EXHIBIT 10.17
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EXPLORATION AND OPTION TO LEASE AGREEMENT
     This EXPLORATION AND OPTION TO LEASE AGREEMENT (hereinafter “Exploration
Agreement”), made and entered on this 13th of February, 2004, between the CROW
TRIBE OF INDIANS, Crow Agency, Montana 59022, (hereinafter “Crow Tribe”), and
WESTMORELAND RESOURCES, INC., a corporation organized under the laws of the
State of Delaware, with its principal place of business at P.O. Box 449, Hardin,
Big Horn County, Montana (hereinafter “Westmoreland”).
RECITALS

A.   The Crow Tribe owns, and is in possession of, mineral properties underlying
land commonly referred to as the “South Extension” as shown on Exhibit “B.” The
Crow Tribe also owns some limited surface interests in the South Extension.   B.
  The Crow Tribe represents the South Extension contains evidence of coal
deposits of value and offers potential for the development of coal.   C.   The
proper exploration and evaluation of the coal deposits, and their proper
development and sale, will require the expenditure of large sums of capital and
adequate time.   D.   Westmoreland is able and willing to furnish the capital
required for the development of the coal deposits located in the Mining Area,
but only in accordance with, and subject to, the conditions set forth in this
Exploration Agreement.   E.   The Minerals Management Service of the United
States Department of the Interior has made demand on Westmoreland for payment of
additional royalties and interest on revenue received by Westmoreland from
Northern States Power (now Xcel) relating to the 1986 NSP Coal Reserve Option
payments. The parties desire to settle said claim as provided herein.   F.  
Westmoreland currently mines coal owned by the Crow Tribe pursuant to the
Amended Coal Mining Lease Indian Lands (“Tract III Lease”) entered into on
November 26, 1974, and subsequently amended. The terms of the Tract III Lease
may be amended by this Exploration Agreement if certain contingencies occur.  
G.   The Crow Tribe wishes to obtain the assistance of Westmoreland in
connection with the Crow Tribe’s desire to obtain an aerial photographic survey
of the Crow Reservation.   H.   The Crow Tribe wishes to expand the amount of
surface rights owned by the Tribe within the boundaries of the Crow Reservation.
  I.   This Agreement and the Coal Lease are entered into pursuant to the Indian
Mineral Development Act of 1982.

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     THEREFORE, based on the foregoing, and for good and valuable consideration,
the parties represent, covenant, state, and agree as follows:
SECTION 1 DEFINITIONS
     1.1 Allotted Land: All allotted trust land, as well as all allotted fee
land, owned by individual Crow Indians whether or not subject to federal
restraints on alienation.
     1.2 Regional Director: The Regional Director of the Bureau of Indian
Affairs, Rocky Mountain Regional Office, Billings, Montana, or any of that
individual’s successors.
     1.3 Carrier: Trucks, railroads, conveyor belts, pipelines, or any
instrumentality or machinery used to deliver Coal after sale.
     1.4 Coal: Any combustible carbonaceous rock, whether classified as
anthracite, bituminous, subbituminous, or lignite, as defined by ASTM Standard
D-388-77, along with all substances mixed with Coal.
     1.5 Coal Delivery or Delivered Coal: Coal loaded into a Carrier at the load
out facility operated by Westmoreland on the Tract III Lease for movement to
another location for commercial use.
     1.6 Coal Lease: The document attached hereto as Exhibit A, which was
executed concurrently with execution of this Exploration Agreement, by the Crow
Tribe and Westmoreland.
     1.7 Crow Indian: An individual who is properly enrolled as a member of the
Crow Tribe.
     1.8 Crow Reservation: All lands lying within the exterior boundaries of the
Crow Indian Reservation in the state of Montana. For the purposes of this
Exploration Agreement, the “Crow Reservation” is further divided into:
(i) Allotted Land; (ii) Tribal Land; and (iii) Fee Land, as those terms are
defined herein.
     1.9 Exercise Date: The date on which Westmoreland exercises its option to
lease pursuant to Section 3.2.
     1.10 Exploration Agreement: This document and the exhibits and attachments
hereto.
     1.11 Exploration Rights: The exclusive right to enter in and upon the
Prospect Area or Mining Area for the purpose of conducting drilling,
exploration, environmental testing, monitoring, data gathering, and other
incidental rights relating thereto, including the right to remove and test
samples of Coal. These Exploration Rights shall be limited in scope and only
pertain to Coal exploration.

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     1.12 Facilities Area: The area within the Tract III Lease that will be
utilized and is necessary for the production of Coal under this Exploration
Agreement, including, but not limited to, haul roads, access roads, buildings,
water drainage courses, dams, ponds, water wells and storage facilities, Coal
processing facilities, railroads, sidetracks, switches, storage facilities,
conveyors, and other structures and improvements.
     1.13 Fee Land: Any land except Tribal Land and/or Allotted Land.
     1.14 Mining Activities: All functions and activities, whether performed on
or off the Crow Reservation, required to prepare for and conduct the mining,
preparation, transportation, and marketing of Coal, by any method, from the
Mining Area covered by this Exploration Agreement; including, but not limited
to:

  a.   Pre-development drilling, sampling, testing, and data gathering
activities;     b.   Environmental and permitting activities;     c.   Design,
construction, and operation of the mine and related facilities such as
buildings, power lines, access roads, railroads, and other transportation
facilities;     d.   Hauling Coal, Coal processing, or delivery to a Carrier and
all equipment, machinery, and workers related thereto;     e.   Related
administrative activities;     f.   Termination activities; and     g.  
Reclamation.

     1.15 Mining Area: The tract of the South Extension Area selected and
identified pursuant to Section 8 of this Exploration Agreement.
     1.16 Mining Permits: All permits, plans, licenses, and approvals required
by the Surface Mining Control and Reclamation Act of 1977; the Clean Air Act of
1990; the Federal Water Pollution Control Act, as amended; and all other
applicable governmental permits, plans, approvals, and licenses required in
order to conduct Mining Activities as contemplated by this Exploration
Agreement.
     1.17 Operating Subsidiary: A wholly owned subsidiary of Westmoreland to
which Westmoreland may sublease or assign all or a portion of the lands leased
pursuant to this Exploration Agreement and the Mining Area.

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     1.18 Prospect Area: The area of land identified on the map or maps attached
hereto as Exhibit B.
     1.19 Secretary of Interior or Secretary: The Secretary of Interior of the
United States or his duly authorized representative.
     1.20 South Extension: An area of land on the Crow Reservation south of the
existing Tract III Lease, shown on Exhibit “B.”
     1.21 Superintendent: The Superintendent of the Bureau of Indian Affairs at
Crow Agency, Montana.
     1.22 Ton: A measure of weight of 2000 pounds avoirdupois.
     1.23 Tract III Lease: The existing Coal Mining Lease (United States
Department of the Interior Bureau of Indian Affairs, Contract
No. 1420-0252-4088, Tract 3, Sale 3), together with all amendments and exhibits
thereto, entered into between the Crow Tribe and Westmoreland.
     1.24 Tribal Attorney: An attorney retained by the Crow Tribe to represent
and act as the legal representative for the Crow Tribe with regard to this
Exploration Agreement.
     1.25 Tribal Land: All land, whether now owned or hereafter acquired, held
in trust by the United States of America for the Crow Tribe, as well as all Fee
Land owned by the Crow Tribe, including Fee Land subject to federal restrictions
on alienation.
     1.26 Tribal Coal: All Coal, any interest in which is owned by the Crow
Tribe, whether held in fee or in trust by the United States for the benefit of
the Crow Tribe, or in fee subject to a restriction on alienation.
     1.27 Trust Land: All land held in trust by the United States of America for
individual Crow Indians or for the Crow Tribe.
SECTION 2 EXPLORATION LICENSE
     2.1 Grant. The Crow Tribe grants to Westmoreland, for a term commencing on
the date of approval of this Exploration Agreement by both parties and ending on
April 1, 2005 (unless extended pursuant to Section 5.4), Exploration Rights in
and on the Prospect Area for all Tribal Land and Tribal Coal located within the
Prospect Area. Approval by the Crow Tribe shall be given by signature of the
Chairman and approval as provided in Section 5.1. Approval by Westmoreland shall
be upon approval by its Board and execution of this Agreement by its executive.
     2.2 Exploration Rights. Westmoreland, as licensee, shall have the right to
exercise all Exploration Rights, including the right to drill, prospect,
explore, test, develop, and work at its own discretion and at its own expense,
on all or any part of the Prospect Area on the condition all work

