Document:

Exhibit

ELIGIBILITY
Employees of Westmoreland Coal Company (“WCC”), or any of its subsidiaries, pay grade 9 or higher scheduled to work at least 40 hours per week are eligible for AIP. Designated front-line supervisors in the U.S. that are pay grade 8 are also eligible. Payments are based on three components:  financial, safety, and individual. AIP payout is based on the achievement of each component and is not guaranteed to pay out at target. Awards are capped at two times target for each component. The target percentage of salary is referenced in Schedule 1.

COMPONENTS OF AIP

	
		
	Financial
	Based on WCC or the employee’s mine location attaining or exceeding its performance goal approved by the Board of Directors each year

	Safety
	Based on lagging and leading indicators for each mine or for global consolidated

	Individual
	Based on achievement of 3 individual goals established by individual and approved by manager

 

Financial Goals: The financial goal is based on the performance of either a specific mine or the global consolidated segment.  Please refer to Schedule 1 for relevant financial goals.

		
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	Financial Threshold: Financial Threshold is defined as meeting 80% the financial goal. 50% of the financial component pays out upon achieving Financial Threshold. If performance fails to meet Financial Threshold, there will be no financial payout.

		
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	Financial Target:  Financial Target is defined as meeting 100% of the financial goal. 100% of the financial component pays out upon achieving Financial Target. Results that fall between Financial Threshold and Financial Target will result in a prorated payout between 50% and 100%.  

		
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	Financial Maximum:  Financial Maximum is defined as exceeding Financial Target by 20%.  200% of the financial component pays out upon achieving Financial Maximum.  Performance that falls between Financial Target and Financial Maximum will result in a prorated calculation and payout between 100% and 200%. Two hundred percent (200%) is the maximum payout of the Financial Goal even if performance exceeds Financial Maximum.

If global consolidated financial performance is below 80%, mine financial performance will be capped at 100% regardless of mine level performance.

Safety Goals:  The safety goals are comprised of lagging (running 3-year average) and leading indicators.  Please refer to Schedule 1.  The metrics are reported monthly.  The safety score is based on actual versus target, and weighted as follows:

		
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	General Managers – 50% on lagging indicators, 50% on leading indicators; and

		
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	All others – 30% on lagging indicators, 70% on leading indicators.

   
In the event of a reportable fatality due to safety, the following rules shall apply:
		
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	No yearly safety bonus will be paid to the facility incurring the fatality;

		
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	Whether or not a safety bonus will be paid to a corporate employee will be at the discretion of the CEO for employees Grade Level 9 through 13, at the discretion of the Compensation & Benefits Committee for the Named Executive Officers and at the discretion of the Board of Directors for the CEO; and

		
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	All other locations will receive pay out based upon their facility’s leading and lagging indicators.

Individual Goals:  The individual goal component is based on achievement of individual goals tied to corporate initiatives.

		
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	The percentage payout will be evaluated on achievement of certain individual goals established between the employee and his/her manager. Employees have the opportunity to earn more than 100% of their individual goals up to 200% based on exemplary achievement of these performance objectives as evaluated by their manager and approved by the Chief Executive Officer (“CEO”).

		
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	Employees will select three AIP goals. These goals should be defined in writing by January 31, but in no case later than March 31 of each year (or in the event that an employee is hired or promoted into an AIP eligible position after the first of the year, on or within 30 days of the employee's date of event). All goals shall be "SMART" goals:  specific, measurable, aligned, realistic, and time-bound. Individual goals cannot be related to safety or financial performance. Further, there will be no payout for individual goals if an employee is deemed responsible for a material weakness relative to the Sarbanes-Oxley Act. WCC reserves the right to recuperate any previous payouts made if gross omission or error is discovered after the fact.

AIP TERMS AND CONDITIONS

		
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	Any incentive award may be adjusted either upward or downward at the sole discretion of the CEO and/or the Board of Directors, based upon company or individual performance and/or any other factor regardless of whether it is earned in accordance with this and/or any other document.

