Document:

exv10w46

 

Exhibit 10.46

Execution Copy

SECOND AMENDED AND RESTATED ASSIGNMENT

AND SECURITY AGREEMENT

between

WESTMORELAND PARTNERS

(as Debtor)

and

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

(as Agent)

Dated as of February 11, 2008

 

 

TABLE
OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	1.

	 	Definitions
	 	 	1	 
	2.

	 	Confirmation of Security Interest; Creation of Security Interest
	 	 	2	 
	3.

	 	Representations, Warranties and Covenants
	 	 	6	 
	4.

	 	Default
	 	 	8	 
	5.

	 	Rights and Remedies Upon Default
	 	 	8	 
	6.

	 	Assignment of Permits; Etc.
	 	 	11	 
	7.

	 	Security Interest Absolute
	 	 	11	 
	8.

	 	Agent Appointed Attorney-in-Fact
	 	 	12	 
	9.

	 	Agent May Perform
	 	 	12	 
	10.

	 	Debtor Remains Liable
	 	 	12	 
	11.

	 	Reasonable Care
	 	 	12	 
	12.

	 	Other Powers
	 	 	13	 
	13.

	 	No Duty on Agent’s Part
	 	 	13	 
	14.

	 	Role of Agent
	 	 	14	 
	15.

	 	Relation to Other Security Documents
	 	 	14	 
	16.

	 	Further Assurances
	 	 	14	 
	17.

	 	Notices
	 	 	15	 
	18.

	 	Other Remedies
	 	 	16	 
	19.

	 	Waiver
	 	 	16	 
	20.

	 	Expenses
	 	 	17	 
	21.

	 	Time of Essence
	 	 	17	 
	22.

	 	Binding Upon Successors
	 	 	17	 
	23.

	 	Captions
	 	 	17	 
	24.

	 	Governing Law and Jurisdiction
	 	 	17	 
	25.

	 	Amendment
	 	 	18	 
	26.

	 	Severability
	 	 	18	 
	27.

	 	Secured Parties Not Liable
	 	 	18	 
	28.

	 	Termination; Release of Pledged Collateral
	 	 	18	 
	29.

	 	Limitation of Recourse
	 	 	18	 
	30.

	 	Counterparts
	 	 	19	 

i

 

SECOND AMENDED AND RESTATED ASSIGNMENT 

AND SECURITY AGREEMENT

     This SECOND AMENDED AND RESTATED ASSIGNMENT AND SECURITY AGREEMENT (this “Security
Agreement”), dated as of February 11, 2008, between WESTMORELAND PARTNERS, a Virginia general
partnership (“Debtor”), and PRUDENTIAL INVESTMENT MANAGEMENT, INC., as agent
(“Agent”) on behalf of and for the benefit of the Secured Parties under the Loan Agreement
(defined below).

WITNESSETH:

     WHEREAS, Debtor, Agent, certain lenders and other parties are parties to that certain Amended
and Restated Construction and Term Loan Agreement, dated as of December 1, 1993, (as amended, the
“Original Credit Agreement”), providing for the financing of the construction and operation
of the Rova I Facility and the Rova II Facility (as defined therein);

     WHEREAS, simultaneously with the entering into of the Original Credit Agreement, Debtor and
Agent entered into an Amended and Restated Assignment and Security Agreement dated as of December
1, 1993 (the “Original Security Agreement”), pursuant to which Debtor granted a security
interest in the Collateral (as defined in the Original Security Agreement) to Agent for the benefit
of the Secured Parties to secure Debtor’s obligations under the Original Credit Agreement;

     WHEREAS, the Original Credit Agreement is being amended and restated in order to, among other
things, issue Tranche C Senior Loans, Senior Subordinated Fixed Rate Loans and Junior Subordinated
Floating Rate Loans, subject to the terms and conditions set forth therein, and to amend and
restate the other terms and conditions of the Original Credit Agreement, in each case as further
set forth in the Loan Agreement (as defined below); and

     WHEREAS, the parties desire to amend and restate the Original Security Agreement on the terms
hereinafter set forth in order to, among other things, confirm the security interest created
pursuant to the Original Security Agreement in connection with the Loan Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein, and in order to
induce the Lenders to make such loans, the parties hereto agree that the Original Security
Agreement is hereby amended and restated in its entirety as follows:

     1. Definitions.

     For purposes of this Security Agreement and unless the context otherwise requires, all
capitalized terms used herein which are defined in the Loan Agreement (and not otherwise defined
herein) shall have their respective meanings as therein defined, and each of the following terms
shall have the respective meaning assigned thereto:

     “Code” means the Uniform Commercial Code as in effect in the State of New York from
time to time.

 

     “Loan Agreement” means the Second Amended and Restated Loan Agreement, dated as of
February 11, 2008, among Debtor, as Borrower, The Prudential Insurance Company of America and each
Purchasing Lender (as defined therein), as Lenders, and Prudential Investment Management, Inc., as
Agent, as the same may be amended, modified or supplemented from time to time.

     2. Confirmation of Security Interest; Creation of Security Interest.

          (a) As security for the full payment or performance when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations (defined below) now existing or hereafter arising,
Debtor hereby confirms the grant made by Debtor on the December 1, 1993 pursuant to the terms of
the Original Security Agreement, and hereby assigns, conveys, mortgages, pledges, hypothecates,
transfers and grants, in favor of Agent for the benefit of the Secured Parties a lien on and first
priority security interest (the “Security Interest”) in all of Debtor’s right, title and
interest in and to all of its properties, assets and rights, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (collectively, the
“Collateral”), including: all personal and fixture property of every kind and nature,
including all goods (including inventory, equipment and accessions thereto), instruments (including
promissory notes), timber to be cut, documents (including, if applicable, electronic documents),
accounts (including health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, securities accounts, letter of credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities and all other
investment property, supporting obligations, any other contract rights or rights to the payment of
money, insurance claims and proceeds, tort claims and all general intangibles (including payment
intangibles), including, without limitation:

          (A) The following agreements:

          (i) Rova I Power Purchase Agreement;

          (ii) Rova I Coal Supply Guaranty;

          (iii) Rova I Coal Supply Agreement;

          (iv) Rova I Coal Supply Subcontract;

          (v) Rova I Three Party Agreement;

          (vi) Rova I Railcar Assignment;

          (vii) Rova I Lime Railcar Lease Agreement;

          (viii) Rova I Lime Supply Agreement;

          (ix) Rail Transportation Agreement;

          (x) Energy Services Agreement;

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          (xi) Steam Host Guaranty;

          (xii) Operating Contract;

          (xiii) Water Service Agreement;

          (xiv) Ash Disposal Agreement;

          (xv) Partnership Agreement;

          (xvi) Venture Management Agreement;

          (xvii) Easement Agreements;

          (xviii) The consent of each party (other than Debtor) to each of the Rova I Project
Documents, where applicable, to the assignment thereof by Debtor to Agent for the benefit of
the Secured Parties;

          (xix) The Rova II Power Purchase Agreement;

          (xx) The Rova II Coal Supply Agreement;

          (xxi) The Rova II Coal Supply Guaranty;

          (xxii) The Rova II Coal Subcontract;

          (xxiii) The Rova II Coal Subcontract Guaranty;

          (xxiv) The Rova II Three Party Agreement;

          (xxv) The Rova II Lime Supply Agreement;

          (xxvi) The Lime Transportation Agreement;

          (xxvii) The Step-in Rights Agreement;

          (xxviii) The consent of each party (other than Debtor) to each of the Rova II Project
Documents, where applicable, to the assignment thereof by Debtor to Agent for the benefit of
the Secured Parties;

          (xxix) Insurance Policies;

          (xxx) All authorizations, consents, approvals, registrations, exemptions, permits and
licenses from Governmental Authorities; provided that any of the foregoing items
described in this clause (xxx) which by its terms or by operation of law would become void,
voidable, terminable or revocable if mortgaged, pledged or assigned hereunder or if a
security interest therein is granted hereunder, is expressly excepted and

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excluded from this grant to the extent necessary to avoid such voidness, voidability,
terminability or revocability;

          (xxxi) Any other agreement, except for Permitted Contracts (other than Easement
Agreements executed by (or on behalf of) Debtor in connection with the Facilities or any of
the Rova I Project Documents and Rova II Project Documents and classified as a Rova I
Project Document or Rova II Project Document by Agent, in its sole discretion, with notice
to Debtor); and

          (xxxii) Any other Permitted Contract which does not, by its terms, prohibit the
assignment thereof as security in the manner contemplated herein,

as each such document may be amended, supplemented or otherwise modified from time to time (said
documents, as amended, supplemented or modified, being individually an “Assigned
Agreement” and collectively the “Assigned Agreements”), including, without
limitation, (1) all rights of Debtor to receive moneys due and to become due under or pursuant to
the Assigned Agreements, (2) all rights of Debtor to receive proceeds of any performance or payment
bond, insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements, (3) all
claims of Debtor for damages arising out of or for breach of or default under the Assigned
Agreements and (4) all rights of Debtor to terminate, amend, supplement, modify or waive
performance of the Assigned Agreements, to perform thereunder and to compel performance and
otherwise exercise all remedies thereunder; provided that until the occurrence of an Event
of Default, Debtor may exercise all rights, interests and benefits under the Assigned Agreements in
any lawful manner not inconsistent with this Security Agreement, the Loan Agreement and the other
Loan Instruments;

     (B) All automobiles, trucks, boats and other rolling stock or moveable personal
property (“Rolling Stock”), including Rolling Stock for which the title thereto is
evidenced by a certificate of title issued by the United States or a state which permits or
requires a lien thereon to be evidenced upon such certificate, in which Debtor now or at any
time in the future may have an interest. In connection therewith, Debtor shall notify Agent
before acquiring any such Rolling Stock, and provide Agent with (1) all lien entry forms and
similar documents, duly completed, executed and acknowledged, (2) the certificates of title
to such Rolling Stock and (3) such other information or documents, in each case, to the
extent required or desirable in order to enable Agent to perfect its lien on such Rolling
Stock for the equal and ratable benefit of the Secured Parties. Upon execution of such lien
entry forms and other documents by Agent, Debtor shall, at its expense, cause such lien
entry forms and other documents to be presented to the appropriate authorities in order to
perfect Agent’s lien on such Rolling Stock for the equal and ratable benefit of the Secured
Parties;

     (C) All consents, registrations, licenses, permits, approvals, certificates, variances,
orders, exemptions and other authorizations now or hereafter issued, made or granted with
respect to the development, construction, reconstruction, repair, alteration, addition,
improvement, replacement, use, operation or management of the Facilities and the Property
(including, without limitation, all Government Approvals now or hereafter

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held in the name or for the benefit of Debtor) (collectively, the “Permits”);
provided that any of the Permits which by their terms or by operation of law would
become void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder
or if a security interest therein were granted hereunder are expressly excepted and excluded
from the lien and terms of this Security Agreement to the extent necessary to avoid such
voidness, voidability, terminability or revocability;

     (D) All equipment, machinery, apparatus, installations, facilities and other tangible
property owned by Debtor or hereafter acquired;

     (E) All accounts (other than the accounts referred to in Section 6.9(b) of the Loan
Agreement) and all balances therein, and all agreements, rights, interests, inventory
(including fuel supplies), goods, contract rights, chattel paper, documents, instruments,
general intangibles, fixtures, trade fixtures, consumer goods, money and other assets owned
by Debtor on the date hereof or hereafter arising or acquired, including, without
limitation, the improvements and equipment associated with the Property and the Facilities,
and designs, plans and specifications relating to the Property and the Facilities owned by
Debtor or hereafter acquired, and any right, title or interest of Debtor under any
insurance, indemnity, warranty or guaranty in respect of the Property and the Facilities or
of any of the foregoing and any rents, revenues, incomes and profits in respect of the
Property and the Facilities; and

     (F) To the extent not included in the foregoing, all proceeds, products and accessions
of and to any and all of the foregoing, including, without limitation, “proceeds,” as
defined in Section 9-102(64) of the Code, including whatever is received upon any
collection, exchange, sale or other disposition of any of the Collateral, and any property
into which any of the Collateral is converted, whether cash or noncash proceeds, and any and
all other amounts paid or payable under or in connection with any of the Collateral.