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and all improvements made by Westmoreland on the Prospect Area, or any part of
the Crow Reservation, under the terms of this Exploration Agreement and during
the period of this Exploration Agreement, shall be done in a miner-like and
proper manner, so that the Prospect Area shall be carefully operated and the
minerals contained in the Prospect Area may be sampled and evaluated in an
economical and environmentally responsible manner.

  a.   Roads. Westmoreland may use existing roads, if any, on the South
Extension and may construct and maintain at its own expense any additional roads
within the Prospect Area that are necessary in carrying on prospecting and
exploration work. The Crow Tribe consents to the construction and use of such
roads and will cooperate in obtaining any needed consents or approvals from any
government entity, including the BIA.     b.   No Public Right. The public shall
obtain no rights to any roads constructed by Westmoreland, nor shall
Westmoreland be obliged to maintain said roads for use by any other person, or
permit any other persons to use them, and on termination of this Exploration
Agreement, or if at any time it becomes unnecessary for Westmoreland to use any
roads for conducting authorized operations, the right to use and any obligation
to maintain the roads shall cease and, subject to any need to use roads to
complete reclamation, all rights shall revest in the surface owner.        
Installations made by Westmoreland in connection with roads may be removed by
Westmoreland.     c.   Removal and Reclamation. Installations made by
Westmoreland in connection with roads may be removed by Westmoreland. If
Westmoreland does not exercise its option, and subject to all terms and
conditions of its governmental permits, Westmoreland will reclaim and restore
all roads and related installations it has constructed, except to the extent
that the surface owners (including the Crow Tribe) wish them to remain in place.

     2.3 Licensing and Permits. Prior to exercising the exploration rights set
forth in this Exploration Agreement, Westmoreland shall obtain all necessary
licenses and permits from the federal government. The parties recognize that
time is of the essence in Westmoreland’s ability to conduct exploration within
the Prospect Area, and it is contemplated that Westmoreland will be able to
obtain a federal approval of a prospecting permit for the limited purpose of
conducting those exploration activities immediately after the Crow Tribe’s
approval of this Agreement, and prior to federal approval pursuant to the
requirements of the IMDA. The Crow Tribe shall cooperate fully with Westmoreland
in Westmoreland’s attempt to obtain all requisite licenses and permits, and the
Crow Tribe shall impose no charges for same.
     2.4 Exploration Results. Upon exercise of its option to lease as provided
for in Section 3 of this Exploration Agreement, or if Westmoreland elects not to
lease, Westmoreland shall provide

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one copy each to the Crow Tribe, MMS, and the Regional Director of logs, tests,
and other raw data obtained through the exploration efforts of Westmoreland on
the Prospect Area, which the Crow Tribe, MMS, and the Regional Director agree to
keep strictly confidential. If Westmoreland elects not to lease, all data
developed hereunder shall be provided to the Crow Tribe as additional
consideration for the right of first refusal provided in Section 3.3.
Westmoreland shall not provide or disclose the data to any other party. The data
provided to the Tribe may be used without restriction by the Tribe and its
consultants for planning a Tribally-owned mine or provided by the Tribe to other
potential lessors, developers, operators, or partners at the Tribe’s sole
discretion.
     2.5 Reservation of Right to Grant Additional Exploration Licenses. The Crow
Tribe retains the right to grant exploration rights for minerals other than
Coal, on the Prospect Area designated by Westmoreland, but the parties agree any
exploration rights so granted shall not interfere with the exploration rights of
Westmoreland. Any exploration rights granted to parties other than Westmoreland
covering the Prospect Area shall provide that activities conducted pursuant to
such rights are subordinate to the exploration rights of Westmoreland and thus
shall not interfere with Westmoreland’s exploration rights and shall further
provide any selection of a mining (including drilling for hydrocarbons) area by
such third parties shall be made only after Westmoreland has selected its Mining
Area in accordance with Section 8 of this Exploration Agreement, and after
selection, Westmoreland shall have the exclusive use of said Mining Area. To the
extent practicable, Westmoreland shall conduct its exploration activities so as
not to diminish the quantity or value of the Tribe’s Coal or coal bed methane
resources in seams that Westmoreland does not intend to mine under this
Agreement.
SECTION 3 OPTION TO LEASE
     3.1 Exclusive Option to Lease. Westmoreland shall have the exclusive option
to lease the Crow Tribe’s Coal in the Prospect Area. Said option shall be
exercised, if at all, upon completion of Westmoreland’s exploration and reserve
analysis in the Prospect Area or no later than April 1, 2005, unless
Westmoreland elects the extension provided in provision 5.4 of this Exploration
Agreement.
     3.2 Exercise of Option. If Westmoreland elects to exercise the option
granted and receive a Coal Lease to the Mining Area, it shall notify the Crow
Tribe in a manner in accordance with provision 25.3 of this Exploration
Agreement. On giving such notice, Westmoreland shall be entitled to receive, in
accordance with and subject to the terms of this Exploration Agreement, a lease
in the form of the Coal Lease attached hereto as Exhibit A. The Crow Tribe
shall, on the receipt of the notice of Westmoreland’s intention to exercise its
option, deliver the fully executed lease to Westmoreland.
     3.3 Conversion of Option into Right of First Refusal. The option to demand
and receive a Coal Lease, if not exercised, shall convert into a right of first
refusal for as long as Westmoreland operates the Absaloka Mine. If the Crow
Tribe receives an offer to lease Coal in the Prospect Area from any party other
than Westmoreland during the right of first refusal period, it

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must present to Westmoreland an offer to lease said Coal on the same terms as
said offer, and Westmoreland shall have sixty (60) days within which to accept
or reject.
          This right of first refusal shall not apply if, after Westmoreland
fails to exercise its option, the Crow Tribe decides to develop the Coal in the
Prospect Area itself, or through any entity or joint venture of which the Crow
Tribes owns not less than one-half (i.e., a Tribally-owned mine); provided,
however, that Westmoreland will be given the opportunity to bid on any general
contract for operating a Tribally-owned mine in the Prospect Area.
          The Crow Tribe must inform any offeror no later than five (5) days
after receiving any offer of Westmoreland’s right of first refusal.
     3.4 Machinery and Equipment. No equipment, tools, machinery, improvements,
or personal property of any nature or description brought or placed in the
property prior to the exercise of this option by Westmoreland for use in the
work shall become a fixture.
          All the equipment, structures, improvements, and other property shall
remain the property of Westmoreland, subject to removal by Westmoreland. If
Westmoreland does not exercise this option, it shall be entitled to remove all
equipment, tools, machinery, structures, improvements, and personal property
from the property within ninety (90) days after the expiration of this option.
     3.5 Title of Owner. The Crow Tribe represents that it is the lawful owner
of all minerals located in the Mining Area, as specifically described herein,
and such Tribal Land as is located in the Mining Area. The Crow Tribe further
represents the minerals covered by this Exploration Agreement are each free from
all liens and encumbrances of every nature and description.
          During the period of this option, the Crow Tribe shall protect all of
its property in the Mining Area from any and all liens except those arising from
the acts of Westmoreland on the Mining Area.
          The Crow Tribe shall not encumber any of its property in the Mining
Area or any part of it and shall furnish to Westmoreland satisfactory evidence
of good title to same not less than ninety (90) days after any written request
from Westmoreland to do so.
          Nothing herein shall be construed as prohibiting the Tribe from
pledging or assigning payments due the Tribe under this Agreement, including
lump sum payments, royalties, and taxes.
     3.6 Unavoidable Delays. Any time lost by Westmoreland in the event of Force
Majeure, as that term is defined in Section 11 of this Exploration Agreement,
shall not run against the time specified in this Exploration Agreement for
exercise of this option.

