Exhibit 10.1

EXECUTION COPY

U.S. $130,000,000

CREDIT AGREEMENT

Dated as of March 8, 2005

Among

THE NORTH AMERICAN COAL CORPORATION

as Borrower

and

THE INITIAL LENDERS NAMED HEREIN

as Initial Lenders

and

CITIGROUP GLOBAL MARKETS INC.

as Lead Arranger and Book Manager

and

KEYBANK NATIONAL ASSOCIATION

and

PNC BANK, NATIONAL ASSOCIATION

as Syndication Agents

and

CITIBANK, N.A.

as Agent

 

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TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

             
SECTION 1.01.
  Certain Defined Terms     5  
SECTION 1.02.
  Computation of Time Periods     15  
SECTION 1.03.
  Accounting Terms     15  
 
           

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

             
SECTION 2.01.
  The Advances     16  
SECTION 2.02.
  Making the Advances     16  
SECTION 2.03.
  Fees     17  
SECTION 2.04.
  Termination or Reduction of the Commitments     17  
SECTION 2.05.
  Repayment of Advances     17  
SECTION 2.06.
  Optional Prepayments of Advances     18  
SECTION 2.07.
  Interest on Advances     18  
SECTION 2.08.
  Interest Rate Determination     18  
SECTION 2.09.
  Optional Conversion of Advances     19  
SECTION 2.10.
  Increased Costs     19  
SECTION 2.11.
  Illegality     20  
SECTION 2.12.
  Payments and Computations     20  
SECTION 2.13.
  Taxes     21  
SECTION 2.14.
  Sharing of Payments, Etc.     23  
SECTION 2.15.
  Use of Proceeds     23  
 
           

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

             
SECTION 3.01.
  Conditions Precedent to Effectiveness of Section 2.01     24  
SECTION 3.02.
  Conditions Precedent to Each Borrowing     25  
SECTION 3.03.
  Determinations Under Section 3.01     25  

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

             
SECTION 4.01.
  Representations and Warranties of the Borrower     25  

ARTICLE V

COVENANTS OF THE BORROWER

             
SECTION 5.01.
  Affirmative Covenants     29  
SECTION 5.02.
  Negative Covenants     32  
SECTION 5.03.
  Financial Covenants     36  

 

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ARTICLE VI

EVENTS OF DEFAULT

             
SECTION 6.01.
  Events of Default     36  

ARTICLE VII

THE AGENT

             
SECTION 7.01.
  Authorization and Action     38  
SECTION 7.02.
  Agent’s Reliance, Etc.     38  
SECTION 7.03.
  Citibank and Affiliates     38  
SECTION 7.04.
  Lender Credit Decision     39  
SECTION 7.05.
  Indemnification     39  
SECTION 7.06.
  Successor Agent     39  

ARTICLE VIII

MISCELLANEOUS

             
SECTION 8.01.
  Amendments, Etc.     39  
SECTION 8.02.
  Notices, Etc.     40  
SECTION 8.03.
  No Waiver; Remedies     41  
SECTION 8.04.
  Costs and Expenses     41  
SECTION 8.05.
  Right of Set-off     41  
SECTION 8.06.
  Binding Effect     42  
SECTION 8.07.
  Assignments and Participations     42  
SECTION 8.08.
  Confidentiality     44  
SECTION 8.09.
  Governing Law     45  
SECTION 8.10.
  Execution in Counterparts     45  
SECTION 8.11.
  Jurisdiction, Etc.     45  
SECTION 8.12.
  Patriot Act Notice     45  
SECTION 8.13.
  Waiver of Jury Trial     46  

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Schedules

Schedule I - List of Applicable Lending Offices

Schedule 1.01 – Inter-company Unconsolidated Debt

Schedule 3.01(b) - Disclosed Litigation

Schedule 4.01(p) - Subsidiaries

Schedule 4.01(s) - Licenses, Permits, etc.

Schedule 4.01(t) - Material Contracts

Schedule 5.02(a) - Existing Liens

Schedule 5.02(i) – Surviving Debt

Exhibits

         
Exhibit A-1
  -   Form of Revolving Credit Note          
Exhibit A-2
  -   Form of Term Note          
Exhibit B
  -   Form of Notice of Borrowing          
Exhibit C
  -   Form of Assignment and Acceptance          
Exhibit D-1
  -   Form of Opinion of Jones Day, counsel for the Borrower          
Exhibit D-2
  -   Form of Opinion of Thomas A. Koza, Esq., counsel for the Borrower

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CREDIT AGREEMENT

Dated as of March 8, 2005

           THE NORTH AMERICAN COAL CORPORATION, a Delaware corporation (the
“Borrower”), the banks, financial institutions and other institutional lenders
(the “Initial Lenders”) listed on the signature pages hereof, and CITIBANK, N.A.
(“Citibank”), as agent (the “Agent”) for the Lenders (as hereinafter defined),
agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

           SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

     “Advance” means a Revolving Credit Advance or a Term Advance.

     “Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.

     “Agent’s Account” means the account of the Agent maintained by the Agent at
Citibank at its office at 388 Greenwich Street, New York, New York 10013,
Account No. 36852248, Attention: Bank Loan Syndications.

     “Applicable Lending Office” means, with respect to each Lender, such
Lender’s Domestic Lending Office in the case of a Base Rate Advance and such
Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

     “Applicable Margin” means as of any date, a percentage per annum determined
by reference to the Debt/EBITDA Ratio in effect on such date as set forth below:

                                        Applicable Margin for                
Applicable Margin     Eurodollar Rate     Applicable Margin     Debt/EBITDA    
for     Revolving Credit     for Eurodollar Rate     Ratio     Base Rate
Advances     Advances     Term Advances     Level 1
Less than or equal to 2.0 to 1.0     0.00%     0.625%     0.750%     Level 2
Greater than 2.0 to 1.0 but less than or equal to 2.5 to 1.0     0.00%    
0.725%     0.875%     Level 3
Greater than 2.5 to 1.0 but less than or equal to 2.75 to 1.0     0.00%    
0.825%     1.000%    

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                                        Applicable Margin for                
Applicable Margin     Eurodollar Rate     Applicable Margin     Debt/EBITDA    
for     Revolving Credit     for Eurodollar Rate     Ratio     Base Rate
Advances     Advances     Term Advances     Level 4
Greater than 2.75 to 1.0 but less than 3.0 to 1.0     0.00%     1.025%    
1.250%     Level 5
Greater than or equal to 3.0 to 1.0     0.00%     1.450%     1.750%    

The Applicable Margin for each Advance shall be determined by reference to the
ratio in effect from time to time; provided, however, that (A) no change in the
Applicable Margin shall be effective until three Business Days after the date on
which the Agent receives the certificate of a Responsible Officer of the
Borrower demonstrating such ratio required to be delivered pursuant to
Section 5.01(h)(i) or (ii), as the case may be, and (B) the Applicable Margin
shall be at Level 5 for so long as the Borrower has not submitted to the Agent
the certificate described in clause (A) of this proviso as and when required
under Section 5.01(h)(i) or (ii), as the case may be.

     “Applicable Percentage” means, as of any date a percentage per annum
determined by reference to the Debt/EBITDA Ratio in effect on such date as set
forth below:

                      Applicable     Debt/EBITDA Ratio     Percentage     Level
1
Less than or equal to 2.0 to 1.0     0.125%     Level 2
Greater than 2.0 to 1.0 but less than or equal to 2.5 to 1.0     0.150%    
Level 3
Greater than 2.5 to 1.0 but less than or equal to 2.75 to 1.0     0.175%    
Level 4
Greater than 2.75 to 1.0 but less than 3.0 to 1.0     0.225%     Level 5
Greater than or equal to 3.0 to 1.0     0.300%    

The Applicable Percentage shall be determined by reference to the ratio in
effect from time to time; provided, however, that (A) no change in the
Applicable Percentage shall be effective until three Business Days after the
date on which the Agent receives the certificate of a Responsible Officer of the
Borrower demonstrating such ratio required to be delivered pursuant to
Section 5.01(h)(i) or (ii), as the case may be, and (B) the Applicable
Percentage shall be at Level 5 for so long as the Borrower has not submitted to
the Agent the certificate described in clause (A) of this proviso as and when
required under Section 5.01(h)(i) or (ii), as the case may be.

     “Appropriate Lender” means, at any time, with respect to either of the Term
or Revolving Credit Facilities, a Lender that has a Commitment with respect to
such Facility at such time.

     “Assignment and Acceptance” means an assignment and acceptance entered into
by a Lender and an Eligible Assignee, and accepted by the Agent, in
substantially the form of Exhibit C hereto.

     “Base Rate” means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the highest of:

     (a) the rate of interest announced publicly by Citibank in New York, New
York, from time to time, as Citibank’s base rate;

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     (b) the sum (adjusted to the nearest 1/4 of 1% or, if there is no nearest
1/4 of 1%, to the next higher 1/4 of 1%) of (i) 1/2 of 1% per annum, plus
(ii) the rate obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business Day, on the
next succeeding Business Day) for the three-week period ending on the previous
Friday by Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York in Federal
Reserve Statistical Release H.15(519) or, if such publication shall be suspended
or terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing
selected by Citibank, by (B) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities) three-month
U.S. dollar non-personal time deposits in the United States, plus (iii) the
average during such three-week period of the annual assessment rates estimated
by Citibank for determining the then current annual assessment payable by
Citibank to the Federal Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of Citibank in the United States; and

     (c) 1/2 of one percent per annum above the Federal Funds Rate.

     “Base Rate Advance” means an Advance that bears interest as provided in
Section 2.07(a)(i).

     “Borrowing” means a Revolving Credit Borrowing or a Term Borrowing.

     “Business Day” means a day of the year on which commercial banks are not
required or authorized by law to close in New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.

     “Commitment” means a Term Commitment or a Revolving Credit Commitment.

     “Confidential Information” means information that the Borrower furnishes to
the Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a source
other than the Borrower.

     “Consolidated” refers to the consolidation of accounts in accordance with
GAAP.

     “Consolidated Subsidiary” means each Subsidiary that is included in the
Consolidated balance sheet of the Borrower prepared in accordance with GAAP,
other than Project Mining Subsidiaries.

     “Consolidated Total Assets” means, as of any date of determination, (a) the
total amount of all assets of the Borrower and its Consolidated Subsidiaries as
such amounts would be shown as assets on a Consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of such time prepared in
accordance with generally accepted accounting principles, minus (b) to the
extent included in clause (a), all amounts properly attributable to minority
interest, if any, in the stock and surplus of Consolidated Subsidiaries.

     “Convert”, “Conversion” and “Converted” each refers to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.08 or
2.09.

     “Debt” of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all obligations of such Person for the
deferred purchase price of property or services (other than

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trade payables incurred in the ordinary course of such Person’s business and
amounts owed to NACCO under the Tax Sharing Agreement and/or in respect of state
taxes paid by NACCO on behalf of the Borrower and its Subsidiaries), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments, (d) all obligations of such Person created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP, recorded as capital
leases, (f) all obligations, contingent or otherwise, of such Person in respect
of acceptances, letters of credit, surety bonds or similar extensions of credit,
(g) all net payment obligations of such Person in respect of Hedge Agreements,
(h) all Debt of others referred to in clauses (a) through (g) above or clause
(i) below guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement
(1) to pay or purchase such Debt or to advance or supply funds for the payment
or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling
the debtor to make payment of such Debt or to assure the holder of such Debt
against loss, (3) to supply funds to or in any other manner invest in the debtor
(including any agreement to pay for property or services irrespective of whether
such property is received or such services are rendered) or (4) otherwise to
assure a creditor against loss, and (i) all Debt referred to in clauses (a)
through (h) above secured by any Lien on property (including, without
limitation, accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Debt.

     “Debt/EBITDA Ratio” means, at any date of determination, the ratio of
Consolidated Recourse Debt of the Borrower and its Subsidiaries as at the end of
the most recently ended fiscal quarter of the Borrower for which financial
statements are required to be delivered to the Lenders pursuant to
Section 5.01(h)(i) or (ii), as the case may be, to Consolidated EBITDA of the
Borrower and its Subsidiaries for such fiscal quarter and the immediately
preceding three fiscal quarters.

     “Default” means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.

     “Disclosed Litigation” has the meaning specified in Section 3.01(b).

     “Domestic Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Domestic Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender, or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.

     “EBITDA” means, for any period, net income (or net loss) plus the sum of
(a) interest expense on Consolidated Recourse Debt (including, without
limitation, letter of credit fees in respect of letters of credit included in
Consolidated Recourse Debt), (b) income tax expense, (c) depreciation, depletion
and amortization expense of the Borrower and all Consolidated Subsidiaries,
(d) negative extraordinary items, (e) negative cumulative effect of accounting
changes, (f) loss from discontinued operations, (g) minority interest charges,
(h) the product of (x) equity in earnings of unconsolidated Affiliates
multiplied by (y) the tax rate of such unconsolidated Affiliates divided by (z)
(1 minus such tax rate), (i) operating lease payments under lease agreements
subject to letters of credit included in Consolidated Recourse Debt,
(j) negative non-recurring items and (k) equity contributions from, and
subordinated Debt owing to, NACCO to the extent not used for Investments
pursuant to Section 5.02(e)(viii) less (i) positive extraordinary items,
(ii) positive cumulative effect of accounting changes, (iii) income from
discontinued operations, (iv) minority interest credits, (v) the product of (x)
equity in loss of unconsolidated Affiliates multiplied by (y) the tax rate of
such unconsolidated Affiliates divided by (z) (1 minus such tax rate), and (vi)
positive non-recurring items, in each case for the Borrower and its Consolidated
Subsidiaries and determined in accordance with GAAP for such period.

     “Effective Date” has the meaning specified in Section 3.01.

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     “Eligible Assignee” means (i) a Lender, (ii) an Affiliate of a Lender and
(iii) any other Person approved by the Agent and, unless an Event of Default has
occurred and is continuing at the time any assignment is effected in accordance
with Section 8.07, the Borrower, such approval, in either case, not to be
unreasonably withheld or delayed; provided, however, that neither the Borrower
nor an Affiliate of the Borrower shall qualify as an Eligible Assignee.

     “Environmental Action” means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
any third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.

     “Environmental Law” means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, judgment, decree or judicial or
agency interpretation, policy or guidance relating to pollution or protection of
the environment, human health, human safety or natural resources, including,
without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.

     “Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

     “ERISA Affiliate” means any Person that for purposes of Title IV of ERISA
is a member of the Borrower’s controlled group, or under common control with the
Borrower, within the meaning of Section 414 of the Internal Revenue Code.

     “ERISA Event” means (a) (i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with a contributing sponsor,
as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the following 30
days, unless the 30-day notice requirement with respect to such event has been
waived by the PBGC; (b) the application for a minimum funding waiver with
respect to a Plan; (c) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the
Borrower or any ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from
a Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan pursuant to Section 307 of ERISA; (h) the
institution by the PBGC of proceedings to terminate a Plan pursuant to
Section 4042 of ERISA, or the occurrence of any event or condition described in
Section 4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, a Plan; or (i) the imposition of any
other material liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to “employee benefit plans” (as
defined in Section 3(3) of ERISA).

     “Eurocurrency Liabilities” has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

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     “Eurodollar Lending Office” means, with respect to any Lender, the office
of such Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent.

     “Eurodollar Rate” means, for any Interest Period for each Eurodollar Rate
Advance comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the rate per annum (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on
Moneyline Telerate Markets Page 3750 (or any successor page) as the London
interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest Period
for a period equal to such Interest Period or, if for any reason such rate is
not available, the rate per annum at which deposits in U.S. dollars are offered
by the principal office of the Reference Bank in London, England to prime banks
in the London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially equal to
the Reference Bank’s Eurodollar Rate Advance comprising part of such Borrowing
to be outstanding during such Interest Period and for a period equal to such
Interest Period, subject, however, to the provisions of Section 2.08 by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such
Interest Period.

     “Eurodollar Rate Advance” means an Advance that bears interest as provided
in Section 2.07(a)(ii).

     “Eurodollar Rate Reserve Percentage” for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.

     “Events of Default” has the meaning specified in Section 6.01.

     “Facility” means the Term Facility or the Revolving Credit Facility.

     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

     “Fixed Charge Coverage Ratio” means the ratio set forth in Section 5.03(b).

     “GAAP” has the meaning specified in Section 1.03.

     “Hazardous Materials” means (a) petroleum and petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.

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     “Hedge Agreements” means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.

     “Information Memorandum” means the information memorandum dated February 2,
2005 used by the Agent in connection with the syndication of the Commitments.

     “Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

     “Interest Period” means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and, thereafter, with respect to
Eurodollar Rate Advances, each subsequent period commencing on the last day of
the immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three or six months, and subject
to clause (c) of this definition, nine or twelve months, as the Borrower may,
upon notice received by the Agent not later than 12:00 noon (New York City time)
on the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:

     (a) the Borrower may not select any Interest Period with respect to any
Eurodollar Rate Advance that ends after any principal repayment installment date
unless, after giving effect to such selection, the aggregate principal amount of
Base Rate Advances and of Eurodollar Rate Advances having Interest Periods that
end on or prior to such principal repayment installment date shall be at least
equal to the aggregate principal amount of Advances due and payable on or prior
to such date;

     (b) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same duration;

     (c) in the case of any such Borrowing, the Borrower shall not be entitled
to select an Interest Period having duration of nine or twelve months unless, by
2:00 P.M. (New York City time) on the third Business Day prior to the first day
of such Interest Period, each Lender notifies the Agent that such Lender will be
providing funding for such Borrowing with such Interest Period (the failure of
any Lender to so respond by such time being deemed for all purposes of this
Agreement as an objection by such Lender to the requested duration of such
Interest Period); provided that, if any or all of the Lenders object to the
requested duration of such Interest Period, the duration of the Interest Period
for such Borrowing shall be one, two, three or six months, as specified by the
Borrower requesting such Revolving Credit Borrowing in the applicable Notice of
Borrowing as the desired alternative to an Interest Period of nine or twelve
months;

     (d) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided, however, that,
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and

     (e) whenever the first day of any Interest Period occurs on a day of an
initial calendar month for which there is no numerically corresponding day in
the calendar month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period, such Interest
Period shall end on the last Business Day of such succeeding calendar month.

