Document:

Exhibit

CONSENT AND NINTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This CONSENT AND NINTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of March 13, 2017 (this “Amendment”), is entered into by and among THE PRIVATEBANK AND TRUST COMPANY (in its individual capacity, “PrivateBank”), as administrative agent for the lenders (the “Lenders”) party to the Loan Agreement (as defined below) (in such capacity, together with its successors and assigns, the “Administrative Agent”), the Lenders, and each of WESTMORELAND COAL COMPANY, a Delaware corporation (“Westmoreland Parent”), WESTMORELAND ENERGY LLC, a Delaware limited liability company (“Westmoreland Energy”), WESTMORELAND – NORTH CAROLINA POWER, L.L.C., a Virginia limited liability company (“Westmoreland NC”), WEI-ROANOKE VALLEY, INC., a Delaware corporation (“WEI”), WESTMORELAND – ROANOKE VALLEY, L.P., a Delaware limited partnership (“Westmoreland Roanoke”), WESTMORELAND PARTNERS, a Virginia general partnership (“Westmoreland Partners”), WESTMORELAND RESOURCES, INC., a Delaware corporation (“Westmoreland Resources”), WESTMORELAND COAL SALES COMPANY, INC., a Delaware corporation (“Coal Sales”), WRI PARTNERS, INC., a Delaware corporation (“WRI”), WCC LAND HOLDING COMPANY, INC., a Delaware corporation (“WCC”), WESTMORELAND CANADA LLC, a Delaware limited liability company (“WC LLC”), WESTMORELAND ENERGY SERVICES, INC., a Delaware corporation (“WES”), WESTMORELAND MINING LLC, a Delaware limited liability company (“WML”), WESTERN ENERGY COMPANY, a Montana corporation (“WECO”), TEXAS WESTMORELAND COAL CO., a Montana corporation (“TWCC”), WESTMORELAND SAVAGE CORPORATION, a Delaware corporation (“Savage”), DAKOTA WESTMORELAND CORPORATION, a Delaware corporation (“Dakota”), and BUCKINGHAM COAL COMPANY, LLC, an Ohio limited liability company (“Buckingham”) and HAYSTACK COAL COMPANY, a Delaware corporation (“Haystack; together with Westmoreland Parent, Westmoreland Energy, Westmoreland NC, WEI, Westmoreland Roanoke, Westmoreland Partners, Westmoreland Resources, Coal Sales, WRI, WCC, WC LLC, WES, WML, WECO, TWCC, Savage, Dakota and Buckingham, each individually a “US Borrower” and collectively, the “US Borrowers”), WESTMORELAND CANADIAN INVESTMENTS L.P., a limited partnership organized and existing under the laws of the Province of Quebec (“WC Investments”), WESTMORELAND CANADA HOLDINGS, INC., a corporation organized and existing under the laws of the Province of Alberta (“Westmoreland Canada”), WESTMORELAND PRAIRIE RESOURCES INC., a corporation organized and existing under the laws of the Province of Alberta (“WPR”), and PRAIRIE MINES & ROYALTY ULC, an unlimited liability company organized under the laws of the Province of Alberta (“PMRL”; together with WC Investments, Westmoreland Canada and WPR, each individually a “Canadian Borrower” and collectively, the “Canadian Borrowers”), and WCC HOLDING B.V., a B.V. organized and existing under the laws of the Netherlands (“WCC BV”; together with the US Borrowers and the Canadian Borrowers, collectively, the “Borrowers”).  
W I T N E S S E T H:
WHEREAS, the Borrowers, the Administrative Agent and the Lenders entered into a certain Second Amended and Restated Loan and Security Agreement dated as of December 16, 2014, as 

	
			
	 
	 
	 

amended by that certain Joinder and First Amendment to Second Amended and Restated Loan and Security Agreement dated March 26, 2015, that certain Consent and Second Amendment to Second Amended and Restated Loan and Security Agreement dated as of May 29, 2015, that certain Third Amendment to Second Amended and Restated Loan and Security Agreement dated as of December 31, 2015, that certain Consent and Fourth Amendment to Second Amended and Restated Loan and Security Agreement dated as of January 29, 2016, that certain Fifth Amendment to Second Amended and Restated Loan and Security Agreement dated as of May 3, 2016, that certain Sixth Amendment to Second Amended and Restated Loan and Security Agreement dated as of June 28, 2016, that certain Seventh Amendment to Second Amended and Restated Loan and Security Agreement dated as of September 30, 2016, and that certain Eighth Amendment to Second Amended and Restated Loan and Security Agreement dated as of October 12, 2016 (as further amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which the Borrowers established certain financing arrangements with the Lenders; 
WHEREAS, PMRL and Capital Power, L.P., an Ontario, Canada, limited partnership (“Capital Power”), are parties to an Amended and Restated Genesee Coal Mine Joint Venture Agreement dated as of April 24, 2014 (the “Genesee JV Agreement”), and an Amended and Restated Operating Agreement, dated as of April 24, 2014 (the “Genesee Operating Agreement”; and together with the Genesee JV Agreement, the “Genesee JV Governing Documents”; which joint venture is referred to herein as the “Genesee Joint Venture”), providing for certain agreements relating to the operation and funding of the Genesee coal mine located near Warburg, Alberta, Canada (the “Genesee Coal Mine”);
WHEREAS, the Borrowers have informed the Lenders that Capital Power and PMRL desire to enter into an amendment agreement to the Genesee JV Agreement and the execution of a security agreement by PMRL in favor of Capital Power in the assets that comprise the Genesee Coal Mine which will result, among other things, in an accelerated payment of approximately $55,000,000 from Capital Power (the “Accelerated Receivable Payment”) to PMRL in exchange for PMRL’s execution and delivery of such agreements; and
WHEREAS, the Lenders and the Borrowers desire to consent to the transactions set forth in Section 2 below and further amend the Loan Agreement in accordance with, and subject to the terms and conditions of, this Amendment.
NOW, THEREFORE, for and in consideration of the premises and mutual agreements herein contained and for the purposes of setting forth the terms and conditions of this Amendment, the parties, intending to be bound, hereby agree as follows:
Section 1.Incorporation of the Loan Agreement.  All capitalized terms which are not defined hereunder shall have the same meanings as set forth in the Loan Agreement, and the Loan Agreement, to the extent not inconsistent with this Amendment, is incorporated herein by this reference as though the same were set forth in its entirety.  To the extent any terms and provisions of the Loan Agreement or the other Loan Documents are inconsistent with the amendments set forth in Section 2 below, such terms and provisions shall be deemed superseded hereby.  Except as specifically set forth herein, the Loan Agreement and the other Loan Documents shall remain in full force and effect and its provisions shall be binding on the parties hereto.