		
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	Awards granted will be calculated based upon the participant's pay grade and base salary on September 30, 2017. For the financial, safety and individual percentages, the location and grade of the employee on September 30 will dictate payout. If the employee is a global employee as of September 30, then global/corporate components and percentages apply.  If the employee is a mine employee, then the mine-level components and percentages apply.  See Schedule 1 for the components and percentages.

		
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	Any employee hired October 1, 2017 or later is ineligible for the 2017 AIP.  Further, changes made to pay grade or salary after September 30 are not considered for purposes of the 2017 AIP.

		
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	Employees must be in a qualified pay grade by September 30 to participate. A participant must be employed by WCC on the date the payments are distributed in 2018 in order to receive payment under the Guideline, except as approved by the Compensation and Benefits (“C&B”) Committee.

		
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	Employees must be an active full-time employee, scheduled to work at least 40 hours per week, and in good standing.  All incentive awards granted will be calculated excluding disability pay continuation three months or greater.  For example, if an employee worked nine months, but was on disability pay continuation for three months, upon return, he/she would receive a 75% AIP bonus (annual salary, less disability pay continuation).  

		
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	The C&B Committee shall approve the financial and safety metrics in the 1st quarter of 2018.

		
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	AIP payments will be distributed following completion of WCC’s consolidated annual audit and approval of the payout by the Board of Directors.

		
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	Taxes, deferrals, and distributions that are required to be withheld by federal, state, provisional or local or other governmental authority shall be deducted from all cash payments.

		
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	No member of the Board of Directors shall be liable for any action taken or determination made in good faith with respect to the AlP.

		
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	Receipt of any portion of the award is subject to all terms and conditions described in this program.

		
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	Participation in the AIP is neither a contract nor a guarantee of continuing employment. The AIP may be modified, suspended or terminated at any time by the Company and no participant has any entitlement until the annual payout is made.

		
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	WCC’s CEO has final say on the interpretation of the AIP and procedures, except where the CEO is directly impacted, in which case the Board of Directors has final say on the interpretation of the AIP.Exhibit

CONSENT AND FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
This CONSENT AND FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT, dated as of January 29, 2016 (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”; 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 and Dakota, each 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”), PRAIRIE MINES & ROYALTY ULC, an unlimited liability company organized under the laws of the Province of Alberta (“PMRL”; together with WC Investments, Westmoreland Canada, WPR, and PMRL, each 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”).  
W I T N E S S E T H:
WHEREAS, the US Borrowers, the Canadian Borrowers, WCC B.V., 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 

	
			
	 
	 
	 

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Consent and Second Amendment to Second Amended and Restated Loan and Security Agreement dated as of May 29, 2015 and that certain Third Amendment to Second Amended and Restated Loan and Security Agreement dated as of December 31, 2015 (as further amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) pursuant to which the US Borrowers and the Canadian Borrowers established certain financing arrangements with the Lenders; 
WHEREAS, Borrowers have notified Lenders that Westmoreland has entered into a Stock Purchase Agreement dated as of July 1, 2015 (together with all exhibits and schedules thereto, the “Purchase Agreement”) with BHP Billiton New Mexico Coal, Inc. (the “Seller”), pursuant to which, among other things, (i) Westmoreland has agreed, subject to the terms and conditions set forth in the Purchase Agreement, to purchase all of the issued and outstanding equity of San Juan Coal Company, a Delaware corporation (“SJCC”), and San Juan Transportation Company, a Delaware corporation (together with SJCC, the “Targets”), and (ii) upon closing of such equity purchase, each Target will become a wholly owned subsidiary of Westmoreland (such transactions contemplated by the Purchase Agreement, the “San Juan Acquisition Transaction”);
WHEREAS, pursuant to the Consent Under Second Amended and Restated Loan and Security Agreement dated October 19, 2015 among Westmoreland, the other Borrowers and the Lenders, the Lenders consented to the formation of WLB Escrow Corporation, a Delaware corporation, that is a wholly-owned Unrestricted Subsidiary of Westmoreland;
WHEREAS, WLB Escrow Corporation intends to change its name to Westmoreland San Juan Holdings, Inc.(“SJ Holdings”);
WHEREAS, to complete the San Juan Acquisition Transaction, SJ Holdings intends to form a new subsidiary, Westmoreland San Juan, LLC, a Delaware limited liability company “Newco”);
WHEREAS, Newco will be an Unrestricted Subsidiary of Westmoreland to which Westmoreland will assign the Purchase Agreement, and Newco’s sole purposes will be to purchase the equity of the Targets pursuant to the Purchase Agreement, to act as the holding company for the Targets and to borrow and repay the San Juan Acquisition Debt (as defined below);
WHEREAS, to finance the San Juan Acquisition Transaction, Westmoreland intends to invest $10,000,000 (the “Newco Equity Investment”) as equity into Newco and pay expenses in connection with the San Juan Acquisition Transaction and San Juan Acquisition Debt not to exceed $4,000,000 in the aggregate (the “Expenses Payment”), and Newco intends to incur a new term loan in an amount not to exceed $125,000,000 from NM Capital Utility Corporation, a Delaware corporation (the “Newco Lender”), in accordance with the terms of that certain Loan Agreement to be dated as of January 31, 2016 (as amended, modified or restated from time to time, the “San Juan Loan Agreement”) among Newco Lender, Bank of Tokyo-Mitsubishi UFJ, Ltd., as agent, Newco, as the borrower thereunder, and SJ Holdings and the Targets, as guarantors (the “San Juan Acquisition Debt”);  
WHEREAS, in connection with the closing of the San Juan Acquisition Transaction, Westmoreland is required to indemnify Seller or its Affiliates for certain contingent obligations of 