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     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated thereunder.

     “Investment” in any Person means any loan or advance to such Person, any
purchase or other acquisition of any capital stock, warrants, rights, options,
obligations or other securities or all or substantially all of the assets of
such Person, any capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement pursuant to which
the investor incurs Debt of the types referred to in clauses (h) and (i) of the
definition of “Debt” in respect of such Person.

     “Lenders” means the Initial Lenders and each Person that shall become a
party hereto pursuant to Section 8.07.

     “Lien” means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

     “Marketable Securities” means any of the following, to the extent owned by
the Borrower or any of its Subsidiaries free and clear of all Liens and having a
maturity of not greater than 360 days from the date of issuance thereof:
(a) readily marketable direct obligations of the Government of the United States
or any agency or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the Government of the United States,
(b) insured certificates of deposit of or time deposits or Eurodollar deposits
with any commercial bank that is a Lender or a member of the Federal Reserve
System, is organized under the laws of the United States or any State thereof
and has combined capital and surplus of at least $1 billion or (c) commercial
paper in an aggregate amount of no more than $1,000,000 per issuer outstanding
at any time, issued by any corporation organized under the laws of any State of
the United States and rated at least “Prime-1” (or the then equivalent grade) by
Moody’s Investors Service, Inc. or “A-1” (or the then equivalent grade) by
Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,
Inc.

     “Material Adverse Change” means any material adverse change in the
business, condition (financial or otherwise) or results of operations, of the
Borrower and its Subsidiaries taken as a whole.

     “Material Adverse Effect” means a material adverse effect on (a) the
business, condition (financial or otherwise), or results of operations of the
Borrower and its Subsidiaries taken as a whole, (b) the rights and remedies of
the Agent or any Lender under this Agreement or any Note or (c) the ability of
the Borrower to perform its obligations under this Agreement or any Note.

     “Material Contract” means each coal or other supply or services contract to
which the Borrower or any Subsidiary is a party and which provides for annual
payments to the Borrower or any Subsidiary which are expected to be in excess of
$5,000,000.

     “Multiemployer Plan” means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.

     “Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and at least one Person other than the Borrower
and the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.

     “NACCO” means NACCO Industries, Inc., a Delaware corporation.

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     “Net Proceeds” means, with respect to any sale of property by the Borrower
or any Subsidiary, the net proceeds from such sale received by the Person, net
of:

     (a) actual expenses and fees relating to such sale (including, without
limitation, legal, accounting and investment banking fees, sales commissions and
relocation expenses);

     (b) taxes paid or payable or estimated by the Borrower (in good faith) to
be payable in connection with such sale after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions or any
tax sharing arrangements;

     (c) repayment or prepayment of any Debt that is required to be repaid or
prepaid in connection with such sale;

     (d) provision for minority interest holders in any Subsidiary as a result
of such sale;

     (e) payments of unassumed liabilities (not constituting Debt) relating to
the assets or property sold at the time of, or within 30 days after, the date of
such sale; and

     (f) appropriate amounts to be provided by the Borrower or any Subsidiary as
the case may be, as reserves in accordance with GAAP, against any liabilities
associated with such sale and retained by the Borrower or any Subsidiary, as the
case may be, after the sale including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such sale.

     “NMHG Bonds” means the 10% senior notes issued by NMHG Holding Co. due 2009
in an aggregate principal amount of $250,000,000.

     “Nonrecourse Debt” means any Debt other than Recourse Debt.

     “Note” means a Revolving Credit Note or a Term Note.

     “Notice of Borrowing” has the meaning specified in Section 2.02(a).

     “Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. 107-56, signed into law October 26, 2001.

     “PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

     “Person” means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, limited liability company or other entity, or a government or any
political subdivision or agency thereof.

     “Phillips Purchase Agreement” means the Purchase and Sale Agreement dated
October 11, 2000 among Phillips Petroleum Company, Phillips Coal Company, North
Gillette Limited Liability Company and The North American Coal Corporation.

     “Plan” means a Single Employer Plan or a Multiple Employer Plan.

     “Project Mining Subsidiary” means any Subsidiary of the Borrower (a) whose
Debt is Non-recourse Debt and (b) the utility customers of which finance or
guarantee the financing and certain other obligations of such Subsidiary.

     “Recourse Debt” of any Person means all items that, in accordance with
GAAP, would be classified as indebtedness on a Consolidated balance sheet of
such Person (other than trade payables

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incurred in the ordinary course of business and amounts owed to NACCO under the
Tax Sharing Agreement and/or in respect of state taxes paid by NACCO on behalf
of the Borrower and its Subsidiaries and other than indebtedness owed by the
Borrower to its unconsolidated Subsidiaries as set forth on Schedule 1.01) plus
Debt comprised of letters of credit that support obligations under operating
leases, but shall not include indebtedness as to which no recourse may be
asserted against the Borrower or any of its Consolidated Subsidiaries except to
the extent that such indebtedness is secured by a Lien on specified assets of
the Borrower or any of its Consolidated Subsidiaries.

     “Reference Bank” means Citibank.

     “Register” has the meaning specified in Section 8.07(d).

     “Required Lenders” means at any time Lenders owed at least a majority in
interest of the then aggregate unpaid principal amount of the Advances, or, if
no such principal amount is then outstanding, Lenders having at least a majority
in interest of the Commitments.

     “Responsible Officer” means any of the following officers of the Borrower:
the chairman of the board of directors, chief executive officer, president,
secretary, any vice president and, with respect to financial matters, the chief
financial officer, treasurer or controller of the Borrower.

     “Revolving Credit Advance” has the meaning specified in Section 2.01(b).

     “Revolving Credit Borrowing” means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by each of the Revolving Credit
Lenders pursuant to Section 2.01.

     “Revolving Credit Commitment” means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Lender’s name on
Schedule I hereto under the caption “Revolving Credit Commitment” or, if such
Lender has entered into one or more Assignment and Acceptances, set forth for
such Lender in the Register maintained by the Agent pursuant to Section 8.07(d)
as such Lender’s “Revolving Credit Commitment”, as such amount may be reduced at
or prior to such time pursuant to Section 2.04.

     “Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Lender’s Revolving Credit Commitments at such time and the
Revolving Credit Advances made thereunder.

     “Revolving Credit Lender” means any Lender that has a Revolving Credit
Commitment.

     “Revolving Credit Note” means a promissory note of the Borrower payable to
the order of any Revolving Credit Lender, in substantially the form of
Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to
such Lender resulting from the Revolving Credit Advances made by such Lender.

     “Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or
any ERISA Affiliate and no Person other than the Borrower and such ERISA
Affiliates or (b) was so maintained and in respect of which the Borrower or any
ERISA Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.

     “SPC” has the meaning specified in Section 8.07(f) hereto.

     “Subsidiary” of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or

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might have voting power upon the occurrence of any contingency), (b) the
interest in the capital or profits of such limited liability company,
partnership or joint venture or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such Person,
by such Person and one or more of its other Subsidiaries or by one or more of
such Person’s other Subsidiaries.

     “Tax Sharing Agreement” means that certain Amended Tax Sharing Agreement
between NACCO and its Subsidiaries, dated May 14, 1997, related to the
allocation of federal tax liabilities among NACCO and its Consolidated U.S.
Subsidiaries, as amended, supplemented or otherwise modified from time to time.

     “Term Advance” has the meaning specified in Section 2.01(a).

     “Term Borrowing” means a borrowing consisting of simultaneous Term Advances
of the same Type made by the Term Lenders.

     “Term Commitment” means, with respect to any Term Lender at any time, the
amount set forth opposite such Lender’s name on Schedule I hereto under the
caption “Term Commitment” or, if such Lender has entered into one or more
Assignment and Acceptances, set forth for such Lender in the Register maintained
by the Agent pursuant to Section 8.07(d) as such Lender’s “Term Commitment”, as
such amount may be reduced at or prior to such time pursuant to Section 2.04.

     “Term Facility” means, at any time, the aggregate amount of the Term
Lenders’ Term Commitments at such time and the Term Advances made thereunder.

     “Term Lender” means any Lender that has a Term Commitment.

     “Term Note” means a promissory note of the Borrower payable to the order of
any Term Lender, in substantially the form of Exhibit A-2 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from the Term Advance made
by such Lender, as amended.

     “Termination Date” means the earlier of March 8, 2010 and the date of
termination in whole of the Commitments pursuant to Section 2.04 or 6.01.

     “Type” means, as to any Advance, its nature as a Base Rate Advance or
Eurodollar Rate Advance.

     “Voting Stock” means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even if the right so to
vote has been suspended by the happening of such a contingency.

     “Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred
percent (100%) of all of the equity interests (except directors’ qualifying
shares) and voting interests of which are owned by any one or more of the
Borrower and the Borrower’s other Wholly-Owned Subsidiaries at such time.

     “Withdrawal Liability” has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.

          SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including” and the words “to” and “until” each
mean “to but excluding”.

          SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(e) (“GAAP”).

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ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

          SECTION 2.01. The Advances. (a) The Term Advances. Each Term Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (a “Term Advance”) to the Borrower on the Effective Date in an
amount not to exceed such Lender’s Term Commitment at such time. The Term
Borrowing shall consist of Term Advances made simultaneously by the Term Lenders
ratably according to their Term Commitments. Amounts borrowed under this
Section 2.01(a) and repaid or prepaid may not be reborrowed.

          (b) The Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a “Revolving Credit Advance”) to the Borrower from time to time
on any Business Day during the period from the date hereof until the Termination
Date in an amount for each such Advance not to exceed such Lender’s unused
Revolving Credit Commitment at such time. Each Revolving Credit Borrowing shall
be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof and shall consist of Revolving Credit Advances made
simultaneously by the Revolving Credit Lenders ratably according to their
Revolving Credit Commitments. Within the limits of each Revolving Credit
Lender’s unused Revolving Credit Commitment in effect from time to time, the
Borrower may borrow under this Section 2.01(b), prepay pursuant to
Section 2.06(a) and reborrow under this Section 2.01(b).

          SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on
notice, given not later than (x) 12:00 noon (New York City time) on the third
Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances or (y) 12:00 noon (New York
City time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Agent, which shall give
to each Appropriate Lender prompt notice thereof by telecopier. Each such notice
of a Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed
immediately in writing, or telecopier in substantially the form of Exhibit B
hereto, specifying therein the requested (i) date of such Borrowing,
(ii) Facility under which such Borrowing is to be made, (iii) Type of Advances
comprising such Borrowing, (iv) aggregate amount of such Borrowing, and (iv) in
the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest
Period for each such Advance. Each Appropriate Lender shall, before 2:00 P.M.
(New York City time) on the date of such Borrowing make available for the
account of its Applicable Lending Office to the Agent at the Agent’s Account, in
same day funds, such Lender’s ratable portion of such Borrowing in accordance
with the respective Commitments under the applicable Facility of such Lender and
the other Appropriate Lenders. After the Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the Agent
will make such funds available to the Borrower at the Agent’s address referred
to in Section 8.02.

          (b) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if
the aggregate amount of such Borrowing is less than $5,000,000 or if the
obligation of the Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant to Section 2.08 or 2.11 and (ii) the Eurodollar Rate Advances
may not be outstanding as part of more than ten separate Borrowings.

          (c) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss,
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.

          (d) Unless the Agent shall have received notice from an Appropriate
Lender prior to the date of any Borrowing that such Lender will not make
available to the Agent such Lender’s ratable portion of such Borrowing, the
Agent may assume that such Lender has made such portion available to the Agent
on the date of such Borrowing in accordance with subsection (a) of this
Section 2.02, and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such

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Lender shall not have so made such ratable portion available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the Borrower, the interest
rate applicable at the time to Advances comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such Lender shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute such
Lender’s Advance as part of such Borrowing for purposes of this Agreement.

          (e) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.

          SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to
the Agent for the account of each Revolving Credit Lender a facility fee on the
aggregate amount of such Lender’s Revolving Credit Commitment from the date
hereof in the case of each Initial Lender and from the effective date specified
in the Assignment and Acceptance pursuant to which it became a Revolving Credit
Lender in the case of each other Lender until the Termination Date at a rate per
annum equal to the Applicable Percentage in effect from time to time, payable in
arrears quarterly on the last day of each March, June, September and December,
commencing March 31, 2005, and on the Termination Date.

          (b) Agent’s Fees. The Borrower shall pay to the Agent for its own
account such fees as may from time to time be agreed between the Borrower and
the Agent.

          SECTION 2.04. Termination or Reduction of the Commitments. (a)
Optional. The Borrower shall have the right, upon at least three Business Days’
notice to the Agent, to terminate in whole or reduce ratably in part the unused
portions of the Revolving Credit Commitments and the Term Commitments, provided
that each partial reduction of a Facility (i) shall be in the aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and
(ii) shall be made ratably among the Appropriate Lenders in accordance with
their Commitments with respect to such Facility.

          (b) Mandatory. On the date of the Term Borrowing, after giving effect
to such Term Borrowing, and from time to time thereafter upon each repayment or
prepayment of the Term Advances, the aggregate Term Commitments of the Term
Lenders shall be automatically and permanently reduced on a pro rata basis by an
amount equal to the amount by which (i) the aggregate Term Commitments
immediately prior to such reduction exceeds (ii) the aggregate unpaid principal
amount of all Term Advances outstanding at such time.

          SECTION 2.05. Repayment of Advances. (a) Term Advances. The Borrower
shall repay to the Agent for the ratable account of the Term Lenders the
aggregate outstanding principal amount of the Term Advances on the following
dates in the amounts indicated (which amounts shall be reduced as a result of
the application of prepayments in accordance with the order of priority set
forth in Section 2.06):

                    Date     Amount    
March 8, 2006
    $ 10,000,000      
March 8, 2007
    $ 10,000,000      
March 8, 2008
    $ 10,000,000      
March 8, 2009
    $ 10,000,000      
March 8, 2010
    $ 15,000,000      

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provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term Advances outstanding on such date.

          (b) Revolving Credit Advances. The Borrower shall repay to the Agent
for the ratable account of the Revolving Credit Lenders on the Termination Date
the aggregate principal amount of the Revolving Credit Advances then
outstanding.

          SECTION 2.06. Optional Prepayments of Advances. The Borrower may, upon
notice at least two Business Days’ prior to the date of such prepayment, in the
case of Eurodollar Rate Advances, and not later than 12:00 noon (New York City
time) on the date of such prepayment, in the case of Base Rate Advances, to the
Agent stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amount of the Advances comprising part of the same
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in
the event of any such prepayment of a Eurodollar Rate Advance, the Borrower
shall be obligated to reimburse the Lenders in respect thereof pursuant to
Section 8.04(c). Each such prepayment of any Term Advances shall be applied to
the installments thereof as the Borrower may direct.

          SECTION 2.07. Interest on Advances. (a) Scheduled Interest. The
Borrower shall pay interest on the unpaid principal amount of each Advance owing
to each Lender from the date of such Advance until such principal amount shall
be paid in full, at the following rates per annum:

     (i) Base Rate Advances. During such periods as such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in
effect from time to time plus (y) the Applicable Margin in effect from time to
time, payable in arrears quarterly on the last day of each March, June,
September and December during such periods and on the date such Base Rate
Advance shall be paid in full.

     (ii) Eurodollar Rate Advances. During such periods as such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during each
Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such
Interest Period for such Advance plus (y) the Applicable Margin in effect from
time to time, payable in arrears on the last day of such Interest Period and, if
such Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full.

          (b) Default Interest. Upon the occurrence and during the continuance
of an Event of Default under Section 6.01(a), the Borrower shall pay interest on
(i) the unpaid principal amount of each Advance owing to each Lender, payable in
arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and
(ii) to the fullest extent permitted by law, the amount of any interest, fee or
other amount payable hereunder that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid
on Base Rate Advances pursuant to clause (a)(i) above.

          SECTION 2.08. Interest Rate Determination. (a) The Reference Bank
agrees to furnish to the Agent timely information for the purpose of determining
each Eurodollar Rate. The Agent shall give prompt notice to the Borrower and the
Lenders of the applicable interest rate determined by the Agent for purposes of
Section 2.07(a)(i) or (ii), and the rate, if any, furnished by the Reference
Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).
Any change in the interest rate on an Advance resulting from a change in the
Base Rate or the Eurocurrency Reserve Requirement shall become effective as of
the opening of business on the day on which such change becomes effective.

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          (b) If, with respect to any Eurodollar Rate Advances, the Required
Lenders notify the Agent that the Eurodollar Rate for any Interest Period for
such Advances will not adequately reflect the cost to such Required Lenders of
making, funding or maintaining their respective Eurodollar Rate Advances for
such Interest Period, the Agent shall forthwith so notify the Borrower and the
Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance, and (ii) the obligation of the Lenders to make, or to Convert Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall notify
the Borrower and the Lenders that the circumstances causing such suspension no
longer exist.

          (c) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of “Interest Period” in Section 1.01, the Agent will
forthwith so notify the Borrower and the Lenders and such Advances will
automatically, on the last day of the then existing Interest Period therefor, be
Converted into Base Rate Advances.

          (d) On the date on which the aggregate unpaid principal amount of
Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.

          (e) Upon the occurrence and during the continuance of any Event of
Default, (i) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(ii) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.

          (f) If Moneyline Telerate Markets Page 3750 is unavailable and the
Reference Bank fails to furnish timely information to the Agent for determining
the Eurodollar Rate for any Eurodollar Rate Advances,

     (i) the Agent shall forthwith notify the Borrower and the Lenders that the
interest rate cannot be determined for such Eurodollar Rate Advances,

     (ii) with respect to Eurodollar Rate Advances, each such Advance will
automatically, on the last day of the then existing Interest Period therefor, be
prepaid by the Borrower or be automatically Converted into a Base Rate Advance
(or if such Advance is then a Base Rate Advance, will continue as a Base Rate
Advance), and

     (iii) the obligation of the Lenders to make Eurodollar Rate Advances or to
Convert Advances into Eurodollar Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist.

          SECTION 2.09. Optional Conversion of Advances. The Borrower may on any
Business Day, upon notice given to the Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Sections 2.08 and 2.11, Convert all
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Base Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances, any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.02(b) and no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(b). Each such notice
of a Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
irrevocable and binding on the Borrower.

