Exhibit 10.9




Exhibit 10.9





	 	 	 	 	 	 	 	 	 

	

WESTMORELAND COAL COMPANY	 	 	 	Number: GP- 04          Page 1 of 6


Issue/Revision Date: June 15, 2011


Supersedes Policy: dated 7/26/04 and GP-04 dated
5/21/07, 12/31/08 and 6/01/2010

Approved Issuing Officer:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Keith E. Alessi	 	 
	 	 	 	 	 	 	 
	Title: Severance Policy

	 	 	 	Name:
	 	Keith E. Alessi	 	 
	 

	 	 	 	Title:
	 	Chief Executive Officer	 	 






POLICY STATEMENT




It is the policy of Westmoreland Coal Company and its subsidiaries, hereinafter collectively “the
Company,” to pay severance benefits under certain specific circumstances, as defined by this
policy, to certain non-union employees who are involuntarily terminated for reasons other than
cause and under certain conditions described herein. The purpose of severance is to aid employees
for hardships incurred upon loss of employment. This policy applies to non-union employees of the
Company and all of its direct and indirect subsidiaries (each such entity, an “Employer” for its
employees, and each such employee, an “Employee” or “you”).




FUTURE OF THE POLICY




Although the Company currently expects to continue the provisions of this policy at its sole
discretion, the Company reserves the right to change or amend at any time, any and all terms and
conditions of this policy, or to terminate this policy in its entirety, upon six (6) months notice
to employees covered under this policy. Furthermore, the Company reserves the right to interpret
and construe the provisions of this policy, including the determination of the eligibility for and
amount of benefits under the policy, to the fullest extent permissible by law.




ELIGIBILITY




You are an “Eligible Employee” if:




	 	•	 	You are an active full-time employee of the Employer, scheduled to work at least 40
hours per week, AND







	 	•	 	Your employment terminates due to:







	 	1.	 	Involuntary termination that is not for Cause (as defined below),
including
but not limited to, permanent layoff, permanent reduction in force, or termination
of employment due to lack of work or job elimination; or







	 	2.	 	The sale of a facility or division or segment of business unless,
following such sale, you are subsequently employed by the purchaser of the
facility or division or segment of business; or







	 	3.	 	A position being relocated in which the distance between the relocated
place of employment and your residence is at least 50 miles greater than the
distance between your former place of employment and your residence, and you do
not continue employment at the relocated place of employment; AND




 


 









 











	 	 	 	 	 	 	 	 	 

	Title: Severance Policy
	 	No.

GP-04
	 	Date Issued:

June 15, 2011
	 	Supersedes
Policy

dated 7/26/04 and

GP-04 dated

5/21/07, 12/31/08 &

6/01/10
	 	Page 2 of 6







	 	•	 	You have a position on the date your employment terminates that is listed in the
Position or Classification section of the attached Addendum; AND







	 	•	 	Within 30 days following your termination with Employer, you do not receive an
offer of Similar Employment from the Employer or any of its affiliates or subsidiaries, or
(i) your employment is terminated by the Employer as a result of or in relation to a sale
of the Employer or any of its assets, business unit(s), or divisions(s), subsidiaries or
affiliates or the contracting out or outsourcing of any function within the Employer, and
(ii) you do not receive an offer of Similar Employment from the purchasing, contracting,
or outsourcing party or a successor thereto. “Similar Employment” means a position with
pay and Working Conditions that are reasonably comparable to that of your last position
with the Company. For purposes of this policy, “Working Conditions” do not include
employee benefits. An Employee is not eligible for severance benefits hereunder if that
Employee does not accept the Similar Employment; AND







	 	•	 	You sign, return to the Company and do not revoke the Release Agreement (“Release
Agreement”) within the time frames specified in that document or a letter accompanying
same in a form satisfactory to the Company.






