Exhibit 10.26
AGREEMENT
THIS AGREEMENT (“Agreement”) is made and entered into as of the 30th day of
June, 1988, by and among THE NORTH AMERICAN COAL CORPORATION, an Ohio
corporation (hereinafter referred to as “NACCO”); SOUTHWESTERN ELECTRIC POWER
COMPANY, a Delaware corporation individually and as Project Manager of the Henry
W. Pirkey Power Plant and the associated Lignite Reserves and in behalf of
owners thereof (hereinafter referred to as “SWEPCO”); TEXAS COMMERCE
BANK-LONGVIEW, NATIONAL ASSOCIATION (successor to Longview National Bank), a
national Banking association having an office at Longview, Texas (hereinafter
referred to as “Escrow Agent”); NORTEX MINING COMPANY, a Delaware corporation
and wholly-owned subsidiary of NACCO (hereinafter referred to as (“NORTEX”); and
THE SABINE MINING COMPANY, a Delaware corporation and wholly–owned subsidiary of
NACCO (hereinafter referred to as “SABINE”).
WITNESSETH:
WHEREAS, NACCO, SWEPCO and Escrow Agent entered into an Option Agreement dated
January 15, 1981 (the “Option Agreement”), whereby NACCO granted to SWEPCO the
exclusive right and option to purchase the capital stock of SABINE; and
WHEREAS, the Option Agreement prohibits the assignment of the capital stock of
SABINE by NACCO; and
WHEREAS, NACCO desires to assign to NORTEX the capital stock of SABINE and all
of NACCO’s interests in the Option Agreement, and NORTEX desires to accept such
capital stock and assignment; and
WHEREAS, SWEPCO is willing to consent to such assignment of the capital stock of
SABINE and the Option Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:

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1.
Contemporaneously with the execution and delivery of this Agreement, Escrow
Agent has

delivered to NACCO, and NACCO hereby acknowledges receipt of, Share Certificate
No. 001 for 1,000 shares of capital stock of SABINE and the originally executed
stock power which were delivered by NACCO to Escrow Agent pursuant to Section 2
of the Option Agreement.
2.
(a)     NACCO does hereby assign, transfer and convey to NORTEX, and NORTEX does
hereby

Accept from NACCO, one thousand (1,000) shares of the capital stock of SABINE.
NACCO hereby delivers to NORTEX, and NORTEX hereby acknowledges receipt of,
Share Certificate No. 001 together with a duly executed legally effective stock
power therefor, permitting the immediate transfer of such capital stock on the
books of SABINE into the name of NORTEX.
(b)     NACCO does hereby assign to NORTEX, and NORTEX does hereby accept and
expressly assume, all of the rights, obligations and interests accruing to NACCO
in, to and under the Option Agreement. NACCO shall act as surety for the timely
performance of all obligations which it hereby assigns to NORTEX.
3.
NORTEX hereby delivers to SABINE, and SABINE hereby acknowledged receipt of,
Share

Certificate No. 001 and the stock power duly executed by NACCO.
4.
SABINE hereby issues and delivers to NORTEX, and NORTEX hereby acknowledges
receipt of,

Share Certificate No. 003 for 1,000 shares of the capital stock of SABINE.
5.
NORTEX hereby delivers to the Escrow Agent, and the Escrow Agent hereby
acknowledges

receipt of, Share Certificate No. 003 for 1,000 shares of the capital stock of
SABINE, together with a duly executed and legally effective stock power,
permitting the immediate transfer of said stock on the books of SABINE, which
share certificate and stock power for all purposes under the Option Agreement
shall replace and be substituted for Share Certificate No. 001 and the stock
power

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delivered by NACCO to the Escrow Agent pursuant to Section 2 of the Option
Agreement.
6.
The timing of the various transfers set forth in Sections 1 through 5 hereof
shall be effected

Sequentially but none shall be deemed to have occurred for any purpose until all
have been concluded.
7.
NORTEX covenants, warrants and guarantees to SWEPCO that it will:

(a)
Assume and perform all rights and obligations of whatever nature acquired and

undertaken by NACCO under the Option Agreement and that certain Lignite Mining
Agreement dated January 15, 1981, between SABINE and SWEPCO.
(b)
Retain SABINE as s single–purpose Texas corporation.