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SECTION 4 SETTLEMENT WITH MMS
     As additional consideration for this Exploration Agreement, the parties
agree to settle the matters recited in the Settlement Agreement attached hereto
as Exhibit C by executing same and carrying out its terms.
     Except for the Exploration License granted in Section 2, the Crow Tribe’s
performance of this Exploration and Option to Lease Agreement is contingent upon
the Tribe’s receipt of the payment due under said Settlement Agreement as
provided in Section 5.2 below.
SECTION 5 LUMP SUM PAYMENTS
     Payments. In consideration for the execution of this Exploration Agreement,
as well as the grant of the rights and obligations contained in this Exploration
Agreement, and the agreement to settle the MMS dispute per Section 4,
Westmoreland shall make lump sum payments as follows:
     5.1 [*****] upon final approval of this Exploration Agreement, including
the Coal Lease and the MMS Settlement Agreement. For purposes of this
contingency, the term “final approval” shall mean binding approval of this
Exploration Agreement and Coal Lease, and all exhibits and agreements attached
thereto, by the Crow Tribe by signed approval of the Executive Branch of the
governing body of the Crow Tribe of Indians and final and binding approval by
the legislature of the Crow Tribe pursuant to Article V, Section 2(d), of the
Constitution of the Crow Tribe. A true and correct copy of the Crow Tribal
Legislative Act No. CLB 0402, enacted February 10, 2004, and approved
February 12, 2004, approving this Exploration Agreement and the Coal Lease, and
all exhibits and attachments, and authorizing the Executive of the Crow
Government to execute said agreements on behalf of the Crow Tribe is attached
hereto as Exhibit “D.”
          If Westmoreland elects not to exercise its option, or if this
Exploration Agreement is not approved by the Secretary as provided in
Section 21, then the [*****], paid pursuant to this, shall be treated as an
advance of royalty and taxes under the existing Tract III Lease and shall be
reimbursed pro rata over the next twenty-four (24) months following expiration
of the term of the option.
     5.2 One Million Five Hundred Thousand Dollars and 0/100 ($1,500,000),
following approval per Section 5.1, and upon approval and execution of the
Settlement Agreement attached as Exhibit C, according to its terms, releasing
Westmoreland from any further royalties, assessments, or taxes of any kind based
on option payments received from Xcel Energy (formerly NSP), from the period
from 1986 to 1999, as full, final and complete settlement of the MMS dispute.
Following approval, execution, and payment as provided herein, the MMS
Settlement Agreement shall survive any of the following: termination of this
Exploration Agreement or the Coal Lease, or failure or refusal of the Secretary
to approve same, and shall be permanent and binding according to its terms.
          This lump sum payment for the MMS Settlement Agreement is not
contingent upon federal approval of this Exploration and Option to Lease
Agreement or associated prospecting permit or Coal Mining Lease and is
non-recoupable according to the terms of the Settlement Agreement, as long as it
has been separately approved according to its terms.

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     5.3 If Westmoreland elects to exercise the option specified in Section 3 of
this Exploration Agreement, Westmoreland shall pay the Crow Tribe the sum of
[*****], which shall be paid, less any advance payment as provided in
Section 5.4 below, within ten (10) days of exercising the option.
     5.4 Westmoreland may extend its exploration rights and the date for
exercising its option from April 1, 2005, to June 1, 2006, by paying an
additional [*****] to the Crow Tribe on or before April 1, 2005. If Westmoreland
subsequently elects to exercise its right to mine, said [*****] shall be an
advance on the consideration required for Westmoreland’s right to elect its
option as specified in provision 5.3. If Westmoreland elects not to exercise its
option, then [*****] of this payment shall be treated as an additional
advancement on royalty and taxes under the existing Tract III Lease to be
reimbursed over the next eight (8) quarters.
     5.5 With the exception of the contingencies outlined in Sections 5.1 and
5.4 of this Exploration Agreement, the above described lump sum payments shall
not be recoupable against future royalties, taxes, or any other amounts
Westmoreland owes the Crow Tribe.
     5.6 All lump sum payments to the Crow Tribe shall be made to the
Superintendent in trust for the use and benefit of the Crow Tribe.
     5.7 All lump sum payments shall be paid by electronic funds transfer to an
account or accounts designated by the Crow Tribe and approved by the
Superintendent.
SECTION 6 AMENDMENT TO TRACT III LEASE
     6.1 Royalty Renegotiation. Lessor and Lessee agree that the royalty
renegotiation provided for in the Tract III Lease, which is scheduled for
November of 2004, shall be resolved as follows: Lessor and Lessee agree that the
tax and royalty terms of the Coal Lease shall be amended into, and shall apply,
to the Tract III Lease from and after December 1, 2004, for new Coal sales (new
sales made or contracted after December 1, 2004). Current Tract III Lease
Royalty Rates shall remain in effect on all sales made under contracts existing
on December 1, 2004, through their term, or any price renegotiation date,
whichever comes first, but Westmoreland shall agree that on such sales, the Crow
Tribe will realize an overall royalty of not less than that provided in
Article 7 of the Coal Lease.
     6.2 Extension of Tract III Lease. If Westmoreland exercises its option to
lease under this Exploration Agreement, the parties recognize that Westmoreland
must use its current Tract III Facilities Area for the efficient production of
Coal from the Mining Area for the entire period during which Westmoreland
conducts Mining Activities in the Mining Area. The parties further recognize
that it is to their mutual interest and benefit to maintain Westmoreland’s Tract
III facilities area beyond the end of the current projected Tract III production
to provide the means for future production should market conditions warrant.
Therefore, if Westmoreland exercises its option to lease hereunder, the Tract
III Lease shall be amended to provide that Westmoreland shall have the

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option to extend the term of the Tract III Lease beyond production of Coal in
paying quantities for a term equal to the term of the Coal Lease by the payment
of One Dollar and 0/100 cents ($1.00) per acre per year as minimum royalty under
the Tract III Lease.
     6.3 Tribal Employment. The Tribal employment provisions in Article 36 of
the Coal Lease shall also apply to the Tract III Lease effective upon the
Tribe’s approval of this Agreement.
     6.4 Amendment to Tract III Lease. The parties will amend the Tract III
Lease to reflect the terms of this Section 6.
SECTION 7 PHOTOGRAPHIC SURVEY
     As additional consideration for the promises herein, following execution of
this Exploration Agreement and approval by the Secretary, Westmoreland shall
actively assist the Crow Tribe in its plan to obtain and create a photographic
survey of the Crow Reservation. Westmoreland will provide technical advice and
support to the Crow Tribe’s project manager. Westmoreland’s staff, time, and
availability will be contingent upon and limited by Westmoreland’s own work
load. In addition, Westmoreland will provide One Hundred Twenty-Five Thousand
Dollars and 0/100 cents ($125,000.00) to the Crow Tribe to help fund this
project. Said fund shall be available thirty (30) days after the date upon which
final approval of this Exploration Agreement is granted by the Secretary. At the
Tribe’s option and request at any time thereafter, the remaining balance of the
fund shall be paid directly to the Tribe.
SECTION 8 SELECTION OF MINING AREA
     8.1 Mining Tract Designation. On or before the Exercise Date, Westmoreland
shall select, from the Prospect Area, the Mining Area. Selection of the Mining
Area shall not itself constitute exercise of the option, and the Mining Area may
be amended by Westmoreland prior to the Exercise Date.
     8.2 Selection Notice. Westmoreland shall select the Mining Area by
delivering to the Crow Tribe written notice, in the manner set forth herein,
providing the legal description of the tract selected. The mining tract
described in the notice shall constitute the Mining Area. The Mining Area shall
be identified and by addendum attached to the Coal Lease.
SECTION 9 COAL LEASE
     9.1 Execution and Approval of Lease Form. The parties will execute and the
Crow Tribe will approve the Coal Lease in the manner provided in Section 5.1 at
the same time as this Exploration Agreement. In addition, the parties shall
request that approval of the attached Coal Lease be simultaneous with approval
of this Exploration Agreement by the Secretary. The parties agree to cooperate
to seek approval of all terms of this Exploration Agreement and Coal Lease by
the Secretary as expeditiously as possible. Approval of the Coal Lease is
subject to the limitations in Section 21.6.