	
			
	 
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Section 2.    Consent.  Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof:
(a)    Notwithstanding Section 13.3 (Liens) of the Loan Agreement, Lenders hereby consent to the execution and delivery by PMRL of a security agreement in form and substance acceptable to Administrative Agent by which PMRL will grant a priority security interest to Capital Power in all of PMRL’s present and after-acquired right, title, estate and interest in the assets that comprise the Genesee Coal Mine (excluding, in all instances, all cash and accounts receivable, together with all products and proceeds thereof) as collateral security for certain continuing obligations of PMRL to the Genesee Joint Venture, subject to execution of a Subordination Agreement between Capital Power and Administrative Agent in form and substance acceptable to the Lenders, provided that upon receipt of the Accelerated Receivable Payment by PMRL the Borrowers shall repay all then outstanding Revolving Loans.  
(b)    The foregoing consent is expressly limited to the transactions described above in this Section 2, and shall not be deemed or otherwise construed to constitute a consent to any other transaction, whether or not similar to the transactions described above in this Section 2.  Lenders have granted the consent set forth in this Section 2 in this particular instance and in light of the facts and circumstance that presently exist, and the grant of such consent shall not constitute a course of dealing or impair Lenders’ right to withhold any similar consent in the future.
(c)    For the avoidance of doubt, it is understood and agreed that all inventory located at the Genesee Coal Mine shall not constitute Eligible Canadian Inventory or Eligible Parts Inventory and all receivables due from Capital Power to PMRL shall not constitute Eligible Canadian Accounts at any time.
Section 3.    Amendments to the Loan Agreement.
(a)    The percentage allocation table set forth at the end of the definition of the term “Canadian Fixed Charges” set forth in Section 1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:  
	
		
	Scheduled cash interest payments for Canadian Borrowers
	Scheduled cash interest payments for US Borrowers

	80%
	20%

(b)    The percentage allocation table set forth at the end of the definition of the term “US Fixed Charges” set forth in Section 1 of the Loan Agreement is hereby amended and restated to read in its entirety as follows:

	
			
	 
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	Scheduled cash interest payments for Canadian Borrowers
	Scheduled cash interest payments for US Borrowers

	80%
	20%

(c)    Section 9.4 of the Loan Agreement is hereby amended and restated to read as follows:
9.4  Annual Projections.  No later than thirty (30) days after the beginning of each Fiscal Year, the Borrowers shall deliver to Administrative Agent projected statements of income and cash flow for the Borrowers, for each quarter during such Fiscal Year, which shall include the assumptions used therein, together with appropriate supporting details as reasonably requested by Administrative Agent.
(d)    A new Section 13.16 is hereby added to the Loan Agreement to read as follows:
13.16  Payments on Long Term Debt.  Notwithstanding the provisions of Section 13.12, no Borrower will utilize any of the proceeds from the payments received by PMRL from Capital Power L.P. in connection with amending the Genesee JV Agreement to make accelerated payments of principal on any long term debt, except for regularly scheduled principal payments or annual payments of excess cash flow relating to the Fiscal Year ended 2017 and thereafter which are required to be made in accordance with the applicable long term debt documents, without the prior written consent of all of the Lenders, which may not be unreasonably withheld.
(e)    Section 14.1 of the Loan Agreement is hereby amended and restated to read as follows:
“14.1    Fixed Charge Coverage. 
14.1.1 US Consolidated Fixed Charge Coverage. Westmoreland Parent and its US Subsidiaries shall not permit the ratio of US EBITDA to US Fixed Charges for each period of four consecutive quarters to be less than 0.9:1.0 tested on the last day of each quarter.  Notwithstanding the foregoing, (i) solely for the quarterly periods ended March 31, 2017 and June 30, 2017, US Consolidated Fixed Charge Coverage will only be tested to the extent Excess Availability at such quarter end is less than $5,000,000, and (ii) US EBITDA may be increased by (a) the amount of Alternative Minimum Tax Credits, as defined by the U.S. Internal Code, received by the US Borrowers during any period of determination, not to exceed $3,000,000 in the aggregate and (b) the amount of unrestricted cash, free and clear of 

	
			
	 
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all liens, claims and encumbrances, which is transferred from BP Energy Company to Borrowers’ operating account on deposit with Administrative Agent relating to the ROVA power plant project in an amount not to exceed $10,000,000 at any time.
14.1.2 Canadian Consolidated Fixed Charge Coverage. The Canadian Borrowers shall not permit the ratio of Canadian EBITDA to Canadian Fixed Charges for each period of four consecutive quarters to be less than 0.9:1.0 tested on the last day of each quarter.  Notwithstanding the foregoing, solely for the quarterly periods ended March 31, 2017 and June 30, 2017, Canadian Consolidated Fixed Charge Coverage will only be tested to the extent Excess Availability under the Canadian Revolving Loan Commitment at such quarter end is less than $5,000,000.  Further, Canadian EBITDA may be increased by the amount of the payments received by PMRL from Capital Power L.P. in connection with amending the Genesee JV Agreement (the “Accelerated Receivable Payment”) in an amount not to exceed $55,000,000 to be allocated equally as an addition to Canadian EBITDA over the subsequent six (6) quarters beginning with the first quarter of fiscal year 2017 and ending with the second quarter of fiscal year 2018; provided that such Accelerated Receivable Payment must be received by April 30, 2017. 
14.1.3 Consolidated Fixed Charge Coverage.  Westmoreland Parent, its US Subsidiaries and the Canadian Borrowers shall not permit the ratio of Consolidated EBITDA to Consolidated Fixed Charges for each period of four consecutive quarters to be less than 1.10:1.0 tested on the last day of each quarter beginning with the quarterly period ending June 30, 2016.  Notwithstanding the foregoing, Consolidated EBITDA may be increased by (i) the amount of Alternative Minimum Tax Credits, as defined by the U.S. Internal Revenue Code, received by the US Borrowers during any period of determination, not to exceed $3,000,000, (ii) the amount of unrestricted cash, free and clear of all liens, claims and encumbrances, which is transferred from BP Energy Company to Borrowers’ operating account on deposit with Administrative Agent relating to the ROVA power plant project in an amount not to exceed $10,000,000 at any time, and (iii) the amount of the payments received by PMRL from Capital Power L.P. in connection with amending the Genesee JV Agreement in an amount not to exceed $55,000,000 to be allocated equally as an addition to Canadian EBITDA over the subsequent six (6) quarters beginning with the first quarter of fiscal year 2017 and ending with the second quarter of fiscal year 2018; provided that such Accelerated Receivable Payment must be received by April 30, 2017.

	
			
	 
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Section 4.    Effectiveness Conditions.  The amendments and other agreements set forth herein shall be effective upon the satisfaction of all of the following conditions precedent, each to the satisfaction of the Administrative Agent in its sole discretion:  
(a)    Receipt by the Administrative Agent from each of the Lenders, the Administrative Agent and Borrowers, of a counterpart of this Amendment signed on behalf of such party; and
(b)    Receipt by the Administrative Agent of such other documents, instruments and  certificates as the Administrative Agent shall reasonably request.
Section 5.    Representations and Warranties; No Default.  
(a)    The representations and warranties of the Borrowers set forth in Section 11 of the Loan Agreement shall be deemed made or remade, as applicable, by each Borrower as of the date hereof, and shall be true and correct in all material respects as of the date hereof except to the extent that such representation or warranty expressly relates to a specified earlier date, in which case such representation and warranty shall be true and correct in all material respects as of such earlier date; and 
(b)    Each Borrower represents and warrants to the Administrative Agent and the Lenders that (i) the execution and delivery by such Borrower of this Amendment and the performance by it of the transactions herein contemplated (A) are and will be within its organizational powers, (B) have been authorized by all necessary organizational action and (C) are not and will not be in contravention of any order of any court or other agency of government, of law or any other indenture, agreement or contract to which such Borrower is a party or by which the property of such Borrower is bound, or be in violation of, result in a breach of, or constitute with due notice and/or lapse of time a default under any such indenture, agreement or contract, which contravention, violation or breach would reasonably be expected to have a Material Adverse Effect or result in the imposition of any lien, charge or encumbrance of any nature on any of the properties of such Borrower (other than Permitted Liens) and (ii) No Default or Event of Default has occurred and is continuing.
Section 6.    Affirmation.  Except as specifically amended pursuant to the terms hereof, the Loan Agreement and the other Loan Documents (and all covenants, terms, conditions and agreements therein), shall remain in full force and effect, and are hereby ratified and confirmed in all respects by the Borrowers.  Each Borrower hereby represents and warrants to the Administrative Agent and the Lenders that as of the date hereof, there are no claims, counterclaims, offsets or defenses arising out of or with respect to the Obligations.  Each Borrower hereby confirms its existing grant to the Administrative Agent, for its benefit and the benefit of the Lenders, of a lien on and security interest in the Collateral.  Each Borrower hereby reaffirms that all liens and security interests at any time granted by it to the Administrative Agent, for its benefit and the benefit of the Lenders, continue in full force and effect and secure and shall continue to secure the Obligations.  Nothing herein contained is intended to in any manner impair or limit the validity, priority and extent of the Administrative Agent’s existing security interest in and liens upon the Collateral.  Any 

