exv10w51






EXHIBIT 10.51




COAL MINING LEASE — CROW TRIBAL LANDS — COAL LEASE




     This CROW TRIBAL LANDS COAL LEASE (hereinafter “Coal Lease”), made and entered into this
13th day of February, 2004, to be effective thirty (30) days after the date upon which
Westmoreland exercises its option under Section 3.2 of the Exploration Agreement (hereinafter
referred to as the “Effective Date of this Coal Lease”), between the CROW TRIBE OF INDIANS, Crow
Agency, Montana 59022 (hereinafter “Lessor”), 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 “Lessee”).



W I T N E S S E T H:




     Lessor and Lessee, in consideration of these premises and for other valuable consideration
herein provided, hereby agree as follows:



ARTICLE 1 INDIAN MINERAL DEVELOPMENT ACT




     This Lease is entered into pursuant to the terms of the Indian Mineral Development Act of
1982.



ARTICLE 2 INCORPORATION OF EXPLORATION AGREEMENT




     This Coal Lease is executed pursuant to and is expressly made subject to the terms and
conditions of that certain Exploration and Option to Lease Agreement (herein the “Exploration
Agreement”) executed contemporaneously with this Coal Lease by and between Lessor and Lessee. The
definitions, terms, and conditions set forth in the Exploration Agreement, and all provisions
listed in Section 27.2 thereof, are incorporated herein by reference. Where there is a conflict
between the terms of the Exploration Agreement and this Coal Lease, the terms of this Coal Lease
shall prevail.



ARTICLE 3 LEASE OF INDIAN LAND




     Lessor, for and in consideration of the payments described in the Exploration Agreement, and
in consideration of the rents and royalties to be paid by Lessee to Lessor hereunder, does hereby
grant, demise, lease, and let exclusively to Lessee, its successors and assigns, for the sole
purpose of mining Coal, all of Lessor’s right, title, and interest in that tract of land
(hereinafter the “Leased Premises”) identified as the Mining Area in accordance with the terms and
conditions of Section 8 of the Exploration Agreement, and the use of the surface and subsurface
overlying the same, in, under and upon the Leased Premises, together with the right to exercise and
conduct Mining Rights and Mining Activities thereon and therein.



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ARTICLE 4 DEFINITION OF “MINING RIGHTS”




     “Mining Rights,” as used herein, shall mean all necessary or convenient rights and privileges
incident to the mining, storing, processing, and shipping of Coal under this Coal Lease or any Coal
acquired pursuant to Article 15, including, but not limited to, the right to mine, remove,
transport, and process Coal in, on, or under the Leased Premises by any method; the right to
market, sell, and ship coal removed; the right to use Tribal Lands leased hereunder to construct,
maintain, and operate roadways, railroads, sidetracks, switches, haul ways, dams, substations,
buildings, processing plants, tipples, water drainage courses and conveyors, and any other
improvements or structures necessary or convenient to accomplish the purpose of this Coal Lease;
the right to use and transport water developed by Lessee and any other water made available to the
Lessee on the Leased Premises; the right to enter in accordance with applicable law upon the
surface of the Leased Premises from time to time with tools, equipment, and machinery for the
purpose of drilling, taking core samples, surveying, mapping, and performing environmental
research; the right to pump and discharge water; the right to transport, without further charge,
rent, or royalty, over and through the Leased Premises and over and through the Crow Reservation
from the Leased Premises, personnel, materials, supplies, and Coal, including coal mined from other
properties now or hereafter leased; the right to make such other use of the Leased Premises as
shall be necessary and convenient for the mining, transporting, storage, and processing of Coal,
Coal refuse, and by-products; the right to do all things necessary and convenient to satisfy all
applicable legal requirements for environmental protection and reclamation during and after Mining
Activities; the right to ingress and egress to the Leased Premises, including the right to
construct, maintain, and operate access roads, power lines, telephone lines, pipelines, and
railroads to and in the Leased Premises, the right to remove Lessee’s improvements, fixtures, and
equipment at the conclusion of mining or reclamation, all without further charge, rent, or royalty,
except as otherwise provided in the Exploration Agreement.



     Subject to the provisions of Article 17 of this Coal Lease, any rights-of-way across Crow
Reservation land shall be granted in accordance with applicable federal laws and regulations
governing rights-of-way across Indian land.



     The parties further agree that any off-lease Mining Rights to be exercised by the Lessee shall
be reasonable and necessary and shall be utilized by Lessee in accordance with all applicable
federal regulations, other than those waived by the Secretary where waiver is found to be in the
best interests of the Lessor and is otherwise appropriate to effectuate the terms and conditions of
this Coal Lease. The parties further agree that Lessee will take whatever measures it deems
necessary to obtain whatever additional rights or interests may be necessary for the uses of lands
described in this Article from the owner or owners of the surface estate other than the Lessor.
The parties understand that the Lessor grants to the Lessee only those rights and interests in the
surface estate within the Leased Premises that it owns or controls and will cooperate with Lessee
in Lessee’s efforts to obtain additional surface rights as provided in the Exploration Agreement.



ARTICLE 5 COVENANT OF QUIET ENJOYMENT




     Lessor covenants that the Lessee, upon complying with the terms, conditions, covenants, and
agreements hereof, shall have quiet and peaceful possession and enjoyment of the Leased Premises
and the Mining Rights granted herein.