	
			
	 
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Seller relating to San Juan in accordance with the terms of (i) that certain Indemnification Agreement Regarding Guaranty of Payment of Utility Payment Stream dated as of January 31, 2016 (Cimarron) among Westmoreland Coal Company and BHP Minerals International, LLC, a Delaware limited liability company, attached hereto as Exhibit A, (ii) that certain Indemnification Agreement Regarding Fruitland Subleases and Guaranty of Payment dated as of January 31, 2016 among Westmoreland, BHP Minerals International, LLC, a Delaware limited liability company, and BHP Billiton Limited, a company registered in Victoria, Australia, attached hereto as Exhibit B (collectively, the “BHP Indemnification Agreements”);
WHEREAS, in connection with the San Juan Acquisition Transaction, Westmoreland agreed to enter into that certain (i) Coal Supply Agreement dated as of July 1, 2015 between Public Service Company of New Mexico (“PNM”) and Westmoreland (together with the exhibits and schedules thereto, the “San Juan Coal Supply Agreement”), (ii) Reclamation Services Agreement dated as of July 1, 2015 between PNM and Westmoreland (together with the exhibits and schedules thereto, the “Reclamation Services Agreement”), and (iii) Coal Combustion Residuals Disposal Agreement dated as of July 1, 2015 between PNM and Westmoreland (together with the exhibits and schedules thereto, the “CCRD Agreement” and, collectively with the San Juan Coal Supply Agreement and the Reclamation Services Agreement, the “PNM Agreements”);
WHEREAS, neither Westmoreland nor any of the other Borrowers shall (i) be a borrower, guarantor, loan party, or other obligor, or have any obligation or liability to any lender party to the San Juan Loan Agreement, or for any of the San Juan Acquisition Debt or (ii) have any obligation or liability to provide credit support or otherwise be liable to any third party for any other obligation of SJ Holdings, Newco or the Targets or any other Person party to the San Juan Acquisition Transaction other than the contingent obligations of Westmoreland under the BHP Indemnification Agreements and the PNM Agreements; 
WHEREAS, the Borrowers recognize that pursuant to the Loan Agreement, the Borrowers are required to obtain the consent of  Lenders prior to (i) the consummation of the formation of Newco, (ii) the making of the Newco Equity Investment, (iii) the consummation of the San Juan Acquisition Transaction, (iv) entering into the BHP Indemnification Agreements and (v) the effectiveness of the PNM Agreements;
WHEREAS, the Borrowers are requesting, pursuant to the Loan Agreement, (a) the consent of Lenders to (i) the formation of Newco, (ii) the making of the Newco Equity Investment, (iii) the consummation of the San Juan Acquisition Transaction, (iv) the entry into the BHP Indemnification Agreements and the PNM Agreements and (v) the designation of SJ Holdings, Newco and the Targets as Unrestricted Subsidiaries, and (b) the amendment to the Loan Agreement in accordance with the terms herein; and
WHEREAS, the Lenders are willing to consent to the foregoing transactions and revise the Loan Agreement as set forth herein subject to the Borrowers executing and delivering this Amendment to the Administrative Agent and the Lenders.