	
			
	 
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and all references to the Loan Agreement in each of the Loan Documents shall be deemed to refer to and include this Amendment.
Section 7.    Fees and Expenses.  Each Borrower agrees to comply with Section 4.3.4  of the Loan Agreement, in connection with the evaluation, negotiation, preparation, execution and delivery of this Amendment.  In addition to the foregoing, the Borrowers agree to pay to the Administrative Agent an amendment fee of $20,000 to be allocated to the Lenders in accordance with their Pro Rata Share of the Commitments
Section 8.    Miscellaneous.
(a)    Each Borrower hereby agrees to take all such actions and to execute and/or deliver to the Administrative Agent all such documents, assignments, financing statements and other documents as the Administrative Agent may reasonably require from time to time, to effectuate and implement the purposes of this Amendment and the other Loan Documents.
(b)    This Amendment shall be binding on and shall inure to the benefit of the Borrowers, the Administrative Agent, the Lenders and their respective successors and (to the extent permitted under the Loan Agreement) assigns.  No rights are intended to be created hereunder for the benefit of any third-party donee, creditor or incidental beneficiary.
(c)    Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.
(d)    The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpret any provision hereof.
(e)    This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.  Execution and delivery by facsimile or other electronic transmission shall bind the undersigned.  Receipt of an executed signature page to this Amendment by facsimile or other electronic transmission shall constitute effective delivery thereof and shall be deemed an original signature hereunder.
(f)    No modification hereof or any agreement referred to herein shall be binding or enforceable unless in writing and signed on behalf of the party against whom enforcement is sought.
(g)    The terms and conditions of this Amendment shall be governed by and construed in accordance with the internal laws of the State of Illinois excluding conflict of laws statutes or common law principles that would result in the application of laws other than the internal laws of the State of Illinois.

	
			
	 
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(h)    EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT AND THE LENDERS, BY THE EXECUTION OR ACCEPTANCE OF THIS AMENDMENT, WAIVES ITS AND THEIR RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL.
[SIGNATURE PAGES FOLLOW]

	
			
	 
	8
	 

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

IN WITNESS WHEREOF, the parties hereto have duly executed this Consent and Ninth Amendment to Second Amended and Restated Loan and Security Agreement as of the date first above written.
	
		
	US BORROWERS:
	WESTMORELAND COAL COMPANY, a Delaware corporation
By:       /s/ Jennifer S. Grafton    
Jennifer S. Grafton 
Chief Administrative Officer & Secretary

	 
	WESTMORELAND ENERGY LLC, a Delaware limited liability company
By:    /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WESTMORELAND – NORTH CAROLINA POWER, L.L.C., a Virginia limited liability company
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WEI-ROANOKE VALLEY, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WESTMORELAND – ROANOKE VALLEY, L.P., a Delaware limited partnership
   By:   WEI-Roanoke Valley, Inc., 
its general partner
By: /s/ Samuel N. Hagreen       
       Samuel N. Hagreen 
       Secretary

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	US BORROWERS:
	WESTMORELAND PARTNERS, a Virginia general partnership
By:   Westmoreland-Roanoke Valley, L.P., its general partner
   By:   WEI-Roanoke Valley, Inc.,  
its general partner
   By: /s/ Samuel N. Hagreen       
              Samuel N. Hagreen 
              Secretary 

By:  Westmoreland-North Carolina Power,   L.L.C., its general partner
By: /s/ Samuel N. Hagreen       
        Samuel N. Hagreen 
        Secretary

	 
	WESTMORELAND RESOURCES, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WESTMORELAND COAL SALES COMPANY, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WRI PARTNERS, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	US BORROWERS:
	WCC LAND HOLDING COMPANY, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	 
	WESTMORELAND CANADA LLC, a Delaware limited liability company
By:   /s/ Jennifer S. Grafton    
   Jennifer S. Grafton 
   Vice President and Secretary 

	 
	WESTMORELAND ENERGY SERVICES, INC., a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WESTMORELAND MINING LLC, a Delaware limited liability company
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	WESTERN ENERGY COMPANY, a Montana corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	TEXAS WESTMORELAND COAL CO., a Montana corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	US BORROWERS:
	WESTMORELAND SAVAGE CORPORATION, a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	DAKOTA WESTMORELAND CORPORATION, a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	 
	BUCKINGHAM COAL COMPANY, LLC, an Ohio limited liability company
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary

	 
	HAYSTACK COAL COMPANY, a Delaware corporation
By:   /s/ Samuel N. Hagreen    
   Samuel N. Hagreen 
   Secretary
   

	CANADIAN BORROWERS:
	WESTMORELAND CANADIAN INVESTMENTS, L.P., a limited partnership organized and existing under the laws of the Province of Quebec
By:   Westmoreland Canada LLC,  
its general partner
   By: /s/ Jennifer S. Grafton       
        Jennifer S. Grafton 
        Vice President and Secretary 

	CANADIAN BORROWERS:
	WESTMORELAND CANADA HOLDINGS, INC., a corporation organized and existing under the laws of the Province of Alberta
By:   /s/ Jennifer S. Grafton    
   Jennifer S. Grafton 
   Assistant Secretary

	 
	WESTMORELAND PRAIRIE RESOURCES INC., a corporation organized and existing under the laws of the Province of Alberta
By:   /s/ Jennifer S. Grafton    
   Jennifer S. Grafton 
   Assistant Secretary

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	 
	PRAIRIE MINES & ROYALTY ULC, an unlimited liability company organized under the laws of the Province of Alberta
By:   /s/ Jennifer S. Grafton    
   Jennifer S. Grafton 
   Assistant Secretary

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	WCC BV:
	WCC HOLDING B.V., a B.V. organized and existing under the laws of the Netherlands
By:   /s/ Jennifer S. Grafton    
   Jennifer S. Grafton  
   Managing Director A
By:    /s/ Clemens Cornelis van den Broek    
   Clemens Cornelis van den Broek 
   Managing Director B

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	ADMINISTRATIVE AGENT  
AND A LENDER:
	THE PRIVATEBANK AND TRUST COMPANY
By:    /s/ Douglas Colletti    
   Douglas Colletti 
   Managing Director 

(Signature Page to Consent and Ninth Amendment to  
Second Amended and Restated Loan and Security Agreement)

	
		
	LENDER:
	EAST WEST BANK
By:   /s/ John Kolb    
   John Kolb 
   Vice PresidentExhibit

 

