Document:

exv10w6

Exhibit 10.6

AMENDED AND RESTATED CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP

     This Amended and Restated Continuing Agreement of Guaranty and Suretyship (the “Guaranty”),
dated as of this 26th day of June, 2008, is jointly and severally given by each of the undersigned
and each of the other Persons which become Guarantors hereunder from time to time (each a
“Guarantor” and collectively the “Guarantors”) in favor of PNC Bank, National Association, as agent
for the Banks (the “Agent”) in connection with that Amended and Restated Credit Agreement, dated as
of the date hereof, by and among Westmoreland Mining LLC, a Delaware limited liability company (the
“Borrower”), the Guarantors now or hereafter party thereto, the Agent, and the Banks now or
hereafter party thereto (the “Banks”) (as amended, restated, modified, or supplemented from time to
time hereafter, the “Credit Agreement”). Capitalized terms not otherwise defined herein shall have
the respective meanings ascribed to them by the Credit Agreement.

     1. Guarantied Obligations. To induce the Agent and the Banks to make loans and grant
other financial accommodations to the Borrower under the Credit Agreement, each Guarantor hereby
jointly and severally, unconditionally and irrevocably guaranties to the Agent and each Bank and
each Affiliate of each Bank and the Collateral Agent on behalf of the Banks, and becomes surety, as
though it was a primary obligor for, the full and punctual payment and performance when due
(whether on demand, at stated maturity, by acceleration, or otherwise and including any amounts
which would become due but for the operation of an automatic stay under the federal bankruptcy code
of the United States or any similar laws of any country or jurisdiction) of (i) all Obligations,
including, without limiting the generality of the foregoing, all obligations (including any
interest or currency swap, future, option or other interest rate protection or similar agreements
(collectively, “Bank-Provided Interest Rate Hedges”)), liabilities, and indebtedness from time to
time of the Borrower or any other Guarantor to the Agent or any of the Banks or any Affiliate of
any Bank under or in connection with the Credit Agreement or any other Loan Document, whether for
principal, interest, fees, indemnities, expenses, or otherwise, and all refinancings or refundings
thereof, whether such obligations, liabilities, or indebtedness are direct or indirect, secured or
unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising (and including obligations, liabilities, and
indebtedness arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization, or similar proceeding with respect to the Borrower or any Guarantor or which would
have arisen or accrued but for the commencement of such proceeding (including, without limitation,
interest after default), even if the claim for such obligation, liability, or indebtedness is not
enforceable or allowable in such proceeding, and including all Obligations, liabilities, and
indebtedness arising from any extensions of credit under or in connection with the Loan Documents
from time to time, regardless whether any such extensions of credit are in excess of the amount
committed under or contemplated by the Loan Documents or are made in circumstances in which any
condition to extension of credit is not satisfied) (ii) any obligation or liability of any of the
Loan Parties arising out of overdrafts on deposits or other accounts or out of electronic funds
(whether by wire transfer or through automated clearing houses or otherwise) or out of the return
of unpaid, or other failure of the Agent or any Bank to receive final payment for, any check, item,
instrument, payment order or other deposit or credit to a deposit or
other account, or out of the Agent’s or any

 

 

Bank’s non-receipt of or inability to collect funds or otherwise not being made
whole in connection with depository or other similar arrangements, and (iii) any amendments,
extensions, renewals and increases of or to any of the foregoing (all of the foregoing obligations,
liabilities and indebtedness are referred to herein collectively as the “Guarantied Obligations”
and each as a “Guarantied Obligation”). Without limitation of the foregoing, any of the Guarantied
Obligations shall be and remain Guarantied Obligations entitled to the benefit of this Guaranty if
the Agent, the Collateral Agent or any of the Banks (or any one or more assignees or transferees
thereof) from time to time assign or otherwise transfer all or any portion of their respective
rights and obligations under the Notes, the Credit Agreement or the other Loan Documents, or any
other Guarantied Obligations, to any other Person in accordance therewith. In furtherance of the
foregoing, each Guarantor jointly and severally agrees as follows.

     2. Guaranty. Each Guarantor hereby jointly and severally promises to pay and perform
all such Guarantied Obligations immediately upon demand of the Agent, the Collateral Agent and the
Banks or any one or more of them. All payments made hereunder shall be made by each Guarantor in
immediately available funds in United States Dollars and shall be made without setoff,
counterclaim, withholding, or other deduction of any nature.

     3. Obligations Absolute. The obligations of the Guarantors hereunder shall not be
discharged or impaired or otherwise diminished by any failure, default, omission, or delay, willful
or otherwise, by any Bank, the Agent, the Collateral Agent or Borrower or any other obligor on any
of the Guarantied Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or
would otherwise operate as a discharge of any Guarantor as a matter of law or equity. Each of the
Guarantors agree that the Guarantied Obligations will be paid and performed strictly in accordance
with the terms of the Loan Documents. Without limiting the generality of the foregoing, each
Guarantor hereby consents to, at any time and from time to time, and the joint and several
obligations of each Guarantor hereunder shall not be diminished, terminated, or otherwise similarly
affected by any of the following:

     (a) Any lack of genuineness, legality, validity, enforceability or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or
subordination, in whole or in part, of any Loan Document or any of the Guarantied Obligations and
regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting
any of the Guarantied Obligations, any of the terms of the Loan Documents, or any rights of the
Agent, the Collateral Agent or the Banks or any other Person with respect thereto;

     (b) Any increase, decrease, or change in the amount, nature, type or purpose of any of the
Guarantied Obligations (whether or not contemplated by the Loan Documents as presently
constituted); any change in the time, manner, method, or place of payment or performance of, or in
any other term of, any of the Guarantied Obligations; any execution or delivery of any additional
Loan Documents; or any amendment, modification or supplement to, or refinancing or refunding of,
any Loan Document or any of the Guarantied Obligations;

     (c) Any failure to assert any breach of or default under any Loan Document or any of the
Guarantied Obligations; any extensions of credit in excess of the amount committed under or

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contemplated by the Loan Documents, or in circumstances in which any condition to such
extensions of credit has not been satisfied; any other exercise or non-exercise, or any other
failure, omission, breach, default, delay, or wrongful action in connection with any exercise or
non-exercise, of any right or remedy against the Borrower or any other Person under or in
connection with any Loan Document or any of the Guarantied Obligations; any refusal of payment or
performance of any of the Guarantied Obligations, whether or not with any reservation of rights
against any Guarantor; or any application of collections (including but not limited to collections
resulting from realization upon any direct or indirect security for the Guarantied Obligations) to
other obligations, if any, not entitled to the benefits of this Guaranty, in preference to
Guarantied Obligations entitled to the benefits of this Guaranty, or if any collections are applied
to Guarantied Obligations, any application to particular Guarantied Obligations;

     (d) Any taking, exchange, amendment, modification, waiver, supplement, termination,
subordination, compromise, release, surrender, loss, or impairment of, or any failure to protect,
perfect, or preserve the value of, or any enforcement of, realization upon, or exercise of rights,
or remedies under or in connection with, or any failure, omission, breach, default, delay, or
wrongful action by the Agent, the Collateral Agent or the Banks, or any of them, or any other
Person in connection with the enforcement of, realization upon, or exercise of rights or remedies
under or in connection with, or, any other action or inaction by any of the Agent, the Collateral
Agent or the Banks, or any of them, or any other Person in respect of, any direct or indirect
security for any of the Guarantied Obligations. As used in this Guaranty, “direct or indirect
security” for the Guarantied Obligations, and similar phrases, includes any collateral security,
guaranty, suretyship, letter of credit, capital maintenance agreement, put option, subordination
agreement, or other right or arrangement of any nature providing direct or indirect assurance of
payment or performance of any of the Guarantied Obligations, made by or on behalf of any Person;

     (e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation of
charter or other organizational document, or forfeiture, or other change in, restructuring or
termination of the corporate, limited liability or other structure or existence of, the Borrower,
any Guarantor or any other Person; any bankruptcy, insolvency, reorganization or similar proceeding
with respect to the Borrower, any Guarantor or any other Person; or any action taken or election
made by the Agent, the Collateral Agent or the Banks, or any of them (including but not limited to
any election under Section 1111(b)(2) of the United States Bankruptcy Code or any comparable law of
any jurisdiction), the Borrower, any Guarantor or any other Person in connection with any such
proceeding;

     (f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted
by the Borrower, any Guarantor or any other Person with respect to any Loan Document or any of the
Guarantied Obligations; or any discharge by operation of law or release of the Borrower, any
Guarantor or any other Person from the performance or observance of any Loan Document or any of the
Guarantied Obligations; and

     (g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and
whether known or unknown, which might otherwise constitute a defense available to, or

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limit the liability of, any Guarantor, a guarantor or a surety, excepting only full, strict, and
indefeasible payment and performance of the Guarantied Obligations in full.

     Each Guarantor acknowledges, consents, and agrees that new Guarantors may join in this
Guaranty pursuant to Section 11.17 [Joinder of Guarantors; Additional Security Agreements] of the
Credit Agreement and each Guarantor affirms that its obligations shall continue hereunder
undiminished.