	
			
	 
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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.
Section 2.    Consent.  Subject to the satisfaction of the conditions precedent set forth in Section 4 hereof and the covenants set forth in Section 5 hereof:
     (a)    Notwithstanding Section 12.7 (Use of Proceeds), Section 13.4 (Mergers, Sales, Acquisitions, Subsidiaries and Other Transactions Outside the Ordinary Course of Business), Section 13.6 (Investments/Loans), Section 13.9 (Affiliate Transactions) and Section 13.13 (Contingent Obligations) of the Loan Agreement, Lenders hereby consent to (i) the formation of Newco, (ii) the designation of each of SJ Holdings, Newco and the Targets as Unrestricted Subsidiaries, (iii) the making of the Newco Equity Investment, (iv) the consummation of the San Juan Acquisition Transaction, (v) the making of the Expenses Payment, and (vi) entering into the BHP Indemnification Agreements and the PNM Agreements, and the performance of its obligations thereunder (including, without limitation, the entry into, and performance of its obligations under, the guaranties that are exhibits to the PNM Agreements) so long as no Borrower is or shall be required to (A) become a borrower, guarantor or loan party under the San Juan Loan Agreement, or otherwise have any obligation or liability for the San Juan Acquisition Debt at any time, (B) assume any liabilities or obligations of SJ Holdings, Newco or the Targets (including, but not limited to, the San Juan Acquisition Debt) at any time, other than the contingent obligations of Westmoreland under the BHP Indemnification Agreements and the PNM Agreements, or (C) have any obligation or liability to provide credit support or otherwise be liable to any third party at any time, for any other obligation of SJ Holdings, Newco or the Targets other than the contingent obligations under the BHP Indemnification Agreements and the PNM Agreements.  In addition to the foregoing, consent to the transaction is subject to the satisfaction of the following financial covenants after giving effect to the closing of  the San Juan Acquisition Transaction on a pro-forma basis calculated on a basis consistent with Exhibit C attached hereto: (i) the Borrowers have a Leverage Ratio of no more than 4.0:1.0 as of the last day of the fiscal quarter most recently ended after giving effect to such San Juan Acquisition Transaction (including, but not limited to, the inclusion of the pro-forma EBITDA of the Targets for the twelve month period ending December 31, 2015) and (ii) the Borrowers have total funded indebtedness (comprised of the Secured Term Debt and the San Juan Acquisition Debt) of less than $810,000,000.  Lenders acknowledge that pursuant to Section 12.13(c) of the Loan Agreement, neither SJ Holdings, Newco nor the Targets are 

	
			
	 
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required to become or will become Borrowers under the Loan Agreement, subject to the continued satisfaction of the terms herein.
(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.
Section 3.    Amendments to the Loan Agreement.  Subject to the terms and conditions hereof, the Loan Agreement is amended as follows:
(a)    The definition of the terms “BHP Indemnification Agreements”, “CCRD Agreement”, “NM Capital”, “PNM Agreements”, “Reclamation Services Agreement”, “San Juan”, “San Juan Acquisition”, “San Juan Acquisition Debt”, “San Juan Coal Supply Agreement”, “San Juan Loan Agreement” and “SJ Holdings” are hereby added to the Loan Agreement to read as follows:
“BHP Indemnification Agreements” means (i) that certain Indemnification Agreement Regarding Guaranty of Payment of Utility Payment Stream dated as of January 31, 2016 (Cimarron) among Westmoreland San Juan Coal Company and BHP Minerals International, LLC, a Delaware limited liability company, and (ii) that certain Indemnification Agreement Regarding Fruitland Subleases and Guaranty of Payment dated as of January 31, 2016 among Westmoreland, BHP Minerals International, LLC, a Delaware limited liability company, and BHP Billiton Limited, a company registered in Victoria, Australia.
“CCRD Agreement” means that certain Coal Combustion Residuals Disposal Agreement dated as of July 1, 2015 between Public Service Company of New Mexico and Westmoreland, together with the exhibits and schedules thereto.
“NM Capital” means NM Capital Utility Corporation, a Delaware corporation.
“PNM Agreements” means, collectively, the San Juan Coal Supply Agreement, the Reclamation Services Agreement and the CCRD Agreement.
“Reclamation Services Agreement” means that certain Reclamation Services Agreement dated as of July 1, 2015 between Public Service 