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ARTICLE 6 TERM




     This Coal Lease is granted for a primary term of ten (10) years from the Effective Date of
this Coal Lease, and for so long thereafter as the Coal is being produced by Lessee in “Paying
Quantities,” but the period for mining shall not exceed twenty-five (25) years from the date of the
first Coal delivery from the Leased Premises, plus any adjustment for Force Majeure. As used in
this Article, the term “Paying Quantities” means that, by midnight of the last day of the primary
term of the Exploration Lease, the Lessee has commenced and thereafter continues the primary
removal of Coal intended for sale and upon which royalties will be paid, subject to the provisions
of Force Majeure contained in Article 31 of this Coal Lease.



     No Coal may be mined from the Leased Premises after the end of such twenty-five (25) year
period, as extended by Force Majeure. However, after the end of the twenty-five (25) year period
for mining or, when prior thereto, mining on the Leased Premises otherwise ceases, this Coal Lease
shall continue for as long as is necessary to allow Lessor to conduct activities necessary or
appropriate to reclaim the land, salvage equipment, and comply with applicable laws and
regulations. Reclamation shall be deemed complete at time of final bond release. If, at the end
of twenty-five (25) years, there is mineable Coal remaining within the Leased Premises that would
be sterilized, bypassed, or forever forsaken by the termination of mining of Coal by Lessee,
adjustments to this termination date may be made by the mutual consent of Lessor and Lessee.



ARTICLE 7 ROYALTY PAYMENTS




     7.1 Minimum Royalty. Lessee shall pay, or cause to be paid, a royalty to the Superintendent
for the use and benefit of Lessor, on or before the twenty-fifth (25th) day of each calendar month
during the term hereof on all Coal mined and shipped from the Leased Premises during the preceding
calendar month. The amount of minimum royalty, hereinafter “Minimum Royalty,” paid shall be an
amount per ton equal to 6.5% of the sales price per ton sold and delivered F.O.B. Mine at loadout
into or onto a Carrier, hereinafter “Sales Price.” The Minimum Royalty of 6.5% may be increased as
provided in provision 7.3 below.



     7.2 Additional Royalty. Lessee shall pay, or cause to be paid, an additional royalty to the
Superintendent for the use and benefit of Lessor, on or before the twenty-fifth (25th) day of the
calendar month following each calendar quarter during the term hereof on all Coal mined and shipped
from the Leased Premises during the preceding calendar quarter. The amount of additional royalty
shall be determined as follows:




	 	a.	 	Lessee shall determine the Sales Price less Minimum Royalty and
any production taxes, hereinafter “Base Price.” The Base Price is determined
using the formula and methodology set forth in Appendix A attached hereto. The
production tax components shown in Appendix A are those currently in effect.
If, in the future, taxes levied and payable change, taxes in effect at the time
of sales will be included in the formula and methodology used in determining
Base Price. The amount of additional royalty shall be equal to one-third (1/3)
the increase in the Base Price per ton above $5.157 per ton,





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hereinafter “Initial Base Price.” The Initial Base Price was determined
using the formula and methodology set forth in Appendix A for a Sales Price
of $7.38 per ton.




	 	b.	 	The Initial Base Price of $5.157 per ton is effective July 1,
2004, and will be adjusted quarterly thereafter on January 1, April 1, July 1,
and October 1 during the term hereof, hereinafter the “Adjustment Date.” The
Initial Base Price as adjusted shall be used to determine the additional
royalty for the quarter preceding the Adjustment Date. The Initial Base Price
shall be adjusted to reflect 85% of any increase in the “GDP-IPD” in accordance
with the definitions, formula, and methodology set forth in Appendix B attached
hereto and effective on the Adjustment Date.
	 
	 	c.	 	After April 1, July 1, October 1, and January 1 each year
during the term hereof, the Lessee shall determine the Base Price for all Coal
mined and shipped on a year-to-date basis during all of the previous quarters
for the calendar year. The additional royalty due for all Coal mined and
shipped on a year-to-date basis will then be computed. The additional royalty
due for the previous quarter will then be equal to the total additional royalty
as computed on a year-to-date basis less the additional royalty payments paid
for all quarters during the current year prior to the quarter being paid.
Appendix C hereto attached shows an example of the formula and methodology for
determining the additional royalty payment for a quarter.





     7.3 Royalty Offset. If the amount of taxes payable to the Crow Tribe is reduced for any
reason (including, but not limited to, a reduction in the Montana tax rates) after this Coal Lease
takes effect, the Minimum Royalty provided in Article 7.1 and payable to the Crow Tribe shall be
increased by an amount necessary to offset the reduction in taxes, so that the total taxes and
royalty paid to the Crow Tribe equals the current taxes in existence in 2003, plus the royalty
otherwise payable under this Coal Lease; provided, however, that the maximum royalty rate shall
not exceed 12.5% of the Sales Price; and provided further that if Westmoreland notifies the Crow
Tribe that the increased royalty will result in serious difficulty in marketing the coal, or loss
of sales under current long term coal sales agreements, the Crow Tribe will negotiate in good faith
on reducing the amount of increase in the royalty rate. If a tax increase occurs, following a tax
reduction and royalty increase per this section, then there will be a commensurate royalty
reduction, so that the total taxes and royalty paid remains as provided in the first sentence of
this Section 7.3.



     7.4 Royalty Cap and Additional Royalty Adjustment. Notwithstanding Sections 7.1, 7.2, or
7.3, the total royalty paid to Lessor from the mining operations under this Coal Lease shall never
exceed 12.5% of the Sale Price.



     7.5 Measure of Quantity for Royalty Payment. The quantity of all Coal mined and shipped by
the Lessee shall be determined by railroad or truck scales, belt weightometers, or other means
mutually agreed upon.