     4. Waivers, etc. Each of the Guarantors hereby waives any defense to or limitation on
its obligations under this Guaranty arising out of or based on any event or circumstance referred
to in Section 3 hereof. Without limitation and to the fullest extent permitted by applicable law,
each Guarantor waives each of the following:

     (a) All notices, disclosures and demand of any nature which otherwise might be required from
time to time to preserve intact any rights against any Guarantor, including the following: any
notice of any event or circumstance described in Section 3 hereof; any notice required by any law,
regulation or order now or hereafter in effect in any jurisdiction; any notice of nonpayment,
nonperformance, dishonor, or protest under any Loan Document or any of the Guarantied Obligations;
any notice of the incurrence of any Guarantied Obligation; any notice of any default or any failure
on the part of the Borrower, any Guarantor or any other Person to comply with any Loan Document or
any of the Guarantied Obligations or any direct or indirect security for any of the Guarantied
Obligations; and any notice of any information pertaining to the business, operations, condition
(financial or otherwise) or prospects of the Borrower, any Guarantor or any other Person;

     (b) Any right to any marshalling of assets, any right to the filing, subject to the provisions
of Section 6 below, of any claim against the Borrower, any Guarantor or any other Person in the
event of any bankruptcy, insolvency, reorganization or similar proceeding, or to the exercise,
subject to the provisions of Section 6 below, against the Borrower, any Guarantor or any other
Person of any other right or remedy under or in connection with any Loan Document or any of the
Guarantied Obligations or any direct or indirect security for any of the Guarantied Obligations;
(except for, following the indefeasible payment and performance in full of the Guaranteed
Obligations, the filing of claims, or the exercise of rights and remedies under or the exercise of
rights and remedies under or in connection with the Loan Documents, against other Loan Parties, in
each case, as and to the extent permitted by Section 6) any requirement of promptness or diligence
on the part of the Agent, the Collateral Agent or the Banks, or any of them, or any other Person;
any requirement to exhaust any remedies under or in connection with, or to mitigate the damages
resulting from default under, any Loan Document or any of the Guarantied Obligations or any direct
or indirect security for any of the Guarantied Obligations; any benefit of any statute of
limitations; and any requirement of acceptance of this Guaranty or any other Loan Document, and any
requirement that any Guarantor receive notice of any such acceptance;

     (c) Any defense or other right arising by reason of any law now or hereafter in effect in any
jurisdiction pertaining to election of remedies (including but not limited to anti-deficiency laws,
“one action” laws or the like), or by reason of any election of remedies or other action or

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inaction by the Agent, the Collateral
Agent or the Banks, or any of them (including but not
limited to commencement or completion of any judicial proceeding or nonjudicial sale or other
action in respect of collateral security for any of the Guarantied Obligations), which results in
denial or impairment of the right of the Agent, the Collateral Agent or the Banks, or any of them,
to seek a deficiency against the Borrower, any Guarantor or any other Person or which otherwise
discharges or impairs any of the Guarantied Obligations; and

     (d) Any and all defenses it may now or hereafter have based on principles of suretyship,
impairment of collateral, or the like.

     5. Reinstatement. This Guaranty is a continuing obligation of the Guarantors and shall
remain in full force and effect notwithstanding that no Guarantied Obligations may be outstanding
from time to time and notwithstanding any other event or circumstance. Upon termination of all
Commitments and expiration or cancellation of all Letters of Credit and indefeasible payment in
full of all Guarantied Obligations, this Guaranty shall terminate; provided, however, that this
Guaranty shall continue to be effective or be reinstated, as the case may be, any time any payment
of any of the Guarantied Obligations is rescinded, recouped, avoided, or must otherwise be returned
or released by the Collateral Agent, any Bank or Agent upon or during the insolvency, bankruptcy,
or reorganization of, or any similar proceeding affecting, Borrower or for any other reason
whatsoever, all as though such payment had not been made and was due and owing.

     6. Subrogation. No Guarantor shall exercise any rights against Borrower or any other
Guarantor arising in connection with the Guarantied Obligations (including rights of subrogation,
contribution, and the like) until the Guarantied Obligations have been indefeasibly paid in full
and all Commitments have been terminated and all Letters of Credit have expired or been terminated.
If any amount shall be paid to any Guarantor by or on behalf of Borrower or any other Guarantor by
virtue of any right of subrogation, contribution, or the like, such amount shall be deemed to have
been paid to such Guarantor for the benefit of, and shall be held in trust for the benefit of, the
Agent, the Collateral Agent and the Banks and shall forthwith be paid to the Agent to be credited
and applied against the Guarantied Obligations, whether matured or unmatured, in accordance with
the terms of the Credit Agreement.

     7. No Stay. Without limitation of any other provision of this Guaranty, if any
declaration of default or acceleration or other exercise or condition to exercise of rights or
remedies under or with respect to any Guarantied Obligation shall at any time be stayed, enjoined,
or prevented for any reason (including but not limited to stay or injunction resulting from the
pendency against the Borrower, any Guarantor or any other Person of a bankruptcy, insolvency,
reorganization or similar proceeding), the Guarantors agree that, for the purposes of this Guaranty
and their obligations hereunder, the Guarantied Obligations shall be deemed to have been declared
in default or accelerated, and such other exercise or conditions to exercise shall be deemed to
have been taken or met, and, to the full extent permitted by law, such stay, injunction or other
impediment shall not be applicable to any Guarantor’s obligations hereunder.

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     8. Taxes.

     (a) No Deductions. All payments and collections made by or from any Guarantor
hereunder or under any of the other Loan Documents or any Bank-Provided Interest Rate Hedges
shall be made or received free and clear of and without deduction for any present or future taxes,
levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on the net income of the Agent or any Bank and all income and franchise
taxes of the United States applicable to the Agent or any Bank (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings, and liabilities being hereinafter referred to
as “Taxes”). If any Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under any of the other Loan Documents or any Bank-Provided Interest
Rate Hedges, (i) the sum payable or collectible shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to additional sums payable or
collectible under this Subsection (a)) the Agent or such Bank, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made, (ii) such
Guarantor shall make such deductions and (iii) such Guarantor shall timely pay the full amount
deducted to the relevant tax authority or other authority in accordance with applicable Law.

     (b) Stamp Taxes. In addition, each Guarantor agrees to pay any and all present and
future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies
which arise from any payment or collection made hereunder or from the execution, delivery, or
registration of, or otherwise with respect to, any of the Loan Documents or any Bank-Provided
Interest Rate Hedges (hereinafter referred to as “Other Taxes”).

     (c) Indemnification for Taxes Paid by any Bank. Each Guarantor shall indemnify each
Bank for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Subsection) paid by any Bank and
any liability (including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days from the date a Bank makes written demand
therefor.

     (d) Certificate. Within thirty (30) days after the date of any payment of any Taxes
or Other Taxes by any Guarantor, such Guarantor shall furnish to each Bank, the original or a
certified copy of a receipt evidencing payment thereof. If no Taxes are payable in respect of any
payment by such Guarantor, such Guarantor shall, if so requested by a Bank, provide a certificate
of an officer of such Guarantor to that effect.

     (e) If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due under any of the Loan Documents in any currency (the “Original Currency”) into another currency
(the “Other Currency”), each Guarantor hereby agrees, to the fullest extent permitted by law, that
the rate of exchange used shall be that at which in accordance with normal banking procedures each
Bank could purchase the Original Currency with the Other Currency after any premium and costs of
exchange on the Business Day preceding that on which final judgment is given.

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     (f) The obligation of each Guarantor in respect of any sum due from such Guarantor to any Bank
under any of the Loan Documents shall, notwithstanding any judgment in an Other Currency, whether
pursuant to a judgment or otherwise, be discharged only to the extent that, on the business day
(being a day on which it is open for business at its principal office in the United
States) following receipt by any Bank of any sum adjudged to be so due in such Other Currency,
such Bank may in accordance with normal banking procedures purchase the Original Currency with such
Other Currency. If the amount of the Original Currency so purchased is less than the sum
originally due to such Bank in the Original Currency, each Guarantor agrees, as a separate
obligation and notwithstanding any such judgment or payment, to indemnify such Bank against such
loss.

     (g) Without prejudice to the survival of any other agreement or any Guarantor hereunder, the
agreements and obligations of each Guarantor contained in clauses (a) through (f) directly above
shall survive the payment in full of principal and interest under any Note and the termination of
the Credit Agreement.

     9. Notices. Each Guarantor agrees that all notices, statements, requests, demands and
other communications under this Guaranty shall be given to such Guarantor at the address set forth
on a Schedule to, or in a Guarantor Joinder given under, the Credit Agreement and in the manner
provided in Section 11.6 [Notices] of the Credit Agreement. The Agent, the Collateral Agent and
the Banks may rely on any notice (whether or not made in a manner contemplated by this Guaranty)
purportedly made by or on behalf of a Guarantor, and the Agent, the Collateral Agent and the Banks
shall have no duty to verify the identity or authority of the Person giving such notice.

     10. Counterparts; Telecopy Signatures. This Guaranty may be executed in any number of
counterparts, each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. Each Guarantor acknowledges and
agrees that a telecopy transmission to Agent or any Bank of signature pages hereof purporting to be
signed on behalf of any Guarantor shall constitute effective and binding execution and delivery
hereof by such Guarantor.

     11. Setoff, Default Payments by Borrower.

     (a) In the event that at any time any obligation of the Guarantors now or hereafter existing
under this Guaranty shall have become due and payable, the Agent and the Banks, or any of them,
shall have the right from time to time, without notice to any Guarantor, to set off against and
apply to such due and payable amount any obligation of any nature of any Bank or the Agent, or any
subsidiary or affiliate of any Bank or Agent, to any Guarantor, including but not limited to all
deposits (whether time or demand, general or special, provisionally credited or finally credited,
however evidenced) now or hereafter maintained by any Guarantor with the Agent or any Bank or any
subsidiary or affiliate thereof. Such right shall be absolute and unconditional in all
circumstances and, without limitation, shall exist whether or not the Agent, the Collateral Agent
or the Banks, or any of them, shall have given any notice or made any demand under this Guaranty or
under such obligation to the Guarantor, whether such obligation to the Guarantor is absolute or
contingent, matured or unmatured (it being agreed that the Agent and the Banks, or

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any of them, may
deem such obligation to be then due and payable at the time of such setoff), and regardless of the
existence or adequacy of any collateral, guaranty, or other direct or indirect security or right or
remedy available to the Agent, the Collateral Agent or any of the Banks. The rights of the Agent
and the Banks under this Section are in addition to such other rights and remedies (including,
without limitation, other rights of setoff and banker’s lien)
which the Agent and the Banks, or any of them, may have, and nothing in this Guaranty or in any
other Loan Document shall be deemed a waiver of or restriction on the right of setoff or banker’s
lien of the Agent and the Banks, or any of them. Each of the Guarantors hereby agree that, to the
fullest extent permitted by law, any affiliate or subsidiary of the Agent or any of the Banks and
any holder of a participation in any obligation of any Guarantor under this Guaranty, shall have
the same rights of setoff as the Agent and the Banks as provided in this Section (regardless
whether such affiliate or participant otherwise would be deemed a creditor of the Guarantor).

