Document:

NCEX 10.9 Tax Allocation Agreement

Exhibit 10.9

TAX ALLOCATION AGREEMENT
BY AND BETWEEN
NACCO INDUSTRIES, INC.
AND
HYSTER-YALE MATERIALS HANDLING, INC.
Dated September 28, 2012
 

TABLE OF CONTENTS

	
				
	 
	 
	Page

	 
	 
	 

	ARTICLE 1
	DEFINITIONS
	2
	

	1.1
	General
	2
	

	 
	 
	 

	ARTICLE 2
	PREPARATION, FILING AND PAYMENT OF TAXES AND REFUNDS SHOWN ON TAX RETURNS
	8
	

	2.1
	Responsibility of Parties to Prepare and File Pre-Closing Income Tax Returns and Straddle Period Income Tax Returns
	8
	

	2.2
	Tax Return Procedures
	9
	

	2.3
	Post-Closing Income Tax Returns and Non-Income Tax Returns
	10
	

	2.4
	Timing of Payments to Taxing Authority
	10
	

	2.5
	Expenses
	10
	

	2.6
	Coordination with Article 4
	10
	

	 
	 
	 

	ARTICLE 3
	PAYMENT OF TAXES AND INDEMNIFICATION
	11
	

	3.1
	Payment and Indemnification by Parent
	11
	

	3.2
	Payment and Indemnification by HY
	11
	

	3.3
	Timing of Tax Payments
	11
	

	3.4
	Characterization of and Adjustments to Payments
	11
	

	 
	 
	 

	ARTICLE 4
	REFUNDS, CARRYBACKS, AMENDMENTS AND TAX ATTRIBUTES
	12
	

	4.1
	Refunds
	12
	

	4.2
	Carrybacks
	12
	

	4.3
	Amended Tax Returns
	14
	

	4.4
	Tax Attributes
	15
	

	 
	 
	 

	ARTICLE 5
	TAX PROCEEDINGS
	15
	

	5.1
	Notification of Tax Proceedings
	15
	

	5.2
	Tax Proceeding Procedures
	15
	

	5.3
	Tax Proceeding Cooperation
	16
	

	5.4
	Correlative Adjustments
	16
	

	 
	 
	 

	ARTICLE 6
	TAX-FREE STATUS OF THE TRANSACTIONS
	17
	

	6.1
	Representations and Warranties
	17
	

	6.2
	Limits on Proposed Acquisition Transactions and Other Transactions During Restriction Period
	18
	

	6.3
	Tax Counsel Advance Conflict Waiver
	20
	

	 
	 
	 

	ARTICLE 7
	COOPERATION
	20
	

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TABLE OF CONTENTS

	
				
	 
	 
	Page

	 
	 
	 

	7.1
	General Cooperation
	20
	

	7.2
	Retention of Records
	20
	

	 
	 
	 

	ARTICLE 8
	MISCELLANEOUS
	21
	

	8.1
	Dispute Resolution
	21
	

	8.2
	Tax Sharing Agreements
	21
	

	8.3
	Interest on Late Payments
	21
	

	8.4
	Survival of Covenants
	22
	

	8.5
	Termination
	22
	

	8.6
	Severability
	22
	

	8.7
	Entire Agreement; Exclusivity
	22
	

	8.8
	Successors and Assigns
	22
	

	8.9
	Third-Party Beneficiaries
	23
	

	8.10
	Specific Performance
	23
	

	8.11
	Amendment
	23
	

	8.12
	Rules of Construction
	23
	

	8.13
	Counterparts
	23
	

	8.14
	Coordination with the Separation Agreement
	24
	

	8.15
	Effective Date
	24
	

	8.16
	Governing Law
	24
	

	8.17
	Force Majeure
	24
	

	8.18
	Notices
	24
	

	8.19
	No Circumvention
	25
	

	8.20
	No Duplication; No Double Recovery
	25
	

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TAX ALLOCATION AGREEMENT

THIS TAX ALLOCATION AGREEMENT (this “Agreement”), dated as of September 28, 2012, is by and between NACCO Industries, Inc. (“Parent”), a Delaware corporation, and NMHG Holding Co. (“HY”), a Delaware corporation.  Each of Parent and HY is sometimes referred to herein as a “Party” and, collectively, as the “Parties.”
WHEREAS, Parent, through its various subsidiaries, is engaged in the Parent Business and the Lift Truck Business;
WHEREAS, the board of directors of Parent has determined that it is in the best interests of Parent and its shareholders to separate and operate the Lift Truck Business as a publicly traded company;
WHEREAS, in furtherance of the foregoing, HY was merged (or will have merged, prior to the effectiveness of this Agreement) with and into NMHG Holding Co., a Delaware corporation and wholly owned Subsidiary of Parent and the name of the surviving corporation was changed to Hyster-Yale Materials Handling, Inc. (the “Merger”), as more fully described in the Separation Agreement;
WHEREAS, Parent intends, following the Merger, to contribute to HY certain assets related to the Lift Truck Business in exchange for the assumption by HY of liabilities associated with the Lift Truck Business and deemed additional equity of HY (the “Contribution”);
WHEREAS, Parent intends, following the Contribution, to distribute to holders of Parent Common Stock all of the outstanding shares of HY Common Stock by means of a distribution on the basis of one share of HY Class A Common Stock and one share of HY Class B Common Stock for every one share of Parent Class A Common Stock or Parent Class B Common Stock (the “Distribution”), and the board of directors of Parent has approved such Distribution;
WHEREAS, for U.S. federal income tax purposes, (i) the Merger is intended to qualify for tax-free treatment under Sections 332 and 337 of the Code and (ii) the Contribution and the Distribution, taken together, are intended to qualify as a reorganization that is described in Sections 355(a) and 368(a)(1)(D) of the Code;
WHEREAS, Parent anticipates receiving an opinion of McDermott Will & Emery LLP to the effect that the Contribution and the Distribution, taken together, will qualify a reorganization that is described in Sections 355(a) and 368(a)(1)(D) of the Code;
WHEREAS, prior to consummation of the Merger, the Contribution, and the Distribution, Parent will be the common parent corporation of an affiliated group of corporations within the meaning of Section 1504 of the Code that includes NMHG and HY; and
WHEREAS, the Parties wish to (a) provide for the payment of Tax liabilities and entitlement to refunds thereof, allocate responsibility for, and cooperation in, the filing of Tax Returns, and provide for certain other matters relating to Taxes, and (b) set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Merger, the Contribution, and the Distribution.

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NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:
ARTICLE 1 
DEFINITIONS
1.1    General.  As used in this Agreement, the following terms shall have the following meanings:
“Accounting Firm” has the meaning set forth in Section 8.1(b) of this Agreement.
“Acting Party” has the meaning set forth in Section 6.2(b).
“Adjustment” means any change in the Tax liability of a taxpayer, determined issue-by-issue or transaction-by-transaction, as the case may be.
“Aggregate Carryback Amount” has the meaning set forth in Section 4.2(c).
“Agreement” has the meaning set forth in the preamble to this Agreement.
“Benefited Party” has the meaning set forth in Section 4.1(b) of this Agreement.
“Carryback Amount” has the meaning set forth in Section 4.2(c).
“Coal Mining Business” has the meaning set forth in the Tax Representation Letter.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Contribution” has the meaning set forth in the preamble to this Agreement.
“Counsel” means McDermott Will & Emery LLP.
“Disqualifying Action” means a Parent Disqualifying Action or a HY Disqualifying Action.
“Distribution” has the meaning set forth in the preamble to this Agreement.
“Distribution Date” means the date on which the Distribution occurs.
“Distribution Taxes” means any Taxes imposed on or by reason of the Merger, the Contribution, or the Distribution (including Transfer Taxes), other than any such Taxes caused by a Disqualifying Action.  For the avoidance of doubt, Distribution Taxes include Taxes by reason of deferred intercompany transactions triggered by the Merger, the Contribution, or the Distribution.
 “Due Date” means (i) with respect to a Tax Return, the date (taking into account all valid extensions) on which such Tax Return is required to be filed under applicable Law and (ii) with respect to a payment of Taxes, the date on which such payment is required to be made to avoid the incurrence of interest, penalties and/or additions to Tax.
 “Extraordinary Transaction” means any action that is not in the Ordinary Course of Business, but shall not include any action described in the Separation Agreement or that is undertaken pursuant to the Merger, the Contribution, or the Distribution.

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“Fifty-Percent or Greater Interest” has the meaning ascribed to such term by Section 355(d)(4) of the Code.
“Final Determination” means the final resolution of liability for any Tax for any taxable period, by or as a result of (i) a final decision, judgment, decree or other order by any court of competent jurisdiction that can no longer be appealed; (ii) a final settlement with the IRS, a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the Laws of other jurisdictions, which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund or credit may be recovered by the jurisdiction imposing the Tax; or (iv) any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other Taxing Authority.
“HY” has the meaning set forth in the preamble to this Agreement.
“HY Allocable Portion” means, with respect to a Mixed Business Income Tax Return filed after the Distribution Date for either a Pre-Closing Period or Straddle Period, the amount of Taxes due and payable attributable to HY or any HY Entity, calculated on a “with and without basis” consistent with Past Practice.
“HY Class A Common Stock” has the meaning set forth in the Separation Agreement.
“HY Class B Common Stock” has the meaning set forth in the Separation Agreement.
“HY Common Stock” means the HY Class A Common Stock and the HY Class B Common Stock.
“HY Disqualifying Action” means (i) any action (or the failure to take any action) by HY or any HY Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), or (ii) any event (or series of events) involving the capital stock of HY, any assets of HY or any assets of any HY Entity that, in each case, negates the Tax-Free Status of the Transactions in whole or in part, regardless of whether such act or failure to act (x) is covered by a Post-Distribution Ruling or an Unqualified Tax Opinion, or (y) occurs during or after the Restriction Period; provided, however, the term “HY Disqualifying Action” shall not include any action described in the Separation Agreement or that is undertaken pursuant to the Merger, the Contribution, or the Distribution.
“HY Entity” means any Subsidiary of HY immediately after the effective time of the Distribution.
“HY Group” means, individually or collectively, as the case may be, HY and any HY Entity.
“HY Indemnified Parties” has the meaning set forth in the Separation Agreement.
“HY Percentage” means the percentage determined by dividing (i) the average total value of the HY Common Stock for the five business days following the Distribution Date, computed for each day by averaging the intraday high and intraday low trading price of the HY Class A Common Stock and multiplying such amount by the total number of shares of HY Common Stock outstanding on such day, by (ii) the sum of (x) the amount determined in clause (i) and (y) 

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the average total value of the Parent Common Stock for the five business days following the Distribution Date, computed for each day by averaging the intraday high and intraday low trading price of the Parent Class A Common Stock and multiplying such amount by the total number of shares of Parent Common Stock outstanding on such day. 
“HY Taxes” means, without duplication, (i) any Taxes imposed on Parent (or any of its Subsidiaries) or HY (or any of its Subsidiaries) attributable to a HY Disqualifying Action, (ii) the HY Percentage of any Taxes imposed on Parent (or any of its Subsidiaries) or HY (or any of its Subsidiaries) attributable to both a HY Disqualifying Action and a Parent Disqualifying Action, (iii) the HY Percentage of any Distribution Taxes imposed on Parent (or any of its Subsidiaries), (iv) the HY Allocable Portion of any Mixed Business Income Taxes in respect of a Mixed Business Income Tax Return governed by Section 2.2(a), (v) any Taxes in respect of any Single Business Tax Return required to be filed by HY or any HY Entity pursuant to Section 2.2(b)(ii), and (vi) any Taxes in respect of any Post-Closing Tax Return or Non-Income Tax Return required to be filed by HY or any HY Entity pursuant to Section 2.3.  For the avoidance of doubt, HY Taxes shall not include any Taxes solely attributable to a Parent Disqualifying Action.
“Income Tax Return” means any Tax Return relating to Income Taxes.
“Income Taxes” means any Taxes based upon, measured by, or calculated with respect to: (A) net income or profits or net receipts (including, but not limited to, any capital gains, minimum Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property, or transfer or similar Taxes) or (B) multiple bases (including corporate franchise, doing business and occupation Taxes) if one or more bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (A).  
“Indemnifying Party” means the Party from which the other Party is entitled to seek indemnification pursuant to the provisions of Article 3.
“Indemnified Party” means the Party which is entitled to seek indemnification from the other Party pursuant to the provisions of Article 3.
“Information” has the meaning set forth in Section 7.1(a).
“Information Request” has the meaning set forth in Section 7.1(a).
“IRS” means the U.S. Internal Revenue Service or any successor thereto, including, but not limited to, its agents, representatives, and attorneys.
“Law” means any U.S. or non-U.S. federal, national, supranational, state, provincial, local or similar statute, treaty, law, ordinance, regulation, rule, code, administrative pronouncement, order, requirement or rule of law (including common law).
“LIBOR” means the London InterBank Offered Rate as published in the Wall Street Journal.
“Lift Truck Business” has the meaning set forth in the Tax Representation Letter.
“Merger” has the meaning set forth in the preamble to this Agreement.
“Mixed Business Income Taxes” means any U.S. federal, state or local, or foreign Income Taxes attributable to any Mixed Business Income Tax Return.

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“Mixed Business Income Tax Return” means any Income Tax Return including any consolidated, combined or unitary Income Tax Return, that relates to at least one asset or activity that is part of the Parent Business, on the one hand, and at least one asset or activity that is part of the Lift Truck Business, on the other hand.
“NMHG” has the meaning set forth in the preamble to this Agreement.
“Non-Acting Party” has the meaning set forth in Section 6.2(b).
“Non-Income Tax Return” means any Tax Return relating to Taxes other than Income Taxes.
 “Opinion” means the opinion of Counsel with respect to certain Tax aspects of the Merger, the Contribution, and the Distribution.
“Ordinary Course of Business” means an action taken by a Person only if such action is taken in the ordinary course of the normal day-to-day operations of such Person.
“Parent” has the meaning set forth in the preamble to this Agreement.
“Parent Business” means the business or businesses conducted by Parent or any of its Subsidiaries before the Distribution other than the Lift Truck Business.
“Parent Class A Common Stock” has the meaning set forth in the Separation Agreement.
“Parent Class B Common Stock” has the meaning set forth in the Separation Agreement.
“Parent Common Stock” means the Parent Class A Common Stock and the Parent Class B Common Stock.
“Parent Disqualifying Action” means (i) any action (or the failure to take any action) within its control by Parent or any Parent Entity (including entering into any agreement, understanding or arrangement or any negotiations with respect to any transaction or series of transactions), or (ii) any event (or series of events) involving the capital stock of Parent, any assets of Parent or any assets of any Parent Entity that, in each case, negates the Tax-Free Status of the Transactions in whole or in part, regardless of whether such act or failure to act (x) is covered by a Post-Distribution Ruling or an Unqualified Tax Opinion, or (y) occurs during or after the Restriction Period; provided, however, the term “Parent Disqualifying Action” shall not include any action described in the Separation Agreement or that is undertaken pursuant to the Merger, the Contribution, or the Distribution.
“Parent Entity” means any Subsidiary of Parent immediately after the Distribution Date.
“Parent Group” means, individually or collectively, as the case may be, Parent and any Parent Entity.
“Parent Indemnified Parties” has the meaning set forth in the Separation Agreement.
“Parent Taxes” means any Taxes of Parent or any Subsidiary or former Subsidiary of Parent for any Pre-Closing Period and, with respect to a Straddle Period, the portion of such period ending on the Distribution Date (determined in accordance with Section 2.2(a)), in each case other than HY Taxes.
“Party” has the meaning set forth in the preamble to this Agreement.