INELIGIBILITY




The following are NOT Eligible Employees:





	 	•	 	Employees who are covered by a collective bargaining agreement that does not
provide for participation in this policy;







	 	•	 	Seasonal, part-time and/or temporary workers (as reflected in the Employer’s
payroll system) and independent contractors;







	 	•	 	Employees whose employment is terminated due to the employee’s resignation, death,
or disability (as defined in the Company’s applicable long- term disability policy);







	 	•	 	Employees whose employment is terminated for Cause, as defined herein.







	 	1.	 	For Cause: Gross or willful misconduct that is injurious to the Company,
or its direct or indirect subsidiaries or affiliates, which includes but is not
limited to an act or acts constituting embezzlement, misappropriation of funds or
property of such entities, larceny, fraud, gross negligence, crime or crimes
resulting in a felony conviction, moral turpitude or behavior that brings the
Employee into public disrepute, contempt, scandal or ridicule or that reflects
unfavorably upon the reputation or high moral or ethical standards of the Company
(or the Employer) or violation of Company (or Employer) policy including but not
limited to the policies set forth in the Code of Conduct and Ethics; employees
terminated pursuant to the Counseling and Discipline Policy; willful
misrepresentation to the Company’s or an Employer’s directors, officers, managers,
supervisors, employees or third parties; or failure to meet the duties of care and
loyalty to the Company or the Employer. For purposes of this paragraph, failure to
act on the employee’s part shall be considered “willful” if done by the employee
without a reasonable belief that the omission was in the best interest of the
Company or the Employer;





 


 









 






	 	 	 	 	 	 	 	 	 
	Title: Severance Policy
	 	No.

GP-04
	 	Date Issued:

June 15, 2011
	 	Supersedes
Policy

dated 7/26/04 and

GP-04 dated

5/21/07, 12/31/08 &

6/01/10
	 	Page 3 of 6







	 	•	 	Any Employee who refuses to sign, revokes or subsequently breaches the Release
Agreement;







	 	•	 	Any Employee who is in material violation of company policy or in material breach
of statutory or common law duties that the Employee owes to the Employer; and







	 	•	 	Any Employee who is not otherwise an Eligible Employee, as provided above.






PROVISIONS




DETERMINATION AND PAYMENT OF SEVERANCE PAYMENTS




If you are an Eligible Employee, you are eligible to receive severance benefits that consist of
three parts: Severance Compensation; Medical, Vision, and Dental Benefit Continuation; and
Outplacement Assistance.





	 	•	 	Severance Compensation. Severance compensation will be calculated based upon your
Position or Classification on the date your employment terminates and completed Years of
Service as set forth in the attached Addendum.







	 	 	 	For purposes of calculating severance compensation, base pay means your “weekly base pay”
in effect for the payroll period during which employment with your Employer is
terminated. Overtime, bonuses, commissions, incentive pay and any taxable or nontaxable
fringe benefit or payment will be excluded. “Weekly base pay” means 40 hours multiplied
by your base hourly rate only for hourly Employees, and your annual base salary divided
by 52 for exempt Employees. Your “monthly base pay” is computed by multiplying your
“weekly base pay” by 52 and then dividing that number by 12. “Year of Service” means
each completed full year of continuous service with the Company or any other Employer
from your date of hire. Partial years of service will not be included in calculating
your severance compensation.







	 	 	 	In addition, your severance benefit under this policy will be reduced (but not below
zero) by all amounts of severance pay or similar pay to which you may be entitled to
under any other Company Severance Policy, benefits mandated by state or federal law,
payment in lieu of WARN notification or any individual written employment agreement or
other written agreement relating to payment upon separation from employment or change of
control of the Company.