     (b) Upon the occurrence and during the continuation of any default under any Guarantied
Obligation, if any amount shall be paid to any Guarantor by or for the account of Borrower, such
amount shall be held in trust for the benefit of each Bank and Agent and shall forthwith be paid to
the Agent to be credited and applied to the Guarantied Obligations when due and payable.

     12. Construction. The section and other headings contained in this Guaranty are for
reference purposes only and shall not affect interpretation of this Guaranty in any respect. This
Guaranty has been fully negotiated between the applicable parties, each party having the benefit of
legal counsel, and accordingly neither any doctrine of construction of guaranties or suretyships in
favor of the guarantor or surety, nor any doctrine of construction of ambiguities in agreement or
instruments against the party controlling the drafting thereof, shall apply to this Guaranty.

     13. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, its
successors and assigns, and shall inure to the benefit of and be enforceable by the Agent and the
Banks, or any of them, and their successors and permitted assigns; provided, however, that no
Guarantor may assign or transfer any of its rights or obligations hereunder or any interest herein
and any such purported assignment or transfer shall be null and void. Without limitation of the
foregoing, the Agent, the Collateral Agent and the Banks, or any of them (and any successive
assignee or transferee), from time to time may assign or otherwise transfer all or any portion of
its rights or obligations under the Loan Documents (including all or any portion of any commitment
to extend credit), or any other Guarantied Obligations, to any other person, in accordance with the
Credit Agreement and such Guarantied Obligations (including any Guarantied Obligations resulting
from extension of credit by such other Person under or in connection with the Loan Documents) shall
be and remain Guarantied Obligations entitled to the benefit of this Guaranty, and to the extent of
its interest in such Guarantied Obligations such other Person shall be vested with all the benefits
in respect thereof granted to the Agent and the Banks in this Guaranty or otherwise.

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     14. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

     (a) This Guaranty shall be governed by, construed, and enforced in accordance with the
internal laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws
principles.

     (b) EACH GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS
OF THE COMMONWEALTH OF
PENNSYLVANIA AND OF THE UNITED STATES DISTRICT COURT OF THE WESTERN DISTRICT OF PENNSYLVANIA, AND
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO THE GUARANTORS AT THE ADDRESS OR
ADDRESSES PROVIDED FOR IN SECTION 11.6 [NOTICES] OF THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.

     (c) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY
ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK
OF JURISDICTION OR VENUE.

     (d) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS GUARANTY, THE CREDIT AGREEMENT, ANY
OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULLEST EXTENT PERMITTED BY LAW.

     15. Severability; Modification to Conform to Law.

     (a) It is the intention of the parties that this Guaranty be enforceable to the fullest extent
permissible under applicable Law, but that the unenforceability (or modification to conform to such
Law) of any provision or provisions hereof shall not render unenforceable, or impair, the remainder
hereof. If any provision in this Guaranty shall be held invalid or unenforceable in whole or in
part in any jurisdiction, this Guaranty shall, as to such jurisdiction, be deemed amended to modify
or delete, as necessary, the offending provision or provisions and to alter the bounds thereof in
order to render it or them valid and enforceable to the maximum extent permitted by applicable Law,
without in any manner affecting the validity or enforceability of such provision or provisions in
any other jurisdiction or the remaining provisions hereof in any jurisdiction and without
invalidating the remaining provisions hereof.

     (b) Without limitation of the preceding Subsection (a), to the extent that applicable Law
(including applicable Laws pertaining to fraudulent conveyance or fraudulent or preferential
transfer) otherwise would render the full amount of the Guarantor’s obligations hereunder invalid,
voidable, or unenforceable on account of the amount of a Guarantor’s aggregate liability under this
Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the aggregate
amount of such liability shall, without any further action by the Agent or any of the

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Banks or
such Guarantor or any other Person, be automatically limited and reduced to the highest amount which is
valid and enforceable as determined in such action or proceeding, which (without limiting the
generality of the foregoing) may be an amount which is equal to the greater of:

     (A) the fair consideration actually received by such Guarantor under the terms
and as a result of the Loan Documents and the value of the benefits described in
Section 18 (b) hereof, including (and to the extent not inconsistent
with applicable federal and state laws affecting the enforceability of
guaranties) distributions, commitments, and advances made to or for the benefit of
such Guarantor with the proceeds of any credit extended under the Loan Documents, or

     (B) the excess of (1) the amount of the fair value of the assets of such
Guarantor as of the date of this Guaranty as determined in accordance with
applicable federal and state laws governing determinations of the insolvency of
debtors as in effect on the date hereof, over (2) the amount of all liabilities of
such Guarantor as of the date of this Guaranty, also as determined on the basis of
applicable federal and state laws governing the insolvency of debtors as in effect
on the date hereof.

     (c) Notwithstanding anything to the contrary in this Section or elsewhere in this Guaranty,
this Guaranty shall be presumptively valid and enforceable to its full extent in accordance with
its terms, as if this Section (and references elsewhere in this Guaranty to enforceability to the
fullest extent permitted by law) were not a part of this Guaranty, and in any related litigation
the burden of proof shall be on the party asserting the invalidity or unenforceability of any
provision hereof or asserting any limitation on any Guarantor’s obligations hereunder as to each
element of such assertion.

     16. Additional Guarantors. At any time after the initial execution and delivery of
this Guaranty to the Agent, the Collateral Agent and the Banks, additional Persons may become
parties to this Guaranty and thereby acquire the duties and rights of being Guarantors hereunder by
executing and delivering to the Agent, the Collateral Agent and the Banks a Guarantor Joinder
pursuant to the Credit Agreement. No notice of the addition of any Guarantor shall be required to
be given to any pre-existing Guarantor and each Guarantor hereby consents thereto.

     17. Joint and Several Obligations. Each of the obligations of each and every
Guarantor under this Guaranty are joint and several with the obligations of the other Guarantors,
and each Guarantor hereby waives to the full extent permitted by Law any defense it may otherwise
have to the payment and performance of the Obligations that its liability hereunder is limited and
not joint and several. Each Guarantor acknowledges and agrees that the foregoing waivers and those
set forth below serve as a material inducement to the agreement of the Agent and the Banks to make
the Loans, and that the Agent and the Banks are relying on each specific waiver and all such
waivers in entering into this Guaranty. The undertakings of each Guarantor hereunder secure the
obligations of itself and the other Guarantors. The Agent and the Banks, or any of them, may, in
their sole discretion, elect to enforce or cause the Collateral Agent to enforce this Guaranty
against any Guarantor without any duty or responsibility to pursue any

- 10 -

 

other Guarantor and such an
election by the Agent and the Banks, or any of them, shall not be a defense to any action the Agent
and the Banks, or any of them, may elect to take against any Guarantor. Each of the Banks and
Agent hereby reserves all rights against each Guarantor.

     18. Receipt of Credit Agreement, Other Loan Documents, Benefits.

     (a) Each Guarantor hereby acknowledges that it has received a copy of the Credit Agreement and
the other Loan Documents and each Guarantor certifies that the representations and warranties made
therein with respect to such Guarantor are true and correct. Further, each
Guarantor acknowledges and agrees to perform, comply with, and be bound by all of the
provisions of the Credit Agreement and the other Loan Documents.

     (b) Each Guarantor hereby acknowledges, represents, and warrants that it receives synergistic
benefits by virtue of its affiliation with Borrower and the other Guarantors and that it will
receive direct and indirect benefits from the financing arrangements contemplated by the Credit
Agreement and that such benefits, together with the rights of contribution and subrogation that may
arise in connection herewith are a reasonably equivalent exchange of value in return for providing
this Guaranty.

     19. Miscellaneous.

     (a) Generality of Certain Terms. As used in this Guaranty, the terms “hereof,”
“herein,” and terms of similar import refer to this Guaranty as a whole and not to any particular
term or provision; the term “including,” as used herein, is not a term of limitation and means
“including without limitation.”

     (b) Amendments, Waivers. No amendment to or waiver of any provision of this Guaranty,
and no consent to any departure by any Guarantor herefrom, shall in any event be effective unless
in a writing manually signed by or on behalf of the Agent and the Banks. Any such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given. No delay or failure of the Agent, the Collateral Agent or the Banks, or any of them, in
exercising any right or remedy under this Guaranty shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right or remedy preclude any other or further exercise
thereof or the exercise of any other right or remedy. The rights and remedies of the Agent, the
Collateral Agent and the Banks under this Guaranty are cumulative and not exclusive of any other
rights or remedies available hereunder, under any other agreement or instrument, by law, or
otherwise.

     (c) Telecommunications. Each Bank, the Collateral Agent and Agent shall be entitled to
rely on the authority of any individual making any telecopy or telephonic notice, request, or
signature without the necessity of receipt of any verification thereof.