          SECTION 2.10. Increased Costs. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining Eurodollar Rate Advances in an amount deemed by
such Lender to be material (excluding for purposes of this Section 2.10 any such
increased costs

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resulting from (i) Taxes or Other Taxes (as to which Section 2.13 shall govern)
and (ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or by the foreign jurisdiction or state under the
laws of which such Lender is organized or has its Applicable Lending Office or
any political subdivision thereof), then the Borrower shall from time to time,
promptly after demand by such Lender (with a copy of such demand to the Agent),
pay to the Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost; provided, however, that before
making any such demand, each Lender agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost and would not,
in the reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender. A certificate as to the amount of such increased cost, submitted to the
Borrower and the Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.

          (b) If any Lender determines that compliance with the adoption of or
any change in any law or regulation or any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
made after the date hereof affects or would affect the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is increased by or
based upon the existence of such Lender’s commitment to lend hereunder and other
commitments of this type by an amount deemed by such Lender to be material,
then, promptly after demand by such Lender (with a copy of such demand to the
Agent), the Borrower shall pay to the Agent for the account of such Lender, from
time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender or such corporation in the light of such circumstances,
to the extent that such Lender reasonably determines such increase in capital to
be allocable to the existence of such Lender’s commitment to lend hereunder;
provided that the Borrower shall not be required to compensate a Lender pursuant
to this Section 2.10(b) for any amounts incurred more than twelve months prior
to the date that such Lender notifies the Borrower of such Lender’s intention to
claim compensation therefor; and provided further that if the circumstances
giving rise to such claim have a retroactive effect, then such twelve-month
period shall be extended to include the period of such retroactive effect. A
certificate as to such amounts submitted to the Borrower and the Agent by such
Lender shall be conclusive and binding for all purposes, absent manifest error.

          SECTION 2.11. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically,
upon such demand, Convert into a Base Rate Advance and (b) the obligation of the
Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar
Rate Advances shall be suspended until the Agent shall notify the Borrower and
the Lenders that the circumstances causing such suspension no longer exist;
provided, however, that before making any such demand, each Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Eurodollar Lending Office if the making
of such a designation would allow such Lender or its Eurodollar Lending Office
to continue to perform its obligations to make Eurodollar Rate Advances or to
continue to fund or maintain Eurodollar Rate Advances and would not, in the
judgment of such Lender, be otherwise disadvantageous to such Lender.

          SECTION 2.12. Payments and Computations. (a) The Borrower shall make
each payment hereunder and under the Notes, irrespective of any counterclaim or
set-off, not later than 12:00 noon (New York City time) on the day when due to
the Agent at the Agent’s Account in same day funds. The Agent will promptly
thereafter cause to be distributed like funds relating to the payment of
principal or interest or facility fees ratably (other than amounts payable
pursuant to Section 2.10, 2.13 or 8.04(c)) to the Lenders for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Lender to such Lender for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 8.07(c), from and after the effective date specified in such Assignment
and Acceptance, the Agent shall make all payments hereunder and under the Notes
in respect of the interest assigned thereby to the Lender assignee thereunder,
and the parties to such Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such effective date directly
between themselves.

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          (b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under the Notes
held by such Lender, to charge from time to time against any or all of the
Borrower’s accounts with such Lender any amount so due.

          (c) All computations of interest based on the Base Rate shall be made
by the Agent on the basis of a year of 365 or 366 days, as the case may be, all
computations of interest based on the Eurodollar Rate or the Federal Funds Rate
and of facility fees shall be made by the Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
facility fees are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

          (d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or facility fee, as the case
may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.

          (e) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Lenders hereunder that the
Borrower will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and the Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on
such due date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the Agent,
each Lender shall repay to the Agent forthwith on demand such amount distributed
to such Lender together with interest thereon, for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate.

          (f) If the Agent receives funds for application to the obligations of
the Borrower hereunder under circumstances for which this Agreement does not
specify the Advances or the Facility to which, or the manner in which, such
funds are to applied, the Agent may, but shall not be obligated to, elect to
distribute such funds to each Lender ratably in accordance with such Lender’s
proportionate share of the principal amount of all outstanding Advances, in
repayment or prepayment of such of the outstanding Advances or other obligations
owed to such Lender, and for application to such principal installments, as the
Agent shall direct.

          SECTION 2.13. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) in the case of each Lender and the Agent, taxes
imposed on or measured by its overall net income, and franchise taxes imposed on
it in lieu of net income taxes, by the United States or by the jurisdictions
under the laws of which such Lender or the Agent (as the case may be) is
organized, in which its principal office is located, carries on business, or any
political subdivision thereof (other than as a result of a connection arising
solely from the Lender, the Agent or other recipient having executed, delivered
or performed its obligations or received a payment hereunder or under the Notes)
and, in the case of each Lender, taxes imposed on its overall net income, and
franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction
of such Lender’s Applicable Lending Office or any political subdivision thereof,
(ii) any branch profits tax imposed by the United States or any similar tax
imposed by any other jurisdiction in which such Applicable Lending Office is
located or (iii) U.S. withholding taxes excluded from Taxes pursuant to
Section 2.13(e) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities in respect of payments hereunder or under
the Notes being hereinafter referred to as “Taxes”). If the Borrower shall be
required by law to deduct or withhold any Taxes from or in respect of any sum
payable hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.13) such Lender or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made, (ii) the Borrower shall make such deductions or
withholdings and (iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxation authority or other authority in accordance
with applicable law.

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          (b) In addition, the Borrower shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as “Other
Taxes”).

          (c) The Borrower shall indemnify each Lender and the Agent for and
hold it harmless against the full amount of Taxes or Other Taxes (including,
without limitation, taxes of any kind imposed by any jurisdiction on amounts
payable under this Section 2.13) imposed on or paid by such Lender or the Agent
(as the case may be) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto. This indemnification shall be made within
30 days from the date such Lender or the Agent (as the case may be) makes
written demand therefor.

          (d) Within 30 days after the date of any payment of Taxes by the
Borrower to a taxing or other authority, the Borrower shall furnish to the
Agent, at its address referred to in Section 8.02, the original or a certified
copy of a receipt evidencing such payment.

          (e) Each Lender organized under the laws of a jurisdiction outside the
United States or otherwise not a “United States person” within the meaning of
section 7701(a)(30) of the Internal Revenue Code, on or prior to the date of its
execution and delivery of this Agreement in the case of each Initial Lender and
on the date of the Assumption Agreement or the Assignment and Acceptance
pursuant to which it becomes a Lender in the case of each other Lender, and from
time to time thereafter as requested in writing by the Borrower (but only so
long as such Lender remains lawfully able to do so), shall provide each of the
Agent and the Borrower with two original Internal Revenue Service forms W-8BEN
or W-8ECI or (in the case of a Lender that has certified in writing to the Agent
that it is not a “bank” as defined in Section 881(c)(3)(A) of the Internal
Revenue Code) form W-8BEN or such other form as the Borrower, in its discretion,
believes is necessary under the Treasury Regulations (and, if such Lender has so
certified that it is not a “bank”, a certificate representing that such Lender
is not a “bank” for purposes of Section 881(c) of the Internal Revenue Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code)), as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or entitled to a reduced rate of United States federal withholding
tax on payments pursuant to this Agreement or the Notes or (in the case of a
Lender certifying that it is not a “bank”), certifying that such Lender is a
foreign corporation, partnership, estate or trust and is the beneficial owner of
the interest. If the form provided by a Lender at the time such Lender first
becomes a party to this Agreement indicates a United States federal withholding
tax rate in excess of zero on payments pursuant to this Agreement or the Notes,
then, withholding tax at such rate shall be considered excluded from Taxes and
the Borrower will not be obligated to pay any additional amount or to indemnify
in respect of such excluded withholding taxes unless and until such Lender
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that, if at the date of
the Assignment and Acceptance pursuant to which a Lender assignee becomes a
party to this Agreement, the Lender assignor was entitled to payments under
subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to such extent, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender assignee on such date but at a rate not in
excess of the rate applicable to the Lender assignor as of such date. If any
form or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form W-8BEN
or W-8ECI or other applicable form (or the related certificate described above),
that the Lender reasonably considers to be confidential, the Lender shall give
notice thereof to the Borrower and shall not be obligated to include in such
form or document such confidential information.

          (f) For any period with respect to which a Lender has failed or is
unable to provide the Borrower with the appropriate form described in
Section 2.13(e) (other than if such failure or inability is due to a change in
law occurring subsequent to the date on which a form originally was required to
be provided, or if such form otherwise is not required under subsection
(e) above), such Lender shall not be entitled to indemnification under
Section 2.13(a) or (c) with respect to Taxes imposed by the United States by
reason of such failure or inability; provided, however, that should a Lender
become subject to Taxes because of its failure or inability to deliver a form

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required hereunder, the Borrower shall take such steps as the Lender shall
reasonably request to assist the Lender to recover such Taxes.

          (g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.13 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.

          (h) If the Agent, a Lender or an assignee thereof determines that it
has received a refund of any Taxes or Other Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.13, it shall pay over such refund
to the Borrower; provided, however, that the Borrower, upon the request of such
Agent, Lender or assignee, as applicable, agrees to repay the amount paid over
to the Borrower pursuant to this Section 2.13(h) to the extent that such Agent,
Lender or assignee, as applicable, is required to repay such refund to the
applicable governmental authority. Nothing contained in this Section 2.13(h)
shall require the Agent or any Lender to make available its tax returns to the
Borrower or any other Person.

          (i) If any Lender or the Agent changes its residence, place of
business or applicable lending office, or takes any similar action and the
effect of such change or action, as of the date thereof, would be to increase
the amounts that the Borrower is obligated to pay or indemnify under this
Section 2.13 (without regard to this Section 2.13(i)), then the Borrower shall
not be obligated to pay or to indemnify the amount of such increase.

          (j) Each Lender that is a “United States person,” within the meaning
of section 7701(a)(30) of the Code, and that is not an “exempt recipient,” as
defined in Treasury Regulation Section 1.6049-4(c), with respect to which no
withholding is required shall, in the case of each Lender that is a signatory
hereto, on or prior to the date of its execution and delivery of this Agreement
and, in the case of an assignee or a participant, on or prior to the date of the
assignment or sale of a participation interest to which it becomes a Lender,
provide to the Borrower two complete copies of Form W-9 or any successor form.

          SECTION 2.14. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances owing to it (other than
pursuant to Section 2.10, 2.13 or 8.04(c)) in excess of its ratable share of
payments on account of the Advances obtained by all the Lenders, such Lender
shall forthwith purchase from the other Lenders such participations in the
Advances owing to them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender’s ratable share
(according to the proportion of (i) the amount of such Lender’s required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered, provided further that, so long as the
obligations of the Borrower under this Agreement and the Notes shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other Appropriate Lenders. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

          SECTION 2.15. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) solely for
general corporate purposes of the Borrower and its Subsidiaries, including
liquidity support for commercial paper and acquisition financing.

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ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

          SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the “Effective Date”) on which the following conditions precedent have
been satisfied:

     (a) There shall have occurred no Material Adverse Change since December 31,
2003.

     (b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrower or any of its Subsidiaries pending or
threatened before any court, governmental agency or arbitrator that (i) could be
reasonably likely to have a Material Adverse Effect other than the matters
described on Schedule 3.01(b) hereto (the “Disclosed Litigation”) or
(ii) purports to affect the legality, validity or enforceability of this
Agreement or any Note or the consummation of the transactions contemplated
hereby, and there shall have been no adverse change in the status, or financial
effect on the Borrower or any of its Subsidiaries, of the Disclosed Litigation
from that described on Schedule 3.01(b) hereto.

     (c) The Agent shall have completed a due diligence investigation of the
Borrower and its Subsidiaries in scope, and with results, reasonably
satisfactory to the Lenders, and nothing shall have come to the attention of the
Lenders during the course of such due diligence investigation to lead them to
believe that the Information Memorandum was or has become misleading, incorrect
or incomplete in any material respect; without limiting the generality of the
foregoing, the Lenders shall have been given such access to the management,
records, books of account, contracts and properties of the Borrower and its
Subsidiaries as they shall have requested.

     (d) All governmental and third party consents and approvals necessary in
connection with the transactions contemplated hereby shall have been obtained
(without the imposition of any conditions that are not acceptable to the
Lenders) and shall remain in effect, and no law or regulation shall be
applicable in the reasonable judgment of the Lenders that restrains, prevents or
imposes materially adverse conditions upon the transactions contemplated hereby.

     (e) The Borrower shall have notified the Agent in writing as to the
proposed Effective Date.

     (f) The Borrower shall have paid all reasonable accrued fees and expenses
of the Agent (including the accrued reasonable fees and expenses of counsel to
the Agent) for which invoices have been presented on or before the Effective
Date.

     (g) On the Effective Date, the following statements shall be true and the
Agent shall have received for the account of each Lender a certificate signed by
a duly authorized officer of the Borrower, dated the Effective Date, stating
that:

     (i) The representations and warranties contained in Section 4.01 are
correct on and as of the Effective Date, and

     (ii) No event has occurred and is continuing that constitutes a Default.

     (h) The Agent shall have received on or before the Effective Date the
following, each dated such day, in form and substance satisfactory to the Agent
and (except for the Notes) in sufficient copies for each Lender:

     (i) The Notes to the order of the Lenders.

     (ii) Certified copies of the resolutions of the Board of Directors of the
Borrower approving this Agreement and the Notes, and of all documents evidencing
other necessary

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corporate action and governmental approvals, if any, with respect to this
Agreement and the Notes.

     (iii) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the Notes and the other documents
to be delivered hereunder.

     (iv) A satisfactory opinion of (A) Jones Day, counsel for the Borrower,
substantially in the form of Exhibit D-1 hereto and (B) Thomas A. Koza, Esq.,
Vice President-Law and Administration of the Borrower, substantially in the form
of Exhibit D-2 hereto and, in each case, as to such other matters as any Lender
through the Agent may reasonably request.

     (v) A favorable opinion of Shearman & Sterling LLP, counsel for the Agent,
in form and substance satisfactory to the Agent.

     (i) The Borrower shall have terminated the commitments, and paid in full
all Debt, interest, fees and other amounts outstanding, under the $175,000,000
Credit Agreement dated as of October 11, 2000 among the Borrower, the lenders
parties thereto and Citibank, as agent for such lenders, and each of the Lenders
that is a party to such Credit Agreement hereby waives, upon execution of this
Agreement, the three Business Days notice required by Section 2.04 of such
Credit Agreement relating to the termination of commitments thereunder.

     SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of
each Appropriate Lender to make an Advance on the occasion of each Borrowing
shall be subject to the conditions precedent that the Effective Date shall have
occurred and on the date of such Borrowing the following statements shall be
true (and each of the giving of the applicable Notice of Borrowing and the
acceptance by the Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty by the Borrower that on the date of such Borrowing
such statements are true):

     (a) the representations and warranties contained in Section 4.01 (except
the representations and warranties set forth in the last sentence of subsection
(e) thereof and in subsection (f)(i) thereof) are correct on and as of such
date, before and after giving effect to such Borrowing and to the application of
the proceeds therefrom, as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date;
and

     (b) no event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds therefrom, that constitutes a
Default.

          SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Agent responsible for the transactions contemplated by this Agreement
shall have received written notice from such Lender prior to the date that the
Borrower, by notice to the Lenders, designates as the proposed Effective Date,
specifying its objection thereto. The Agent shall promptly notify the Lenders of
the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          SECTION 4.01. Representations and Warranties of the Borrower. The
Borrower represents and warrants as follows:

     (a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.

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     (b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes, and the consummation of the transactions contemplated
hereby, are within the Borrower’s corporate powers, have been duly authorized by
all necessary corporate action, and do not contravene (i) the Borrower’s charter
or by-laws or (ii) any applicable law or any material contractual restriction
binding on or affecting the Borrower.

     (c) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or any other third
party is required for the due execution, delivery and performance by the
Borrower of this Agreement or the Notes.

     (d) This Agreement has been, and each of the Notes when delivered hereunder
will have been, duly executed and delivered by the Borrower. This Agreement is,
and each of the Notes when delivered hereunder will be, the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by processing in equity or
at law).

     (e) The Consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as at December 31, 2003, and the related Consolidated statements of
income and cash flows of the Borrower and its Consolidated Subsidiaries for the
fiscal year then ended, accompanied by an opinion of Ernst & Young LLP, an
independent public accounting firm, copies of which have been furnished to each
Lender, fairly present the Consolidated financial condition of the Borrower and
its Consolidated Subsidiaries as at such date and the Consolidated results of
the operations of the Borrower and its Consolidated Subsidiaries for the period
ended on such date, all in accordance with generally accepted accounting
principles consistently applied. Since December 31, 2003, there has been no
Material Adverse Change.

     (f) There is no pending or, to the knowledge of the Borrower, threatened
action, suit, investigation, litigation or proceeding, including, without
limitation, any Environmental Action, affecting the Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator that (i) could
be reasonably likely to have a Material Adverse Effect (other than the Disclosed
Litigation) or (ii) purports to materially adversely affect the legality,
validity or enforceability of this Agreement or any Note or the consummation of
the transactions contemplated hereby, and there has been no adverse change in
the status, or financial effect on the Borrower or any of its Subsidiaries, of
the Disclosed Litigation from that described on Schedule 3.01(b) hereto.

     (g) The Borrower is not engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock, except to the extent of advances or distributions made by the
Borrower to NACCO to purchase shares of NACCO capital stock.

     (h) The Borrower is not an “investment company”, or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.

     (i) The operations and properties of the Borrower and each of its
Subsidiaries comply in all material respects with all applicable Environmental
Laws and Environmental Permits, all past material non-compliance with such
Environmental Laws and Environmental Permits has been resolved without ongoing
obligations or costs, and no circumstances exist that could be reasonably likely
to (i) form the basis of an Environmental Action against the Borrower or any of
its Subsidiaries or any of their properties that could reasonably be expected to
have a Material Adverse Effect or (ii) cause any such property to be subject to
any restrictions on ownership, occupancy, use or transferability under any
Environmental Law that could reasonably be expected to have a Material Adverse
Effect.