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“Past Practice” has the meaning set forth in Section 2.2(a).
“Person” has the meaning set forth in the Separation Agreement.
“Post-Closing Income Tax Returns” means, collectively, all Income Tax Returns required to be filed by a Party or any of its Subsidiaries for a Post-Closing Period.
“Post-Closing Period” means any taxable period (or portion thereof) beginning after the Distribution Date.
“Post-Distribution Ruling” has the meaning set forth in Section 6.2(b).
“Pre-Closing Income Tax Returns” means, collectively, all Income Tax Returns required to be filed by a Party or any of its Subsidiaries for a Pre-Closing Period.
“Pre-Closing Period” means any taxable period (or portion thereof) ending on or before the Distribution Date.
“Proposed Acquisition Transaction” means a transaction or series of transactions (or any agreement, understanding, arrangement, or substantial negotiations within the meaning of Section 355(e) of the Code and Treasury Regulation Section 1.355-7, or any other regulations promulgated thereunder, to enter into a transaction or series of transactions), whether such transaction is supported by the applicable Party’s management or shareholders, is a hostile acquisition, or otherwise, as a result of which such Party would merge or consolidate with any other Person or as a result of which one or more Persons would (directly or indirectly) acquire, or have the right to acquire, from such Party and/or one or more holders of outstanding shares of such Party’s capital stock, as the case may be, a number of shares of such Party’s capital stock that would, when combined with any other changes in ownership of such Party’s capital stock pertinent for purposes of Section 355(e) of the Code, comprise 35% or more of (A) the value of all outstanding shares of stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of voting stock of such Party as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series.  Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (A) the adoption by a Party of a shareholder rights plan or (B) issuances by a Party that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulation Section 1.355-7(d).  For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders.  This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly.  Any clarification of, or change in, the statute or regulations promulgated under Section 355(e) of the Code shall be incorporated in this definition and its interpretation.
 “Refund” means any refund (or credit in lieu thereof) of Taxes (including any overpayment of Taxes that can be refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with respect to such refund of Taxes, provided, however, that for purposes of this Agreement, the amount of any Refund required to be paid to another Party 

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shall be reduced by the net amount of any Income Taxes imposed on, related to, or attributable to, the receipt or accrual of such Refund determined based on the assumptions set forth in Section 3.4.
“Restriction Period” means the period beginning at the effective time of the Distribution and ending on the two-year anniversary of the day after the Distribution Date.
“Section 6.2(c) Acquisition Transaction” means any transaction or series of transactions that is not a Proposed Acquisition Transaction but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 35%.
“Separation Agreement” means the Separation Agreement by and between the Parties dated as of September 28, 2012.
“Single Business Tax Return” means any Tax Return including any consolidated, combined or unitary Tax Return, that includes assets or activities relating only to the Parent Business, on the one hand, or the Lift Truck Business, on the other (but not both), whether or not the Person charged by Law to file such Tax Return is engaged in the business to which the Tax Return relates.
 “Straddle Period” means any taxable period that begins on or before and ends after the Distribution Date.
“Straddle Period Income Tax Returns” mean, collectively, all Income Tax Returns required to be filed by a Party or any of its Subsidiaries for a Straddle Period.
“Subsidiary” has the meaning set forth in the Separation Agreement.
“Tax” means (i) all taxes, charges, fees, duties, levies, imposts, or other similar assessments, imposed by any U.S. federal, state or local or foreign governmental authority, including, but not limited to, income, gross receipts, excise, property, sales, use, license, capital stock, transfer, franchise, payroll, withholding, social security, value added, goods and services, consumption, and other taxes, (ii) any interest, penalties or additions attributable thereto and (iii) all liabilities in respect of any items described in clauses (i) or (ii) payable by reason of assumption, transferee or successor liability, operation of Law or Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).
“Tax Attribute” means a net operating loss, net capital loss, tax credit, earnings and profits, overall foreign loss, separate limitation loss, previously taxed income, or any item of income, gain, loss, deduction, credit, recapture or other item that may have the effect of increasing or decreasing any Income Tax paid or payable.
“Tax Benefit” means the reduction in Taxes resulting from the payment by a Party (or its Subsidiaries) of amounts that are indemnified by the other Party under this Agreement or the Separation Agreement.
“Tax-Free Status of the Transactions” means the tax-free treatment accorded to the Contribution and the Distribution as set forth in the Opinion. 

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“Taxing Authority” means any governmental authority or any subdivision, agency, commission or entity thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS).
“Tax Materials” has the meaning set forth in Section 6.1(a).
“Tax Matter” has the meaning set forth in Section 7.1(a)(i).
“Tax Package” means all relevant Tax-related information relating to the operations of the Parent Business or the Lift Truck Business, as applicable, that is reasonably necessary to prepare and file the applicable Tax Return.
“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations.
“Tax Representation Letter” means any letter containing certain representations and covenants issued by Parent or any of its Subsidiaries to Counsel in connection with the Opinion.
“Tax Return” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, or declaration of estimated Tax) required to be supplied to, or filed with, a Taxing Authority in connection with the payment, determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax and any amended Tax return or claim for refund.
“Transfer Taxes” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed on the Merger, the Contribution, or the Distribution.
“Treasury Regulations” means the final and temporary (but not proposed) Income Tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
“Unqualified Tax Opinion” means a reasoned “will” opinion, without qualifications, of a nationally recognized law firm to the effect that a transaction will not affect the Tax-Free Status of the Transactions.  For purposes of this definition, an opinion is reasoned if it describes the reasons for the conclusions and includes the facts, assumptions, and supporting legal analysis.
 “U.S.” means the United States of America.
ARTICLE 2 
PREPARATION, FILING AND PAYMENT OF 
TAXES AND REFUNDS SHOWN ON TAX RETURNS
2.1    Responsibility of Parties to Prepare and File Pre-Closing Income Tax Returns and Straddle Period Income Tax Returns.
(a)    Parent Income Tax Returns.  Parent shall prepare and file (or cause a Parent Entity to prepare and file) all Income Tax Returns set forth on Schedule 2.1(a), and shall 

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pay (or cause such Parent Entity to pay) all Taxes shown to be due and payable on such Income Tax Returns.
(b)    HY Income Tax Returns.  HY shall prepare and file (or cause a HY Entity to prepare and file) all Income Tax Returns set forth on Schedule 2.1(b), and shall pay (or cause such HY Entity to pay) all Taxes shown to be due and payable on such Income Tax Returns.
2.2    Tax Return Procedures.
(a)    Mixed Business Income Tax Returns.
(i)    In connection with the preparation of any Mixed Business Income Tax Return pursuant to Section 2.1, HY will assist and cooperate with Parent by preparing and providing to Parent pro forma Tax Returns for HY and any HY Entity to be included in such Mixed Business Income Tax Return at least ninety (90) days before the Due Date of such Tax Return.  Pro forma Tax Returns shall be prepared in accordance with Parent’s past practices, accounting methods, elections and conventions (“Past Practice”), unless otherwise required by Law or agreed to in writing by Parent.  At its option and expense, Parent may engage an Accounting Firm of its choice to review the pro forma Tax Return, supporting documentation, and statements submitted by HY and in connection therewith, shall determine whether such Tax Return was prepared in accordance with Past Practice. Prior to engaging such Accounting Firm, Parent shall provide the suggested scope for such accounting review to HY for review and discussion.
(ii)    Parent shall prepare all Mixed Business Income Tax Returns consistent with Past Practice, the Opinion, and the Tax Representation Letter unless otherwise required by Law or agreed to in writing by HY.  In the event that there is no Past Practice for reporting a particular item or matter, (x) Parent shall determine the reporting of such item or matter provided that such determination is, in the reasonable opinion of Parent, at least more likely than not to be sustained and provided further that, (y) in respect to any item or matter excluded from (i), Parent and HY shall agree as to the reporting of such item.
(iii)    In connection with any Mixed Business Income Tax Return pursuant to Section 2.1(a), no later than forty-five (45) days prior to the Due Date of each such Tax Return, Parent shall make available or cause to be made available drafts of such Tax Return (together with all related work papers) to HY.  HY shall have access to any and all data and information necessary for the preparation of all such Mixed Business Income Tax Returns and the Parties shall cooperate fully in the preparation and review of such Tax Returns. Subject to the preceding sentence, no later than fifteen (15) days after receipt of such Mixed Business Income Tax Returns, HY shall have a right to object to such Mixed Business Income Tax Return (or items with respect thereto) by written notice to Parent; such written notice shall contain such disputed item (or items) and the basis for its objection.  HY shall pay to Parent no later than five (5) days prior to the Due Date of each such Tax Return the HY Allocable Portion of Taxes shown as due and payable on such Mixed Business Tax Return (net of any prepayment made against such amount).

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(iv)    With respect to a Mixed Business Income Tax Return delivered by Parent to HY pursuant to Section 2.2(a)(iii), if HY does not object by proper written notice described in Section 2.2(a)(iii), such Mixed Business Income Tax Return shall be deemed to have been accepted and agreed upon, and to be final and conclusive, for purposes of this Section 2.2(a)(iv).  If HY does object by proper written notice described in Section 2.2(a)(iii), Parent and HY shall act in good faith to resolve any such dispute as promptly as practicable; provided, however, that, notwithstanding anything to the contrary contained herein, if Parent and HY have not resolved the disputed item or items by the day five (5) days prior to the Due Date of such Mixed Business Income Tax Return, such Tax Return shall be filed as prepared pursuant to this Section 2.2(a) (revised to reflect all initially disputed items that Parent and HY have agreed upon prior to such date).  In the event that a Mixed Business Income Tax Return is filed that includes any disputed item for which proper notice was given pursuant to Section 2.2(a)(iii) that was not finally resolved and agreed upon, such disputed item (or items) shall be resolved in accordance with Section 8.1 (interpreted without regard to the requirement that the Accounting Firm render a determination no later than the Due Date of the Tax Return at issue).  In the event that the resolution of such disputed item (or items) in accordance with Section 8.1 with respect to a Mixed Business Income Tax Return is inconsistent with such Mixed Business Income Tax Return as filed, Parent (with cooperation from HY, if necessary) shall, as promptly as practicable, amend such Tax Return to properly reflect the final resolution of the disputed item (or items).  In the event that the amount of Taxes shown to be due and owing on a Mixed Business Income Tax Return is adjusted as a result of a resolution pursuant to this Section 2.2(a)(iv), proper adjustment shall be made to the amounts previously paid or required to be paid in a manner that reflects such resolution.
(b)    Single Business Tax Returns.
(i)    Parent shall prepare and file (or cause a Parent Entity to prepare and file) any Single Business Tax Return for a Pre-Closing Period or a Straddle Period required to be filed by Parent or a Parent Entity and shall pay, or cause such Parent Entity to pay, all Taxes shown to be due and payable on such Tax Return.  For the avoidance of doubt, the Single Business Tax Returns subject to this Section 2.2(b)(i) shall be set forth on Schedule 2.1(a).
(ii)    HY shall prepare and file (or cause a HY Entity to prepare and file) any Single Business Tax Return for a Pre-Closing Period or a Straddle Period required to be filed by HY or a HY Entity and shall pay, or cause such HY Entity to pay, all Taxes shown to be due and payable on such Tax Return.  For the avoidance of doubt, the Single Business Tax Returns subject to this Section 2.2(b)(ii) shall be set forth on Schedule 2.1(b).
2.3    Post-Closing Income Tax Returns and Non-Income Tax Returns.  The Party or its Subsidiary responsible under applicable Law for filing a Post-Closing Income Tax Return or a Non-Income Tax Return shall prepare and timely file or cause to be prepared and timely filed that Tax Return (at that Party’s own cost and expense) and shall pay all Taxes shown to be due and payable on such Post-Closing Tax Return or Non-Income Tax Return.
2.4    Timing of Payments to Taxing Authority.  All Taxes required to be paid or caused to be paid by either Parent, a Parent Entity, HY or a HY Entity, as the case may be, to an 

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applicable Taxing Authority, shall be paid on or before the Due Date for the payment of such Taxes.
2.5    Expenses.  Except as provided otherwise herein, each Party shall bear its own expenses incurred in connection with this Article 2.
2.6    Coordination with Article 4.  This Article 2 shall not apply to any amended Tax Returns, such amended Tax Returns being governed by Article 4.
ARTICLE 3 
PAYMENT OF TAXES AND INDEMNIFICATION
3.1    Payment and Indemnification by Parent.  Parent shall pay, and shall indemnify and hold the HY Indemnified Parties harmless from and against, without duplication, (i) all Parent Taxes, (ii) all Taxes incurred by HY or any HY Entity by reason of the breach by Parent of any of its representations, warranties or covenants hereunder, and (iii) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses). 
3.2    Payment and Indemnification by HY.  HY shall pay, and shall indemnify and hold the Parent Indemnified Parties harmless from and against, without duplication, (i) all HY Taxes, (ii) all Taxes incurred by Parent or any Parent Entity by reason of the breach by HY of any of its representations, warranties or covenants hereunder, and (iii) any costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses).
3.3    Timing of Tax Payments.  Unless otherwise provided in this Agreement, in the event that an Indemnifying Party is required to make a payment to an Indemnified Party pursuant to this Agreement, the Indemnified Party shall deliver written notice of the payments to the Indemnifying Party, including proof of payment to the Taxing Authority, in accordance with Section 8.18 on the last day of the calendar quarter in which the obligation giving rise to the indemnification payment must be satisfied, and the Indemnifying Party shall be required to make payment to the Indemnified Party within ten (10) days after notice of such payment is delivered to the Indemnifying Party.
3.4    Characterization of and Adjustments to Payments.
(a)    For all Tax purposes, Parent and HY agree to treat (i) any payment required by this Agreement (other than payments of expenses, interest pursuant to Section 8.3, and any item described in (ii) below) as a payment of an assumed or retained liability, as the case may be, or as either a contribution by Parent to HY or a distribution by HY to Parent, as the case may be, occurring immediately prior to the Distribution Date and (ii) any payment (x) of Taxes to or Refunds received from a Taxing Authority which either gives rise to a tax deduction or taxable income, or (y) of interest, as tax deductible, or includible in, taxable income, as the case may be, to the Party entitled under this Agreement to retain such payment or required under this Agreement to make such payment, in either case, except as otherwise required by applicable Law.

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(b)    Any indemnity payment under this Article 3 or the Separation Agreement shall be increased to take into account any inclusion in income of the Indemnified Party arising from the receipt of such indemnity payment and shall be decreased to take into account any reduction in income of the Indemnified Party arising from the payment by the Indemnified Party of such indemnified liability.  For purposes hereof, any inclusion or reduction shall be determined (i) using the highest applicable marginal U.S. federal corporate income tax rate in effect at the time of the determination (and excluding any state income tax effect of such inclusion or reduction) and (ii) assuming that the Indemnified Party will be liable for Taxes at such rate, has sufficient taxable income to use any tax deduction, and has no Tax Attributes at the time of the determination.
ARTICLE 4 
REFUNDS, CARRYBACKS, AMENDMENTS AND TAX ATTRIBUTES
4.1    Refunds.
(a)    Except as provided in Section 4.2, Parent shall be entitled to all Refunds of Taxes for which Parent is or may be liable pursuant to Article 3, and HY shall be entitled to all Refunds of Taxes for which HY is or may be liable pursuant to Article 3. A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay the amount to which such other Party is entitled within ten (10) days after the receipt of the Refund.
(b)    Notwithstanding Section 4.1(a), to the extent that a Party applies or causes to be applied an overpayment of Taxes as a credit toward or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this Section 4.1, such Party shall pay such amount to the other Party no later than the Due Date of the Tax Return for which such overpayment is applied to reduce Taxes otherwise payable.
(c)    In the event of an Adjustment relating to Taxes for which one Party is or may be liable pursuant to Article 3 which would have given rise to a Refund but for an offset against the Taxes for which the other Party is or may be liable pursuant to Article 3 (the “Benefited Party”), then the Benefited Party shall pay to the other Party, within ten (10) days of the Final Determination of such Adjustment an amount equal to the lesser of (i) the amount of such hypothetical Refund or (ii) the amount of such reduction in the Taxes of the Benefited Party, in each case plus interest at the rate set forth in Section 6621(a)(1) of the Code on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date to the other Party.
(d)    To the extent that the amount of any Refund under this Section 4.1 is later reduced by a Taxing Authority or as the result of a Tax Proceeding, such reduction shall be allocated to the Party that was entitled to such Refund pursuant to this Section 4.1 and an appropriate adjusting payment shall be made by such Party to the other Party if the other Party originally paid the Refund to such Party.  For the avoidance of doubt, this Section 4.1(d) is intended to make whole the other Party that was not entitled to the Refund.

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4.2    Carrybacks.
(a)    Each Party shall be permitted (but not required) to carry back (or to cause its Subsidiaries to carry back) a loss, credit, or other Tax Attribute realized in a Post-Closing Period or a Straddle Period to a Pre-Closing Period or a Straddle Period; provided, however, that if such carryback would reasonably be expected to adversely impact the other Party (including through an increase in Taxes or a loss or reduction in the utilization of a loss, credit, or other Tax Attribute regardless of whether or when such loss, credit, or other Tax Attribute otherwise would have been used), such carryback shall not be permitted without first obtaining the prior written consent of such other Party, which consent shall not be unreasonably withheld or delayed.
(b)    
(i)    Subject to Sections 4.2(c) and 4.2(d), in the event that any member of the HY Group chooses to (or is required to under applicable Law), and is permitted to under Section 4.2(a), carry back a loss, credit, or other Tax Attribute, Parent shall cooperate with HY and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from a permitted carryback (including by filing an amended Tax Return) at HY’s cost and expense.  HY (or such member) shall be entitled to any Refund realized by any member of the Parent Group or HY Group as a result of the carryback reduced by the value of any additional Tax Attributes allocable to any member of the HY Group as a result of the carryback.  For purposes of the preceding sentence, the value of additional Tax Attributes shall be computed by assuming that they can be immediately and fully utilized by the HY Group
(ii)    Subject to Sections 4.2(c) and 4.2(d), in the event that any member of the Parent Group chooses to (or is required to under applicable Law), and is permitted to under Section 4.2(a), carry back a loss, credit, or other Tax Attribute, HY shall cooperate with Parent and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from a permitted carryback (including by filing an amended Tax Return) at Parent’s cost and expense.  Parent shall be entitled to any Refund realized by any member of the HY Group or Parent Group as a result of the carryback reduced by the value of any additional Tax Attributes allocable to any member of the Parent Group as a result of the carryback.  For purposes of the preceding sentence, the value of additional Tax Attributes shall be computed by assuming that they can be immediately and fully utilized by the Parent Group.
(c)    Except as otherwise provided by applicable Law, if any loss, credit or other Tax Attribute of the Parent Business and the Lift Truck Business both would be eligible to be carried back or carried forward to the same Pre-Closing Period (had such carryback been the only carryback to such taxable period) (such amount for each of Parent Business and the Lift Truck Business separately referred to as the “Carryback Amount” and the sum of both amounts returned to as the “Aggregate Carryback Amount”), any Refund resulting therefrom shall be allocated between Parent and HY proportionately based on the ratio of the Parent Business Carryback Amount to the Aggregate Carryback Amount and the Lift Truck Business Carryback Amount to the Aggregate Carryback Amount, respectively, would have been entitled had such carryback been the only carryback to such taxable period.  Appropriate adjustments to the allocation of any Refund under the preceding sentence shall be made if the carryback results in 