     (d) Expenses. Each Guarantor unconditionally agrees to pay all reasonable costs and
expenses, including reasonable attorney’s fees incurred by the Agent, the Collateral Agent or any
of the Banks in enforcing this Guaranty against any Guarantor and each Guarantor shall pay and
indemnify each Bank the Collateral Agent and Agent for, and hold it harmless from and against,

- 11 -

 

any
and all obligations, liabilities, losses, damages, costs, expenses (including disbursements and
reasonable legal fees of counsel to any Bank , the Collateral Agent or Agent), penalties,
judgments, suits, actions, claims, and disbursements imposed on, asserted against, or incurred by
any Bank, the Collateral Agent or Agent (A) relating to the preparation, negotiation, execution,
administration, or enforcement of or collection under this Guaranty or any document, instrument, or
agreement relating to any of the Obligations, including in any bankruptcy, insolvency, or similar
proceeding in any jurisdiction or political subdivision thereof; (B) relating to any amendment,
modification, waiver, or consent hereunder or relating to any telecopy or telephonic or electronic
transmission purporting to be by any Guarantor or the Borrower; (C) in any way relating to or
arising out of this Guaranty, or any document, instrument, or agreement relating to
any of the Guarantied Obligations, or any action taken or omitted to be taken by the
Collateral Agent, any Bank or Agent hereunder, and including those arising directly or indirectly
from the violation or asserted violation by any Guarantor or the Borrower, the Collateral Agent or
Agent or any Bank of any law, rule, regulation, judgment, order, or the like of any jurisdiction or
political subdivision thereof (including those relating to environmental protection, health, labor,
importing, exporting, or safety) and regardless whether asserted by any governmental entity or any
other Person except for any which arises out of the gross negligence or willful misconduct of the
Collateral Agent, the Agent or any Bank.

     (e) Prior Understandings. This Guaranty, the Credit Agreement and the other Loan
Documents constitute the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede any and all other prior and contemporaneous understandings and agreements.

     (f) Survival. All representations and warranties of the Guarantors made in connection
with this Guaranty shall survive, and shall not be waived by, the execution and delivery of this
Guaranty, any investigation by or knowledge of the Agent, the Collateral Agent and the Banks, or
any of them, any extension of credit, or any other event or circumstance whatsoever.

     20. No Novation. This Guaranty amends and restates the Continuing Agreement of
Guaranty and Suretyship dated April 27, 2001 (the “Original Guaranty”) and this Guaranty is not
intended to constitute, nor does it constitute, an interruption, suspension of continuity,
satisfaction, discharge of prior duties, novation, or termination of the indebtedness, liabilities,
expenses, or obligations under the Original Guaranty.

[SIGNATURE PAGE FOLLOWS]

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[SIGNATURE PAGE 1 OF 1
OF AMENDED AND RESTATED CONTINUING

AGREEMENT OF GUARANTY AND SURETYSHIP]

     IN WITNESS WHEREOF, each Guarantor intending to be legally bound, has executed this Guaranty
as of the date first above written with the intention that this Guaranty shall constitute a sealed
instrument.

	 	 	 	 	 
	 	WESTERN ENERGY COMPANY

 	 
	 	By:  	                /s/ Douglas P. Kathol
 	 [Seal] 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 
	 
	 	DAKOTA WESTMORELAND CORPORATION

 	 
	 	By:  	             /s/ Douglas P. Kathol
 	 [Seal] 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 
	 
	 	WESTMORELAND SAVAGE CORPORATION

 	 
	 	By:  	             /s/ Douglas P. Kathol
 	 [Seal] 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice Presidentexv10w7

	 	 	 	 	 

Exhibit 10.7

AMENDED AND RESTATED SECURITY AGREEMENT

     THIS AMENDED AND RESTATED SECURITY AGREEMENT (the “Agreement”), dated as of June 26, 2008, is
entered into by and among each of the undersigned and each of the other Persons which become
Guarantors under the Credit Agreement (defined below) from time to time, (each a “Debtor” and
collectively the “Debtors”), and U.S. Bank National Association, successor by merger to Firstar
Bank, N.A., as Collateral Agent (the “Collateral Agent”) for the Banks (as defined below);

WITNESSETH THAT:

     WHEREAS, the Debtors are (or will be with respect to after-acquired property) the legal and
beneficial owners and the holders of the Collateral (as defined in Section 1 hereof); and

     WHEREAS, certain Loan Parties and Firstar Bank, N.A. (“Firstar”) have entered into the
Original Security Agreement (as defined herein) in connection with that certain $20,000,000
Revolving Credit Facility Credit Agreement dated April 27, 2001 (the “Original Credit Agreement”).

     WHEREAS, the parties have agreed to amend and restate the Original Credit Agreement and
pursuant to that certain Amended and Restated Credit Agreement (as it may hereafter from time to
time be restated, amended, modified or supplemented, the “Credit Agreement”) of even date herewith
by and among PNC Bank, National Association, as agent thereunder (“PNC”), the Banks now or
hereafter party thereto (the “Banks”), the Guarantors now or hereafter party thereto and
Westmoreland Mining LLC, a Delaware limited liability company (the “Borrower”), PNC and the Banks
have agreed to make certain loans to the Borrower; and

     WHEREAS, the obligation of the Banks to make loans under the Credit Agreement is subject to
the condition, among others, that the Debtors secure their obligations and the obligations of the
Borrower to the Banks under the Credit Agreement and the other Loan Documents in the manner set
forth herein; and

     WHEREAS, each Debtor acknowledges its receipt of benefit, whether direct or indirect, from the
Credit Agreement which is being made available, either directly or indirectly, to each Debtor and
for the sale and purchase of certain notes under the Note Purchase Agreement, concurrently with the
closing of the Credit Agreement.

     NOW, THEREFORE, intending to be legally bound hereby, the parties hereto covenant and agree as
follows:

     1. Terms which are defined in the Credit Agreement and not otherwise defined herein are used
herein as defined therein and the rules of construction set forth in Section 1.2 [Construction] of
the Credit Agreement shall apply to this Agreement. The following words and terms shall have the
following meanings, respectively, unless the context hereof otherwise clearly requires:

 

 

     (a) “Code” “ means the Uniform Commercial Code as in effect in the State of New York on the
date hereof and as amended from time to time except to the extent that the conflict of law rules of
such Uniform Commercial Code shall apply the Uniform Commercial Code as in effect from time to time
in any other state to specific property or other matters.

     (b) “Collateral” means all of each Debtor’s right, title and interest in, to and under the
following described property of such Debtor (each capitalized term used in this Section 1(b) shall
have in this Agreement the meaning given to it by the Code):

     (i) all now existing and hereafter acquired or arising Accounts, Goods, General
Intangibles, Payment Intangibles, Deposit Accounts, Chattel Paper (including without
limitation Electronic Chattel Paper), Documents, Instruments, Software, Investment Property,
Letters of Credit, Letter of Credit Rights, advices of credit, money, Commercial Tort Claims
as listed on Schedule B hereto (as such Schedule is amended or supplemented from
time to time), Equipment, Inventory, As-Extracted Collateral (including As-Extracted
Collateral from such Debtor’s present and future operations regardless of whether such
mineral or gas interests are presently owned or hereafter acquired by such Debtor), Fixtures
and Supporting Obligations, together with all products of and Accessions to any of the
foregoing and all Proceeds of any of the foregoing (including without limitation all
insurance proceeds);

     (ii) to the extent, if any, not included in clause (i) above, such Debtor’s present and
future contracts, agreements, arrangements, or understandings (A) for the sale, supply,
provision or disposition of any coal, natural gas, coalbed methane gas or other minerals by
such Debtor, or any one or more of its agents, representatives, successors, or assigns, to
any purchaser or acquirer thereof, and all products, replacements, and proceeds thereof
(including without limitation all coal, natural gas and coalbed methane gas sales contracts)
and (B) relating to the mining, drilling or recovery of any mineral or gas reserves for the
benefit of or on behalf of such Debtor or any of its agents, representatives, successors, or
assigns (including without limitation all contract mining, drilling or recovery agreements
and arrangements), and all products and Proceeds thereof and payments thereunder, together
with all products and Proceeds (including all insurance proceeds) of and any Accessions to
any of the foregoing;

     (iii) to the extent, if any, not included in clauses (i) and (ii) above, each and every
other item of personal property and fixtures, whether now existing or hereafter arising or
acquired, including without limitation all licenses, contracts and agreements, and all
collateral for the payment or performance of any contract or agreement, together with all
products and Proceeds (including without limitation all insurance proceeds) of and any
Accessions to any of the foregoing;

     (iv) Without limiting the foregoing, Collateral includes all business records and
information, including computer tapes and other storage media containing the same and
computer programs and software (including without limitation, source code, object code and
related manuals and documentation and all licenses to use such software) for accessing and
manipulating such information. Notwithstanding the foregoing provisions

- 2 -

 

of Section 1(b),
(i) this Agreement shall not be deemed to be an assignment of
any agreements, contracts or licenses to the extent the terms of such agreements, contracts or
licenses would be violated by such assignment and (ii) the term “Collateral” shall not
include, (A) any agreements, contracts or licenses which are now or hereafter held by the
Debtor to the extent that (a) the terms of such agreements contracts or licenses would be
violated by being included in “Collateral”, (b) such agreements, contracts or licenses are
not capable of being encumbered as a matter of law or (c) an encumbrance thereon or security
interest therein, or the inclusion thereof otherwise in the Collateral, without the consent
of the other applicable party thereto results in a violation, breach, default or termination
of such agreement, contract or license, and such consent has not been obtained; provided,
however, that the term “Collateral” shall include such otherwise excluded agreements,
contracts or licenses once consent has been obtained and any and all proceeds thereof that
might have theretofore been excluded from such grant of a security interest (it is
understood that each Debtor shall use commercially reasonable efforts to exclude from all
hereafter acquired and hereafter renewed material agreements, contracts and licenses
restrictions on the encumbrancing of the same or granting of security interests therein) and
(B) the Subsidiary Shares of TWCC and any and all Proceeds thereof.

     (c) “Original Security Agreement” means that certain Security Agreement dated April
27, 2001, by and between the Debtors party thereto and Firstar.

     (d) “Receivables” means all of the Collateral except Equipment, Inventory and
As-Extracted Collateral of each Debtor.