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     (j) Except as, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (i) none of the properties currently or formerly owned
or operated by the Borrower or any of its Subsidiaries is listed or proposed for
listing on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (“NPL”) or on the Comprehensive
Environmental Response, Compensation and Liability Information System maintained
by the U.S. Environmental Protection Agency (“CERCLIS”) or any analogous
foreign, state or local list or, to the best knowledge of the Borrower, is
adjacent to any such property; (ii) there are no and never have been any
underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have
been treated, stored or disposed of on any property currently or formerly owned
or operated by the Borrower or any of its Subsidiaries or, to the best of its
knowledge, on any property formerly owned or operated by the Borrower or any of
its Subsidiaries; (iii) there is no asbestos or asbestos-containing material on
any property currently owned or operated by the Borrower or any of its
Subsidiaries; and (iv) Hazardous Materials have not been released, discharged or
disposed of on any property currently or formerly owned or operated by the
Borrower or any of its Subsidiaries or, to the best of its knowledge, any
adjoining property.

     (k) Except as, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (i) neither the Borrower nor any of its Subsidiaries is
undertaking, and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any governmental or regulatory authority
or the requirements of any Environmental Law; and (ii) all Hazardous Materials
generated, used, treated, handled or stored at or transported to or from any
property currently or formerly owned or operated by the Borrower or any of its
Subsidiaries have been disposed of in a manner not reasonably expected to result
in material liability to the Borrower or any of its Subsidiaries.

     (l) Each Plan has been operated and administered in compliance with its
terms and all applicable laws except as could not reasonably be expected to
result in a Material Adverse Effect.

     (m) The expected post-retirement benefit obligation (determined as of the
last day of the Borrower’s most recently ended fiscal year in accordance with
Financial Accounting Standard’s Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 498B of
the Code) of the Borrower is not material.

     (n) No ERISA Event has occurred or is reasonably expected to occur with
respect to any Plan.

     (o) As of the January 1, 2004 annual actuarial valuation date, (i) with
respect to each Plan other than the NACCO Materials Handling Group, Inc. Defined
Benefit Plan for Union Employees (the “NMHG Plan”), the funded current liability
percentage, as defined in Section 302(d)(8) of ERISA, exceeds 90%, and with
respect to the NMHG Plan, the funded current liability percentage exceeds 60%,
and (ii) with respect to each Plan, the unfunded current liability does not
exceed $15,000,000; and there has been no material adverse change in the funding
status of any Plan since such date.

     (p) Neither the Borrower nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan.

     (q) Neither the Borrower nor any ERISA Affiliate has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and no such Multiemployer Plan is reasonably expected to be in reorganization or
to be terminated, within the meaning of Title IV of ERISA.

     (r) Neither the Information Memorandum nor any other information, exhibit
or report furnished by or on behalf of the Borrower to the Agent or any Lender
in connection with the negotiation and syndication of this Agreement or pursuant
to the terms of this Agreement contained, as of the date such information,
exhibit or report was so furnished, any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made therein
not misleading.

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     (s) (i) Schedule 4.01(s) contains (except as noted therein) as of the date
hereof complete and correct lists of (A) the Borrower’s Subsidiaries, showing,
as to each Subsidiary, the correct name thereof, the jurisdiction of its
organization, and the percentage of shares of each class of its capital stock or
similar equity interests outstanding owned by the Borrower and (B) the
Borrower’s directors and senior officers.

     (ii) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 4.01(s) as being owned by the
Borrower and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Borrower or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 4.01(s) or permitted
hereunder).

     (iii) As of the date hereof, each Subsidiary identified in Schedule 4.01(s)
is a corporation or other legal entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect. As of the date hereof, each such Subsidiary has the corporate or
other power and authority to own or hold under lease the properties it purports
to own or hold under lease and to transact the business it transacts and
proposes to transact.

     (iv) As of the date hereof, no Subsidiary identified on Schedule 4.01(s) is
a party to, or otherwise subject to, any legal restriction or any agreement
(other than the agreements listed on Schedule 4.01(s) and customary limitations
imposed by corporate law statutes) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Borrower or any of its Subsidiaries that owns outstanding shares of
capital stock or similar equity interests of such Subsidiary.

     (t) As of the date hereof, the Borrower and its Subsidiaries have good and
sufficient title to their respective properties which the Borrower and its
Subsidiaries own or purport to own that in the aggregate are material, including
all such properties reflected in the most recent audited balance sheet referred
to in Section 4.01(e) or purported to have been acquired by the Borrower or any
Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that in the aggregate are material are valid and
subsisting and are in full force and effect in all material respects.

     (u) Except as disclosed in Schedule 4.01(u), as of the date hereof,

     (i) the Borrower and its Subsidiaries own or are licensed to use all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are material, without known conflict with the rights of others
except for those conflicts, that, in the aggregate, would not reasonably be
expected to have a Material Adverse Effect;

     (ii) to the best knowledge of the Borrower, no product of the Borrower or
any of its Subsidiaries infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark, trade name
or other right owned by any other Person; and

     (iii) to the best knowledge of the Borrower, there is no material violation
by any Person of any right of the Borrower or any of its Subsidiaries with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by the Borrower or any of its Subsidiaries.

     (v) Schedule 4.01(v) accurately sets out, as of the date hereof, a list and
description of all Material Contracts. As of the date hereof, each Material
Contract is in full force and effect and is a legal,

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valid and binding obligation of each of the parties thereto, enforceable in
accordance with its terms, subject to bankruptcy, insolvency and other laws of
general application limiting the enforceability of creditors’ rights. As of the
date hereof, there is no default or breach by the Borrower or any Subsidiary or
any other Person under any Material Contract (and there exists no state of facts
which after notice or the passage of time or both would constitute such a
default or breach) and there are no proceedings, actual or threatened, which, in
each case, have or could reasonably be expected to result in the revocation,
cancellation, suspension or any material adverse modification of any Material
Contract.

ARTICLE V

COVENANTS OF THE BORROWER

          SECTION 5.01. Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will:

     (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries
to comply with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, compliance with ERISA and
Environmental Laws as provided in Section 5.01(i), except to the extent the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

     (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries (other than the Project Mining Subsidiaries) to pay and discharge,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges or levies imposed upon it or upon its property and (ii) all
lawful claims that, if unpaid, could reasonably be expected by law to become a
Lien (other than a Lien permitted by Section 5.02(a)(iv)) upon its property;
provided, however, that neither the Borrower nor any of such Subsidiaries shall
be required to pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, unless and until any Lien resulting
therefrom attaches to its property and becomes enforceable against its other
creditors. The Borrower will cause each Project Mining Subsidiary to pay and
discharge at or before the due date thereof, all of its income tax liabilities
and obligations under the Tax Sharing Agreement.

     (c) Maintenance of Insurance. Maintain, and cause each of its Consolidated
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary operates.

     (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and
cause (or with respect to any Project Mining Subsidiary, will use its best
efforts to cause) each of its Subsidiaries to preserve and maintain, its
corporate existence, rights (charter and statutory) and franchises except, in
the case of rights and franchises, to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect; provided, however,
that the Borrower and its Subsidiaries may consummate any merger or
consolidation permitted under Section 5.02(b) and provided further that neither
the Borrower nor any of its Subsidiaries shall be required to preserve any right
or franchise if the Board of Directors of the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Borrower or such Subsidiary, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Borrower,
such Subsidiary or the Lenders.

     (e) Visitation Rights. At any reasonable time and from time to time, permit
the Agent or any of the Lenders or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their independent
certified public accountants at the expense of the Borrower only upon the
occurrence of and during the continuance of an Event of Default.

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     (f) Keeping of Books. Keep proper consolidated books of record and account,
in which full and correct entries shall be made of all financial transactions
and the assets and business of the consolidated accounts of the Borrower and its
Subsidiaries in accordance with generally accepted accounting principles in
effect from time to time.

     (g) Maintenance of Properties, Etc. Maintain and preserve, and cause (or
with respect to any Project Mining Subsidiary, will use its best efforts to
cause) each of its Subsidiaries to maintain and preserve, all of its properties
that are used and necessary and useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.

     (h) Reporting Requirements. Furnish to the Lenders:

     (i) as soon as available and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of the Borrower, the
Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and Consolidated statements of income and cash flows
of the Borrower and its Consolidated Subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such quarter,
duly certified (subject to year-end audit adjustments) by a Responsible Officer
of the Borrower as having been prepared in accordance with generally accepted
accounting principles and certificates of a Responsible Officer of the Borrower
as to compliance with the terms of this Agreement and setting forth in
reasonable detail (x) the calculations necessary to demonstrate compliance with
Section 5.03, (y) the Investments made pursuant to Section 5.02(e)(e)(vi),
(vii) and (viii) during such fiscal quarter and (z) the Restricted Payments made
pursuant to Section 5.02(f) during such fiscal quarter, provided that in the
event of any change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for the determination
of compliance with Section 5.03, a statement of reconciliation conforming such
financial statements to GAAP;

     (ii) as soon as available and in any event within 90 days after the end of
each fiscal year of the Borrower, a copy of the annual audit report for such
year for the Borrower and its Consolidated Subsidiaries, containing the
Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
such fiscal year and Consolidated statements of income and cash flows of the
Borrower and its Consolidated Subsidiaries for such fiscal year, in each case
accompanied by an opinion reasonably acceptable to the Required Lenders by Ernst
& Young LLP or other independent public accountants reasonably acceptable to the
Required Lenders and certificates of a Responsible Officer of the Borrower as to
compliance with the terms of this Agreement and setting forth in reasonable
detail (x) the calculations necessary to demonstrate compliance with
Section 5.03, (y) the Investments made pursuant to Section 5.02(e)(e)(vi),
(vii) and (viii) during such fiscal year and (z) the Restricted Payments made
pursuant to Section 5.02(f) during such fiscal year, provided that in the event
of any change in GAAP used in the preparation of such financial statements, the
Borrower shall also provide, if necessary for the determination of compliance
with Section 5.03, a statement of reconciliation conforming such financial
statements to GAAP;

     (iii) as soon as possible and in any event within five days after the
occurrence of each Default continuing on the date of such statement, a statement
of a Responsible Officer of the Borrower setting forth details of such Default
and the action that the Borrower has taken and proposes to take with respect
thereto;

     (iv) promptly after the sending or filing thereof, copies of all reports,
if any, that the Borrower sends to any of its securityholders other than NACCO,
and copies of all reports and registration statements that the Borrower or its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange;

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     (v) promptly after the commencement thereof, notice of all actions and
proceedings before any court, governmental agency or arbitrator affecting the
Borrower or any of its Subsidiaries of the type described in Section 4.01(f);

     (vi) (A) promptly and in any event within 30 days after the Borrower or any
ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, a
statement of a Responsible Officer of the Borrower describing such ERISA Event
and the action, if any, that the Borrower or such ERISA Affiliate has taken and
proposes to take with respect thereto and (B) on the date any records, documents
or other information must be furnished to the PBGC with respect to any Plan
pursuant to Section 4010 of ERISA, a copy of such records, documents and
information;

     (vii) promptly and in any event within two Business Days after receipt
thereof by the Borrower or any ERISA Affiliate, copies of each notice from the
PBGC stating its intention to terminate any Plan or to have a trustee appointed
to administer any Plan;

     (viii) promptly and in any event within 30 days after the receipt thereof
by the Borrower or any ERISA Affiliate, a copy of the annual actuarial report
for each Plan the funded current liability percentage (as defined in
Section 302(d)(8) of ERISA) of which is less than 90% and the unfunded current
liability of which exceeds $12,000,000;

     (ix) promptly and in any event within five Business Days after receipt
thereof by the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, copies of each notice concerning (A) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (B) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (C) the amount of liability incurred, or that may be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described in clause
(A) or (B);

     (x) promptly after the assertion or occurrence thereof, written notice of
any Environmental Action against or of any noncompliance by the Borrower or any
of its Subsidiaries with any Environmental Law or Environmental Permit that
could reasonably be expected to have a Material Adverse Effect; and

     (xi) such other information respecting the Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time reasonably
request.

     (i) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause each of
its Subsidiaries to obtain and renew all Environmental Permits necessary for its
operations and properties; and conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling and testing, and undertake any
cleanup, removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from any of its properties, in accordance with the
requirements of all applicable Environmental Laws; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to undertake
any such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances.

     (j) Delivery of Reclamation Plans. If an Event of Default shall have
occurred and be continuing, at the request of the Agent, provide to the Lenders
promptly, at the expense of the Borrower, the reclamation plan for the
properties described in such request indicating the presence or absence of
Hazardous Materials and the estimated cost of any legally required compliance
with applicable laws, removal or remedial action in connection with any
Hazardous Materials on such properties.

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                    SECTION 5.02. Negative Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will not:

                    (a) Liens, Etc. Create or suffer to exist, or permit any of
its Consolidated Subsidiaries to create or suffer to exist, any Lien on or with
respect to any of its properties, whether now owned or hereafter acquired, or
assign, or permit any of its Consolidated Subsidiaries to assign, any right to
receive income, other than:

                         (i) purchase money Liens upon or in any real property
or equipment or other fixed or capital assets acquired or held by the Borrower
or any Subsidiary in the ordinary course of business to secure the purchase
price of such property or equipment or other fixed or capital assets or to
secure Debt incurred solely for the purpose of financing the acquisition of such
property or equipment or other fixed or capital assets, or Liens existing on
such property or equipment or other fixed or capital assets at the time of its
acquisition (other than any such Liens created in contemplation of such
acquisition that were not incurred to finance the acquisition of such property)
or extensions, renewals or replacements of any of the foregoing for the same or
a lesser amount, provided, however, that no such Lien shall extend to or cover
any properties of any character other than the real property or equipment or
other fixed or capital assets being acquired, and no such extension, renewal or
replacement shall extend to or cover any properties not theretofore subject to
the Lien being extended, renewed or replaced,

                         (ii) the Liens existing on the Effective Date and
described on Schedule 5.02(a) hereto,

                         (iii) Liens securing Debt other than Recourse Debt in
an aggregate principal amount not to exceed $2,500,000 at any time outstanding,

                         (iv) such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(A) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(B) hereof; (B) Liens imposed
by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s
Liens and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 30 days or
that are being contested in good faith by appropriate proceedings and for which
appropriate reserves are being maintained in accordance with generally accepted
accounting principles; (C) pledges or deposits to secure obligations under
workers’ compensation laws or similar legislation or to secure public or
statutory obligations including, without limitation, unemployment insurance and
other social security legislation; and (D) easements, rights of way and other
encumbrances on title to real property that do not render title to the property
encumbered thereby unmarketable or materially interfere with the use of such
property for its present purposes,

                         (v) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature, in
each case for any Consolidated Subsidiaries and incurred in the ordinary course
of business,

                         (vi) legal or equitable encumbrances deemed to exist by
reason of the existence of any litigation or other legal proceeding or arising
out of a judgment or award with respect to which an appeal is being prosecuted,
to the extent the amount thereof (in excess of applicable insurance coverage)
does not exceed, in the aggregate, $15,000,000, but only so long as such legal
or equitable encumbrances (A) are being actively contested in good faith by
appropriate proceedings or (B) are paid or otherwise discharged within ten days
after a Responsible Officer obtains knowledge thereof,

                         (vii) environmental Liens with respect to liabilities
in an aggregate amount (in excess of applicable insurance coverage) not
exceeding $1,000,000 (A) to the extent such liabilities are

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not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which appropriate reserves have been established
or (B) which are released or otherwise discharged within ten days after a
Responsible Officer obtains knowledge thereof,

                         (viii) Liens arising pursuant to Section 412(n) of the
Internal Revenue Code or Section 4068(a) of ERISA with respect to liabilities in
an aggregate amount not exceeding $1,000,000 if (A) the defaulted payments to
which such Liens relate are made within ten days after a Responsible Officer
obtains knowledge of such defaulted payments and such Liens are released as
promptly as practicable thereafter or (B) the obligation to make such payments
is being contested in good faith by appropriate proceedings and with respect to
which appropriate reserves have been established,

                         (ix) any interest or title of a lessor under any lease
entered into by the Borrower or any other Subsidiary in the ordinary course of
its business and covering only the assets so leased,

                         (x) options or rights granted to the customers of any
Project Mining Subsidiary to acquire the capital stock of such Project Mining
Subsidiary in connection with the mining or lignite sales agreement relating to
such Project Mining Subsidiary,

                         (xi) restrictions on the transferability of the capital
stock and certain assets of any Project Mining Subsidiary without the consent of
the customers of such Project Mining Subsidiary,

                         (xii) options or rights granted to (A) the customer of
any Project Mining Subsidiary to acquire the capital stock of such Project
Mining Subsidiary and/or certain assets of such Project Mining Subsidiary and
(B) the Borrower to transfer to the customer of any Project Mining Subsidiary
the capital stock and/or certain assets of such Project Mining Subsidiary, in
each case in connection with the termination, if any, of the mining or lignite
sales agreement relating to such Project Mining Subsidiary,

                         (xiii) rights of any customer of the Borrower or any
Subsidiary to acquire, or rights of the Borrower or such Subsidiary to transfer
to such customer, certain assets or other property of the Borrower (other than
property that constitutes capital stock of a Subsidiary) or such Subsidiary and
used solely in the conduct of the business of the Borrower or such Subsidiary
with such customer, to the extent that such rights are exercisable in connection
with a mining agreement or sales agreement,

                         (xiv) other Liens securing Recourse Debt in an
aggregate principal amount not to exceed $2,500,000 at any time outstanding, and

                         (xv) the replacement, extension or renewal of any Lien
permitted by clause (ii) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the amount
or change in any direct or contingent obligor) of the Debt secured thereby.

                    (b) Mergers, Etc. Merge or consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or permit any of its Subsidiaries to
do so, except that (i) any Subsidiary of the Borrower may merge or consolidate
with or into, or dispose of assets to, any other Subsidiary of the Borrower,
(ii) any Project Mining Subsidiary may merge or consolidate with or into, or
dispose of assets to, its utility customers, (iii) any Subsidiary may merge or
consolidate with or into any Person if such Subsidiary is the surviving entity
and (iv) any Subsidiary of the Borrower may merge into or dispose of assets to
the Borrower, provided, in each case, that no Default shall have occurred and be
continuing at the time of such proposed transaction or would result therefrom.