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     7.6 Royalty Payments. All royalty payments and reports shall be made according to the
applicable federal regulations governing royalty payments for Indian coal. Where the express terms
of this Agreement differ from any provisions of the applicable federal regulations, the terms of
this Agreement shall control. This method of payment shall also apply to the Annual Rental and
surface rental payable pursuant to Articles 9 and 10 of this Coal Lease, and to royalties payable
under the Tract III Lease as provided in section 6.1 of the Exploration Agreement.



ARTICLE 8 TAX




     Lessee shall pay, or cause to be paid, to the Superintendent for the use and benefit of
Lessor, a tax on its mining operations as follows:



     8.1 Exploration Agreement. All tax provisions in the Exploration Agreement, including,
without limitation, Sections 15, 17, and 19, shall apply to all mining and Mining Activities
undertaken pursuant to this Coal Lease.



     8.2 Tax Obligation and Calculation. On Coal mined and shipped from the Mining Area pursuant
to this Coal Lease, Lessee will from time to time pay to the Lessor a tax equal to the Montana coal
severance tax existing at the time the Exploration Agreement is executed and applicable to the
mining of Coal generally within the state of Montana and a tax equal to the Montana state gross
proceeds tax existing at that time and applicable to the mining of Coal generally within the state,
less whatever amount is required to be paid in severance and gross proceeds taxes to the state of
Montana or its political subdivisions. The tax shall be levied on the Sales Prices of Coal as
defined in Section 7.1, less any applicable deductions.



          Compliance with the terms of this Coal Lease shall satisfy any obligation which Lessee may
have now, or at any time hereafter, to pay any severance or other tax to Lessor pursuant to any tax
ordinance which now exists or may be adopted by Lessor hereafter. Lessor shall not attempt to
assess or collect any tax or other amount from Lessee except as provided for in this Coal Lease or
the Exploration Agreement.




          Nothing in this Lease is to be construed as an admission that Montana has any right to tax
coal on the Crow Reservation. In the event the Crow Tribe litigates this issue, Lessee will
cooperate reasonably to provide information to the Lessor.




     8.3 Maximum Tax. The amount of tax payable to Lessor under provision 8.2 will not exceed the
amount that otherwise would be payable by a Coal operator on non-tribal lands to Montana or its
political subdivisions, giving effect to all allowable deductions and credits, if Lessor’s
activities were fully taxable by Montana or its political subdivisions.



     8.4 Reporting and Payment. Lessee shall provide to the Lessor all of the information that
Lessee may be, or otherwise would be, required to provide to the state of Montana or its political
subdivisions in satisfaction of the requirements of Montana’s severance tax law and gross proceeds
tax law at the same time that such information is, or otherwise would be, provided to the state of
Montana or to its political subdivisions. Lessee shall pay any amounts due to the Lessor under
this Article, and provide an accounting of, and explanation for, said amounts, at the same time



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that Montana’s severance and gross proceeds taxes are being, or otherwise would be, paid. The
confidentiality provisions of Article 18 shall apply equally to this Article. All tax payments
shall be made according to the applicable federal regulations governing royalty payments for Indian
coal. Where the express terms of this Agreement differ from any provisions of the applicable
federal regulations, the terms of this Agreement shall control.




     8.5 Changes in Rate of Tax.


a. Tax Reduction. In the event that either the Montana state severance tax or gross proceeds tax
should be repealed or reduced below its current level, then amounts paid by Lessee under Section
8.2 shall be reduced accordingly. Further, an adjustment to royalty will be made in accord with
Article 7. In addition, the parties shall have the rights provided herein below:





	 	(1)	 	Lessor may require Lessee to negotiate with
Lessor on the amount of severance and/or gross proceeds taxes, if any,
which Lessee will pay to the Lessor by giving Lessee notice of an
intent to renegotiate this provision with respect to a severance tax
and/or gross proceeds tax within ninety (90) days (unless otherwise
agreed) after the effective date of the act of the Montana legislature
or after action of any Montana political subdivision effecting such
reduction.
	 
	 	(2)	 	Unless otherwise agreed, negotiations shall
commence within thirty (30) days after Lessee’s receipt of the Lessor’s
notice of intent to renegotiate.
	 
	 	(3)	 	Lessee’s obligation to pay a severance and/or a
gross proceeds tax to Lessor under this Coal Lease shall be suspended
during the period of renegotiation from the last day of the month in
which the intent to renegotiate is received by Lessor. If tax rates
are established by agreement as a result of renegotiation, then Lessee
shall pay Lessor a tax or taxes based on those rates retroactive to the
time of suspension of payment under this Coal Lease.




b. Procedure for Renegotiation Impasse. In the event Lessor and Lessee are unable to reach an
agreement on the amount of taxes to be paid to the Lessor within sixty (60) days of the
commencement of negotiations provided for in 8.5a.(1) (excluding time required to seek approval of
any such agreement at the next meeting of Lessor’s Tribal Legislature), then, unless otherwise
agreed, either Lessor or Lessee may resolve the issue of the proper amount of taxes payable by
Lessee to Lessor under this Coal Lease through binding arbitration. The arbitration procedure
shall be that provided in the Exploration Agreement at Section 26. The arbitrators shall be asked
to arrive at a reasonable rate of severance and gross proceeds tax which, when combined with the
royalty received by the Crow Tribe, accomplishes the following goals: provision to Westmoreland of
a reasonable profit and rate of return on its investment, when compared with similar (including
non-tribal) mining operations located within Lessee’s market area; while
providing a reasonable return to the Crow Tribe from the mining of its mineral assets in the form
of royalty and severance and gross proceeds taxes.