     (e) “Secured Obligations” shall mean and include the full and punctual payment and
performance when due (whether on demand, at stated maturity, by acceleration, or otherwise and
including any amounts which would become due but for the operation of an automatic stay under the
federal bankruptcy code of the U.S. or any similar laws of any country or jurisdiction) of (i) all
Obligations (including any interest or currency swap, future, option or other interest rate
protection or similar agreements (collectively, “Bank-Provided Interest Rate Hedges”), including,
without limiting the generality of the foregoing, all obligations, liabilities, and indebtedness
from time to time of the Borrower or any other Loan Party to the Collateral Agent or any of the
Banks or any affiliate of any Bank or the Collateral Agent under or in connection with the Credit
Agreement or any other Loan Document or any Bank-Provided Interest Rate Hedge, whether for
principal, interest, fees, indemnities, expenses, or otherwise, and all refinancings or refundings
thereof, whether such obligations, liabilities, or indebtedness are direct or indirect, secured or
unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising (and including obligations, liabilities, and
indebtedness arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization, or similar proceeding with respect to the Borrower or any other Loan Party or which
would have arisen or accrued but for the commencement of such proceeding (including without
limitation interest after default), even if the claim for such obligation, liability, or
indebtedness is not enforceable or allowable in such proceeding, and including all Obligations,
liabilities, and indebtedness arising from any extensions of credit under or in connection with the
Loan Documents or any Bank-Provided Interest Rate Hedges from time to time, regardless

- 3 -

 

whether any such extensions
of credit are in excess of the amount committed under or
contemplated by the Loan Documents or any Bank-Provided Interest Rate Hedges or are made in
circumstances in which any condition to extension of credit is not satisfied), (ii) any obligation
or liability of any of the Loan Parties arising out of overdrafts on deposits or other accounts or
out of electronic funds (whether by wire transfer or through automated clearing houses or
otherwise) or out of the return unpaid of, or other failure of the Collateral Agent or any Bank to
receive final payment for, any check, item, instrument, payment order or other deposit or credit to
a deposit or other account, or out of the Collateral Agent’s or any Bank’s non-receipt of or
inability to collect funds or otherwise not being made whole in connection with depository or other
similar arrangements, and (iii) any amendments, extensions, renewals and increases of or to any of
the foregoing.

     2. As security for the due and punctual payment and performance of the Secured Obligations in
full, each Debtor hereby agrees that the Collateral Agent, PNC and the Banks and any Affiliate of
any Bank shall have, and each Debtor hereby grants to and creates in favor of the Collateral Agent
for the benefit of PNC, the Banks and their respective Affiliates, a continuing first priority
security interest in and to the Collateral subject only to Permitted Liens of the types described
in clauses (i) through (iii), (v) through (vii) and (ix) of the definition of that term set forth
in the Credit Agreement. Without limiting the generality of Section 4 below, each Debtor further
agrees that with respect to each item of Collateral as to which (i) the creation of a valid and
enforceable security interest is not governed exclusively by the Code or (ii) the perfection of a
valid and enforceable security interest therein under the Code cannot be accomplished either by the
Collateral Agent taking possession thereof or by the filing in appropriate locations of appropriate
Code financing statements executed by such Debtor, such Debtor will at its expense execute and
deliver to the Collateral Agent, and hereby does authorize the Collateral Agent to execute and file
such documents, agreements, notices, assignments and instruments and take such further actions as
may be reasonably requested by PNC from time to time for the purpose of creating a valid and
perfected first priority Lien on such item, subject only to Permitted Liens, enforceable against
such Debtor and all third parties to secure the Secured Obligations.

     3. Except as otherwise provided or permitted in the Credit Agreement and without limiting any
provisions thereof, each Debtor represents and warrants to the Collateral Agent and the Banks that
(a) each Debtor has good and marketable title to its Collateral, (b) except for the security
interest granted to and created in favor of the Collateral Agent for the benefit of PNC and the
Banks and their respective Affiliates hereunder and Permitted Liens, all the Collateral is free and
clear of any Lien (c) each Debtor will defend the Collateral against all claims and demands of all
persons at any time claiming the same or any interest therein (other than Permitted Liens), (d)
each Account and General Intangible is genuine and enforceable in accordance with its terms and
such Debtor will defend the same against all claims, demands, recoupment, setoffs (other than
setoffs validly asserted under the Note Purchase Agreement) and counterclaims at any time asserted,
(e) at the time any Account becomes subject to this Agreement, such Account will be a good and
valid Account representing a bona fide sale of goods or services by such Debtor and such goods will
have been shipped to the respective account debtors or the services will have been performed for
the respective account debtors (or for those on behalf of whom the account debtors are obligated on
the Accounts), and no such Account which is a Qualified Account will be subject to any claim for
credit, allowance, setoff,

- 4 -

 

recoupment,
defense, counterclaim or adjustment by an account debtor or any setoff, defense or
counterclaim, and (f) no consent are necessary for the granting of the security interest in the
Collateral by such Debtor to the Collateral Agent.

     4. Each Debtor will faithfully preserve and protect the Collateral Agent’s security interest
in the Collateral as a prior perfected security interest under the Code, superior and prior to the
rights of all third Persons, except for Permitted Liens of the type described in clauses (i)
through (iii), (v) through (vii) and (ix) of the definition of that term in the Credit Agreement,
and will do all such other acts and things and will, upon reasonable request therefor by PNC,
execute, deliver, file and record, and each Debtor hereby authorizes the Collateral Agent to so
file, all such other documents and instruments, including, without limitation, financing statements
and extensions thereof, security agreements, assignments and documents and powers of attorney with
respect to the Collateral, and pay all filing fees and taxes related thereto, as PNC in its
reasonable discretion may deem necessary or advisable from time to time in order to attach,
continue, preserve, perfect and protect said security interest including the filing at any time or
times after the date hereof financing statements under, and in the locations advisable pursuant to,
the Code); and each Debtor hereby irrevocably appoints the Collateral Agent, its officers,
employees and agents, or any of them, as attorneys-in-fact for such Debtor to execute, deliver,
file and record such items for such Debtor and in such Debtor’s name, place and stead. This power
of attorney, being coupled with an interest, shall be irrevocable for the life of this Agreement.

     5. Each Debtor covenants and agrees that:

     (a) it will defend the Collateral Agent’s, PNC’s and the Banks’ right, title and security
interest in and to the Collateral and the proceeds thereof against the claims and demands of all
Persons whomsoever, other than (i) any Person claiming a right in the Collateral pursuant to an
agreement between such Person and the Collateral Agent or (ii) Permitted Liens;

     (b) it will not suffer or permit to exist on any Collateral any Lien except for Permitted
Liens;

     (c) it will not take or omit to take any action, the taking or the omission of which might
reasonably be expected to result in a material alteration or impairment of the Collateral or of the
Collateral Agent’s rights under this Agreement;

     (d) it will not sell, assign or otherwise dispose of any portion of the Collateral except as
permitted in Section 8.2.7 [Disposition of Assets or Subsidiaries] of the Credit Agreement;

     (e) it will (i) obtain and maintain sole and exclusive possession of the Collateral, (ii) keep
the Collateral and all records pertaining thereto at the locations specified on the Security
Interest Data Summary attached as Schedule A hereto, unless it shall have given the
Collateral Agent prior notice and taken any action reasonably requested by the Collateral Agent to
maintain its security interest therein, (iii) notify the Collateral Agent if an Account becomes
evidenced or secured by an Instrument or Chattel Paper and deliver to the Collateral Agent upon the
Collateral Agent’s request therefor all Collateral consisting of Chattel Paper immediately upon
such Debtor’s receipt of a request therefor, (iv) deliver to the Collateral Agent possession of all

- 5 -

 

Collateral
the possession of which is required to perfect the Collateral Agent’s lien thereon
or security interest therein or the possession of which grants priority over a Person filing a
financing statement with respect thereto, (v) execute control agreements and cause other Persons to
execute acknowledgments in form and substance satisfactory to the Collateral Agent evidencing the
Collateral Agent’s control with respect to all Collateral the control or acknowledgment of which
perfects the Collateral Agent’s security interest therein, including Letters of Credit, Letter of
Credit Rights, Electronic Chattel Paper, Deposit Accounts and Investment Property, and (vi) keep
materially accurate and complete books and records concerning the Collateral and such other books
and records required in accordance with the Credit Agreement;

     (f) it will promptly furnish to the Collateral Agent such information and documents relating
to the Collateral as PNC may reasonably request, including, without limitation, all invoices,
Documents, contracts, Chattel Paper, Instruments and other writings pertaining to such Debtor’s
contracts or the performance thereof, all of the foregoing to be certified upon request of PNC by
an authorized officer of such Debtor; and

     (g) it shall immediately notify the Collateral Agent if any material account arises out of
contracts with the United States, Canada or any department, agency or instrumentality thereof or
any one or more of the states of the United States or of provinces of Canada or any department,
agency, or instrumentality thereof, and will execute any instruments and take any steps required by
the Collateral Agent so that all monies due under such contract shall be assigned to the Collateral
Agent and notice of the assignment given to and acknowledged by the appropriate government agency
or authority under the Federal Assignment of Claims Act (or applicable similar legislation);

     (h) such Debtor will not change its state of incorporation, formation or organization, as
applicable, without providing ten (10) days prior written notice to the Collateral Agent;

     (i) such Debtor will not change its name without providing ten (10) days prior written notice
to the Collateral Agent;

     (j) if any Debtor shall at any time acquire a Commercial Tort Claim, as defined in the Code
having a value in excess of $250,000, such Debtor shall promptly notify the Collateral Agent in a
writing signed by such Debtor of the details thereof and grant to the Collateral Agent, for the
benefit of itself, the Banks and their respective affiliates, in such writing a security interest
therein and in the proceeds thereof, with such writing to be in form and substance satisfactory to
PNC and such writing shall constitute a supplement to Schedule B hereto;