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                    (c) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies or reporting
practices, except as required or permitted by generally accepted accounting
principles.

                    (d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof or that are reasonably related thereto.

                    (e) Investments in Other Persons. Make or hold, or permit
any of its Subsidiaries to make or hold, any Investment in any Person other
than:

                         (i) Investments by the Borrower and its Subsidiaries in
the Consolidated Subsidiaries of the Borrower;

                         (ii) loans and advances to employees in the ordinary
course of the business (including for travel, entertainment and relocation
expenses) of the Borrower and its Subsidiaries as presently conducted in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding;

                         (iii) Investments in Marketable Securities;

                         (iv) Investments consisting of intercompany Debt within
the group of the Borrower and its Subsidiaries;

                         (v) Investments consisting of trade credit in the
ordinary course of business;

                         (vi) Investments consisting of loans and advances to
NACCO made by the Borrower in the ordinary course of business (which loans and
advances will be used by NACCO for general corporate purposes);

                         (vii) Investments made with the proceeds of
subordinated debt issued to NACCO and/or equity contributions from NACCO;

                         (viii) other Investments; provided that with respect to
Investments made under this clause (viii), (A) immediately before and after
giving effect thereto, no Default shall have occurred and be continuing or would
result therefrom, (B) any company or business acquired or invested in pursuant
to this clause (viii) shall be in the same line of business as the Borrower or
any of its Subsidiaries or in power plants fueled by coal or in coal
gasification plants (except that the Borrower may make Investments in connection
with the development of power plants fueled by coal or coal gasification plants
(other than nuclear power plants) in Mississippi to the extent of its right to
participate in such development as set forth in the Phillips Purchase Agreement)
and (C) immediately after giving effect to such Investment pursuant to this
clause (viii), the Debt/EBITDA Ratio as of the last day of the fiscal quarter
ending immediately prior to the date such Investment is made, giving pro forma
effect to such Investment as if it had been made on the last day of such fiscal
quarter, does not exceed 3.25 to 1.00, as evidenced by a certificate of a
Responsible Officer of the Borrower delivered to the Lenders demonstrating such
compliance;

                         (ix) Investments in the NMHG Bonds in an aggregate
principal amount not to exceed $10,000,000 at any time outstanding; and

                         (x) Investments permitted under Sections 5.02(f),
(h) or (i).

                    (f) Restricted Payments. Directly or indirectly, or permit
any of its Subsidiaries to (i) declare or pay any dividend (other than dividends
payable solely in common stock of the Person making such dividend) on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any equity interests of the

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Borrower or any Subsidiary, whether now or hereafter outstanding, or make any
other distribution in respect thereof either directly or indirectly, whether in
cash or property or in obligations of the Borrower or any Subsidiary or
(ii) otherwise make any distribution to NACCO, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary
(other than distributions payable solely in common stock of the Person making
such distributions) (collectively, “Restricted Payments”), except that:

                         (A) the Borrower or any Subsidiary may make any
Restricted Payment so long as the Debt/EBITDA Ratio as of the last day of the
fiscal quarter ending immediately prior to the date of such Restricted Payment,
giving pro forma effect to such Restricted Payment as if it had occurred on the
last day of such fiscal quarter, does not exceed 3.25 to 1.00;

                         (B) notwithstanding the provisions of clause (A) above,
the Borrower may make Restricted Payments to NACCO (i) in respect of the
Borrower’s allocable share of NACCO’s overhead and other selling, general and
administrative expenses (including legal, accounting, other professional fees
and costs) incurred in the ordinary course of business, (ii) in respect of
liabilities of NACCO arising from, in connection with or relating to the closing
of certain mining operations of Bellaire Corporation, (iii) in respect of
amounts due to NACCO under the Tax Sharing Agreement and (iv) in respect of
state taxes paid by NACCO on behalf of the Borrower and its Subsidiaries; and

                         (C) notwithstanding the provisions of clause (A) above,
any Subsidiary may make Restricted Payments to the Borrower.

                    (g) Sales of Assets. Sell, lease or otherwise dispose, or
permit any Subsidiary to, sell, lease or otherwise dispose, of any substantial
part (as defined below) of the assets of the Borrower and its Subsidiaries
(including, without limitation, accounts receivable, leasehold interests and the
capital stock or other equity interests in any Subsidiary) in any fiscal year;
provided, however, that the Borrower or any Subsidiary may sell, lease or
otherwise dispose of assets constituting a substantial part of the assets of the
Borrower and its Subsidiaries if (x) such assets are sold for cash in an
arm’s-length transaction for fair market value to a Person other than an
Affiliate, (y) at such time and after giving effect thereto, no Default shall
have occurred and be continuing and (z) an amount equal to the Net Proceeds
received from such sale, lease or other disposition (but excluding any portion
of the Net Proceeds which are attributable to assets which constitute less than
a substantial part of the assets of the Borrower and its Subsidiaries) shall be
used, in any combination:

                    (1) within two years of such sale, lease or disposition to
acquire productive assets used or useful in carrying on the business of the
Borrower and its Subsidiaries and having a value at least equal to the value of
such assets sold, leased or otherwise disposed of; or

                    (2) to prepay or retire Consolidated Debt of the Borrower
and/or its Subsidiaries.

As used in this Section 5.02(g), a sale, lease or other disposition of assets
shall be deemed to be a “substantial part” of the assets of the Borrower and its
Subsidiaries if the book value of such assets, when added to the book value of
all other assets sold, leased or otherwise disposed of by the Borrower and its
Subsidiaries during the same fiscal year, exceeds 15% of the book value of
Consolidated Total Assets, determined as of the end of the fiscal year
immediately preceding such sale, lease or other disposition; provided that there
shall be excluded from any determination of a “substantial part” any (i) sale or
disposition of assets in the ordinary course of business of the Borrower and its
Subsidiaries, and (ii) any transfer of assets from the Borrower to any
Wholly-Owned Subsidiary or from any Subsidiary to the Borrower or a Wholly-Owned
Subsidiary.

                    (h) Sale of Stock. (i) Not permit any Subsidiary to issue or
sell any shares of stock or other equity interests of any class (including as
“stock” for the purposes of this Section 5.02(h), any warrants, rights or
options to purchase or otherwise acquire stock or other equity interests or
other securities exchangeable for or convertible into stock or other equity
interests) of such Subsidiary to any Person other

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than the Borrower or a Wholly-Owned Subsidiary, except for the purpose of
qualifying directors, or except in satisfaction of the validly pre-existing
preemptive or contractual rights of minority shareholders in connection with the
simultaneous issuance of stock or other equity interests to the Borrower and/or
a Subsidiary whereby the Borrower and/or such Subsidiary maintain their same
proportionate interest in such Subsidiary.

                         (ii) The Borrower will not sell, transfer or otherwise
dispose of any shares of stock or other equity interests of any Subsidiary
(except to qualify directors), and will not permit any Subsidiary to sell,
transfer or otherwise dispose of (except to the Borrower or a Wholly-Owned
Subsidiary) any shares of stock or other equity interests of any other
Subsidiary, unless (A) the consideration for such sale, transfer or other
disposition is either cash or shares of stock, (B) such sale, transfer or other
disposition is made to a Person (other than an Affiliate), of the Borrower’s
entire Investment in such Subsidiary and (C) such sale, transfer or other
disposition can be made within the limitations of Section 5.02(g).

                    (i) Subsidiary Debt. The Borrower will not permit any
Consolidated Subsidiary to, directly or indirectly, incur or have outstanding
any Debt except (i) Debt outstanding on the date of this Agreement and described
in Schedule 5.02(i), (ii) Debt owing to the Borrower or to a Wholly-Owned
Consolidated Subsidiary and (iii) Debt secured by Liens permitted under
Section 5.02(a).

                    SECTION 5.03. Financial Covenants. So long as any Advance
shall remain unpaid or any Lender shall have any Commitment hereunder, the
Borrower will:

                    (a) Debt/EBITDA Ratio. Maintain a Debt/EBITDA Ratio of not
more than 3.50:1.

                    (b) Fixed Charge Coverage Ratio. Maintain a ratio of
Consolidated EBITDA of the Borrower and its Consolidated Subsidiaries to the sum
of interest payable on, and amortization of debt discount in respect of, all
Consolidated Recourse Debt during such period, by the Borrower and its
Consolidated Subsidiaries for each period of four fiscal quarters of not less
than 4.00:1.

ARTICLE VI

EVENTS OF DEFAULT

                    SECTION 6.01. Events of Default. If any of the following
events (“Events of Default”) shall occur and be continuing:

                    (a) The Borrower shall fail to pay any principal of any
Advance when the same becomes due and payable; or the Borrower shall fail to pay
any interest on any Advance or make any other payment of fees or other amounts
payable under this Agreement or any Note within three Business Days after the
same becomes due and payable; or

                    (b) Any representation or warranty made by the Borrower
herein or by the Borrower (or any of its officers) in connection with this
Agreement shall prove to have been incorrect in any material respect when made;
or

                    (c) (i) The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Section 5.01(d), (e) or (h), 5.02 or
5.03 or (ii) the Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Agent or any Lender;
or

                    (d) The Borrower or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt (excluding any
Nonrecourse Debt or Debt of any Project Mining Subsidiary) that is outstanding
in a principal or net amount of at least $10,000,000 in the aggregate (but
excluding Debt

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outstanding hereunder) of the Borrower or such Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or condition
shall exist under any agreement or instrument relating to any such Debt and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or

                    (e) The Borrower or any of its Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against the
Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
the Borrower or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this subsection (e); or

                    (f) Judgments or orders for the payment of money in excess
of $10,000,000 in the aggregate shall be rendered against the Borrower or any of
its Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 20 days from the entry thereof; provided, however, that any such
judgment or order shall not be an Event of Default under this Section 6.01(f) if
and for so long as (i) the amount of such judgment or order is covered by a
valid and binding policy of insurance between the defendant and the insurer
covering payment thereof and (ii) such insurer, which shall be rated at least
“A” by A.M. Best Company, has been notified of, and has not disputed the claim
made for payment of, the amount of such judgment or order; or

                    (g) NACCO shall cease to own, directly or indirectly, at
least 51% of the Voting Stock of the Borrower; or

                    (h) Any ERISA Event shall have occurred with respect to a
Plan and the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all other
Plans with respect to which an ERISA Event shall have occurred and then exist
(or the liability of the Borrower and the ERISA Affiliates related to such ERISA
Event) exceeds $10,000,000; or

                    (i) The Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when aggregated with all
other amounts required to be paid to Multiemployer Plans by the Borrower and the
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $10,000,000 or requires payments exceeding $2,500,000 per
annum; or

                    (j) The Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within the meaning of Title IV of
ERISA, and as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and the ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated have
been or will be increased over the amounts contributed to such Multiemployer
Plans for the plan years of such Multiemployer Plans immediately preceding the
plan year in which such reorganization or termination occurs by an amount
exceeding $10,000,000; or

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                    (k) The Insufficiency under all Plans exceeds $80,000,000;
or

                    (l) The Borrower or any of its Subsidiaries establishes or
amends any employee welfare benefit plan that provides post-employment welfare
benefits in a manner that could increase the liability of the Borrower, except
as could not reasonably be expected to have a Material Adverse Effect;

then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the
Advances, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Advances, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to the
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Advances shall automatically be terminated and (B) the Advances, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.

ARTICLE VII

THE AGENT

                    SECTION 7.01. Authorization and Action. Each Lender hereby
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or that
is contrary to this Agreement or applicable law. The Agent agrees to give to
each Lender prompt notice of each notice given to it by the Borrower pursuant to
the terms of this Agreement.

                    SECTION 7.02. Agent’s Reliance, Etc. Neither the Agent nor
any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the payee of any Note as the holder thereof until the Agent
receives and accepts an Assignment and Acceptance entered into by the Lender
that is the payee of such Note, as assignor, and an Eligible Assignee, as
assignee, as provided in Section 8.07; (ii) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability under or in respect
of this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier or telegram) believed by it to
be genuine and signed or sent by the proper party or parties.

                    SECTION 7.03. Citibank and Affiliates. With respect to its
Commitment, the Advances made by it and the Note issued to it, Citibank shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not the Agent; and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated, include Citibank in its
individual capacity. Citibank and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and

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generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Lenders.

                    SECTION 7.04. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon the Agent or
any other Lender and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

                    SECTION 7.05. Indemnification. The Lenders agree to
indemnify the Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of the Advances then owed to each
of them (or if no Advances are at the time outstanding, ratably according to the
respective amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or any action taken or omitted by the Agent under
this Agreement (collectively, the “Indemnified Costs”), provided that no Lender
shall be liable for any portion of the Indemnified Costs resulting from the
Agent’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Agent is not reimbursed for such expenses by the Borrower. In the case of
any investigation, litigation or proceeding giving rise to any Indemnified
Costs, this Section 7.05 applies whether any such investigation, litigation or
proceeding is brought by the Agent, any Lender or a third party.

                    SECTION 7.06. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent with the consent, unless a Default has occurred and is
continuing, of the Borrower (which consent shall not be unreasonably withheld or
delayed). If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring Agent’s resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.

ARTICLE VIII

MISCELLANEOUS

                    SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that (a) no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders affected thereby, do any
of the following: (i) waive any of the conditions specified in Section 3.01,
(ii) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Advances, or the number of Lenders, that shall be
required for the Lenders or any of them to take any action hereunder or
(iii) amend this Section 8.01 and (b) no amendment, waiver or consent shall,
unless in writing and signed by the Required Lenders and each Lender that has a
Commitment

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under the Term Facility or the Revolving Credit Facility if such Lender is
directly affected by such amendment, waiver or consent, (i) increase the
Commitments of the Lenders, (ii) reduce the principal of, or interest on, the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes held by such Lender or any fees or other amounts payable
hereunder to such Lender or (iv) change the order of application of any
prepayment set forth in Section 2.06 in any manner that materially affects such
Lender; and provided further that (x) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Lenders required
above to take such action, affect the rights or duties of the Agent under this
Agreement or any Note and (y) no amendment, waiver or consent of Section 8.07(f)
shall, unless in writing and signed by each Lender that has granted a funding
option to an SPC in addition to the Lenders required above to take such action,
affect the rights or duties of such Lender or SPC under this Agreement or any
Note.

                    SECTION 8.02. Notices, Etc. (a) All notices and other
communications provided for hereunder shall be either (x) in writing (including
telecopier or telegraphic communication) and mailed, telecopied, telegraphed or
delivered or (y) as and to the extent set forth in Section 8.02(b) and in the
proviso to this Section 8.02(a), if to the Borrower, at its address at Signature
Place II, 14785 Preston Road, Suite 1100, Dallas, Texas 75254-7891, Attention:
K. Donald Grischow; if to any Initial Lender, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender; and if to the Agent, at its address at Two Penns Way,
New Castle, Delaware 19720, Attention: Bank Loan Syndications Department; or, as
to the Borrower or the Agent, at such other address as shall be designated by
such party in a written notice to the other parties and, as to each other party,
at such other address as shall be designated by such party in a written notice
to the Borrower and the Agent, provided that materials required to be delivered
pursuant to Section 5.01(h)(i), (ii) or (iv) shall be delivered to the Agent as
specified in Section 8.02(b) or as otherwise specified to the Borrower by the
Agent. All such notices and communications shall, when mailed, telecopied,
telegraphed or e-mailed, be effective when deposited in the mails, telecopied,
delivered to the telegraph company or confirmed by e-mail, respectively, except
that notices and communications to the Agent pursuant to Article II, III or VII
shall not be effective until received by the Agent. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.

                    (b) So long as Citibank or any of its Affiliates is the
Agent, materials required to be delivered pursuant to Section 5.01(h)(i),
(ii) and (iv) shall be delivered to the Agent in an electronic medium in a
format acceptable to the Agent and the Lenders by e-mail at
oploanswebadmin@citigroup.com. The Borrower agrees that the Agent may make such
materials, as well as any other written information, documents, instruments and
other material relating to the Borrower, any of its Subsidiaries or any other
materials or matters relating to this Agreement, the Notes or any of the
transactions contemplated hereby (collectively, the “Communications”) available
to the Lenders by posting such notices on Intralinks or a substantially similar
electronic system (the “Platform”). The Borrower acknowledges that (i) the
distribution of material through an electronic medium is not necessarily secure
and that there are confidentiality and other risks associated with such
distribution, (ii) the Platform is provided “as is” and “as available” and
(iii) neither the Agent nor any of its Affiliates warrants the accuracy,
adequacy or completeness of the Communications or the Platform and each
expressly disclaims liability for errors or omissions in the Communications or
the Platform, except to the extent resulting from the gross negligence or
willful misconduct of such Persons. No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by the Agent or any of its
Affiliates in connection with the Platform.

                    (c) Each Lender agrees that notice to it (as provided in the
next sentence) (a “Notice”) specifying that any Communications have been posted
to the Platform shall constitute effective delivery of such information,
documents or other materials to such Lender for purposes of this Agreement;
provided that if requested by any Lender the Agent shall deliver a copy of the
Communications to such Lender by email or telecopier. Each Lender agrees (i) to
notify the Agent in writing of such Lender’s e-mail address to which a Notice
may be sent by electronic transmission (including by electronic communication)
on or before the date such Lender becomes a party to this Agreement (and from
time to time thereafter to ensure that the Agent has on record an effective
e-mail address for such Lender) and (ii) that any Notice may be sent to such
e-mail address.

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                    SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

                    SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand all reasonable costs and expenses of the Agent in connection with
the preparation, execution, delivery, administration, modification and amendment
of this Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, (A) all due diligence, syndication (including
printing, distribution and bank meetings), transportation, computer,
duplication, appraisal, consultant, and audit expenses and (B) the reasonable
fees and expenses of counsel for the Agent with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under this
Agreement. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
counsel fees and expenses), in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement, the Notes and
the other documents to be delivered hereunder, including, without limitation,
reasonable fees and expenses of counsel for the Agent and each Lender in
connection with the enforcement of rights under this Section 8.04(a).