	
			
	 
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Company of New Mexico and Westmoreland, together with the exhibits and schedules thereto.
“San Juan” means collectively, each of San Juan Coal Company, a Delaware corporation, and San Juan Transportation Company, a Delaware corporation.
“San Juan Acquisition” means the purchase by SJ Holdings of the equity interests of San Juan.
“San Juan Acquisition Debt” means all indebtedness and liabilities arising under the San Juan Loan Agreement.
“San Juan Coal Supply Agreement” means that certain Coal Supply Agreement dated as of July 1, 2015 between Public Service Company of New Mexico and Westmoreland. 
“San Juan Loan Agreement” means that certain Loan Agreement dated as of January 31, 2016 among NM Capital, as lender, Tokyo-Mitsubishi UFJ, Ltd., as agent, Westmoreland San Juan Holdings, Inc., Westmoreland San Juan LLC, San Juan Transportation Company and San Juan Coal Company, as amended, modified or restated from time to time.
“SJ Holdings” means Westmoreland San Juan Holdings, Inc., a Delaware corporation.
(b)    Paragraph (9) of the definition of “Interest Expense” set forth in Section 1 of the Loan Agreement is hereby amended and restated to read as follows:
(9)    all interest on any Indebtedness of any other Person guaranteed by such Person; provided, that to the extent directly related to the issuance of the Secured Term Debt, amortization of debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded.  Interest Expense shall be calculated after giving effect to Hedging Obligations (including associated costs) involving interest rate swap and collar agreements, but excluding unrealized gains and losses with respect to Hedging Obligations.  Notwithstanding the foregoing, Interest Expense shall be allocated among the Canadian Borrowers and the US Borrowers on a percentage basis for each calendar year as follows: 
	
			
	Computation Date
	Canadian Interest Expense
	US Interest Expense

	Fourth Quarter 2015 and each year thereafter
	70.0%
	30.0%

	
			
	 
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(c)    Each of Newco and the Targets shall be deemed to be an Unrestricted Subsidiary under the Loan Agreement, subject to the limitations set forth in the definition of “Unrestricted Subsidiary.”  It is understood and agreed that all financial performance of SJ Holdings, Newco and the Targets shall be excluded from the financial covenant calculations set forth in Section 14 of the Loan Agreement.
(d)    A new Section 12.14 is hereby added to the Loan Agreement to read as follows:
12.14  San Juan Escrow Account.  On or before March 1, 2016, Westmoreland shall cause San Juan to establish an escrow account (or other depository account acceptable to Administrative Agent in its sole discretion) at PrivateBank (the “San Juan Royalty Escrow Account”) which will be utilized exclusively for the deposit of all utility payment streams and economic interest payments (collectively, the “San Juan Royalty Payments”) received from Public Service Company of New Mexico (“PNM”) or Tucson Electric Power Company (“TEP”) or any successors thereto as referenced in the BHP Indemnification Agreements.  Within three (3) days after receipt of any San Juan Royalty Payment, Westmoreland shall cause San Juan to deposit such royalty payments into the San Juan Royalty Escrow Account.  All San Juan Royalty Payments shall remain on deposit in the San Juan Royalty Escrow Account until such time as such royalty payments are required to be paid to Cimarron Coal Company, AU Mines and First Trust of California National Association as set forth in the BHP Indemnification Agreements in accordance with the underlying contractual agreements governing the payment of the San Juan Royalty Payments. 
(e)    A new Section 12.2.9 is hereby added to the Loan Agreement to read as follows:
12.2.9  San Juan Obligations.  Promptly advise the Administrative Agent of (i) any default by SJ Holdings, Newco or the Targets under the San Juan Loan Agreement, (ii) any breach or default by Westmoreland or San Juan under any PNM Agreement or (iii) any claim or demand under the BHP Indemnification Agreements.
(f)    A new Section 13.15 is hereby added to the Loan Agreement to read as follows:
13.15  San Juan Obligations.  No Borrower has any obligation or liability (i) for any of the San Juan Acquisition Debt or (ii) to any other Person for liabilities or obligations of SJ Holdings or San Juan, 

