrip 3 & 4 and (iii) for the procurement of coal by a Loan Party if
(a) the price paid for such substitute coal is less than the cost that would otherwise be incurred
by such Loan Party’s mine in supplying such coal, (b) such Loan Party is permitted to deliver such
substitute coal under a Coal Supply Contract for its mines and (c) the substitute coal provides a
benefit to such Loan Party’s mine (for example, by providing a higher quality coal to blend with
such Loan Party’s mine coal) thereby enhancing the customer plant’s operations and overall fuel
blend.



          8.2.16 Capital Expenditures and Leases.




               No Loan Party shall make, or permit any of its Subsidiaries to make, any Capital Expenditures
in any fiscal year, other than Capital Expenditures made (i) in the ordinary course of business and
on terms (whether of purchase or lease) which are usual and customary and (ii) in amounts which,
when taken together with all other Capital Expenditures made by the Loan Parties and their
Subsidiaries in such fiscal year, shall not exceed in the aggregate the amount set forth for such
fiscal year on Schedule 8.2.16; provided, that if the amount set forth on Schedule
8.2.16 for any fiscal year shall exceed the aggregate amount of Capital Expenditures made by
the Loan Parties and their Subsidiaries in such fiscal year, the amount of such excess may be
carried forward and utilized for Capital Expenditures in subsequent fiscal years.



          8.2.17 Minimum Debt Service Coverage Ratio.




               The Loan Parties shall not permit the Debt Service Coverage Ratio to be less than 1.30 to
1.00, calculated as of the end of each fiscal quarter after the Closing Date based upon the
immediately preceding four fiscal quarters.



          8.2.18 Maximum Leverage Ratio.




               The Loan Parties shall not permit the ratio of Consolidated Net Indebtedness of the Borrower
and its Subsidiaries to Consolidated EBITDA to exceed the ratio set forth below for such period,
calculated as of the end of each fiscal quarter during each such period based upon the immediately
preceding four fiscal quarters:



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	Period
	 	Ratio
	Closing Date through June 30, 2010

	 	3.00 to 1.00
	July 1, 2010 through December 31, 2010

	 	2.75 to 1.00
	January 1, 2011 through December 31,
2011

	 	2.50 to 1.00
	January 1, 2012 through December 31,
2012

	 	2.25 to 1.00
	January 1, 2013 and thereafter

	 	1.50 to 1.00






     8.3 Reporting Requirements.



          The Loan Parties, jointly and severally, covenant and agree that until payment in full of the
Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest thereon, expiration
or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations
hereunder and under the other Loan Documents and termination of the Commitments, the Loan Parties
will furnish or cause to be furnished to the Agent and each of the Banks:




          8.3.1 Monthly Financial Statements, Borrowing Base Certificate.




               As soon as available and in any event within thirty (30) calendar days after the end of each
calendar month, the Borrower’s financial statements, consisting of a consolidated and consolidating
balance sheet as of the end of such month and related consolidated and consolidating statements of
income, member’s equity and cash flows for the month then ended and the fiscal year through that
date, all in reasonable detail and certified (subject to normal year-end adjustments) by the Chief
Executive Officer, President or Chief Financial Officer of the Borrower as having been prepared in
accordance with GAAP (provided that the failure to provide footnotes shall not be violative of this
Section), consistently applied, and setting forth in comparative form on a consolidated basis the
respective financial statements for the corresponding date and period in the previous fiscal year.
Within twenty (20) calendar days after the end of each month, a Borrowing Base Certificate as of
the end of the immediately preceding month in the form of Exhibit 8.3.1 hereto,
appropriately completed, executed and delivered by an Authorized Officer.



          8.3.2 Quarterly Financial Statements.




               As soon as available and in any event within fifty (50) calendar days after the end of each of
the first three fiscal quarters in each fiscal year of the Borrower, financial statements of the
Borrower, consisting of a consolidated and consolidating balance sheet as of the end of such fiscal
quarter and related consolidated and consolidating statements of income, changes in member’s equity
and cash flows for the fiscal quarter and the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding date and period in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally (provided that the failure to provide footnotes shall not
be violative of this Section), and certified by the Chief Executive Officer, President or Chief
Financial Officer of the Borrower as fairly presenting, in



93









 







all material respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end adjustments.



          8.3.3 Annual Financial Statements.




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



          8.3.4 Certificate of the Borrower.




               Concurrently with the financial statements of the Borrower furnished to the Agent and to the
Banks pursuant to Sections 8.3.2 [Quarterly Financial Statements] and 8.3.3 [Annual Financial
Statements], a certificate (each a “Compliance Certificate”) of the Borrower signed by the Chief
Executive Officer, President or Chief Financial Officer or other responsible officer (whose
position shall be reasonably satisfactory to the Banks) of the Borrower, in the



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form of Exhibit 8.3.4, to the effect that, except as described pursuant to
Section 8.3.5 [Notice of Default], (i) the representations and warranties of the Borrower contained
in Section 6 and in the other Loan Documents are true in all material respects on and as of the
date of such certificate with the same effect as though such representations and warranties had
been made on and as of such date (except representations and warranties which expressly relate
solely to an earlier date or time) and the Loan Parties have performed and complied with all
covenants and conditions hereof, (ii) no Event of Default or Potential Default exists and is
continuing on the date of such certificate, and (iii) containing (w) calculations in sufficient
detail to demonstrate compliance as of the date of such financial statements with all financial
covenants contained in Section 8.2 [Negative Covenants] and with Section 8.2.5 [Dividends and
Related Distributions], (x) a brief summary of applications made during the period covered by such
financial statements of Retained Cash as of the Payment Date most recently preceding such period
and, in the case of the Officer’s Certificate accompanying any financial statements furnished
pursuant to Sections 8.3.2 [Quarterly Financial Statements] and 8.3.3 [Annual Financial
Statements], Retained Cash as of each other Payment Date occurring during such period, (y) a
statement of the aggregate amount paid by the Borrower and the Guarantors to WRI and the aggregate
amount received by them from WRI, pursuant to the Shared Services Arrangements during each month
included in the period covered by such financial statements, and (z) a written discussion of
management comparing the financial performance of the Loan Parties against both the annual budget
and the results of operations from the corresponding fiscal quarter in the immediately preceding
fiscal year. Each such certificate delivered with the financial statements pursuant to Sections
8.3.2 [Quarterly Financial Statements] and 8.3.3 [Annual Financial Statements] shall include a
determination in reasonable detail of (1) the Available Cash and Retained Cash and (2) the
Unfinanced Capital Expenditures, as adjusted each fiscal quarter.



          8.3.5 Notices.




               8.3.5.1 Default. Promptly after any officer of any Loan Party has learned of the
occurrence of an Event of Default or Potential Default, a certificate signed by an Authorized
Officer setting forth the details of such Event of Default or Potential Default and the action
which such Loan Party proposes to take with respect thereto.



               8.3.5.2 Organizational Documents. Within the time limits set forth in Section 8.2.14
[Changes in Organizational Documents], any amendment to the organizational documents of any Loan
Party.



               8.3.5.3 Erroneous Financial Information. Immediately in the event that the Borrower
or its accountants conclude or advise that any previously issued financial statement, audit report
or interim review should no longer be relied upon or that disclosure should be made or action
should be taken to prevent future reliance.



               8.3.5.4 ERISA Event. Immediately upon the occurrence of any ERISA Event.



          8.3.6 Notice of Litigation.




               Promptly after the commencement thereof, notice of all actions, suits, proceedings or
investigations before or by any Official Body or any other Person against any Loan Party or
Subsidiary of any Loan Party which relate to the Collateral, involve a claim or



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series of claims in excess of $1,000,000.00 or which if adversely determined would constitute
a Material Adverse Change; and promptly after any Loan Party becoming aware of, notice of the
enactment, promulgation, adoption or existence of any Law, or any construction or application of
any Law by any official body, which could reasonably be expected to result in a Material Adverse
Change.



          8.3.7 Certain Events.




               Written notice to the Agent:



          (i) at least thirty (30) calendar days prior thereto, with respect to any change in any Loan
Party’s location of its assets or principal office from the states and locations set forth in
Schedule A to the Security Agreement.