SUBSTITUTE ENERGY PURCHASE AGREEMENT
BY AND BETWEEN
WESTMORELAND PARTNERS
AND
VIRGINIA ELECTRIC AND POWER COMPANY
Dated as of
December 21, 2016

TABLE OF CONTENTS

		
	ARTICLE 1
	DEFINITIONS AND INTERPRETATION 1

		
	1.1
	Definitions 1

		
	1.2
	Interpretations 4

		
	ARTICLE 2
	SALE AND PURCHASE OF SUBSTITUTE ENERGY 4

		
	2.1
	Purchase and Sale 4

		
	2.2
	Forward Contract 4

		
	ARTICLE 3
	NOTICES 5

		
	3.1
	Notices 5

		
	3.2
	Addressees and Addresses 5

		
	3.3
	Changes to Addressees or Addresses 5

		
	ARTICLE 4
	TERM 5

		
	4.1
	Term 5

		
	4.2
	Superseding of the PPA 5

		
	4.3
	Actual Deactivation Date 6

		
	ARTICLE 5
	COMPLIANCE WITH LAWS; FINE AND PENALTIES 6

		
	5.1
	Compliance with Laws and Codes 6

		
	5.2
	Fines Imposed on Westmorland 6

		
	5.3
	Fines Imposed on DNCP 6

		
	ARTICLE 6
	REPRESENTATIONS AND WARRANTIES OF WESTMORELAND 6

		
	6.1
	Representations and Warranties of Westmoreland 6

		
	ARTICLE 7
	SUBSTITUTE ENERGY 7

		
	7.1
	Daily Elections by DNCP 7

		
	7.2
	Delivered Energy Cap 7

		
	7.3
	Quantity of Delivered Energy 8

		
	7.4
	Delivery Point 8

		
	ARTICLE 8
	BOOKS AND RECORDS 8

		
	8.1
	Records 8

		
	8.2
	Time Periods 8

		
	8.3
	Examination of Records 9

		
	ARTICLE 9
	COMPENSATION, PAYMENT, AND BILLINGS 9

		
	9.1
	Variable Payment 9

TABLE OF CONTENTS
(continued)

		
	9.2
	Fixed Payment9

		
	9.3
	Dispatch Incentive Payment 9

		
	9.4
	Payment Instructions 9

		
	9.5
	Netting 9

		
	ARTICLE 10
	DEFAULTS AND REMEDIES 10

		
	10.1
	Defaults and Cure 10

		
	10.2
	Westmoreland Defaults 10

		
	10.3
	Failures with Regard to Bilaterals and Liability 11

		
	ARTICLE 11
	PERFORMANCE SECURITY 11

		
	11.1
	Amount 11

		
	11.2
	Form of Security 11

		
	11.3
	Use of Security 12

		
	ARTICLE 12
	FORCE MAJEURE 12

		
	12.1
	Obligations Excused 12

		
	12.2
	No Extension of Term 12

		
	12.3
	Impact on Payments 12

		
	ARTICLE 13
	TAXES 13

		
	13.1
	Taxes 13

		
	ARTICLE 14
	CHOICE OF LAW 13

		
	14.1
	Choice of Law 13

		
	ARTICLE 15
	MISCELLANEOUS PROVISIONS 13

		
	15.1
	Assignment 13

		
	15.2
	Amendment 13

		
	15.3
	No Waiver 13

		
	15.4
	Headings 13

		
	15.5
	Not for Benefit of Third Parties 14

		
	15.6
	No Joint Venture 14

		
	15.7
	Survival 14

		
	15.8
	Waiver of Consequential Damages 14

		
	15.9
	Indemnification 14

		
	ARTICLE 16
	STATUTORY AND REGULATORY CHANGES 14

		
	16.1
	Disallowance 14

TABLE OF CONTENTS
(continued)

		
	16.2
	Mobile Sierra 14

		
	ARTICLE 17
	ENTIRETY 15

		
	17.1
	Entirety of Agreement 15

SCHEDULE A - PRICING

SUBSTITUTE ENERGY PURCHASE AGREEMENT

THIS SUBSTITUTE ENERGY PURCHASE AGREEMENT (this "Agreement") is effective as of the 21st day of December, 2016 ("Effective Date"), and is by and between WESTMORELAND – PARTNERS, a Virginia general partnership ("Westmoreland"), and VIRGINIA ELECTRIC AND POWER COMPANY, a Virginia public service corporation, operating in North Carolina as Dominion North Carolina Power ("DNCP").  Both Westmoreland and DNCP are herein individually referred to as a "Party," and collectively referred to as the "Parties."
RECITALS

WHEREAS, the Parties are parties to that certain Consolidated  Power Purchase and Operating Agreement for Roanoke Valley Units 1 and 2 by and between Westmoreland Partners and Virginia Electric and Power Company effective December 23, 2013 (the "PPA"); 

WHEREAS, the Parties desire that this Agreement amend the PPA on the Expected Deactivation Date (if it occurs before the Actual Deactivation Date) and replace the PPA in its entirety upon the Actual Deactivation Date as defined below;

WHEREAS, Westmoreland wishes to sell Substitute Energy to DNCP, such sale to be pursuant to the terms and conditions set forth herein; and

WHEREAS, DNCP wishes to purchase Substitute Energy, pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the above premises (which are hereby incorporated by reference into this Agreement) and the promises and the mutual covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound thereby, the Parties agree as follows:

ARTICLE 1 
 
DEFINITIONS AND INTERPRETATION
1.1    Definitions.  Whenever the following terms appear in this Agreement, whether in the singular or in the plural, present or past tense, they shall have the meaning stated below:
"Actual Deactivation Date" has the meaning as stated in Section 4.3 (Actual Deactivation Date). 

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"Agreement" has the meaning set forth in the Preamble.
"Business Day" means Monday through Friday excluding holidays recognized by PJM or DNCP.  As of the date of this Agreement, these holidays include New Year’s Day, Martin Luther King’s Birthday, Good Friday, Memorial Day, Fourth of July, Labor Day, Veteran’s Day, Thanksgiving Day, day after Thanksgiving Day, Christmas Eve and Christmas Day.  The Day DNCP observes such holidays may be changed by DNCP upon ten (10) Days written notice to Westmoreland.
"Day" means the 24-hour period beginning at 0000 hours and ending 24 hours later at 2400 hours of the same Day Eastern Time.  
"Day-ahead Price" means the Day-ahead locational marginal price announced by PJM for a given zone in PJM.
"Delivered Energy" has the meaning set forth in Section 7.3 (Quantity of Delivered Energy). 
"Delivered Energy Cap" means 1,600,000 MWh of Substitute Energy under this Agreement for each Year, or a pro rata portion thereof for partial years, as applicable.
"Disallowance" has the meaning set forth in Section 16.1 (Disallowance).
"Dispatch Incentive Payment" has the meaning set forth in section 7.5 of the PPA.
"DNCP" has the meaning set forth in the Preamble.
"Effective Date" has the meaning set forth in the Preamble.
"Energy Purchase Price" means the price per kilowatt-hour that DNCP will pay, in accordance with Article 9 (Compensation, Payment, and Billings) and Schedule A – Pricing, to Westmoreland for Substitute Energy delivered to DNCP.
"Expected Deactivation Date" means March 1, 2017, unless changed by mutual written agreement between the Parties. 
"Facility" means Westmoreland’s generation facility as referenced in the PPA.
"Fixed Payment" means the price in cents per Day per kW of Substitute Energy as set forth in Section II of Schedule A – Pricing.  
"Force Majeure" has the meaning set forth in Section 12.1 (Obligations Excused).      
"Interest" means the compensation for the accrual of monetary obligations under this Agreement computed Monthly and prorated daily from the time each such obligation arises based on an annual interest rate equal to the Prime Rate plus two (2) percent.  For purposes of this Agreement, Prime Rate shall mean the Prime Rate published in the most recent edition of the Wall 