                    (b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an “Indemnified Party”) from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by or asserted or awarded against any Indemnified Party, in each case
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation or proceeding or
preparation of a defense in connection therewith) (i) the Notes, this Agreement,
any of the transactions contemplated herein or the actual or proposed use of the
proceeds of the Advances or (ii) the actual or alleged presence of Hazardous
Materials on any property of the Borrower or any of its Subsidiaries or any
Environmental Action relating in any way to the Borrower or any of its
Subsidiaries, except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 8.04(b) applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors, shareholders or creditors
or an Indemnified Party or any other Person or any Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Borrower also agrees not to assert any claim for
special, indirect, consequential or punitive damages against the Agent, any
Lender, any of their Affiliates, or any of their respective directors, officers,
employees, attorneys and agents, on any theory of liability, arising out of or
otherwise relating to the Notes, this Agreement, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances.

                    (c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance, as a
result of a payment or Conversion pursuant to Section 18(d) or (e), 2.09 or
2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for
any other reason, or by an Eligible Assignee to a Lender other than on the last
day of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by the Borrower pursuant to Section 8.07(a), the Borrower shall, upon
demand by such Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Lender to fund or maintain such Advance.

                    (d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in Sections 2.10, 2.13 and 8.04 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the Notes.

                    SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Agent to declare the Notes due and payable pursuant to the provisions of
Section 6.01, each Lender

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and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender or such Affiliate
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, whether or not such Lender shall have made any
demand under this Agreement or such Note and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of each Lender and its Affiliates under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) that such Lender and its Affiliates may have.

                    SECTION 8.06. Binding Effect. This Agreement shall become
effective (other than Section 2.01, which shall only become effective upon
satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower and the Agent and when the Agent shall
have been notified by each Initial Lender that such Initial Lender has executed
it and thereafter shall be binding upon and inure to the benefit of the
Borrower, the Agent and each Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lenders.

                    SECTION 8.07. Assignments and Participations. (a) Each
Lender may with the consent of the Agent and, unless an Event of Default has
occurred and is continuing at the time of such assignment, the Borrower (which
consent, in each case, shall not be unreasonably withheld or delayed) and, if
demanded by the Borrower (following (x) a demand by such Lender pursuant to
Section 2.10 or 2.13, (y) a default by such Lender in the performance of its
obligations hereunder or (z) such Lender’s refusal to approve any amendment or
waiver to this Agreement requested by the Borrower) upon at least five Business
Days’ notice to such Lender and the Agent, will assign to one or more Persons
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing to it
and the Note or Notes held by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all rights
and obligations under and in respect of one or more Facilities, (ii) except in
the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender’s rights and
obligations under this Agreement, (x) the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000 or an integral multiple of $1,000,000
in excess thereof under each Facility for which a Commitment is being assigned
and (y) no assignment which would result in any Lender holding less than
$5,000,000 under any Facility shall be permitted, (iii) each such assignment
shall be to an Eligible Assignee, (iv) each such assignment made as a result of
a demand by the Borrower pursuant to this Section 8.07(a) shall be arranged by
the Borrower after consultation with the Agent and shall be either an assignment
of all of the rights and obligations of the assigning Lender under this
Agreement or an assignment of a portion of such rights and obligations made
concurrently with another such assignment or other such assignments that
together cover all of the rights and obligations of the assigning Lender under
this Agreement, (v) no Lender shall be obligated to make any such assignment as
a result of a demand by the Borrower pursuant to this Section 8.07(a) unless and
until such Lender shall have received one or more payments from either the
Borrower or one or more Eligible Assignees in an aggregate amount at least equal
to the aggregate outstanding principal amount of the Advances owing to such
Lender, together with accrued interest thereon to the date of payment of such
principal amount and all other amounts payable to such Lender under this
Agreement, and (vi) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with any Note subject to such assignment and
a processing and recordation fee of $3,500 payable by the parties to each such
assignment, provided, however, that in the case of each assignment made as a
result of a demand by the Borrower, such recordation fee shall be payable by the
Borrower except that no such recordation fee shall be payable in the case of an
assignment made at the request of the Borrower to an Eligible Assignee that is
an existing Lender, and (vii) any Lender may, without the approval of the
Borrower and the Agent, assign all or a portion of its rights to any of its
Affiliates. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its

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rights (other than its rights under Section 2.10, 2.13 and 8.04 to the extent
any claim thereunder relates to an event arising prior such assignment) and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

                    (b) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers and discretion as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Lender.

                    (c) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with any Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent in exchange for the surrendered Note or Notes a
new Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it under each Facility pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment hereunder
under such Facility, a new Note to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1 or A-2 hereto, as the case may be.

                    (d) The Agent, acting for this purpose (but only for this
purpose) as the agent of the Borrower, shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Advances owing
to, each Lender from time to time (the “Register”). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders shall treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

                    (e) Each Lender may sell participations to one or more banks
or other entities (other than the Borrower or any of its Affiliates) in or to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment, the Advances owing to it
and the Note or Notes held by it); provided, however, that (i) such Lender’s
obligations under this Agreement (including, without limitation, its Commitment
to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders
shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under

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this Agreement and (v) no participant under any such participation shall have
any right to approve any amendment or waiver of any provision of this Agreement
or any Note, or any consent to any departure by the Borrower therefrom, except
to the extent that such amendment, waiver or consent would reduce the principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, or postpone any date
fixed for any payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation.

                    (f) Each Lender may grant to a special purpose funding
vehicle (an “SPC”) the option to fund all or any part of any Advance that such
Lender is obligated to fund under this Agreement (and upon the exercise by such
SPC of such option to fund, such Lender’s obligations with respect to such
Advance shall be deemed satisfied to the extent of any amounts funded by such
SPC); provided, however, that (i) such Lender’s obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, (iv) any such option granted to an SPC shall
not constitute a commitment by such SPC to fund any Advance, (v) neither the
grant nor the exercise of such option to an SPC shall increase the costs or
expenses or otherwise increase or change the obligations of the Borrower under
this Agreement (including, without limitation, its obligations under Section
2.09) and (vi) no SPC shall have any right to approve any amendment or waiver of
any provision of this Agreement or any Note, nor any consent to any departure by
the Borrower therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
grant of funding option, or postpone any date fixed for any payment of principal
of, or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such grant of funding option. Each party to
this Agreement hereby agrees that no SPC shall be liable for any indemnity or
payment under this Agreement for which a Lender would otherwise be liable.
Subject to the foregoing provisions of this clause (f), an SPC shall have all
the rights of the granting Lender. An SPC may assign or participate all or a
portion of its interest in any Advances to the granting Lender or to any
financial institution providing liquidity or credit support to or for the
account of such SPC without paying any processing fee therefor and, in
connection therewith may disclose on a confidential basis any information
relating to the Borrower to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancements to such
SPC. In furtherance of the foregoing, each party hereto agrees (which agreements
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof.

                    (g) Any Lender may, in connection with any assignment,
participation or grant of funding option or proposed assignment, participation
or grant of funding option pursuant to this Section 8.07, disclose to the
assignee, participant or SPC or proposed assignee, participant or SPC any
information relating to the Borrower furnished to such Lender by or on behalf of
the Borrower; provided, however, that, prior to any such disclosure, the
assignee, participant or SPC or proposed assignee, participant or SPC shall
agree to preserve the confidentiality of any Confidential Information received
by it from such Lender.

                    (h) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System.

                    SECTION 8.08. Confidentiality. Neither the Agent nor any
Lender or SPC shall disclose any Confidential Information to any other Person
without the consent of the Borrower, other than (a) to the Agent’s or such
Lender’s Affiliates and their officers, directors, employees, agents, attorneys,
accountants and advisors and, as contemplated by Section 8.07(f), to actual or
prospective assignees and participants, and then only on a confidential basis,
(b) as required by any law, rule or regulation or judicial process and (c) as
requested or required by any state, federal or foreign authority or examiner
regulating banks or banking.

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                    SECTION 8.09. Governing Law. This Agreement and the Notes
shall be governed by, and construed and interpreted in accordance with, the laws
of the State of New York.

                    SECTION 8.10. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

                    SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in the Southern District
of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the Notes, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. The Borrower
hereby agrees that service of process in any such action or proceeding brought
in the any such New York State court or in such federal court may be made upon
CT Corporation System at its offices at 111 Eighth Avenue, 13th Floor, New York,
New York 10011 (the “Process Agent”) and the Borrower hereby irrevocably
appoints the Process Agent its authorized agent to accept such service of
process, and agrees that the failure of the Process Agent to give any notice of
any such service shall not impair or affect the validity of such service or of
any judgment rendered in any action or proceeding based thereon. The Borrower
hereby further irrevocably consents to the service of process in any action or
proceeding in such courts by the mailing thereof by any parties hereto by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Borrower at its address specified pursuant to
Section 8.02. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or the Notes
in the courts of any jurisdiction.

                    (b) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the Notes in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

                    SECTION 8.12. Patriot Act Notice. Each Lender and the Agent
(for itself and not on behalf of any Lender) hereby notifies the Borrower that
pursuant to the requirements of the Patriot Act, it is required to obtain,
verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will
allow such Lender or the Agent, as applicable, to identify the Borrower in
accordance with the Patriot Act. The Borrower shall provide, to the extent
commercially reasonable, such information and take such actions as are
reasonably requested by the Agent or any Lenders in order to assist the Agent
and the Lenders in maintaining compliance with the Patriot Act.

[Rest of page intentionally left blank]

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                    SECTION 8.13. Waiver of Jury Trial. Each of the Borrower,
the Agent and the Lenders hereby irrevocably and unconditionally waives all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Agreement or
the Notes or the actions of the Agent or any Lender in the negotiation,
administration, performance or enforcement thereof.

                    IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

            THE NORTH AMERICAN COAL CORPORATION
      By:           Title:   

            CITIBANK, N.A.,
as Agent
      By:           Title:   

              Initial Lenders

      CITIBANK, N.A.               By:             Title:   

            KEYBANK NATIONAL ASSOCIATION
      By:           Title:   

            PNC BANK, NATIONAL ASSOCIATION
      By:           Title:   

            REGIONS BANK
      By:           Title:   

            U.S. BANK NATIONAL ASSOCIATION
      By:           Title:   

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SCHEDULE I
THE NORTH AMERICAN COAL CORPORATION
CREDIT AGREEMENT
APPLICABLE LENDING OFFICES

                                          Name of Initial     Revolving Credit  
            Domestic Lending           Lender     Commitment     Term Commitment
    Office     Eurodollar Lending Office    
Citibank, N.A.
    $ 20,192,308       $ 14,807,692       Two Penns Way
New Castle DE 19720
Attn: Jason Trala
T: (302) 894-6075
F: (302) 894-6120

    Two Penns Way
New Castle DE 19720
Attn: Jason Trala
T: (302) 894-6075
F: (302) 894-6120    
KeyBank National
Association
    $ 14,423,077       $ 10,576,923       127 Public Square
Cleveland, OH 44114
Attn: Marianne Meil
T: (216) 689-3549
F: (216) 689-4981

    127 Public Square
Cleveland, OH 44114
Attn: Marianne Meil
T: (216) 689-3549
F: (216) 689-4981    
PNC Bank, National
Association
    $ 14,423,077       $ 10,576,923       One PNC Plaza, 3Fl.
249 Fifth Avenue
Pittsburgh, PA 15222
Attn: Richard Munsick
T: (412) 762-4299
F: (412) 705-3232

    One PNC Plaza, 3Fl.
249 Fifth Avenue
Pittsburgh, PA 15222
Attn: Richard Munsick
T: (412) 762-4299
F: (412) 705-3232    
Regions Bank
    $ 14,423,077       $ 10,576,923       417 North 20th Street
Corporate Banking
8th Floor
Birmingham, AL 35203
Attn: Michelle Walls
T: (205) 326-7353
F: (203) 326-7746

    417 North 20th Street
Corporate Banking
8th Floor
Birmingham, AL 35203
Attn: Michelle Walls
T: (205) 326-7353
F: (203) 326-7746    
U.S. Bank National Association
    $ 11,538,462       $ 8,461,538       555 S.W. Oak Street FL-7
Portland, OR 97204
Attn: Lennie Regalado
T: (503) 275-5960
F: (503) 275-4600     555 S.W. Oak Street FL-7
Portland, OR 97204
Attn: Lennie Regalado
T: (503) 275-5960
F: (503) 275-4600    
Total:
    $ 75,000,000       $ 55,000,000                  

 

--------------------------------------------------------------------------------

 

Schedule 1.01

SCHEDULE OF INTER-COMPANY UNCONSOLIDATED DEBT

Fluctuating Balance Promissory Note, dated January 1, 1999, payable by The North
American Coal Corporation to The Coteau Properties Company.

48

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Schedule 3.01(b)

SCHEDULE OF DISCLOSED LITIGATION

1.   Dispute with Robert A. Keogh and Priscilla Keogh, Trustee regarding Coal
Lease dated June 1, 1960 and Extension Agreement dated October 14, 1971.      
By letter dated May 30, 2002, Robert A. Keogh notified North American Coal
Royalty Company that the lessors considered the above referenced coal lease
covering lands in Mercer County, North Dakota to have expired as of August 30,
2001. Based on their interpretation, the lessors have not cashed checks the
Company has sent to them since August 30, 2001 for payment due under the coal
lease.       By letter dated June 12, 2002, the Company responded that the
Company had extended term of the subject coal lease by tendering annual advance
royalty payments to the lessor. The Company also stated the even though the coal
lease term had been extended it was willing to enter into a replacement coal
lease on terms specified in the letter. Mr. Keogh subsequently rejected the
Company’s offer to enter into a replacement coal lease. The Company intends to
continue making payments to the lessors in accordance with the terms of the coal
lease. The Company has made an offer to the lessors in an effort to resolve the
lessors’ complaints and is awaiting a response.   2.   Dispute with Tim Pruitt,
et al. regarding Coal Lease at Mississippi Lignite Mining Company.       The
lessors under a coal lease held by Mississippi Lignite Mining Company have
refused to cash the surface damage payment check that the Company issued to
them, claiming that the payment did not properly compensate them for the value
of trees the Company removed from their property to construct a sedimentation
pond. The lessors have notified the Company that if the Company does not pay
them an amount they consider adequate for the trees removed and lease an
additional tract from them under terms they demand, they will consider the
existing coal lease to be terminated. The Company believes the existing coal
lease is in full force and effect and will defend vigorously any attempt by the
lessors to terminate it.   3.   Dispute with Jerry Orr regarding Coal Lease at
Mississippi Lignite Mining Company.       Mr. Orr is the lessor under a coal
lease held by Mississippi Lignite Mining Company. He has refused to cash annual
advance royalty checks that Phillips Coal Company and the Company have sent him,
claiming that Phillips Coal Company, from which the Company acquired the coal
lease, failed to make a timely payment to extend the term of the coal lease. The
Company has notified Mr. Orr that it considers the coal lease to be in full
force and effect, but is willing to negotiate reasonable terms to settle the
matter.   4.   Charge of Discrimination by John J. Tymrak, Jr.       On
October 8, 2003 John J. Tymrak, an employee at the Company’s San Miguel Lignite
Mining Operations, filed a Charge of Discrimination with the Equal Employment
Opportunity Commission (EEOC). Mr. Tymrak claims that the Company violated the
Age Discrimination in Employment Act of 1967 and the Americans with Disabilities
Act of 1990. Mr. Tymrak also filed a complaint with the Wage and Hour Division
of the Department of Labor (Wage & Hour Division), claiming that the Company
violated the Family and Medical Leave Act of 1993. Both charges stem from the
Company’s decision to offer Mr. Tymrak a position as a heavy equipment operator
rather than reinstating him as a mechanic after he returned to work from long
term disability leave for a knee injury. The Wage and Hour Division has notified
the Company that it has closed its investigation of Mr. Tymrak’s Family and
Medical Leave Act complaint, because he has engaged a private attorney. The
Company filed a response with the EEOC denying that the Company discriminated
against Mr. Tymrak. On May 13, 2004 the EEOC dismissed Mr. Tymrak’s Charge of
Discrimination. On July 20, 2004, Mr. Tymrak filed suit in Bexar County District
Court alleging that the Company terminated him because of his age in violation
of the Texas Labor Code and in retaliation for complaining about discriminatory
treatment and retaliation for filing a worker’s compensation claim, also in
violation of the Texas Labor Code. The Company believes that the claims by

49

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    Mr. Tymrak, who has not, in fact been terminated, are groundless, and the
Company intends to defend itself vigorously against his claims.   5.   The North
American Coal Corporation Savings Plan and its Plan Administrator, The North
American Coal Corporation, Plaintiffs, v. Todd Roth and Mitch Schlaht,
Defendants, In the U.S. District Court of North Dakota (Southwestern Division),
Civil Action Case No. A4-03-124       On November 4, 2003, the Company, as Plan
Administrator of the Savings Plan, filed suit against defendants Todd Roth and
Mitch Schlaht to recover an overpayment of $28,651.78 from the distribution of
Mr. Roth’s account balance in the Savings Plan. Due to an administrative error,
in early September, 2003, the Company processed Mr. Roth’s request for the
distribution of his entire account balance in the Saving Plan. On September 26,
2003, the Company received a copy of a Qualified Domestic Relations Order issued
by a state District Court in Burleigh County, North Dakota, which QDRO awarded
65% of the net balance in Mr. Roth’s Savings Plan account to his ex-spouse. The
overpayment of $28,651.78 is Defendant Roth’s ex-spouse’s share of his account
as determined pursuant to the QDRO. Defendant Roth, who is incarcerated in
prison, endorsed the distribution check to Defendant Schlaht, who signed and
cashed the check. The Company is vigorously pursuing reimbursement of the
overpayment. On March 22, 2004, the U.S. District Court granted the Company’s
Motion for Summary Judgment as to Defendant Roth and Partial Summary Judgment as
to Defendant Schlaht. Defendant Roth has filed with the 8th Circuit Court of
Appeals a Motion to Stay further proceedings in the District Court with respect
to the summary judgment. The 8th Circuit Court of Appeals granted the Company’s
Motion to Dismiss Defendant Roth’s appeals and denied Roth’s Motion to Stay. The
Company has filed a motion to hold Roth in contempt of court for failure to
comply with the judgment entered against him, and the Court has not yet ruled on
this motion.   6.   Dispute Regarding Coal Ownership at Mississippi Lignite
Mining Company.       A dispute exists regarding the ownership of the coal
underlying certain tracts of land at Mississippi Lignite Mining Company. The
Company has a lease covering several tracts with Johnny F. Black, William E.
Black, Thomas B. Black, Barbara B. Nelson and J. P. Black, who claim 100% of the
coal under the leased premises. The Company also has a lease with Black Stone
Acquisitions Partners I, LP, successor to the interest of Tormin, Inc. who
claims 50% of the coal under the same leased premises as a result of an old
Federal Land Bank reservation of 50% of the oil, gas and other minerals. The
Company commenced mining operations on one of the tracts and in accordance with
the terms of the leases has suspended royalty payments on 50% of the coal being
mined until the dispute between the two claimants is terminated and the Company
is furnished with documentation satisfactory to evidence legal title to the
disputed 50% coal interest.   7.   Dos Republicas Resources Co., Inc. Request
for Extension of Time to Commence Mining Operations, Eagle Pass Mine, Maverick
County, Texas, before the Railroad Commission of Texas, Surface Mining and
Reclamation Division, Docket No. C3-0016-SC-42-B.       NAC and Dos Republicas
Resources Co., Inc. (DRRC) are general partners in Dos Republicas Coal
Partnership (DRCP) which was created under the Amended and Restated Joint
Venture Agreement dated October 10, 1996 for the purpose of mining and selling
coal from the Eagle Pass Mine reserves in Maverick County, Texas. The initial
five (5) year permit for the project became effective on April 11, 2000. Under
the terms of the surface mining and reclamation permit (“Permit”) issued by the
Railroad Commission of Texas (the “Commission”) , the Permit would automatically
expire on April 11, 2003 if the permit holder did not commence mining operations
by such date.       DRRC and NAC, who were not successful in obtaining a coal
supply agreement for the project, were in the process of winding up the
partnership when Coahuila Industrial Minera, S.A. (a Mexican company) indicated
its desire to purchase the partnership and/or its assets. Any such sale would be
conditioned on the permit being extended. Therefore, on April 4, 2003, DRRC
filed a request for an extension to commence operations at the Eagle Pass Mine.