          8.3.8 Budgets, Forecasts, Other Reports and Information.




               Promptly upon their becoming available to the Borrower, but in no event later than the
specific time period specified below, if any:




          (i) the budget and annual forecasts or projections of the Borrower and its Subsidiaries for
each fiscal year, to be supplied not later than January 1 of such fiscal year to which any of the
foregoing may be applicable,




          (ii) all reports including management letters submitted to the Borrower by independent
accountants in connection with any annual, interim or special audit,




          (iii) all reports, notices or proxy statements generally distributed by the Borrower to its
members on a date no later than the date supplied to such members,




          (iv) all regular, periodic and other reports, including Forms 10-K, 10-Q and 8-K, registration
statements and prospectuses, filed by the Parent or the Borrower with the Securities and Exchange
Commission,




          (v) a copy of any order in any proceeding to which the Borrower or any of its Subsidiaries is
a party issued by any Official Body, except for orders of the type that are typically received by
mining companies with respect to violations of the Law occurring in connection with mining
activities which have no reasonable likelihood of materially disrupting the projected mining
operations of the Loan Parties or resulting in any substantial obligation to the Loan Parties or of
otherwise constituting or giving rise to a Material Adverse Change,




          (vi) within 10 Business Days of the end of each calendar month, a report signed by an
Authorized Officer which discloses for each Loan Party for such immediately preceding calendar
month (a) the volume of coal produced (in tons) by such Loan Party, (b) the volume of coal sold by
such Loan Party, and (c) the price per ton obtained for such coal sold, and




          (vii) such other reports and information as any of the Banks may from time to time reasonably
request. The Borrower shall also notify the Banks promptly of the enactment or adoption of any Law
which could reasonably be expected to result in a Material Adverse Change.




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          8.3.9 Notices Regarding Plans and Benefit Arrangements.




               8.3.9.1 Certain Events.



                    Promptly after a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature of the event; when known, any action taken or threatened by a governmental
agency or other adverse party; and the action, if any, that the Borrower or an other member of the
ERISA Group proposes to take with respect thereto:



          (i) with respect to any Plan, any Reportable Event; or




          (ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the Borrower or any member of the ERISA
Group of a notice from a Multiemployer Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or




          (iii) any event, transaction or condition that could reasonably be expected to result in the
incurrence of any liability by the Borrower or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Internal Revenue Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the
Borrower or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any other such liabilities or Liens then
existing, could reasonably be expected to constitute or result in a substantial obligation to the
Borrower or other member of the ERISA Group or otherwise result in a Material Adverse Change.




               8.3.9.2 Annual Reports



                    Promptly after receipt thereof, at the request of the Agent or any Bank, copies of each annual
report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports,
the most recent financial information concerning the financial status of each Plan administered or
maintained by the Borrower or any other member of the ERISA Group, and schedules showing the
amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the
ERISA Group in which any of their personnel participate or from which such personnel may derive a
benefit, and each Schedule B (Actuarial Information) to the annual report filed by the Borrower or
any other member of the ERISA Group with the Internal Revenue Service with respect to each such
Plan.



               8.3.9.3 Notice of Voluntary Termination.



                    Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form
to Form 5310, filed with the PBGC in connection with the termination of any Plan.



          8.3.10 Information as to certain Price Adjustments.




               If any Price Determination Event shall arise under any material Coal Supply Contract, the
Borrower or the relevant Loan Party shall provide (i) notice thereof at least 30 days prior to the
effectiveness of any adjustment or potential adjustment under such contract



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to each holder, identifying such contract and setting forth the price currently payable
thereunder and the basis on which such adjustment is or may be made, (ii) such pertinent
information as any such holder may reasonably request as to the computation of such price
adjustment or potential price adjustment and the impact thereof on the business and cash flows of
the Borrower and the other Loan Parties, and (iii) not later than the third Business Day following
the effectiveness of any such adjustment, confirmation of the amount thereof and the manner in
which it was determined; provided, however that nominal price adjustments in the ordinary course of
business based on cost and inflation indices or the quality of the coal furnished pursuant to such
contracts need not be disclosed under this Section. The term “Price Determination Event” shall
mean, with respect to any Coal Supply Contract, (i) any scheduled “re-opener” of the price payable
under such contract (other than the quarterly price adjustment under the Coyote Plant coal sales
contract), (ii) any amendment to or interpretation of such contract that could reasonably be
expected to alter negatively, from the Loan Party’s perspective, and materially the price payable
to the Loan Party thereunder, and (iii) any arbitration or judicial proceeding involving the price
payable under such contract.



          8.3.11 Single Purpose Entity Status.




               Concurrently with the annual financial statements required to be furnished pursuant to Section
8.3.3 [Indebtedness] in respect of each fiscal year, a written report substantially in the format
of Exhibit 8.3.11 hereto, signed by the Secretary and a Senior Financial Officer of the
Borrower, discussing the actions taken by the Borrower and its Subsidiaries during such fiscal year
in order to assure compliance with Section 8.1.16 [Single Purpose Entities], setting forth, with
respect to each of subdivisions (i) through (xvii) of such Section, that its and their businesses,
affairs, books and records have been conducted and maintained during such fiscal year in compliance
with the separateness covenants, agreements, terms and conditions set forth in each such
subdivision, and, in the event of any failure to have complied with any such covenant, agreement,
term or condition, specifying in reasonable detail the control imposed or other actions taken or to
be taken by the Borrower with respect thereto.



9. DEFAULT




     9.1 Events of Default.



          An Event of Default shall mean the occurrence or existence of any one or more of the following
events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected
by operation of Law):




          9.1.1 Payments Under Loan Documents.




               The Borrower (i) shall fail to pay any principal of any Loan (including scheduled
installments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or
Letter of Credit Borrowing after such principal amount becomes due or (ii) shall fail to pay for
more than five (5) Business Days any interest on any Loan, Reimbursement Obligation or Letter of
Credit Borrowing or any other amount owing hereunder or under the other Loan Documents after such
interest or other amount becomes due in accordance with the terms hereof or thereof;



          9.1.2 Breach of Warranty.




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               Any representation or warranty made in writing by or on behalf of a Loan Party or by any
officer of a Loan Party in any Loan Document or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any material respect on
the date as of which made;



          9.1.3 Breach of Negative Covenants, Single Purpose Entity or Visitation Rights.




               Any of the Loan Parties shall default in the compliance with or performance of any covenant
contained in Section 8.1.6 [Visitation Rights] or Section 8.2 [Negative Covenants] or shall fail to
comply with the covenants contained in Section 8.1.16 [Single Purpose Entity]; provided, that, with
respect to the covenants contained in Section 8.1.16, such violation or failure to comply shall not
constitute an Event of Default so long as (A) such violation or failure to comply was immaterial to
the covenants contained in Section 8.1.16 taken as a whole, and (B) if such violation or failure to
comply is curable, the Loan Parties shall cure such violation or failure to comply within thirty
(30) calendar days following a Responsible Officer obtaining actual knowledge of the violation or
failure to comply;



          9.1.4 Breach of Other Covenants.




               A Loan Party defaults in the performance of or compliance with any term contained herein
(other than those referred to in Sections 9.1.1 [Payment Under Loan Documents], 9.1.2 [Breach of
Warranty] and 9.1.3 [Visitation Rights] of this Section 9) or in any other term of any Loan
Documents and such default is not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default or (ii) the Borrower receiving written notice of
such default from any holder of a Note (any such written notice to be identified as a “notice of
default” and to refer specifically to this paragraph (d) of Section 11 [Miscellaneous]), or the
Guaranty Agreement or any other Security Document fails to be in full force and effect;



          9.1.5 Defaults in Other Agreements or Indebtedness, or Material Contracts.




          (i) (i) any “Event of Default” shall occur or exist under the Term Agreement or any of the
other Note Purchase Documents, or (ii) the Borrower or any Subsidiary of the Borrower is in default
(as principal or as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal
amount of at least $500,000 beyond any period of grace provided with respect thereto, or (iii) the
Borrower or any Subsidiary of the Borrower is in default in the performance of or compliance with
any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at
least $500,000 or of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such Indebtedness described in
clauses (ii) and (iii) has been declared due and payable (or one or more Persons are entitled to
declare such Indebtedness to be due and payable) before its stated maturity or before its regularly
scheduled dates of payment, or (iv) as a consequence of the occurrence or continuation of any event
or condition (other than the passage of time or the right of the holder of Indebtedness to convert
such Indebtedness into equity interests), the Borrower or any Subsidiary of the Borrower has become
obligated to purchase or repay Indebtedness before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at least $500,000, or
(v) the earlier to occur of (1) a default or event of default (or right to cancel or terminate such
agreement prior to its stated



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term) by any of the Loan Parties shall occur at any time under the terms of any Coal Supply
Contract (upon occurrence of any such event, a “Defaulted Agreement”) and such breach, default or
event of default could result in cancellation or termination of the Defaulted Agreement prior to
its stated term, or (2) the cancellation or termination of any Defaulted Agreement or (vi) a
default or event of default (or a right to cancel or terminate such agreement prior to its stated
term) shall occur at any time under the terms of any one or more of the Coal Leases which is
reasonably likely to cause a Material Adverse Change;




          9.1.6 Final Judgments or Orders.




               A final judgment or judgments for the payment of money aggregating in excess of $1,000,000
(net of insurance coverage, provided, that (i) the insurance carrier has acknowledged in writing
its obligation to satisfy such judgment or judgments and (ii) such insurance carrier is solvent and
has a long term debt rating which is at least “A2” by Moody’s or Standard & Poor’s) are rendered
against one or more of the Borrower and its Subsidiaries and which judgments are not, within 45
days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within
45 days after the expiration of such stay, or, notwithstanding any such bonding, stay or discharge
thereof, such judgment or judgments affect the Collateral in any material respect or, in the
aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or
under the other Note Purchase Documents; or



          9.1.7 Events Relating to Plans and Benefit Arrangements.




               Any of the following events occur, involving the Borrower or any member of the ERISA Group,
which event, alone or together with any other such event(s), would, or would reasonably be expected
to, result in a substantial obligation to the Borrower or any of its Subsidiaries or otherwise
result in a Material Adverse Change: (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Internal Revenue Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought to be granted under section 430 of
the Internal Revenue Code; (ii) the Plans, considered in the aggregate, shall cease to be
Adequately Funded; (iii) failure to make any contribution when due to a Multiemployer Plan; (iv) a
notice of intent to terminate shall have been or is reasonably expected to be filed with the PBGC
with respect to any Plan; (v) a Reportable Event on the basis of which the PBGC is reasonably
expected to terminate a Plan; (vi) the PBGC shall have instituted proceedings under ERISA section
4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have given notice
that a Plan may become the subject of such proceedings; (vii) adoption of an amendment to a Plan
with respect to which security is required under ERISA section 307; (viii) partial or complete
withdrawal under ERISA section 4062(e), from a Multiple Employer Plan or (ix) partial or complete
withdrawal from a Multiemployer Plan.