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Street Journal (or similar publication should the Wall Street Journal no longer provide such Prime Rate), determined for each obligation to pay interest at the time such obligation arises.
"Month" means a calendar month.  
"NCUC" means the North Carolina Utility Commission.  
"Party" or "Parties" has the meaning set forth in the Preamble.
"PJM" means the PJM Interconnection, LLC, and its successors, a regional transmission organization (RTO).
"PJM Agreements" means the PJM Open Access Transmission Tariff, Operating Agreement of PJM, PJM Reliability Assurance Agreement among Load-Serving Entities in the PJM South Region and any other applicable PJM agreements, tariffs, manuals or rules setting forth the rights and obligations of the Parties with respect to PJM.
"PJM-West Hub" means the PJM-West Hub as defined in the PJM Agreements, which is the hub that acts as the source and sink for Substitute Energy.
"PPA" has the meaning set forth in the first Recital. 
"SCC" means the State Corporation Commission of Virginia.
"Substitute Delivery Point" means the PJM-West Hub.
"Substitute Energy" means energy sold by Westmoreland, or by Westmoreland’s designee or agent, to DNCP pursuant to a Substitute Energy Bilateral Schedule and delivered to the Substitute Delivery Point.
"Substitute Energy Bilateral Schedule" has the meaning set forth in Section 7.3 (Quantity of Delivered Energy).
"Substitute Energy Non-Delivery Damages" has the meaning set forth in Section 10.3 (Failures with Regard to Bilaterals and Liability).
"Term" has the meaning set forth in Section 4.1 (Term).
"Westmoreland" has the meaning set forth in the Preamble.
"Year" means the 12-Month period beginning 12:00 midnight on December 31 and ending at 12:00 midnight on the subsequent December 31.  Notwithstanding the foregoing provisions, if the Term is canceled, expires or otherwise terminates on any Day other than December 31, the term Year shall also be deemed to refer to the time from and including January 1 of such Year through the effective date of such cancellation, expiration or termination for purposes of this Agreement.

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1.2    Interpretations.  Any references in this Agreement to specific Sections shall be deemed to be references to Sections of this Agreement, unless the context requires otherwise.  Unless the context otherwise requires, the capitalized terms used in this Agreement shall have the definitions set forth in this Article 1.  
(a)    The singular shall include the plural, and the masculine shall include the feminine and neuter, as the context requires.  
(b)    The terms "includes" or "including" means "including, but not limited to."  
(c)    Any term not defined in this Article 1, shall have its plain meaning in common English usage provided that words and abbreviations having well-known meaning in the United States electric generation industry shall have those meanings.  
(d)    Reference to an agreement, contract, or document shall include any subsequent amendments to such agreement, contract, or document unless otherwise stated herein.  
(e)    Reference to a Party includes that Party’s successors and permitted assigns.
(f)    Reference to a governmental authority shall include an entity succeeding to its functions.
(g)    All monetary amounts refer to the currency of the United States.
(h)    All references herein to time shall mean "Eastern Time."  Eastern Time means either Eastern Standard Time or Eastern Daylight Savings Time, as in effect, from time to time, in Richmond, Virginia. 
ARTICLE 2     
 
SALE AND PURCHASE OF SUBSTITUTE ENERGY
2.1    Purchase and Sale.  Beginning on the Actual Deactivation Date and continuing until the end of the Term, Westmoreland agrees to sell, and DNCP agrees to purchase, all of the Substitute Energy, subject to the terms and conditions of this Agreement and up to the Delivered Energy Cap. 
2.2    Forward Contract. The Parties acknowledge and agree that this Agreement constitutes a "forward contract" and the Parties agrees that both Parties are "forward contract merchants" within the meaning of the United States Bankruptcy Code.  

ARTICLE 3     
 
 NOTICES

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3.1    Notices.  Any notice or communication required to be in writing hereunder shall be given by any of the following means: registered, certified, or first class mail or ground or air courier, or mutually agreed electronic means such as email and PDF.  Such notice or communication shall be sent to the respective Parties at the address listed below.  Except as expressly provided herein, any notice shall be deemed to have been given when sent.  Any notice given by first class mail shall be considered sent at the time of posting and, if sent by ground or air courier, such notice shall be deemed sent one (1) Business Day after delivery to the courier. 
3.2    Addressees and Addresses.  For all notice purposes herein, the notice shall be addressed as follows:
In the case of Westmoreland, to:
Westmoreland Partners
9540 South Maroon Circle, Suite 200
Englewood, Colorado  80112
Attn:  Senior Vice President & Chief Administrative Officer
Email:  jgrafton@westmoreland.com
In the case of DNCP, to:
Dominion North Carolina Power
Director – Power Contracts
5000 Dominion Boulevard
Glen Allen, VA  23060
Attn: Director – Power Contracts
Email: j.scott.gaskill@dom.com

3.3    Changes to Addressees or Addresses.  Either Party may, by prior written notice to the other, change the representative or the address to which such notices and communications are to be sent.
ARTICLE 4     
 
TERM
4.1    Term.  The Term of this Agreement is from the Effective Date through March 31, 2019, unless sooner terminated or cancelled in accordance with the Agreement.
4.2    Superseding of the PPA.  On the Actual Deactivation Date, this Agreement shall automatically terminate and supersede the PPA. If the Actual Deactivation Date has not occurred prior to the Expected Deactivation Date, then this Agreement shall be considered as an amendment to the PPA for purposes of the Capacity Purchase Price (as defined in the PPA) such that the Capacity Purchase Price is replaced by the "Fixed Payment" set forth in Section 9.2 (Fixed Payment) and Schedule A – Pricing through the end of the Term.

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4.3    Actual Deactivation Date.  The Actual Deactivation Date shall be the date both the following have occurred:
(a)    PJM formally states to DNCP in a manner acceptable to DNCP that the Facility may be deactivated from the PJM system; and
(b)    Westmoreland and DNCP jointly agree by written notice to the other that each wishes to execute deactivation of the Facility from the PJM system on a date certain.
ARTICLE 5     
 
COMPLIANCE WITH LAWS; FINES AND PENALTIES
5.1    Compliance with Laws.  The Parties shall comply with all applicable laws, rules, regulations and ordinances in the performance of this Agreement.  
5.2    Fines Imposed on Westmorland.  Any fines or other penalties incurred by Westmoreland or its agents, employees or subcontractors for noncompliance by Westmoreland, its employees, or subcontractors with laws, rules, regulations or ordinances shall not be reimbursed by DNCP but shall be the sole responsibility of Westmoreland.  
5.3    Fines Imposed on DNCP.  If fines, penalties or legal costs are assessed against DNCP by any government agency or court or any other laws, rules, regulations or ordinances with which compliance is required herein, or if the work of Westmoreland or any part thereof is delayed or stopped by order of any government agency or court due to Westmoreland’s noncompliance with any such laws, rules, regulations or ordinances, Westmoreland shall indemnify and hold harmless DNCP against any and all fines or penalties imposed on DNCP clearly attributable to the sole failure of Westmoreland to comply therewith.  Westmoreland shall also reimburse DNCP for any and all legal or other expenses (including attorneys’ fees) reasonably incurred by DNCP in connection with such fines or penalties.
ARTICLE 6    
 