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ARTICLE 9 ANNUAL RENTAL




     Lessee shall pay, or cause to be paid, for the use and benefit of Lessor, in advance,
beginning with the date of approval of this Coal Lease by the Secretary, as annual rental, One
Dollar and 0/100 ($1.00) per acre for the first lease year, and subsequently One Dollar and 0/100
($1.00) per acre per year, payable in advance on or before the first day of each lease year, for
each and every year during the continuance of this Coal Lease. The rent is not to be credited on
royalties accruing to Lessor under this Coal Lease. If this Coal Lease is surrendered or
cancelled, no part of any advance rental shall be refunded to Lessee, nor shall the surrender or
cancellation relieve Lessee from the obligation to pay the advance rental when it becomes due, on
any portion of the Lease that is retained.



ARTICLE 10 SURFACE LEASE




     Lessee shall pay a separate surface rental on all surface property owned by Lessee within the
Mining Area of one dollar and 0/100 cents ($1.00) per acre per year.



ARTICLE 11 PREVENTION OF WASTE




     Lessee shall carry on development and operations in a workmanlike manner and agrees to the
following: to neither commit nor suffer waste to be committed upon the land leased; to comply
with applicable laws of the United States; and to surrender and return promptly the premises upon
the termination of this Coal Lease to whoever is lawfully entitled thereto. If Lessee is in
compliance with applicable federal laws and regulations and mining in accord with approved mining
plans and permits, including the Resource Recovery and Protection Plan, it shall be deemed to be in
full compliance with its obligation to prevent waste and to mine in a workmanlike manner.



     If the payments agreed upon in this Coal Lease have been made and the other lease terms and
applicable regulations have been complied with, the office fixtures and records, personal property,
tools, pumping and drilling equipment, boilers, engines and mining machinery, facilities and
equipment, and all other personal property and improvements on the leased land (except the Lessor’s
property) may be removed by the Lessee as soon as practicable after the Coal Lease expires by
forfeiture or otherwise.



ARTICLE 12 FORESTS, CROPS, AND GRAZING




     The Lessor agrees that with respect to any surface property rights acquired by Lessee in the
Leased Land, or acquired by Lessee for Lessor as provided in Article 15, Lessee may remove any
timber, crop, or improvements to the extent convenient for Mining Activities without compensation
for same to Lessor.



     With respect to any surface owned by the Tribe and under lease pursuant to this Agreement,
Lessee will reasonably compensate the Tribe for any forest, crops, or grazing damage or removal in
the year it occurs, and for any diminution in value due to mining assessed as of the
completion of final reclamation (i.e., final bond release).



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ARTICLE 13 ENVIRONMENTAL PROTECTION AND SURFACE RESTORATION




     Lessee’s mining operations shall be conducted in accord with all applicable federal laws
regarding protection of the environment, reclamation, and restoration of mined areas.
Westmoreland’s compliance with said laws shall constitute full compliance with any obligation
Westmoreland has to the Crow Tribe concerning pollution, pollution control or abatement,
environmental protection, control or abatement, mining procedures, reclamation, reclamation
procedures, results, mining plans, protection of persons or property, and any other issue addressed
by said laws or regulations. The parties recognize the Crow Tribe’s legal position that the State
of Montana lacks jurisdiction to regulate Westmoreland’s activities under this Agreement that occur
on or affect lands within the exterior boundaries of the diminished Reservation (which include all
of the Prospect Area and Mining Area), while the State asserts jurisdiction to regulate
Westmoreland’s activities outside the boundaries of the diminished Reservation (including
Westmoreland’s existing mining operations on Tract III within the “ceded strip”).



     The Lessee shall comply with all applicable requirements of the law, including the Surface
Mining Control and Reclamations Act of 1977, and all regulations promulgated thereunder, including
those codified at 30 CFR part 750.



     Lessee recognizes that the Crow Tribe may seek and be granted legal authority pursuant to
federal law (including future acts of Congress) to operate and administer certain environmental
regulatory programs within the Crow Indian Reservation that would otherwise be operated or
administered by federal agencies, including, but not limited to, SMCRA and the Clean Water Act.
Lessee will not take any actions opposing the Tribe’s efforts to obtain such authority. If at any
time in the future the Crow Tribe gains the legal right and ability to regulate those activities
described above in this Article 13, and desires to establish and undertake such regulation, Lessee
agrees to negotiate in good faith to amend this Agreement to allow such regulation of its
activities upon such terms as shall guarantee: (a) no net increase in Lessee’s costs; (b) no
duplication, overlap, inconsistency, or conflict with, between, or among competing laws and
regulations issued and applied by any other government with the right and power to impose such
regulation; and (c) Lessee shall not be subjected to inspection, regulation, and enforcement by
more than one governmental entity.



ARTICLE 14 USE OF LANDS OUTSIDE THE LEASED PREMISES




     Subject to Article 4 of this Coal Lease, Lessee shall be entitled to make use of tribal
surface lands lying outside the Leased Premises reasonably required for Mining Activities on the
Leased Premises, including, but not limited to, the construction, operation, and maintenance of
roads, power lines, railroads, conveyors, and any road easements required for landowner access.
Lessee shall, to the extent deemed by it to be reasonably feasible and prudent, utilize such lands
in a manner which will minimally impact the Lessor’s use of such lands, including mining operations
conducted by others.