          9.1.8 Change of Control.




               There shall have occurred (a) any Loan Parties’ Change in Control or Control Event with
respect to the Borrower or any of the Loan Parties or (b) any Parent Change in Control with respect
to the Parent (as such terms are defined in Section 5.5 [Mandatory Prepayments] of this Agreement).



          9.1.9 Involuntary Proceedings.




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               a court or governmental authority of competent jurisdiction enters an order appointing,
without consent by the Borrower or any of its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief or reorganization
or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the
Borrower or any of its Subsidiaries, or any such petition shall be filed against the Borrower or
any of its Subsidiaries and such order or petition shall not be dismissed within 60 days; or



          9.1.10 Voluntary Proceedings.




               the Borrower or any Subsidiary (i) is generally not paying, or admits in writing its inability
to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of
its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose
of any of the foregoing.



          9.1.11 Default or Non-performance by Manager.




               The manager shall default under or otherwise fail to perform any of its obligations or duties
under the Management Agreement.



          9.1.12 Loss of Bonding Capacity.




               Any of the Loan Parties shall fail to maintain sufficient mine bonding capacity to be able to
conduct its operations substantially as contemplated by the mining plans used in preparing the
Financial Projections provided to the Agent, or (ii) any of the Loan Parties shall default in the
compliance with or the performance of its surety bonding agreements and obligations (including, but
not limited to any default in the payment of outstanding reimbursement claims owing in connection
with any of the bonds outstanding) and in either case, such default is not remedied within 30 days.



          9.1.13 Loan Document Unenforceable.




               Any of the material provisions of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the Loan Party executing the same or such Loan Party’s successors
and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof
or the enforceability shall in any way be terminated (except in accordance with its terms) or
become or be declared ineffective or inoperative or shall in any way be challenged or contested or
cease to give or provide the respective Liens, security interests, or other material rights,
titles, interests, remedies, powers or privileges intended to be created thereby;



          9.1.14 Liens. Any Lien purported to be created by any Security Document shall fail or cease to be a valid and
perfected Lien on material Collateral intended to be subject thereto



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subject to no other Lien
(whether ranking on a parity therewith or prior or junior thereto) not expressly permitted by such
Security Document or the Intercreditor Agreement.




     9.2 Consequences of Event of Default.



          9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.




               If an Event of Default specified under Sections 9.1.1 [Payments Under Loan Documents] through
9.1.8 [Change of Control] shall occur and be continuing, the Banks and the Agent shall be under no
further obligation to make Loans or issue Letters of Credit, as the case may be, and the Agent may,
and upon the request of the Required Banks, shall (i) by written notice to the Borrower, declare
the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder and thereunder to be
forthwith due and payable, and the same shall thereupon become and be immediately due and payable
to the Agent for the benefit of each Bank without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived, and (ii) require the Borrower to, and the
Borrower shall thereupon, deposit in a non-interest-bearing account with the Agent, as cash
Collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount
currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and
the Borrower hereby pledges to the Agent and the Banks, and grants to the Agent and the Banks a
security interest in, all such cash as security for such Obligations. Upon the curing of all
existing Events of Default to the satisfaction of the Required Banks, the Agent shall return such
cash Collateral to the Borrower; and



          9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.




               If an Event of Default specified under Section 9.1.9 [Involuntary Proceedings] or 9.1.10
[Voluntary Proceedings] shall occur, the Banks shall be under no further obligations to make Loans
hereunder and the unpaid principal amount of the Loans then outstanding and all interest accrued
thereon, any unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder and
thereunder shall be immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived; and



          9.2.3 Set-off.




               If an Event of Default shall occur and be continuing, any Bank to whom any Obligation is owed
by any Loan Party hereunder or under any other Loan Document or any participant of such Bank which
has agreed in writing to be bound by the provisions of Section 10.13 [Equalization of Banks] and
any branch, Subsidiary or Affiliate of such Bank or participant anywhere in the world shall have
the right, in addition to all other rights and remedies available to it, without notice to such
Loan Party, to set-off against and apply to the then unpaid balance of all the Loans and all other
Obligations of the Borrower and the other Loan Parties hereunder or under any other Loan Document
any debt owing to, and any other funds held in any manner for the account of, the Borrower or such
other Loan Party (other than TWCC) by such
Bank or participant or by such branch, Subsidiary or Affiliate, including all funds in all
deposit accounts (whether time or demand, general or special, provisionally credited or finally
credited,



102









 








or otherwise) now or hereafter maintained by the Borrower or such other Loan Party (other
than TWCC) for its own account (but not including funds held in custodian or trust accounts) with
such Bank or participant or such branch, Subsidiary or Affiliate. Such right shall exist whether
or not any Bank or the Agent shall have made any demand under this Agreement or any other Loan
Document, whether or not such debt owing to or funds held for the account of the Borrower or such
other Loan Party (other than TWCC) is or are matured or unmatured and regardless of the existence
or adequacy of any Collateral, Guaranty or any other security, right or remedy available to any
Bank or the Agent. Notwithstanding anything contained in this Section 9.2.3 to the contrary, to
the extent that Borrower maintains a deposit account with any Bank, which Borrower has identified
to the Agent as containing monies solely for the payment of black lung trust fund obligations (the
“Black Lung Trust Account”), the Banks agree that they will not set-off against any monies
contained in such Black Lung Trust Account; and



          9.2.4 Suits, Actions, Proceedings.




               If an Event of Default shall occur and be continuing, and whether or not the Agent shall have
accelerated the maturity of Loans pursuant to any of the foregoing provisions of this Section 9.2,
the Agent or any Bank, if owed any amount with respect to the Loans, may proceed to protect and
enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether
for the specific performance of any covenant or agreement contained in this Agreement or the other
Loan Documents, including as permitted by applicable Law the obtaining of the ex parte appointment
of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of the Agent or such Bank; and



          9.2.5 Application of Proceeds.




               From and after the date on which the Agent has taken any action pursuant to this Section 9.2
and until all Obligations of the Borrower and the Guarantors have been paid in full, any and all
proceeds received by the Agent from any sale or other disposition of the Collateral, or any part
thereof, or the exercise of any other remedy by the Agent, shall be applied as follows:




          (i) first, to reimburse the Agent and the Banks for out-of-pocket costs, expenses and
disbursements, including reasonable attorneys’ and paralegals’ fees and legal expenses, incurred by
the Agent or the Banks in connection with realizing on the Collateral or collection of any
Obligations of any of the Loan Parties under any of the Loan Documents, including advances made by
the Banks or any one of them or the Agent for the reasonable maintenance, preservation, protection
or enforcement of, or realization upon, the Collateral, including advances for taxes, insurance,
repairs and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare
for sale or other realization on, any of the Collateral;




          (ii) second, to the repayment of all Indebtedness then due and unpaid of the Loan Parties to
the Banks incurred under this Agreement or any of the other Loan Documents, whether of principal,
interest, fees, expenses or otherwise, in such manner as the Agent may determine in its discretion;
and




          (iii) the balance, if any, as required by Law.





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          9.2.6 Other Rights and Remedies.




               In addition to all of the rights and remedies contained in this Agreement or in any of the
other Loan Documents (including the Mortgage), the Agent shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code or other applicable Law, all of which rights
and remedies shall be cumulative and non-exclusive, to the extent permitted by Law. The Agent may,
and upon the request of the Required Banks shall, exercise all post-default rights granted to the
Agent and the Banks under the Loan Documents or applicable Law.



     9.3 Notice of Sale.



          Any notice required to be given by the Agent of a sale, lease, or other disposition of the
Collateral or any other intended action by the Agent, if given ten (10) days prior to such proposed
action, shall constitute commercially reasonable and fair notice thereof to the Borrower.