50

--------------------------------------------------------------------------------

 

    Hearings were held before the Hearings Examiner for the Commission on
October 1 to 3, 2003. On December 18, 2003, the Hearings Examiner issued her
Proposal for Decision recommending that the Commission enter an Order granting
the request for extension of time to April 11, 2005 to commence mining
operations.       On February 10, 2004, the Commission approved the requested
extension. On April 20, 2004 Theodosia Coppock, who owns land adjoining the
proposed mine site, filed suit against the Commission in the District Court of
Travis County, Texas, appealing the Commission’s approval of the requested
extension of time to commence mining operations. A hearing on Coppock’s appeal
was held on January 7, 2005       At the hearing, the Court ruled against DRRC
on the issue of whether it was entitled to an extension of the time to commence
mining operations because of the lack of a market for the coal. As a result of
the Court’s ruling, DRRC does not have valid surface mining Permit at this time,
pending an appeal to the Texas Court of Appeals. The Railroad Commission of
Texas has requested the Texas Attorney General’s office to file an appeal of the
Court’s decision. In the interim, DRRC has filed for a further extension of the
commencement of mining requirement based on the Texas Natural Resource Code
Section 134.072 and 16 TAC Section 12.219(b) which provides that an extension
can be granted if “litigation precludes the commencement or threatens
substantial economic loss to the permitee.” The Commission has stayed all
proceedings pending the outcome of the Commission’s appeal to the Texas Court of
Appeals.   8.   Lendell Banks v. Marcelo P. Merino, et al., in the Circuit Court
of the 1st Judicial District of Hinds County, Mississippi, Civil Action
No. ###-##-#### CIV.       This is a personal injury suit arising out of a motor
vehicle accident in which Marcelo P. Merino was involved while on Company
business. The Company’s auto liability insurance carrier has undertaken the
defense of Mr. Merino and the Company. The parties have agreed to settle this
matter.   9.   Carl Wilbanks v. The North American Coal Corporation and Marcelo
P. Merino in the Circuit Court Leake County, Mississippi, Civil Action
No. 2004-0099.       This is a personal injury suit arising out of the same
motor vehicle accident that is the subject of Lendell Banks v. Marcelo Merino,
et al. described above. The Company has submitted the matter to its auto
liability carrier to undertake the defense of Mr. Merino and the Company. The
parties are undertaking discovery.   10.   Complaint by Larry Slone to the
Railroad Commission of Texas (RCT).       Mr. Larry Slone owns a tract of land
adjoining The Sabine Mining Company’s (Sabine) mine and has sent letters to the
RCT, complaining that discharges from one of Sabine sedimentation ponds has
caused erosion in the stream channel that runs through his property. By letter
dated June 28, 2004, the RCT advised Mr. Slone that the RCT will attempt to
develop a suitable engineering correction for the problems of which Mr. Slone
has complained.       On December 21, 2004 Mr. Slone filed an action against
Southwestern Electric Power Company, Sabine’s customer, for damages allegedly
caused by Sabine’s discharges. To date Sabine has not been joined in this
action.   11.   Tony L. Broome v. The Sabine Mining Company, in the District
Court of Harrison County, Texas, Cause No. 04-1004.       On October 12, 2004,
Tony L. Broome filed suit against The Sabine Mining Company for injuries
suffered while performing repairs on one of Sabine’s coal hauling trucks. Mr.
Broome was an employee of an independent contractor, Minserco, and the injuries
he sustained resulted in the amputation of his left foot. Mr. Broome alleges
that the accident was the result of Sabine’s negligence, which Sabine denies.

51

--------------------------------------------------------------------------------

 

    This claim is covered by Sabine’s liability insurance, and Sabine has
referred the claim to its insurance carrier.       Under the terms of Sabine’s
contract with Minserco, Minserco is required to indemnify Sabine for claims by
Minserco’s employees against Sabine that result from the negligence of Minserco.
Furthermore, Minserco was required to name Sabine as an additional insured under
its liability insurance. Sabine tendered the defense of this claim to Minserco
and its insurance carrier. Minserco refused to accept the defense of the claim,
so Sabine has joined Minserco as a third party defendant. The parties are
undertaking discovery.   12.   Nicky E. Holloway v. Mississippi Lignite Mining
Company, in the Circuit Court of Choctow County, MS, Civil Action
No. 20005-0006-CV-L.       This is a wrongful termination action by a former
employee of Mississippi Lignite Mining Company, who alleges that he was
terminated for reporting to the Mississippi Workers Compensation Commission that
the Company “illegally and unlawfully” failed to provide Workers Compensation
Coverage. The Company at all times has provided Workers Compensation Coverage,
believes that the claims by Mr. Holloway are groundless and intends to defend
itself vigorously against his claims.   13.   Voda Petroleum Site.       By
letter March 27, 1996 the U.S. Environmental Protection Agency (“U.S. EPA”)
notified The Sabine Mining Company that it may be a potentially responsible
party for the Voda Petroleum Site in Clarksville, Gregg County, Texas. Following
receipt of this notice, Sabine reviewed its records and determined that it had
sent five shipments of nonhazardous waste oil to the site between 1984 and 1986.
Accordingly, the Company believes that these are subject to the Oil Pollution
Act, not “Superfund” or CERCLA, and that the Company is not responsible for
cleanup and removal costs of the waste oil. By letter dated December 31, 1998,
U.S. EPA notified Sabine that it had spent $804,260.04 cleaning up the site and
invited Sabine to enter into a de minimis agreement to pay a portion of this
cost. Sabine declined to enter into such an agreement and has had no further
communication from U.S. EPA on this matter.       By letter November 6, 2000,
the Texas Natural Resources Conservation Commission (“TNRCC”) also notified
Sabine that it considers Sabine to be a potentially responsible party for Voda
Petroleum Site and invited Sabine to submit a good faith offer to fully fund or
conduct a Remedial Investigation/Feasibility Study (“RI/FS”). Sabine declined to
submit an offer. By letter dated September 14, 2001, TNRCC notified Sabine that
none of the PRPs had offered to do an RI/FS, that TNRCC intended to begin
remedial action at the site and that it would be authorized to initiate a cost
recovery action for amounts expended. The Company believes that Sabine’s
liability, if any, will be de minimis.   14.   Diesel Fuel in Monitoring Wells
at The Coteau Properties Company.       Trace amounts of weathered diesel fuel
have been found in groundwater monitoring wells near the fuel farm site at The
Coteau Properties Company. Environmental personnel at Coteau believe this may be
from an old leak at the fuel farm. The closest tanks were reset. The State
Health Department has been informed and has approved Coteau’s proposal to
continue monitoring. No further cleanup or remedial action is planned at this
time.

52

--------------------------------------------------------------------------------

 

Schedule 4.01(s)

SCHEDULE OF BORROWER’S SUBSIDIARY COMPANIES

                              Subsidiary Name     Entity Type     State of
Formation     Ownership Interest  

                             
The Coteau Properties
Company
    Corporation     Ohio       100 %    
The Falkirk Mining
Company
    Corporation     Ohio       100 %    
The Sabine Mining
Company
    Corporation     Nevada       100 %    
Mississippi Lignite
Mining Company(1)
    Joint Venture     Texas       100 %    
Red River Mining
Company(2)
    Joint Venture     Texas       100 %    
North American Coal
Royalty Company
    Corporation     Delaware       100 %    
Red Hills Property Company L.L.C.
    Limited Liability
Company     Mississippi       100 %    
Oxbow Property Company L.L.C.
    Limited Liability
Company     Louisiana       100 %    
Dos Republicas Coal
Partnership(3)

    General Partnership     Texas       55.42 %    

--------------------------------------------------------------------------------

(1)   Mississippi Lignite Mining Company is a joint venture of The North
American Coal Corporation and Red Hills Property Company L.L.C.   (2)   Red
River Mining Company is a joint venture of The North American Coal Corporation
and Oxbow Property Company L.L.C.   (3)   Dos Republicas Coal Partnership is a
partnership of The North American Coal Corporation and Dos Republicas Resources
Co., Inc.

 

--------------------------------------------------------------------------------

 

Schedule 4.01(s)

SCHEDULE OF BORROWER’S DIRECTORS AND SENIOR OFFICERS

                OFFICERS                              
Name:
  Clifford R. Miercort     Name:   Charles B. Friley
Title:
  President and     Title:   Senior Vice President and

  Chief Executive Officer         Chief Financial Officer        
 
             
Name:
  Thomas A. Koza     Name:   Clark A. Moseley
Title:
  Vice President – Law and Administration, and     Title:   Vice President –
Business Development and

  Secretary         Engineering        
 
             
Name:
  Bob D. Carlton     Name:   K. Donald Grischow
Title:
  Vice President - Financial Services, and     Title:   Treasurer

  Controller                  
 
             
Name:
  Robert L. Benson     Name:   Andrew S. Good
Title:
  Vice President - Eastern & Southern     Title:   Assistant Secretary

  Operations                  
 
             
Name:
  Charles A. Bittenbender          
Title:
  Assistant Secretary          

                DIRECTORS                              
Name:
  Owsley Brown II     Name:   Robert M. Gates        
 
             
Name:
  Leon J. Hendrix, Jr.     Name:   Dennis W. LaBarre        
 
             
Name:
  Clifford R. Miercort     Name:   Richard de J. Osborne        
 
             
Name:
  Alfred M. Rankin, Jr.     Name:   Roger F. Rankin        
 
             
Name:
  Ian M. Ross     Name:   Michael E. Shannon        
 
             
Name:
  Britton T. Taplin     Name:   David F. Taplin        
 
             
Name:
  John F. Turben     Name:   Eugene Wong

 

--------------------------------------------------------------------------------

 

Schedule 4.01(u)

SCHEDULE OF NECESSARY INTELLECTUAL PROPERTY RIGHTS

NONE

 

--------------------------------------------------------------------------------

 

Schedule 4.01(v)

SCHEDULE OF MATERIAL CONTRACTS

1.   Coteau Lignite Sales Agreement dated as of January 1, 1990 between The
Coteau Properties Company and Dakota Coal Company, as amended.   2.  
Restatement of Coal Sales Agreement dated as of January 1, 2000 between The
Falkirk Mining Company and Great River Energy, Cooperative Power Association and
United Power Association.   3.   Second Restatement of Lignite Mining Agreement
dated as of December 1, 2001, between Southwestern Electric Power Company and
The Sabine Mining Company.   4.   Lignite Sales Agreement dated as of April 1,
1998, between Mississippi Lignite Mining Company and Choctaw Generation Limited
Partnership, as amended.   5.   Lignite Supply and Transportation Agreement
dated January 1, 1995 between Red River Mining Company and Central Louisiana
Electric Company, Inc. and Southwestern Electric Power Company, as amended.  
6.   Contract Mining Agreement dated January 22, 1997 between San Miguel
Electric Cooperative, Inc. and The North American Coal Corporation, as amended,
  7.   Mining Services Agreement dated December 15, 1994, by and between
Vecellio & Grogan Inc., d/b/a White Rock Quarries and The North American Coal
Corporation, as amended.   8.   Mining Services Agreement dated January 12,
2001, by and between Vecellio & Grogan Inc., d/b/a White Rock Quarries and The
North American Coal Corporation, as amended.   9.   Mining Services Agreement
dated March 1, 2004, by and between Vecellio & Grogan Inc., d/b/a White Rock
Quarries and The North American Coal Corporation.   10.   Mining Services
Agreement dated May 18, 2004, by and between Vecellio & Grogan Inc., d/b/a White
Rock Quarries and The North American Coal Corporation.   11.   Mining Services
Agreement dated February 4, 2005, by and between Vecellio & Grogan Inc., d/b/a
White Rock Quarries and The North American Coal Corporation.   12.   Mining
Services Agreement dated March 11, 2003, between Rinker Materials of Florida,
Inc. and The North American Coal Corporation.   13.   Mining Services Agreement
dated January 12, 2004, between Rinker Materials of Florida, Inc. and The North
American Coal Corporation.   14.   Mining Services Agreement dated January 21,
2005, between Rinker Materials of Florida, Inc. and The North American Coal
Corporation.

 

--------------------------------------------------------------------------------

 

Schedule 5.02(a)

SCHEDULE OF EXISTING LIENS

Three Promissory Notes dated April 2, 2003, and related Security Agreements
dated March 26, 2003, between The North American Coal Corporation and Key
Equipment Finance:

      Principal Balance    
$5,823,292.08 38
  payments of principal and interest of $170,706.67 (final payment in May 2008)
 
   
$1,648,446.03 26
  payments of principal and interest of $70,148.95 (assigned to Siemens
Financial) (final payment in May 2007)
 
   
$1,863,145.93 26
  payments of principal and interest of $79,285.42 (assigned to Siemens
Financial) (final payment in May 2007)

 

--------------------------------------------------------------------------------

 

Schedule 5.02(i)

SCHEDULE OF SURVIVING DEBT

NONE

 

--------------------------------------------------------------------------------

 

EXHIBIT A-1 - FORM OF
REVOLVING CREDIT
PROMISSORY NOTE

     
U.S.$                    
  Dated:                    , 200_

     FOR VALUE RECEIVED, the undersigned, THE NORTH AMERICAN COAL CORPORATION, a
Delaware corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of
                                         (the “Lender”) for the account of its
Applicable Lending Office on the Termination Date (each as defined in the Credit
Agreement referred to below) the principal sum of U.S.$[amount of the Lender’s
Commitment in figures] or, if less, the aggregate principal amount of the
Revolving Credit Advances made by the Lender to the Borrower pursuant to the
Credit Agreement dated as of March 8, 2005 among the Borrower, the Lender and
certain other lenders parties thereto, and Citibank, N.A. as Agent for the
Lender and such other lenders (as amended or modified from time to time, the
“Credit Agreement”; the terms defined therein being used herein as therein
defined) outstanding on the Termination Date.

     The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.

     Both principal and interest are payable in lawful money of the United
States of America to Citibank, as Agent, at 388 Greenwich Street, New York, New
York 10013, in same day funds. Each Revolving Credit Advance owing to the Lender
by the Borrower pursuant to the Credit Agreement, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Promissory Note provided, however, that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the Borrower
under this Promissory Note.

     This Promissory Note is one of the Revolving Credit Notes referred to in,
and is entitled to the benefits of, the Credit Agreement. The Credit Agreement,
among other things, (i) provides for the making of Revolving Credit Advances by
the Lender to the Borrower from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Credit Advance
being evidenced by this Promissory Note and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.

     This Promissory Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.

                  THE NORTH AMERICAN COAL
CORPORATION
 
           

  By:        

           

      Title:    

 

--------------------------------------------------------------------------------

 

ADVANCES AND PAYMENTS OF PRINCIPAL

                                              Amount of                      
Amount of     Principal Paid or     Unpaid Principal     Notation     Date    
Advance     Prepaid     Balance     Made By    
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           

2

--------------------------------------------------------------------------------

 

EXHIBIT A-2 - FORM OF
TERM PROMISSORY NOTE

     
U.S.$                    
  Dated:                     , 200_

     FOR VALUE RECEIVED, the undersigned, THE NORTH AMERICAN COAL CORPORATION, a
Delaware corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of
                                         (the “Lender”) for the account of its
Applicable Lending Office on the Termination Date (each as defined in the Credit
Agreement referred to below) the principal sum of U.S.$[amount of the Lender’s
Commitment in figures] or, if less, the aggregate principal amount of the Term
Advance made by the Lender to the Borrower pursuant to the Credit Agreement
dated as of March 8, 2005 among the Borrower, the Lender and certain other
lenders parties thereto, and Citibank, N.A. as Agent for the Lender and such
other lenders (as amended or modified from time to time, the “Credit Agreement”;
the terms defined therein being used herein as therein defined) on the dates and
in the amounts specified in the Credit Agreement.

     The Borrower promises to pay interest on the unpaid principal amount of the
Term Advance from the date of the Term Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

     Both principal and interest are payable in lawful money of the United
States of America to Citibank, as Agent, at 388 Greenwich Street, New York, New
York 10013, in same day funds. The Term Advance owing to the Lender by the
Borrower pursuant to the Credit Agreement, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note; provided, however, that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
under this Promissory Note.