(c)
Maintain or cause SABINE to maintain separate and complete books and records of
all

SABINE transactions of whatever nature, including but not limited to, affiliated
intercompany and third party transactions as well as transfers to pension or
other employee benefit plans or trusts.
8.
NACCO covenants, warrants and guarantees to SWEPCO the timely performance of any
and

all obligations of NACCO contained in that certain Lignite Mining Agreement
dated January 15, 1981, between SABINE and SWEPCO, Should NORTEX, as assignee of
such obligations, fail or refuse to satisfy or discharge any or all such
obligations or liabilities, NACCO shall promptly act to perform such
obligations.
9.
NACCO and NORTEX covenant, warrant and guarantee that the buy-out provisions

contained in Section 5 of the Option Agreement shall pertain only to values
displayed by the financial statements of SABINE. Should any legal action, suit,
claim or involuntary reorganization of NORTEX result in a merger or other
combination of the assets, liabilities and shareholders’ equity of SABINE with
NORTEX or any other company, or should SABINE cease to exist as a legally
separate, single-purpose corporation, regardless of whether such event or
reorganization was within the control or ability of NORTEX or NACCO to prevent,
NACCO and NORTEX covenant, warrant and agree that they shall be jointly and
severally liable to SWEPCO for, and shall jointly and

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severally indemnify and hold harmless SWEPCO against, any amounts, claims,
expense or causes of action which extend, change or otherwise accrue to SABINE
as a result of such merger, combination or carry over of obligations, costs
and/or liabilities of SABINE. NACCO and NORTEX shall pay to SWEPCO, at a
minimum, that amount of capital in excess of the amount of capital less $1,000
appearing on the latest certified monthly financial statement of SABINE existing
prior to any involuntary merger or combination of SABINE assets, liabilities and
shareholders’ equity with that of any other company.
    
This indemnification and hold harmless agreement shall continue even though
SABINE is involuntarily dissolved or the purposes of the Option Agreement have
been otherwise frustrated by actions beyond the control of NACCO and NORTEX.
10.
NACCO and NORTEX agree that SWEPCO’s audit rights under the Lignite Mining
Agreement

dated January 15, 1981 shall be extended do that SWEPCO may trace all SABINE
transactions involving its assets and expense either forward or backward into or
out of any NACCO affiliate. To accomplish this purpose, NACCO and NORTEX agree
that SWEPCO may audit the accounts of NACCO or any NACCO affiliate in the same
manner as if SWEPCO were exercising its audit rights of SABINE under ARTICLE
XIII of the Lignite Mining Agreement dated January 15, 1981.
11.
Notwithstanding anything to the contrary contained in the Option Agreement,
SWEPCO

hereby consents and agrees to the transactions contemplated by this Agreement.
12.
The Option Agreement, as modified by the transactions contemplated hereby and
Section 7

hereof, is hereby ratified and confirmed and shall remain in full force and
effect.
13.
This Agreement may be executed in any number of counterparts, each of which,

when executed and delivered, shall be an original, but all of which shall
collectively constitute one and the same instrument.
14.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their

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respective nominees, successors and assigns.

IN WITNESS WHEREOF, the parties hereto have executed this instrument the day and
year first above written.
 
 
THE NORTH AMERICAN COAL CORPORATION
ATTEST:
 
 
 
/s/ Thomas A. Koza
 
By:
/s/ Clifford R. Miercort
Secretary
 
 
President

 
 
SOUTHWESTERN ELECTRIC POWER COMPANY, individually and as Project Manager of the
Henry W. Pirkey Power Plant and the Associated Lignite Reserves and in behalf of
the owners thereof
ATTEST:
 
 
 
/s/ Elizabeth D. Stephens
 
By:
/s/ John W. Turk, Jr.
 
 
 
John W. Turk, Jr.
Secretary
 
 
President

 
 
Texas Commerce BANK-Longview, National Association
ATTEST:
 
 
 
/s/ Signature Illegible
 
By:
/s/ Signature Illegible
Title:
 
 
Vice President

 
 
NORTEX MINING COMPANY
ATTEST:
 
 
 
/s/ Thomas A. Koza
 
By:
/s/ John R. Cook
Secretary
 
 
Vice President – Finance and Administration

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THE SABINE COMPANY
ATTEST:
 
 
 
/s/ Thomas A. Koza
 
By:
/s/ Glen A. Eckhart
Secretary
 
 
President

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