     (k) each Debtor hereby authorizes the Collateral Agent to, at any time and from time to time,
file in any one or more jurisdictions financing statements that describe the Collateral, together
with continuation statements thereof and amendments thereto, without the signature of such Debtor
and which contain any information required by the Code or any other applicable statute applicable
to such jurisdiction for the sufficiency or filing office acceptance of any financing statements,
continuation statements, or amendments. Each Debtor agrees to furnish any such information to the
Collateral Agent promptly upon request. Any such financing statements, continuation statements, or
amendments may be signed by the Collateral Agent on

- 6 -

 

behalf of any Debtor if the Collateral Agent so elects and may be filed by the Collateral
Agent at any time in any jurisdiction;

     (l) such Debtor shall at any time and from time to time take such steps as PNC may reasonably
request as are necessary for the Collateral Agent to insure the continued perfection of the
Collateral Agent’s and the Banks’ security interest in the Collateral with the same priority
required hereby and the preservation of its rights therein;

     (m) upon an Event of Default then in existence, such Debtor shall at its sole expense, and
shall cause all of the other Loan Parties at their sole expense to, upon the request of the
Collateral Agent (i) execute and deliver to the Collateral Agent a lockbox agreement, in form,
substance and scope satisfactory to the Collateral Agent, with respect to any cash, checks, notes,
drafts or other similar items of payment relating to or constituting the Collateral (or proceeds
thereof) received by such Debtor or any other Loan Party (other than TWCC) (or any of its
respective Affiliates (other than TWCC), shareholders, directors, officers, employees, agents or
Persons acting for or in concert with such Debtor or such Loan Party), and (ii) notify all Account
Debtors to make all payments due from them to such Debtor or any other Loan Party directly to a
lockbox for collection pursuant to such lockbox agreement; and

     (n) each Debtor waives and agrees it will not exercise any rights against the Borrower or any
other Debtor arising in connection with, or any Collateral securing, the Secured Obligations
(including rights of subrogation, contribution, and the like) until the Secured Obligations have
been indefeasibly paid in full, and all Commitments have been terminated and all Letters of Credit
and Bank-Provided Interest Rate Hedges have expired or been terminated. If any amount shall be
paid to any Debtor by or on behalf of the Borrower or any other Debtor by virtue of any right of
subrogation, contribution, or the like, such amount shall be deemed to have been paid to such
Debtor for the benefit of, and shall be held in trust for the benefit of, the Collateral Agent and
the Banks and shall forthwith be paid to the Collateral Agent to be credited and applied upon the
Secured Obligations, whether matured or unmatured, in accordance with the terms of the Credit
Agreement.

     6. Each Debtor assumes full responsibility for taking any and all necessary steps to preserve
the Collateral Agent’s, PNC’s and the Banks’ rights with respect to the Collateral against all
Persons other than anyone asserting rights in respect of a Permitted Lien. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral Agent takes such action for that purpose as such Debtor shall
request in writing, provided that such requested action will not, in the judgment of PNC, impair
the security interest in the Collateral created hereby or the Collateral Agent’s and the Banks’
rights in, or the value of, the Collateral, and provided further that such written request is
received by the Collateral Agent in sufficient time to permit the Collateral Agent to take the
requested action.

     7. The pledge, security interests, and other Liens and the obligations of each Debtor
hereunder shall not be discharged or impaired or otherwise diminished by any failure, default,
omission, or delay, willful or otherwise, by the Collateral Agent, any Bank, such Debtor or any
other obligor on any of the Secured Obligations, or by any other act or thing or omission or delay

- 7 -

 

to do
any other act or thing which may or might in any manner or to any extent vary the risk of
any Debtor or which would otherwise operate as a discharge of any Debtor as a matter of law or
equity. Without limiting the generality of the foregoing, each Debtor hereby consents to, and the
pledge, security interests, and other Liens given by any Debtor hereunder shall not be diminished,
terminated, or otherwise similarly affected by any of the following at any time and from time to
time:

     (a) Any lack of genuineness, legality, validity, enforceability, or allowability (in a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or any avoidance or
subordination, in whole or in part, of any Loan Document, any Bank-Provided Interest Rate Hedge or
any of the Secured Obligations and regardless of any law, regulation, or order now or hereafter in
effect in any jurisdiction affecting any of the Secured Obligations, any of the terms of the Loan
Documents or the Bank-Provided Interest Rate Hedges, or any rights of the Collateral Agent or the
Banks or any other Person with respect thereto;

     (b) Any increase, decrease, or change in the amount, nature, type or purpose of any of, or any
release, surrender, exchange, compromise or settlement of any of the Secured Obligations (whether
or not contemplated by the Loan Documents or the Bank-Provided Interest Rate Hedges as presently
constituted); any change in the time, manner, method, or place of payment or performance of, or in
any other term of, any of the Secured Obligations; any execution or delivery of any additional Loan
Documents or any Bank-Provided Interest Rate Hedges; or any amendment, modification or supplement
to, or refinancing or refunding of, any Loan Document, any Bank-Provided Interest Rate Hedge or any
of the Secured Obligations;

     (c) Any failure to assert or any breach of or default under any Loan Document, any
Bank-Provided Interest Rate Hedge or any of the Secured Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Loan Documents or the Bank-Provided
Interest Rate Hedges, or in circumstances in which any condition to such extensions of credit has
not been satisfied; any other exercise or non-exercise, or any other failure, omission, breach,
default, delay, or wrongful action in connection with any exercise or non-exercise, of any right or
remedy against any Debtor or any other Person under or in connection with any Loan Document, any
Bank-Provided Interest Rate Hedge or any of the Secured Obligations; any refusal of payment or
performance of any of the Secured Obligations, whether or not with any reservation of rights
against any Debtor; or any application of collections (including but not limited to collections
resulting from realization upon any direct or indirect security for the Secured Obligations) to
other obligations, if any, not entitled to the benefits of this Agreement, in preference to Secured
Obligations entitled to the benefit of this Agreement or, if any collections are applied to Secured
Obligations, any application to particular Secured Obligations;

     (d) Any taking, exchange, amendment, modification, supplement, termination, subordination,
release, loss, or impairment of, or any failure to protect, perfect, or preserve the value of, or
any enforcement of, realization upon, or exercise of rights or remedies under or in connection
with, or any failure, omission, breach, default, delay, or wrongful action by the Collateral Agent
or the Banks, or any of them, or any other Person in connection with the enforcement of,
realization upon, or exercise of rights or remedies under or in connection with, or, any other
action or inaction by the Collateral Agent or any other Person in respect of, any

- 8 -

 

direct
or indirect security for any of the Secured Obligations (including the Collateral). As
used in this Agreement, “direct or indirect security” for the Secured Obligations, and similar
phrases, includes any collateral security, guaranty, suretyship, letter of credit, capital
maintenance agreement, put option, subordination agreement, or other right or arrangement of any
nature providing direct or indirect assurance of payment or performance of any of the Secured
Obligations, made by or on behalf of any Person;

     (e) Any merger, consolidation, liquidation, dissolution, winding-up, charter revocation, or
forfeiture, or other change in, restructuring or termination of the corporate, limited liability
company or partnership structure or existence of any Debtor or any other Person; any bankruptcy,
insolvency, reorganization or similar proceeding with respect to any Debtor or any other Person; or
any action taken or election (including but not limited to any election under Section 1111(b)(2) of
the U.S. Bankruptcy Code or any comparable law of any jurisdiction) made by the Collateral Agent or
the Banks, or any of them, or any Debtor or by any other Person in connection with any such
proceeding;

     (f) Any defense, setoff, or counterclaim which may at any time be available to or be asserted
by any Debtor or any other Person with respect to any Loan Document, any Bank-Provided Interest
Rate Hedge or any of the Secured Obligations; or any discharge by operation of law or release of
any Debtor or any other Person from the performance or observance of any Loan Document, any
Bank-Provided Interest Rate Hedge or any of the Secured Obligations; or

     (g) Any other event or circumstance, whether similar or dissimilar to the foregoing, and
whether known or unknown, which might otherwise constitute a defense available to, or limit the
liability of a guarantor or a surety, including any Debtor, excepting only full, strict, and
indefeasible payment and performance of the Secured Obligations in full.

     8. Each Debtor hereby waives any and all defenses which such Debtor may now or hereafter have
based on principles of suretyship, impairment of collateral, or the like and each Debtor hereby
waives any defense to or limitation on its obligations under this Agreement arising out of or based
on any event or circumstance referred to in the immediately preceding Section hereof. Without
limiting the generality of the foregoing and to the fullest extent permitted by applicable Law,
each Debtor hereby further waives each of the following:

     (a) Except as otherwise required under any of the Loan Documents, all notices, disclosures and
demands of any nature which otherwise might be required from time to time to preserve intact any
rights against any Debtor, including the following: any notice of any event or circumstance
described in the immediately preceding Section hereof; any notice required by any law, regulation
or order now or hereafter in effect in any jurisdiction; any notice of nonpayment, nonperformance,
dishonor, or protest under any Loan Document, any Bank-Provided Interest Rate Hedge or any of the
Secured Obligations; any notice of the incurrence of any Secured Obligations; any notice of any
default or any failure on the part of any Debtor or any other Person to comply with any Loan
Document, any Bank-Provided Interest Rate Hedge or any of the Secured Obligations or any
requirement pertaining to any direct or indirect security for any of the Secured Obligations; and
any notice or other information pertaining to the business, operations, condition (financial or
otherwise), or prospects of any Debtor or any other Person;

- 9 -

 

     (b) Any right to any marshalling of assets, to the filing of any claim against any Debtor or
any other Person in the event of any bankruptcy, insolvency, reorganization, or similar proceeding,
or to the exercise against any Debtor, or any other Person of any other right or remedy under or in
connection with any Loan Document, any Bank-Provided Interest Rate Hedge or any of the Secured
Obligations or any direct or indirect security for any of the Secured Obligations; any requirement
of promptness or diligence on the part of the Collateral Agent or the Banks, or any of them, or any
other Person; any requirement to exhaust any remedies under or in connection with, or to mitigate
the damages resulting from default under, any Loan Document, any Bank-Provided Interest Rate Hedge
or any of the Secured Obligations or any direct or indirect security for any of the Secured
Obligations; any benefit of any statute of limitations; and any requirement of acceptance of this
Agreement or any other Loan Document or any Bank-Provided Interest Rate Hedge, and any requirement
that any Debtor receive notice of any such acceptance; and

     (c) Any defense or other right arising by reason of any Law now or hereafter in effect in any
jurisdiction pertaining to election of remedies (including anti-deficiency laws, “one action” laws,
or the like), or by reason of any election of remedies or other action or inaction by the
Collateral Agent or the Banks, or any of them (including but not limited to commencement or
completion of any judicial proceeding or nonjudicial sale or other action in respect of collateral
security for any of the Secured Obligations), which results in denial or impairment of the right of
the Collateral Agent or the Banks, or any of them, to seek a deficiency against any Debtor or any
other Person or which otherwise discharges or impairs any of the Secured Obligations.