          (b) This Security Agreement and the Collateral secures, in accordance with the provisions
hereof, the following obligations, now existing or hereafter arising (collectively, the
“Obligations”):

          (i) payment and performance of each and every obligation, covenant and agreement of
Debtor now or hereafter existing contained in the Loan Agreement and any of the other Loan
Instruments, including, without limitation, the “Obligations” as defined in the Loan
Agreement, in each case whether for principal, interest, fees, Yield-Maintenance Premium, if
any, expenses or otherwise, and any amendments or supplements thereto, extensions or
renewals thereof or replacements therefor;

          (ii) payment of all sums advanced in accordance herewith or in accordance with the
other Security Documents by or on behalf of the Secured Parties to protect any of the
Collateral purported to be covered hereby or thereby, with interest thereon at the rate
equal to the Default Interest Rate;

5

 

          (iii) performance of every obligation, covenant and agreement of Debtor contained in
the Loan Agreement and any of the other Loan Instruments or in any agreement now or
hereafter executed by Debtor which recites that the obligations thereunder are secured by
this Security Agreement or the Collateral; and

          (iv) payment of all sums, with interest thereon at the Default Interest Rate, that may
become due and payable to or for the benefit of the Secured Parties pursuant to the terms of
this Security Agreement;

in each case, when due (whether at stated maturity, by acceleration, because of mandatory
prepayment, or otherwise, and including the payment of amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)),
and in each case whether direct or indirect, joint or several, absolute or contingent, liquidated
or unliquidated, now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and including, without
limitation, all indebtedness of Debtor under any instrument now or hereafter evidencing or securing
any of the foregoing.

     3. Representations, Warranties and Covenants.

     Debtor hereby represents, warrants and covenants as follows:

          (a) The grant of the Security Interest in the Collateral creates a legal, valid and perfected
first priority security interest in the Collateral, now owned by Debtor or hereafter acquired
(subject to Permitted Liens).

          (b) No authorization, approval or other action by, and no notice to or filing with, any
Governmental Authority, any regulatory body or any other Person is required of Debtor with respect
to (i) the grant of the Security Interest in the Collateral or (ii) the exercise by Agent of the
rights provided in this Security Agreement, the Loan Agreement or any of the other Loan Instruments
or the remedies in respect of the Collateral pursuant to this Security Agreement, the Loan
Agreement or any of the other Loan Instruments.

          (c) Debtor shall immediately notify Agent of any claim against the Collateral adverse to the
interest of the Secured Parties hereunder.

          (d) Debtor has delivered to Agent a Perfection Certificate, a copy of which is attached as
Exhibit A to this Security Agreement. Debtor represents and warrants to Agent and each Lender
that: (i) Debtor’s exact legal name is stated in the Perfection Certificate and on the signature
page hereof; (ii) Debtor is an organization of the type, and is organized in the jurisdiction, set
forth in the Perfection Certificate; (iii) the Perfection Certificate accurately sets forth
Debtor’s organizational identification number or accurately states that Debtor has none; (iv) the
Perfection Certificate accurately sets forth as of the date hereof Debtor’s place of business, its
chief executive office, the office where Debtor keeps its records regarding the Collateral and the
original executed copies of the Assigned Agreements and, if different, Debtor’s mailing address;
and (v) all other information set forth in the Perfection Certificate is accurate and complete as
of

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the date hereof. Debtor shall notify Agent immediately in writing of any change in the
location of its chief executive office, principal place of business or the office where such
records and originals are kept, or the establishment by Debtor of any other office or place of
business, or the adoption or change of its name or any trade name or fictitious business name and,
upon written request of Agent, shall execute any additional documents or certificates necessary to
reflect the adoption of or change in its name or any trade name or fictitious business name.

          (e) Debtor agrees that from time to time, at its expense, Debtor will promptly execute and
deliver all further instruments and documents, and take all further action, that may be necessary,
or that Agent may reasonably request, in order to perfect and protect the Security Interest granted
or purported to be granted in the Collateral or to enable Agent to exercise and enforce its rights
and remedies with respect to the Collateral. Without limiting the generality of the foregoing,
Debtor will: (i) mark conspicuously each note, instrument or chattel paper included in the
Collateral with a legend indicating that such note, instrument or chattel paper is subject to the
security interest granted or purported to be granted hereby; (ii) if any Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to Agent
such note or instrument or chattel paper duly indorsed and accompanied by duly executed instruments
of transfer or assignment, all in form satisfactory to Agent; and (iii) execute (if necessary) and
file such financing or continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as Agent may request, in order to perfect and
preserve the security interest granted or purported to be granted hereby. Debtor hereby authorizes
Agent to file one or more such financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of Debtor where permitted by
law. Copies of any such statement or amendment thereto shall promptly be delivered to Debtor.

          (f) Debtor will keep and maintain at its own cost and expense satisfactory and complete
records of the Collateral. Debtor will furnish to Agent from time to time statements and schedules
further identifying and describing the Collateral and such other reports in connection with the
Collateral as Agent may reasonably request, all in reasonable detail. Subject to Section 6.10 of
the Loan Agreement, Agent and the Secured Parties may inspect the Collateral at any reasonable time
and upon reasonable notice, wherever located.

          (g) Debtor will not create, incur or permit to exist, will defend the Collateral against, and
will take such other action as is necessary to remove, any lien or claim on or to the Collateral,
other than Permitted Liens, and will defend the right, title and interest of Agent in and to any of
the Collateral against the claims and demands of all persons whomsoever.

          (h) Debtor shall notify Agent promptly if any tangible items of Collateral, or any items that
are to become Collateral, are to be stored for any length of time (other than temporary storage
incident to transportation to the Property) in any location other than the Property or Debtor’s
chief executive office. The notice shall specify, in such detail as is required by Agent: (i) the
items that are to be stored, (ii) the location at which such items are to be stored and the name
and addresses of the owner and operator of the storage facility, (iii) the length of time that such
items are to be stored at that location and (iv) the name of the Person or entity who is the owner
of such items. If required by Agent, Debtor shall execute additional security

7

 

agreements, financing statements and other related documents, all in form reasonably
satisfactory to Agent, covering the items that are to be stored. If for any reason Agent, on behalf
and for the benefit of the Secured Parties, cannot perfect a first priority security interest in
the items stored or to be stored, then upon instructions from Agent, Debtor shall promptly
transport such items to the Property. Upon instructions from Agent, Debtor shall obtain such
additional insurance on the Collateral stored at any location other than the Property as Agent
deems reasonably necessary to protect the Secured Parties’ interests.

     4. Default.

     The occurrence of any Event of Default (as defined in the Loan Agreement) shall constitute an
event of default (“Event of Default”) hereunder.

     5. Rights and Remedies Upon Default.

          (a) Upon the occurrence and continuance of an Event of Default hereunder, for the benefit of
and on behalf of the Secured Parties, Agent may do one or more of the following:

          (i) Declare, without presentment, demand, protest or notice of any kind, all of which
Debtor hereby expressly waives, all Obligations and other indebtedness and amounts secured
hereby to be immediately due and payable, whereupon all of said Obligations and other
indebtedness and amounts declared due and payable shall be and become immediately due and
payable (provided that if, with respect to Debtor, an Event of Default occurs
pursuant to Section 7.1(i) or (j) of the Loan Agreement, the acceleration provided for in
this Section 5(a)(i) shall be deemed to have been made upon the occurrence of such Event of
Default without declaration or any other action by Agent);

          (ii) Take all cash held by Depositary or in any Local Bank Account and all cash
proceeds received or receivable by Depositary in respect of the Collateral and then or at
any time thereafter apply the same (after payment of any amounts payable to Agent pursuant
to Section 20 hereof), in whole or in part, for the benefit of the Secured Parties in
satisfaction of all or any part of the Obligations in the manner specified in Section 5(b)
hereof, unless otherwise agreed by all Lenders in a writing delivered to Agent;

          (iii) give notice of the Event of Default to any Person, collect proceeds and amounts
in respect of the Collateral, and enforce all rights of Debtor in the Collateral;

          (iv) take possession of any or all of the Collateral, wherever it may be found, and
hold, store, repair, improve, operate and manage the same;

          (v) Upon notice to Debtor, which notice need not be in writing (but which notice shall
promptly be confirmed in writing), make such payments and do such acts as Agent may deem
necessary to protect, perfect or continue the perfection of the Secured Parties’ Security
Interest in the Collateral including, without limitation, paying,

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purchasing, contesting or compromising any encumbrance, charge or lien which is, or
purports to be, prior to or superior to the Security Interest in the Collateral, and
commencing, appearing or otherwise participating in or controlling any action or proceeding
purporting to affect the Secured Parties’ Security Interest in or ownership of the
Collateral;

          (vi) Foreclose this Security Agreement as herein provided or in any manner permitted by
law transfer to or register in the name of Agent or its nominees any and all of the
Collateral, and exercise any and all of the rights and remedies conferred upon the Secured
Parties by the Project Documents or the Loan Instruments either concurrently or in such
order as Agent may determine without affecting the rights or remedies to which the Secured
Parties may be entitled under the Loan Instruments;

          (vii) In accordance with Law, accept the Collateral in full or partial satisfaction of
the Obligations; and

          (viii) Exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies of a secured
party after default under the Code, and sell, license or otherwise dispose of the Collateral
or any part thereof in a commercially reasonable manner, at public or private sale, at any
exchange, broker’s board or at any of Agent’s offices or elsewhere, for cash, on credit or
for future delivery, at such price or prices, and upon such other terms as are commercially
reasonable. Debtor agrees that, to the extent notice of any such disposition shall be
required by Law, at least ten (10) days’ notice to Debtor of the time and the place of any
public disposition or the time after which any private disposition is to be made shall
constitute reasonable notification. Agent shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it was so
adjourned. Agent shall incur no liability as a result of the manner of disposition of the
Collateral, or any part thereof, at any private disposition conducted in a commercially
reasonable manner. Debtor hereby waives, to the extent permitted by Law, any claims against
Agent arising by reason of the fact that the price at which the Collateral, or any part
thereof, may have been disposed of at a private disposition was less than the price which
might have been obtained at a public disposition or was less than the aggregate amount of
the Obligations. To the extent permitted by Law, Debtor hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any Law now existing
or hereafter enacted. Debtor authorizes Agent, at any time and from time to time, to
execute, in connection with a disposition of the Collateral pursuant to the provisions of
this Agreement, any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.

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If Agent shall have exercised its rights and remedies hereunder:

                    (A) Upon request by Agent or any Lender after the occurrence of an Event of Default, Debtor
agrees, promptly and at its own expense, to assemble any or all of the Collateral and make it
available to Agent.

                    (B) Agent will be entitled to sell the Collateral on any commercially reasonable terms, and
Debtor agrees that a private sale or a sale on extended payment terms, or in exchange for property,
stock or other consideration will not in and of itself be deemed to be commercially unreasonable.
The Collateral may be sold in one lot as an entirety or in separate parcels. Any Lender may
purchase any or all of the Collateral sold at any public sale and, to the extent permitted by
applicable Law, may purchase any or all of the Collateral sold at any private sale, including by a
credit bid.

                    (C) Agent may restrict the prospective bidders or purchasers at any sale in a commercially
reasonable fashion as to their number, nature of business, financial or business expertise, net
worth or financial resources and investment intention or on the basis of any other factors that are
commercially reasonable.

                    (D) Agent will not be obligated to hold any sale pursuant to any such notice and may, without
notice or publication, adjourn any public or private sale by announcement at the time and place
fixed for such sale, and a subsequent sale may be held at the time and place designated in such
announcement without further notice or publication. To the extent permitted by applicable law,
Debtor irrevocably waives any right it may have to make a demand of performance or other demand,
advertisement, judicial hearing or notice to it or any other Person in connection with the
collection, sale or other disposition of, or realization upon, the Collateral.

                    (E) Before any sale or disposition of the Collateral, Agent at its option may cause any or all
of such Collateral to be improved, repaired or reconditioned in such manner and to such extent as
Agent may deem advisable. Agent may also settle, pay or discharge any or all taxes, Liens, claims
and other charges with respect to the Collateral, and may procure or continue insurance with
respect to the Collateral. All sums expended by Agent pursuant to this clause (E) will constitute
Obligations. Neither Agent nor any Lender will have any duty to take any action authorized by this
clause (E), and no sale of the Collateral will be deemed to have been commercially unreasonable by
reason of Agent’s decision not to take any such action.

                    (F) Except to the extent required by applicable law, neither Agent nor any Lender will be
required to marshal any Collateral or any guaranties of the Obligations, or to resort to any item
of the Collateral or any guaranty in any particular order, and Agent’s rights with respect to the
Collateral and any guaranties will be cumulative and in addition to all other rights, however
existing or arising. To the extent permitted by applicable law, Debtor irrevocably waives, and
agrees that it will not invoke or assert, any law requiring or relating to the marshaling of
collateral or any other law which might cause a delay in or impede the enforcement of Agent’s
rights under this Security Agreement or any other Financing Document.