REPRESENTATIONS AND WARRANTIES OF WESTMORELAND

6.1    Representations and Warranties of Westmoreland.  Westmoreland and the general partners of Westmoreland hereby represent and warrant as follows:  
(a)    Organization. (i) Westmoreland is a partnership duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia; (ii) the general partners of Westmoreland are Westmoreland Roanoke Valley, L.P., a limited partnership whose general partner is WEI Roanoke Valley, Inc., both of which are duly organized, validly existing and in good standing under the laws of the State of Delaware, and Westmoreland–North Carolina Power, L.L.C., a limited liability company that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia; (iii)Westmoreland and the general partners of Westmoreland are qualified to do business in 

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North Carolina and in each other jurisdiction where the failure so to qualify would have a material adverse effect upon their business or financial condition; and (iv) each has all requisite power and authority to conduct its business, to own its properties, and to execute, to deliver, and to perform its obligations under this Agreement.
(b)    Authority.  The execution, delivery and performance by Westmoreland of this Agreement have been duly authorized by all necessary partnership, limited liability company or corporate action as applicable, and do not and will not: (i) require any consent or approval of the Westmoreland’s board of directors, partners or shareholders as applicable, other than that which has been obtained (evidence of which shall be, if it has not heretofore been, delivered to DNCP), (ii) violate any provisions of Westmoreland’s corporate bylaws or other organic documents, any indenture, contract or agreement to which it is a party or by which it or its properties may be bound, or any law, rule, regulation, order, writ, judgment, injunction, decree, determination, or award presently in effect having applicability to Westmoreland, or (iii) result in a breach or constitute a default under  Westmoreland’s corporate bylaws, other organic documents or other material indentures, contracts, or agreements, and Westmoreland is not in default under its corporate bylaws or other organic documents or other material indentures, contracts, or agreements to which it is a party or by which it or its property may be bound.
(c)    Governmental Approvals.  No authorizations or approval by any governmental or other official agency is necessary for the due execution and delivery by Westmoreland of this Agreement as in effect on the date of this Agreement.
(d)    Binding Agreement.  This Agreement is a valid and binding obligation of Westmoreland.
(e)    No Pending Actions.  There is no pending or threatened action or proceeding affecting Westmoreland before any court, governmental agency or arbitrator that could reasonably be expected to affect materially and adversely the financial condition of Westmoreland or the ability of Westmoreland to perform its obligations hereunder, or which purports to affect the legality, validity or enforceability of this Agreement (as in effect on the date of this Agreement).
ARTICLE 7     
 
SUBSTITUTE ENERGY 
7.1    Daily Elections by DNCP.  DNCP shall make the election to receive or not receive Substitute Energy on a daily basis.  
7.2    Delivered Energy Cap.  After the Actual Deactivation Date, Westmoreland shall have no further obligation to deliver Substitute Energy for any Year once the amount of Delivered Energy equals or exceeds the Delivered Energy Cap for that current Year, or partial year, as the case may be.

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7.3    Quantity of Delivered Energy.  DNCP shall have the right to request and receive, and Westmoreland has the obligation to deliver, Substitute Energy in the amount of 200 MWh in each hour, as elected by DNCP.  Delivered Energy shall equal the sum of the following:
(a)    Substitute Energy delivered to DNCP, and
(b)    Substitute Energy made available to DNCP as to which DNCP did not exercise its right to take delivery.
DNCP shall provide Westmoreland with a requested schedule of hourly Substitute Energy no later than 1000 hours on the first (1st) Business Day following the Day in question and Westmoreland shall purchase the designated MWh of Substitute Energy and shall enter into a bilateral schedule with DNCP, pursuant to the PJM Agreements (the "Substitute Energy Bilateral Schedule"), to sell such MWh of Substitute Energy to DNCP for the Day in question.  Westmoreland shall enter such Substitute Energy Bilateral Schedule no later than 1400 hours on the first (1st) Business Day following the Day in question at which time such a Substitute Energy Bilateral Schedule shall be reviewed for conformity to DNCP’s request submitted to Westmoreland as above and if such Substitute Energy Bilateral Schedule is in compliance with DNCP’s request shall be confirmed by DNCP and accepted by PJM for the Day in question.  The Party entering such a Substitute Energy Bilateral Schedule into PJM must give the other Party notice of such event as soon as practicable.  The Parties shall use the then current PJM procedures to effect all Substitute Energy Bilateral Schedules.  Westmoreland, or its designee, shall be the Substitute Energy seller, DNCP shall be the designated buyer, and the corresponding source and sink shall be the PJM-West Hub.  The designated seller shall be authorized and competent to conduct such transactions in the PJM Substitute Energy procedures.  Pricing to be paid by DNCP for such Substitute Energy shall be the Energy Purchase Price specified in Schedule A – Pricing.  If DNCP has made an election for Substitute Energy as provided in Section 7.1 (Daily Elections by DNCP) and Westmoreland fails to enter or confirm such Substitute Energy Bilateral Schedule as described in this paragraph, Westmoreland shall be liable to DNCP for damages as set forth in Section 10.3 (Failures with Regard to Bilaterals and Liability).  
7.4    Delivery Point.  Westmoreland shall sell and deliver, or cause to be delivered, and DNCP shall purchase and receive, or cause to be received, the quantity of the Substitute Energy at the Substitute Delivery Point.
ARTICLE 8     
 
BOOKS AND RECORDS
8.1    Records.  Each Party shall keep complete and accurate records and all other data required by each of them for the purposes of proper administration of this Agreement.
8.2    Time Periods.  All such records shall be maintained for a minimum of five (5) years after the creation of such record or data and for any additional length of time required by regulatory agencies with jurisdiction over the Parties; provided, however, that Westmoreland shall not dispose 

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of or destroy any such records even after the five (5) years without thirty (30) Days prior notice to DNCP.
8.3    Examination of Records.  Either Party shall have the right from time to time, upon fourteen (14) Days written notice to the other Party, to examine the relevant records and data of the other Party relating to this Agreement at any time during the period the records are required to be maintained.
ARTICLE 9     
 
COMPENSATION, PAYMENT, AND BILLINGS
9.1    Variable Payment.  Beginning on the Actual Deactivation Date, DNCP shall compensate Westmoreland for Substitute Energy on a per kWh basis at a rate equal to the Energy Purchase Price specified in Schedule A – Pricing.
9.2    Fixed Payment.  On the earlier to occur of the Actual Deactivation Date or the Expected Deactivation Date, DNCP shall compensate Westmoreland for Substitute Energy on a fixed per kW-day basis at a rate equal to the Fixed Payment as specified in Schedule A – Pricing.  The Fixed Payment shall supersede the Capacity Purchase Payment in Schedule C of the PPA.
9.3    Dispatch Incentive Payment. On termination of the PPA in accordance with Section 4.2 (Superseding of the PPA), Westmoreland shall pay DNCP the last and final Dispatch Incentive Payment, which may be netted against DNCP’s payment for the final Month of the applicable period of the PPA.
9.4    Payment instructions.  Payment to DNCP shall be made by check to the following address:
Dominion North Carolina Power
5000 Dominion Boulevard
Glen Allen, VA 23060
Attention: Director – Power Contracts

Payment to Westmoreland shall be made by wire transfer to the following account:

Bank Name: The Private Bank
Bank Address: 70 W Madison Ave, Chicago, IL 60606
Routing No: 071006486
Beneficiary Name: Westmoreland Partners
Account No: 2310150
9.4.1    Changes to Instructions.  Either Party may, by prior written notice to the other, change the address to which such payments are to be sent.