     9. Each of the obligations and additional liabilities of each and every Debtor under this
Agreement are joint and several with the obligations of the other Debtors, and each Debtor hereby
waives to the full extent permitted by Law any defense it may otherwise have to the payment and
performance of the Obligations that its liability hereunder is limited and not joint and several.
Each Debtor acknowledges and agrees that the foregoing waivers and those set forth below serve as a
material inducement to the agreement of the Collateral Agent and the Banks to make the Loans and
issue the Letters of Credit, and that the Collateral Agent and the Banks are relying on each
specific waiver and all such waivers in entering into this Agreement. The undertakings of each
Debtor hereunder secure the obligations of the Borrower, itself and the other Loan Parties. The
Collateral Agent and the Banks, or any of them, may, in their sole discretion, elect to enforce
this Agreement against any Debtor without any duty or responsibility to pursue any other Loan Party
and such an election by the Collateral Agent and the Banks, or any of them, shall not be a defense
to any action the Collateral Agent and the Banks, or any of them, may elect to take against any
Debtor. Each of the Banks and the Collateral Agent hereby reserves all rights against each Debtor.

     10. (a) At any time and from time to time whether or not an Event of Default then exists and
without prior notice to or consent of any Debtor, the Collateral Agent may at its option take such
actions as the Collateral Agent deems appropriate (i) to attach, perfect, continue, preserve and
protect the Collateral Agent’s, PNC’s and the Banks’ prior security interest in the Collateral,
and/or (ii) subject to the provisions of Section 8.1.6 [Visitation Rights] of the Credit Agreement,
to inspect, audit and verify the Collateral, including reviewing all of such Debtor’s books and
records and copying and making excerpts therefrom, provided that prior to an Event of

- 10 -

 

Default or a Potential Default, the same is done with advance notice during normal business
hours to the extent access to such Debtor’s premises is required, and (iii) to add all liabilities,
obligations, reasonable costs and expenses reasonably incurred in connection with the foregoing
clauses (i) and (ii) to the Secured Obligations, to be paid by the Debtors to the Collateral Agent
for the benefit of PNC and the Banks upon demand; and

     (a) At any time and from time to time after an Event of Default exists and is continuing and
without prior notice to or consent of any Debtor, the Collateral Agent may at its option take such
action as the Collateral Agent deems appropriate (i) to maintain, repair, protect and insure the
Collateral, and/or (ii) to perform, keep, observe and render true and correct any and all
covenants, agreements, representations and warranties of any Debtor hereunder, and (iii) to add all
liabilities, obligations, costs and expenses reasonably incurred in connection with the foregoing
clauses (i) and (ii) to the Secured Obligations, to be paid by any Debtor to the Collateral Agent
for the benefit of PNC and the Banks upon demand.

     11. After there exists any Event of Default under the Credit Agreement:

     (a) The Collateral Agent shall have and may exercise all the rights and remedies available to
a secured party under the Code in effect at the time, and such other rights and remedies as may be
provided by Law and as set forth below, including without limitation to take over and collect any
or all of any Debtor’s Collateral and all other Collateral, and to this end each Debtor hereby
appoints the Collateral Agent, its officers, employees and agents, as its irrevocable, true and
lawful attorneys-in-fact with all necessary power and authority to (i) take possession immediately,
with or without notice, demand, or legal process, of any of or all of the Collateral wherever
found, and for such purposes, enter upon any premises upon which the Collateral may be found and
remove the Collateral therefrom, (ii) require any Debtor to assemble the Collateral and deliver it
to the Collateral Agent or to any place designated by the Collateral Agent at such Debtor’s
expense, (iii) receive, open and dispose of all mail addressed to any Debtor and notify postal
authorities to change the address for delivery thereof to such address as the Collateral Agent may
designate, (iv) demand payment of all of the Collateral except Equipment and Inventory,
(v) enforce payment of all of the Collateral except Equipment and Inventory by legal proceedings or
otherwise, (vi) exercise all of any Debtor’s rights and remedies with respect to the collection of
all of the Collateral except Equipment and Inventory, (vii) settle, adjust, compromise, extend or
renew all of the Collateral except Equipment and Inventory, (viii) settle, adjust or compromise any
legal proceedings brought to collect all of the Collateral except Equipment and Inventory, (ix) to
the extent permitted by applicable Law, sell or assign all of the Collateral except Equipment and
Inventory upon such terms, for such amounts and at such time or times as the Collateral Agent deems
advisable, (x) discharge and release all of the Collateral except Equipment and Inventory,
(xi) take control, in any manner, of any item of payment or proceeds from any account debtor,
(xii) prepare, file and sign any Debtor’s name on any Proof of Claim in Bankruptcy or similar
document against any account debtor, (xiii) prepare, file and sign any Debtor’s name on any notice
of Lien, assignment or satisfaction of Lien or similar document in connection with all of the
Collateral except Equipment and Inventory, (xiv) do all acts and things necessary, in PNC’s sole
discretion, to fulfill any Debtor’s obligations under the Loan Documents, (xv) endorse the name of
any Debtor upon any check, Chattel Paper, Document, Instrument, invoice, freight bill, bill of
lading or similar document or agreement

- 11 -

 

relating to all of the Collateral except Equipment; (xvi) use any Debtor’s stationery and sign
such Debtor’s name to verifications of all of the Collateral except Equipment and Inventory and
notices thereof to account debtors; (xvii) access and use the information recorded on or contained
in any data processing equipment or computer hardware or software relating to the Collateral or
proceeds thereof to which any Debtor has access, (xviii) demand, sue for, collect, compromise and
give acquittances for any and all Collateral, (xix) prosecute, defend or compromise any action,
claim or proceeding with respect to any of the Collateral, and (xx) take such other action as PNC
may deem appropriate, including extending or modifying the terms of payment of any Debtor’s
debtors. This power of attorney, being coupled with an interest, shall be irrevocable for the life
of this Agreement. To the extent permitted by Law, each Debtor hereby waives all claims of damages
due to or arising from or connected with any of the rights or remedies exercised by the Collateral
Agent pursuant to this Agreement, except claims arising (to the extent so arising) from gross
negligence or willful misconduct by the Collateral Agent.

     (b) The Collateral Agent shall have the right to lease, sell or otherwise dispose of all or
any of the Collateral at public or private sale or sales for cash, credit or any combination
thereof, with such notice as may be required by Law (it being agreed by each Debtor that, in the
absence of any contrary requirement of Law, ten (10) business days’ prior notice of a public or
private sale of Collateral shall be deemed reasonable notice), in lots or in bulk, for cash or on
credit, all as PNC, in its sole discretion, may deem advisable. Such sales may be adjourned from
time to time with or without notice. The Collateral Agent shall have the right to conduct such
sales on any Debtor’s premises or elsewhere and shall have the right to use any Debtor’s premises
without charge for such sales for such time or times as the Collateral Agent may see fit. The
Collateral Agent may purchase all or any part of the Collateral at public or, if permitted by Law,
private sale and, in lieu of actual payment of such purchase price, may set off the amount of such
price against the Secured Obligations.

     12. The security interest in each Debtor’s Collateral granted to and created in favor of the
Collateral Agent by this Agreement shall be for the benefit of the Collateral Agent, PNC and the
Banks. Each of the rights, privileges, and remedies provided to the Collateral Agent hereunder or
otherwise by Law with respect to any Debtor’s Collateral shall be exercised by the Collateral Agent
only for its own benefit and the benefit of PNC and the Banks, and any of such Debtor’s Collateral
or proceeds thereof held or realized upon at any time by the Collateral Agent shall be applied as
set forth in Section 9.2.5 [Application of Proceeds] of the Credit Agreement. Each Debtor shall
remain liable to PNC and the Banks for and shall pay to the Collateral Agent for the benefit of PNC
and the Banks any deficiency which may remain after such sale or collection.

     13. If the Collateral Agent repossesses or seeks to repossess any of the Collateral pursuant
to the terms hereof because of the occurrence of an Event of Default, then to the extent it is
commercially reasonable for the Collateral Agent to store any Collateral on any of any Debtor’s
premises, each Debtor hereby agrees to lease to the Collateral Agent on a month-to-month tenancy
for a period not to exceed one hundred twenty (120) days at the Collateral Agent’s election, at a
rental of One Dollar ($1.00) per month, the premises on which the Collateral is located, provided
it is located on premises owned or leased by such Debtor.