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                    (G) The sale or other transfer pursuant to this Security Agreement of any right, title or
interest of Debtor in any item of the Collateral will operate to permanently divest Debtor and all
Persons claiming under or through Debtor of such right, title or interest, and will be a perpetual
bar, both at law and in equity, to any and all claims by Debtor or any such Person with respect to
such item of the Collateral.

          (b) The proceeds of any sale or realization of the Collateral shall be applied as follows:

          (i) To the repayment of the reasonable costs and expenses of retaking, holding and
preparing for the sale and the selling of the Collateral (including, without limitation,
legal expenses and attorneys’ fees) and the discharge of all assessments, encumbrances,
charges or liens, if any, on the Collateral prior to the lien hereof (except any taxes,
assessments, encumbrances, charges or liens subject to which such sale shall have been
made);

          (ii) To the payment in full of the “Obligations” (as defined in the Loan Agreement) in
accordance with the priority of application specified in Section 2.6(b) of the Loan
Agreement, and then to the payment in full of all other Obligations;

          (iii) To the payment of any other outstanding obligations of Debtor under the Project
Documents; and

          (iv) The surplus, if any, shall be paid to Debtor if lawfully entitled to receive the
same or shall be paid to whomsoever a court of competent jurisdiction may direct.

     6. Assignment of Permits; Etc.

     Debtor shall, upon the occurrence of an Event of Default and at the request of Agent, assign,
transfer or otherwise furnish to Agent (to the extent so assignable or transferable) or to any
designee of Agent, all of Debtor’s rights and interest in, to and under all Governmental
Requirements, offsets and similar rights issued under or in connection with Laws enacted or
promulgated for the protection of the environment or the public health, including, without
limitation, Governmental Requirements respecting air emissions (including air emission reduction,
credits or offsets), wastewater discharge and solid or hazardous waste management, which are
required from time to time to permit the Rova I Facility and/or Rova II Facility, as the case may
be, to be operated in accordance with all applicable Laws. Debtor agrees to use its best efforts to
have renewed or extended in the name of Agent or its designee (or other Person operating the Rova I
Facility and/or the Rova II Facility, as the case may be), or otherwise to obtain for Agent (or
such other Person) the benefits of all of the Governmental Requirements and other rights referred
to in the immediately preceding sentence to the extent that such Governmental Requirements and
other rights shall not be assignable.

11

 

     7. Security Interest Absolute.

     All rights of Agent and the Secured Parties hereunder, the Security Interest and all
obligations of Debtor hereunder, shall be absolute and unconditional irrespective of:

          (i) any lack of validity or enforceability of the Original Security Agreement, the Loan
Instruments or the Assigned Agreements or any other agreement or instrument relating
thereto;

          (ii) any change in the time, manner or place of payment of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or any consent to any
departure from the Loan Instruments or the Assigned Agreements; or

          (iii) any exchange, release or non-perfection of any other collateral, or any release
or amendment or waiver of or consent to or departure from any guaranty, for all or any of
the Obligations.

     8. Agent Appointed Attorney-in-Fact.

     Debtor hereby irrevocably constitutes and appoints Agent to act, upon the occurrence of an
Event of Default, as Debtor’s attorney-in-fact (which appointment as attorney-in-fact shall be
coupled with an interest and irrevocable), with full authority in the place and stead of Debtor and
in the name of Debtor or otherwise, from time to time in Agent’s discretion, to take any action and
to execute any instrument which Agent may deem necessary or advisable to accomplish the purposes of
this Security Agreement. Debtor hereby ratifies and confirms all actions taken by Agent or its
agents pursuant to this power of attorney.

     9. Agent May Perform.

     Upon the occurrence and continuance of an Event of Default or if Agent reasonably determines
that an Event of Default is imminent, Agent, without releasing Debtor from any obligation, covenant
or condition hereof, itself may make any payment or perform, or cause the performance of, any such
obligation, covenant, condition or agreement or any other action in such manner and to such extent
as Agent may deem necessary to protect, perfect or continue the perfection of the Secured Parties’
Security Interest in the Collateral.

     10. Debtor Remains Liable.

     Anything herein to the contrary notwithstanding, Debtor shall remain liable under the Assigned
Agreements to the extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Security Agreement had not been executed. The exercise by Agent of
any of the rights hereunder shall not release Debtor from any of its duties or obligations under
the Assigned Agreements. Neither Agent nor any other Secured Party shall have any obligation or
liability under the Assigned Agreements by reason of this Security Agreement, nor shall Agent or
any other Secured Party be obligated to perform any of the obligations or duties of Debtor
thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

12

 

     11. Reasonable Care.

          (a) Agent shall exercise the same degree of care hereunder as it exercises or would exercise
in connection with similar transactions for its own account. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which Agent accords or would
accord collateral held by Agent in similar transactions for its own account; provided,
however, it is expressly understood that Agent shall not have responsibility for taking any
steps to preserve rights against any parties with respect to the Collateral. In furtherance of the
foregoing, to the extent Laws impose on Agent an obligation to exercise remedies in a commercially
reasonable manner, Debtor acknowledges and agrees that, to the extent consistent with Law, it is
not commercially unreasonable for Agent (i) to fail to incur expenses reasonably deemed significant
by Agent to prepare the Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to fail to obtain
third party consents for access to the Collateral to be disposed of, or to obtain or, if not
required by other Laws, to fail to obtain governmental or third party consents for the collection
or disposition of the Collateral to be collected or disposed of, (iii) to fail to exercise
collection remedies against account debtors or other persons obligated on the Collateral or to
remove Liens or encumbrances on or any adverse claims against the Collateral, (iv) to exercise or
fail to exercise collection remedies against account debtors and other Persons obligated on the
Collateral directly or through the use of collection agencies and other collection specialists, (v)
to advertise or fail to advertise dispositions of the Collateral through publications or media of
general circulation, whether or not the Collateral is of a specialized nature, (vi) to hire or fail
to hire one or more professional auctioneers to assist in the disposition of the Collateral,
whether or not the Collateral is of a specialized nature, (vii) to disclaim disposition warranties,
(viii) to purchase or fail to purchase insurance or credit enhancements to insure Agent against the
risk of loss, collection or disposition of the Collateral, or (ix) to obtain or fail to obtain the
services of brokers, investment bankers, consultants and other professionals to assist Agent in the
collection or disposition of any of the Collateral.

          (b) Without limiting the generality of the foregoing and except as otherwise provided by Law,
Agent shall not be required to resort to any item of the Collateral or guarantees in any particular
order; and all of Agent’s rights hereunder and in respect of such Collateral and guarantees shall
be cumulative and in addition to all other rights, however existing or arising.

     12. Other Powers.

     Debtor authorizes Agent, at any time and from time to time, to execute, in connection with a
sale of the Collateral pursuant to the provisions of this Security Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the Collateral.

     13. No Duty on Agent’s Part.

          (a) The grant to Agent under this Security Agreement of any right or power does not impose
upon Agent any duty to exercise such right or power. Agent will have no

13

 

obligation to take any steps to preserve any claim or other right against any Person or with
respect to any Collateral.

          (b) To the extent permitted by applicable law, Debtor waives all claims against Agent or its
agents arising out of the repossession, taking, retention, storage, operation or sale of the
Collateral except to the extent such actions constitute gross negligence or willful misconduct of
such Person. Debtor waives any claim it may have based on the allegation or fact that the price
obtained for Collateral sold at a private sale was less than could have been obtained for the same
Collateral at a public sale. All risk of loss, damage, diminution in value or destruction of the
Collateral will be borne by Debtor. Agent will have no responsibility for any act or omission of
any carrier, warehouseman, bailee, forwarding agency, broker, operator or any other Person. Agent
will have no responsibility to Debtor for any act or omission of Agent, except to the extent such
act or failure to act constitutes gross negligence or willful misconduct by such Person.

          (c) Agent will be accountable only for such proceeds as Agent actually receives as a result of
the exercise of its rights under this Security Agreement, and delivery or other proper accounting
of such proceeds or the Collateral by Agent to Debtor or the assignee of the Obligations will
discharge Agent of all liability therefor.

     14. Role of Agent.

     The rights, duties, liabilities and immunities of Agent and its appointment and replacement
hereunder shall be governed by Article 8 of the Loan Agreement.

     15. Relation to Other Security Documents.

     The provisions of this Security Agreement supplement the provisions of any real estate
mortgage or deed of trust granted by Debtor to Agent, for the benefit of the Secured Parties, and
which secures the payment or performance of any of the Obligations. Nothing contained in any such
real estate mortgage or deed of trust shall derogate from any of the rights or remedies of Agent
hereunder.

     16. Further Assurances.

          (a) Debtor agrees that from time to time, at the expense of Debtor, Debtor will promptly
execute and deliver all further instruments and documents, and take all further action, that may be
necessary or desirable, or that Agent or any Lender may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to enable Agent to
exercise and enforce its rights and remedies hereunder with respect to any Collateral.

          (b) Debtor hereby authorizes Agent and each Lender at the expense of Debtor (including the
fees and expenses of counsel to Agent and any Lender) to file one or more financing or continuation
statements, and amendments thereto, relating to all or any part of the Collateral without the
signature of Debtor where permitted by law. Such statements may describe the Collateral as all
assets of Debtor or words of similar effect, or with greater detail. A

14

 

photocopy or other reproduction of this Security Agreement or any financing statement covering
the Collateral or any part thereof shall be sufficient as a financing statement where permitted by
law. Debtor understands and agrees that even though they have no obligation to do so, with respect
to any financing statement, Agent and the Lenders may file (at the expense of Debtor, including the
fees and expenses of counsel to Agent and any Lender) any continuation statement or amendment where
failure to file could reasonably be expected to result in the ineffectiveness of such financing
statement at any time within three months of any such proposed filing. Debtor also ratifies its
authorization for Agent and the Lenders to have filed in any Code jurisdiction any initial
financing statements or amendments thereto if filed prior to the date hereof. Notwithstanding the
foregoing, Debtor agrees to prepare and arrange for the filing of all financing statements,
continuation statements and amendments thereto necessary to perfect or maintain the perfection of
Agent’s security interest in the Collateral and to obtain any necessary Agent authorization for
such filing. Neither Agent nor any Lender shall have any obligation to perfect or maintain the
perfection of Agent’s security interest in the Collateral or to file any financing statements,
continuation statements or amendments thereto in any public office at any time or times.

          (c) Debtor will furnish to Agent and the other Secured Parties from time to time statements
and schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as any of the Secured Parties may reasonably request, all in
reasonable detail.

          (d) Debtor will furnish to the Secured Parties in every odd numbered year on or before
December 1 of such year (commencing December 1, 2009), an opinion of counsel acceptable to the
Secured Parties (i) stating that all action has been taken with respect to the filing, recording,
re-filing and re-recording of the Security Documents and/or financing statements and continuation
statements with respect thereto as is necessary to protect and preserve the rights and interests of
Agent in and to the Collateral and the Liens on and in the Collateral created hereby and by the
other Security Documents and reciting the details of such action or referring to prior opinions of
counsel in which such details are given and (ii) stating what, if any, action of the foregoing
nature may reasonably be expected to become necessary during the next 27 months in order to protect
and preserve the rights and interests of Agent in and to the Collateral and the Liens on and in the
Collateral created hereby.

          (e) Debtor shall pay all filing, registration and recording fees or re-filing, re-registration
and re-recording fees, and all expenses incident to the execution and acknowledgment of this
Security Agreement, and any instruments of further assurance, and all Federal, state, county and
municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or
in connection with the execution and delivery of this Security Agreement, any agreement
supplemental hereto and any instruments of further assurance.

     17. Notices.

     All notices, demands, requests and other communications required or permitted hereunder shall
be in writing and shall be deemed to have been given (a) when presented personally, (b) when
transmitted by facsimile to the number specified below and the receipt

15

 

confirmed, (c) when sent by overnight courier service, the Banking Day following the date of
delivery to such courier service, or such later day as demonstrated by a bona fide
receipt therefor, or (d) when sent by the United States Postal Service, postage prepaid, registered
or certified, return receipt requested, the date received, addressed to the respective party, as
the case may be, at the following address, or such other address as any party may from time to time
designate by written notice to the others as herein required.