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     9.2 Effective Date of Lease. In the event Westmoreland elects to exercise
its option to lease, the Coal Lease shall take effect thirty (30) days following
Westmoreland’s notice of its election to lease.
     9.3 Limitation of Mining Area. Notwithstanding any provision in this
Exploration Agreement or the Coal Lease, any grant of rights from the Crow Tribe
to Westmoreland to use or lease land, or to explore for and/or mine Coal is
limited to Tribal Land and Tribal Coal. To the extent there is other land and/or
Coal located in the Prospect Area and/or the Mining Area, Westmoreland shall be
responsible for obtaining any necessary right to enter, explore for, and mine
Coal on said land or to use and occupy said land, including the acquisition of
any necessary surface rights.
     9.4 Acreage Under Lease. Lessee currently leases Coal owned by Lessor
outside the boundaries of the Crow Reservation pursuant to the terms of the
Tract III lease. Lessee may identify and lease a Mining Area in excess of 2,560
acres, but not more than 3,400 acres, in a single, reasonably compact block.
Approval of the Exploration Agreement and Coal Lease shall constitute consent of
the Crow Tribe and approval by the Secretary of the Interior, pursuant to
applicable law (including 25 C.F.R. §211.25) of: (a) Lessee holding both the
Tract III lease and the Coal Lease; and (b) Lessee leasing more than 2,560
acres, but not more than 3,400 acres under the Coal Lease.
SECTION 10 ACQUISITION OF SURFACE RIGHTS
     10.1 The parties recognize that Exploration Rights and Mining Activities
will require acquisition of surface rights and/or payment for use and/or damage
to surface owners. The parties also recognize that without the ability to
conduct Mining Activities in the Mining Area, the Crow Tribe will be unable to
realize financial returns of significant benefit to the Crow people.
     10.2 Westmoreland will be solely responsible for the cost of paying surface
property owners for interests acquired, including grants of ownership,
easements, or leases, and for payment of any loss of use or surface damage
incurred.
     10.3 The Crow Tribe will cooperate and reasonably assist Westmoreland in
gaining access to the surface as required to conduct Mining Activities. The Crow
Tribe acknowledges that, according to the law, custom, and usage of the Crow
Tribe, it has the right, particularly within the boundaries of the Crow
Reservation, but also elsewhere, to use and disturb the surface and subsurface
of lands, including lands owned by others, to explore for and evaluate mineral
deposits, to extract minerals owned by the Crow Tribe, and to convey these
rights to a mineral lessee, subject only to the obligation of the Crow Tribe, or
the mineral lessee as the case may be, to compensate the property owner for any
loss of use or damage to the property. The Crow Tribe agrees to fully support
Westmoreland’s efforts in accord with this principle, to obtain such surface
rights as may be required to conduct Mining Activities under this Exploration
Agreement, or to enforce said right to mine subject to said obligation to
reasonably compensate surface owners for loss of use and damage to property.

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     10.4 If Westmoreland’s acquisition of surface title within the Crow
Reservation would otherwise be prevented as a practical matter by the operation
of Section 2 of the 1920 Crow Allotment Act, 41 Stat. 751, 752, and initial
acquisition of such lands in the name of the Crow Tribe would lawfully avoid the
impediment, the Tribe agrees to cooperate with Westmoreland by taking title to
(and, as applicable, exchanging) such lands as are necessary for the purposes of
this Agreement in its name and subject to Westmoreland’s rights to use and
possess them or to use them for exchange purposes pursuant to Sections 16.2 and
16.3. Nothing in this Agreement shall affect any rights of individual Crow
allottees or their heirs or successors arising under Section 2.
SECTION 11 FORCE MAJEURE
     11.1 Suspension of Obligations. In the event of Force Majeure, as defined
in this section, the obligations of Westmoreland pursuant to this Exploration
Agreement and the documents executed pursuant to this Exploration Agreement,
including deadlines for exercising options, shall be suspended, and the term of
this Exploration Agreement and all time periods provided for herein shall be
extended during the period of Force Majeure, but for no longer period, except as
otherwise provided by this Exploration Agreement. However, this provision shall
not apply to the settlement with MMS addressed in Section 4.
     11.2 Definition. The term “Force Majeure”, as used in this Exploration
Agreement, means any cause beyond the control of Westmoreland, including, but
not limited to: acts of God, labor disputes, insurrections, riots, labor or
material shortages, break downs of or damage to equipment or facilities,
interruption of transportation of Coal, (including rail car shortages),
embargoes, fires, explosions, floods, litigation of any nature preventing
Westmoreland from exercising any rights outlined in this Exploration Agreement,
the elements, casualties not attributable to Westmoreland, an administrative
delay in a governmental agency (including Tribal Government), which is not
caused by Westmoreland’s action, newly enacted or mandatory legislation or
administrative regulations or changes in the interpretation thereof, orders of
civil or military authority or of anybody having jurisdiction over the parties,
the Prospect Area or the Mining Area, and extraordinary circumstances not
attributable to and not reasonably foreseeable by a reasonably prudent operator,
whether such situations affect Westmoreland directly or by reason of their
effect on a subsidiary, customer, contractor, shipper, or supplier, which wholly
or partly prevent the exercise of the Exploration Rights or the mining or
delivery of Coal at a reasonable profit.
          The examples enumerated above are by way of example, and not
limitation. Force Majeure shall not include any condition arising out of
business risks such as fluctuations in prices, sales, or costs, including costs
of compliance with requirements for environmental protection; commonly
experienced delays in delivery of supplies or equipment; or inability to obtain
sufficient sales.
     11.3 Mitigation. Westmoreland shall diligently attempt to remedy, as soon
as possible, any Force Majeure and to mitigate its effects on the implementation
of this Exploration Agreement

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and on the payments due the Crow Tribe hereunder; provided, that nothing
contained herein shall require the settlement of strikes, lockouts, or other
labor difficulties by Westmoreland contrary to its wishes, and the disposition
or manner of handling or remedying any and all such labor difficulties is hereby
expressly acknowledged to be entirely within the discretion of Westmoreland.
     11.4 Procedures. If a period of Force Majeure is incurred, Westmoreland
will notify the Crow Tribe within thirty (30) days from the beginning of such
period of Force Majeure. The notice will include descriptions of the
circumstances that prevent Westmoreland’s performance and Westmoreland’s plans
and efforts to remedy or mitigate the Force Majeure, and an estimate of the
expected duration of the period of Force Majeure. When the period of Force
Majeure has ended, Westmoreland will also notify the Crow Tribe. Notice of the
commencement of and cessation of Force Majeure periods will be given to the Crow
Tribe in writing in accordance with provision 25.3 of this Exploration
Agreement. Notice shall also be given to the Regional Director and to the Tribal
Attorney.
SECTION 12 CROW REPRESENTATIVES
     Authorized Representative. Crow Tribal Chairperson, who is recognized as
such by the BIA, or the said Chairperson’s designee (“Designated Official”),
shall be the sole party authorized to deal with Westmoreland on any matters
related to this Exploration Agreement, excluding regulatory matters and any
action taken or authorized by the Tribal Chairperson or the Designated Official
shall be deemed to be action taken or authorized by the Crow Tribe unless the
authority of the Tribal Chairperson or the Designated Official has been called
into question or otherwise been diminished or withdrawn by a properly adopted
Tribal resolution delivered to Westmoreland. Westmoreland may otherwise rely
upon the authority of the Tribal Chairperson or the Designated Official in
conducting any transactions, negotiations, or dealings involving the Crow Tribe,
to the full extent of the Chairperson’s powers as head of the Executive Branch
of the Crow Tribal Government as provided in Article IV of the Constitution and
Bylaws of the Crow Tribe.
SECTION 13 EMPLOYMENT STANDARDS
     Employment Rights. Tribal employment rights are provided in Article 36 of
the Coal Lease.
SECTION 14 ASSIGNMENT
     14.1 Assignment of Rights. Each right and obligation hereunder shall extend
to and be binding upon, and every benefit hereof shall inure to the heirs,
executors, administrators, successors, or assigns of the respective parties.
     14.2 Restriction on Assignment. Westmoreland agrees not to assign this
Exploration Agreement, by an operating agreement or otherwise, not to sublet any
portion of the lands under this Exploration Agreement except with the approval
of the Crow Tribe and the Secretary, provided, however, such approval shall not
be unreasonably withheld. It is further provided such approval