     Lessee shall at all times be required to comply with the federal laws and regulations
governing rights-of-way across Indian lands, unless waived in accordance with Article 4 of this
Coal Lease. Notwithstanding any provision of this Coal Lease or the Exploration Agreement, any
rights-



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of-way across tribal land shall be granted by the Crow Tribe without further charge or
compensation, in consideration of the payments made to the Lessor under this Coal Lease and the
Exploration Agreement. However, if the Secretary or the Lessor should ever require the Lessee to
pay compensation for any right-
of-way across tribal land, then there is hereby granted to the
Lessee a credit, against any tribal taxes due hereunder, equal to the amount of any compensation
Lessee is required to pay.




ARTICLE 15 ACQUISITION OF NON-TRIBAL COAL AND SURFACE RIGHTS BY LESSEE




     15.1 Acquisition. When requested by Lessee, Lessor shall assist Lessee in acquiring the
rights to utilize whatever surface land or interests in lands within the Crow Reservation Lessee
deems necessary or convenient for Mining Activities.



     15.2 Transfer of Surface Rights to Lessor.




	 	a.	 	Lessee may acquire and maintain ownership of surface lands
within the Crow Reservation owned by persons or entities other than the Crow
Tribe to the maximum extent possible while remaining in compliance with the
limitations on land ownership contained in any relevant and applicable federal
law. Any surface lands within the Crow Reservation necessary or convenient for
Mining Activities in excess of permissible acreage limitations may first be
acquired by Lessor, and leased back to the Lessee at the surface rental rates
specified in this Coal Lease.
	 
	 	 	 	If Lessor declines to acquire such lands, then such lands may be acquired by
Lessee for Lessor, such acquisition to be evidenced by an appropriate deed
in Lessor’s name. Lessor shall then execute and deliver a lease of said
lands back to Lessee which grants Lessee all rights to use provided in this
Coal Lease and the Exploration Agreement, without cost, (except as otherwise
provided for in this Coal Lease or the Exploration Agreement) any and all of
the land and any water rights associated with such land for Mining
Activities until the Mining Activities on that land have been completed, and
all uses by Lessee for any purposes connected with mining or reclamation
cease. The term of said lease shall run concurrently with the term of this
Coal Lease. Lessee shall provide Lessor with copies of any data,
information or materials in its possession relative to title to the lands
conveyed.
	 
	 	b.	 	The mechanism provided in this Article for the acquisition of
surface rights may also be used by Lessee to acquire surface lands within the
Crow Reservation which are outside the Mining Area for the purpose of
exchanging said lands for lands within the Mining Area.
	 
	 	c.	 	With respect to any surface lands acquired and owned by Lessee
pursuant to provision 15.2.a. of this Coal Lease, Lessee shall, at the end of
the term of this Coal Lease, convey the same to the Crow Tribe. However, this
provision




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	 	 	 	will not prevent Westmoreland from acquiring property within the
boundaries of the Crow Reservation for the purpose of swapping or trading for
other property in order 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.
	 
	 	d.	 	Lessee reserves the right to burden any property acquired and
conveyed pursuant to this Article with easements for road access in favor of
Lessee or private landowners (to the extent required to obtain surface rights
needed for Mining Rights).





ARTICLE 16 TRANSFER OF LANDS BY LESSOR




     The Lessor shall retain the right to sell, lease, trade, transfer, or otherwise convey any of
the lands covered by this Coal Lease, including the Perimeter Area lands. Any such conveyance
shall, however, be subject at all times to the rights of Lessee provided in this Coal Lease and the
Exploration Agreement, including Article 23 of this Coal Lease.



ARTICLE 17 MINE OPERATIONS–ROADS AND WATER




     17.1 Existing Roads. To the extent it may do so, the Lessor grants to Lessee the right to use
any existing public roads on the Crow Reservation and the right to improve such roads. Subject to
the provisions of Article 4 of this Coal Lease and compliance with applicable laws and regulations
governing rights-of-way across Indian lands, Lessor shall also grant to Lessee the right to
construct, maintain, and use new roads within the Crow Reservation to facilitate activities
contemplated by this Coal Lease.



          Before Lessee paves or improves any existing road, or constructs a new road which provides a
link to an existing road providing access beyond the Leased Premises, the Lessor shall be notified
of the plan for such road. The location and construction of any new roads shall require the
consent of the Lessor and Secretary pursuant to applicable federal law, provided that the Lessor’s
consent may not be unreasonably withheld.




          Lessee will not dedicate any road constructed by it within the Leased Premises for public use
and such roads will be marked with signs indicating that they are only for private use
unless Lessor determines that such road is needed as a public road, subject, however, to the
consent of Lessee.



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          Upon expiration of this Coal Lease, or at such times as the roads constructed on the Leased
Premises are no longer needed by Lessee for the activities contemplated under this Coal Lease, the
rights granted by Lessor to Lessee to use such roads shall cease. Such roads shall then vest
solely in the Lessor or surface owner, which shall assume all further responsibility for the upkeep
and maintenance of such roads, to the maximum extent allowed by law.




     17.2 Water. The Lessor grants to Lessee the right to use any tribal water rights Lessor may
have appurtenant to the Leased Premises for Mining Activities. Lessee may use surface or
subsurface water for Mining Activities, regardless of the manner of its occurrence, including
groundwater and pit water; except that any water and/or wastewater disposal shall be in compliance
with applicable laws and regulations. Lessee may drill at its expense any necessary water wells on
land covered hereby; provided such well shall not affect the quality or quantity of water being
used for domestic, livestock, irrigation, or other existing tribal purposes, and further provided
that Lessee obtain any Crow Tribal permits required for water well drilling on the Crow
Reservation.