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9.5    Netting.  The Parties hereby agree that they may discharge mutual debts and payment obligations due and owing to each other on the same date through netting, in which case all amounts owed by each Party to the other Party for performance or non-performance under this Agreement, including any related damages calculated pursuant to Section 10.3 (Failures with Regard to Bilaterals and Liability) may be set-off against payments due the other Party, including Fixed Energy Payments.
ARTICLE 10     
 
DEFAULTS AND REMEDIES
10.1    Defaults and Cure.  If either Party defaults under this Agreement, then the non-defaulting Party shall give the defaulting Party written notice describing such default.  The defaulting Party shall be given sixty (60) Days from the receipt of such notice to cure such default; provided, however, that there shall be no cure period for defaults under Section 10.2.1 Bankruptcy or Insolvency Events) and the cure period is limited to five (5) Days for defaults under Section 10.2.2 (Security).  If the default (other than those described in Sections 10.2.1 and 10.2.2) cannot be cured within sixty (60) Days with the exercise of reasonable diligence, then the non-defaulting Party shall grant an additional reasonable period of time to cure such default, if the default is an Westmoreland default, but such period of time shall not exceed an additional sixty (60) Days in which to cure such default.  If the defaulting Party fails to cure such default within the prescribed period of time, then the non-defaulting Party may, in addition to any other rights or remedies available at law or in equity, immediately terminate this Agreement and consider defaulting Party in material breach of its obligations under this Agreement.  
10.2    Westmoreland Defaults.  Any of the following conditions shall be considered defaults by Westmoreland under this Section 10.2, including without limitation:
10.2.1    Bankruptcy or Insolvency Event.  If Westmoreland:
(a)    commences a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent; 
(b)    consents to the entry of a decree or order for relief in respect of Westmoreland in any involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it; 
(c)    files any petition, answer or consent seeking reorganization or relief under any applicable Federal or state law;
(d)    consents to the filing of any petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of Westmoreland or of any substantial part of its property; 
(e)    makes an assignment for the benefit of creditors; 

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(f)    is unable or admits in writing its inability to pay its debts generally as they become due; or 
(g)    takes any action in furtherance of any of the foregoing.
10.2.2    Security.  Failure to post security as stipulated in Article 11 (Performance Security), for which event a five (5) Day cure period shall be permitted hereunder; Westmoreland agrees that in no event shall Westmoreland be entitled to any further extension of the deadline for the posting of security pursuant to Section 11.1 (Amount), including by reason of Force Majeure pursuant to Article 12 (Force Majeure).
10.3    Failures with Regard to Bilaterals and Liability.  If Westmoreland is obligated but fails to either (i) submit to PJM a proposed Substitute Energy Bilateral Schedule to which the Parties have agreed, or (ii) confirm to PJM a proposed Substitute Energy Bilateral Schedule submitted by DNCP, to the extent of such failure, as Westmoreland’s sole liability for damages and DNCP’s exclusive remedy for damages therefor, Westmoreland shall be liable to DNCP for "Substitute Energy Non-Delivery Damages." The Substitute Energy Non-Delivery Damages, for each MWh that would have been scheduled in such proposed Substitute Energy Bilateral Schedule, shall be equal to the following calculation:
The sum of two dollars ($2) per MWh multiplied by the number of MWh pursuant to the proposed Substitute Energy Bilateral Schedule to which the Parties had agreed, plus one hundred percent (100%) of the positive difference, if any, obtained by subtracting the Energy Purchase Price from the Day-ahead Price at the Dominion Zone in PJM multiplied by the number of MWh pursuant to the proposed Substitute Energy Bilateral Schedule to which the Parties had agreed.
ARTICLE 11     
 
PERFORMANCE SECURITY
11.1    Amount.  Commencing with the Actual Deactivation Date, Westmoreland shall provide and maintain, at Westmoreland’s sole expense, security for Westmoreland’s performance under this Agreement as described in Section 11.2 (Form of Security), in an amount equal to two million five hundred thousand dollars ($2,500,000).  Such security shall be maintained throughout the Term of this Agreement.  
11.2    Form of Security.  Security for compliance with Section 11.1 (Amount) shall consist of one or more of the following:
(a)    An unconditional and irrevocable direct pay letter of credit issued by a bank acceptable to DNCP in a form and with substance acceptable to DNCP;
(b)    A payment or performance bond issued by a company acceptable to DNCP for payment to DNCP in the event of a material breach by Westmoreland in a form and with substance acceptable to DNCP;

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(c)    A corporate guaranty that DNCP, at its discretion, deems to be equivalent in quality to the security detailed in (a) and (b) above in a form and with substance acceptable to DNCP.
11.3    Use of Security.  DNCP shall be allowed to collect any funds due and owing by Westmoreland to DNCP from the performance security provided under this Article 11 that are not paid in a timely manner, and Westmoreland shall be obligated to replenish the security after any such withdrawal.  
ARTICLE 12     
 
FORCE MAJEURE
12.1    Obligations Excused.  Neither Party shall be responsible or liable for or deemed in breach of this Agreement because of any delay in the performance of their respective obligations hereunder due solely to circumstances beyond the reasonable control of the Party experiencing such delay, including but not limited to acts of God or actions or failures to act on the part of governmental authorities preventing performance (such causes hereinafter called "Force Majeure"); provided, that:
(a)    The non-performing Party gives the other Party written notice describing the particulars of the occurrence within seventy-two (72) hours of the beginning of said occurrence.
(b)    The suspension of performance is of no greater scope and of no longer duration than is required by the Force Majeure;
(c)    The non-performing Party uses its best efforts to remedy its inability to perform;
(d)    When the non-performing Party is able to resume performance of its obligations under this Agreement, that Party shall give the other Party written notice to that effect; and
(e)    The Force Majeure was not caused by or connected with any negligent or intentional acts, errors, or omissions, or failure to comply with any law, rule, regulation, order or ordinance or any breach or default of this Agreement.
12.2    No Extension of Term.  In no event will any condition of Force Majeure extend this Agreement beyond its stated Term.  If any condition of Force Majeure delays a Party’s performance for a time period greater than three (3) months, the Party not delayed by such Force Majeure may terminate this Agreement, without further obligation, or extend such period at its sole discretion if the Party delayed by such Force Majeure is exercising due diligence in its efforts to cure the condition of Force Majeure.
12.3    Impact on Payments.  In no event shall DNCP pay Westmoreland the Energy Purchase Price and Fixed Payment during a Force Majeure Period (which, for the purpose of this Article 12, 

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means the period of time beginning with the date designated in Westmoreland's notice provided pursuant to 12.1(a) hereof and ending with Westmoreland's notice provided pursuant to Section 12.1(d) hereof. 
ARTICLE 13     
 
TAXES 
13.1    Taxes.  All present or future federal, state, municipal or other lawful taxes applicable by reason of the sale of Substitute Energy shall be paid by Westmoreland.
ARTICLE 14     
 
CHOICE OF LAW
14.1    Choice of Law.  This Agreement shall be interpreted, construed and governed by the laws of the Commonwealth of Virginia.  The Parties hereby submit to the jurisdiction of courts located in, and venue is hereby stipulated to be in, Richmond, Virginia.
ARTICLE 15     
 