- 12 -

 

     14. Upon indefeasible payment in full of the Secured Obligations and termination of the Credit
Agreement, this Agreement shall terminate and be of no further force and effect, and the Collateral
Agent shall thereupon promptly return to a Debtor such of the Collateral and such other documents
delivered by such Debtor hereunder as may then be in the Collateral Agent’s possession. Until such
time, however, this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

     15. No failure or delay on the part of the Collateral Agent in exercising any right, remedy,
power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power
or privilege of the Collateral Agent hereunder; nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. No waiver of a single Event of Default
shall be deemed a waiver of a subsequent Event of Default. All waivers under this Agreement must
be in writing. The rights and remedies of the Collateral Agent under this Agreement are cumulative
and in addition to any rights or remedies which it may otherwise have, and the Collateral Agent may
enforce any one or more remedies hereunder successively or concurrently at its option.

     16. All notices, statements, requests, demands, directions and other communications
(collectively, “notices”) given to or made upon any party hereto under the provisions of
this Agreement shall be given to the applicable party hereto at the address set forth on
Schedule 1.1(B) to the Credit Agreement and in the manner provided in Section 11.6 [Notices] of the
Credit Agreement. The Collateral Agent and the Banks may rely on any notice (whether or not made
in the manner contemplated by this Agreement) reasonably believed to have been made by or on behalf
of any Debtor, and the Collateral Agent and the Banks shall have no duty to verify the identity or
authority of the Person giving such notice.

     17. Each Debtor agrees that as of the date hereof, all information contained on the Security
Interest Data Schedule attached hereto as Schedule A is accurate and complete in all
material respects and contains no material omission or misrepresentation. Each Debtor shall
promptly notify the Collateral Agent of any changes in the information set forth thereon.

     18. Each Debtor acknowledges that the provisions hereof giving the Collateral Agent rights of
access to books, records and information concerning the Collateral and such Debtor’s operations and
providing the Collateral Agent access to such Debtor’s premises are intended to afford the
Collateral Agent with immediate access to current information concerning such Debtor and its
activities, including without limitation, the value, nature and location of the Collateral so that
the Collateral Agent can, among other things, make an appropriate determination after the
occurrence of an Event of Default, whether and when to exercise its other remedies hereunder and at
Law, including without limitation, instituting a replevin action should any Debtor refuse to turn
over any Collateral to the Collateral Agent. Each Debtor further acknowledges that should such
Debtor at any time fail to promptly provide such information and access to the Collateral Agent,
each Debtor acknowledges that the Collateral Agent would have no adequate remedy at Law to promptly
obtain the same. Each Debtor agrees that the provisions hereof may be specifically enforced by the
Collateral Agent and waives any claim or defense in any such action or proceeding that the
Collateral Agent has an adequate remedy at Law.

- 13 -

 

     19. This Agreement shall be binding upon and inure to the benefit of the Collateral Agent,
PNC, the Banks and their respective successors and assigns, and each Debtor and each of its
respective successors and assigns, except that no debtor may assign or transfer such Debtor’s
obligations hereunder or any interest herein, and any such purported assignment or transfer shall
be null and void.

     20. This Agreement shall be deemed to be a contract under the laws of the State of New York
and for all purposes shall be governed by and construed and enforced in accordance with the laws of
said State.

     21. (a) It is the intention of the parties that this Agreement be enforceable to the fullest
extent permissible under applicable Law, but that the unenforceability (or modification to conform
to such Law) of any provision or provisions hereof shall not render unenforceable, or impair, the
remainder hereof. If any provision in this Agreement shall be held invalid or unenforceable in
whole or in part in any jurisdiction, this Agreement shall, as to such jurisdiction, be deemed
amended to modify or delete, as necessary, the offending provision or provisions and to alter the
bounds thereof in order to render it or them valid and enforceable to the maximum extent permitted
by applicable Law, without in any manner affecting the validity or enforceability of such provision
or provisions in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

     (b) Without limitation of the preceding subsection (a), to the extent that applicable Law
(including applicable Laws pertaining to fraudulent conveyance or fraudulent or preferential
transfer) otherwise would render the full amount of any Debtor’s obligations hereunder invalid,
voidable or unenforceable on account of the amount of a Debtor’s aggregate liability under this
Agreement, then, notwithstanding any other provision of this Agreement to the contrary, the
aggregate amount of such liability shall, without any further action by the Collateral Agent or any
of the Banks or such Debtor or any other Person, be automatically limited and reduced to the
highest amount which is valid and enforceable as determined in such action or proceeding, which
(without limiting the generality of the foregoing) may be an amount which is equal to the greater
of:

     (i) the fair consideration actually received by such Debtor under the terms and as a
result of the Loan Documents and the Bank-Provided Interest Rate Hedges and the value of the
benefits described in Paragraph 25(b) hereof, including (and to the extent not inconsistent
with applicable federal and state laws affecting the enforceability of guaranties)
distributions, commitments, and advances made to or for the benefit of such Debtor with the
proceeds of any credit extended under the Loan Documents or the Bank-Provided Interest Rate
Hedges, or

     (ii) the excess of (1) the amount of the fair value of the assets of such Debtor as of
the date of this Agreement as determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors as in effect on the date hereof,
over (2) the amount of all liabilities of such Debtor as of the date of this Agreement, also
as determined on the basis of applicable federal and state laws governing the insolvency of
debtors as in effect on the date hereof.

- 14 -

 

     (c) Notwithstanding anything to the contrary in this Section 21 or elsewhere in this
Agreement, this Agreement shall be presumptively valid and enforceable to its full extent in
accordance with its terms, as if this Section 21 (and references elsewhere in this Agreement to
enforceability to the fullest extent permitted by Law) were not a part of this Agreement, and in
any related litigation the burden of proof shall be on the party asserting the invalidity or
unenforceability of any provision hereof or asserting any limitation on any Debtor’s obligations
hereunder as to each element of such assertion.

     22. EACH DEBTOR HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF
NEW YORK OR THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH DEBTOR AT THE ADDRESS PROVIDED FOR IN SECTION 11.6
[NOTICES] OF THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL
RECEIPT THEREOF. EACH DEBTOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF
ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON
SUCH LACK OF JURISDICTION OR VENUE.

     23. EACH DEBTOR HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE CREDIT AGREEMENT, ANY
OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULLEST EXTENT PERMITTED BY LAW.

     24. At any time after the initial execution and delivery of this Agreement to the Collateral
Agent for the benefit of the Banks, additional Persons may become parties to this Agreement and
thereby acquire the duties and rights of being Debtors hereunder by executing and delivering to the
Collateral Agent and the Banks a Guarantor Joinder pursuant to the Credit Agreement and, in
addition, a new Schedule A and Schedule B hereto shall be provided to the
Collateral Agent with respect to such new Debtor. No notice of the addition of any Debtor shall be
required to be given to any pre-existing Debtor and each Debtor hereby consents thereto.

     25. (a) Each Debtor hereby acknowledges that it has received a copy of the Credit Agreement
and the other Loan Documents and each Debtor certifies that the representations and warranties made
therein with respect to such Debtor are true and correct. Further, each Debtor acknowledges and
agrees to perform, comply with, and be bound by all of the provisions of the Credit Agreement and
the other Loan Documents.

     (a) Each Debtor hereby acknowledges, represents, and warrants that it receives synergistic
benefits by virtue of its affiliation with the Borrower and the other Debtors and that it will
receive direct and indirect benefits from the financing arrangements contemplated by the Credit
Agreement and that such benefits, together with the rights of contribution and subrogation

- 15 -

 

that may arise in connection herewith are a reasonably equivalent exchange of value in return
for providing this Agreement.

     26. This Agreement supersedes all prior understandings and agreements, whether written or
oral, between the parties hereto relating to a grant of a security interest in the Collateral by
any Debtor. This Agreement is subject to waiver, modification, supplement or amendment only by a
writing signed by the parties, except as provided in this Agreement with respect to additions and
supplements to Schedule A and Schedule B hereto.

     27. This Agreement may be executed by different parties hereto on any number of separate
counterparts, each of which, when so executed and delivered, shall be deemed an original, and all
such counterparts shall together constitute one and the same instrument. Each Debtor acknowledges
and agrees that a telecopy or electronic transmission to the Collateral Agent or any Bank of the
signature pages hereof purporting to be signed on behalf of any Debtor shall constitute effective
and binding execution and delivery hereof by such Debtor.

     28. This Agreement amends and restates the Original Security Agreement and this Agreement is
not intended to constitute, nor does it constitute, an interruption, suspension of continuity,
satisfaction, discharge of prior duties, novation, or termination of the indebtedness, liabilities,
expenses, or obligations under the Original Security Agreement. This Agreement and the Credit
Agreement and the other Loan Documents constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede any and all other prior and contemporaneous
understandings and agreements.

[SIGNATURE PAGES FOLLOW]

- 16 -

 

[SIGNATURE PAGE 1 OF 2 TO

AMENDED AND RESTATED SECURITY AGREEMENT]

     IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have
executed and delivered this Agreement as of the day and year first above set forth.

	 	 	 	 	 
	 	WESTMORELAND MINING LLC

 	 
	 	By:  	               /s/ Douglas P. Kathol
 	(SEAL) 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 
	 
	 	DAKOTA WESTMORELAND CORPORATION

 	 
	 	By:  	            /s/ Douglas P. Kathol
 	(SEAL) 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 
	 
	 	WESTMORELAND SAVAGE CORPORATION

 	 
	 	By:  	            /s/ Douglas P. Kathol
 	(SEAL) 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 
	 
	 	WESTERN ENERGY COMPANY

 	 
	 	By:  	                /s/ Douglas P. Kathol
 	(SEAL) 
	 	Name:  	Douglas P. Kathol 	 
	 	Title:  	Vice President 	 

 

	 	 	 	 	 

[SIGNATURE PAGE 2 OF 2 TO

AMENDED AND RESTATED SECURITY AGREEMENT]

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as

Collateral Agent

 	 
	 	By:  	                   /s/ Brian J. Kabbes
 	 
	 	Name:  	Brian J. Kabbes 	 
	 	Title:  	Vice President 	 

- 18 -

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