Unassociated Document


    COAL SALES ORDER  

     

    THIS COAL SALES ORDER
("Order") dated November 5, 2009 confirms the sale of coal by Westmoreland Coal
Sales Company (“WCSC”) to Red Trail Energy, LLC (“Buyer”) pursuant to the
following terms and conditions.

    


    


    ORDER
NUMBER:      Red Trail WCSC
#003-2010/2011

    


    
      	
              SOURCE:

            	
              The
      primary source of the coal to be delivered hereunder shall be from Western
      Energy Company’s (“WECO”) Rosebud Mine located at Colstrip, Montana,
      until such time as the BNSF Railway begins to provide single-car service
      from the Absaloka Coal LLC (“ACL”) Absaloka Mine at BNSF designation
      Kuehn, Montana, at which time the Absaloka Mine shall become the primary
      source of coal. The delivering mine hereinafter referred to as the
      “Mine.”

            


    

    


    WECO and
ACL are affiliates of WCSC.

    


    
      	
              TERM:

            	
              January
      1, 2010 through December 31, 2011.

            


    

    


    
      	
              QUANTITY:

            	
              The
      quantities of coal to be delivered in each year shall be no less than
      90,000 tons and no more than 115,000 tons per
  year.

            


    

    


    
      	
               
      

            	
              For
      purposes of this Order, a “ton” shall mean 2,000 pounds
      avoirdupois.

            


    

    


    
      	
               
      

            	
              In
      the event Buyer shuts down for any reason or cause and does not purchase
      coal from other sources, the amount of coal which Buyer would ordinarily
      consume during such shutdown will be reduced and such amount shall be
      deducted from the amount of coal Buyer is required to purchase pursuant to
      this Order. Buyer will give prompt notice to WCSC of any shutdown and the
      reduced amount of coal required as a result during such
      shutdown.

            


    

    


    
      	
               
      

            	
              In
      the event WCSC fails to provide the coal required in a timely manner,
      other than due to an event of force majeure, and Buyer is required to
      obtain the coal through alternate means (i.e. using trucks to haul the
      coal from the mines or obtaining coal from another company), and Buyer has
      provided WCSC a reasonable opportunity to provide coal from other sources
      or to otherwise address its delay in a timely manner, WCSC shall be liable
      to Buyer for the cost difference between the cost to obtain the coal under
      the terms of this Order and the cost actually paid by Buyer to obtain the
      coal using alternate means, specifically excluding any incidental or
      consequential costs or damages.

            


    

    


    DELIVERY
DATE & SCHEDULE:

     

    Buyer and
WCSC shall coordinate and agree upon the delivery schedule in a prompt manner
based on the needs of Buyer.

    


    
      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:

            	
              The
      price of coal F.O.B. Mine, in United States dollars, (“Price”) shall be as
      follows:

            


    

     

    
      
        	 
      	
                Rosebud
      Mine

              	
                Absaloka
      Mine

              
	
                January
      1-June 30, 2010

              	
                $****

              	
                $****

              
	
                July
      1-December 31, 2010

              	
                $****

              	
                $****

              
	
                January
      1-June 30, 2011

              	
                $****

              	
                $****

              
	
                July
      1-December 31, 2011

              	
                $****

              	
                $****

              


      

       

    

    
      	
               
      

            	
              In
      the event, subsequent to December 31, 2009, the supplying Mine(s) has
      increased costs in the mining, production, processing, delivery or
      marketing of coal under this Order as a result of any new, amended or
      reinterpreted federal, state or local law, regulation, rule or order, WCSC
      shall have the right to increase the Price in an amount equal to the
      increased costs. Notwithstanding the foregoing and in lieu of paying the
      increased Price, Buyer shall have the right to elect to terminate this
      Order upon thirty (30) days prior written to
  WCSC.

            


    

     

    
      
        
        

      

      
        
          **** -
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.

        

        
          

        

      

      
        
        

      

    

     

    
      	
              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.

            


    

     

    
      
        	
                Quality

              	 	
                Rosebud
      Mine

              	 	

                Absaloka Mine

              
	
                Btu/lb

              	
                 

              	
                8,500

              	 	
                8,600

              
	
                Sulfur

              	 	
                0.70%

              	 	
                0.65%

              
	
                Na20
      in Ash

              	 	
                0.10%-2.00%
      

              	 	
                0.5%-2.00%

              
	
                Ash

              	 	
                9.35%

              	 	
                9.65%

              


      

       

    

    Notwithstanding
the above, WCSC shall cause the Rosebud Mine to make commercially reasonable
efforts to supply coal with a sulfur content of 0.65% or less.

    


    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%). WCSC 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 WCSC 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
      WCSC. WCSC will send invoices for each rail shipment of coal and will
      have the right to withhold subsequent shipments pending payment of each
      invoice.

            


    

    


    
      	
              WEIGHTS:

            	
              The
      weight of the coal shall be determined by WCSC at the Mine by certified
      weigh scale(s).

            


    

    


    
      GENERAL TERMS AND
CONDITIONS:  The General Terms and Conditions are as
attached.

    

    


    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: /s/ Mark E
Klimpel

    Title:
CFO

    


    WCSC: Westmoreland Coal Sales
Company

    


    By: /s/ Virg O.
Meyer    

    Title: VP Sales and
Transportation

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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 WCSC or Buyer of their respective
      obligations under this Order.  A force majeure event affecting
      any of WCSC's suppliers, including its mining contractor, shall be
      considered a force majeure event affecting WCSC.  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 WCSC 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 WCSC.

    


    
      	
              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
      WCSC.

            


    

    


    
      	
              4.

            	
              WCSC
      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. WCSC will provide to Buyer one ASTM sample for each
      train load, and WCSC shall also provide by email to Buyer an electronic
      copy of WCSC’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 WCSC 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 reasonable judgment of WCSC, Buyer's ability to perform hereunder
      has or will become impaired, WCSC shall have the right, upon notice to
      Buyer, to suspend further shipments until WCSC receives adequate assurance
      of Buyer's performance, which may include a prepayment account equal to
      one month of coal deliveries.  If such security is not furnished
      within ten (10) days after receipt of such notice.  WCSC 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 hereunder, 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, WCSC 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 WCSC 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 WCSC 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.

            


    

    


    
      	
              12.

            	
              WCSC
      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 WCSC, to (a) Buyer’s or its contracted rail carriers’ equipment while
      on WCSC’s property except to the extent such damage is caused by the
      negligence of Buyer or its contracted rail carrier, and (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
      WCSC’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.

            


    

    


     

    #              #               #

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Amendment
A to Coal Sales Order Number Red Trail WCSC #003-2010/2011

    


    Due to
uncertainty regarding government environmental regulations, Red Trail Energy may
order less than 90,000 tons of coal if new environmental regulations are passed
the force Red Trail to offset its coal usage with a fuel source other than
coal.  Possible examples of these environmental regulations include
state level or national level low-carbon fuel standards that measure the carbon
intensity of the fuel produced or carbon cap and trade
legislation.  Red Trail will provide notice to Westmoreland Coal Sales
Company if it becomes aware of the passage of such legislation and the effect it
will have on the number of tons Red Trail will require.