	
			
	 
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except in connection with the PNM Agreements and the BHP Indemnification Agreements.
(g)    A new Section 15.15 is hereby added to the Loan Agreement to read as follows:
15.15.  San Juan Claims.  Any (a) material default or breach by Westmoreland or San Juan occurs under any PNM Agreement or (b) claim is made against any Borrower for (i) any obligation or liability of SJ Holdings, Newco or the Targets (including, but not limited to, the San Juan Acquisition Debt) or (ii) any obligation or liability of any Person associated with the San Juan Acquisition (including, but not limited to, any claim or demand arising under the BHP Indemnification Agreements).
(h)    Schedule 11.9 attached to the Loan Agreement is hereby amended to include the Supplemental Schedule 11.9 attached hereto as Exhibit D.  Such Supplemental Schedule is hereby incorporated into the Loan Agreement as if originally set forth therein as a supplement to the existing Schedule 11.9 to the Loan Agreement.
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)    As a condition to this Amendment (other than the formation of Newco), Administrative Agent shall have received certified copies of the following documents on the date of, or promptly following the closing of the San Juan Acquisition Transaction:  (i) a final draft of the Purchase Agreement and all schedules thereto, (ii) a final draft of the San Juan Loan Agreement and all schedules and ancillary documents executed in connection therewith, (iii) all documentation evidencing the Newco Equity Investment, (iv) each PNM Agreement, and (v) the BHP Indemnification Agreements, all of which shall be in form and substance acceptable to the Administrative Agent.  In addition to the foregoing, final execution copies of the foregoing documents and all material agreements executed in connection therewith shall be provided to the Administrative Agent within five (5) Business Days of closing of the foregoing transactions.
Section 5.    Representations and Warranties; No Default.  
(a)    After giving effect to the information set forth on the Supplemental Schedule 11.9 attached hereto as Exhibit D, 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 

	
			
	 
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material respects as of the date hereof after giving effect to the transactions which are subject to the consents set forth in Section 1 herein 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.  
(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 (i) are and will be within its organizational powers, (ii) have been authorized by all necessary organizational action and (iii) 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, after giving effect to the transactions which are subject to the consents set forth in Section 1 herein.  Any 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, for the pro-rata benefit of the Lenders, an amendment fee of $30,000 which shall be fully earned and non-refundable as of the date hereof. 

	
			
	 
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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.
(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]

	
			
	 
	10
	 

CHICAGO/#2796156.9 

	
			
	 
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CHICAGO/#2796156.9 

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

IN WITNESS WHEREOF, the parties hereto have duly executed this Consent and Fourth 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/ Jason William Veenstra     
   Jason William Veenstra 
   Chief Financial Officer and Treasurer

	 
	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

	
			
	 
	 
	 

CHICAGO/#2796156 

(Signature Page to Consent and Fourth 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

	
			
	 
	 
	 

CHICAGO/#2796156 

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

	
		
	 
	WESTMORELAND CANADA LLC, a Delaware limited liability company
By:   /s/ Jason William Veenstra    
   Jason William Veenstra 
   President and Treasurer

	 
	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

	
			
	 
	 
	 

CHICAGO/#2796156 

(Signature Page to Consent and Fourth 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

	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/ Jason William Veenstra    
        Jason William Veenstra 
        President and Treasurer