10. THE AGENT




     10.1 Appointment.



          Each Bank hereby irrevocably designates, appoints and authorizes PNC Bank to act as Agent for
such Bank under this Agreement and to execute and deliver or accept on behalf of each of the Banks
the other Loan Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note by
the acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents and any other
instruments and agreements referred to herein, and to exercise such powers and to perform such
duties hereunder as are specifically delegated to or required of the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. PNC Bank agrees to act as the
Agent on behalf of the Banks to the extent provided in this Agreement.




     10.2 Delegation of Duties.



          The Agent may perform any of its duties hereunder by or through agents or employees (provided
such delegation does not constitute a relinquishment of its duties as Agent) and, subject to
Sections 10.5 [Reimbursement of Agent by Borrower, Etc.] and 10.6, shall be entitled to engage and
pay for the advice or services of any attorneys, accountants or other experts concerning all
matters pertaining to its duties hereunder and to rely upon any advice so obtained.




     10.3 Nature of Duties; Independent Credit Investigation.



          The Agent shall have no duties or responsibilities except those expressly set forth in this
Agreement and no implied covenants, functions, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or otherwise exist. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a
fiduciary or trust relationship in respect of any Bank; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in


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respect of this Agreement except as expressly set forth herein. Without limiting
the generality of the foregoing, the use of the term “agent” in this Agreement with reference to
the Agent is not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative relationship between
independent contracting parties. Each Bank expressly acknowledges (i) that the Agent has not made
any representations or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any of the Loan Parties, shall be deemed to constitute any representation
or warranty by the Agent to any Bank; (ii) that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial condition and affairs
and its own appraisal of the creditworthiness of each of the Loan Parties in connection with this
Agreement and the making and continuance of the Loans hereunder; and (iii) except as expressly
provided herein, that the Agent shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Bank with any credit or other information with respect thereto,
whether coming into its possession before the making of any Loan or at any time or times
thereafter.




     10.4 Actions in Discretion of Agent; Instructions From the Banks.



          The Agent agrees, upon the written request of the Required Banks, to take or refrain from
taking any action of the type specified as being within the Agent’s rights, powers or discretion
herein, provided that the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or any other Loan Document or applicable
Law. In the absence of a request by the Required Banks, the Agent shall have authority, in its
sole discretion, to take or not to take any such action, unless this Agreement specifically
requires the consent of the Required Banks or all of the Banks. Any action taken or failure to act
pursuant to such instructions or discretion shall be binding on the Banks, subject to Section 10.6
[Exculpatory Provisions, Etc.]. Subject to the provisions of Section 10.6 [Exculpatory
Provisions], no Bank shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder in accordance with the instructions of the
Required Banks, or in the absence of such instructions, in the absolute discretion of the Agent.




     10.5 Reimbursement and Indemnification of Agent by the Borrower.



          The Borrower shall indemnify the Agent (and any sub-agent thereof), each Bank and the Issuing
Bank, and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and disbursements of any
counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees
and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any
other Loan Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan
or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by
the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do




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not strictly comply with the terms of such Letter of Credit), (iii) breach of representations,
warranties or covenants of the Borrower under the Loan Documents, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, including any such
items or losses relating to or arising under Environmental Laws or pertaining to environmental
matters, whether based on contract, tort or any other theory, whether brought by a third party or
by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the
extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a
court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the
Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s
obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has
obtained a final and nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.




          To the extent that the Borrower for any reason fails to indefeasibly pay any amount required
under Sections 5.6.1 [Costs and Expenses] or this Section 10.5 [Indemnification by the Borrower] to
be paid by it to the Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of any
of the foregoing, each Bank severally agrees to pay to the Agent (or any such sub-agent), the
Issuing Bank or such Related Party, as the case may be, such Bank’s Ratable Share (determined as of
the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted against the Agent (or
any such sub-agent) or the Issuing Bank in its capacity as such, or against any Related Party of
any of the foregoing acting for the Agent (or any such sub-agent) or Issuing Bank in connection
with such capacity.




     10.6 Exculpatory Provisions; Limitation of Liability.


          Neither the Agent nor any of its directors, officers, employees, agents, attorneys or
Affiliates shall (a) be liable to any Bank for any action taken or omitted to be taken by it or
them hereunder, or in connection herewith including pursuant to any Loan Document, unless caused by
its or their own gross negligence or willful misconduct, (b) be responsible in any manner to any of
the Banks for the effectiveness, enforceability, genuineness, validity or the due execution of this
Agreement or any other Loan Documents or for any recital, representation, warranty, document,
certificate, report or statement herein or made or furnished under or in connection with this
Agreement or any other Loan Documents, or (c) be under any obligation to any of the Banks to
ascertain or to inquire as to the performance or observance of any of the terms, covenants or
conditions hereof or thereof on the part of the Loan Parties, or the financial condition of the
Loan Parties, or the existence or possible existence of any Event of Default or Potential Default.
No claim may be made by any of the Loan Parties, any Bank, the Agent or any of their respective
Subsidiaries against the Agent, any Bank or any of their respective directors, officers, employees,
agents, attorneys or Affiliates, or any of them, for any special, indirect or consequential damages
or, to the fullest extent permitted by Law, for any punitive damages in respect of any claim or
cause of action (whether based on contract, tort, statutory liability, or any other ground) based
on, arising out of or related to any Loan Document or the transactions contemplated hereby or any
act, omission or event occurring in connection therewith, including the negotiation, documentation, administration or collection of the Loans, and each of the
Loan


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Parties, (for itself and on behalf of each of its Subsidiaries), the Agent and each Bank
hereby waive, releases and agree never to sue upon any claim for any such damages, whether such
claim now exists or hereafter arises and whether or not it is now known or suspected to exist in
its favor. Each Bank agrees that, except for notices, reports and other documents expressly
required to be furnished to the Banks by the Agent hereunder or given to the Agent for the account
of or with copies for the Banks, the Agent and each of its directors, officers, employees, agents,
attorneys or Affiliates shall not have any duty or responsibility to provide any Bank with an
credit or other information concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties which may come into the possession of
the Agent or any of its directors, officers, employees, agents, attorneys or Affiliates.




     10.7 Reimbursement and Indemnification of Agent by Banks.



          Each Bank agrees to reimburse and indemnify the Agent (to the extent not reimbursed by the
Borrower and without limiting the Obligation of the Borrower to do so) in proportion to its Ratable
Share from and against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements, including attorneys’ fees and disbursements
(including the allocated costs of staff counsel), and costs of appraisers and environmental
consultants, of any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement
or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder,
provided that no Bank shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (a) if the
same results from the Agent’s gross negligence or willful misconduct, or (b) if such Bank was not
given notice of the subject claim and the opportunity to participate in the defense thereof, at its
expense (except that such Bank shall remain liable to the extent such failure to give notice does
not result in a loss to the Bank), or (c) if the same results from a compromise and settlement
agreement entered into without the consent of such Bank, which shall not be unreasonably withheld.
In addition, each Bank agrees promptly upon demand to reimburse the Agent (to the extent not
reimbursed by the Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share for all amounts due and payable by the Borrower to the Agent in
connection with the Agent’s periodic audit of the Loan Parties’ books, records and business
properties.




     10.8 Reliance by Agent.



          The Agent shall be entitled to rely upon any writing, telegram, telex or teletype message,
resolution, notice, consent, certificate, letter, cablegram, statement, order or other document or
conversation by telephone or otherwise believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons, and upon the advice and opinions of counsel
and other professional advisers selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action hereunder unless it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.




     10.9 Notice of Default.



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          The Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential
Default or Event of Default unless the Agent has received written notice from a Bank or the
Borrower referring to this Agreement, describing such Potential Default or Event of Default and
stating that such notice is a “notice of default.”




     10.10 Notices.



          The Agent shall promptly send to each Bank a copy of all notices received from the Borrower
pursuant to the provisions of this Agreement or the other Loan Documents promptly upon receipt
thereof. The Agent shall promptly notify the Borrower and the other Banks of each change in the
Base Rate and the effective date thereof.




     10.11 Banks in Their Individual Capacities; Agent in its Individual Capacity.



          With respect to its Revolving Credit Commitment, and the Revolving Credit Loans made by it and
any other rights and powers given to it as a Bank hereunder or under any of the other Loan
Documents, the Agent shall have the same rights and powers hereunder as any other Bank and may
exercise the same as though it were not the Agent, and the term “Bank” and “Banks” shall, unless
the context otherwise indicates, include the Agent in its individual capacity. PNC Bank and its
Affiliates and each of the Banks and their respective Affiliates may, without liability to account,
except as prohibited herein, make loans to, issue letters of credit for the account of, acquire
equity interests in, accept deposits from, discount drafts for, act as trustee under indentures of,
and generally engage in any kind of banking, trust, financial advisory, underwriting or other
business with, the Loan Parties and their Affiliates, in the case of the Agent, as though it were
not acting as Agent hereunder and in the case of each Bank, as though such Bank were not a Bank
hereunder, in each case without notice to or consent of the other Banks. The Banks acknowledge
that, pursuant to such activities, the Agent or its Affiliates may (i) receive information
regarding the Loan Parties or any of their Subsidiaries or Affiliates (including information that
may be subject to confidentiality obligations in favor of the Loan Parties or such Subsidiary or
Affiliate) and acknowledge that the Agent shall be under no obligation to provide such information
to them, and (ii) accept fees and other consideration from the Loan Parties for services in
connection with this Agreement and otherwise without having to account for the same to the Banks.