     This Promissory Note is one of the Term Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of a single Term Advance by the Lender
to the Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Term Advance
being evidenced by this Promissory Note and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.

     This Promissory Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.

                  THE NORTH AMERICAN COAL
CORPORATION
 
           

  By:        

           

      Title:    

 

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ADVANCES AND PAYMENTS OF PRINCIPAL

                                              Amount of                      
Amount of     Principal Paid or     Unpaid Principal     Notation     Date    
Advance     Prepaid     Balance     Made By    
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           
 
                           

2

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EXHIBIT B — FORM OF NOTICE OF
BORROWING

Citibank, N.A., as Agent

 for the Lenders parties
 to the Credit Agreement
 referred to below
 Two Penns Way
 New Castle, Delaware 19720

[Date]

               Attention: Bank Loan Syndications Department

Ladies and Gentlemen:

               The undersigned, The North American Coal Corporation, refers to
the Credit Agreement, dated as of March 8, 2005 (as amended or modified from
time to time, the “Credit Agreement”, the terms defined therein being used
herein as therein defined), among the undersigned, certain Lenders parties
thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
“Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement:

               (i) The Business Day of the Proposed Borrowing is ___, 200_.

               (ii) The Facility under which the Proposed Borrowing is requested
is the [Term][Revolving Credit] Facility.

               (iii) The Type of Advances comprising the Proposed Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].

               (iv) The aggregate amount of the Proposed Borrowing is $___.

               [(v) The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is ___month[s].]

               The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the Proposed
Borrowing:

               (A) the representations and warranties contained in Section 4.01
of the Credit Agreement (except the representations set forth in the last
sentence of subsection (e) thereof and in subsection (f)(i) thereof) are
correct, before and after giving effect to the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date;
and

               (B) no event has occurred and is continuing, or would result from
such Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default.

                  Very truly yours,
 
                THE NORTH AMERICAN COAL CORPORATION
 
           

  By        

           

      Title:    

 

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EXHIBIT C — FORM OF
ASSIGNMENT AND ACCEPTANCE

     Reference is made to the Credit Agreement dated as of March 8, 2005 (as
amended or modified from time to time, the “Credit Agreement”) among The North
American Coal Corporation, a Delaware corporation (the “Borrower”), the Lenders
(as defined in the Credit Agreement) and Citibank, N.A., as agent for the
Lenders (the “Agent”). Terms defined in the Credit Agreement are used herein
with the same meaning.

     The “Assignor” and the “Assignee” referred to on Schedule I hereto agree as
follows:

     1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor’s rights and obligations under the Credit Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Credit Agreement Facility or
Facilities specified on Schedule 1 hereto. After giving effect to such sale and
assignment, the Assignee’s Commitment and the amount of the Advances owing to
the Assignee will be as set forth on Schedule 1 hereto.

     2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Note or Notes held by the Assignor and requests that the
Agent exchange such Note or Notes for a new Note or Notes payable to the order
of the Assignee in an amount equal to the Commitment assumed by the Assignee
pursuant hereto or new Notes payable to the order of such Assignee in an amount
equal to the Commitments assumed by the Assignee pursuant hereto and the
Assignor in an amount equal to the Commitments retained by the Assignor under
the Credit Agreement, respectively, as specified on Schedule 1 hereto.

     3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service forms required under Section 2.13 of the Credit
Agreement.

     4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the “Effective Date”) shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1
hereto.

     5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.

 

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     6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and facility fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.

     7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.

     8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.

     IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.

2

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Schedule 1

to

Assignment and Acceptance

     
As to the Revolving Credit Facility:
   
 
   
Percentage interest assigned:
                      %
 
   
Assignee’s Revolving Credit Commitment:
  $                    
 
   
Aggregate outstanding principal amount of Revolving Credit Advances assigned:
  $                    
 
   
Principal amount of Revolving Credit Note payable to Assignee:
  $                    
 
   
Principal amount of Revolving Credit Note payable to Assignor:
  $                    
 
   
As to the Term Facility:
   
 
   
Percentage interest assigned:
                      %
 
   
Assignee’s Term Commitment:
  $                    
 
   
Aggregate outstanding principal amount of Term Advances assigned:
  $                    
 
   
Principal amount of Term Note payable to Assignee:
  $                    
 
   
Principal amount of Term Note payable to Assignor:
  $                    
 
   
Effective Date*:                                         , 200_
   

                  [NAME OF ASSIGNOR], as Assignor
 
           

  By  
                                                                                
   

  Title:        
 
           

  Dated:                                           , 200_    
 
                [NAME OF ASSIGNEE], as Assignee
 
           

  By  
                                                                                
   

  Title:        
 
           

  Dated:                                           , 200_    

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* This date should be no earlier than five Business Days after the delivery of
this Assignment and Acceptance to the Agent.

3

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Domestic Lending Office:
[Address]

Eurodollar Lending Office:
[Address]

      Accepted [and Approved]** this                                         
day of                                                             , 200_
 
    CITIBANK, N.A., as Agent
 
   
By
 
                                                                                                    

  Title:
 
    [Approved this                                          day of
                                                            , 200_
 
    THE NORTH AMERICAN COAL CORPORATION
 
   
By
 
                                                                                                    ]*

  Title:

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** Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of “Eligible Assignee”.   * Required if the Assignee is
an Eligible Assignee solely by reason of clause (iii) of the definition of
“Eligible Assignee”.

4

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EXHIBIT D-1 OPINION OF JONES DAY

March 8, 2005

Citibank, N.A., as Agent under the
Credit Agreement, as hereinafter
defined (the “Agent”) and
The Lenders parties to
the Credit Agreement

Re: Credit Agreement, dated as of March 8, 2005, among The North American
Coal Corporation, the Lenders identified in the Credit Agreement and the Agent

Ladies and Gentlemen:

      We have acted as special New York counsel for The North American Coal
Corporation, a Delaware corporation (the “Company”) in connection with the
Credit Agreement, dated as of March 8, 2005 (the “Credit Agreement”), among the
Company, the financial institutions listed on the signature pages thereof (the
“Lenders”) and Citibank, N.A., as agent for the Lenders (in such capacity, the
“Agent”). This opinion letter is delivered to you pursuant to Section
3.01(h)(iv)(A) of the Credit Agreement. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to such terms in the Credit
Agreement. The Uniform Commercial Code, as amended and in effect in the State of
New York on the date hereof, is referred to herein as the “NY UCC.” With your
permission, all assumptions and statements of reliance herein have been made
without any independent investigation or verification on our part except to the
extent, if any, otherwise expressly stated, and we express no opinion with
respect to the subject matter or accuracy of the assumptions or items upon which
we have relied.

      In connection with the opinions expressed herein, we have examined such
documents, records and matters of law as we have deemed necessary for the
purposes of such opinions. We have examined, among other documents, the
following:

  (1)   an executed copy of the Credit Agreement;     (2)   an executed copy of
each of the Notes (the “Notes”); and     (3)   the Officer’s Certificate of the
Company delivered to us in connection with this opinion letter, a copy of which
is attached hereto as Exhibit A (the “Officer’s Certificate”).

      The documents referred to in items (1) and (2) above are referred to
herein collectively as the “Credit Documents.”

      In all such examinations, we have assumed, without independent
investigation, the legal capacity of all natural persons executing documents,
the genuineness of all signatures, the authenticity of original and certified
documents and the conformity to original or certified copies of all copies
submitted to us as conformed or reproduction copies. As to various questions of
fact relevant to the opinions expressed herein, we have relied upon, and assume
the accuracy of, representations and warranties contained in the Credit
Documents and certificates and oral or written statements and other information
of or from representatives of the Company and others and assume compliance on
the part of all parties to the Credit Documents with their covenants and
agreements contained therein. With respect to the opinions expressed in
paragraph (a) below, our opinions are limited (x) to our actual knowledge, if
any, of the Company’s

 

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specially regulated business activities and properties based solely upon an
officer’s certificate in respect of such matters and without any independent
investigation or verification on our part and (y) to our review of only those
laws and regulations that, in our experience, are normally applicable to
transactions of the type contemplated by the Credit Documents.

      To the extent it may be relevant to the opinions expressed herein, we have
assumed, without independent investigation, that the parties to the Credit
Documents other than the Company have the power to enter into and perform such
documents and to consummate the transactions contemplated thereby and that such
documents have been duly authorized, executed and delivered by, and constitute
legal, valid and binding obligations of, such parties.

      Based upon the foregoing, and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:

      (a) The execution and delivery to the Agent and the Lenders by the Company
of the Credit Documents and the performance by the Company of its obligations
thereunder, (i) do not require under present law, or present regulation of any
governmental agency or authority, of the State of New York or the United States
of America any filing or registration by the Company with, or approval or
consent to the Company of, any governmental agency or authority of the State of
New York or the United States of America that has not been made or obtained
except those required in the ordinary course of business in connection with the
performance by the Company of its obligations under certain covenants contained
in the Credit Documents and (ii) do not violate any present law, or present
regulation of any governmental agency or authority, of the State of New York or
the United States of America applicable to the Company or its property.

      (b) Upon execution and delivery of the Notes by the Company, each such
Note will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms. Each other Credit Document
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.

      (c) The borrowings by the Company under the Credit Agreement and the
application of the proceeds thereof as provided in the Credit Agreement will not
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System (the “Margin Regulations”).

      The opinions set forth above are subject to the following qualifications
and limitations:

      (A) Our opinions in paragraph (b) above are subject to (i) applicable
bankruptcy, insolvency, reorganization, fraudulent transfer and conveyance,
voidable preference, moratorium, receivership, conservatorship, arrangement or
similar laws, and related regulations and judicial doctrines, from time to time
in effect affecting creditors’ rights and remedies generally and (ii) general
principles of equity (including, without limitation, standards of materiality,
good faith, fair dealing and reasonableness, equitable defenses, the exercise of
judicial discretion and limits on the availability of equitable remedies),
whether such principles are considered in a proceeding at law or in equity.

      (B) We express no opinion as to the enforceability of any provision in the
Credit Documents:

     (i) relating to indemnification, contribution or exculpation in connection
with violations of any securities laws or statutory duties or public policy, or
in connection with willful, reckless or unlawful acts or gross negligence of the
indemnified or exculpated party or the party receiving contribution;

     (ii) providing that any person or entity may exercise set-off rights other
than in accordance with and pursuant to applicable law;

 

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     (iii) relating to choice of governing law to the extent that the
enforceability of any such provision is to be determined by any court other than
a court of the State of New York or may be subject to constitutional
limitations;

     (iv) purporting to confer, or constituting an agreement with respect to,
subject matter jurisdiction of United States federal courts to adjudicate any
matter;

     (v) specifying that provisions thereof may be waived only in writing, to
the extent that an oral agreement or an implied agreement by trade practice or
course of conduct has been created that modifies any provision of such Credit
Documents; or

     (v) giving any person or entity the power to accelerate obligations without
any notice to the obligor.

      (C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:

     (i) provide that forum selection clauses in contracts are not necessarily
binding on the court(s) in the forum selected; and

     (ii) may, where less than all of a contract may be unenforceable, limit the
enforceability of the balance of the contract to circumstances in which the
unenforceable portion is not an essential part of the agreed exchange, or that
permit a court to reserve to itself a decision as to whether any provision of
any agreement is severable.

      (D) We express no opinion as to the enforceability of any purported
waiver, release, variation, disclaimer, consent or other agreement to similar
effect (all of the foregoing, collectively, a “Waiver”) by the Company under any
of the Credit Documents to the extent limited by provisions of applicable law
(including judicial decisions), or to the extent that such a Waiver applies to a
right, claim, duty or defense or a ground for, or a circumstance that would
operate as, a discharge or release otherwise existing or occurring as a matter
of law (including judicial decisions), except to the extent that such a Waiver
is effective under and is not prohibited by or void or invalid under provisions
of applicable law (including judicial decisions).

      (E) For purposes of our opinions above insofar as they relate to the
Company, we have assumed that (i) the Company is a corporation validly existing
in good standing in its jurisdiction of organization, has all requisite power
and authority, and has obtained all requisite corporate, shareholder and third
party consents and approvals necessary to execute, deliver and perform the
Credit Documents and that such execution, delivery, performance and grant will
not violate or conflict with any law, rule, regulation, order, decree, judgment,
instrument or agreement binding upon or applicable to it or its properties
(except to the extent noted in paragraph (a) above), and (ii) the Credit
Documents have been duly executed and delivered by it.

      (F) For purposes of the opinions set forth in paragraph (c) above, we have
assumed that (i) neither the Agent nor any of the Lenders has or will have the
benefit of any agreement or arrangement (excluding the Credit Documents)
pursuant to which any extensions of credit to the Company are directly or
indirectly secured by “margin stock” (as defined under the Margin Regulations),
(ii) neither the Agent nor any of the Lenders nor any of their respective
affiliates has extended or will extend any other credit to the Company directly
or indirectly secured by margin stock and (iii) neither the Agent nor any of the
Lenders has relied or will rely upon any margin stock as collateral in extending
or maintaining any extensions of credit pursuant to the Credit Agreement.

      The opinions expressed herein are limited to the federal laws of the
United States of America and the laws of the State of New York, in each case as
currently in effect.

 

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      We express no opinion as to the compliance or noncompliance, or the effect
of the compliance or noncompliance, of each of the addressees or any other
person or entity with any state or federal laws or regulations applicable to
each of them by reason of their status as or affiliation with a federally
insured depository institution.

      Our opinions are limited to those expressly set forth herein, and we
express no opinions by implication.

      In rendering this opinion, we have relied, with your permission, upon the
opinion of Thomas A. Koza, Esq., the Vice President — Law and Administration of
the Company, a copy of which has been furnished to you.

      The opinions expressed herein are solely for the benefit of the addressees
hereof in connection with the transaction referred to herein and may not be
relied on by such addressees for any other purpose or in any manner or for any
purpose by any other person or entity.

      Dennis W. LaBarre, a partner of Jones Day, is a Director of NACCO
Industries, Inc., the parent of the Company, and a Director of the Company.

Very truly yours,

 

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EXHIBIT D-2 - FORM OF
OPINION OF COUNSEL
FOR THE BORROWER

March 8, 2005

Citibank, N.A., as Agent under the
Credit Agreement, as hereinafter
defined (the “Agent”) and
The Lenders parties to the Credit Agreement

         

  Re:   Credit Agreement, dated as of March 8, 2005 (the “Credit Agreement”)
among The North American Coal Corporation, a Delaware corporation (the
“Company”), the Lenders identified in the Credit Agreement and the Agent

Ladies and Gentlemen:

         I am the Vice President - Law and Administration for The North American
Coal Corporation, a Delaware corporation (the “Company”), and have acted as such
in connection with the preparation, execution and delivery of the Credit
Agreement and the Notes delivered to the Lenders on the date hereof (the
“Notes”), the Credit Agreement and the Notes being collectively referred to as
the “Credit Documents.” This opinion is delivered to you pursuant to
Section 3.01(h)(iv)(B) of the Credit Agreement. Capitalized terms used herein
and not otherwise defined herein have the meanings assigned to such terms in the
Credit Agreement.

         In connection with the opinions expressed herein, I have examined such
documents, records and matters of law as I have deemed necessary for the
purposes of this opinion. I have examined, among other documents, the following:

  (i)   An executed copy of the Credit Agreement, signed by the Company and by
the Agent and certain of the Lenders; and     (ii)   An executed copy of each of
the Notes.

         I, or attorneys over whom I exercise supervision, have also examined
the originals, or copies certified to our satisfaction, of the agreements,
instruments and other documents, and all of the orders, writs, judgments,
awards, injunctions and decrees, which affect or purport to affect the ability
of the Company to perform its obligations under the Credit Documents to which it
is a party. In addition, I, or attorneys over whom I exercise supervision, have
examined the originals, or copies certified to our satisfaction, of the
Certificate of Incorporation and By-laws of the Company, and such other
corporate records of the Company, certificates of public officials and of
officers of the Company, and agreements, instruments and other documents, as I
have deemed necessary as a basis for the opinions hereinafter expressed.

         To the extent it may be relevant to the opinions expressed herein, I
have assumed that the parties to the Credit Documents other than the Company
have the power to enter into and perform such documents and to consummate the
transactions contemplated thereby and that such documents have been duly
authorized, executed and delivered by, and constitute legal, valid and binding
obligations of, such parties.

         The opinions expressed below are limited to the federal laws of the
United States, and, to the extent relevant hereto, the General Corporation Law
of the State of Delaware, as currently in effect. I assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if I become aware of any facts that might change the opinions expressed herein
after the date hereof.

 

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         Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth herein, I am of the opinion that:

     1. The Company (i) is a corporation duly incorporated, validly existing in
good standing under the laws of the State of Delaware and (ii) has the corporate
power and authority to enter into and to perform its obligations under the
Credit Documents and to obtain extensions of credit under the Credit Agreement
to the extent provided for therein. The Company possesses governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, the absence of which would have a Material Adverse Effect.

     2. The execution, delivery and performance by the Company of the Credit
Documents are within the Company’s corporate powers, have been duly authorized
by all necessary corporate action, require no action, consent or approval by or
in respect of, or filing with, any governmental body, agency or official or
other third party, do not contravene, or constitute a default under, any
provision of applicable law, rule or regulation or of the Certificate of
Incorporation or By-laws of the Company or of any material agreement binding
upon the Company or any judgment, injunction, order, decree or other instrument
binding upon the Company, and will not result in the creation or imposition of
any lien on any asset of the Company or any of its Subsidiaries. The Credit
Documents have been duly executed and delivered on behalf of the Company.

     3. There is no action, suit or proceeding pending against, or, to the best
of my knowledge, threatened against or affecting, the Company or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official that purports to affect the legality, validity, binding effect or
enforceability of the Credit Documents or the consummation of the transactions
contemplated thereby or that are likely to have a Material Adverse Effect.

This opinion is furnished by me, as counsel to the Company, to you solely for
your benefit and solely with respect to the transactions contemplated by the
Credit Documents upon the understanding that I am not hereby assuming any
professional responsibility to any other person whatsoever.

         

      Very truly yours,

                                                                            
          

      Vice President - Law and Administration,

      The North American Coal Corporation

2