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any additional Tax Attributes being allocated to the Parent Group or the HY Group (for example, under the regulations applicable to U.S. federal consolidated income tax returns) to the extent necessary to cause the Parent Group, on the one hand, and the HY Group, on the other hand, to proportionately benefit from such carryback.
(d)    To the extent the amount of any Refund under this Section 4.2 is later reduced by a Tax Authority or a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 4.2.
4.3    Amended Tax Returns.
(a)    Mixed Business Income Tax Returns.  Parent shall, in its sole discretion, be permitted to amend or file, or to cause HY or any HY Entity to amend or file (and HY shall, if Parent so chooses, amend or file or cause the applicable HY Entity to amend or file), any Mixed Business Income Tax Return for a Pre-Closing Period or a Straddle Period; provided, however, that unless otherwise required by a Final Determination, Parent shall not be permitted to so amend or file any such Mixed Business Income Tax Return to the extent that any such amendment or filing (i) would reasonably be expected to materially adversely impact HY (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), (ii) would be inconsistent with Past Practice, or (iii) would be inconsistent with the Opinion or Tax Representation Letter, in each case without the prior written consent of HY, which consent shall not be unreasonably withheld or delayed.  If requested in writing by HY at least sixty (60) days prior to the expiration of the applicable statute of limitations, Parent shall amend or file any Mixed Business Income Tax Return for a Pre-Closing Period or a Straddle Period to reflect changes proposed by HY; provided, however, that HY shall reimburse Parent for all reasonable out-of-pocket costs and expenses incurred by Parent in amending or filing such Mixed Business Income Tax Return; provided, further, that unless otherwise required by a Final Determination, Parent shall not be required to so amend or file any such Mixed Business Income Tax Return to the extent that any such amendment or filing (i) would reasonably be expected to materially adversely impact Parent (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), (ii) would be inconsistent with Past Practice, or (iii) would be inconsistent with the Opinion or Tax Representation Letter.  
(b)    Non-Income Tax Returns and Single Business Tax Returns.
(i)    Parent.  Parent shall, in its sole discretion, be permitted to amend or file (or cause or permit to be amended) any Non-Income Tax Return or Single Business Tax Return that was filed by Parent (or any Parent Entity) pursuant to Section 2.2(b)(i) or Section 2.3 for a Pre-Closing Period or Straddle Period; provided, however, that if Parent wishes to amend or file any such Tax Return for which HY may be liable for Taxes pursuant to this Agreement, then, unless otherwise required by Law or a Final Determination, Parent shall not be permitted to so amend or file (or cause or permit to be amended or filed) any such Non-Income Tax Return or Single Business Tax Return, as the case may be, to the extent that any such amendment (i) would reasonably be expected to impact HY (through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been 

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used), (ii) would be inconsistent with Past Practice, or (iii) would be inconsistent with the Opinion or Tax Representation Letter, in each case without the prior written consent of HY, which consent shall not be unreasonably withheld or delayed.
(ii)    HY.  HY shall, in its sole discretion, be permitted to amend or file (or cause or permit to be amended) any Non-Income Tax Return or Single Business Tax Return that was filed by HY (or any HY Entity) pursuant to Section 2.2(b)(ii) or Section 2.3 for a Pre-Closing Period or Straddle Period; provided, however, that if HY wishes to amend or file any such Tax Return for which Parent may be liable for Taxes pursuant to this Agreement, then, unless otherwise required by Law or a Final Determination, HY shall not be permitted to so amend or file (or cause or permit to be amended or filed) any such Non-Income Tax Return or Single Business Tax Return, as the case may be, to the extent that any such amendment (i) would reasonably be expected to impact Parent (through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), (ii) would be inconsistent with Past Practice, or (iii) would be inconsistent with the Opinion or Tax Representation Letter, in each case without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed.
(c)    Post-Closing Income Tax Returns.  A Party (or its Subsidiary) that files a Post-Closing Income Tax Return pursuant to Section 2.3 shall be permitted to amend such Post-Closing Income Tax Return without the consent of the other Party.
4.4    Tax Attributes.
(a)    Tax Attributes arising in a Pre-Closing Period shall be allocated to the Parent Group and the HY Group in accordance with the Code and Treasury Regulations (and any applicable state, local and foreign Law).  Parent and HY shall jointly determine the allocation of such Tax Attributes arising in Pre-Closing Periods as soon as reasonably practicable following the Distribution Date, and shall compute all Taxes for Post-Closing Periods consistently with that determination unless otherwise required by a Final Determination.
(b)    Except as otherwise provided herein, to the extent that the amount of any Tax Attribute is later reduced or increased by a Taxing Authority or as a result of a Tax Proceeding, such reduction or increase shall be allocated to the Party to which such Tax Attribute was allocated pursuant to Section 4.4(a).
ARTICLE 5     
 
TAX PROCEEDINGS
5.1    Notification of Tax Proceedings.  Within ten (10) days after an Indemnified Party (or its Subsidiary) becomes aware of the commencement of a Tax Proceeding that may give rise to Taxes for which an Indemnifying Party is responsible pursuant to Article 3, such Indemnified Party shall provide notice to the Indemnifying Party of such Tax Proceeding, and thereafter shall promptly forward or make available to the Indemnifying Party copies of notices and communications relating to such Tax Proceeding. The failure of the Indemnified Party to provide 

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notice to the Indemnifying Party of the commencement of any such Tax Proceeding within such ten (10)-day period or promptly forward any further notices or communications shall not relieve the Indemnifying Party of any obligation which it may have to the Indemnified Party under this Agreement except to the extent that the Indemnifying Party is actually prejudiced by such failure.
5.2    Tax Proceeding Procedures.  The Indemnifying Party, in its sole discretion, and at its own expense, shall be entitled to control, administer, contest, litigate, compromise and settle any Adjustment proposed, asserted or assessed pursuant to any Tax Proceeding for which the Indemnifying Party is responsible pursuant to Article 3 and any such actions taken by the Indemnifying Party shall be made diligently and in good faith; provided that, the Indemnifying Party shall keep the Indemnified Party informed in a timely manner of all actions proposed to be taken by the Indemnifying Party and shall permit the Indemnified Party to comment in advance on the Indemnifying Party’s oral or written submissions with respect to such Tax Proceeding; provided further that, if such Adjustment (or any actions proposed to be taken with respect thereto) would reasonably be expected to give rise to Taxes in a Post-Closing Period of the Indemnified Party in an amount of $100,000, determined on an annual basis, then, the Indemnifying Party shall (a) prepare all correspondence or filings to be submitted to any Taxing Authority or judicial authority in a manner consistent with the Tax Return, which is the subject of such Adjustment, as filed and timely provide the Indemnified Party with copies of any such correspondence or filings for the Indemnified Party’s prior review and comment, (b) provide the Indemnified Party with written notice reasonably in advance of, and the Indemnified Party shall have the right to attend and participate in, any formally scheduled meetings with any Taxing Authority or hearings or proceedings before any judicial authority with respect to such Adjustment, (c) not enter into any settlement with any Taxing Authority with respect to such Adjustment without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld and (d) not contest such Adjustment before a judicial authority unless (A) such Adjustment would reasonably be expected to give rise to Taxes payable by the Indemnifying Party in an amount greater than $100,000 or (B) the Indemnifying Party has received an opinion of a nationally recognized law firm that it is more likely than not to prevail on the merits.
5.3    Tax Proceeding Cooperation.  The Parties shall act in good faith and use their reasonable best efforts to cooperate fully with the other Party (and its Subsidiaries) in connection with such Tax Proceeding and shall provide or cause their Subsidiaries to provide such information to each other as may be necessary or useful with respect to such Tax Proceeding in a timely manner, identify and provide access to potential witnesses, and other persons with knowledge and other information within its control and reasonably necessary  to the resolution of the Tax Proceeding.  The Indemnified Party shall (and shall cause its Subsidiaries to) execute and deliver to the Indemnifying Party any power of attorney or other document reasonably requested by the Indemnifying Party in connection with any Tax Proceeding described in Section 5.1.  Any extension of the statute of limitations for any Taxes or a Tax Return for any Pre-Closing Period or a Straddle Period shall be made by the Indemnified Party at the request of the Indemnifying Party.

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5.4    Correlative Adjustments.  If as a result of a Final Determination, a Party (or its Subsidiary) becomes entitled to an increase of an item of deduction, loss, or credit (or a reduction of an item of income or gain) that is included in a Pre-Closing Period or the portion of a Straddle Period ending on the Distribution Date, and another Party (or its Subsidiary) suffers a correlative disallowance of an item of deduction, loss, or credit (or an increase of an item of income or gain) that is included in a Pre-Closing Period or the portion of a Straddle Period ending on the Distribution Date, the former Party shall pay any amount it actually realizes as a result of the Tax benefit to the latter Party, but only to the extent of the latter Party’s detriment.  For purposes of this Section 5.4, the computation of any Tax benefit, on the one hand, and Tax detriment, on the other hand, shall be made taking into account any increase or decrease in Tax Attributes allocable to the Parent Group and the HY Group as a result of the Final Determination described in this Section 5.4.
ARTICLE 6 
TAX-FREE STATUS OF THE TRANSACTIONS
6.1    Representations and Warranties.
(a)    HY.  HY hereby represents and warrants or covenants and agrees, as appropriate, that
(i)    it has examined (A) the Opinion, (B) the Tax Representation Letter, and (C) any other materials delivered or deliverable by Parent or HY in connection with the rendering by Counsel of the Opinion (all of the foregoing, collectively, the “Tax Materials”),
(ii)    the facts presented and the representations made therein, to the extent descriptive of the HY Group (including the business purposes for the Merger, the Contribution, and the Distribution as described in the Opinion and the other Tax Materials to the extent that they relate to the HY Group and the plans, proposals, intentions and policies of the HY Group), are, or will be from the time presented or made through and including the Distribution Date and thereafter as relevant, true, correct and complete in all respects,
(iii)    it knows of no fact (after due inquiry) that may negate the Tax-Free Status of the Transactions, and
(iv)    neither it, nor any of its Subsidiaries, has any plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials.
(b)    Parent.  Parent hereby represents and warrants or covenants and agrees, as appropriate, that
(i)    it has examined the Tax Materials,
(ii)    it has delivered complete and accurate copies of the Tax Materials to HY, and the facts presented and the representations made therein, to the extent descriptive of 

17

the Parent Group (including the business purposes for the Merger, the Contribution, and the Distribution as described in the Opinion, and the other Tax Materials to the extent that they relate to the Parent Group and the plans, proposals, intentions and policies of the Parent Group), are, or will be from the time presented or made through and including the Distribution Date and thereafter as relevant, true, correct and complete in all respects,
(iii)    it knows of no fact (after due inquiry) that may negate the Tax-Free Status of the Transactions, and
(iv)    neither it, nor any of its Subsidiaries, has any plan or intent to take any action which is inconsistent with any statements or representations made in the Tax Materials. 
6.2    Limits on Proposed Acquisition Transactions and Other Transactions During Restriction Period.  
(a)    During the Restriction Period, Parent and HY:
(i)    shall continue and cause to be continued the active conduct of the Coal Mining Business and the Lift Truck Business, in each case taking into account Section 355(b)(3) of the Code and as conducted immediately prior to the Distribution;
(ii)    shall not voluntarily dissolve, liquidate, or partially liquidate (including any action that is treated as a liquidation for federal Income Tax purposes);
(iii)    shall not enter into any Proposed Acquisition Transaction or, approve any Proposed Acquisition Transaction, or permit any Proposed Acquisition Transaction to occur;
(iv)    shall not redeem or otherwise repurchase (directly or through an Affiliate) any stock, or rights to acquire stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48 (provided, however, that the fact that any such redemption or repurchase satisfies Section 4.05(1)(b) of Revenue Procedure 96-30 shall not prevent such redemption or repurchase from being considered, or taken into account for purposes of another transaction constituting, a Proposed Acquisition Transaction, in which case clause (iii) shall apply);
(v)    shall not amend its certificate of incorporation (or other organizational documents), or take any other action or approve or permit the taking of any action, whether through a stockholder vote or otherwise, affecting the relative voting rights of the capital stock (including through the conversion of any capital stock into another class of capital stock);
(vi)    shall not issue shares of a new class of nonvoting stock;
(vii)    shall not merge or consolidate with any other Person; provided, however, that if Parent or HY acquires equity of another Person in a transaction that is not 

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otherwise described in clauses (i) through (vi), (viii), or (ix) of this Section 6.2(a), then the merger or consolidation of such Person with and into Parent or HY (with Parent or HY surviving), as applicable, shall not constitute a merger or consolidation described in this clause (vii);
(viii)    shall not sell, transfer, or otherwise dispose of or agree to, sell, transfer or otherwise dispose of (including in any transaction treated for U.S. federal Income Tax purposes as a sale, transfer or disposition, and including any sale, transfer or other disposition to an Subsidiary or otherwise) assets (including, any shares of capital stock of a Subsidiary) that, in the aggregate, constitute more than 35% of its consolidated gross or net assets.  The foregoing sentence shall not apply to (A) sales, transfers, or dispositions of assets in the Ordinary Course of Business, (B) any cash paid to acquire assets from an unrelated Person in an arm’s-length transaction, (C) any assets transferred to a Person that is disregarded as an entity separate from the transferor for U.S. federal Income Tax purposes or (D) any mandatory or optional repayment (or pre-payment) of any indebtedness of such company.  The percentages of consolidated gross and net assets sold, transferred, or otherwise disposed of, shall be based on the fair market value of the gross or net assets, as the case may be, of Parent and HY, as applicable, as of the Distribution Date.  For purposes of this Section 6.2(a)(viii), a merger of Parent or HY with and into any Person shall constitute a disposition of all of the assets of Parent or HY, respectively;
(ix)    shall not take any other action or actions (including any action or transaction that would be reasonably likely to be inconsistent with any representation made in the Tax Materials) which in the aggregate (and taking into account any other transactions described in this Section 6.2(a)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire directly or indirectly stock representing a Fifty-Percent or Greater Interest in Parent or HY or otherwise jeopardize the Tax-Free Status of the Transactions.
(b)    Notwithstanding the restrictions imposed by Section 6.2(a), during the Restriction Period, Parent and HY shall be permitted to take such action or one or more actions set forth in the foregoing clauses (i) through (ix), if, prior to taking any such actions, the Party taking the action (the “Acting Party”) set forth in the foregoing clauses (i) through (ix) shall (1) have received a favorable private letter ruling from the IRS, or a ruling from another appropriate Taxing Authority that confirms that such action or actions will not affect the Tax-Free Status of the Transactions, taking into account such actions and any other relevant transactions in the aggregate (a “Post-Distribution Ruling”), in form and substance satisfactory to the other Party (the “Non-Acting Party”), or (2) have received an Unqualified Tax Opinion that confirms that such action or actions will not affect the Tax-Free Status of the Transactions, or (3) the Non-Acting Party shall have waived in writing the requirement to obtain such ruling or opinion.  In determining whether a ruling or opinion is satisfactory, the Non-Acting Party shall exercise its discretion, in good faith, solely to preserve the Tax-Free Status of the Transactions and may consider, among other factors, the appropriateness of any underlying assumptions or representations used as a basis for the ruling or opinion and the Non-Acting Party’s views on the substantive merits of such ruling or opinion.  The Acting Party shall provide a copy of the Post-Distribution Ruling or the Unqualified Tax Opinion described in this paragraph to the Non-

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Acting Party as soon as practicable prior to taking or failing to take any action set forth in the foregoing clause (i) through (ix).  The Acting Party shall bear all costs and expenses of securing any such Post-Distribution Ruling or Unqualified Tax Opinion and shall reimburse the Non-Acting Party for all reasonable out-of-pocket costs and expenses that the Non-Acting Party may incur in good faith in seeking to obtain or evaluate any such Post-Distribution Ruling or Unqualified Tax Opinion.
(c)    Certain Issuances of Capital Stock.  If a Party proposes to enter into any Section 6.2(c) Acquisition Transaction or, to the extent such Party has the right to prohibit any Section 6.2(c) Acquisition Transaction, proposes to permit any Section 6.2(c) Acquisition Transaction to occur, in each case, during the Restriction Period, such Party shall provide the other Party, no later than ten (10) days following the signing of any written agreement with respect to any such Section 6.2(c) Acquisition Transaction, with a written description of such transaction (including the type and amount of such Party’s capital stock to be issued in such transaction).
6.3    Tax Counsel Advance Conflict Waiver.  Unless prohibited by Law or the ethical rules applicable to attorneys, each of the Parties agrees to waive or to cause its Affiliates to waive in advance any conflicts that must be waived in order to permit McDermott Will & Emery LLP or Jones Day to (i) evaluate whether a Party’s proposed action or actions constitute any of the actions described in clauses (i) through (ix) in Section 6.2(a) or (ii) issue any Unqualified Tax Opinion to be obtained by a Party pursuant to this Article 6.
ARTICLE 7 
COOPERATION
7.1    General Cooperation.
(a)    The Parties shall each cooperate fully (and each shall cause its respective Subsidiaries to cooperate fully) with all reasonable requests in writing (“Information Request”) from another Party hereto, or from an agent, representative or advisor to such Party, in connection with the preparation and filing of Tax Returns (including the preparation of Tax Packages), claims for Refunds, Tax Proceedings, and calculations of amounts required to be paid pursuant to this Agreement, in each case, related or attributable to or arising in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this Agreement and the establishment of any reserve required in connection with any financial reporting (a “Tax Matter”). Such cooperation shall include the provision of any information reasonably necessary or helpful in connection with a Tax Matter (“Information”) and shall include, without limitation, at each Party’s own cost:
(i)    the provision of any Tax Returns of the Parties and their respective Subsidiaries, books, records (including information regarding ownership and Tax basis of property), documentation and other information relating to such Tax Returns, including accompanying schedules, related work papers, and documents relating to rulings or other determinations by Taxing Authorities;