MISCELLANEOUS PROVISIONS
15.1    Assignment.  Neither Party shall assign this Agreement or any portion thereof without the prior written consent of the other Party which consent shall not be unreasonably withheld; provided, however, such consent shall not be required prior to an assignment to a parent, subsidiary or affiliated entity; but provided, further that:
(a)    No assignment shall impair any security given by Westmoreland hereunder; provided that if, as of the time of such assignment, Westmoreland has posted an irrevocable, direct pay letter of credit with DNCP pursuant to Section 11.2 (a) (Form of Security), an assignee may provide a letter of credit in the same amount and from equivalent or better issuer quality in substitution for the letter of credit theretofore posted by Westmoreland hereunder; and
(b)    Unless expressly agreed by the other Party, no assignment, whether or not consented to, shall relieve the assignor of its obligations hereunder in the event its assignee fails to perform.
15.2    Amendment.  This Agreement, including the appendices hereto, can be amended only by mutual agreement between the Parties in writing.
15.3    No Waiver.  The failure of either Party to insist in any one or more instances upon strict performance of any provisions of this Agreement, or to take advantage of any of its rights hereunder, shall not be construed as a waiver of any such provisions or the relinquishment of any such right or any other right hereunder, which shall remain in full force and effect.

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15.4    Headings.  The headings contained in this Agreement are used solely for convenience and do not constitute a part of the agreement between the Parties hereto, nor should they be used to aid in any manner in the construction of this Agreement.
15.5    Not for Benefit of Third Parties.  This Agreement is intended solely for the benefit of the Parties.  Nothing in this Agreement shall be construed to create any duty to, or standard of care with reference to, or any liability to, any person not a Party to this Agreement.
15.6    No Joint Venture.  This Agreement shall not be interpreted or construed to create an association, joint venture, or partnership between the Parties or to impose any partnership obligation or liability upon either Party.  Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative of, or to otherwise bind, the other Party.
15.7    Survival.  Cancellation, expiration or earlier termination of this Agreement shall not relieve the Parties of obligations that, by their nature, should survive such cancellation, expiration or termination, including, without limitation, warranties, remedies, promises of indemnity and confidentiality.
15.8    Waiver of Consequential Damages.  Neither Party shall be liable to the other Party for any special, incidental, indirect or consequential damages.
15.9    Indemnification.  The Parties agree to indemnify and hold each other harmless from and against all claims, demands, losses, liabilities and expenses (including reasonable attorneys’ fees) for personal injury or death to persons and damage to each other’s property or facilities or the property of any other person or entity to the extent arising out of, resulting from or caused by their negligent or intentional acts, errors, or omissions. 
ARTICLE 16     
 
STATUTORY AND REGULATORY CHANGES
16.1    Disallowance.  The Parties recognize and hereby agree that if any federal, state or municipal government or regulatory authority, including, without limitation, the SCC or the NCUC, should for any reason enter an order, modify its rules, or take any action whatsoever, having the effect of disallowing DNCP the recovery from its customers of all or any portion of the payments for  Substitute Energy hereunder (hereinafter referred to as the "Disallowance") (except where such disallowance is due to DNCP’s failure to seek recovery or comply with procedural requirements governing recovery of such costs), then:
16.1.1    If the Disallowance occurs for payments made after the Effective Date, all future payments for Substitute Energy shall not exceed the amount unaffected by the Disallowance.  Further, Westmoreland shall repay the full amount of the Disallowance with Interest by one (1) year from the date of such Disallowance.  The Parties obligate themselves to all good faith efforts to establish, if practicable, an appeal and overruling of the Disallowance or a superseding order, 

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approval of modified rules or tariffs, or other action so as to allow timely resumption of full, or failing that, adjusted payments hereunder.
16.2    Mobile Sierra.  Neither Party shall seek, nor shall they support any third party in seeking, to prospectively or retroactively revise the rates, terms or conditions of service of this Agreement through application or complaint to FERC pursuant to the provisions of Section 205, 206 or 306 of the Federal Power Act, or any other provisions of the Federal Power Act, absent prior written agreement of the Parties.  Further, absent the prior agreement in writing by both Parties, the standard of review for changes to the rates, terms or conditions of this Agreement proposed by a Party, a non-party or the FERC acting sua sponte shall be the "public interest" application of the "just and reasonable" standard of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350 U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350 U.S. 348 (1956), and clarified by Morgan Stanley Capital Group, Inc. v. Public Util. Dist. No. 1 of Snohomish, 554 U.S. 527 (2008).
ARTICLE 17     
 
ENTIRETY
17.1    Entirety of Agreement.  This Agreement is intended by the Parties as the final expression of their Agreement and is intended also as a complete and exclusive statement of the terms of their Agreement with respect to the energy sold and purchased hereunder.  All prior written or oral understandings, offers or other communications of every kind pertaining to the sale of energy hereunder between the Parties or their respective predecessors-in-interest are hereby abrogated and withdrawn (including the PPA once the Actual Deactivation Date occurs).

[Signature page follows.]

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IN WITNESS WHEREOF, the Parties have caused this Substitute Energy Purchase Agreement to be executed as of the Effective Date. 

WESTMORELAND PARTNERS                          a Virginia general partnership
BY: its general partners:
WESTMORELAND-ROANOKE VALLEY, L.P. a Delaware limited partnership, 
By:  WEI Roanoke Valley, its general partner    
	
		
	By:
	/s/ Jennifer S. Grafton

	 
	Jennifer S. Grafton

	 
	Director

AND:
WESTMORELAND-NORTH CAROLINA POWER, L.L.C., a Virginia limited liability company
	
		
	By:
	/s/ Jennifer S. Grafton

	 
	Jennifer S. Grafton

	 
	Director

VIRGINIA ELECTRIC AND POWER COMPANY
	
		
	By:
	/s/ Michael S. Hupp Jr.

	 
	Michael S. Hupp Jr.

	 
	Authorized Representative

Schedule A – 1

SCHEDULE A

PRICING  

		
	I.
	VARIABLE ENERGY PRICING:

This variable energy pricing for Substitute Energy shall become effective as of the Actual Deactivation Date. 

For any Substitute Energy delivered up to the Delivered Energy Cap in a Year, the Energy Purchase Price per kWh for Substitute Energy shall be equal to sum of the Escalating Energy Component and the Non-Escalating Energy Component where:

The initial "Escalating Energy Component" equals 0.626 cents/kWh in 2016 dollars.  This price shall be increased or decreased, as appropriate on each April 1 thereafter, as follows:  
    
0.626 cents/kWh shall be multiplied by a fraction, the numerator of which is the Gross Domestic Product Implicit Price Deflator Index (the "GDPIPD") for the previous Year (as specified by the US Department of Commerce, or such other organization as the Parties may mutually agree), and the denominator of which is the GDPIPD for Year 2012.

The "Non-Escalating Energy Component" equals 0.900 cents/kWh. 

		
	II.
	FIXED PRICING (i.e., per kW, not dependent on kWh delivered) 

The "Fixed Payment" shall become effective as of the earlier to occur of the Actual Deactivation Date or the Expected Deactivation Date and shall be payable monthly and shall be the product of (i) 200,000 kW, (ii) the Fixed Unit Price, and (iii) the number of Days in the Month.

Where, the "Fixed Unit Price" equals:   

For 2017:    57.8470 cents/kW-Day
For 2018:     58.3647 cents/kW-Day
For 2019:     51.1992 cents/kW-Day

Schedule A – 2

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