	 	 	 	 	 
	 
	 	If to Debtor:	 	WESTMORELAND PARTNERS
	 
	 	 	 	Westmoreland Partners
	 
	 	 	 	c/o Westmoreland Energy LLC
	 
	 	 	 	2 North Cascade Avenue
	 
	 	 	 	Colorado Springs, Colorado 80903
	 
	 	 	 	Attention: Chief Financial Officer
	 
	 	 	 	Telecopy: (719) 448-8098
	 
	 	 	 	 
	 
	 	with copy to:	 	WESTMORELAND PARTNERS
	 
	 	 	 	c/o Westmoreland Energy LLC
	 
	 	 	 	2 North Cascade Avenue
	 
	 	 	 	Colorado Springs, Colorado  80903
	 
	 	 	 	Attention: General Counsel
	 
	 	 	 	Telecopy: (719) 448-8097
	 
	 	 	 	 
	 
	 	with copies to:	 	Westmoreland-Roanoke Valley, L.P.
	 
	 	 	 	Westmoreland-North Carolina Power, LLC c/o
	 
	 	 	 	Westmoreland Energy, Inc.
	 
	 	 	 	300 Preston Avenue
	 
	 	 	 	Fifth Floor
	 
	 	 	 	Charlottesville, Virginia 22902
	 
	 	 	 	Attention: Vice President, Finance
	 
	 	 	 	Telecopy:          (804) 980-5225
	 
	 	 	 	 
	 
	 	If to Agent:     	 	 
	 
	 	 	 	 
	 
	 	 	 	Prudential Investment Management, Inc.
	 
	 	 	 	c/o Prudential Capital Group
	 
	 	 	 	2200 Ross Avenue, Suite 4200E
	 
	 	 	 	Dallas, TX 75201
	 
	 	 	 	Attention:  Managing Director, Electric Finance Group
	 
	 	 	 	Telephone:                       (214) 720-6272
	 
	 	 	 	Facsimile:                        (214) 720-6297

     18. Other Remedies.

     Any and all remedies herein expressly conferred upon Agent shall be deemed cumulative with,
and not exclusive of, any other remedy conferred hereby, by the other Loan Instruments or

16

 

by law on Agent, and the exercise of any one remedy shall not stop, prevent or preclude the
exercise of any other remedy which Agent or the Secured Parties may have until such time as all of
Debtor’s Obligations under the Loan Instruments shall have been satisfied, released and discharged
in full. The application of the Collateral to satisfy Debtor’s Obligations pursuant to the terms
hereof shall not operate to release Debtor from its Obligations until payment in full of any
deficiency has been made in cash.

     19. Waiver.

     By exercising or failing to exercise any of its rights, options or elections hereunder, Agent,
on behalf of the Secured Parties, shall not be deemed to have waived any breach or default on the
part of Debtor or to have released Debtor from any of its Obligations secured hereby. A waiver or
release of Debtor shall be effective only if it is in writing and signed by Agent.

     20. Expenses.

     Debtor agrees to pay, upon demand, to Agent the amount of (a) any and all fees and expenses,
including, without limitation, the fees and expenses of Agent’s counsel and of any experts and
agents, which Agent may incur in connection with (i) the execution and acknowledgment of this
Security Agreement, any agreement supplemental hereto and any instrument of further assurance, (ii)
the custody or preservation of the Collateral (including, without limitation, any such fees and
expenses incurred in connection with filing, registration and recording, or refiling,
reregistration and rerecording of this Security Agreement or any evidence of the Security Interest
in the Collateral), (iii) the exercise or enforcement of any rights of Agent hereunder or (iv) the
failure by Debtor to perform or observe any of the provisions hereof, and (b) all federal, state
and local taxes, duties, imposts, assessments and charges arising in connection with the execution
and delivery of this Security Agreement, any agreement supplemental hereto and any instrument of
further assurance, together, in respect of any amount payable pursuant to this Section 20, with
interest thereon at the Default Interest Rate from the date of demand for each such payment by
Agent.

     21. Time of Essence.

     Time is of the essence with respect to this Security Agreement and all of its provisions.

     22. Binding Upon Successors.

     All agreements, covenants, conditions and provisions of this Security Agreement shall be
binding upon and inure to the benefit of the successors and assigns of each of the parties hereto.

     23. Captions.

     The caption or heading at the beginning of each Section and the table of contents are for the
convenience of the parties only and are not a part of this Security Agreement.

17

 

     24. Governing Law and Jurisdiction.

          (a) This Security Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York as to interpretation, enforcement, validity, construction, effect and
in all other respects, but excluding perfection, which shall be governed by the laws of the
jurisdiction relevant thereto.

          (b) With respect to any legal action or proceeding brought by Agent or the Secured Parties
against Debtor arising out of or in connection with this Security Agreement, Debtor hereby
irrevocably (i) consents to the jurisdiction of any state or federal court located in the State of
New York, (ii) consents to the service of process outside the territorial jurisdiction of said
courts in any such action or proceeding by mailing copies thereof by registered United States mail,
postage prepaid, to the address specified by Debtor for the receipt of notices if such address is
outside such territorial jurisdiction and (iii) waive any objection to the venue of the aforesaid
courts. Debtor hereby irrevocably designates, appoints and empowers CT Corporation System (the
“Process Agent”, which has consented thereto) with offices on the date hereof at 111 Eighth Avenue,
New York, New York 10019 as agent to receive for and on behalf of Debtor service of process in the
State of New York. Debtor agrees it will at all times continuously maintain either a registered
office or an agent to receive service of process in the State of New York on behalf of itself and
its properties with respect to this Security Agreement.

     25. Amendment.

     This Security Agreement may be modified, amended or rescinded only by a writing expressly
referring to this Security Agreement and signed by all of the parties hereto.

     26. Severability.

     Every provision of this Security Agreement is intended to be severable. If any term or
provision hereof is declared by a court of competent jurisdiction to be illegal, invalid or
unenforceable for any reason whatsoever, such illegality, invalidity or unenforceability shall not
affect the other terms and provisions hereof, which terms and provisions shall remain binding and
enforceable, and to the extent possible all of such other provisions shall remain in full force and
effect.

     27. Secured Parties Not Liable.

     Neither this Security Agreement nor any action on the part of Agent or the Secured Parties
shall constitute an assumption by Agent or the Secured Parties of any of the obligations of Debtor
related to any of the Collateral, and Debtor shall continue to be liable for all such Obligations
whether incurred before or after an Event of Default.

     28. Termination; Release of Pledged Collateral.

     This Security Agreement shall terminate, and all of the Collateral shall be released
automatically from the Security Interest therein, at such time that the Secured Parties are

18

 

required to release and terminate all Liens of the Security Documents pursuant to Section 9.17
of the Loan Agreement.

     29. Limitation of Recourse.

     Anything herein to the contrary notwithstanding, the obligations of Debtor under this Security
Agreement are special obligations of Debtor and do not constitute a debt or obligation of (and no
recourse shall be had with respect thereto to) any Partner or Affiliate of Debtor, or any
shareholder, partner, officer or director of any thereof as such, and any judicial proceedings the
Lenders or Agent may institute against Debtor shall be limited to seeking the preservation,
enforcement, foreclosure or other sale or disposition of the Security Interest in the Collateral
and the performance by Debtor of its other covenants and obligations hereunder; absent fraud or
willful misconduct on the part of such Persons, no judgment for any deficiency upon the obligations
hereunder shall be obtainable by the Lenders or Agent against any Partner or Affiliate of Debtor or
any shareholder, partner, officer or director of any thereof; provided that this Section 29 shall
not limit the obligations of any of the Partners or any Affiliate thereof under the Loan Agreement
or any other Loan Instrument to which such Person is a party.

     30. Counterparts.

     This Security Agreement may be executed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were upon the same
instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

19

 

     IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be duly executed
as of the day and year first written above.

	 	 	 	 	 
	 	WESTMORELAND PARTNERS, as Debtor

 	 
	 	By:  	Westmoreland-Roanoke Valley, L.P.,
as general partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                                WEI-Roanoke Valley, Inc.,
 as general partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                                /s/ David J. Blair
 	 
	 	 	Name:  	David J. Blair 	 
	 	 	Title:  	CFO & Treasurer 	 
	 
	 	PRUDENTIAL INVESTMENT MANAGEMENT, INC., as Agent

 	 
	 	By:  	/s/ Timothy M. Laczkowski
 	 WHB
	 	 	Name:  	Timothy M. Laczkowski 	 
	 	 	Title:  	Vice President 	 

 

 

	 	 	 	 	 

[use applicable state form of Notary Block]

	 	 	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	ss.
	 	 
	COUNTY OF DALLAS

	 	 	)	 	 	 	 	 

     On February 5, 2008, before me, Melanie Brown, Notary Public, personally appeared Timothy M.
Laczkowski, o personally known to me or
þ proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf
of which the person(s) acted, executed the instrument.

     WITNESS my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	                                                     /s/ Melanie Brown
 	 
	 	Signature of Notary Public 	 
	 	 	 
	 

Melanie Brown

Notary Public State of Texas

Commission Expires:

February 14, 2010

 

 

Exhibit A

PERFECTION CERTIFICATE

     The
undersigned, the                      of WESTMORELAND PARTNERS, a Virginia general partnership (the
“Debtor”), hereby certifies as follows:

     1. Name. The exact legal name of Debtor is                                         .

     2. Other Identifying Factors.

          (a) The mailing address of Debtor is                                         .

          (b) If different from its mailing address, Debtor’s place of business or, if more than one,
its chief executive office is located at:

	 	 	 	 	 
	Address	 	County	 	State
	 

	 	 
	 	 

          (c) The type of organization of Debtor is a                          .

          (d) The jurisdiction of Debtor’s organization is                     .

          (e) Debtor’s state issued organizational identification number [state “None” if the state does
not issue such a number] is                     .

          (f) Debtor’s EIN is                     .

     3. Other Names.

          (a) The following is a list of all other names (including trade names or similar appellations)
used by Debtor, or any other business or organization to which Debtor became the successor by
merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or
otherwise, now or at any time during the past five years:

     4. Other Current Locations.

          (a) The following are all other locations in which Debtor maintains any books or records
relating to its accounts, instruments, chattel paper, general intangibles or mobile goods:

	 	 	 	 	 
	Address	 	County	 	State
	 

	 	 
	 	 

 

 

          (b) The following are all other places of business of Debtor:

	 	 	 	 	 
	Address	 	County	 	State
	 

	 	 
	 	 

          (c) The following are all other locations where any of Debtor’s inventory or equipment is
located:

	 	 	 	 	 
	Address	 	County	 	State
	 

	 	 
	 	 

          (d) The following are the names and addresses of all persons or entities other than Debtor,
such as lessees, consignees, warehousemen or purchasers of chattel paper, which have possession or
are intended to have possession of any of Debtor’s instruments, chattel paper, inventory or
equipment:

	 	 	 	 	 	 	 	 	 
	Name	 	Mailing Address	 	County	 	State
	 
	 	 
	 	 

     5. Prior Locations.

          (a) Set forth below is each location or place of business maintained by Debtor during the past
five years:

	 	 	 	 	 
	Address	 	County	 	State
	 

	 	 
	 	 

          (b) Set forth below is each other location at which, or other person or entity with which, any
of Debtor’s inventory or equipment has been held during the past twelve months:

	 	 	 	 	 	 	 	 	 
	Name	 	Mailing Address	 	County	 	State
	 
	 	 
	 	 

2

 

     6. Fixtures. Set forth below is a description of the real property on which any of
the Collateral consisting of fixtures are or are to be located (including reference to a book and
page number in the applicable recording office and the name of the record owner of the real
property) and the name and address of each real estate recording office where a mortgage on the
real estate on which such fixtures are or are to be located would be recorded:

     7. Intellectual Property. Set forth below is a complete list of all United States and
foreign patents, copyrights, trademarks, trade names and service marks registered or for which
applications are pending in the name of Debtor:

     8. Securities; Instruments. Set forth below is a complete list of all stocks, bonds,
debentures, notes and other securities and investment property owned by Debtor (provide name of
issuer, a description of security and value):

     9. Motor Vehicles. Set forth below is a complete list of all motor vehicles owned by
Debtor (describe each vehicle by make, model and year and indicate for each the state in which
registered and the state in which based):

	 	 	 	 	 	 	 	 	 
	Make	 	Model	 	Model Year	 	Registered State	 	Vehicle Location
	 	 	 	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 	 

     10. Bank Accounts. Set forth below is a complete list of all bank accounts (including
securities and commodities accounts) maintained by Debtor:

	 	 	 	 	 	 	 
	Depositary Bank
	 	Bank Address
	 	Type of Account
	 	Account No.
	 	 	 	 	 	 	 

     11. Commercial Tort Claims. Set forth below is a brief written description of each
commercial tort claim which Debtor holds:

3

 

     IN WITNESS WHEREOF, the undersigned has signed this Certificate on                           , 2007.