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(ii)    the execution of any document (including any power of attorney) in connection with any Tax Proceedings of any of the Parties or their respective Subsidiaries, or the filing of a Tax Return or a Refund claim of the Parties or any of their respective Subsidiaries;
(iii)    the use of the Party’s reasonable best efforts to obtain any documentation in connection with a Tax Matter; and
(iv)    the use of the Party’s reasonable best efforts to obtain any Tax Returns (including accompanying schedules, related work papers, and documents), documents, books, records or other information in connection with the filing of any Tax Returns of any of the Parties or their Subsidiaries.
Each Party shall make its employees, advisors, and facilities available, without charge, on a reasonable and mutually convenient basis in connection with the foregoing matters.
7.2    Retention of Records.  Parent and HY shall retain or cause to be retained all Tax Returns, schedules and workpapers, and all material records or other documents relating thereto in their possession, until sixty (60) days after the expiration of the applicable statute of limitations (including any waivers or extensions thereof) of the taxable periods to which such Tax Returns and other documents relate or until the expiration of any additional period that any Party reasonably requests, in writing, with respect to specific material records or documents. A Party intending to destroy any material records or documents shall provide the other Party with reasonable advance notice and the opportunity to copy or take possession of such records and documents. The Parties hereto will provide notice to each other in writing of any waivers or extensions of the applicable statute of limitations that may affect the period for which the foregoing records or other documents must be retained.
ARTICLE 8 
MISCELLANEOUS
8.1    Dispute Resolution.
(a)    Except as otherwise provided herein, in the event of any dispute between the Parties as to any matter covered by this Agreement, the dispute shall be governed by the procedures set forth in Section 8.1(b) of this Agreement.
(b)    With respect to any dispute governed by this Section 8.1(b), the Parties shall appoint a nationally recognized independent public accounting firm (the “Accounting Firm”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Parent and HY and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to resolve all disputes no later than forty-five (45) days after the submission of such dispute to the Accounting Firm, but in no event later than the Due Date for the payment of Taxes or the filing of the applicable Tax Return, if applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a 

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manner consistent with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the Past Practices of Parent and its Subsidiaries, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party.
8.2    Tax Sharing Agreements.  All Tax sharing, indemnification and similar agreements, written or unwritten, as between Parent, on the one hand, and HY or a HY Entity, on the other (other than this Agreement), shall be or shall have been terminated no later than the effective time of the Distribution and, after the effective time of the Distribution, none of Parent, HY or a HY Entity shall have any further rights or obligations under any such Tax sharing, indemnification or similar agreement.
8.3    Interest on Late Payments.  With respect to any payment between the Parties pursuant to this Agreement not made by the due date set forth in this Agreement for such payment, the outstanding amount will accrue interest at a rate per annum equal to the 1-month LIBOR plus 350 basis points.
8.4    Survival of Covenants.  Except as otherwise contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Distribution Date and remain in full force and effect in accordance with their applicable terms, provided, however, that the representations and warranties and all indemnification for Taxes shall survive until ninety (90) days following the expiration of the applicable statute of limitations (taking into account all extensions thereof), if any, of the Tax that gave rise to the indemnification, provided, further, that, in the event that notice for indemnification has been given within the applicable survival period, such indemnification shall survive until such time as such claim is finally resolved.
8.5    Termination.  Notwithstanding any provision to the contrary, this Agreement may be terminated at any time prior to the Distribution Date by and in the sole discretion of Parent without the prior approval of any Person, including HY. In the event of such termination, this Agreement shall become void and no Party, or any of its officers and directors shall have any liability to any Person by reason of this Agreement. After the Distribution Date, this Agreement may not be terminated except by an agreement in writing signed by each of the Parties to this Agreement.
8.6    Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or as a matter of public policy, all other conditions and provisions of this Agreement shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.
8.7    Entire Agreement; Exclusivity.  Except as otherwise expressly provided in this Agreement, this Agreement (including the Schedules thereto) constitutes the entire agreement of the Parties hereto with respect to the subject matter of this Agreement and supersedes all prior 

22

agreements and undertakings, both written and oral, between or on behalf of the Parties hereto with respect to the subject matter of this Agreement.  Except as specifically set forth in the Separation Agreement, all matters related to Taxes or Tax Returns of the Parties and their respective Subsidiaries shall be governed exclusively by this Agreement.  In the event of a conflict between this Agreement and the Separation Agreement with respect to such matters, this Agreement shall govern and control.
8.8    Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided, however, that the rights and obligations of either Party under this Agreement shall not be assignable by such Party without the prior written consent of the other Party.  The successors and permitted assigns hereunder shall include any permitted assignee as well as the successors in interest to such permitted assignee (whether by merger, liquidation (including successive mergers or liquidations) or otherwise).
8.9    Third-Party Beneficiaries.  Except as provided in Article 3 with respect to the HY Indemnified Parties and the Parent Indemnified Parties, this Agreement is for the sole benefit of the Parties to this Agreement and their respective Subsidiaries and their permitted successors and assigns and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.10    Specific Performance.  Subject to the provisions of Section 8.1, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief (on an interim or permanent basis) of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, may be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by the Parties to this Agreement.
8.11    Amendment.  No provision of this Agreement may be amended or modified except by a written instrument signed by the Parties to this Agreement. No waiver by any Party of any provision of this Agreement shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other subsequent breach.
8.12    Rules of Construction.  Interpretation of this Agreement shall be governed by the following rules of construction: (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires; (ii) references to the terms Article, Section, paragraph, clause, Exhibit and Schedule are references to the Articles, Sections, paragraphs, clauses, exhibits and schedules of this Agreement unless otherwise specified; (iii) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including the Schedules and Exhibits 

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hereto; (iv) references to “$” shall mean U.S. dollars; (v) the word “including” and words of similar import when used in this Agreement shall mean “including without limitation,” unless otherwise specified; (vi) the word “or” shall not be exclusive; (vii) references to “written” or “in writing” include in electronic form; (viii) provisions shall apply, when appropriate, to successive events and transactions; (ix) the table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; (x) Parent and HY have each participated in the negotiation and drafting of this Agreement and if an ambiguity or question of interpretation should arise, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or burdening either Party by virtue of the authorship of any of the provisions in this Agreement or any interim drafts of this Agreement; and (xi) a reference to any Person includes such Person’s successors and permitted assigns.
8.13    Counterparts.  This Agreement may be executed in one or more counterparts each of which when executed shall be deemed to be an original but 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 facsimile or portable document format (PDF) shall be as effective as delivery of a manually executed counterpart of any such Agreement. 
8.14    Coordination with the Separation Agreement.  To the extent any covenants or agreements between the Parties with respect to employee withholding Taxes are set forth in the Separation Agreement, such Taxes shall be governed exclusively by the Separation Agreement and not by this Agreement.
8.15    Effective Date.  This Agreement shall become effective only upon the occurrence of the Distribution.
8.16    Governing Law.  This Agreement shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of Laws principles of the State of Delaware.
8.17    Force Majeure.  No party hereto (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure.  A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (i) notify the other Party of the nature and extent of any such Force Majeure condition and (ii) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement as soon as feasible.
8.18    Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by facsimile with receipt confirmed, by electronic mail with receipt confirmed or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following 

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addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8.18):
If to Parent, to:
NACCO Industries, Inc.
5875 Landerbrook Dr., Suite 200
Cleveland, OH 44124
Attention:    Frank Brown
        
EMail:    Brown@naccoind.com

if to HY:
Hyster-Yale Materials Handling, Inc.
5875 Landerbrook Dr., Suite 300
Cleveland, OH 44124
Attention:    Greg Breier
        
EMail:    Greg.Breier@nmhg.com

8.19    No Circumvention.  Each Party agrees not to directly or indirectly take any actions, act in concert with any Person who takes any action, or cause or allow any of its Subsidiaries to take any actions (including the failure to take any reasonable action) such that the resulting effect is to materially undermine the effectiveness of any of the provisions of this Agreement (including adversely affecting the rights or ability of any Party to successfully pursue indemnification or payment pursuant to the provisions of this Agreement).
8.20    No Duplication; No Double Recovery.  Nothing in this Agreement is intended to confer or impose upon any Party a duplicative right, entitlement, obligation, or recovery with respect to any matter arising out of the same facts and circumstances.
 [The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

	
		
	NACCO Industries, Inc.
	Hyster-Yale Materials Handling, Inc.

	 
	 

	Name: /s/ Charles A. Bittenbender       
	Name: /s/ Suzanne S. Taylor           

	Title: Vice President           
	Title: Associate General Counsel and Assistant Secretary                   

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Schedule 2.1(a) Parent Income Tax Returns
All Pre-Closing Period or Straddle Period U.S. federal Income Tax Returns of Parent and its subsidiaries.
All U.S. state Income Tax Returns and non-U.S. Income Tax Returns required to be filed by Parent or any Parent Entity.

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Schedule 2.1(b) HY Income Tax Returns
All U.S. state Income Tax Returns and non-U.S. Income Tax Returns required to be filed by HY or any HY Entity.

28NCEX 10.11

Exhibit 10.11

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT.  PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS [***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”.  MATERIAL OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

COTEAU LIGNITE SALES AGREEMENT
dated as of January 1, 1990
by and between
THE COTEAU PROPERTIES COMPANY
and
DAKOTA COAL COMPANY

1

CONTENTS

2

Exhibits
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H

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COTEAU LIGNITE SALES AGREEMENT
THIS COTEAU LIGNITE SALES AGREEMENT (Agreement) dated as of January 1, 1990, is by and between THE COTEAU PROPERTIES COMPANY, an Ohio corporation authorized to do business in the State of North Dakota (Coteau) and DAKOTA COAL COMPANY, a North Dakota corporation (Dakota).
W I T N E S S E T H :
WHEREAS, Coteau is a party to the Restatement of Coal Sales Agreement dated as of June 1, 1979, as subsequently amended (the Coal Sales Agreement), by and between Coteau and ANG Coal Gasification Company (ANG);
WHEREAS, as of November 1, 1988, ANG assigned, and Dakota assumed, all of ANG's rights, interests and obligations pursuant to and under the Coal Sales Agreement;
WHEREAS, Dakota has entered into an agreement entitled “Coal Sales Agreement” dated as of November 1, 1988 with Basin Electric Power Cooperative (Basin Electric) pursuant to which Dakota is selling lignite to Basin Electric for use by Basin Electric in its Antelope Valley Station, which consists of two 450 MW generating units and is located near Beulah, North Dakota;
WHEREAS, Dakota has also entered into the Coal Supply Agreement dated as of November 1, 1988 with Dakota Gasification Company (DGC) pursuant to which Dakota is selling lignite to DGC for use by DGC in its Great Plains Coal Gasification Plant, the first phase of which consists of a Lurgi lignite gasification facility with the capability of producing approximately 160 MMSCF of pipeline quality synthetic natural gas per day and is located on a site adjacent to Basin Electric's Antelope Valley Station;
WHEREAS, Dakota may enter into another agreement with Basin Electric or an Affiliate (as hereinafter defined) of Basin Electric pursuant to which Dakota will supply to Basin Electric all of the lignite to be used by Basin Electric in any expansion of the electrical generating capability at the Antelope Valley Station;
WHEREAS, Dakota may enter into another agreement with DGC or an Affiliate of DGC pursuant to which Dakota will supply to DGC all of the lignite used by DGC in any expansion of the Great Plains Coal Gasification Plant;
WHEREAS, Dakota intends to enter into another agreement with Basin Electric or an Affiliate of Basin Electric pursuant to which Dakota will supply to Basin Electric or an Affiliate of Basin Electric the portion of the lignite used at Basin Electric's Leland Olds Station, which consists of a 215 MW generating unit and a 440 MW generating unit and is located near Stanton, North Dakota, which is not supplied by the Glenharold Mine;
WHEREAS, Dakota hopes to enter into agreements with other third parties pursuant to which Dakota will provide all or a portion of the lignite used by said third parties' facilities; and
WHEREAS, in light of the foregoing, the Coal Sales Agreement is being terminated by Coteau and Dakota simultaneously in connection with the execution and delivery of this Agreement, and Coteau and Dakota desire that this Agreement supersede and replace the Coal Sales Agreement.

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NOW, THEREFORE, Coteau and Dakota agree as follows:
ARTICLE I 
DEFINITIONS
Section 1.1    Definitions. As used in this Agreement, the following terms shall have the following meanings:
Additional Dedicated Lignite shall mean those lignite reserves in the areas outside of the Primary Dedicated Lignite which, pursuant to Section 3.3 hereof, are made part of the Dedicated Lignite pursuant to this Agreement by being hereafter (a) acquired or held by Dakota or an Affiliate of Dakota, which then are acquired by, or transferred or subleased to Coteau or (b) acquired by Coteau at the direction of Dakota.
Affiliate shall mean any other person who, directly or indirectly, through ownership of securities, contract or otherwise, controls, is controlled by or is under common control with another person.
Agreed Profit shall have the meanings ascribed to the term in Sections 5.4, 5.5 and 5.7 hereof.
ANG shall mean ANG Coal Gasification Company, a Delaware corporation authorized to do business in the State of North Dakota and a second tier wholly owned subsidiary of Basin Electric.
Basic Agreement shall mean the Basic Agreement dated March 6, 1973, between North American Coal and Michigan Wisconsin Pipe Line Company. Pursuant to an Assignment Agreement dated July 1, 1975, Michigan Wisconsin Pipe Line Company assigned all of its rights and obligations under said Basic Agreement to American Natural Gas Production Company. Pursuant to an Assignment Agreement dated November 2, 1977, American Natural Gas Production Company assigned all of its rights and obligations under said Basic Agreement to WCDC. The Basic Agreement was subsequently restated pursuant to the Restatement of Basic Agreement dated as of June 1, 1979. Subsequently, the Restatement of Basic Agreement was terminated and replaced by the Coal Reserve Agreement. Pursuant to the Coal Reserve Agreement, WCDC transferred its obligations under the Restatement of Basic Agreement to ANG.
Basin Electric shall mean Basin Electric Power Cooperative, a North Dakota electric cooperative corporation.
Business Day shall mean any day other than a Saturday, Sunday or day on which banks in North Dakota or New York City are required or authorized to be closed.
Coal Reserve Agreement shall mean the Coal Reserve Agreement made and entered into as of March 2, 1987, by and among Coteau, Dakota (as successor in interest to ANG), North American Coal, The Missouri Valley Properties Company and WCDC.
Coal Sales Agreement shall mean the Restatement of Coal Sales Agreement dated as of June 1, 1979, and as subsequently amended, by and between Coteau and Dakota (as successor in interest to ANG).
Cost of Production shall have the meaning ascribed to the term in Section 5.2 hereof.
Coteau shall mean The Coteau Properties Company, an Ohio corporation authorized to do business in the State of North Dakota and a wholly owned subsidiary of North American Coal.
Coteau's Mine shall mean all mining areas developed by Coteau in the Dedicated Lignite.
Dakota shall mean Dakota Coal Company, a North Dakota corporation and a wholly owned subsidiary of Basin Electric.