ARTICLE 18 MONTHLY STATEMENTS




     Lessee shall keep an accurate record of mining operations, showing for each month the total
sales and amounts of Coal mined and sold. Lessee shall furnish the Superintendent and Crow Tribal
Mineral Office monthly reports of these matters before the twenty-fifth (25th) day of
the succeeding month.



     An audit of Lessee’s accounts and books shall be made annually or at any time directed by the
Superintendent, by a certified public accountant approved by the Secretary or the Secretary’s
authorized representative and at the expense of Lessee. Lessee shall furnish, through the
Superintendent, a free copy of the audit to the Secretary or the Secretary’s authorized
representative and Crow Tribal Mineral office promptly after the completion of each audit.



     Lessor acknowledges that much of the information described in this Article is trade secret
information of potential benefit and use to Lessee’s business competitors and, therefore, agrees to
keep all information strictly confidential to the maximum extent allowed by law.



ARTICLE 19 REGULATIONS




     Lessee shall abide by and conform to any and all legal and enforceable regulations of the
Secretary now or in the future in force relative to the Coal Lease. Neither the rate of royalty,
nor the annual rental, nor the term of the Coal Lease may be changed by a future regulation without
the consent of the parties to this Coal Lease.



ARTICLE 20 ASSIGNMENT OF LEASE




     Lessee shall not assign this Coal Lease or sublet any portion of the Leased Premises, except
with the approval of the Secretary. Notwithstanding this limitation, Westmoreland may assign to an
Operating Subsidiary without the approval of the Crow Tribe or the Secretary as provided in 25.1 of
the Exploration Agreement.



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ARTICLE 21 BOND




     Lessee agrees to furnish such bonds as may be required by law to conduct Mining Activities
under this Coal Lease.



ARTICLE 22 INSPECTION




     The Leased Premises, producing operations, and appurtenances of the Lessee may be inspected by
the Lessor and its agents or any authorized representative of the Secretary.



ARTICLE 23 DISPOSITION OF OTHER RESOURCES




     Lessor, along with the United States, retains the right to grant to other persons, firms, or
corporations oil and gas leases (including methane gas), mineral leases (other than coal) or
licenses, or exploration rights for oil, gas or other minerals (other than coal) or rights-of-way
incident thereto, on the Mining Areas and Facilities Area, all of which will be made subordinate
and subject to Lessee’s rights specifically granted herein. Such oil, gas, and minerals activities
(other than coal) may be carried out concurrently with Mining Activities hereunder; provided,
however, that such operations shall not interfere in any way with Mining Activities hereunder and
no permanent fixture will be placed on, and no mining or drilling activity undertaken in, an active
or planned Mining Area without Lessee’s prior written approval. Any coal bed methane leases
granted by Lessor covering lands covered by this Coal Lease shall provide that any attempts to
drill for coal bed methane on the acres leased must be done in a manner that will not interfere in
any way with Lessee’s operation, present or future, or sterilize any coal reserves.



ARTICLE 24 SURRENDER AND TERMINATION




     Lessee may at any time terminate this Coal Lease or any part thereof upon the payment of all
rentals, royalties, and other obligations then due to the Lessor and a surrender fee of Five
Dollars and 0/100 ($5.00) and upon written notice being given sixty (60) days in advance to the
Lessor through the Crow Tribal Government and the Secretary. This Coal Lease shall continue in
full force and effect as to the lands not so surrendered. If this Coal Lease or any assignment
thereof has been recorded, the Lessee or assignee shall file a recorded release and provide notice
to the Superintendent of termination of this or any portion of this Coal Lease.



ARTICLE 25 RELINQUISHMENT OF SUPERVISION BY SECRETARY OF INTERIOR




     Should the Secretary of Interior, at any time during the term of this instrument, relinquish
supervision as to all or part of the acreage covered, the relinquishment shall not bind Lessee
until the Secretary has given Lessee thirty (30) days written notice. Until these requirements are
fulfilled, Lessee shall continue to make all royalty and rental payments due under this Coal Lease.



     After notice of relinquishment has been received by Lessee, this Coal Lease shall be subject
to the following further conditions:



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     25.1 All rentals and royalties accruing shall be paid directly to Lessor or its successors in
title; and



     25.2 If, at the time supervision is relinquished by the Secretary as to all lands under this
Coal Lease, Lessee has made all payments due and has fully performed all obligations on its part to
be performed up to the time of the relinquishment, any bond given to the Secretary to secure
performance of the Coal Lease shall be released to Lessee.



ARTICLE 26 INSURANCE, SOCIAL SECURITY, AND TAXES




     Lessee agrees to carry such insurance covering all persons working in, on, or in connection
with the Leased Premises for the Lessee as will fully comply with the provisions of the statutes of
the state of Montana covering worker’s compensation and occupational disease, as are now in force
or as may be amended. Further, the Lessee agrees to comply with all the terms and provisions of
all applicable laws of the state of Montana and of the United States of America as now exist or as
may be amended, pertaining to Social Security, unemployment compensation, wages, hours and
conditions of labor; and to indemnify and hold the Lessor and the United States harmless from
payment of any damages occasioned by the Lessee’s failure to comply with these laws.