	 	 	 	 	 
	 	WESTMORELAND PARTNERS, as Debtor

 	 
	 	By:  	Westmoreland-Roanoke Valley, L.P.,
 as general partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                      WEI-Roanoke Valley, Inc.,
 as general partner
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

4exv10w47

 

     Exhibit 10.47

     Execution Copy

THIRD AMENDED AND RESTATED

GENERAL PARTNER SECURITY AND LIMITED

GUARANTY AGREEMENT

among

WESTMORELAND-ROANOKE VALLEY, L.P.

and

WESTMORELAND-NORTH CAROLINA POWER, LLC

(as Partners)

and

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

(as Agent)

Dated as of February 11, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	Definitions
	 	 	2	 
	2.

	 	Joint and Several Limited Guaranty
	 	 	2	 
	3.

	 	Confirmation of Security Interest; Creation of Security Interest
	 	 	4	 
	4.

	 	Representations, Warranties and Covenants
	 	 	7	 
	5.

	 	Default
	 	 	10	 
	6.

	 	Rights and Remedies Upon Default
	 	 	10	 
	7.

	 	Security Interest Absolute
	 	 	12	 
	8.

	 	Agent Appointed Attorney-in-Fact
	 	 	13	 
	9.

	 	Agent May Perform
	 	 	14	 
	10.

	 	Rights and Limitations on Obligations of Agent
	 	 	14	 
	11.

	 	Other Powers
	 	 	14	 
	12.

	 	No Duty on Agent’s Part
	 	 	14	 
	13.

	 	Reasonable Care; Standards for Exercising Remedies; Marshaling Collateral
	 	 	15	 
	14.

	 	Role of Agent
	 	 	15	 
	15.

	 	Notices
	 	 	16	 
	16.

	 	Other Remedies
	 	 	16	 
	17.

	 	Waiver
	 	 	17	 
	18.

	 	Waiver of Claims
	 	 	17	 
	19.

	 	Expenses
	 	 	17	 
	20.

	 	Time of Essence
	 	 	18	 
	21.

	 	Binding Upon Successors
	 	 	18	 
	22.

	 	Captions
	 	 	18	 
	23.

	 	Governing Law and Jurisdiction
	 	 	18	 
	24.

	 	Amendment
	 	 	18	 
	25.

	 	Severability
	 	 	19	 
	26.

	 	Secured Parties Not Liable
	 	 	19	 
	27.

	 	Termination; Release of Collateral
	 	 	19	 
	28.

	 	Counterparts
	 	 	19	 

i

 

 

THIRD AMENDED AND RESTATED GENERAL PARTNER SECURITY AND LIMITED

GUARANTY AGREEMENT

     This THIRD AMENDED AND RESTATED GENERAL PARTNER SECURITY AND LIMITED GUARANTY AGREEMENT (this
“General Partner Security Agreement”), dated as of February 11, 2008, among
WESTMORELAND-ROANOKE VALLEY, L.P., a Delaware limited partnership (the “Westmoreland I
Partner”), WESTMORELAND-NORTH CAROLINA POWER, LLC, a Virginia limited liability company (the
“Westmoreland II Partner” and, together with Westmoreland I Partner, the
“Partners”, and each individually, a “Partner”), and PRUDENTIAL INVESTMENT
MANAGEMENT, INC., as agent (“Agent”) on behalf of and for the benefit of the Secured
Parties under the Loan Agreement (defined below).

WITNESSETH:

     WHEREAS, the Partners are the two general partners of Westmoreland Partners, a Virginia
general partnership (the “Partnership”);

     WHEREAS, the Partnership, Agent, certain Lenders and other parties are parties to that certain
Amended and Restated Construction and Term Loan Agreement, dated as of December 1, 1993 (as
amended, the “Original Credit Agreement”), providing for the financing of the construction
and operation of the Rova I Facility and the Rova II Facility (as defined in the original Credit
Agreement);

     WHEREAS, simultaneously with the entering into of the Original Credit Agreement, Debtor and
Agent entered into an Amended and Restated General Partner Security and Limited Guaranty Agreement,
dated as of December 1, 1993 (the “Original General Partner Security Agreement”),
pursuant to which inter alia, the Westmoreland I Partner guaranteed the obligations of the
Partnership under the Original Credit Agreement and the documents executed in connection therewith,
and collaterally assigned all of its respective interests in the Partnership to the Secured Parties
in order to secure its respective obligations under such guaranty;

     WHEREAS, on June 29, 2006, the Westmoreland II Partner acquired its interest in the
Partnership, and the Original General Partner Security Agreement was amended and restated, as that
certain Second Amended and Restated General Partner Security and Limited Guaranty Agreement (the
“Second General Partner Security Agreement”);

     WHEREAS, the Original Credit Agreement is being amended and restated in order to, among other
things, issue Tranche C Senior Loans, Senior Subordinated Fixed Rate Loans and Junior Subordinated
Floating Rate Loans, subject to the terms and conditions set forth therein, and to amend and
restate the other terms and conditions of the Original Credit Agreement, in each case as further
set forth in the Loan Agreement (as defined below); and

     WHEREAS, the parties desire to amend and restate the Second General Partner Security Agreement
on the terms hereinafter set forth in order to, among other things, confirm the collateral
assignment of the Partners’ respective interests in the Partnership created pursuant to the
Original General Partner Security Agreement and the Second General Partner Security

 

 

Agreement and the guaranty of the obligations of the Partnership under the Loan Agreement and
the documents executed in connection therewith, in each case in connection with such issuance.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and in order to
induce the Lenders to make such loans under the Loan Agreement, the parties hereto agree that the
Second Amended and Restated General Partner Security and Limited Guaranty Agreement is hereby
amended and restated in its entirety as follows:

     1. Definitions.

     For purposes of this General Partner Security Agreement and unless the context otherwise
requires, all capitalized terms used herein which are defined in the Loan Agreement (and not
otherwise defined herein) shall have their respective meanings as therein defined, and each of the
following terms shall have the respective meaning assigned thereto:

     “Code” means the Uniform Commercial Code as in effect in the State of New York from
time to time.

     “Loan Agreement” means the Second Amended and Restated Loan Agreement, dated as of
February 11, 2008, among the Partnership, as Borrower, The Prudential Insurance Company of America
and each Purchasing Lender (as defined therein), as Lenders, and Prudential Investment Management,
Inc., as Agent, as the same may be amended, modified or supplemented from time to time.

     2. Joint and Several Limited Guaranty.

          (a) Each Partner hereby confirms its joint and several unconditional and irrevocable guaranty
of the timely payment and performance by the Partnership of all of the Partnership’s obligations
and liabilities of any kind, now or hereafter existing, to any of the Secured Parties under the
Loan Agreement and any of the other Loan Instruments, including, without limitation:

     (i) payment and performance of each and every obligation, covenant and
agreement of the Partnership now or hereafter existing contained in the Loan
Agreement and any of the other Loan Instruments, including without limitation all
“Obligations” (as defined in the Loan Agreement), in each case whether for
principal, interest, fees, Yield-Maintenance Premium, if any, expenses or otherwise,
and any amendments or supplements thereto, extensions or renewals thereof or
replacements therefor;

     (ii) payment of all sums advanced in accordance herewith or in accordance with
the other Security Documents by or on behalf of the Secured Parties to protect any
of the Collateral purported to be covered hereby or thereby, with interest thereon
at the rate equal to the Default Interest Rate;

     (iii) performance of every obligation, covenant and agreement of the
Partnership contained in the Loan Agreement and any of the other Loan Instruments or
in any agreement now or hereafter executed by the Partnership

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which recites that the obligations thereunder are secured by this General
Partner Security Agreement or the Collateral; and

     (iv) payment of all sums, with interest thereon at the Default Interest Rate,
that may become due and payable to or for the benefit of the Secured Parties
pursuant to the terms of this General Partner Security Agreement;

in each case, when due (whether at stated maturity, by acceleration, because of mandatory
prepayment, or otherwise, and including the payment of amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)),
and in each case whether direct or indirect, joint or several, absolute or contingent, liquidated
or unliquidated, now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and including, without
limitation, all indebtedness of the Partnership under any instrument now or hereafter evidencing or
securing any of the foregoing (all such obligations and liabilities hereinafter collectively
referred to as the “Guarantied Obligations”).

     Notwithstanding the foregoing, the liability of each Partner under this General Partner
Security Agreement with respect to such Guarantied Obligations shall be limited to the extent of
the Collateral (defined below).

          (b) Each Partner hereby confirms and agrees that its obligations under Section 2(a) hereof
shall be absolute, irrevocable and unconditional, without regard to the validity or enforceability
of the Loan Agreement, the Notes or any other Loan Instrument, any Project Document, any amendment,
acceleration, extension, waiver or consent by the Secured Parties with respect thereto or any
provision thereof, any release, surrender, compromise, exchange or sale of any collateral security
or guaranty therefor or right of offset with respect thereto, any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be available to or asserted
by or against the Partnership or any other person, or any other circumstances whatsoever which
might otherwise constitute a legal or equitable discharge or defense (other than a defense of
payment or performance) of the Partnership for its obligations under the Loan Agreement or the
other Loan Instruments, whether in bankruptcy or in any other instance. Each Partner hereby waives
diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon
the Partnership itself or the other Partner with respect to any amounts due under this General
Partner Security Agreement.

          (c) Notwithstanding any payments made by any Partner under the Original General Partner
Security Agreement, the Second General Partner Security Agreement or under this General Partner
Security Agreement, neither Partner shall be entitled to be subrogated to any of the rights of any
of the Secured Parties against the Partnership or either Partner or any collateral security or
guaranty held by any of the Secured Parties, nor shall either of the Partners seek any
reimbursement from the other Partner or the Partnership (except as permitted pursuant to the
Partnership Agreement) in respect of payments made by such Partner hereunder or in respect of
payments made with the Collateral, unless and until all Obligations (defined below) shall have been
indefeasibly paid or performed, as the case may be, in full, pursuant to this General Partner
Security Agreement, the Loan Agreement and the other Loan Instruments. If any amount shall be paid
to either Partner on account of such subrogation rights at any time

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when all such Obligations shall not have been indefeasibly paid or performed, as the case may
be, in full, such amount shall be held by such Partner in trust for the Secured Parties, segregated
from its other funds, and shall be turned over to Agent for the benefit of the Secured Parties in
the exact form received by such Partner (duly endorsed to Agent for the benefit of the Secured
Parties, if required) to be applied against the Obligations in such order as the Secured Parties
may elect.

          (d) The obligations set forth herein shall continue to be effective or reinstated, as the case
may be, if at any time and for any reason any payment made by the Partnership with respect to any
Guarantied Obligations is rescinded or must otherwise be returned by any Secured Party, all as
though such payment had not been made.

     3. Confirmation of Security Interest; Creation of Security Interest.

          (a) As security for the full payment or performance when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations (defined below) now existing or hereafter arising,
each Partner hereby confirms the grant made by such Partner on the Closing Date pursuant to the
terms of the Original General Partner Security Agreement of, and hereby grants, a lien on and first
priority security interest (“Security Interest”) in favor of Agent for the equal and
ratable benefit of the Secured Parties in all of such Partner’s right, title and interest in and to
the following collateral, whether now existing or hereinafter acquired (collectively, the
“Collateral”):

     (i) its general partnership interest, voting rights and powers of ownership in
the Partnership, any other ownership interest of whatever type in the Partnership
now or hereafter owned by such Partner, and all of its rights under the Partnership
Agreement (including, without limitation, all of its right, title and interest as a
general partner to participate in the operation or management of the Partnership and
all of its rights to property, assets, partnership interests and distributions under
the Partnership Agreement), in each case together with any certificates evidencing
the same and any options, warrants or other rights to purchase such interests at any
time owned by such Partner (including all such interests or options, warrants or
other rights acquired by each Partner in the future (collectively, the
“Partnership Interests”));

     (ii) all present and future rights of such Partner to receive payment of money
or other distribution or payment arising out of or in connection with its general
partnership interest in the Partnership and its rights under the Partnership
Agreement or otherwise;

     (iii) all of its claims, rights, powers, privileges, authority, options,
security interests, liens and remedies, if any, under the Partnership Agreement or
at law or otherwise in respect of such Partnership Interests, including, without
limitation, all of its rights (including voting rights) as a Partner of the
Partnership;

     (iv) all of the Partner’s rights under the Partnership Agreement or at law to
exercise and enforce every right, power, remedy, authority, option and

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privilege of the Partner relating to the Partnership Interests, including any
power to terminate, cancel or modify the Partnership Agreement, to execute any
instruments and to take any and all other action on behalf of and in the name of the
Partner in respect of the Partnership Interests and the Partner, to make
determinations, to exercise any election (including, but not limited to, election of
remedies) or option or to give or receive any notice, consent, amendment, waiver or
approval, together with full power and authority to demand, receive, enforce, or
collect for any of the foregoing or for any Partnership Interests, or to enforce or
execute any checks, or other instruments or orders, or to file any claims or take
any action in connection with any of the foregoing;

     (v) all interests in substitution for or in addition to any of the foregoing,
any certificates representing or evidencing such interests, and all cash,
securities, distributions and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in exchange for any
or all of the foregoing; and

     (vi) to the extent not otherwise included, all proceeds, products and
accessions of and to any and all of the foregoing, including, without limitation,
“proceeds” as defined in Section 9-102(a)(64) of the Code, including whatever is
received upon any collection, exchange, sale or other disposition of any of the
Collateral, and any property into which any of the Collateral is converted, whether
cash or noncash proceeds, and any and all other amounts paid or payable under or in
connection with any of the Collateral;

provided that any distributions made to the Partnership from the Project Control Account
pursuant to and in conformity with the provisions of Section 4.1 of the Deposit Agreement shall be
released from the Security Interest in the Collateral and shall no longer be part of the Collateral
upon the making of such distribution; and provided, further, that the right of each
Partner to receive payments from the Partnership on account of Debt incurred by the Partnership to
such Partner in accordance with Section 6.12 of the Loan Agreement shall not be part of the
Collateral.