     10.12 Holders of Notes.



          The Agent may deem and treat any payee of any Note as the owner thereof for all purposes
hereof unless and until written notice of the assignment or transfer thereof shall have been filed
with the Agent. Any request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the holder of any Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.




     10.13 Equalization of Banks.



          The Banks and the holders of any participations in any Notes agree among themselves that, with
respect to all amounts received by any Bank or any such holder for application on any Obligation
hereunder or under any Note or under any such participation, whether received by voluntary payment,
by realization upon security, by the exercise of the right


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of set-off or banker’s lien, by counterclaim or by any other non-pro rata source, equitable
adjustment will be made in the manner stated in the following sentence so that, in effect, all such
excess amounts will be shared ratably among the Banks and such holders in proportion to their
interests in payments under the Notes, except as otherwise provided in Section 4.4.3 [Agent’s and
Bank’s Rights], 5.4.2 [Replacement of a Bank] or 5.6 [Additional Compensation in Certain
Circumstances]. The Banks or any such holder receiving any such amount shall purchase for cash
from each of the other Banks an interest in such Bank’s Loans in such amount as shall result in a
ratable participation by the Banks and each such holder in the aggregate unpaid amount under the
Notes, provided that if all or any portion of such excess amount is thereafter recovered from the
Bank or the holder making such purchase, such purchase shall be rescinded and the purchase price
restored to the extent of such recovery, together with interest or other amounts, if any, required
by law (including court order) to be paid by the Bank or the holder making such purchase.




     10.14 Successor Agent.



          The Agent (i) may resign as Agent or (ii) shall resign if such resignation is requested by the
Required Banks (if the Agent is a Bank, the Agent’s Loans and its Commitment shall be considered in
determining whether the Required Banks have requested such resignation) or required by
Section 5.4.2 [Replacement of a Bank], in either case of (i) or (ii) by giving not less than thirty
(30) days’ prior written notice to the Borrower. If the Agent shall resign under this Agreement,
then either (a) the Required Banks shall appoint from among the Banks a successor agent for the
Banks, subject to the consent of the Borrower, such consent not to be unreasonably withheld, or
(b) if a successor agent shall not be so appointed and approved within the thirty (30) day period
following the Agent’s notice to the Banks of its resignation, then the Agent shall appoint, with
the consent of the Borrower, such consent not to be unreasonably withheld, a successor agent who
shall serve as Agent until such time as the Required Banks appoint and the Borrower consents to the
appointment of a successor agent. Upon its appointment pursuant to either clause (a) or (b) above,
such successor agent shall succeed to the rights, powers and duties of the Agent, and the term
“Agent” shall mean such successor agent, effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement. After the resignation of
any Agent hereunder, the provisions of this Section 10 shall inure to the benefit of such former
Agent and such former Agent shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while it was an Agent under this Agreement.




     10.15 Availability of Funds.



          The Agent may assume that each Bank has made or will make the proceeds of a Loan available to
the Agent unless the Agent shall have been notified by such Bank on or before the later of (1) the
close of Business on the Business Day preceding the Borrowing Date with respect to such Loan or two
(2) hours before the time on which the Agent actually funds the proceeds of such Loan to the
Borrower (whether using its own funds pursuant to this Section 10.15 or using proceeds deposited
with the Agent by the Banks and whether such funding occurs before or after the time on which Banks
are required to deposit the proceeds of such Loan with the Agent). The Agent may, in reliance upon
such assumption (but shall not be required to), make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the Agent by such Bank, the
Agent shall be entitled to


109









 







recover such amount on demand from such Bank (or, if such Bank fails to pay such amount
forthwith upon such demand from the Borrower) together with interest thereon, in respect of each
day during the period commencing on the date such amount was made available to the Borrower and
ending on the date the Agent recovers such amount, at a rate per annum equal to (i) the Federal
Funds Effective Rate during the first three (3) days after such interest shall begin to accrue and
(ii) the applicable interest rate in respect of such Loan after the end of such three-day period.




     10.16 Calculations.



          In the absence of gross negligence or willful misconduct, the Agent shall not be liable for
any error in computing the amount payable to any Bank whether in respect of the Loans, fees or any
other amounts due to the Banks under this Agreement. In the event an error in computing any amount
payable to any Bank is made, the Agent, the Borrower and each affected Bank shall, forthwith upon
discovery of such error, make such adjustments as shall be required to correct such error, and any
compensation therefor will be calculated at the Federal Funds Effective Rate.




     10.17 Beneficiaries.



          Except as expressly provided herein, the provisions of this Section 10 are solely for the
benefit of the Agent and the Banks, and the Loan Parties shall not have any rights to rely on or
enforce any of the provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or for any of the Loan
Parties.




11. MISCELLANEOUS




     11.1 Modifications, Amendments or Waivers.



          With the written consent of the Required Banks, the Agent, acting on behalf of all the Banks,
and the Borrower, on behalf of the Loan Parties, may from time to time enter into written
agreements amending or changing any provision of this Agreement or any other Loan Document or the
rights of the Banks or the Loan Parties hereunder or thereunder, or may grant written waivers or
consents to a departure from the due performance of the Obligations of the Loan Parties hereunder
or thereunder. Any such agreement, waiver or consent made with such written consent shall be
effective to bind all the Banks and the Loan Parties; provided, that, without the written consent
of all the Banks, no such agreement, waiver or consent may be made which will:




          11.1.1 Increase of Commitment; Extension of Expiration Date.




               Increase the amount of the Revolving Credit Commitment of any Bank hereunder or extend the
Expiration Date;



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          11.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of
Terms of Payment.




               Whether or not any Loans are outstanding, extend the time for payment of principal or interest
of any Loan (excluding the due date of any mandatory prepayment of a Loan or any mandatory
Commitment reduction in connection with such a mandatory prepayment hereunder except for mandatory
reductions of the Commitments on the Expiration Date), the Commitment Fee or any other fee payable
to any Bank, or reduce the principal amount of or the rate of interest borne by any Loan or reduce
the Commitment Fee or any other fee payable to any Bank, or otherwise affect the terms of payment
of the principal of or interest of any Loan, the Commitment Fee or any other fee payable to any
Bank;



          11.1.3 Release of Collateral or Guarantor.




               Except for sales of assets permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries],
release any Collateral consisting of capital stock or other ownership interests of any Loan Party
or its Subsidiary or substantially all of the assets of any Loan Party, any Guarantor from its
Obligations under the Guaranty Agreement or any other security for any of the Loan Parties’
Obligations; or



          11.1.4 Miscellaneous.




               Amend Section 5.2 [Pro Rata Treatment of Banks], 10.6 [Exculpatory Provisions, Etc.] or 10.13
[Equalization of Banks] or this Section 11.1, alter any provision regarding the pro rata treatment
of the Banks, change the definition of Required Banks, or change any requirement providing for the
Banks or the Required Banks to authorize the taking of any action hereunder;


provided that no agreement, waiver or consent which would modify the interests, rights or
obligations of the Agent or the Issuing Bank without the written consent of such Agent or Issuing
Bank, as applicable, and provided, further that, if in connection with any proposed waiver,
amendment or modification referred to in Sections 11.1.1 through 11.1.4 above, the consent of the
Required Banks is obtained but the consent of one or more of such other Banks whose consent is
required is not obtained (each a “Non-Consenting Bank”), then the Borrower shall have the right to
replace any such Non-Consenting Bank with one or more replacement Banks pursuant to Section 5.4.2
[Replacement of a Bank].




     11.2 No Implied Waivers; Cumulative Remedies; Writing Required.



          No course of dealing and no delay or failure of the Agent or any Bank in exercising any right,
power, remedy or privilege under this Agreement or any other Loan Document shall affect any other
or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise
thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power, remedy or privilege.
The rights and remedies of the Agent and the Banks under this Agreement and any other Loan
Documents are cumulative and not exclusive of any rights or remedies which they would otherwise
have. Any waiver, permit, consent or approval of any kind or character on the part of any Bank of
any breach or default under this Agreement or



111









 






any such waiver of any provision or condition of this Agreement must be in writing and shall
be effective only to the extent specifically set forth in such writing.




     11.3 Reimbursement and Indemnification of Banks by the Borrower; Taxes.



          11.3.1 Payments Free of Taxes.
Any and all payments by or on account of any obligation of the Borrower hereunder or under any
other Loan Document shall be made free and clear of and without reduction or withholding for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required by applicable Law
to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the Agent, Bank or Issuing
Bank, as the case may be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall
timely pay the full amount deducted to the relevant Official Body in accordance with applicable
Law.