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shall not be required in the event the assignment or sublease is to an Operating
Subsidiary of Westmoreland. Westmoreland shall, however, provide notice of such
assignment to the Crow Tribe, the Tribal Attorney, and the Regional Director.
SECTION 15 CROW REGULATION
     15.1 Recognition of Tribal Sovereignty. Westmoreland recognizes the
sovereignty of the Crow Tribe as established by treaty and recognized by federal
law. The parties recognize the Crow Tribe, as a sovereign, is concerned with the
protection of the health and general welfare of the Crow Tribe and its members,
the quality of the environment, the protection, and conservation of tribal
resources as well as concerns for the Crow Tribe’s unique cultural interests.
The rights provided by this Section 15 are in addition to, and do not diminish,
the rights provided in Section 18.
     15.2 Tribal Recognition of Competitive Nature of Mining. The Crow Tribe
recognizes the competitive nature of mining and the need for Crow Tribal Coal to
be competitive in the marketplace with other Coal mines located within and
without Montana. The Crow Tribe also recognizes the Coal mined from the property
covered by this Exploration Agreement will compete with low-cost incremental
Coal production from existing operations, including non-tribal operations.
     15.3 Notification of Increased Government Costs. The Crow Tribe agrees that
while it may adopt laws or regulations that affect the conduct of Westmoreland’s
business and exploration and Mining Activities pursuant to this Exploration
Agreement, such laws or regulations will not be effective, as to Westmoreland,
until one hundred and twenty (120) days after Westmoreland has been provided
with a copy of such regulation or law. Westmoreland shall then have the right to
determine whether the law results in any increased governmental costs to
Westmoreland.

  a.   Definition. For purposes of this Exploration Agreement, “Governmental
Costs” shall include all externally imposed costs on Westmoreland, including,
but not limited to, costs incurred by an Operating Subsidiary and other costs
associated with Mining Activities (excluding the costs of Westmoreland’s regular
staff required for reporting to the Crow Tribe as a government), whether imposed
by the Crow Tribe, the United States, or some other governmental entity.     b.
  Governmental Costs, as used herein, shall not include state, county, local, or
tribal taxes, which are addressed elsewhere in this Exploration Agreement.

     15.4 Objection Procedure. If Westmoreland determines the new law or
regulation will increase Westmoreland’s total current Governmental Costs,
Westmoreland shall notify the Crow Tribe, in writing, detailing the basis of
Westmoreland’s belief. Westmoreland and the Crow Tribe shall thereafter meet
within thirty (30) days after the Crow Tribe’s receipt of Westmoreland’s notice
to discuss the matter. If, after that meeting, Westmoreland maintains its
position and the Crow Tribe does not amend or modify the Tribal Law to remove
Westmoreland’s objection, Westmoreland may seek arbitration regarding such law
or regulation and its economic impact on Westmoreland.

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     15.5 Effect of Arbitrator’s Determination. If the arbitrators rule that the
law does not increase Westmoreland’s Governmental Costs, then Westmoreland shall
comply with such law, unless otherwise provided for herein, including
Section 18. If the arbitrators determine the new law or regulation results in an
increase in Governmental Costs, then Westmoreland shall comply with the new law
or regulation but the Crow Tribe shall, at its option, either subsidize the
increased Governmental Costs through a tribal tax credit or waive the
applicability of the new law or regulation to the extent it results in
Westmoreland’s Governmental Costs.
          If the arbitrators have not ruled within the one hundred and twenty
(120) day period prior to the new tribal law or regulation taking effect,
Westmoreland will comply with the new law or regulation as provided above until
a ruling is made, provided, however, that in the event the arbitrators
subsequently rule that the tribal law under review causes the total Governmental
Costs of mining Crow Coal to increase, then Westmoreland shall be entitled to
recover the difference in such costs incurred from the end of the one hundred
and twenty day (120) period provided for above until the date the arbitrators’
ruling goes into effect. Such recovery shall be paid by the Crow Tribe by giving
Westmoreland a deduction in tribal taxes due or to become due from Westmoreland.
     15.6 Arbitrators Standard of Review. In determining whether the tribal law
under review causes the Governmental Costs of mining Crow Coal to increase, the
arbitrators shall compare the Governmental Costs applicable to mining under this
Exploration Agreement and the Coal Lease prior to enactment to said Governmental
Costs after enactment. Such costs shall include, but not be limited to, fees,
operating expenses, safety requirements and reclamation costs. In making this
comparison, the arbitrators shall take into account all relevant factors they
consider reasonable and necessary to permit a valid comparison. In addition, the
arbitrator may consider any savings or reduction in Governmental Costs of mining
Crow Coal which have resulted from the passage of other tribal laws, and those
savings shall be utilized as offsets in considering the Governmental Costs
associated with the tribal law under review.
     15.7 Prohibition Against Regulatory Takings. While making no
representations as to the quality, quantity, or location of any Coal reserves
subject to this Exploration Agreement, the Crow Tribe agrees it will take no
action which precludes Westmoreland from mining Crow Coal covered by this
Exploration Agreement where such Coal could otherwise be mined under state or
federal law, nor will the Crow Tribe enact, as to Westmoreland, any law,
ordinance, or regulation which would result in a regulatory taking of the rights
and permits granted to Westmoreland under this Exploration Agreement. The Crow
Tribe further agrees not to unreasonably withhold or delay any licenses,
permits, or other concurrences required by Westmoreland pursuant to any law
enacted by the Crow Tribe.
     15.8 Procedure. Arbitration shall be conducted in accord with Section 26,
except as otherwise provided in this section.

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SECTION 16 TRIBAL LAND
     16.1 Conveyance of Tribal Land. Notwithstanding any provision of this
Exploration Agreement or the Coal Lease to the contrary, no lease of coal or
option to lease by the Crow Tribe provided for herein, shall be construed by any
court or regulatory agency, for any purpose, as a conveyance of Tribal Land in
fee. Any such conveyance shall be considered a conveyance of a possessory
interest only, and shall in no way be construed to divest the Crow Tribe of its
jurisdiction over its land and activities occurring thereon. Except as expressly
and unequivocally provided in this Exploration Agreement and Coal Lease
(including, without limitation, the limited waivers of sovereign immunity
contained therein), the Crow Tribe retains all attributes of its sovereignty and
jurisdiction over the lands encumbered by this Exploration Agreement or any
right-of-way granted hereunder, and over any activities occurring thereon.
     16.2 Conveyance of Acquired Property. Westmoreland recognizes the Crow
Tribe’s interest in obtaining title to property it may acquire within the
boundaries of the Crow Reservation as part of its South Extension Project.
Westmoreland agrees to convey to the Crow Tribe title to any property interest
acquired within the boundary of the Crow Reservation pursuant to the Coal Lease
at the conclusion of Mining Activities. Westmoreland shall retain the exclusive
and entire right to use and possession of properties within the lease boundaries
for the duration of its Mining Activities, including reclamation activities
(through final bond release).
     16.3 Property Acquired to Trade. This provision will not prevent
Westmoreland from acquiring property within the boundaries of the Crow
Reservation for the purpose of swapping or trading for other property, to allow
Westmoreland to acquire title to surface within the Mining Area. Property
acquired by Westmoreland for that purpose, and eventually used for that purpose,
shall not be conveyed to the Crow Tribe. Further, to facilitate acquisition of
property needed for Mining Activities, Westmoreland may encumber any property it
acquires within the Crow Reservation or any property acquired by it for or in
the name of the Crow Tribe with access road easements in favor of Westmoreland
(for Mining Activities) or private owners as may be needed to arrange land swaps
or purchases, for acquisition by Westmoreland of surface rights needed for
Mining Activities. Westmoreland will not increase the number of acres owned on
the Crow Reservation in fee by non-tribal members.
SECTION 17 TRIBAL TAXES
     17.1 Tribal Severance and Gross Proceeds Taxes. The parties recognize the
economic difficulties that will be encountered in developing a new mine in the
proposed Mining Area which will be economically competitive in the marketplace,
and that taxes on Coal mined hereunder have a negative effect on Westmoreland’s
ability to market Tribal Coal and maximize the Crow Tribe’s royalties and
Westmoreland’s profits. The parties further recognize this Exploration Agreement
and the Coal Lease include provisions which will assist in making Crow Coal
produced under the Exploration Agreement more marketable. Thus, except as
otherwise provided in this Exploration Agreement or the Coal Lease, the parties
hereto agree the activities of Westmoreland on the Crow Reservation pursuant to
this Exploration Agreement shall only be subject to the Crow Tribe severance tax
and gross proceeds tax calculated as provided in the Coal Lease and as further
limited by its terms.