5

Dakota's Other Plants shall mean all additional generating units installed by Basin Electric which increase the original generating capacity of the Antelope Valley Station and all additional gasifiers as well as the incremental increased capacity achieved by replacing one or more of the existing gasifiers with a replacement gasifier having a capacity greater than the gasifier being replaced at or near the Great Plains Coal Gasification Plant.
Dakota's Plants shall mean collectively Dakota's Primary Plants, Dakota's Secondary Plant, Dakota's Other Plants and Other Plants.
Dakota's Primary Plants shall mean collectively the Antelope Valley Station, consisting of two 450 MW generating units named Units 1 and 2 and located near Beulah, North Dakota, which is controlled and operated by Basin Electric, and the Great Plains Coal Gasification Plant, the first phase of which consists of a Lurgi lignite gasification facility with the capability of producing approximately 160 MMSCF of pipeline quality synthetic natural gas per day and is located on a site adjacent to the Antelope Valley Station, which is owned and operated by DGC.
Dakota's Requirements shall mean (a) all of the coal requirements of Dakota's Primary Plants and Dakota's Other Plants, (b) except as otherwise provided by Section 2.1 hereof, the portion of the coal used at Dakota's Secondary Plant which is not supplied by the Glenharold Mine and (c) the portion of the coal requirements of Other Plants which Dakota desires Coteau to supply.
Dakota's Secondary Plant shall mean the Leland Olds Station, consisting of a 215 MW generating unit and a 440 MW generating unit, owned by Basin Electric and located near Stanton, North Dakota.
Dedicated Lignite shall mean collectively the Primary Dedicated Lignite and the Additional Dedicated Lignite.
Development Period shall mean, with respect to the development of any mining area of Coteau's Mine for Dakota's Plants, the period from the date of Dakota's written approval of the Mining Plan with respect to such mining area until such date that Dakota shall designate.
DGC shall mean Dakota Gasification Company, a North Dakota corporation and a wholly owned subsidiary of Basin Electric.
Emergency Expenditures shall mean expenditures for Coteau’s Mine which, in the reasonable judgment of Coteau, are necessary as a result of explosion, fire, flood or other emergency and the delay of which, in order to secure Dakota’s prior approval, would either jeopardize life or substantial property of Dakota or Coteau, or result in a material interruption of Couteau’s Mine production. 
Escrowed Stock shall mean the one hundred (100) shares of common stock, without par value, issued and outstanding of Coteau.
Glenharold Mine shall mean the lignite reserves delineated in Exhibit A hereto which by this reference is made a part hereof.
Index shall mean the average [* * *] on the base 1982 = 100, published by the Bureau of Labor Statistics of the U.S. Department of Labor, for the twelve (12) months of said calendar year. The base for calculating changes in the Index in Subsections 5.5(a), 5.5(b) and 5.5(c) hereof shall be the Producer Price Index - All Commodities for July, 1988.
Loans and Leases shall have the meaning ascribed to the term in Section 10.1 hereof.
* * * Confidential Treatment Requested

6

Mining Plan shall mean the mining plan furnished to and approved by Dakota in accordance with Section 4.1 hereof and updated pursuant to such Section.
North American Coal shall mean The North American Coal Corporation, a Delaware corporation authorized to do business in the State of North Dakota (formerly Nortex Mining Company).
Option Agreement shall mean the Option and Put Agreement dated as of January 1, 1990, by and among Dakota, North American Coal and the State of North Dakota doing business as the Bank of North Dakota.
Other Plants shall mean any other facility owned by a third party for which Dakota shall contract to provide lignite.
Party shall mean either Coteau or Dakota as indicated by the context.
Parties shall mean Coteau and Dakota.
Premature Termination Mine Closing Costs shall have the meaning ascribed to the term in Section 14.2 hereof.
Primary Dedicated Lignite shall mean those lignite reserves within the areas of interest described in Exhibit B hereto which by this reference is made a part hereof which areas may be changed from time to time pursuant to Section 3.3 hereof.
Primary Truck Dump shall mean the facility presently located at Couteau’s Mine where mine-run lignite is dumped and subsequently crushed before delivery to the Secondary Crusher Building.
Production Payment shall have the meaning ascribed to the term in Section 5.7 hereof.
Secondary Crusher Building shall mean the building constructed by Coteau to house the secondary crusher and to accommodate the transfer of lignite from the Primary Truck Dump to Dakota’s Primary Plants.
Sub-Quality Lignite shall mean lignite with an average calorific content of less than six thousand two hundred (6,200) BTUs per pound on an as-received basis.
Such average computations shall be based upon the analyses of representative samples taken in accordance with the provisions of Subsection 5.5(d) and Section 9.1 hereof.
Ton shall mean a net ton of two thousand (2,000) pounds.
WCDC shall mean ANR Western Coal Development Company, a Delaware corporation.
ARTICLE II
SALE OF LIGNITE
Section 2.1    General. Dakota agrees to purchase and accept and Coteau agrees to sell and deliver lignite pursuant to the terms and conditions of this Agreement. Dakota shall purchase from Coteau all of Dakota’s Requirements pursuant to this Agreement; provided, however, that lignite purchased by Dakota from an Affiliate of Basin Electric from lignite reserves located in the Glenharold Mine for use at Dakota’s Secondary Plant shall be exempt from this requirement; and further provided that, if federal, state or local laws prohibit or, in the reasonable opinion of Basin Electric or an Affiliate of Basin Electric, render uneconomical the use of North Dakota lignite at Dakota’s Secondary Plant, Dakota shall have the right to purchase and use, outside of the scope of this Agreement, alternative fuels or sub-bituminous or bituminous coal at Dakota’s Secondary Plant.

7

Section 2.2    Tonnages. On a time schedule agreed to by the Parties, Dakota shall designate in writing to Coteau Dakota’s Requirements for the following calendar year, including the monthly tonnage requirements from Coteau’s Mine for each of Dakota’s Plants. Dakota shall promptly advise Coteau in writing of any material revisions and modifications to the annual designation of Dakota’s Requirements.
As necessary, Dakota shall consult with Coteau as to projected increases and decreases in Dakota’s Requirements on a long-range basis. If Dakota desires to increase the annual lignite deliveries for any calendar year by more than ten percent (10%) of the preceding year’s lignite requirements, Dakota shall provide Coteau with a written estimated schedule of Dakota’s Requirements on an annual basis for the succeeding five (5) calendar years, including the estimated deliveries from Coteau's Mine for each of Dakota’s Plants. The lignite quantities set forth in such schedule shall be within the limits of Coteau’s productive capability, provided that when any increase in estimated lignite requirements occurs which necessitates the acquisition by Coteau of additional equipment, Coteau shall not be obligated to supply such increased requirements until such time as it is able to acquire and install such additional equipment and do all other things necessary to supply such increased requirements.
Section 2.3    Rate. Scheduled deliveries shall be in approximately equal weekly amounts in each calendar year during the entire term of this Agreement, subject, however, to the right of Dakota to increase or decrease such weekly amounts pursuant to Section 2.2 hereof. The scheduling of such shipments of lignite shall be made by mutual agreement of the Parties. To the extent practicable, Coteau shall coordinate the vacation schedule at Coteau's Mine so as to accommodate the requirements of Dakota's Plants for lignite and other services provided hereunder.
Section 2.4    Point(s) of Delivery. Delivery of lignite shall be made at Dakota's Primary Plants or to such other point(s) designated in writing by Dakota to Coteau. Any transportation beyond said point(s) of delivery shall be arranged by and at the cost of Dakota.
ARTICLE III
DESCRIPTION OF LIGNITE
Section 3.1    Lignite Quality.
The lignite to be sold and delivered hereunder shall be from Coteau's Mine and shall be mine-run lignite. Coteau shall make all reasonable efforts to avoid shipping extraneous impurities and, upon request of and reasonable written notice from Dakota, shall install lignite cleaning facilities specified by Dakota. Coteau shall not mine lignite from any area estimated by Coteau and Dakota to contain Sub-Quality Lignite unless Dakota shall have given its prior written consent.
Section 3.2    Sub-Quality Lignite.
Dakota shall have the right to reject Sub-Quality Lignite, provided that Dakota shall not have the right to reject Sub-Quality Lignite mined with its consent from an area estimated to contain Sub-Quality Lignite pursuant to Section 3.1 hereof. If Coteau delivers Sub-Quality Lignite without receiving Dakota's prior written consent pursuant to Section 3.1 hereof, Dakota shall have the right, on notice to Coteau confirmed in writing, to suspend deliveries of lignite until Coteau establishes that it will meet specifications. Any Sub-Quality Lignite so rejected and not utilized or sold by Dakota shall be excluded from the tonnages upon which Coteau's Agreed Profit is based.
Section 3.3    Dedicated Lignite.
The lignite to be sold and delivered hereunder shall be from the Dedicated Lignite. At the written direction of Dakota from time to time the geographic boundaries of the Dedicated Lignite may be modified to reflect the addition of Additional Dedicated Lignite to the Dedicated Lignite. At the written direction of Dakota from time to time the geographic boundaries of Primary Dedicated Lignite may be modified to reflect additions to the Primary Dedicated Lignite. With the mutual written approval of Coteau and Dakota, the geographic boundaries of the Dedicated Lignite may be modified from time to time to reflect deletions from the Dedicated 

8

Lignite. With the mutual written approval of Coteau and Dakota, the geographic boundaries of the Primary Dedicated Lignite also may be modified from time to time to reflect deletions from the Primary Dedicated Lignite.
ARTICLE IV
MINING PLAN, FINANCIAL PROTECTION TO DAKOTA
Section 4.1    Mining Plan.
From time to time at Dakota's request, Coteau shall provide to Dakota in writing a Mining Plan to furnish Dakota's Requirements from the Dedicated Lignite. The Mining Plan shall be in accordance with sound engineering and design practices and applicable laws, rules and regulations and shall include production schedules, manpower and equipment requirements, estimated costs per Ton, time schedules for mine development, estimated dates of initial production and full production, method of operation, including method of operation of any lignite handling facilities, reclamation and permitting schedules, capital expenditure and operating cost requirements, mine design, mine projection maps, mine progression and reserve studies and such other data as may be reasonably requested by Dakota. The Mining Plan shall be in such detail and format as may be reasonably requested by Dakota. Within seventy-five (75) days after receipt by Dakota of such Mining Plan, Dakota shall give Coteau written notice of Dakota's approval or disapproval of the Mining Plan. If Dakota does not give such notice within such seventy-five (75) days, Dakota shall be deemed to have approved such Mining Plan. If Dakota disapproves the Mining Plan or any portion(s) thereof, Dakota shall state in detail in its notice of disapproval the reason(s) for such disapproval and Coteau and Dakota shall meet promptly and attempt in good faith to settle their differences with respect to the Mining Plan. If Coteau and Dakota are unable to resolve their differences within thirty (30) days after Coteau's receipt from Dakota of such notice of disapproval, Dakota may reasonably direct Coteau, subject to Section 16.4 hereof, as to the revisions to be made in the Mining Plan and Coteau shall make such revisions. The Mining Plan shall be reviewed and revised or expanded annually (or as necessary) with the written approval of Dakota. Such revisions shall be based upon the then current projections developed by Coteau and requirements of applicable law, rules and regulations and shall be subject to approval by Dakota as provided above. No material modification of or deviation from the Mining Plan shall be made without the written approval of Dakota, which approval shall not be unreasonably withheld. It is recognized by the Parties that, subject to the duties imposed upon Coteau pursuant to Section 16.4 hereof, Coteau may make minor modifications of or deviations from the Mining Plan without Dakota's approval. Coteau shall consult with and keep Dakota informed of the progress of the design, development and operation of Coteau's Mine and shall, upon Dakota's request, furnish to Dakota copies of all major and significant drawings and documents relating to such design, development and operation.
Section 4.2    Budgets and Cash Flow Projections.
Coteau shall furnish to Dakota, on a time schedule agreed to by the Parties, the following budgets and cash flow for activities pursuant to this Agreement during the following calendar year: 
(a)    An annual capital budget containing estimates of all commitments in excess of $10,000. Such annual capital budget shall be revised quarterly and submitted to Dakota no later than forty-five (45) days prior to the end of each calendar quarter. Within forty-five (45) days after Dakota’s receipt of the foregoing annual capital budget and within thirty (30) days after Dakota’s receipt of the foregoing revised quarterly budgets, Dakota shall give Coteau written notice of Dakota’s approval or disapproval of such capital budgets. If Dakota shall fail to give such notice within such forty-five (45) day or thirty (30) day period, as the case may be, Dakota shall be deemed to have approved such budgets. Dakota’s approval of such capital budgets may be limited to the immediately following calendar quarter. Upon the approval of any capital budget or portion thereof by Dakota, such budget or portion thereof shall be deemed part of the Mining Plan.

9

(b)    An operating budget containing estimates of all operating and production costs. Such operating budget may be modified pursuant to the change order procedure described in Section 4.4 hereof. The annual operating budget shall be presented on a month-by-month basis. Within forty-five (45) days after Dakota’s receipt of the foregoing annual operating budget, Dakota shall give Coteau written notice of Dakota’s approval or disapproval of such operating budget. If Dakota shall fail to give such notice within such forty-five (45) day period, Dakota shall be deemed to have approved such budget. Upon the approval of any operating budget or portion thereof by Dakota, such budget or portion thereof shall be deemed part of the Mining Plan. 
(c)    A cash flow statement for all capital expenditures and operating and production costs presented on a month-by-month basis for the following four (4) calendar years. Such cash flow statement shall be revised monthly by Coteau and submitted to Dakota. 
Such budgets and cash flow statement, as described in this Section 4.2, shall be in such form and detail acceptable to Dakota. 
Section 4.3    Financial Protection to Dakota.

Coteau shall not make any expenditures unless they are generally reflected in a budget, or portion thereof, approved by Dakota as aforesaid; nor shall Coteau make any single expenditure (except for expenditures made to maintain inventory levels as approved by Dakota from time to time) for materials, supplies, equipment, facilities or services in excess of $10,000, or enter into any contracts, agreements or commitments involving more than $10,000, unless such item has been specifically identified in a budget, or portion thereof, approved by Dakota or unless Dakota has otherwise approved thereof. 
Any expenditures made by Coteau for capital items which are not made in accordance with the immediately preceding paragraph shall be deemed to have been made for the account of Coteau and shall not be recoverable from Dakota under any of the other provisions of this Agreement. Coteau shall have the right in its sole discretion to dispose of any capital items which are deemed to have been made for the account of Coteau.
Notwithstanding anything to the contrary contained in this Agreement, Coteau shall have the right during any calendar year to make Emergency Expenditures without advance approval by Dakota, provided that Coteau shall subsequently and promptly give Dakota written notice thereof.
If, at any time while an operating budget as approved by Dakota is in effect and Dakota, in good faith, believes that Coteau is not in compliance with any of the provisions of such operating budget, Dakota shall have the right to give Coteau notice of such noncompliance. Such notice shall be in writing and identified as a "Notice of Noncompliance Pursuant to Section 4.3 of the Coteau Lignite Sales Agreement dated as of January 1, 1990", shall cite the provision(s) of the operating budget as to which Dakota believes Coteau is not in compliance, shall state in detail the reasons why Dakota so believes Coteau is not in compliance and shall include all other pertinent information.
No later than fifteen (15) Business Days after Couteau’s receipt of such notice of noncompliance, Coteau shall either (a) give Dakota written notice that Coteau denies that such noncompliance has occurred or is occurring or (b) correct such noncompliance; provided, however, that if Coteau within five (5) Business Days after Coteau's receipt of such notice of noncompliance from Dakota gives Dakota notice confirmed in writing that Coteau needs more than fifteen (15) Business Days in order to correct the noncompliance(s) cited in such notice, together with reasons therefor, Dakota shall give Coteau such reasonable extension as may be necessary in order to make such correction(s).
If Coteau gives Dakota notice denying such noncompliance, Coteau and Dakota shall meet promptly and attempt in good faith to settle their differences. Any matter agreed upon by Coteau and Dakota with respect 

10

to such operating budget which requires implementation shall be implemented promptly. If Coteau and Dakota are unable to resolve their differences within thirty (30) days after Dakota’s receipt of notice from Coteau denying such noncompliance, either Party may submit the matter to arbitration as provided in Section 16.2 hereof. If arbitration is sought, Coteau shall not be deemed to be in noncompliance and shall not be required to correct any noncompliance until the matter shall have been determined finally in accordance with the aforesaid arbitration provisions.
If the noncompliance is not corrected or resolved by Coteau and Dakota as aforesaid and (x) arbitration is not so sought, or (y) Coteau subsequently is found in arbitration proceedings to be in noncompliance, then all costs incurred by Coteau following the expiration of five (5) Business Days after Coteau's receipt of notice of noncompliance from Dakota, including costs incurred during the period prior to the completion of any arbitration proceeding, and which costs result directly from such noncompliance with the operating budget as specified in said notice of noncompliance from Dakota, shall be disallowed up to an amount equal to the Agreed Profit due to Coteau for lignite produced during the period of disallowance and computed in accordance with Section 5.4 hereof. Subject to the provisions of Section 16.4 hereof, such disallowance shall be Dakota’s exclusive remedy for such noncompliance.
Section 4.4    Change Orders.
Coteau shall develop a change order procedure acceptable to Dakota. Change orders consistent with such procedures shall be submitted by Coteau to Dakota for Dakota’s approval for (a) any change in the annual operating budget, as approved by Dakota, resulting from changes requested in writing by Dakota in the lignite quantities or design criteria contained in the annual operating budget, (b) any factor which results in a change in the current delivery schedule for lignite and (c) any predicted or actual increase in the annual operating budget, as approved by Dakota.
Section 4.5    Meetings.
Coteau and Dakota shall meet periodically to review the progress of the design, development and operation of Coteau's Mine. Coteau and Dakota anticipate these meetings will be held quarterly. Prior to such meetings, Coteau shall submit to Dakota in a format acceptable to Dakota, such reports, schedules and operating and financial data as may be reasonably requested by Dakota.
Section 4.6    Reports.
Coteau and Dakota shall cooperate to establish, maintain and use a cost and schedule control system with respect to the development of Coteau's Mine adequate for (a) the preparation of a project schedule which shall facilitate the planning of the development of Coteau's Mine and demonstrate production date impact resulting from schedule slippages, if any, in the development of Coteau's Mine, and (b) a cost control system and a physical progress data reporting system which (i) provide actual cost and scheduling status reports to Dakota for the immediately preceding calendar month by the fifteenth (15th) Business Day of every month in which development of Coteau's Mine is in progress, (ii) report the actual progress of the development of Coteau's Mine relative to the Mining Plan and such other schedules as Dakota shall designate and (iii) provide adequate audit trail information. Such control system may include the preparation by Coteau, as requested by Dakota, of the following documents in a format acceptable to Dakota:
1)     Budget Status Report
2)     Projected Expenditures Report (actual/projected)
3)     Cost and Comparison to Estimate Report
4)     Physical Progress Report
5)     Permit Status Report
6)     Project Status Report (written detail, all areas)
7)     Project Development Schedule (bar chart or time-oriented activity diagram); 
or such other documents as requested by Dakota. Coteau shall notify Dakota in writing of any proposed changes in the cost and schedule control system previously approved by Dakota.

Section 4.7    Procurement Policies.