          (b) If either Partner acquires (by purchase, distribution or otherwise) any additional
Partnership Interest at any time or from time to time after the date hereof, it shall:

     (i) forthwith pledge such Partnership Interest as security to Agent hereunder;

     (ii) promptly notify Agent of such acquisition;

     (iii) to the extent such Partnership Interest (whether now owned or hereafter
acquired) is certificated, promptly deliver to Agent its certificates therefor
accompanied by such instruments of transfer as are reasonably acceptable to Agent
and promptly thereafter deliver to Agent a certificate executed by any authorized
officer of such Partner describing such Partnership Interest and certifying that it
has been duly pledged hereunder; and

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     (iv) to the extent such Partnership Interest (whether now owned or hereafter
acquired) is uncertificated, promptly notify Agent thereof and promptly take all
actions required to perfect the security interest of Agent under Law, including,
without limitation, Section 8-106(c) of the Code.

          (c) This General Partner Security Agreement and the Collateral secures, in accordance with the
provisions hereof, the following obligations, now existing or hereafter arising (collectively, the
“Obligations”):

     (i) payment and performance of the Guarantied Obligations and of each and every
obligation, covenant and agreement of each Partner now or hereafter existing
contained in any of the Loan Instruments, including, without limitation, this
General Partner Security Agreement and any amendments or supplements thereto,
extensions or renewals thereof or replacements therefor;

     (ii) payment of all sums advanced in accordance herewith or in accordance with
the other Security Documents by or on behalf of the Secured Parties to protect any
of the Collateral purported to be covered hereby or thereby, with interest thereon
at the rate equal to the Default Interest Rate;

     (iii) performance of every obligation, covenant and agreement of either Partner
contained in any agreement now or hereafter executed by either Partner which recites
that the obligations thereunder are secured by this General Partner Security
Agreement or the Collateral; and

     (iv) payment of all sums, with interest thereon at the Default Interest Rate,
that may become due and payable to or for the benefit of Secured Parties pursuant to
the terms of this General Partner Security Agreement;

          (d) Each Partner shall deliver to Agent all “security certificates” (as defined in Section
8-102(a)(16) of the Code) (including, without limitation, its Partnership Certificate (as defined
in Section 4(k) below)) and other documents, instruments or certificates evidencing or representing
the Partnership Interests, in each case properly endorsed in blank and in suitable form for
transfer by delivery and accompanied by a partnership power in the form of Exhibit A hereto. Each
Partner shall take such actions as Agent reasonably requests to effect the foregoing, to permit
Agent to exercise any of its rights and remedies hereunder, to effect fully the purposes of this
Agreement, to create, perfect, maintain, and preserve first priority Liens on the Collateral in
favor of Agent, and to provide for the payment of the Obligations in accordance with the terms of
the Loan Instruments. Upon reasonable request of Agent, each Partner shall provide an opinion of
counsel with respect to the perfection of the Lien hereunder reasonably satisfactory to Agent with
respect to any pledge of Partnership Interests, upon any change in Law or other material change in
circumstances affecting perfection of the security interests granted hereunder. At any time and
from time to time, Agent will have the right to exchange certificates or instruments evidencing or
representing the Collateral for certificates or instruments of smaller or larger denominations.

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     4. Representations, Warranties and Covenants.

     Each Partner hereby represents, warrants and covenants (until such time as each and every
Obligation has been satisfied and discharged in full) as follows:

          (a) It (i) is a limited partnership (in the case of the Westmoreland I Partner) or a limited
liability company (in the case of the Westmoreland II Partner) duly organized, validly existing and
in good standing under the laws of the jurisdiction of its formation, and has the organizational
capacity and power to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby, (ii) is duly qualified to do business and in good
standing in each other jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (iii) has the requisite organizational power to
own its Partnership Interest.

          (b) It has taken all necessary limited partnership, limited liability company or other action,
as the case may be, to authorize the transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by it and constitutes its legal, valid and binding obligations
enforceable in accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement of creditors’ rights
generally and general equitable principles.

          (c) Neither the execution and delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, nor compliance with any of the terms and provisions hereof (i)
contravenes any Law applicable to it or any of its respective properties or other assets, (ii)
conflicts with, breaches or contravenes the provisions of its organizational documents or under any
mortgage, indenture or other contract, agreement or instrument to which it is a party or by which
it or its property is bound, (iii) results in the creation or imposition of any Liens (other than
those created hereunder) upon any of its property or assets under, or in a condition or event that
constitutes (or that, upon notice or lapse of time or both, would constitute) an event of default
with respect to any of its contractual obligations, or (iv) results in the acceleration or
mandatory prepayment of, any Debt evidenced by, or termination of, any contract, agreement or
instrument to which it is a party or by which it or any of its property is bound, except in each
case where non-compliance, conflict, lien or termination could not have a materially adverse effect
on Borrower, the Facilities, the Property, Borrower’s or any Partner’s ability to perform its
obligations under the Loan Instruments or the Project Documents or the rights or interests of the
Secured Parties.

          (d) There is no action, suit, investigation or proceeding pending or, to such Partner’s
knowledge, threatened against such Partner in any court or before any Governmental Authority which,
individually or in the aggregate, if decided adversely to the interests of such Partner, could
reasonably be expected to materially adversely affect the Partnership Interest or the ability of
such Partner to enter into and perform its obligations under this Agreement or any other Loan
Instruments to which it is a party or which questions or could reasonably be expected to materially
adversely affect the legality, validity or enforceability of any of the Loan Instruments.

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          (e) Such Partner is the legal and beneficial owner of the Collateral now owned by it, and will
be the legal and beneficial owner of the Collateral hereafter acquired, free and clear of any lien,
security interest, pledge, claim or other charge, encumbrance or security arrangement except for
the Security Interest.

          (f) This Agreement creates in favor of Agent a valid Security Interest in all of the
Collateral and upon delivery to Agent of its Partnership Certificate (as defined below in clause
(k) of this Section 4) together with an undated partnership power endorsed in blank (in the form of
Exhibit A hereto), such Security Interest shall constitute a duly perfected first priority Security
Interest in favor of Agent in all of the Collateral. The Partnership Interests pledged by it
hereunder are duly and validly pledged hereunder in accordance with Law.

          (g) Except for the actions contemplated in Section 3(b) hereof with respect to additional
Partnership Interests, no authorization, approval or other action by, and no notice to or filing
with, any Governmental Authority, any regulatory body or any other Person is required of such
Partner with respect to (i) the grant by it of the Security Interest in the Collateral, (ii) the
perfection or maintenance of the Security Interest created hereby (including the first priority
nature of such Security Interest) or (iii) the exercise by Agent of the rights provided in this
Agreement or the remedies in respect of the Collateral pursuant to this Agreement.

          (h) Such Partner shall immediately notify Agent of any claim against the Collateral adverse to
the interest of the Secured Parties hereunder.

          (i) Each Partner has delivered to Agent a Perfection Certificate, a copy of which is attached
as Exhibit C to this Security Agreement. Each Partner represents and warrants to Agent and each
Lender that: (i) each Partner’s exact legal name is stated in the Perfection Certificate and on the
signature page hereof; (ii) such Partner is an organization of the type, and is organized in the
jurisdiction, set forth in the Perfection Certificate; (iii) the Perfection Certificate accurately
sets forth such Partner’s organizational identification number or accurately states that such
Partner has none; (iv) the Perfection Certificate accurately sets forth as of the date hereof such
Partner’s place of business, its chief executive office, the office where such Partner keeps its
records regarding the Collateral and the original executed copies of the Assigned Agreements and,
if different, such Partner’s mailing address; and (v) all other information set forth in the
Perfection Certificate is accurate and complete as of the date hereof. Each Partner shall notify
Agent immediately in writing of any change in the location of its chief executive office, principal
place of business or the office where such records and originals are kept, or the establishment by
such Partner of any other office or place of business, or the adoption or change of its name or any
trade name or fictitious business name and, upon written request of Agent, shall execute any
additional documents or certificates necessary to reflect the adoption of or change in its name or
any trade name or fictitious business name.

          (j) Such Partner agrees that from time to time, at its expense, it will promptly execute and
deliver all further instruments and documents, and take all further action, that may be necessary,
or that Agent may reasonably request, in order to perfect and protect the Security Interest granted
or purported to be granted in the Collateral or to enable Agent to exercise and enforce its rights
and remedies hereunder with respect to the Collateral. Without limiting the generality of the
foregoing, such Partner will: (i) mark conspicuously each security note,

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instrument or chattel paper included in, and each of its records pertaining to, the Collateral
with a legend indicating that such document, chattel paper or Collateral is subject to the security
interest granted or purported to be granted hereby; (ii) if any Collateral shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge to Agent such note or
instrument or chattel paper duly endorsed and accompanied by duly executed instruments of transfer
or assignment, all in form satisfactory to Agent; and (iii) execute (if necessary) and file such
financing or continuation statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as Agent may request, in order to perfect and preserve the
security interest granted or purported to be granted hereby. Each Partner hereby authorizes Agent
to file one or more financing or continuation statements, and amendments thereto, relating to all
or any part of the Collateral without the signature of such Partner where permitted by law. Copies
of any such statement or amendment thereto shall promptly be delivered to each of the Partners.

          (k) The Partnership Interest pledged hereunder is not subject to any defense, offset or
counterclaim, nor, to its knowledge, has any of the foregoing been asserted or alleged against it
by any Person. There are no certificates, instruments, documents or other writings (other than the
Partnership Agreement) of such Partner which evidence any Partnership Interest of such Partner
other than the partnership certificate evidencing its Partnership Interest (its “Partnership
Certificate”), the form of which is attached hereto as Exhibit B and the original of which will
be delivered to Agent on the date hereof. The Partnership Interest is represented by a security
certificate in registered form (the transfer of which shall be registered upon books maintained by
the Partner) and by its terms expressly provides that it is a security governed by Article 8 of the
Code.

          (l) Such Partner will not create, incur, assume or permit to exist, will defend the Collateral
against, and will take such other action as is necessary to remove, any lien or claim on or to the
Collateral, other than the Security Interest in the Collateral, and will defend the right, title
and interest of Agent in and to any of the Collateral against the claims and demands of all persons
whomsoever.

          (m) Such Partner shall not, without the prior written consent of Agent, execute or file in any
public office or consent to the execution of or filing of any enforceable financing statement or
statements covering any or all of its Collateral, except financing statements filed or to be filed
in favor of the Agent.

          (n) Such Partner shall cause the Partnership Interests pledged hereunder to constitute at all
times not less than the entire partnership interests of the Partnership then issued and
outstanding. It shall not permit (i) the Partnership to issue any additional limited or general
partnership interests in the Partnership at any time (whether or not certificated), (ii) the
Partnership to have outstanding any subscription agreements, warrants, rights or options to acquire
any partnership interests of whatever type, (iii) any partnership interest of the Partnership to be
dealt in or traded on any securities exchange or in any securities market, or (iv) any partnership
interest of the Partnership to be deemed an investment company security (as defined in Section
8-103(b) of the Code).

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     5. Default.

     The occurrence of an Event of Default under the Loan Agreement shall constitute an event of
default (“Event of Default”) hereunder.