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     17.2 Exclusion of Additional Taxes. It is the intent of the Crow Tribe that
the taxes provided for in this section and the Coal Lease shall be in lieu of
all other ad valorem real or personal property taxes, or other taxes of any kind
or character, including sales taxes, resource indemnity trust taxes, real,
personal, or business property taxes, or income taxes the Crow Tribe might
otherwise be empowered to levy against Westmoreland.
     17.3 Preemption. It is the intent of the parties that the taxes imposed by
the Crow Tribe will preempt all state and local taxes, since it is the finding
and conclusion of the parties hereto that any additional or dual taxes will
place the Coal produced under this Exploration Agreement and Coal Lease at a
competitive disadvantage in the marketplace, thus frustrating the Crow Tribe’s
efforts to market Crow Coal and improve the Crow Reservation’s economy. In
particular, the parties acknowledge Westmoreland is unwilling to enter into this
Exploration Agreement and Coal Lease without the tax incentives and protections
provided herein and in the Coal Lease, and that Coal cannot be mined profitably
if Westmoreland is required to pay dual state and tribal taxes.
SECTION 18 JURISDICTIONAL DISPUTES
     If Westmoreland should, in good faith, question any tribal law or
regulation on the basis the Crow Tribe does not have jurisdiction to pass such
law, Westmoreland shall, subject to the other provisions of this Exploration
Agreement, comply with such tribal law or regulation where there is no
conflicting federal law, and such compliance shall continue until there is a
determination by a court of competent jurisdiction that the Crow Tribe lacks
jurisdiction to enforce such law. If there exists a conflict between the tribal
law or regulation and a law or regulation of the United States or the state of
Montana, Westmoreland shall comply with the tribal law unless Westmoreland
obtains an opinion of counsel which provides Westmoreland with a good faith
basis for believing that said law or regulation is preempted by conflicting
state or federal law and that compliance with the conflicting state or federal
law or regulation is appropriate. In such a situation, Westmoreland need only
comply with the conflicting state or federal law or regulation until such time
as a court of competent jurisdiction determines the state or federal law has no
application to Westmoreland. Thereafter, Westmoreland shall, subject to other
provisions of this Exploration Agreement, comply with the applicable tribal law
or regulation.
SECTION 19 LIMITED WAIVER OF SOVEREIGN IMMUNITY
     The Crow Tribe specifically and unequivocally waives its sovereign immunity
from suit and hereby consents to being named as a party in any litigation
between Westmoreland, an Operating Subsidiary and the Crow Tribe involving the
construction, execution, interpretation, validity, enforcement, performance, or
any dispute arising under this Exploration Agreement and the Coal Lease,
including any dispute concerning the rights, responsibilities, and obligations
of the parties hereto relating to the mining of Crow Coal under this Exploration
Agreement and the Coal Lease. It is agreed that this waiver of sovereign
immunity is limited and extends only to Westmoreland and an Operating Subsidiary
and to no other parties, and that the waiver is further limited to only those
matters referenced in this provision.

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     This waiver shall be effective such that both parties shall comply with the
binding arbitration provisions of the Exploration Agreement and Coal Lease and
either party may have recourse to federal court to fully enforce the parties’
agreement to arbitrate and the arbitration result pursuant to the Federal
Arbitration Act found at 9 U.S.C. § 1, et seq.
     This waiver of sovereign immunity is based upon the Crow Tribe’s opinion,
belief and considered finding that the assertion of the Crow Tribe’s sovereign
immunity in any dispute involving Westmoreland concerning this Exploration
Agreement or the Coal Lease would be inappropriate. The parties expressly
recognize this waiver shall not extend to or apply to any claim which might be
brought against the Crow Tribe for punitive damages. Further, the parties
expressly recognize this waiver shall not permit or authorize the sale or
transfer of any property held by the United States in trust for the Crow Tribe.
Except for an award of costs and attorneys’ fees of or for any arbitration
proceedings, the Crow Tribe’s monetary liability resulting from any dispute
arising under the referenced agreements and the waiver of sovereign immunity
herein is limited to an award against the Tribe of offsets or withholding of
future royalties and taxes otherwise payable by Westmoreland to the Crow Tribe,
and/or injunctive relief providing for enforcement of Westmoreland’s right to
explore, lease, and mine according to the referenced agreements.
     A true and correct copy of Crow Tribal Legislative Act No. CLB 0402,
enacted February 10, 2004, and approved February 12, 2004, approving this
limited waiver of sovereign immunity as to matters arising in conjunction with
this Exploration Agreement and Coal Lease, is attached hereto as Exhibit “D.”
SECTION 20 AUTHORIZATIONS
     20.1 Crow Tribe Authorizations. The Crow Tribe warrants the execution of
this Exploration Agreement has been validly authorized by the Crow Tribal
Legislature and Executive Branch and that the execution by the Chairman of the
Crow Tribe has been duly authorized and approved. A certified copy of a validly
adopted resolution of the Crow Tribal Legislature approving this Exploration
Agreement and Coal Lease and authorizing its execution by the officers whose
signatures are set forth below is attached hereto as Exhibit D.
     20.2 Opinion of Tribal Attorney. The Tribal Attorney has, simultaneously
with the execution of this Exploration Agreement, delivered to Westmoreland an
opinion that this Exploration Agreement is duly authorized and validly executed
by the Crow Tribe in accordance with the Tribal Constitution and Bylaws, which
opinion is attached hereto as Exhibit E.
     20.3 Corporate Existence of Westmoreland. Westmoreland is a corporation
duly incorporated, validly existing, and in good standing under the laws of the
state of Delaware, is registered to do business in Montana, and its registration
status in Montana is active and in good standing. Westmoreland has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