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All materials, supplies, equipment, facilities and services, and all contracts, agreements and commitments therefor or in connection therewith required to construct, develop and operate Coteau's Mine shall be acquired, entered into or made only pursuant to formal procurement policies adopted by Coteau and acceptable to Dakota. Coteau shall notify Dakota in writing of any proposed material changes to formal procurement policies previously approved by Dakota.
Section 4.8    Payment of Dividends.
Coteau shall have the right to pay dividends on the Escrowed Stock only from earned surplus.
Section 4.9    Accounting Practices.
Coteau shall maintain accurate books and records in accordance with generally accepted accounting principles and as necessary to support such detailed cost analyses, classifications and allocations as may be requested from time to time by Dakota.
Couteau’s accounting systems, policies and procedures shall conform to Dakota’s specifications, which shall be in accordance with generally accepted accounting principles, and shall be subject to Dakota’s approval. Coteau shall notify Dakota in writing of any proposed material changes to Couteau’s accounting systems, policies and procedures previously approved by Dakota. Couteau’s accounting system shall provide for cost classifications (chart of accounts) as requested by Dakota. Coteau shall develop a cash management system acceptable to Dakota which shall include the maintenance of separate cash accounts to the extent requested by Dakota.
Couteau’s accounting operations with respect to matters related to this Agreement shall be at such location as Dakota shall approve; provided, however, that Coteau shall have the right under this Agreement to conduct such other accounting operations and maintain such other accounting records and systems as Coteau deems necessary to be consistent with the accounting system of Affiliates of Coteau, the cost of which shall be included in the Cost of Production defined in Section 5.2 hereof.
Section 4.10    Other Policies and Practices.
Coteau shall develop formal written policies with respect to executive compensation plans, which policies shall be subject to approval of Dakota. Such approval shall not be withheld if such policies are consistent with those of North American Coal.
Expenditures by Coteau for memberships in national trade associations and state trade associations which are included in the Cost of Production shall be limited to one and two, respectively, unless expenditures for additional memberships are approved by Dakota. Coteau shall keep Dakota apprised of the activities of the trade associations of which Coteau is a member and shall use its influence as a member to support the causes of Dakota.
Coteau shall develop formal written policies with respect to matters such as travel and entertainment, overtime, labor reporting, attendance at seminars, meetings and schools, use of company aircraft and vehicles, mine-related cost allocation methods and equipment replacement policies, all of which policies shall be subject to approval by Dakota.
Coteau shall develop formal written policies with respect to employee insurance, ·relocation expense, vacation and retirement benefits, all of which policies shall be subject to approval by Dakota. Such approval shall not be withheld if such policies are consistent with those of North American Coal and generally consistent with those of the lignite mining industry.
Coteau shall develop formal written policies with respect to donations to charitable and civic organizations and corporate sponsorships, which policies shall be subject to approval by Dakota. Expenditures by Coteau for donations and sponsorships which are included in the Cost of Production shall be limited to not more than $10,000 per year, unless a higher amount is approved in writing by Dakota. Coteau shall provide Dakota a listing of estimated planned expenditures for donations and sponsorships for the following calendar year 

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by December 1.
Coteau shall notify Dakota in writing of any proposed material changes to such policies previously approved by Dakota.
Section 4.11    Employment Contracts.
Coteau shall consult with Dakota and consider the advice and counsel provided by Dakota before entering into any employment contracts or any contracts for the employment of consultants in its mining business other than contracts for professional services such as accounting services, architectural services and legal services which normally are performed by independent contractors.
ARTICLE V
PRICING
Section 5.1    Determination of Price.
Subject to the right of Dakota to determine the price during the Development Period pursuant to Section 5.3 hereof and to adjustment as provided in Sections 5.5 and 5.7 hereof, Dakota shall pay for the lignite sold and delivered hereunder a price which annually equals the Cost of Production, as defined in Section 5.2 hereof, plus the Agreed Profit as determined pursuant to Sections5.4, 5.5 and 5.7 hereof.
Section 5.2    Cost of Production.
For the purposes of this Agreement, except as otherwise expressly stated, "Cost of Production" shall mean all the costs actually incurred by Coteau in the design, development, construction and operation of Coteau's Mine and the mining, processing and delivery of lignite under this Agreement. Such costs shall be determined and allocated on an accrual basis in accordance with generally accepted accounting principles (except as otherwise expressly stated herein), consistently applied and shall include but not be limited to the following:
		
	a)
	All production, transportation and maintenance costs including without limitation the following types of costs:

		
	i)
	Labor costs, which include wages and the costs of all related payroll taxes, benefits and fringes, including welfare plans; group insurance, vacations and other comparable benefits of employees, wherever located, whose labor cost is properly charged directly to Coteau's Mine, 

		
	ii)
	Materials and supplies, 

		
	iii)
	Tools, 

		
	iv)
	Machinery and equipment not capitalized or leased, 

		
	v)
	With respect to the particular lignite mined, an appropriate allocation of the cost of acquiring interests in lignite reserves and surface lands, whether in fee, by lease or otherwise, prepaid royalties recoverable on mining and other expenses of having kept such interests in effect (not including costs paid by Dakota or its Affiliates pursuant to paragraph 5 of the Coal Reserve Agreement) and current tonnage royalty actually paid, if any, 

		
	vi)
	Rental of machinery and equipment,

		
	vii)
	Power costs, 

		
	viii)
	Reasonable and necessary services by third parties other than Affiliates of Coteau, 

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	ix)
	Insurance including Worker’s Compensation either in the state fund or self insurance, whichever in the best judgment of Coteau is more advantageous, · 

		
	x)
	Taxes, but not including income taxes or alternative minimum income taxes imposed by any governmental unit, 

		
	xi)
	Cost of reclamation as required by law or at such higher level of reclamation as shall be agreed upon between the Parties, 

		
	xii)
	Costs incurred by Coteau in connection with or as a result of the enactment, modification, interpretation, repeal or enforcement of all applicable federal, state and local governmental laws, rules and regulations, 

		
	xiii)
	Development costs, which shall be amortized ratably after the end of the Development Period as provided in Section 5.3 hereof, 

		
	xiv)
	Amounts payable to WCDC pursuant to paragraph 7 of the Coal Reserve Agreement, and 

		
	xv)
	Amounts payable to WCDC pursuant to paragraph 8 of the Coal Reserve Agreement.

There shall be credited to costs under this Subsection 5.2(a): (y) any investment tax credit or other tax credits based upon new investment taken by Coteau and any net receipts by Coteau from rental of, or other net income derived by Coteau from, property including surface lands overlying the Dedicated Lignite, and (z) all amounts disallowed in accordance with the last paragraph of Section 4.3 hereof. There shall be credited to costs under this Subsection 5.2(a) any gains, and so charged any losses, on the disposal of any property owned by Coteau related to Couteau’s Mine or the Dedicated Lignite. 
		
	b) 
	General and administrative costs of Coteau's Mine including services rendered by Affiliates of Coteau.

If any of the foregoing items in Subsections 5.2(a) and 5.2(b) hereof include costs incurred by an Affiliate of Coteau and charged to Coteau, they shall be included only at the cost to such Affiliate without addition for any loading, inter-company profit or service charge and shall be allocated to Coteau on the basis of time spent or (in the case of buildings) space used.
		
	c)
	Depreciation and amortization on personal property owned by Coteau the rates of which, reflecting salvage, shall be determined by Coteau and Dakota from time to time, and which shall not, except by mutual consent of the Parties, exceed the maximum deduction allowable under applicable federal income tax laws and regulations. Transactions involving capital assets between Coteau and any of its Affiliates shall be reflected in Coteau’s accounts at the higher of the cost of the assets involved, less accrued depreciation, as shown by the accounts of the transferring company or the fair market value of the assets involved.

d)   Loan and Lease Expense. Interest on indebtedness and loan and lease commitment fees to the extent not previously paid by Dakota during the Development Period currently due and payable, and amortization of other expenses incurred in connection with Coteau obtaining loans or leases (to the extent not otherwise provided for under Subsection 5.2(c) hereof), accrued by Coteau with respect to such loans and leases, less interest or dividends received by Coteau on its investments.
e)   Protective Provisions. If Coteau files consolidated tax returns with an Affiliate or Affiliates of Coteau, it shall collect from such Affiliate or Affiliates any net tax benefit derived by any such Affiliate from such consolidation attributable to Coteau. If Coteau has any surplus cash, it shall invest it in income producing securities or, if requested by Dakota, use such excess to repay indebtedness of Coteau.
Notwithstanding the foregoing, "Cost of Production" shall specifically exclude fines and penalties imposed 

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by any governmental agency, administration, commission or body, with the exception of (i) a fine or penalty imposed by a governmental agency, administration, commission or body regulating the mining of lignite or the reclamation of mined lignite lands or (ii) a fine or penalty imposed by any governmental agency, administration, commission or body on activities or conduct specifically directed or otherwise approved by Dakota or one of its Affiliates.
Section 5.3    Price During Development Period.
Dakota shall determine the price to be paid during each Development Period for the lignite sold and delivered hereunder from the relevant portion of Coteau's Mine, which price shall not be less per Ton of lignite than the prior calendar year's Cost of Production per Ton of lignite and which shall be deemed to include the Agreed Profit with respect to lignite delivered from such portion of Coteau's Mine. During each Development Period, the excess of the Cost of Production over the price (less Agreed Profit) paid for such lignite shall be capitalized, for purposes of determining subsequent price. The amount so capitalized shall be recovered by inclusion in the Cost of Production pro rata commencing at the end of each Development Period over a period, designated by Dakota, which shall not be longer than the estimated life of the particular mining area.
Section 5.4    Computation of Agreed Profit.
		
	a) 
	For lignite sold and delivered hereunder in any calendar year for use at Dakota's Primary Plants, the Agreed Profit, expressed in July 1, 1988 dollars, shall be [* * *] per Ton for all Tons of lignite up to and including [* * *] Tons and shall be [* * *] per Ton for all Tons of lignite which exceed [* * *] Tons, which such amounts of Agreed Profit shall be subject to adjustment as provided in Subsection 5.5(a) hereof.

For the first [* * *] Tons of lignite sold and delivered from the Dedicated Lignite for use at Dakota's Primary Plants following the date of this Agreement, the Agreed Profit per Ton, after adjustment pursuant to Subsection 5.5(a) hereof, shall be reduced by an amount equal to [* * *] adjusted in the manner as provided in paragraph 7 of the Coal Reserve Agreement. An example of the aforesaid calculation is attached hereto as Exhibit C and made a part hereof.
		
	b) 
	For lignite sold and delivered hereunder for use at Dakota's Other Plants, the Agreed Profit, expressed in July 1, 1988 dollars, shall be [* * *] per Ton, which such amount shall be subject to adjustment as provided in Subsection 5.5(b) hereof, until the quantity of lignite sold and delivered to Dakota's Secondary Plant, Dakota's Other Plants and Other Plants equals the total quantity of economically recoverable lignite reserves contained within the Additional Dedicated Lignite then owned, leased or subleased by Coteau pursuant to this Agreement. Once the aggregate lignite deliveries to Dakota's Secondary Plant, Dakota's Other Plants and Other Plants equal such quantity, the Agreed Profit for all lignite delivered to Dakota for use at Dakota's Other Plants shall be at the rate(s) specified in Subsection 5.4(a) hereof and the adjustment of such Agreed Profit shall be as provided in Subsection 5.5(a) hereof.

		
	c) 
	For lignite sold and delivered hereunder in any calendar year for use at Dakota's Secondary Plant and at Other Plants, the Agreed Profit, expressed in July 1, 1988 dollars, shall be [* * *] per Ton for all Tons up to and including [* * *] Tons, [* * *] per Ton for all Tons in excess of [* * *] and less than [* * *] Tons, and [* * *] per Ton for all Tons including and in excess of [* * *] Tons, which such amounts of Agreed Profit shall be subject to adjustment as provided in Subsection 5.5(c) hereof, until the quantity of lignite sold and delivered to Dakota's Secondary Plant, Dakota's Other Plants and Other Plants equals the total quantity of economically recoverable lignite reserves contained within the Additional Dedicated Lignite then owned, leased or subleased by Coteau pursuant to this Agreement. Once the aggregate lignite deliveries to Dakota's Secondary Plant, Dakota's Other Plants and Other Plants equal such total quantity, the Agreed Profit for all lignite delivered to Dakota for use at Dakota's Secondary Plant and at Other Plants shall be at the rate(s) specified in Subsection 5.4(a) hereof and the adjustment of such Agreed Profit shall be as provided in Subsection 5.5(a) hereof.

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Section 5.5    Modification of Agreed Profit.
		
	a)
	The Agreed Profit per Ton for each Ton of lignite sold and delivered hereunder for use at Dakota's Primary Plants shall be adjusted for each calendar year, as of December 31 of such calendar year, by one hundred percent (100%) of the percentage difference between the Index for the year under consideration and the base Index figure. An example of the aforesaid calculation is attached hereto as Exhibit D and made a part hereof. 

		
	b)
	Subject to Subsection 5.4(b) hereof, the Agreed Profit per Ton for each Ton of lignite sold and delivered hereunder for use at Dakota's Other Plants shall be adjusted for each calendar year, as of December 31 of such calendar year, by:

		
	i)
	Seventy-five percent (75%) of the first four percent (4%) of the change in the Index for the year under consideration relative to the previous year's Index and

		
	ii)
	A prorated percentage of that portion of the percentage change in the Index for the year under consideration relative to the previous year's Index which is greater than four percent (4%) but less than eight percent (8%), which proration shall be made linearly, with the prorated percentage being seventy-five percent (75%) for a four and one one-hundredth percent (4.01%) increase or decrease in the Index and with the prorated percentage being one hundred percent (100%) for the eight percent (8%) change in the Index and 

		
	iii)
	One hundred percent (100%) of that portion of the percentage increase or decrease in the Index relative to the previous year's Index which is equal to or greater than eight percent (8%). 

Examples of the aforesaid calculation are attached hereto as Exhibit E and made a part hereof. 
		
	c) 
	Subject to Subsection 5.4(c) hereof, the Agreed Profit per Ton for each Ton of lignite sold and delivered hereunder for use at Dakota's Secondary Plant and Other Plants shall be adjusted for each calendar year, as of December 31 of such calendar year, by seventy-five percent (75%) of the percentage difference between the Index for the year under consideration and the base Index figure. An example of the aforesaid calculation is attached hereto as Exhibit F and made a part hereof. 

		
	d)
	The Agreed Profit for all Sub-Quality Lignite that is sold and delivered hereunder shall be reduced by multiplying the applicable Agreed Profit by a fraction, the numerator of which shall be the actual BTU content of said Sub-Quality Lignite and the denominator of which shall be six thousand seven hundred fifty (6,750) BTUs per pound. The Agreed Profit rate to which such reductions shall be made shall be the average Agreed Profit rate, before said adjustment, paid by Dakota to Coteau during the month in which the Sub-Quality Lignite is severed by Coteau and sold and delivered to Dakota hereunder. An example of the aforesaid calculation is attached hereto as Exhibit G and made a part hereof. Specific mining areas in which Sub-Quality Lignite is available shall be determined by Coteau and agreed to by Dakota prior to the delivery of such lignite. The actual quantities of Sub-Quality Lignite taken from these specific areas to which the adjustment in this Subsection 5.5(d) shall apply shall be determined by pit survey, and the BTU rating shall be determined from pit samples, utilizing procedures mutually agreed to by Coteau and Dakota.