     6. Rights and Remedies Upon Default.

          (a) Upon the occurrence and during the continuation of an Event of Default hereunder, for the
equal and ratable benefit of and on behalf of the Secured Parties, Agent may do one or more of the
following:

     (i) Declare, without presentment, demand, protest or notice of any kind, all of
which the Partners hereby expressly waive, all Obligations and other indebtedness
and amounts secured hereby to be immediately due and payable, whereupon all of said
Obligations and other indebtedness and amounts declared due and payable shall be and
become immediately due and payable (provided that if, with respect to the
Partnership, an Event of Default occurs pursuant to Section 7.1(i) or (j) of the
Loan Agreement, the acceleration provided for in this Section 6(a)(i) shall be
deemed to have been made upon the occurrence of such Event of Default without
declaration or any other action by Agent);

     (ii) Take all cash held by Agent as Collateral and all cash proceeds received
or receivable by Agent in respect of the Collateral and then or at any time
thereafter apply the same (after payment of any amounts payable to Agent pursuant to
Section 19 hereof), in whole or in part, subject to the requirements of the Loan
Agreement, to all or any part of the Obligations in the manner specified in Section
6(c) below, unless otherwise agreed by all Lenders in a writing delivered to Agent;

     (iii) give notice of the Event of Default to any Person, collect proceeds and
amounts in respect of the Collateral, and enforce all rights of in the Collateral;

     (iv) take possession of any or all of the Collateral, wherever it may be found,
and hold, store, repair, improve, operate and manage the same;

     (v) Upon notice to the Partners, which notice need not be in writing (but which
notice shall promptly be confirmed in writing), make such payments and do such acts
as Agent may deem necessary to protect, perfect or continue the perfection of the
Secured Parties’ Security Interest in the Collateral including, without limitation,
paying, purchasing, contesting or compromising any encumbrance, charge or lien which
is, or purports to be, prior to or superior to the Security Interest in the
Collateral, and commencing, appearing or otherwise participating in or controlling
any action or proceeding purporting to affect the Secured Parties’ Security Interest
in or ownership of the Collateral;

     (vi) Foreclose this General Partner Security Agreement as herein provided or in
any manner permitted by law, transfer to or register in the name of Agent or any of
its nominees any or all of the Collateral, and exercise any and all

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of the rights and remedies conferred upon the Secured Parties by the Project
Documents or the Loan Instruments either concurrently or in such order as Agent may
determine without affecting the rights or remedies to which the Secured Parties may
be entitled under the Loan Instruments;

     (vii) Upon notice to the Partners, exercise all voting and other rights of the
Partners as general partners of the Partnership and exercise all other rights
provided under the Partnership Agreement, including, without limitation, receipt of
all permitted distributions, if any, made for the account of any Partner under the
Partnership Agreement;

     (viii) In accordance with Law, accept the Collateral in full or partial
satisfaction of the Obligations; and

     (ix) Exercise in respect of the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party after default under the Code, and sell, license or
otherwise dispose of the Collateral or any part thereof in a commercially reasonable
manner, at public or private sale, at any exchange, broker’s board or at any of
Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such
price or prices, and upon such other terms as are commercially reasonable. The
Partners agree that, to the extent notice of any such disposition shall be required
by Law, at least ten (10) days’ notice to the Partners of the time and the place of
any public disposition or the time after which any private disposition is to be made
shall constitute reasonable notification. Agent shall not be obligated to make any
sale of the Collateral regardless of notice of sale having been given. Agent may
adjourn any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Agent shall incur no liability as a result
of the manner of disposition of the Collateral, or any part thereof, at any private
disposition conducted in a commercially reasonable manner. The Partners hereby
waive, to the extent permitted by Law, any claims against Agent arising by reason of
the fact that the price at which the Collateral, or any part thereof, may have been
disposed of at a private disposition was less than the price which might have been
obtained at a public disposition or was less than the aggregate amount of the
Obligations. To the extent permitted by Law, the Partners hereby specifically waive
all rights of redemption, stay or appraisal which it has or may have under any Law
now existing or hereafter enacted. The Partners authorize Agent, at any time and
from time to time, to execute, in connection with a disposition of the Collateral
pursuant to the provisions of this Agreement, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.

          (b) The parties hereto acknowledge that a right of first refusal with respect to each
Partner’s partnership interest has been granted to Virginia Power pursuant to the Rova I Power
Purchase Agreement; the First Refusal Agreement, dated as of November 19, 1991 between the
Partnership and Virginia Power; the Consent to Assignment of Agreement, dated as

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of November 19, 1991, between Virginia Power and Agent; the Rova II Power Purchase Agreement;
the First Refusal Agreement, dated as of December 1, 1993, between the Partnership and Virginia
Power; and the Consent to Assignment of Agreement, dated December 23, 1993, between Virginia Power,
the Borrower and Agent, and, accordingly, each party hereto hereby agrees that, notwithstanding any
provisions of this General Partner Security Agreement to the contrary, any sale pursuant to the
provisions of this General Partner Security Agreement shall comply with the terms thereof. Each
Partner hereby agrees that its right of first refusal with respect to the other Partner’s
partnership interest pursuant to the terms set forth in the Partnership Agreement shall not apply
to any sale of partnership interests pursuant to the provisions of this General Partner Security
Agreement.

          (c) The proceeds of any sale or realization of the Collateral shall be applied as follows:

     (i) To the repayment of the reasonable costs and expenses of retaking, holding
and preparing for the sale and the selling of the Collateral (including, without
limitation, legal expenses and attorneys’ fees) and the discharge of all
assessments, encumbrances, charges or liens, if any, on the Collateral prior to the
lien hereof (except any taxes, assessments, encumbrances, charges or liens subject
to which such sale shall have been made);

     (ii) To the payment in full of the “Obligations” (as defined in the Loan
Agreement) in accordance with the priority of application specified in Section
2.6(b) of the Loan Agreement and then to the payment in full of any other
Obligations;

     (iii) To the payment of any other outstanding obligations of the Partnership or
the Partners under the Project Documents; and

     (iv) The surplus, if any, shall be paid to the Partners if lawfully entitled to
receive the same or shall be paid to whomsoever a court of competent jurisdiction
may direct.

     7. Security Interest Absolute.

     All rights of Agent and the Secured Parties hereunder, the Security Interest and all
obligations of the Partners hereunder, shall be absolute and unconditional irrespective of:

     (i) any lack of validity or enforceability of the Original General Partner
Security Agreement, the Loan Instruments, the Project Documents (including, without
limitation, the Partnership Agreement), or any other agreement or instrument
relating thereto;

     (ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Loan Instruments, the Project Documents
(including, without limitation, the Partnership Agreement); or

-12-

 

     (iii) any exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty, for
all or any of the Obligations.

     8. Agent Appointed Attorney-in-Fact.

     Each Partner hereby irrevocably constitutes and appoints Agent to act, during the continuation
of an Event of Default, as such Partner’s attorney-in-fact (which appointment as attorney-in-fact
shall be coupled with an interest and irrevocable), with full authority in the place and stead of
such Partner and in the name of such Partner or otherwise, from time to time in Agent’s discretion,
to take any action and to execute any and all documents and instruments which Agent may deem
necessary or advisable to accomplish the purposes of this General Partner Security Agreement,
including, without limitation:

     (i) upon the occurrence and during the continuance of any Event of Default, to
exercise all partnership rights, powers and privileges to the same extent as a
general partner, including, without limitation, to represent and vote all of the
Partnership Interests and to endorse its name on the partnership powers delivered to
it pursuant to Section 3(d) hereof;

     (ii) to receive, endorse and collect all instruments made payable to the
Partners representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by Agent for the purpose of collecting
any and all of such dividends, payments or other distributions;

     (iii) to pay or discharge taxes and liens levied or placed on the Collateral;
and

     (iv) upon the occurrence and during the continuance of any Event of Default,
(A) to direct any party liable for any payment in respect of or arising out of any
of the Collateral to make payment of any and all moneys due or to become due in
connection therewith directly to Agent or as Agent shall direct, (B) to ask or make
demand for, collect, receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or arising out of
any Collateral, (C) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any Collateral, (D) to
defend any suit, action or proceeding brought against the Partners with respect to
any Collateral, (E) to settle, compromise or adjust any suit, action or proceeding
described in clause (D) above and, in connection therewith, to give such discharges
or releases as Agent may deem appropriate and (F) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though Agent were the absolute owner thereof
for all purposes, and to do, at Agent’s option and at the Partners’ expense, at any
time, or from time to time, all acts and things

-13-

 

which Agent deems necessary to protect, preserve or realize upon the Collateral
and the Security Interest therein and to effect the intent of this General Partner
Security Agreement, all as fully and effectively as the Partners might do.

     9. Agent May Perform.

     During the continuation of an Event of Default, Agent, without releasing the Partners from any
obligation, covenant or condition hereof, itself may make any payment or perform, or cause the
performance of, any such obligation, covenant, condition or agreement or any other action in such
manner and to such extent as Agent may deem necessary to protect, perfect or continue the
perfection of the Secured Parties’ Security Interest in the Collateral. Unless an Event of Default
shall have occurred and be continuing, each Partner shall be entitled to receive all distributions
made pursuant to the Partnership Agreement, subject to the terms of the Deposit Agreement and
exercise all voting rights and take all action it is authorized to take under the Partnership
Agreement, provided that no distribution shall be made which is prohibited by this General
Partner Security Agreement, the Loan Agreement, any other Loan Instrument or any of the other
documents executed in connection with the transactions contemplated hereby or thereby; and
provided, further, that no vote or other action taken shall impair any of the
Collateral.

     10. Rights and Limitations on Obligations of Agent.

     Anything herein to the contrary notwithstanding, each Partner shall remain liable under the
Partnership Agreement to observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with and pursuant to the terms and provisions
thereof. Agent shall not have any obligation or liability by reason of or arising out of the
Original General Partner Security Agreement or out of this General Partner Security Agreement or
the receipt by Agent of any payment relating to any Collateral pursuant hereto, nor shall Agent be
obligated in any manner to perform any of the obligations of the Partners under or pursuant to this
General Partner Security Agreement, the Partnership Agreement, or any other Project Document or
Loan Instrument to which it is a party to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of any performance by any
party under any thereof, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned to it or to which
it may be entitled at any time or times.

     11. Other Powers.

     The Partners authorize Agent, at any time and from time to time, to execute, in connection
with a sale of the Collateral pursuant to the provisions of this General Partner Security
Agreement, any endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.

     12. No Duty on Agent’s Part.

     The powers conferred on Agent hereunder are solely to protect Agent’s interests in the
Collateral and shall not impose any duty upon it to exercise any such powers. Agent shall be
accountable only for amounts that it actually receives as a result of the exercise of such powers,

-14-

 

and neither it nor any of its officers, directors, employees or agents shall be responsible to
the Partners for any act or failure to act hereunder, except for its own gross negligence or
willful misconduct.

     13. Reasonable Care; Standards for Exercising Remedies; Marshaling Collateral.

          (a) Agent shall exercise the same degree of care hereunder as it exercises or would exercise
in connection with similar transactions for its own account. Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which Agent accords or would
accord collateral held by Agent in similar transactions for its own account; provided,
however, it is expressly understood that Agent shall not have responsibility for taking any
steps to preserve rights against any parties with respect to the Collateral. In furtherance of the
foregoing, to the extent Laws impose on Agent an obligation to exercise remedies in a commercially
reasonable manner, the Partners acknowledge and agree that, to the extent consistent with Law, it
is not commercially unreasonable for Agent (i) to fail to incur expenses reasonably deemed
significant by Agent to prepare the Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to the Collateral to be disposed of, or to obtain
or, if not required by other Laws, to fail to obtain governmental or third party consents for the
collection or disposition of the Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against account debtors or other persons obligated on the Collateral
or to remove Liens or encumbrances on or any adverse claims against the Collateral, (iv) to
exercise or fail to exercise collection remedies against account debtors and other Persons
obligated on the Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise or fail to advertise dispositions of the Collateral through
publications or media of general circulation, whether or not the Collateral is of a specialized
nature, (vi) to hire or fail to hire one or more professional auctioneers to assist in the
disposition of the Collateral, whether or not the Collateral is of a specialized nature, (vii) to
disclaim disposition warranties, (viii) to purchase or fail to purchase insurance or credit
enhancements to insure Agent against the risk of loss, collection or disposition of the Collateral,
or (ix) to obtain or fail to obtain the services of brokers, investment bankers, consultants and
other professionals to assist Agent in the collection or disposition of any of the Collateral.