ARTICLE 27 HEIRS AND SUCCESSORS IN INTEREST




     Lessor and Lessee agree each obligation under this Coal Lease shall extend to and be binding
on, and every benefit shall inure to, the heirs, executors, administrators, successors of, or
assigns of the parties to this Coal Lease.



ARTICLE 28 GOVERNMENT EMPLOYEES NOT TO ACQUIRE LEASE




     No lease, its assignment, or interest in the same will be approved to any employee or
employees of the United States Government, whether connected with the Bureau of Indian Affairs or
otherwise. No employee of the United States Department of the Interior shall be permitted to
acquire any interest in the leases by ownership of stock in corporations having leases or in any
other manner.



ARTICLE 29 DEFAULT




     Any defaults hereunder by either party shall be handled in accord with Section 23 of the
Exploration Agreement.



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ARTICLE 30 PRESERVATION OF ANTIQUITIES




     Lessee shall obtain necessary archeological clearances in accordance with the Antiquities Act
of 1906, the Archaeological Resources Protection Act of 1979, and other applicable laws before the
start of any mining. When directed by the Lessor or the Secretary, Lessee shall obtain, at its own
expense, a qualified archaeologist to examine and, if necessary, excavate or gather any ruins or
other objects of historical or cultural significance located on the Leased Premises. Such actions
will be conducted after consultation with Lessor, the Bureau of Indian Affairs, and the Advisory
Council on Historic Preservation. Any objects that are excavated or gathered shall be turned over
to the Lessor or the appropriate federal agency.



ARTICLE 31 FORCE MAJEURE




     If, because of Force Majeure, the Lessee is reasonably prevented from performing any of its
obligations under this Coal Lease or satisfying any of the conditions of this Coal Lease, including
those obligations and conditions, which if unfulfilled, may limit the term of the Coal Lease, then
such obligations and conditions shall be reduced, and any time or date (including those on the term
of this Coal Lease if production of coal in paying quantities is interrupted by such Force
Majeure), shall be extended or reduced to the extent the Lessee is so prevented. As used herein,
“Force Majeure” shall have the meaning provided at Section 11 of the Exploration Agreement and the
mitigation and notification procedures provided therein shall apply.



ARTICLE 32 ARBITRATION




     Except as otherwise provided herein, any disputes arising under this Coal Lease or the
Exploration Agreement, and any claims of breach, default, invalidity, or termination, or
application or interpretation hereunder, and any other disputes arising hereunder, shall be settled
by binding arbitration. The arbitration provisions of Section 26 of the Exploration Agreement
shall apply.



ARTICLE 33 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 disputes arising under this Coal Lease and the Exploration
Agreement, including any dispute concerning the rights, responsibilities, and obligations of the
parties hereto relating to the mining of Crow Coal under this Coal Lease and the Exploration
Agreement. 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.



     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.



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     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.”



ARTICLE 34 OBLIGATIONS




     While the Leased Premises are in trust or restricted status, all of the Lessee’s obligations
under this Coal Lease and the obligations of its sureties are to the United States as well as to
the owners of the Leased Premises.



ARTICLE 35 MISCELLANEOUS




     35.1 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 Lessor:
	 
	 	 	 	 
	 

	 	 	 	Chairperson
	 

	 	 	 	Crow Tribal Council
	 

	 	 	 	Crow Agency, Montana 59022
	 
	 	 	 	 
	 

	 	and	 	 
	 
	 	 	 	 
	 

	 	 	 	Crow Tribe Legal Department
	 

	 	 	 	P.O. Box 340
	 

	 	 	 	Crow Agency, MT 59022
	 
	 	 	 	 
	 	 	If to Lessee:
	 
	 	 	 	 
	 

	 	 	 	President






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	 	 	 	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
	 
	 	 	 	 
	 	 	If to Regional Director:
	 
	 	 	 	 
	 

	 	 	 	Regional Director
	 

	 	 	 	Billings Area Office
	 

	 	 	 	Bureau of Indian Affairs
	 

	 	 	 	316 North 26th Street
	 

	 	 	 	Billings, Montana 59101
	 
	 	 	 	 
	 	 	And if to the Superintendent:
	 
	 	 	 	 
	 

	 	 	 	Superintendent
	 

	 	 	 	Bureau of Indian Affairs
	 

	 	 	 	Crow Indian Agency
	 

	 	 	 	P.O. Box 69
	 

	 	 	 	Crow Agency, Montana 59022





or to such other address or individual as the Lessor or Lessee may otherwise specify.




     35.2 Applicable Law. This Coal Lease 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 Lessee within
the exterior boundaries of the Crow Reservation.



     35.3 Headings. The captions of Articles and underlying provisions are for convenience of
reference and are not to be considered a part of the text or to be used to interpret any provision
of this Coal Lease.



     35.4 Invalidity. If any court shall hold any part of this Coal Lease to be invalid, such
holding shall not invalidate any other part of this Coal Lease.



     35.5 Other Tribal Coal Leases. In the event Lessor enters into a coal lease or other coal
development lease with someone other than Lessee on lands in the vicinity of the Mining Areas
identified herein, Lessee agrees that it will not unreasonably interfere with the operations of
such lessee. Lessor agrees that if it should enter into a coal lease or other coal development
lease on lands



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in the vicinity of the Mining Areas identified herein, Lessor shall provide in such
lease or other lease that the lessee thereunder shall conduct its operations so as not to
unreasonably interfere with Lessee’s Mining Activities.




     35.6 Interest. All royalties, taxes, rentals, and any other sums payable under this Coal
Lease 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%), with the rate fixed according to the prime
rate of interest in effect on the due date of the payment.