Section 5.6    Further Modifications.
If at any time during the term of this Agreement it is reasonably believed by either Party that the [* * *] or any index substituted therefor in accordance with the following provisions reflects the true change in
* * * Confidential Treatment Requested

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purchasing power of the United States dollar, then upon the written request of either Party a substituted index or method whereby such change in purchasing power of the United States dollar can be determined shall be substituted by mutual agreement. In the event that the [* * *] or any substituted index is changed in the future to use some
base other than the base of 1982 = 100, then, for the purposes hereof, the [* * *] or any substitute index, as the case may be, shall be adjusted so as to be in correct relationship to the base of 1982 = 100, or some other alternative base which is mutually agreeable to Coteau and Dakota. In the event publication of the [* * *] or any substituted index is no longer made by any federal agency, the index to be used as aforesaid shall be that index agreed to by the Parties which, after necessary adjustment, if any, provides the most reasonable substitute for said index.
Section 5.7    Post-Expiration/Termination Payments.

		
	a) 
	In the event that, following an expiration of this Agreement pursuant to Section 14.1 hereof, Dakota exercises its right, pursuant to the Option Agreement, to cause the transfer of the Escrowed Stock to Dakota, or in the event that, following a premature termination of this Agreement pursuant to Subsection 14.2(a) hereof, North American Coal exercises its put option under the Option Agreement, Dakota shall then pay to North American Coal or its designee as part of the purchase price for the Escrowed Stock a production payment (Production Payment) in the following amounts under the following circumstances:

		
	i)
	Until such time as Dakota shall have paid Agreed Profit as calculated pursuant to Subsection 5.4(a) hereof as adjusted pursuant to Subsection 5.5(a) hereof and/or Production Payments pursuant to the terms of this Agreement for three hundred ninety million (390,000,000) Tons of coal and/or lignite sold and delivered following the date of this Agreement, a Production Payment equal to the Agreed Profit as calculated pursuant to Subsection 5.4(a) hereof as adjusted pursuant to Subsection 5.7(b) hereof for x) coal and/or lignite sold and delivered to Dakota's Primary Plants, regardless of the source of such coal and/or lignite, and/or y) lignite sold and delivered to Dakota's Plants from Primary Dedicated Lignite;

		
	ii)
	After the conditions of Subsection 5.7(a)(i) hereof have been satisfied and Dakota shall have paid the specified Agreed Profit and/or Production Payments for three hundred ninety million (390,000,000) Tons, a Production Payment, expressed in January 1, 1990 dollars, equal to [* * *] per Ton for all Tons mined from the Primary Dedicated Lignite and sold to Dakota's Plants, until such time as Dakota shall have paid Agreed Profit pursuant to Subsection 5.4(a) hereof as adjusted pursuant to Subsection 5.5(a) and/or Production Payments pursuant to Subsection 5.7(a)(i) hereof and this Subsection 5.7(a)(ii) as adjusted pursuant to Subsection 5.7(b) hereof for all Tons in excess of three hundred ninety million (390,000,000) Tons of coal and/or lignite but less than four hundred forty million (440,000,000) Tons of coal and/or lignite; and

		
	iii)
	Thereafter, a Production Payment, expressed in January 1, 1990 dollars, equal to [* * *] per Ton for all Tons mined from the Primary Dedicated Lignite and sold and delivered to Dakota's Plants, until such time as Dakota shall have paid Agreed Profit pursuant to Subsection 5.4(a) hereof as adjusted pursuant to Subsection 5.5(a) hereof and/or Production Payments pursuant to Subsection 5.7(a)(i) and Subsection 5.7(a)(ii) hereof and this Subsection 5.7(a)(iii) as adjusted pursuant to Subsection 5.7(b) hereof for all Tons in excess of four hundred forty million (440,000,000) but less than five hundred fifty million (550,000,000) Tons of coal and/or lignite;

* * * Confidential Treatment Requested

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at which point Dakota’s obligation to pay the Production Payment shall cease.
		
	b)
	The Production Payment per Ton of lignite referenced in Subsection 5.7(a)(i) hereof shall be adjusted for each calendar year, as of December 31 of such calendar year, by one hundred percent (100%) of the percentage difference between the Index for the year under consideration and the Index as of July 1, 1988. The Production Payment per Ton of lignite referenced in Subsections 5.7(a)(ii) and 5.7(a)(iii) hereof shall be adjusted for each calendar year, as of December 31 of such calendar year, by one hundred percent (100%) of the percentage difference between the Index for the year under consideration and the Index as of January 1, 1990.

		
	c)
	There shall be included in and counted toward the tonnage figures in Subsection 5.7(a) hereof all Tons of lignite sold by Coteau to third parties as provided in Section 13.1 hereof.

		
	d)
	In the event Dakota or North American Coal exercises its right, pursuant to the Option Agreement, to cause the transfer of the Escrowed Stock to Dakota, (i) the obligations of Dakota under this Section 5.7 shall survive any termination or expiration of this Agreement, (ii) Dakota shall not, and shall cause Coteau to not, dissolve or liquidate and (iii) Dakota shall not, and shall cause Coteau to not, merge or consolidate with, or sell all or substantially all of its assets to, any third party unless such third party shall have agreed in writing to be bound by the terms of this Section 5.7 and shall be financially capable of performing Dakota’s obligation under this Section 5.7 and shall otherwise be solvent.

Section 5.8    Mine Closing Costs.
Dakota recognizes that mine closing costs will be incurred by Coteau from time to time. Dakota shall reimburse Coteau for all such mine closing costs. Such costs when determined shall be included within budgets and operating plans submitted to Dakota for its approval and shall be paid as part of the Cost of Production or otherwise be reimbursed to Coteau by Dakota as incurred, which obligation of Dakota shall survive any termination or expiration of this Agreement.
ARTICLE VI
AUDITS AND FINANCIAL REPORTS
Section 6.1    Audits.
Coteau shall annually have an audit of its accounts performed by a firm of independent certified public accountants and shall provide Dakota with a copy of such audit. Dakota shall have the right at any time on reasonable notice in writing to Coteau to examine by its certified public accountants (which may include representatives of Basin Electric or its Affiliate) the records and books of account of Coteau and any Affiliate of Coteau, relating to the items and allocations of cost and production entering into the computation of the Cost of Production. Payment or payments under Article VII of this Agreement shall not be deemed a waiver of any rights of Dakota to have the price hereunder corrected.
Section 6.2    Financial Reports.
On or before the twentieth (20th) day of each month, Coteau shall furnish to Dakota financial statements reflecting Coteau's financial position as of the end of the preceding calendar month and the results of operations of Coteau for the period then ending and a detailed statement of the Cost of Production for the preceding calendar month at Coteau's Mine, including the quantity of lignite delivered and the aggregate man-hours by classification and shifts required for its production. Coteau shall furnish to Dakota detailed cost analyses and other financial reports with respect to Coteau as Dakota may reasonably request. Said statements, analyses and reports shall be in such form and detail as may reasonably be requested by Dakota.

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ARTICLE VII
BILLING AND ADJUSTMENTS
Section 7.1    Billing.
The monthly invoice for lignite sold and delivered hereunder in a calendar month shall be issued by Coteau no earlier than the sixth (6th) day of the next calendar month. Any such invoice received by Dakota after 12:00 Noon, Bismarck time, on any Business Day shall be deemed to have been received by Dakota on the following Business Day. Dakota shall pay such invoice within ten (10) days after its receipt thereof. If such tenth (10th) day is not a Business Day, Dakota shall pay such invoice no later than the next following Business Day.
Section 7.2    Adjustments.
After the end of each Development Period, the monthly billing of lignite sold and delivered from Coteau's Mine to which such Development Period related in each calendar month shall be based upon the estimated Cost of Production applicable to Coteau's Mine during such month, plus the Agreed Profit on lignite mined from Coteau's Mine for such month. Any differences between the estimated Cost of Production, upon which the billing is based, and actual Cost of Production for each calendar month shall be included as an adjustment to the monthly billing of lignite in each subsequent calendar month. Billings for lignite sold and delivered from Coteau's Mine for each calendar month shall be based upon the Agreed Profit for the previous calendar year as recomputed pursuant.to Section 5.5 hereof. As soon as possible after the expiration of each calendar year, the Agreed Profit shall be recomputed on an annual basis for such calendar year and additional payment or refund shall be made accordingly. An example of such recomputation is attached hereto as Exhibit H and made a part hereof.
ARTICLE VIII
RATE OF SHIPMENT, PERFORMANCE
Section 8.1    Rate of Shipment.
If by reason of failure to receive shipping instructions or releases from Dakota under this Agreement, Coteau does not ship the required amount for any particular month, Coteau shall have the option, but shall not be required, to waive the actual delivery of the undelivered tonnage for such month, but any such waiver shall not relieve Dakota from liability to respond in damages for the failure to perform its obligations; provided, however, that Dakota shall not incur any liability to respond in damages if the failure to perform its obligations pursuant to this Agreement is due to an event described in Section 11.2 hereof. If Coteau fails to make deliveries required of it hereunder, Dakota shall have the option, but shall not be required, to waive the actual delivery of the undelivered tonnage, but such waiver shall not relieve Coteau from the liability to respond in damages for the failure to perform its obligations.
Section 8.2    Performance.
Notwithstanding anything to the contrary contained in this Agreement, Coteau shall not incur any liability to respond in damages for failure to perform its obligations pursuant to this Agreement if such failure is due to an event described in Section 11.1 hereof or if such failure is due to control exercised by Dakota in accordance with this Agreement or results from the failure of Dakota to perform its obligations in accordance herewith.
ARTICLE IX
SAMPLING AND ANALYSIS, WEIGHTS
Section 9.1    Sampling and Analysis.
Except for the analyses of pit samples of Sub-Quality Lignite pursuant to Subsection 5.5(d) hereof, the quality of the lignite sold and delivered hereunder from Coteau's Mine shall be determined by analyses of samples taken from at least five thousand (5,000) Tons of lignite at a point or points mutually agreed upon by Coteau 

19

and Dakota. Sampling and analysis shall be performed by methods which meet the standards of the American Society of Testing Materials, or by such other methods as may be mutually agreed upon by Coteau and Dakota. Each sample shall be divided into two (2) parts and put into suitable air-tight containers. One (1) part shall be submitted to Dakota for analysis and the second part shall be properly sealed and labeled and retained by Dakota for thirty (30) days, to be analyzed if a dispute arises with respect to the results of the analyses of Dakota. Coteau shall be given copies of all analyses made by Dakota and Coteau shall have the right to have a representative present at any and all times to observe the sampling and analyses performed by Dakota.
If any dispute arises with respect to the results of the analyses of Dakota, an analysis of the second part shall be made by an independent commercial testing laboratory mutually chosen by Coteau and Dakota and the analysis of the independent commercial testing laboratory shall be controlling. The cost of the analysis made by such commercial laboratory shall be paid by Coteau and shall be included in the Cost of Production. If any dispute arises with respect to the methods of sampling or analyses performed or being performed by Dakota, Coteau shall so advise Dakota. Coteau and Dakota shall meet promptly and shall, within thirty (30) days of notice of such dispute, mutually agree upon modifications or changes in such method(s) to resolve such dispute.
Section 9.2    Weights.
The weight of the lignite sold and delivered hereunder for use at Dakota's Plants shall be determined by Coteau on scales located on the conveyors between the Primary Truck Dump and the Secondary Crusher Building at Dakota's Primary Plants or at such other location(s) mutually agreed to by the Parties; provided, however, that when Coteau's scales are inoperable, the weight of lignite sold and delivered hereunder for use at Dakota's Primary Plants and Dakota's Other Plants shall be determined by Basin Electric's and/or DGC's scales at Dakota's Primary Plants. Dakota shall be given a record of all weight determinations made by Coteau and shall have the right to have a representative present at any and all times to observe the weighing of lignite sold and delivered hereunder. If Dakota at any time questions the accuracy of the weights, Dakota shall so advise Coteau and Coteau shall permit Dakota's representatives to test and check such scales. If such tests show that any scale is inaccurate, it shall be adjusted by mutual agreement of Coteau and Dakota to an accurate condition. 
The weight of lignite redelivered by Dakota to Dakota's Secondary Plant and to Other Plants shall be determined from rail car or truck weight receipts acquired from the transportation contractor(s), or by some other method mutually agreeable to the Parties. The weight of the lignite utilized by Dakota's Primary Plants and Dakota's Other Plants shall be determined by subtracting the weight of the lignite ultimately delivered to Dakota's Secondary Plant and to Other Plants from the total lignite measured on Coteau's scales at the location(s) specified in this Section 9.2. For the weight of all lignite redelivered by Dakota to Dakota's Secondary Plant and Other Plants, Coteau shall be given a record of all weight determinations made by Dakota, and Coteau shall have the right to have a representative present at any or all times to observe the weighing of lignite delivered hereunder. If Coteau should at any time question the accuracy of the weights, Coteau shall so advise Dakota and Dakota shall permit Coteau's representatives to test and check such scales. If such tests show that any scale is inaccurate, it shall be adjusted by mutual agreement of Coteau and Dakota to an accurate condition. 
If it is determined that any scale or any other method used to weigh lignite is inaccurate, the quantities of lignite delivered hereunder during the period when such inaccuracy existed shall be adjusted pursuant to procedures agreed to by the Parties.
ARTICLE X
LOAN AND LEASE OBLIGATIONS
Section 10.1    Loan and Lease Obligations.
It will be necessary for Coteau to obtain loans and/or leases for the construction and equipping of Coteau's Mine, which shall be indebtedness or lease obligations of Coteau not guaranteed by North American Coal. 

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If Dakota so requests, Coteau shall use its best efforts to obtain long-term loans and/or long-term leases (such loans and leases and such continued or additional loans or leases as may be necessitated by replacement of or addition to Coteau's · equipment, or by the expiration of any lease of equipment to Coteau prior to the expiration of this Agreement being referred to herein collectively as the "Loans and Leases'') in amounts sufficient for the following purposes: developing, equipping and operating of Coteau's Mine, including, without limitation, (a) developing roadways, (b) constructing tipples and cleaning plants, (c) acquiring machinery and (d) maintaining working capital for operating Coteau's Mine; provided, however, that (i) the Loans and Leases and the amounts thereof must be approved by Dakota in its sole discretion and shall be made if directed by Dakota and (ii) if such Loans and Leases are not available to Coteau, or Dakota does not request that Coteau obtain the same or does not approve the same, Dakota shall assume the responsibility for obtaining the Loans and Leases for such amounts and on such terms as it shall reasonably determine to be necessary to meet the foregoing purposes. If Dakota has such responsibility, Dakota itself shall (w) provide the Loans and Leases, (x) arrange for Loans or Leases by Coteau from third persons, (y) direct Coteau to borrow or lease from third persons or (z) combine Dakota's Loans or Leases with those of third persons. If the Loans and Leases shall be arranged with third persons, Dakota shall have the right subsequently to discharge the Loans or Leases and substitute itself as lender or lessor for the balance of the term of such Loans or Leases. Any Loan or Lease provided, arranged for or directed by Dakota in the exercise of its rights under this Section 10.1 shall not be less favorable to Coteau than a Loan or Lease for the same term which could be obtained by Coteau directly. Dakota shall have the right to cause part or all of its obligations under this Section 10.1 with respect to Coteau's Mine to be performed by an Affiliate, but such performance by an Affiliate shall not relieve Dakota of its responsibility for arranging subsequent Loans and Leases for Coteau's Mine.
Section 10.2    Negative Pledge.
Coteau shall not incur any long-term debt or pledge or encumber any assets owned by it in fee or any leasehold interests which it may hold except in connection with financing which has been approved by Dakota or an Affiliate of Dakota.
ARTICLE XI
FORCE MAJEURE
Section 11.1    Force Majeure/Coteau.
In the event of strikes, labor disputes, fires, accidents at Coteau's Mine, failure of equipment, inability of Coteau to obtain necessary equipment by reason of a general short supply thereof, failure of transportation or shortage of transportation equipment, federal, state or local laws or regulations or other contingencies, whether of a like or different nature, beyond the control of Coteau and not due to its negligence, any of which contingencies prevents or interferes with the production or shipment of lignite hereunder, the shipments contracted for may, at the election of Coteau, be suspended or partially suspended as the case may require for the duration of the contingency. 
Section 11.2    Force Majeure/Dakota.
In the event of strikes, labor disputes, fires, accidents at Dakota's Plants, failure of equipment, the inability to obtain necessary equipment for Dakota's Plants by reason of a general short supply thereof, failure of transportation or shortage of transportation equipment, federal, state or local laws or regulations or other contingencies, whether of a like or different nature, beyond control of Dakota and not due to its negligence, any of which contingencies prevents or interferes with the taking of delivery of the lignite purchased hereunder at Dakota's Plants to which, under instructions of Dakota, such lignite is then currently being delivered, or which prevents or interferes with the processing of such lignite or the subsequent transportation of the product to be produced at Dakota’s Plants, or in the event that the product to be produced at Dakota’s Plants cannot be sold on an economic basis, then shipments contracted for shall, at the election of Dakota, be suspended or partially suspended as the case may require for the duration of such contingency.
Section 11.3    Idle Mine Expenses.

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Notwithstanding the suspensions of delivery of lignite provided for in Sections11.1 and 11.2 hereof, if Coteau's Mine is substantially idle during a calendar month pursuant to such Sections, or if Dakota takes no deliveries in any calendar month, Dakota shall pay to Coteau as part of the Cost of Production or otherwise reimburse Coteau for the actual out-of-pocket idle mine expenses and depreciation for such month. 
Section 11.4    Resumption After Interruption. 
Interruptions in tendering delivery or acceptance of shipments and deliveries referred to in this Article XI shall not invalidate the remainder of this Agreement, but upon removal of the cause of such interruptions, delivery shall be resumed at the rate specified herein. In the event of such interruptions, the Party immediately affected by such contingency shall, if possible, give reasonable advance notice confirmed in writing to the other Party of the extent and probable duration thereof, with sufficient detail to enable the other Party to verify the same.
ARTICLE XII
LIGNITE FEE LAND AND LEASE ACQUISITION AND MAINTENANCE
Section 12.1    Leases.
Coteau shall proceed as directed by Dakota to acquire leases or the fee title to lignite reserves within the Dedicated Lignite. Coteau shall drill said areas to the extent that Dakota determines is necessary to establish the estimated quantity and the estimated quality of lignite therein and shall provide Dakota with access to all cores and access to and copies of all logs and other records of such drilling. In its acquisition and drilling program, Coteau shall follow any guidelines stated in writing by Dakota as to terms and conditions as well as the maximum amount it may pay for fee interests or in lease rentals or in tonnage royalties and amounts to be spent for drilling, and shall keep Dakota currently advised as to the progress of such acquisition and drilling programs. Upon the request of Dakota, Coteau shall provide, at the expense of Dakota, good and sufficient evidence of the right, title and interest of Coteau in and to leases and fee title to lignite reserves within the Dedicated Lignite. As to any parcel of land, whether mineral or surface or both, which by reason of its location is within the Dedicated Lignite, if Coteau notifies Dakota of the availability of such parcel for acquisition and Dakota does not request that it be acquired, North American Coal shall be free to acquire the same for its own account in accordance with the Coal Reserve Agreement and it shall not thereafter be considered a part or portion of the Dedicated Lignite. 
Section 12.2    Recoverable Tons.
At the time Additional Dedicated Lignite is acquired by Coteau or assigned, transferred or subleased by Dakota to Coteau, Dakota and Coteau shall mutually agree as to the total quantity of economically recoverable Tons of lignite contained in such lignite reserves. If Coteau and Dakota cannot agree on the quantity of economically recoverable Tons of lignite contained within such reserves, Coteau and Dakota shall jointly select a qualified independent consultant to make a final and binding determination of such quantity.
Section 12.3    Protection of Reserves. 
Coteau, utilizing lease maintenance and payment procedures approved by Dakota in writing, agrees to make all payments due under those leases acquired by or assigned or transferred to Coteau in the Dedicated Lignite in a timely manner, not to permit any default under said leases to occur, not to surrender said leases in whole or in part without the written consent of Dakota and not to encumber, assign or sublease said leases, except in connection with financing pursuant to Section 10.1 hereof.
Section 12.4    Remedy for Failure to Protect.
If Coteau, without the written consent of Dakota, causes or permits any such lease covering lignite with a calorific content of six thousand two hundred (6,200) BTUs per pound or more, on an as-received basis, to be surrendered, terminated or cancelled prior to the expiration of its term or encumbers, assigns or subleases any such lease, (a) Coteau shall (i) at its sole expense, remove the encumbrance(s), (ii) reinstate such lease or (iii) acquire and make available a substitute lease or leases within the Dedicated Lignite which, to the reasonable satisfaction of Dakota, covers lignite of no less total BTU content than the lignite covered by any 