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     20.4 Authority. The execution and delivery by Westmoreland of this
Agreement, and the performance by Westmoreland of its obligations hereunder,
have been duly and validly authorized by Westmoreland and no other corporate
action on the part of Westmoreland is necessary. Upon execution by the President
of Westmoreland, and delivery by Westmoreland, and upon due execution by the
Crow Tribe, and by governmental approval as provided herein, this Agreement
shall be valid and binding upon Westmoreland and enforceable against
Westmoreland in accordance with its terms.
     20.5 Opinion of Counsel of Westmoreland. The legal counsel of Westmoreland
has simultaneously, with the execution of this Exploration Agreement, delivered
to the Crow Tribe an opinion that this Exploration Agreement is duly authorized
and validly executed by Westmoreland, which opinion is attached hereto as
Exhibit F.
SECTION 21 APPROVAL BY SECRETARY AND BY THE TRIBE
     21.1 Approval by Crow Tribe. The Crow Tribe shall approve this and all
attached and related exhibits and agreements in the manner provided in
Section 5.1.
     21.2 Approval by the Secretary. Approval by the Secretary is required.
Westmoreland and the Crow Tribe shall cooperate in seeking prompt approval of
this Exploration Agreement and the Coal Lease and all other agreements and
exhibits attached or incorporated therein. Failure to obtain approval of the
Secretary shall result in cancellation of this Agreement or related agreements
as provided herein. It is understood that after approval by the Crow Tribe,
further approval of the MMS Settlement Agreement by the Secretary (including the
MMS) shall be independent from the Secretary’s approval of the remainder of the
Exploration and Option to Lease Agreement.
     21.3 Deadline for Secretarial Approval. The Secretary shall approve the
agreements as provided in Section 21.2 within six (6) months of the date of the
payment of the sum described in Section 5.1. If said approval does not occur
within six (6) months, Westmoreland may, at its sole option, cancel this and all
related agreements or extend the time provided for such secretarial approval.
The parties anticipate and request that the separate approvals by the Secretary
of the MMS Settlement Agreement (Exhibit C) and the Prospecting Permit referred
to in Section 2.3 occur as soon after the Tribe’s approval of this Agreement as
is reasonably practical.
     21.4 Payments Prior to Secretarial Approval. The payment described in
Section 5.1 shall be made upon the approval described therein, but shall be
refunded as provided therein if the Secretary does not provide approval as
provided in this Section 21. The payment described in Section 5.2 shall not be
refunded to Westmoreland if the Secretary does not provide approval of the
Exploration Agreement and Coal Lease, as long as the MMS Settlement Agreement
referenced in Section 5.2 has been fully approved according to its separate
terms.
     21.5 Approval of This and Related Agreements. Approval of this Exploration
Agreement by the Secretary, the Crow Tribe, and Westmoreland constitutes
approval of all other agreements and exhibits attached or incorporated herein,
specifically including the Coal Lease, and

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further secretarial approval of those agreements shall be unnecessary. It is the
finding of the Secretary, by the approval of this Exploration Agreement, that
such approval is in the best interests of the Crow Indian Tribe, and any
regulations that are, in any way, inconsistent with the rights granted herein,
are waived.
     21.6 Approval of Agreements Does Not Constitute Permission to Mine. The
Secretary’s approval of the Exploration Agreement and the Coal Lease do not
constitute approval or authorization of any surface disturbing activities from
an environmental perspective. All parties acknowledge that future NEPA (National
Environmental Policy Act, 42 U.S.C. § 4321, et seq.) compliance will be
necessary for exploration/development, drilling, and mining. it is contemplated
that future NEPA compliance will involve environmental analysis satisfactory to
the BIA, BLM, and OSM prior to authorization and permitting for mining.
Therefore, the approval provided by this section does not constitute issuance or
approval of any required exploration, drilling, or mining permit or plan.
SECTION 22 FEDERAL TRUST AND SUPERVISION
     22.1 Federal Trust Responsibilities. While the mineral interests and
certain lands covered by this Exploration Agreement and the Coal Lease are in
trust or restricted status, all of Westmoreland’s obligations under this
Exploration Agreement and the Coal Lease, and the obligations of its sureties,
are to the United States as well as to the Crow Tribe, and all payments to the
Crow Tribe provided herein or therein will be made to the Superintendent for the
use and benefit of the Crow Tribe, and payments shall be made according to
applicable federal regulations. Nothing contained in this Exploration Agreement
or the Coal Lease shall operate to delay or prevent a termination of Federal
trust responsibilities with respect to the lands covered by this Exploration
Agreement or the Coal Lease; however, such termination shall not serve to
abrogate this Mining Area Agreement or the Coal Lease.
     22.2 Relinquishment of Supervision. Should the Secretary, at any time
during the term of this Exploration Agreement or the Coal Lease, relinquish
supervision as to all or part of the lands covered by this Exploration Agreement
or the Coal Lease, the relinquishment shall not bind Westmoreland until it has
received from the Secretary thirty (30) days written notice of such
relinquishment. After notice of relinquishment has been received, this
Exploration Agreement and the Coal Lease are subject to the following further
conditions:

  a.   Payments. All payments payable after such notice attributable to tribally
owned Coal relinquished from supervision shall be paid directly to the Crow
Tribe.     b.   Effect on Bonding Requirements. If at the time supervision is
relinquished by the Secretary as to all the tribally-owned Coal within the
Mining Area or Facilities Area, Westmoreland has made all payments due under
this Exploration Agreement or the Coal Lease and has fully performed all
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bond given to secure the performance of this Exploration Agreement or the Coal
Lease and on file in the office of the Bureau of Indian Affairs shall be
cancelled and released.
If at the time of any such relinquishment of supervision by the Bureau,
Westmoreland has not performed all obligations imposed upon it hereunder or
under the Coal Lease, Westmoreland shall file with the Crow Tribe a bond (“New
Bond”) in favor of the Crow Tribe in a principal amount equal to that
immediately theretofore in force with the Bureau of Indian Affairs and
conditioned upon the performance by Westmoreland of those undertakings provided
for in the bond (“Old Bond”) immediately theretofore in force with the Bureau.
The new Bond shall be continued in force until Westmoreland performs all
obligations secured thereby, provided, however, that such New Bond shall not be
required until the Old Bond filed with the Bureau has been released.
SECTION 23 DEFAULT
     23.1 Conditions of Default. The breach by Westmoreland or the Crow Tribe of
any of the terms and conditions of this Exploration Agreement of the Coal Lease
shall constitute a default hereunder.
     23.2 Default Procedures. If a party believes a default has occurred, it may
notify the other party in writing of such alleged default, specifying its
nature. The parties shall meet within thirty (30) days to attempt to agree in
whether there is such a default and, if so, on an appropriate remedy. If the
parties are unable to agree, the complaining party may, within sixty (60) days
after giving notice of such default, begin arbitration proceedings as provided
for in this Exploration Agreement.

  a.   Non-Monetary Default. If the arbitrator decides that a non-monetary
default has occurred, the defaulting party shall have one hundred and eighty
(180) days after receipt of the decision finding a default to cure such default,
provided, however, such one hundred and eighty (180) day period shall be
extended to include any period during which the defaulting party prosecutes with
diligence and to completion an attempt to cure such non-monetary default, if it
cannot be cured within one hundred and eighty (180) days.     b.   Monetary
Default. If the arbitrator decides a monetary default has occurred, the
defaulting party shall have sixty (60) days after receipt of the decision
finding such a default to cure that default. If such default is not cured as
required, the complaining party, in addition to seeking other remedies available
at law, may ask the arbitrator to impose penalties or sanctions; provided, any
sanction that involves termination of all or part of this Exploration Agreement
or the Coal Lease because such uncured default

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shall be effective only after a determination by the arbitrators that the
defaulting party has acted willfully in failing to cure the default.
     23.3 Remedies for Westmoreland’s Default. If default by Westmoreland is not
cured as required by the arbitrators, the Crow Tribe may request, and the
arbitrators may order, a termination of this Exploration Agreement or the Coal
Lease as to the Prospect Area or the Mining Area with respect to which the
default occurred.
     23.4 Remedies of Secretary. The parties hereto expressly recognize this
section does not limit the options of the Secretary, in the exercise of the
Secretary’s trust responsibilities, under this Exploration Agreement.
SECTION 24 TERMINATION
     Termination Rights. At any time prior to the effective date of the Coal
Lease as provided in Section 9.2 herein, Westmoreland may terminate this
Exploration Agreement. In the event of termination, any payments made pursuant
to Section 5 which are refundable in the event the option to lease is not
exercised, shall be refunded according to the terms of Section 5.
SECTION 25 MISCELLANEOUS
     25.1 Operating Subsidiaries. Westmoreland may assign any portion of the
Exploration Agreement or Coal Lease to an Operating Subsidiary, or sublease any
portion of the Coal Lease to an Operating Subsidiary. Westmoreland guarantees
the performance of any Operating Subsidiary to which any portion of the
Exploration Agreement or Coal Lease is assigned or to which any lands covered
therein are subleased.
     25.2 Waiver. No failure by either party to insist upon the strict
performance of the terms or conditions of this Exploration Agreement or to
exercise any right or remedy consequent upon the breach thereof, or to complain
of any act or omission by the other party and no acceptance of full or partial
payments during the continuance of such breach constitutes a waiver of any terms
or conditions of this Exploration Agreement to be performed or observed by the
parties.
     25.3 Notices. Unless otherwise specified, all notices, requests,
statements, and other information shall be in writing and delivered to or sent
by registered or certified mail, with return receipt requested, postage prepaid,
to the address of the party as set out below, and shall be effective upon
receipt.
          If to the Crow Tribe:
Chairperson
The Crow Tribe of Indians
Crow Tribal Council
Crow Agency, Montana 59022