ARTICLE 36 TRIBAL EMPLOYMENT




     Lessee shall give a priority right of employment to members of the Crow Tribe for all
positions for which they are qualified and available and shall pay the prevailing wage rates for
similar services in the area. Upon initial hiring and whenever thereafter a job opening occurs,
Lessee, its contractors or subcontractors, shall give notice of such opening to the Crow Tribe
stating the time and place where job applications will be accepted. Except in cases of emergency,
no nonmember of the Tribe shall be hired for any job until at least forty-eight (48) hours (not
including Saturdays and Sundays) following the delivery of such notice to the Crow Tribe. In order
to supplement and reinforce the above employment standards, which have governed Westmoreland’s
Tribal employment obligations since the inception of the Tract III Lease, Lessee agrees to use
reasonable good faith efforts to:




	 	a.	 	Expand Tribal employment when job openings occur for which
there are qualified and available Tribal members in supervisory, management,
and staff positions within WRI and its mining contractor, and provide training
and promotional opportunities to qualified Crow Tribal members at least equal
to those opportunities provided to other members of WRI’s and its contractor’s
professional staffs;
	 
	 	b.	 	Expand employment of Crow Tribal members by subcontractors when
job openings occur for which there are qualified and available Tribal members
and periodically provide advance planning notice of typical anticipated
subcontracting needs (including emergency services) to the Tribe’s TERO office;
	 
	 	c.	 	Encourage the purchase of materials and services by WRI and its
mining contractor from Crow-owned businesses when qualified and competitive,
and periodically provide advance planning notice of typical anticipated
purchasing needs to the Tribe’s TERO office.





     Lessee further agrees to follow the foregoing Tribal employment provisions on the Tract III
Lease effective immediately upon the parties’ execution of the Exploration Agreement.



     The terms of this paragraph may be amended by subsequent agreement of the parties to this
Lease. Compliance with this provision shall be deemed full compliance with any Crow Tribal law or
regulation related to employment of Tribal members, except that Lessee take no position with



17









 




respect to Tribal regulation of union membership or dues requirements for Tribal members working on
the Reservation.




ARTICLE 37 SALE OF COAL WITHIN FIFTY MILES




     Lessee will not sell coal mined from the Leased Premises for use in a coal conversion or
mine-mouth generating facility to be located on the Crow Indian Reservation or within fifty (50)
miles of the exterior boundaries of the diminished Crow Indian Reservation without first receiving
approval of such sale from the Lessor.



ARTICLE 38 THE MINE-MOUTH GENERATING FACILITY




     It is the intention of Westmoreland and the Crow Tribe to continue exploring the possibility
and feasibility, on mutually agreeable terms, of constructing and operating a coal-fired generating
facility on or near the Crow Indian Reservation using coal mined by Westmoreland from the Mining
Area and/or the Tract III lease area. The terms of this Lease are not intended to apply to Crow
coal produced to supply such a facility. Without affecting the terms of this Lease, the Crow Tribe
reserves the right and authority to grant tax and royalty concessions of any type for any Crow coal
produced to supply a coal conversion or electric generating facility in which the Crow Tribe or
other Tribally-owned entity has an equity interest.



ARTICLE 39 USE OF FACILITIES AREA




     In addition to the Leased Premises, Lessee shall use the area lying north of the Leased
Premises and currently within the boundaries of the Tract III Lease existing between the Lessor and
Lessee dated November 26, 1974, for location of mining facilities. The Facilities Area shall be
used for any hauling, processing, storing, weighing, loading, and any other Mining Activities
related to the production of Coal.



     To provide for the use of said area, and notwithstanding any other agreements between the
parties, Lessor and Lessee agree that any obligations Lessee may have under that agreement entitled
“Land Purchase Option Agreement” dated November 26, 1974, to offer to sell any lands to the Crow
Tribe shall abate and be suspended until the completion of any and all mining or reclamation
activities in connection with or occurring pursuant to this Coal Lease.



ARTICLE 40 WAIVER




     No failure by either party to insist upon the strict performance of the terms of conditions of
this Coal Lease 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 Coal
Lease to be performed or observed by the parties.



ARTICLE 41 MEMORANDUM OF LEASE




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     Lessor or Lessee intend to execute a Memorandum of Lease for purposes of recordation in the
county wherein the Leased Premises are located. In the event of any inconsistency between the
Memorandum of Lease and the terms hereof, the terms hereof shall govern.



ARTICLE 42 APPROVAL BY SECRETARY




     The parties’ obligations hereunder are contingent upon the approval of this Coal Lease by the
Secretary which shall occur pursuant to Section 21 of the Exploration Agreement. Approval of this
Coal Lease by the Secretary constitutes approval of the exhibits attached hereto and all other
agreements or exhibits incorporated herein. Further, by the approval of this Coal Lease, it is the
finding of the Secretary that this Coal Lease and the attached exhibits are in the best interest of
the Crow Tribe, and any regulations that are, in any way, inconsistent with the rights granted
herein, are waived. The Secretary’s approval of this Lease is expressly limited by Section 21.6 of
the Exploration Agreement.



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     IN WITNESS WHEREOF, the parties have executed this Coal Lease Agreement on the day and year
first mentioned.



	 	 	 	 	 	 	 
	 	 	CROW TRIBE OF INDIANS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

          Chairman
	 	 
	 
	 	 	 	 	 	 
	 	 	WESTMORELAND RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 





	 	 	 
	APPROVED:
	 	 
	 
	 	 
	 

Secretary of Interior

	 	     







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