          11.3.2 Payment of Other Taxes by the Borrower. Without limiting the provisions of Section 11.3.1 [Payments Free of Taxes] above, the Borrower
shall timely pay any Other Taxes to the relevant Official Body in accordance with applicable Law.



          11.3.3 Indemnification by the Borrower. The Borrower shall indemnify the Agent, each Bank and the Issuing Bank, within ten (10) days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section)
paid by the Agent, such Bank or the Issuing Bank, as the case may be, and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Official Body.
A certificate as to the amount of such payment or liability, with appropriate back up
documentation, delivered to the Borrower by a Bank or the Issuing Bank (with a copy to the Agent),
or by the Agent on its own behalf or on behalf of a Bank or the Issuing Bank, shall be conclusive
absent manifest error.




          11.3.4 Reimbursement by Banks. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under
Sections 5.6.1 [Costs and Expenses] or 11.3.3 [Indemnification by the Borrower] to be paid by it to
the Agent (or any sub-agent thereof), the Issuing Bank or any Related Party of any of the
foregoing, each Bank severally agrees to pay to the Agent (or any such sub-agent), the Issuing Bank
or such Related Party, as the case may be, such Bank’s Ratable Share (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent)
or the Issuing Bank in its capacity as such, or against any Related Party of
any of the foregoing acting for the Agent (or any such sub-agent) or Issuing Bank in connection
with such capacity.




          11.3.5 Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a
Official Body, the Borrower shall deliver to the Agent the original or a certified copy of a
receipt issued by such Official Body



112









 







evidencing such payment, a copy of the return reporting such
payment or other evidence of such payment reasonably satisfactory to the Agent.




          11.3.6 Status of Banks. Any Foreign Bank that is entitled to an exemption from or reduction of withholding tax under the
Law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which
such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Borrower (with a copy to the Agent), at the time or times prescribed by
applicable Law or reasonably requested by the Borrower or the Agent, such properly completed and
executed documentation prescribed by applicable Law as will permit such payments to be made without
withholding or at a reduced rate of withholding. Notwithstanding the submission of a such
documentation claiming a reduced rate of or exemption from U.S. withholding tax, the Agent shall be
entitled to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under § 1.1441-7(b) of the United States Income Tax Regulations. Further, the
Agent is indemnified under § 1.1461-1(e) of the United States Income Tax Regulations against any
claims and demands of any Bank or assignee or participant of a Bank for the amount of any tax it
deducts and withholds in accordance with regulations under § 1441 of the Internal Revenue Code. In
addition, any Bank, if requested by the Borrower or the Agent, shall deliver such other
documentation prescribed by applicable Law or reasonably requested by the Borrower or the Agent as
will enable the Borrower or the Agent to determine whether or not such Bank is subject to backup
withholding or information reporting requirements.




               Without limiting the generality of the foregoing, in the event that the Borrower is resident
for tax purposes in the United States of America, any Foreign Bank shall deliver to the Borrower
and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the
date on which such Foreign Bank becomes a Bank under this Agreement (and from time to time
thereafter upon the request of the Borrower or the Agent, but only if such Foreign Bank is legally
entitled to do so), whichever of the following is applicable:



          (i) duly completed copies of IRS Form W-8BEN claiming eligibility for benefits of an income
tax treaty to which the United States of America is a party,




          (ii) duly completed copies of IRS Form W-8ECI,




          (iii) in the case of a Foreign Bank claiming the benefits of the exemption for portfolio
interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Bank
is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent
shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or
(C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y)
duly completed copies of IRS Form W-8BEN, or




          (iv) any other form prescribed by applicable Law as a basis for claiming exemption from or a
reduction in United States Federal withholding tax duly completed together with such supplementary
documentation as may be prescribed by applicable Law to permit the Borrower to determine the
withholding or deduction required to be made.




          11.3.7 Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Borrower shall not assert, and hereby
waives, any claim against any



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Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter
of Credit or the use of the proceeds thereof. No Indemnitee referred to in Section 11.3.3
[Indemnification by Borrower] shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this Agreement or the other
Loan Documents or the transactions contemplated hereby or thereby.




     11.4 Holidays.



          Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a
Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2
[Interest Periods] with respect to Interest Periods under the Libor-Rate Option) and such extension
of time shall be included in computing interest and fees, except that the Loans shall be due on the
Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever
any payment or action to be made or taken hereunder (other than payment of the Loans) shall be
stated to be due on a day which is not a Business Day, such payment or action shall be made or
taken on the next following Business Day, and such extension of time shall not be included in
computing interest or fees, if any, in connection with such payment or action.




     11.5 Funding by Branch, Subsidiary or Affiliate.


          11.5.1 Notional Funding.



               Each Bank shall have the right from time to time, without notice to the Borrower, to deem any
branch, Subsidiary or Affiliate (which for the purposes of this Section 11.5 shall mean any
corporation or association which is directly or indirectly controlled by or is under direct or
indirect common control with any corporation or association which directly or indirectly controls
such Bank) of such Bank to have made, maintained or funded any Loan to which the Libor-Rate Option
applies at any time, provided that immediately following (on the assumption that a payment were
then due from the Borrower to such other office), and as a result of such change, the Borrower
would not be under any greater financial obligation pursuant to Section 5.6 [Additional
Compensation in Certain Circumstances] or for Additional Taxes than it would have been in the
absence of such change. Notional funding offices may be selected by each Bank without regard to such Bank’s actual methods of making, maintaining or
funding the Loans or any sources of funding actually used by or available to such Bank.



          11.5.2 Actual Funding.




               Each Bank shall have the right from time to time to make or maintain any Loan by arranging for
a branch, Subsidiary or Affiliate of such Bank to make or maintain such Loan subject to the last
sentence of this Section 11.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or
maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except
where the context clearly requires otherwise, be applicable to such part of the Loans to the same
extent as if such Loans were made or maintained by such Bank, but in no event shall any Bank’s use
of such a branch, Subsidiary or Affiliate to make or maintain any


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part of the Loans hereunder cause
such Bank or such branch, Subsidiary or Affiliate to incur any cost or expenses payable by the
Borrower hereunder or require the Borrower to pay any other compensation to any Bank (including any
expenses incurred or payable pursuant to Section 5.6 [Additional Compensation in Certain
Circumstances]) which would otherwise not be incurred.




     11.6 Notices.



          11.6.1 Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone
(and except as provided in Section 11.6.2 [Electronic Communications]), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by telecopier (i) if to a Bank, to
it at its address set forth in its administrative questionnaire, (ii) if to the Collateral Agent,
at the address set forth in the Collateral Agency Agreement or (iii) if to any other Person, to it
at its address set forth on Schedule 1.1(B).




               Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
Section 11.6.2 [Electronic Communications], shall be effective as provided in such Section.



          11.6.2 Electronic Communications. Notices and other communications to the Banks and the Issuing Bank hereunder may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant
to procedures approved by the Agent; provided that the foregoing shall not apply to notices to any
Bank or the Issuing Bank if such Bank or the Issuing Bank, as applicable, has notified the Agent
that it is incapable of receiving notices under such Article by electronic communication. The
Agent or the Borrower may, in its discretion, agree to accept notices and other communications to
it hereunder by electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or communications. Unless the
Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement); provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




          11.6.3 Change of Address, Etc. Any party hereto may change its address or telecopier number for notices and other communications
hereunder by notice to the other parties hereto.



     11.7 Severability.



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          The provisions of this Agreement are intended to be severable. If any provision of this
Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability thereof in any
other jurisdiction or the remaining provisions hereof in any jurisdiction.




     11.8 Governing Law.



          11.8.1 Governing Law. This Agreement shall be deemed to be a contract under the Laws of the Commonwealth of Pennsylvania
without regard to its conflict of laws principles. Each standby Letter of Credit issued under this
Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the
time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication
Number 590) (“ISP98”), as determined by the Issuing Bank, and each trade Letter of Credit shall be
subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the
Commonwealth of Pennsylvania without regard to its conflict of laws principles.




          11.8.2 SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF (1) THE COMMONWEALTH OF PENNSYLVANIA
SITTING IN ALLEGHENY COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE WESTERN DISTRICT OF
PENNSYLVANIA AND ANY APPELLATE COURT FROM ANY THEREOF AND (2) THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH PENNSYLVANIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN
DOCUMENT SHALL AFFECT ANY RIGHT THAT THE AGENT, ANY BANK OR THE ISSUING BANK MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.




          11.8.3 WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION. EACH



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OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH
DEFENSE.




          11.8.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 11.6 [NOTICES]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.




          11.8.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.




     11.9 Prior Understanding.



          This Agreement and the other Loan Documents supersede all prior understandings and agreements,
whether written or oral, between the parties hereto and thereto relating to the transactions
provided for herein and therein, including any prior confidentiality agreements and commitments.




