Exhibit 10.1



 






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




 









 








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	 






 









 






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	 






3









 






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






4









 






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%	 
	 





5









 






	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	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;



6









 






     (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




7









 







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.



8









 






     “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.



9









 






     “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.



10









 






     “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.



11









 






     “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.



12









 






     “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



13









 






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



14









 






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”).




15










 






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




16









 








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	 	 
	 






17









 








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.




18









 








          (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




19









 








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.




20









 








          (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.




21









 








          (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




22









 








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.




23









 








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



24









 






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.



25









 






     (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.



26









 






     (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.



27









 






     (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,


28









 





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.



29









 






     (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;



30









 






     (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.




31










 







                    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




32









 






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.



33









 






                    (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



34









 






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



35









 






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



36









 






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



37









 






                    (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



38









 





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



39









 





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.



40









 





                    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



41









 




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



42









 




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



43









 




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.



44









 





                    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]





45









 








                    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: 	 





46









 






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









 








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









 






	   	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:	 	 






 









 






ADVANCES AND PAYMENTS OF PRINCIPAL




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





2









 






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:	 	 






 









 






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.



 









 





     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









 






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_	 	 












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




3









 










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:












	** 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









 






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



 








 




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;



 








 






     (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.



 








 





      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,




 









 








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.



 









 





         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