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and
Crow Tribe Legal Department
P.O. Box 340
Crow Agency, MT 59022
          If to Westmoreland:
President
Westmoreland Resources, Inc.
P.O. Box 449
Hardin, MT 59034
and
General Counsel
Westmoreland Coal Company
2 North Cascade Avenue, Third Floor
Colorado Springs, CO 80903-1614
          And if to the Bureau of Indian Affairs:
Superintendent
Bureau of Indian Affairs
Crow Agency
P.O. Box 69
Crow Agency, MT 59022
     25.4 Applicable Law. This Exploration Agreement shall be construed in
accordance with the laws of the state of Montana. It is the intention of the
parties that this provision shall relate only to matters of contract
construction, and that such provision shall in no way be construed to authorize
the imposition of Montana regulatory law relative to Mining Activities
undertaken by Westmoreland within the exterior boundaries of the Crow
Reservation.
     25.5 Headings. The captions of sections and underlying provisions in this
Exploration Agreement are for convenience of reference only and are not to be
considered a part of the text or to be used to interpret any provision of this
Exploration Agreement.
     25.6 Invalidity. If any court shall hold any part of this Exploration
Agreement to be invalid, such holding shall not invalidate any other part of
this Exploration Agreement.
     25.7 Legal Counsel. Each party acknowledges it has had the advice and
representation of legal counsel in negotiating and entering into this
Exploration Agreement, and the parties recognize that each party has been
actively involved in drafting such Exploration Agreement.

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Confidential materials omitted and filed separately with the SEC. Asterisks
denote omissions.
     25.8 Interest. Except as otherwise specifically provided, any sums payable
under this Exploration Agreement which are not paid when due shall thereafter
bear simple interest, from the date due until paid, at the fixed rate of prime
plus two percent (2%).
     25.9 Transfer of Lands Subject to This Exploration Agreement. The Crow
Tribe shall retain the right to sell, trade, transfer, or otherwise convey any
surface it owns of the Prospect Area, Mining Area, or Facilities Areas, as the
case may be. Any such conveyance shall, however, be subject at all times to the
rights acquired by Westmoreland in such lands pursuant to this Exploration
Agreement and the Coal Lease.
SECTION 26 ARBITRATION
     26.1 Exclusive Mechanism for Settlement of Disputes. Except as otherwise
provided herein, all disputes as to the application or interpretation of this
Exploration Agreement, or the breach, default, termination, or invalidity
thereof, shall be settled by arbitration as provided for in this section. The
arbitrators shall not have the authority to add to, delete from, or otherwise
change this Exploration Agreement. The decision of the arbitrators shall be
final and binding upon the parties. The Commercial Arbitration Rules of the
American Arbitration Association shall be applicable, except as modified herein.
     26.2 Arbitration Process.

  a.   Commencement of Arbitration. Arbitration shall be commenced by written
notice of the existence of a dispute and a demand for arbitration.     b.  
Selection of Arbitrators. In the event of arbitration, Westmoreland shall select
one arbitrator, the Crow Tribe shall select one arbitrator, and those two
arbitrators shall select a mutually satisfactory third arbitrator. Westmoreland
and the Crow Tribe shall select their respective arbitrators within thirty
(30) days of receipt of the arbitration demand. The two arbitrators the parties
select shall select a third, or announce their inability to do so, within thirty
(30) days of their selection. In the event the two arbitrators selected by the
parties are unable to agree on a third arbitrator, the parties agree that they
shall request the federal judge for the United States Federal District Court for
the District of Montana to appoint a third arbitrator from lists provided by the
parties.     c.   Arbitrator Requirements. All arbitrators shall be competent
and professionally experienced in the technical and/or legal matters in dispute
in the arbitration. The parties agree that none of the arbitrators shall be
enrolled members of the Crow Tribe or employees, advisors, stockholders, or
bondholders of Westmoreland or any organization affiliated with Westmoreland.

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Confidential materials omitted and filed separately with the SEC. Asterisks
denote omissions.

  d.   Schedule. Within thirty (30) days of selection of the full panel of
arbitrators, the arbitrators will select a chairperson and hold a conference by
telephone with representatives of the parties to calendar discovery, information
or briefing submittal dates, a hearing date, and address such other issues as
shall ensure an economical, efficient, and timely resolution of the dispute. The
hearing shall be scheduled no more than one hundred eighty (180) days from the
date of this conference. The arbitrators shall issue their decision no more than
thirty (30) days following the hearing.     e.   Discovery. Deposition and
written discovery shall be reasonably limited by the arbitrators to achieve
economical resolution of the dispute. Except in exceptional circumstances, or by
mutual agreement of the parties, two sets of not more than sixty
(60) interrogatories and ten (10) document requests and depositions of opposing
experts and no more than five (5) fact depositions shall be deemed adequate.    
f.   Arbitration Hearings and Costs. Unless mutually agreed, arbitration
hearings shall be held in Billings, Montana. At such hearings, the parties may
present evidence and may cross-examine the witnesses of the other party. After
hearing both parties, the arbitrator shall promptly make a decision in writing
upon the question or questions submitted and serve a copy of such award upon
each party hereto.         The cost of arbitration proceedings shall initially
be paid by the party requesting the arbitration, but if that party prevails in
the proceedings, it shall be reimbursed by the other party. Any question of cost
shall be determined by the arbitrators in the course of their decision and/or
award.

     26.3 Procedure for Noncompliance. If either party fails to comply with the
arbitrators’ decision, the other party shall file and serve a complaint against
the party in noncompliance with the arbitrators’ decision in federal district
court to enforce the arbitrator’s decision in accordance with that court’s rules
of procedure.
     26.4 Recognition of Secretary’s Authority. The parties specifically
recognize that the Secretary’s authority herein shall not be infringed upon or
diminished pursuant to this section.
SECTION 27 SURVIVAL OF CONTRACT PROVISIONS
     27.1 Upon Termination. Upon termination of this Agreement pursuant to
Section 24, or if the Agreement expires without exercise by Westmoreland of its
option to lease, the obligations in Section 3.3 and Sections 4 and 5.2 survive;
and the provisions of Sections 19 and 26 shall survive and be applicable to any
disputes which may arise with respect to this Agreement.

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Confidential materials omitted and filed separately with the SEC. Asterisks
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     27.2 Upon Exercise of Option. Upon exercise by Westmoreland of its option
to lease provided herein, all provisions of this Exploration Agreement
applicable to any activities related to the Coal Lease, including all Mining
Activities, all efforts to acquire permits, property, surface rights or easement
accesses, licenses, or any other activities necessary or convenient to engage in
Mining Activities pursuant to the Coal Lease, including, without limitation, the
definitions and Sections 4 and 10 through 26 survive and apply as provided
herein and in the Coal Lease to the Coal Lease. Any conflict between the
Exploration Agreement and the Coal Lease shall be resolved in favor of the Coal
Lease. Further, Section 6 shall survive and amend the Tract III Lease as
provided therein.
     IN WITNESS WHEREOF, the parties have executed this Exploration Agreement on
the day and year first above mentioned.

                 
 
          CROW TRIBE OF INDIANS    
 
               
 
         
 
Chairperson    
 
                ATTEST:       WESTMORELAND RESOURCES, INC.    
 
               
By:
               
 
 
 
            Secretary      
 
President & Chief Executive Officer    
 
                APPROVED:            
 
                             
 
              Secretary of Interior            
 
                             
 
              Date of Approval            

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