     11.10 Duration; Survival.



          All representations and warranties of the Loan Parties contained herein or made in connection
herewith shall survive the making of Loans and issuance of Letters of Credit and shall not be
waived by the execution and delivery of this Agreement, any investigation by the Agent or the
Banks, the making of Loans, issuance of Letters of Credit, or payment in full of the Loans. All
covenants and agreements of the Loan Parties contained in Sections 8.1 [Affirmative Covenants], 8.2
[Negative Covenants] and 8.3 [Reporting Requirements] herein shall continue in full force and
effect from and after the date hereof so long as the Borrower may borrow or request Letters of
Credit hereunder and until termination of the Commitments and payment in full of the Loans and
expiration or termination of all Letters of Credit. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, premiums, additional compensation
or expenses and indemnification, including those set forth in the Notes, Section 5 [Payments] and
Sections 10.5 [Reimbursement of Agent by Borrower,




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Etc.], 10.7 [Reimbursement of Agent by Banks,
Etc.] and 11.3 [Reimbursement of Banks by Borrower; Etc.], shall survive payment in full of the
Loans, expiration or termination of the Letters of Credit and termination of the Commitments.




     11.11 Successors and Assigns.



          11.11.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns permitted hereby, except that neither the
Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Agent and each Bank and no Bank may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of Section 11.11.2 [Assignments by Banks], (ii) by way of
participation in accordance with the provisions of Section 11.11.4 [Participations], or (iii) by
way of pledge or assignment of a security interest subject to the restrictions of Section 11.11.6
[Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer
by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in Section 11.11.4
[Participations] and, to the extent expressly contemplated hereby, the Related Parties of each of
the Agent and the Banks) any legal or equitable right, remedy or claim under or by reason of this
Agreement.




          11.11.2 Assignments by Banks. Any Bank may at any time assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that any such assignment shall be subject to the following
conditions:




          (i) Minimum Amounts.




                    (A) in the case of an assignment of the entire remaining amount of the assigning Bank’s
Commitment and the Loans at the time owing to it or in the case of an assignment to a Bank, an
Affiliate of a Bank or an Approved Fund, no minimum amount need be assigned; and



                    (B) in any case not described in clause (i)(A) of this Section 11.11.2, the aggregate amount
of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the
applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the
assigning Bank subject to each such assignment (determined as of the date the Assignment and
Assumption Agreement with respect to such assignment is delivered to the Agent or, if “Trade Date”
is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less
than $2,500,000, in the case of any assignment in respect of the Revolving Credit Commitment of the
assigning Bank, unless each of the Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or
delayed).



          (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Bank’s rights and obligations under this Agreement with
respect to the Loan or the Commitment assigned.




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          (iii) Required Consents. No consent shall be required for any assignment except for the
consent of the Agent (which shall not be unreasonably withheld or delayed) and:




                    (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed)
shall be required unless (x) an Event of Default has occurred and is continuing at the time of such
assignment or (y) such assignment is to a Bank, an Affiliate of a Bank or an Approved Fund;



                    (B) the consent of the Issuing Bank (such consent not to be unreasonably withheld or delayed)
shall be required for any assignment that increases the obligation of the assignee to participate
in exposure under one or more Letters of Credit (whether or not then outstanding).



          (iv) Assignment and Assumption Agreement. The parties to each assignment shall execute and
deliver to the Agent an Assignment and Assumption Agreement, together with a processing and
recordation fee of $3,500, and the assignee, if it is not a Bank, shall deliver to the Agent an
administrative questionnaire provided by the Agent.




          (v) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the
Borrower’s Affiliates or Subsidiaries.




          (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person.



Subject to acceptance and recording thereof by the Agent pursuant to Section 11.11.3 [Register],
from and after the effective date specified in each Assignment and Assumption Agreement, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption Agreement, have the rights and obligations of a Bank under this
Agreement, and the assigning Bank thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in
the case of an Assignment and Assumption Agreement covering all of the assigning Bank’s rights and
obligations under this Agreement, such Bank shall cease to be a party hereto) but shall continue to
be entitled to the benefits of Sections 4.4 [LIBOR Rate Unascertainable; Illegality; Increased
Costs; Deposits Not Available], 5.6 [Additional Compensation in Certain Circumstances], and 11.3
[Reimbursements and Indemnification of the Banks by the Borrower; Taxes] with respect to facts and
circumstances occurring prior to the effective date of such assignment. Any assignment or transfer
by a Bank of rights or obligations under this Agreement that does not comply with this Section
11.11.2 shall be treated for purposes of this Agreement as a sale by such Bank of a participation
in such rights and obligations in accordance with Section 11.11.4 [Participations].




          11.11.3 Register. The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a record of
the names and addresses of the Banks, and the Commitments of, and principal amounts of the Loans
owing to, each Bank pursuant to the terms hereof from time to time. Such register shall be
conclusive, and the Borrower, the Agent and the Banks may treat each Person whose name is in such
register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. Such register shall be available for inspection by the
Borrower and any Bank, at any reasonable time and from time to time upon reasonable prior notice.




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          11.11.4 Participations. Any Bank may at any time, without the consent of, or notice to, the Borrower or the Agent, sell
participations to any Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Bank’s rights
and/or obligations under this Agreement (including all or a portion of its Commitment and/or the
Loans owing to it); provided that (i) such Bank’s obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Agent and the Banks, Issuing Bank shall
continue to deal solely and directly with such Bank in connection with such Bank’s rights and
obligations under this Agreement.




               Any agreement or instrument pursuant to which a Bank sells such a participation shall provide
that such Bank shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Bank will not, without the consent of the Participant, agree to
any amendment, modification or waiver with respect to Sections 11.1.1 [Increase of Commitment,
Etc.], 11.1.2 [Extension of Payment, Etc.], or 11.1.3 [Release of Collateral or Guarantor]).
Subject to Section 11.11.5 [Limitations upon Participant Rights Successors and Assigns Generally],
the Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.4 [LIBOR
Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available] and 5.6 [Additional
Compensation in Certain Circumstances] and 11.3 [Reimbursement and Indemnification of the Banks by
the Borrower; Taxes] to the same extent as
if it were a Bank and had acquired its interest by assignment pursuant to Section 11.11.2
[Assignments by Banks]. To the extent permitted by Law, each Participant also shall be entitled to
the benefits of Section 9.2.3 [Setoff] as though it were a Bank; provided such Participant agrees
to be subject to Section 5.2 [Pro-Rata Treatment of Banks] as though it were a Bank.



          11.11.5 Limitations upon Participant Rights Successors and Assigns Generally. A Participant shall not be entitled to receive any greater payment under Sections 5.6 [Additional
Compensation in Certain Circumstances], 4.4 [LIBOR Rate Unascertainable; Illegality; Increased
Costs; Persons Not Available] and 11.3 [Reimbursement and Indemnification of the Banks by the
Borrower; Taxes] than the applicable Bank would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrower’s prior written consent. A Participant that would be a Foreign Bank if it
were a Bank shall not be entitled to the benefits of Section 11.3 [Reimbursement and
Indemnification of the Banks by the Borrower; Taxes] unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 11.3.6 [Status of Banks] as though it were a Bank.




          11.11.6 Certain Pledges; Successors and Assigns Generally. Any Bank may at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement to secure obligations of such Bank, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall
release such Bank from any of its obligations hereunder or substitute any such pledgee or assignee
for such Bank as a party hereto.




     11.12 Confidentiality.



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          11.12.1 General.




               The Agent and the Banks each agree to keep confidential all information obtained from any Loan
Party or its Subsidiaries which is nonpublic and confidential or proprietary in nature (including
any information the Borrower specifically designates as confidential), except as provided below,
and to use such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby. The Agent and the Banks shall be permitted to
disclose such information (i) to outside legal counsel, accountants and other professional advisors
who need to know such information in connection with the administration and enforcement of this
Agreement, subject to agreement of such Persons to maintain the confidentiality, (ii) to assignees
and participants as contemplated by Section 11.11, and prospective assignees and participants,
(iii) to the extent requested by any bank regulatory authority or, with notice to the Borrower, as
otherwise required by applicable Law or by any subpoena or similar legal process, or in connection
with any investigation or proceeding arising out of the transactions contemplated by this
Agreement, (iv) if it becomes publicly available other than as a result of a breach of this
Agreement or becomes available from a source not known to be subject to confidentiality
restrictions, or (v) if the Borrower shall have consented to such disclosure. Notwithstanding
anything herein to the contrary, the information subject to this Section 11.12.1 shall not include,
and the Agent and each Bank may disclose without limitation of any kind, any information with
respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the
transactions contemplated hereby and all materials of any kind (including opinions or other tax
analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax
structure; provided that, with respect to any document or similar item that, in either case,
contains information concerning the tax treatment or tax structure of the transaction, as well as
other information, this sentence shall only apply to such portions of the document or similar items
that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions
contemplated hereby.