          (b) Without limiting the generality of the foregoing and except as otherwise provided by Law,
Agent shall not be required to resort to any item of the Collateral or guarantees in any particular
order; and all of Agent’s rights hereunder and in respect of such Collateral and guarantees shall
be cumulative and in addition to all other rights, however existing or arising.

     14. Role of Agent.

     The rights, duties, liabilities and immunities of Agent and its appointment and replacement
hereunder shall be governed by Article 8 of the Loan Agreement.

-15-

 

     15. Notices.

     All notices, demands, requests and other communications required or permitted hereunder shall
be in writing and shall be deemed to have been given (a) when presented personally, (b) when
transmitted by facsimile to the number specified below and the receipt confirmed, (c) when sent by
overnight courier service, the Banking Day following the date of delivery to such courier service,
or such later day as demonstrated by a bona fide receipt therefor, or (d) when sent
by the United States Postal Service, postage prepaid, registered or certified, return receipt
requested, the date received, addressed to the respective party, as the case may be, at the
following address, or such other address as any party may from time to time designate by written
notice to the others as herein required.

	 	 	 
	If to the Partners:

	 	Westmoreland-Roanoke Valley, L.P.
	 

	 	c/o Westmoreland Energy, LLC
	 

	 	2 North Cascade Avenue
	 

	 	Colorado Springs, Colorado 80903
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopy: (719) 448-8098
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	Westmoreland-North Carolina Power, LLC
	 

	 	c/o Westmoreland Energy, LLC
	 

	 	2 North Cascade Avenue
	 

	 	Colorado Springs, Colorado 80903
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopy: (719) 448-8097
	 
	 	 
	If to Agent:
	 	 
	 
	 	 
	 

	 	Prudential Investment Management, Inc.
	 

	 	c/o Prudential Capital Group
	 

	 	2200 Ross Avenue, Suite 4200E
	 

	 	Dallas, TX 75201
	 

	 	Attention: Managing Director, Electric Finance Group
	 

	 	Telephone: (214) 720-6272
	 

	 	Facsimile: (214) 720-6297

     16. Other Remedies.

     Any and all remedies herein expressly conferred upon Agent shall be deemed cumulative with,
and not exclusive of, any other remedy conferred hereby, by the other Loan Instruments or by law on
Agent, and the exercise of any one remedy shall not stop, prevent or preclude the exercise of any
other remedy which Agent or the Secured Parties may have until such time as all of the Obligations
and the guaranty of such Obligations shall have been satisfied, released and discharged in full.
The application of the Collateral to satisfy the Obligations pursuant to the

-16-

 

terms hereof shall not operate to release the Security Interest in the Collateral until
payment in full of any deficiency has been made in cash.

     17. Waiver.

     By exercising or failing to exercise any of its rights, options or elections hereunder, Agent,
on behalf of the Secured Parties, shall not be deemed to have waived any breach or default on the
part of the Partners or to have released the Partners from any of the Obligations secured hereby.
A waiver or release of the Partners shall be effective only if it is in writing and signed by
Agent.

     18. Waiver of Claims.

     Notwithstanding any payment or payments made by the Partners or the exercise by Agent of any
of the remedies provided under this General Partner Security Agreement, the Loan Agreement or any
of the other Loan Instruments, each Partner expressly, irrevocably and unconditionally waives and
releases any and all “claims” (as that term is defined in Title 11 of the United States Code) it
may now or hereafter have against the Partnership, and shall not be entitled to, and hereby
expressly waives, any and all rights of subrogation, reimbursement, indemnity, exoneration and
contribution against the Partnership and against any collateral security and guaranty held by any
of the Secured Parties, which such Partner may now or hereafter have against the Partnership,
without regard to whether any such right or claim arises expressly, implicitly, by operation of law
or otherwise; provided that such waiver and release shall not be effective as to any such
claim or entitlement or such subrogation and other rights that arise, and result from transactions
or other events occurring in their entirety, after the indefeasible payment, performance or other
satisfaction in full of the Obligations; and provided further, however, that
nothing contained herein shall impair any right of reimbursement, contribution or indemnification
of one Partner against the other. If any amount shall be paid at any time to such Partner on
account of subrogation or other rights, notwithstanding the foregoing waiver and release thereof,
such amount shall be held by such Partner in trust for the Secured Parties, segregated from its
other funds, and shall be turned over to Agent for the benefit of the Secured Parties in the exact
form received by such Partner (duly endorsed to Agent for the benefit of the Secured Parties, if
required) to be applied against the Obligations in such order as the Secured Parties may elect.

     19. Expenses.

     The Partners agree to pay, upon demand, to Agent the amount of any and all expenses,
including, without limitations, the fees and expenses of Agent’s counsel and of any experts and
agents, which Agent may incur in connection with (i) the custody or preservation of the Collateral,
(ii) the exercise or enforcement of any rights of Agent hereunder or (iii) the failure by the
Partners to perform or observe any of the provisions hereof, together with interest thereon at the
Default Interest Rate from the date of demand for each such payment by Agent.

     20. Time of Essence.

     Time is of the essence with respect to this General Partner Security Agreement and all of its
provisions.

-17-

 

     21. Binding Upon Successors.

     All agreements, covenants, conditions and provisions of this General Partner Security
Agreement shall be binding upon and inure to the benefit of the successors and assigns of each of
the parties hereto.

     22. Captions.

     The caption or heading at the beginning of each Section and the table of contents are for the
convenience of the parties only and are not a part of this General Partner Security Agreement.

     23. Governing Law and Jurisdiction.

          (a) This General Partner Security Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York as to interpretation, enforcement, validity,
construction, effect and in all other respects, but excluding perfection, which shall be governed
by the laws of the jurisdiction relevant thereto.

          (b) With respect to any legal action or proceeding brought by Agent on behalf of the Secured
Parties against the Partners arising out of or in connection with any of the Loan Instruments to
which any Partner is a party, each Partner hereby irrevocably (i) consents to the jurisdiction of
any state or federal court located in the State of New York, (ii) consents to the service of
process outside the territorial jurisdiction of said courts in any such action or proceeding by
mailing copies thereof by registered United States mail, postage prepaid, to the address specified
by such Partner for the receipt of notices if such address is outside such territorial jurisdiction
and (iii) waives any objection to the venue of the aforesaid courts. Each Partner hereby
irrevocably designates, appoints and empowers CT Corporation System (the “Process Agent”,
which has consented thereto) with offices on the date hereof at 111 Eighth Avenue, New York, New
York 10019 as agent to receive for and on behalf of each Partner service of process in the State of
New York. Each Partner agrees that each will at all times continuously maintain either a
registered office or an agent to receive service of process in the State of New York on behalf of
itself and its properties with respect to any Loan Instrument to which it is a party.

     24. Amendment.

     This General Partner Security Agreement may be modified, amended or rescinded only by a
writing expressly referring to this General Partner Security Agreement and signed by all of the
parties hereto.

     25. Severability.

     Every provision of this General Partner Security Agreement is intended to be severable. If
any term or provision hereof is declared by a court of competent jurisdiction to be illegal,
invalid or unenforceable for any reason whatsoever, such illegality, invalidity or unenforceability
shall not affect the other terms and provisions hereof, which terms and provisions shall remain

-18-

 

binding and enforceable, and to the extent possible all of such other provisions shall remain
in full force and effect.

     26. Secured Parties Not Liable.

     Neither this General Partner Security Agreement nor any action on the part of Agent or the
Secured Parties shall constitute an assumption by Agent or the Secured Parties of any of the
obligations of the Partners or the Partnership related to any of the Collateral, and the Partners
and the Partnership shall continue to be liable for all such obligations whether incurred before or
after an Event of Default.

     27. Termination; Release of Collateral.

     This General Partner Security Agreement shall terminate, and all of the Collateral shall be
released automatically from the Security Interest therein, at such time that the Secured Parties
are required to release and terminate all Liens of the Security Documents pursuant to Section 9.17
of the Loan Agreement.

     28. Counterparts.

     This General Partner Security Agreement may be executed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

-19-

 

     IN WITNESS WHEREOF, the parties hereto have caused this General Partner Security Agreement to
be duly executed as of the day and year first written above.

	 	 	 	 	 
	 	WESTMORELAND-ROANOKE VALLEY, L.P.

 	 
	 	By:  	WEI-Roanoke Valley, Inc., a general partner of
 	 
	 	 	Westmoreland-Roanoke Valley, L.P. 	 
	 	 	 	 
	 	 	By:  	                                                   /s/ David J. Blair
 
	 	 	 	Name:  David J. Blair	 
	 	 	 	Title:    CFO & Treasurer	 

	 	 	 	 	 
	 	WESTMORELAND-NORTH CAROLINA POWER, LLC, a Virginia
limited liability company
 	 
	 
	 	By:  	/s/ David J. Blair
 	 
	 	 	Name:  	David J. Blair 	 
	 	 	Title:  	CFO & Treasurer 	 
	 

	 	 	 	 	 
	 	PRUDENTIAL INVESTMENT MANAGEMENT, INC., as Agent

 	 
	 	By:  	/s/ Timothy M. Laczkowski
 	WHB 
	 	 	Name:  	Timothy M. Laczkowski 	 
	 	 	Title:  	Vice President 	 

-20-

 

	 	 	 	 	 

Exhibit A

FORM OF PARTNERSHIP POWER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                                            , all of its partnership interests(s) in Westmoreland Partners, a
Virginia general partnership, standing in its name on the books of Westmoreland- Partners,
represented by the following certificate(s)                                         , and irrevocably appoints
                                                             as attorney to transfer such certificated securities with full power of
substitution in the premises.

	 	 	 	 	 
	Date:                                                             	WESTMORELAND-ROANOKE VALLEY, L.P.

 	 
	 	By:  	WEI-Roanoke Valley, Inc., a general partner of
 	 
	 	 	Westmoreland-Roanoke Valley, L.P. 	 
	 	 	 	 
	 	 	By:  	/s/ David J. Blair
 	 
	 	 	 	Name:  David J. Blair	 
	 	 	 	Title:    CFO & Treasurer	 
	 

In the presence of:

/s/ Morris W. Kegley 

 

 

Exhibit B

FORM OF PARTNERSHIP CERTIFICATE

PARTNERSHIP INTEREST CERTIFICATE

WESTMORELAND PARTNERS

a Virginia general partnership

			
	 	 	 
	Percentage:
	 	Cert. No. ___

General Partner Interest

     THIS CERTIFIES THAT                                          is the owner of a Fifty Percent (50%) Partnership
Interest in Westmoreland Partners, a Virginia general partnership (the “Partnership”). Such
Partnership Interest is not transferable except as provided in the (i) General Partner Security
Agreement (as defined in Exhibit X to the Credit Agreement, dated as of February 11, 2008 by and
among the Partnership, as borrower, the lenders party thereto and Prudential Investment Management,
Inc., as Agent, as amended and as may be further amended, modified or supplemented from time to
time) and (ii) Amended and Restated General Partnership Agreement, dated as of December 1, 1993, as
amended, modified or restated from time to time (as so amended, modified or restated, the
“Partnership Agreement”), and is otherwise subject to the terms and conditions of the
General Partner Security Agreement and the Partnership Agreement. Capitalized terms used herein are
used as defined in the Partnership Agreement.

     THIS CERTIFICATE is not negotiable or transferable except in connection with the transfer of
the Partnership Interest evidenced hereby and as provided in the General Partner Security Agreement
and in Section 8 of the Partnership Agreement; provided, however, that this Partnership Interest
certificate, when coupled with the partnership power in the form set forth on the reverse hereof,
duly executed in blank or assigned to the named assignee, may be deposited with the continuing
partners of the Partnership and shall constitute direction by the registered owner of this
Partnership Interest certificate to such continuing partners of the Partnership to register the
change of ownership of the Partnership Interest evidenced hereby to such assignee and to issue a
new certificate reflecting such change of ownership to such assignee. The Partnership Interest
evidenced by this Partnership Interest certificate shall constitute “securities” within the meaning
of and governed by (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15)
thereof) as in effect from time to time in the Commonwealth of Virginia and in the State of New
York and (ii) the law of any other applicable jurisdiction that presently or hereafter is
substantially similar to such Article 8.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

 

 

     IN WITNESS WHEREOF, the Partnership has caused this Partnership Interest certificate to be
signed on this                          day of                                  
       .

	 	 	 	 	 
	 	WESTMORELAND PARTNERS
 	 
	 	By:  	     WESTMORELAND-ROANOKE VALLEY,L.P.

as general partner 	 
	 
	 	By:	WEI-ROANOKE VALLEY, INC.,

as general partner 	 
	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:  	 
	 	 	 	Title:  	 
	 

THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND
QUALIFIED OR IF AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

-2-

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