	 	 	 	Severance payments will be paid in equal installments on the normal payroll schedule or
in a lump-sum payment as determined solely by the Employer (except that for payments to a
CEO of an Employer, the determination shall be made by the Employer’s board of directors,
excluding the CEO if a board member) and shall be net of any tax, medical or other
required withholdings. Severance payments shall commence upon the Employee’s “separation
of service” within the meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code
of 1986, as amended (“Code”) from the Employer; provided, however, any payments that
would otherwise be made in the case of a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, within six months after such Employee’s separation
from service (but only with respect to payments that would otherwise be subject to
additional tax under Code Section 409A), shall be delayed until the date of such
Employee’s separation from service or, if applicable, expiration of the six month period
(or, if earlier, the date of death of the Employee).




 


 









 











	 	 	 	 	 	 	 	 	 

	Title: Severance Policy
	 	No.

GP-04
	 	Date Issued:

June 15, 2011
	 	Supersedes
Policy

dated 7/26/04 and

GP-04 dated

5/21/07, 12/31/08 &

6/01/10
	 	Page 4 of 6







	 	 	 	No severance payments will be made later than two years after the separation from
service or without the return of an executed and non-revoked Release Agreement.







	 	•	 	Medical, Dental, and/or Vision Benefit Continuation. If you have medical, dental,
and/or vision coverage provided by or through the Employer upon your termination of
employment, these coverages will terminate at the end of the month following the date your
employment terminates. You and your dependents have the right to continue your benefits
under COBRA. If you choose to continue your benefits under COBRA, the Employer will share
in the cost of the established COBRA rate through the period specified in the attached
Addendum based on your Position or Classification on the date your employment terminates.
You will be responsible to share the cost of the COBRA rate by paying an equivalent of the
established employee premium rate through your specific severance period. The Employer
reserves the right to pay you a lump- sum value of the established COBRA rate equal to the
length of your specified severance period in lieu of paying the Employer share of cost, in
which case you will then be required to pay the full COBRA rate for any continued
coverage, and the lump sum payment to you will be taxable income to you. At the end of
your specified severance period, you will be responsible for the entire COBRA rate (both
employee and Employer portions) through the remaining COBRA period.







	 	 	 	Additionally, the benefit continuation benefit applies only to medical, dental, and vision
benefits under Employer-sponsored Plans. It is not provided for the cost of any flexible
spending account coverage (which in certain circumstances is also subject to COBRA) or
other benefits (for example life insurance or long term disability benefits.) Except for
the limited continuation of health coverage discussed here, other employee benefit plans
and arrangements of the Employer stop when your employment terminates in accordance with
the standard rules of such Plans and arrangements.







	 	•	 	Outplacement Assistance. You will be able to obtain outplacement assistance
services from an outplacement firm selected by the Employer for a specified period of
time, as indicated in the Addendum, based on your Position or Classification on the date
your employment terminates. You must begin such outplacement assistance within three
months of your employment termination to receive this benefit.






CONDITIONS TO PAYMENT OF BENEFITS




As a condition of your entitlement to severance benefits under this policy, you must agree in
writing to release the Company and others associated with the Company from any and all legal claims
associated with your employment by the Employer, except those preserved by public policy, by
signing and not revoking the Release Agreement.




Your severance benefits will be paid in equal installments or in a lump-sum payment, solely
determined by the Company, after the expiration of any applicable waiting periods set forth in the
Release Agreement and starting within two pay periods of said waiting period and never to exceed
two years (unless payment is delayed as provided herein). Your severance benefits will be subject
to all applicable tax and other withholdings. No deductions will be made as contributions to the
Westmoreland Coal Company and Subsidiaries Employees’ Savings Plan, also known as the 401(k) Plan.
As provided above, you will not be paid severance benefits if you are in material violation of
applicable Company policies or you are in violation of any other legal or contractual obligation
you may owe the Employer, including without limitation the Release Agreement. To the extent that an
Eligible Employee is or has been covered by any other Company or Employer
severance policy(ies) or arrangement(s), this Severance Policy expressly supersedes and
replaces any and all such policy(ies) or arrangement(s) (other than an individual written
employment agreement or other written agreement relating to payment upon separation from
employment, including change of control agreements) the terms of which will supersede this policy
to the extent such terms are inconsistent herewith.