	 
	WESTMORELAND CANADA HOLDINGS, INC., a corporation organized and existing under the laws of the Province of Alberta
By:   /s/ Jason William Veenstra    
   Jason William Veenstra 
   Vice President of Finance and Treasurer

	CANADIAN BORROWERS:
	WESTMORELAND PRAIRIE RESOURCES INC., a corporation organized and existing under the laws of the Province of Alberta
By:   /s/ Jason William Veenstra    
   Jason William Veenstra 
   Vice President of Finance and Treasurer

	 
	PRAIRIE MINES & ROYALTY ULC, an unlimited liability company organized under the laws of the Province of Alberta
By:   /s/ Jason William Veenstra    
   Jason William Veenstra 
   Vice President of Finance and Treasurer

	 
	 

	
			
	 
	 
	 

CHICAGO/#2796156 

(Signature Page to Consent and Fourth 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/ Jason William Veenstra    
   Jason William Veenstra 
   Managing Director A
By:  /s/ R.H.W. Funnekotter     
   R.H.W. Funnekotter 
   Managing Director B

	
			
	 
	 
	 

CHICAGO/#2796156 

(Signature Page to Consent and Fourth 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 

	
			
	 
	 
	 

CHICAGO/#2796156 

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

	
		
	LENDER:
	BANK OF THE WEST
By:  /s/ Philip Garlinhouse     
   Philip Garlinghouse 
   Vice President

	
			
	 
	 
	 

CHICAGO/#2796156 

EXHIBIT A
CIMARRON INDEMNIFICATION AGREEMENT

	
			
	 
	 
	 

CHICAGO/#2796156 

EXHIBIT B
FRUITLAND INDEMNIFICATION AGREEMENT

	
			
	 
	 
	 

CHICAGO/#2796156 

EXHIBIT C

	
														
	Westmoreland - Compliance Test
	 
	 
	 

	In US$ million unless otherwise noted
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	San Juan inputs
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Debt
	 
	

	$125.0
	

	 
	 
	 

	EBITDA
	 
	

	$56.4
	

	 
	 
	 

	 
	 
	 
	 
	 
	 

	Pro forma metrics
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	All figures shown on an LTM basis
	 
	WLB
	SJCC
	Pro forma

	 
	 
	 
	 
	 
	 

	Revolver ($50 mm)
	 
	 
	--
	

	--
	

	--
	

	Sr. Secured Term Loan due 2020
	 
	

	$328.0
	

	--
	

	

	$328.0
	

	Sr. Secured Notes due 2022
	 
	

	$350.0
	

	--
	

	

	$350.0
	

	Incremental New Debt for San Juan
	 
	--
	

	

	$125.0
	

	

	$125.0
	

	Total Debt
	 
	 
	

	$678.0
	

	

	$125.0
	

	

	$803.0
	

	 
	 
	 
	 
	 
	 

	WLB
	 
	 
	

	$155.0
	

	--
	

	

	$155.0
	

	San Juan
	 
	 
	--
	

	

	$56.4
	

	

	$56.4
	

	Distributions from WMLP
	 
	

	$16.0
	

	--
	

	

	$16.0
	

	Total EBITDA
	 
	 
	

	$171.0
	

	

	$56.4
	

	

	$227.4
	

	 
	 
	 
	 
	 
	 

	Total Debt / EBITDA
	 
	3.96x
	

	2.22x
	

	3.53x
	

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	Source: Management
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	
			
	 
	 
	 

CHICAGO/#2796156 

EXHIBIT D
Supplemental Schedule 11.9 to Loan Agreement 
(See attached)

	
			
	 
	 
	 

CHICAGO/#2796156 

Supplemental Schedule 11.9 - Affiliate Transactions
to the Consent and Fourth Amendment to Second Amended and Restated Loan and Security
Agreement dated as of January 29, 2016, by and among Westmoreland Coal Company, et al. and the
PrivateBank and Trust Company

		
	1.
	Services Agreement dated as of January 31, 2016 among Westmoreland Coal Company and San Juan Coal Company. 

	
			
	 
	 
	 

CHICAGO/#2796156

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