EXHIBIT 10.5
(COAL SALES ORDER LOGO) [c14481c1448101.gif]
THIS COAL SALES ORDER (“Order”) dated April 18, 2007 confirms sale of coal by
Westmoreland Resources, Inc. (“WRI”) to Red Trail Energy, LLC (“Buyer”) pursuant
to the following terms and conditions.

     
ORDER NUMBER:
  Red Trail WRI-#001-2007
 
   
SOURCE:
  The source of the coal to be delivered hereunder shall be from the
Westmoreland Resources, Inc. (“WRI”) Absaloks Mine, located at Sarpy Creek
Montana.
 
   
TERM:
  April 18, 2007 through May 31, 2007.
 
   
QUANTITY:
  For the period April 18 through May 31, 2007, Buyer will purchase and WRI
shall sell two unit trains of coal from the WRI’s Absaloka Mine.
 
   
 
  The total quantity of coal delivered during April 18 through May 31, 2007 will
not exceed 25,000 tons.
 
   
 
  For purposes of this Order, a “ton” shall mean 2,000 pounds avoirdupois.
 
   
 DELIVERY DATE & SCHEDULE:
  Buyer and WRI shall coordinate and agree upon the delivery schedule in a
prompt manner based on the needs of Buyer and availability of coal at the
Absaloka Mine.
 
   
POINT OF DELIVERY:
  The Point of Delivery for coal sold hereunder shall be F.O.B. Mine, loaded
into Buyer provided railcars. All title and risk of loss shall transfer to Buyer
upon loading into railcars.
 
 
 
   
PRICE:
  US $**** per ton FOB Mine (“the Price”).
 
   
QUALITY:
  Typical coal quality specifications are set forth below. Buyer acknowledges
that the quality of actual coal deliveries may vary based on industry standards
from the typical specifications below. All qualities below are on as As-Received
basis.

          Absaloka Mine        
Btu/lb
    8,875  
Sulfur
    0.64 %
Na20 in Ash
    2.00 %
Ash
    9.50 %

     
 
  The size of the coal provided hereunder shall be two inch by zero inch (2” x
0”) with a maximum oversize of ten percent (10%). WRI will use commercially
reasonable efforts to maintain a top size not to exceed three inches (3”).
 
   
BILLING:
  Buyer will be invoiced for coal to the address shown below unless Buyer
otherwise advises WRI in writing of a different address to which invoices should
be mailed:
 
   
 
  P.O. Box 11
 
  Richardton, ND 58652
 
  Telephone #: 701-974-3308
 
  Telefax #: 701-974-3309
 
   
PAYMENT:
  Buyer shall pay invoices within ten (10) days after the date of the invoice at
the address provided on the invoices, including by wire if requested by WRI.
Invoices will be sent every two weeks.
 
   
WEIGHTS;
  The weight of the coal shall be determined by WRI at the Mine by certified
commercial weigh scale(s).

****Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.

 

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      GENERAL TERMS AND CONDITIONS: The General Terms and Conditions are as
attached.
 
   
 
   
SALES AGENT:
  Westmoreland Coal Sales Company shall be the exclusive sales agent for and on
behalf of WRI for all purposes under this Order.

IN WITNESS WHEREOF, the parties hereto have caused this Order to be executed in
duplicate by their duly authorized representatives as of the day and year first
above written.

                      Buyer:   Red Trail Energy, LLC    
 
               
 
      By:
Title:   /s/ Mick J. Miller
 
President
 
    
 
                    WRI:   Westmoreland Resources, Inc.    
 
               
 
      By:
Title:   /s/ Thomas L. Rossetto
 
President
 
    

****Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.

 

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GENERAL TERMS AND CONDITIONS