 


 









 








	 	 	 	 	 	 	 	 	 

	Title: Severance Policy
	 	No.

GP-04
	 	Date Issued:

June 15, 2011
	 	Supersedes
Policy

dated 7/26/04 and

GP-04 dated

5/21/07, 12/31/08 &

6/01/10
	 	Page 5 of 6






If you become re-employed with the Company or another Employer in any category of employment prior
to your completion of the severance compensation period, your severance benefits under this policy
resulting from the termination will cease, and if you received a lump sum, you will be required to
reimburse the Company for the remaining pro-rated amount of severance in accordance with your
identified severance period as referenced in the attached Addendum. You again will be subject to
the terms of this policy.




If a court of competent jurisdiction, including without limitation a United States Bankruptcy
Court, limits the amount or ability of the Company to pay benefits hereunder, neither the Company,
its subsidiaries, affiliates, or successors and their respective employees, officers, directors,
shareholders, and agents will have any liability therefore. Likewise, regardless of whether
benefits described hereunder are in certain jurisdictions deemed to be wages or compensation, no
employee, officer, director, shareholder, or
agent of the Company or its subsidiaries, affiliates or successors assumes any liability for the
payment of benefits hereunder.




SURVIVABILITY OF PAYMENTS




The commitments under this policy shall survive, to the extent permissible by law, upon the
bankruptcy, insolvency, liquidation or dissolution of the Company.



 


 









 






	 	 	 	 	 	 	 	 	 
	Title: Severance Policy
	 	No.

GP-04
	 	Date Issued:

June 15, 2011
	 	Supersedes
Policy

dated 7/26/04 and

GP-04 dated

5/21/07, 12/31/08 &

6/01/10
	 	Page 6 of 6






ADDENDUM




WESTMORELAND COAL COMPANY SEVERANCE POLICY FOR NON-UNION EMPLOYEES




JUNE 1, 2010




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Outplacement	 	Health Benefit
	Grade	 	Level	 	Position or Classification	 	Severance Compensation	 	Assistance	 	Cost Share
	12 &

Above

	 	 	1	 	 	•   CEO


•   Chief Financial Officer


•   Senior/Executive Vice
Presidents


•   General Counsel


•   Vice Presidents of a
Functional
Area


	 	Twelve months of monthly base
pay as defined in this document
	 	Nine-month

program
	 	Twelve months
	11

	 	 	2	 	 	•   Directors of a Functional Area


•   Assistant General Counsel


•   Mine Managers


•   Corporate Controller


	 	Nine months of monthly base
pay; plus one week of base pay
for each year of service, not to
exceed a maximum of 12
months of monthly base pay as
defined in this document.
	 	Six-month

program
	 	Nine months
	9, 10

	 	 	3	 	 	•    Senior Managers of a
Functional Area

	 	Six months of monthly base pay;
plus one week of base pay for
each year of service, not to
exceed a maximum of 12
months of monthly base pay as
defined in this document.
	 	Three-month

program
	 	Six months
	 
	8, 9

	 	 	4	 	 	•    Other Management Personnel

or key contributors

	 	One month of monthly base pay
as defined in this document plus
one week of weekly base pay as
defined in this document for
each year of service not to
exceed 26 weeks
	 	Two-week

program
	 	Equal to
Severance
Compensation
	 
	6, 7

	 	 	5	 	 	Other Exempt Salaried Personnel
who are Individual Contributors
	 	One month of monthly base pay
as defined in this document plus
one week of weekly base pay as
defined in this document for
each year of service not to
exceed 26 weeks
	 	Two-day

program
	 	Equal to
Severance
Compensation
	 
	5 &

Below

	 	 	6	 	 	Non-Exempt or Hourly Personnel
	 	One week of weekly base pay as
defined in this document per
Year of Service — two-week
minimum not to exceed 26
weeks
	 	Two-day

program
	 	One month