          11.12.2 Sharing Information With Affiliates of the Banks.




               Each Loan Party acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its Affiliates (in
connection with this Agreement or otherwise) by any Bank or by one or more Subsidiaries or
Affiliates of such Bank and each of the Loan Parties hereby authorizes each Bank to share any
information delivered to such Bank by such Loan Party and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Bank to enter into this Agreement, to any
such Subsidiary or Affiliate of such Bank, it being understood that any such Subsidiary or
affiliate of any Bank receiving such information shall be bound by the provisions of Section
11.12.1 as if it were a Bank hereunder. Such Authorization shall survive the repayment of the
Loans and other Obligations and the termination of the Commitments.



     11.13 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Loan Documents, and any separate
letter agreements with respect to fees payable to the Agent, constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof including any prior
confidentiality agreements and



121









 







commitments. Except as provided in Section 7 [Letters of Credit],
this Agreement shall become effective when it shall have been executed by the Agent and when the
Agent shall have received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this
Agreement.



     11.14 Agent’s or Bank’s Consent.



          Whenever the Agent’s or any Bank’s consent is required to be obtained under this Agreement or
any of the other Loan Documents as a condition to any action, inaction, condition or event, the
Agent and each Bank shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional Collateral, the payment of
money or any other matter.




     11.15 Exceptions.



          The representations, warranties and covenants contained herein shall be independent of each
other, and no exception to any representation, warranty or covenant shall be
deemed to be an exception to any other representation, warranty or covenant contained herein
unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission
that would be in contravention of applicable Law.




     11.16 Tax Withholding Clause.



          Each Bank or assignee or participant of a Bank that is not incorporated under the Laws of the
United States of America or a state thereof agrees that it will deliver to each of the Borrower and
the Agent two (2) duly completed copies of the following: (i) if any lending office of such Bank
is located in the United States,  Internal Revenue Service Form W-8ECI (“Form W-8ECI”), and
Internal Revenue Service Form W-9 (“Form W-9”), or other applicable form prescribed by the Internal
Revenue Service, and/or (ii)  if any lending office of such Bank is located outside the United
States Internal Revenue Service Form W-8BEN (“Form W-8BEN”) and Internal Revenue Service Form W-8
or any successor thereto, certifying that such Bank, assignee or participant is entitled to
receive payments under this Agreement and the other Loan Documents without deduction or withholding
of any United States federal income taxes, or is subject to such tax at a reduced rate under an
applicable tax treaty or indicating that no such exemption or reduced rate is allowable with
respect to such payments. Each Bank, assignee or participant required to deliver to the Borrower
and the Agent a form or certificate pursuant to the preceding sentence shall deliver such form or
certificate as follows: (A) each Bank which is a party hereto on the Closing Date shall deliver
such form or certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by the Borrower hereunder for the account of such Bank; (B) each
assignee or participant shall deliver such form or certificate at least five (5) Business Days
before the effective date of such assignment or participation (unless the Agent in its sole
discretion shall permit such assignee or participant to deliver such form or certificate less than
five (5) Business Days before such date in which case it shall be due on the date specified by the
Agent). Each Bank, assignee or participant which so delivers a Form W-8ECI, Form W-9, Form W-8BEN
or Form W-8 or any applicable successor thereto further undertakes to deliver to each of the
Borrower and the Agent two (2) additional copies of such form (or a successor form) on or before
the date that such form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form


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so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent, either certifying
that such Bank, assignee or participant is entitled to receive payments under this Agreement and
the other Loan Documents without deduction or withholding of any United States federal income taxes
or is subject to such tax at a reduced rate under an applicable tax treaty or stating that no such
exemption or reduced rate is allowable. The Agent shall be entitled to withhold United States
federal income taxes at the full withholding rate unless the Bank, assignee or participant
establishes an exemption or that it is subject to a reduced rate as established pursuant to the
above provisions.




     11.17 Joinder of Guarantors; Additional Security Arrangements.



          Any Subsidiary of the Borrower which is required to join this Agreement as a Guarantor
pursuant to Section 8.2.9 [Subsidiaries, Partnerships and Joint Ventures] shall execute and deliver
to the Agent (i) a Guarantor Joinder in substantially the form attached hereto as Exhibit
1.1(G)(1) pursuant to which it shall join as a Guarantor each of the documents to which the
Guarantors are parties; (ii) documents in the forms described in Section 7.1 [First Loans] modified
as appropriate to relate to such Subsidiary; and (iii) documents necessary to grant and perfect
Prior Security Interests to the Agent for the benefit of the Banks in all Collateral held by
such Subsidiary. The Loan Parties shall deliver such Guarantor Joinder and related documents
to the Agent within five (5) Business Days after the date of the filing of such Subsidiary’s
articles of incorporation if the Subsidiary is a corporation, the date of the filing of its
certificate of limited partnership if it is a limited partnership or the date of its organization
if it is an entity other than a limited partnership or corporation. In addition to and not in
limitation of the foregoing, the Loan Parties will not deliver any Guaranty, collateral, security
or other credit enhancement in respect of the Note Purchase Agreement (excluding Note Purchase
Collateral) unless, concurrently therewith, such credit enhancement is also delivered to or for the
benefit of the Banks on a pari passu basis.




     11.18 Environmental Indemnity.



          The Loan Parties (other than TWCC), jointly and severally, will indemnify, protect, hold
harmless and defend each Bank and the Collateral Agent and their respective officers, directors,
trustees, employees and agents (collectively, “Indemnitees”), from and against any and all
liabilities, costs (including, without limitation, reasonable fees and disbursements of attorneys,
consultants and experts, and costs of investigation, clean up, response, removal, remediation,
containment, restoration, treatment and disposal), claims, damages, demands, litigation, suits,
proceedings, actions, losses, obligations, penalties, fines, judgments, sums paid in settlement of
any of the above, and reasonable disbursements actually incurred by any Indemnitee arising from or
out of, or in any way connected with, (i) any failure of any representation or warranty set forth
in Section 6.1.26 [Environmental Matters] to be true and correct when made or any failure by the
Loan Parties (or any of them) to comply with any of the covenants, agreements, terms and conditions
set forth in Section 8.1.10 [Compliance with Laws] or to comply with any Environmental Law, (ii)
the manufacture, generation, refining, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport, arranging for transport or handling, or the emission, discharge,
release or threatened release into the environment, of any Regulated Substance at any time on, in,
under or above the Property or any part thereof, (iii) the presence or suspected presence of any
Regulated Substances manufactured, generated, refined, processed, distributed, sold, treated,
received, stored, disposed of, transported, arranged to be transported or handled by the Loan
Parties (or any of them) or any of their respective


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




     11.19 Finance Code Opt-Out.



          Each of the Loan Parties and the Banks each hereby agree that Chapter 346 of the Texas Finance
Code does not apply to this Credit Agreement, to the Notes issued pursuant to this Credit
Agreement, or to the account or arrangement evidenced by or provided for in this Credit Agreement.




     11.20 USA Patriot Act Notice. 



          Each Bank that is subject to the USA Patriot Act and the Agent (for itself and not on behalf
of any Bank) hereby notifies Loan Parties that pursuant to the requirements of the USA Patriot Act,
it is required to obtain, verify and record information that identifies the Loan Parties, which
information includes the name and address of Loan Parties and other information that will allow
such Bank or Agent, as applicable, to identify the Loan Parties in accordance with the USA Patriot
Act.



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[SIGNATURE PAGES FOLLOW]




125









 








[SIGNATURE PAGE 1 OF 2 TO CREDIT AGREEMENT]




     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed this Agreement as of the day and year first above written.



BORROWER:




	 	 	 	 	 	 	 
	ATTEST:	 	WESTMORELAND MINING LLC
	 
	 	 	 	 	 	 
	/s/ Morris W. Kegley

	 	By:
	 	/s/ Douglas P. Kathol
	 	(Seal)
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas P. Kathol	 	 
	 

	 	Title:
	 	Vice President	 	 






GUARANTORS:




	 	 	 	 	 	 	 
	ATTEST:	 	WESTERN ENERGY COMPANY
	 
	 	 	 	 	 	 
	/s/ Morris W. Kegley

	 	By:
	 	/s/ Douglas P. Kathol
	 	(Seal)
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas P. Kathol	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	DAKOTA WESTMORELAND CORPORATION
	 
	 	 	 	 	 	 
	/s/ Morris W. Kegley

	 	By:
	 	/s/ Douglas P. Kathol
	 	(Seal)
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas P. Kathol	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	WESTMORELAND SAVAGE CORPORATION
	 
	 	 	 	 	 	 
	/s/ Morris W. Kegley

	 	By:
	 	/s/ Douglas P. Kathol
	 	(Seal)
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Douglas P. Kathol	 	 
	 

	 	Title:
	 	Vice President	 	 
















 






[SIGNATURE PAGE 2 OF 2 TO CREDIT AGREEMENT]




BANK:




	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION, individually as a
Bank and as Agent

 	 
	 	By:  	/s/ Richard C. Munsick
 	 
	 	Name:  	Richard C. Munsick 	 
	 	Title:  	Senior Vice President