1.   Title to and risk of loss of the coal shall pass to Buyer at the Point of
Delivery.   2.   The term “force majeure” shall mean any cause beyond the
control of the party affected thereby, such as acts of God, strike, lockout,
labor dispute, labor shortage, fire, flood, war, riot, explosion, accident, car
shortage, embargo, contingencies of transportation, inability to secure supplies
or fuel or power. Breakdown of machinery or apparatus, regulation or rule or law
of any governmental authority, or any other cause, whether similar or dissimilar
to the aforestated causes and whether or not foreseen or foreseeable by the
parties. which wholly or partially prevents, interrupts or delays the
performance by WRI or Buyer of their respective obligations under this Order. A
force majeure event affecting any of WRI’s suppliers, including its mining
contractor, shall be considered a force majeure event affecting WRI. Settlement
of a strike, lockout or other labor dispute shall be deemed beyond the control
of the party claiming excuse thereby regardless of the cause of, or the ability
of such party to settle, such dispute.       If because of force majeure either
Buyer or WRI is unable to carry out its obligations under this Order, except
obligations to pay money to the other party, then the obligations of such party
shall be suspended to the extent made necessary by such force majeure and during
its continuance, provided such force majeure is eliminated insofar as possible
and economically practicable with all reasonable dispatch. Any deficiency in
coal tonnage to be delivered under this Order caused by such force majeure shall
not be made up except by mutual consent of Buyer and WRI.   3.   The coal sold
hereunder may not be used at, or reconsigned to, any location other than Buyer’s
facility, without the prior written consent of WRI.   4.   WRI shall provide for
sampling and analysis of the coal at the Mine in accordance with ASTM standards.
Buyer shall have the right to have a representative present during sampling at
any and all times to observe the sampling process. WRI will provide to Buyer one
ASTM sample for each train load, and WRI shall also provide by email to Buyer an
electronic copy of WRl’s quality analysis for each train load.   5.   Failure of
the Buyer to pay for coal delivered in accordance with the terms hereof shall
give WRI the option to (a) suspend further shipments until all previous
shipments are paid for, or (b) cancel the Order upon written notice to Buyer,
provided that Buyer shall have a thirty (30) day cure period after receipt of a
notice of cancellation hereunder. if in the judgment of WRI, Buyer’s ability to
perform hereunder has become impaired, WRI shall have the right, upon notice to
Buyer, to suspend further shipments until WRI receives adequate assurance of
Buyer’s performance, If such security is not furnished within ten (10) days
after receipt of such notice. WRI shall have the right to cancel this Order upon
notice to Buyer.   6.   This Order shall not be assigned by either party without
the prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, either party may assign
this Order without such consent to a parent company, or any other affiliate of
the assigning party, or for purposes of securing indebtedness. but assignor
shall continue to be liable for its performance hereunder.   7.   A party’s
failure to insist in any one or more instances upon strict performance of a
provision of, or to take advantage of any of its rights under this Order shall
not be construed as a waiver of such provision or right. No default of either
party to this Order in the performance of any of its covenants or obligations
herounder, except the obligation for payment, shall result in a right to the
other party to cancel this contract unless such defaulting party shall fail to
correct the default within thirty (30) days after written notice of claim of
such default has been given by the party claiming such default.   8.   Notice
sent by facsimile, first class, certified or registered U.S. Mail, or a
reputable over night courier service, addressed to the party to whom such notice
is given, at the address of such party stated in this Order or to such other
address (or facsimile number) as such party may designate, shall be deemed
sufficient notice in any case requiring notice under this Order.   9.   EXCEPT
AS EXPRESSLY STATED IN THIS ORDER, WRI MAKES NO WARRANTIES, WHETHER EXPRESS OR
IMPLIED, WRITTEN OR ORAL, ARISING FROM A COURSE OF DEALING, USAGE OF TRADE, OR
OTHERWISE, REGARDING MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUALITY,
QUANTITY, OR OTHERWISE, Neither party shall be liable for any punitive, special,
incidental or consequential damages (including without limitation, loss of
profits or overhead), based upon breach of warranty or of contract, negligence
or any other theory of legal liability arising out of this Order; provided,
however, such limitation regarding incidental or consequential damages shall not
apply to any liability for third party claims for which WRI has indemnified
Buyer pursuant to paragraph 12 below, to the extent that Buyer has liability for
such incidental or consequential damages.   10.   The terms and conditions set
forth in this Order are considered by both Buyer and WRI to be CONFIDENTIAL.
Neither party shall disclose any such information to any third party without the
advance written consent of the other party, except where such disclosure may be
required by law (including by rule or order of the Securities and Exchange
Commission) or is necessary to assert a claim or defense in judicial or
administrative proceedings, in which event the party desiring to make the
disclosure shall advise the other party in advance in writing and shall
cooperate to the extent practicable to minimize the disclosure of any such
information. If a party believes that any disclosure of the terms of this Order
are required by law, such party shall (i) provide prompt written notice to the
other party, and (ii) take such steps are reasonably available to minimize the
disclosure of the terms of this Order.   11.   This Order shall be governed in
all respects by the law of the State of Montana, without regard to its choice of
laws provisions.

****Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.

 

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12.   WRI shall be (i) liable to Buyer for, and (ii) indemnify and save harmless
Buyer from and against any and all claims made or brought by any third party in
respect of, any damage, caused by the negligent acts or omissions of WRI, to
(a) Buyer’s or its contracted rail carriers’ equipment while on WRI’s property
except to the extent such damage is caused by the negligence of Buyer or its
contracted rail carrier, end (b) Buyer’s equipment, including mobile railcars
and stationary equipment at Buyer’s coal combustion facility, to the extent said
equipment is damaged due to non-coal material having been interspersed with the
coal prior to leaving WRI’s mine property.   13.   This Order contains the
entire agreement of the parties, is expressly limited to the terms and
conditions specifically set forth or incorporated by reference herein,
supersedes all prior communications between the parties regarding the subject
matter of this Order and shall be amended or modified only by agreement of the
parties in writing. Should any provision of this Order for any reason be
declared invalid or unenforceable by an order of any court having jurisdiction,
such decision shall not affect the validity or enforceability of the remaining
provisions of this Order, and such provisions shall remain in full force and
effect as if this Order had been executed without the invalid or unenforceable
provision.

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****Confidential treatment has been requested with respect to certain portions
of this exhibit. Omitted portions have been filed separately with the Securities
and Exchange Commission.