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such lease which was surrendered, terminated, cancelled, assigned or subleased, or (b) Coteau may, at its sole discretion, deliver to Dakota substitute lignite of no less total BTU content than the lignite covered by any such lease which was surrendered, terminated, cancelled, assigned or subleased at a per-Ton cost each month equal to the average of the Cost of Production, as defined in Section 5.2 hereof, for the twelve (12) month period preceding such month in which the substitute lignite is delivered to Dakota plus the applicable Agreed Profit. For the purposes of Subsections 12.4(a)(iii) and 12.4(b) hereof, only lignite with a calorific content of six thousand two hundred (6,200) or more BTUs per pound, on an as-received basis, shall be considered. For the activities described in Subsections 12.4(a)(ii) and 12.4(a)(iii) hereof, Coteau shall pay the acquisition costs (as hereinafter defined), drilling costs, engineering and testing costs, any increase in the annual advance engineering and testing costs and any increase in the annual advance royalty or rental payments and/or the production royalty rates. For the purposes of this Section 12.4 and Article XII hereof, the term 11 acquisition costs11 shall mean the salaries, associated overhead costs and related expenses of employees engaged in the reinstatement of any lease(s) or in the acquisition of a substitute lease(s), bonus or advance royalty for a lease(s), brokerage fees, legal and other expenses in establishing and reviewing titles, closing expenses and all drilling, exploratory, analytical and engineering costs directly related to such acquisition work. It is understood and agreed that in the event of a default by Coteau of its obligations under Section 12.3 hereof, Dakota's sole exclusive remedy shall be the enforcement of the obligations of Coteau set forth in this Section 12.4.
ARTICLE XIII
LIMITATION OF COTEAU'S ACTIVITIES
Section 13.1    Sales to Others.
Coteau shall engage in no business other than the ownership and operation of
Coteau's Mine, the sale of the products thereof and the rental of property which is owned as an incident to its mining business. Coteau shall not sell outside of this Agreement any lignite extracted from the Dedicated Lignite which would make Coteau unable to give first priority to the performance of its obligations under this Agreement, including any extensions thereof. Coteau shall notify Dakota in writing annually of the amount of lignite to be extracted from the Dedicated Lignite, if any, which it proposes to sell outside this Agreement in advance of such sale, and Dakota shall be entitled to prohibit such sale if, in the reasonable judgment of Dakota, such sale would impair Coteau's ability to perform its obligations under this Agreement including any extensions thereof. In addition to the foregoing restrictions, such sales outside this Agreement shall not without written consent of Dakota exceed two million (2,000,000) Tons per calendar year during the first ten (10) calendar years of this Agreement.
Any sale of lignite by Coteau to third parties shall be from lignite reserves within the Dedicated Lignite. All Tons of lignite sold by Coteau to third parties shall be treated as if such Tons were sold and delivered to Dakota's Primary Plants for purposes of Section 5.7 hereof. In consideration of Dakota providing the financing that has enabled and will enable Coteau to acquire equipment which Coteau has used and will use to produce and sell lignite under this Agreement and to third parties, Coteau shall pay to Dakota for each Ton of lignite sold by Coteau during the term of this Agreement to third parties a fee equal to [* * *] per Ton, which fee shall be adjusted as provided in Subsection 5.5(a) hereof. In addition, Coteau shall include in the cost of lignite sold to third parties a cost per Ton not less than the then current Cost of Production per Ton. For all Tons of lignite sold to third parties, Coteau also shall reimburse Dakota or its Affiliate a proportionate amount of the costs that Dakota or such Affiliate has incurred, and for which Dakota has not been reimbursed by Coteau, of providing financing for Coteau's Mine or for which Dakota or its Affiliates anticipate Dakota or its Affiliates will incur during the period of time that said lignite is being sold to said third parties and would not otherwise be reimbursed by Coteau.

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Section 13.2    Other Activities.
Notwithstanding the provisions of Section 13.1 hereof, it is contemplated that Coteau may provide other services to Dakota such as solid waste disposal, disposal of excess lignite fines, snow removal as well as such other services, in each instance as may be mutually agreed upon by Coteau and Dakota. It is further contemplated that Coteau shall provide said services to Dakota at a price agreed to by the Parties.
ARTICLE XIV
TERM, PREMATURE TERMINATION AND EXPIRATION OPTIONS
Section 14.1    Term.
The original term of this Agreement shall commence on the date first written above and shall expire on April 22, 2007, provided that Dakota shall have the option to extend this Agreement for up to ten (10) successive five (5) year periods by giving written notification to Coteau not less than three (3) years before the expiration of the original term or, in the case of renewal terms, eighteen (18) months before the expiration of the renewal term then in effect; provided, however, that this Agreement shall terminate upon the exhaustion of the Dedicated Lignite. The lignite covered by any particular lease shall be deemed to be exhausted upon the expiration of such lease without further right of renewal.
Section 14.2    Premature Termination.

		
	a) 
	If all of Dakota's Plants are permanently closed or if a federal, state or local law, rule or regulation is enacted or promulgated which, at the time of said enactment or promulgation, permanently prohibits or permanently prevents the mining of lignite in North Dakota, Dakota shall have the right to terminate this Agreement by giving Coteau nine (9) months' prior written notice unless Dakota is prevented from giving such prior notice by such federal, state or local law, rule or regulation in which case if Dakota so notifies Coteau in writing, this Agreement shall terminate upon the permanent closure of all of Dakota's Plants or the effective date when the mining of lignite in North Dakota is prohibited or prevented pursuant to federal, state or local law, rule or regulation as the case may be. 

		
	b) 
	If Dakota exercises its right to terminate this Agreement in accordance with Subsection 14.2(a) hereof and provided North American Coal has not exercised its put option under the Option Agreement, Coteau shall retain title to all machinery, equipment and improvements or other assets of Coteau's Mine and shall retain title to all lignite which has not been mined at the date of such termination and the acquisition cost of which has been reimbursed to Coteau by Dakota or its Affiliates. Provided that (i) Dakota has paid all amounts due hereunder including all indebtedness and lease obligations which have theretofore been incurred by Coteau pursuant to Section 10.1 hereof, (ii) Dakota has reimbursed Coteau for all Premature Termination Mine Closing Costs and (iii) Dakota has assigned to Coteau all leases for equipment, machinery and other things leased or subleased by Dakota to Coteau, then Coteau shall pay to Dakota (x) the fair market value of all machinery, equipment, improvements and other assets then at Coteau's Mine and owned by Coteau (other than surface and/or lignite lands and leases) and (y) an amount equal to the acquisition costs and carrying charges of unmined lignite for which Dakota or one of its Affiliates has reimbursed Coteau for the acquisition costs plus interest on such costs and charges at the prime rate charged from time to time by Ameritrust Company National Association, Cleveland, Ohio, from the date of reimbursement to Coteau by Dakota or an Affiliate to the time of payment by Coteau to Dakota or an Affiliate.

		
	c) 
	If Dakota exercises its right to terminate this Agreement in accordance with Subsection 14.2(a) hereof and North American Coal elects not to exercise its put option under the Option Agreement, Coteau and Dakota shall meet promptly and negotiate in good faith to determine the amount of the Premature Termination Mine Closing Costs. The Premature Termination Mine Closing Costs shall 

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be determined as though Coteau's Mine were closing on the effective date of the termination of this Agreement, regardless of  Couteau’s intention regarding the future operation of Coteau’s Mine. If within six (6) months following the commencement of such negotiations the Parties are unable to agree on the amount of any such Premature Termination Mine Closing Costs, the Parties shall mutually select disinterested mining engineers, appraisers, actuaries or other qualified experts on the issues in controversy to determine the amounts of all such disputed mine closing costs. The determination of such experts shall be binding on the Parties.
[* * *]
Section 14.3    Expiration.
In the event of the expiration of this Agreement other than as provided in Section 14.2 hereof, and provided that Dakota has not exercised its rights as provided in Section 14.4 hereof, Dakota shall pay all sums then due to Coteau hereunder and shall expressly assume in writing the primary obligation to pay all remaining indebtedness and lease obligations incurred by Coteau with respect thereto to acquire all machinery, equipment and improvements or other assets (other than lignite lands) held by Coteau in connection with Coteau’s Mine. Coteau shall execute and deliver to Dakota appropriate deeds, assignments, bills of sales and other instruments of transfer without further payment by Dakota. Any expense, including sales or transfer taxes, in connection with such transfer shall be paid by Dakota.
Notwithstanding the foregoing paragraph, Coteau shall have the right to retain title to all or any specified items of such property as shall be specified in writing by notice to Dakota upon payment to Dakota in cash of the fair market value of the property so retained or the amount of liens or lease rentals owing thereon, whichever is greater.
Dakota shall have no right to acquire Coteau’s lignite reserves or surface lands which were owned by it or North American Coal or an Affiliate of North American Coal prior to October 1, 1971.
Coteau shall be entitled to retain the lignite which has not been mined at the date of such termination and the acquisition cost of which has been reimbursed to Coteau by Dakota or its Affiliates upon payment to Dakota of an amount equal to the acquisition costs and carrying charges for such lignite plus an amount equal to interest on such costs and charges at the prime rate charged from time to time by Ameritrust Company National Association, Cleveland, Ohio, from the date of reimbursement to Coteau by Dakota or its Affiliates to the time of payment by Coteau to Dakota or its Affiliates. This right shall apply to all but not part of such lignite.
All lignite lands, the acquisition costs and carrying charges of which were paid by Dakota or its Affiliates which are not retained by Coteau as hereinabove provided in the foregoing paragraph, shall be transferred to Dakota by quitclaim deeds or assignment of leases without recourse, and Dakota shall pay only the expense, including transfer taxes, of such transfer.
Section 14.4    Exercise of Option for Escrowed Stock.
Provided that Dakota has not exercised any of its rights under Section 14.2 hereof, upon the expiration of the original term of this Agreement or expiration of any renewal term of this Agreement, as the case may be, Dakota may exercise its right, pursuant to the Option Agreement, to cause the transfer of the Escrowed Stock to Dakota. To exercise said right, Dakota shall give written notice to Coteau with a copy to the escrow agent under the Option Agreement not less than three (3) years before the expiration of the original term or, in the case of renewal terms, eighteen (18) months before the expiration of the renewal term then in effect and shall otherwise comply with the terms and conditions of the Option Agreement.

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ARTICLE XV
FEDERAL GOVERNMENT PROVISIONS
Section 15.1    Buy American.
Coteau agrees that no funds advanced by Dakota or any of its Affiliates directly or indirectly to Coteau for development of Coteau's Mine shall, without the approval of Dakota, be used to acquire (a) unmanufactured articles, materials or supplies as have been mined or produced outside the United States, or (b) manufactured articles, materials or supplies mined, produced or manufactured outside the United States or manufactured inside the United States substantially all from articles, materials or supplies mined, produced or manufactured, as the case may be, outside the United States.
Section 15.2    Historic Preservation.
Coteau shall not, without the approval of Dakota, use any funds advanced directly or indirectly by Dakota or any of its Affiliates for the development of Coteau's Mine to construct any facilities which will involve any district, site, building, structure or object which is included in the National Register of Historic Places, maintained by the Secretary of the Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act. 
Section 15.3    Nondiscrimination.

		
	a) 
	Coteau shall not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. Coteau shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex or national origin. Such action shall include but not be limited to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. Coteau shall post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.

		
	b) 
	Coteau shall, in all solicitations or advertisements for employees placed by or on behalf of Coteau, state that all qualified applicants shall receive consideration for employment without regard to race, color, religion, sex or national origin.

		
	c) 
	Coteau shall send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, with respect to Coteau's Mine, a notice to be provided advising the said labor union or workers' representative of Coteau's commitments under this Section 15.3 and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

		
	d) 
	Coteau shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor to the extent applicable to Coteau.

		
	e) 
	Coteau shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations and orders of the Secretary of Labor applicable thereto or pursuant thereto, and shall permit access to its books, records and accounts by the Rural Electrification Administration and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders.

		
	f) 
	In the event of Coteau's noncompliance with the nondiscrimination clauses of this Agreement or with any of the said rules, regulations or orders referred to above, this Agreement may be cancelled, terminated or suspended by the U.S. Department of Labor in whole or in part and Coteau may be declared ineligible for further government contracts or federally assisted construction contracts in 

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accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and. remedies invoked as provided in the said Executive Order or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law.
		
	g) 
	Coteau shall include the provisions of paragraphs (a) through (g) of this Section 15.3 in every subcontract or purchase order for construction work which is paid for in whole or in part with funds advanced directly or indirectly to Coteau by Dakota or an Affiliate, unless exempted by rules, regulations or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order 11246, dated September 24, 1965, so that such provisions will be binding upon each such subcontractor or vendor. Coteau shall take such action with respect to any subcontract or purchase order as the U.S. Department of Labor may direct as a means of enforcing such provision, including sanctions for noncompliance; provided, however, that in the event Coteau becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by such agency, Coteau may request Dakota or an Affiliate and the United States to enter into such litigation to protect the interests of Dakota and the United States.

		
	h) 
	In employing persons to carry out this Agreement, Coteau shall take affirmative action to employ and advance in employment qualified handicapped individuals as defined in Section 7(a) of the Federal Rehabilitation Act of1973 and qualified veterans covered by the Vietnam Era Veterans Readjustment Act of 1974 when applicable.

ARTICLE XVI
GENERAL
Section 16.1    Effect of Waiver.
Waiver by either Party of any breach by the other Party of any of the terms and provisions of this Agreement shall not be deemed to be a waiver of breach on any other occasion of the same, nor a waiver of breach of any other term or condition. No course of dealing by either of the Parties shall operate as a waiver of any rights in respect to this Agreement. No delay or omission on the part of either Party in exercising any right in respect to this Agreement shall operate as a waiver of such right or any other right hereunder.
Section 16.2    Arbitration.
A dispute between the Parties arising out of Section 4.3 hereof shall be tried by arbitration pursuant to the Rules of the American Arbitration Association in effect at the time of such arbitration, with the exceptions, as hereinafter provided for. The request for arbitration shall be in writing, setting forth in detail the claim or claims to be arbitrated, the amount involved, if any, and the remedy sought. It shall be delivered to the other Party within ninety (90) days of the date of the first knowledge of the claiming Party of the occurrence or conditions giving rise to the dispute. Any failure to request arbitration within such ninety (90) day period shall be deemed a waiver of the right to arbitrate the dispute. Within fifteen (15) days after the delivery of the request, the Parties shall agree upon an arbitrator. If the Parties are unable to agree upon the arbitrator within such fifteen (15) days, the arbitrator, who shall be an expert in the field of knowledge wherein the controversy lies, shall be selected by the Senior Judge of the United States Court of Appeals for the Eighth Circuit. The decision of the arbitrator shall be limited to selecting either the position and remedy stated by the Party in its request or the position and remedy stated by the other Party in its response to such request. The arbitrator shall have no power to mediate or compromise any dispute, but shall have only the limited authority herein provided to review the information presented by the Parties and to select the position and remedy proposed by one of the Parties. The award of the arbitrator shall be binding upon the Parties.
It is mutually understood that the existence of a dispute which has or may become the subject of an arbitration shall in no way excuse either Coteau or Dakota from performing its obligations under Section 4.3 hereof, and each of the Parties hereto shall continue to perform in accordance with the terms of this Agreement irrespective of the existence of any such dispute.

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Section 16.3    Assignment.
This Agreement shall not be assigned by either Party without the written consent of the other Party except that either Coteau or Dakota may assign its interest in this Agreement either in connection with the merger, consolidation or sale of substantially all the assets of the assigning Party or under their respective mortgages or indentures to finance any of Coteau's Mine or Dakota's Plants. Any such permitted assignment shall not relieve the assignor of its obligation hereunder.
Section 16.4    Conduct of Operations.
Coteau shall conduct its mining operations hereunder in a careful, good and workmanlike manner according to the best mining practices prevalent in the field. Coteau shall also use its best efforts to operate Coteau's Mine in accordance with the laws, rules and regulations of all applicable federal, state and local governments, or their instrumentalities, if any, relating to mining operations and using of mining premises; provided, however, that Coteau shall have the right to contest in good faith through appropriate legal proceedings the validity or applicability of any such law, rule or regulation so long as Coteau gives Dakota prompt written notice of such proceedings and so long as the exercise of such right does not result in excessive additional costs or does not result in the closure of Coteau's Mine or a substantial portion thereof.
Section 16.5    Right of Inspection.
Dakota or its Affiliates, as Dakota's designees, shall upon reasonable notice have the right and privilege at any time of entering Coteau's Mine in order to inspect or survey the same and Dakota may designate a permanent representative for such purpose; provided, however, that the exercise of such rights shall not interfere with the operation of Coteau's Mine. Coteau shall implement the written recommendations made by Dakota pursuant to written notice in accordance with Section 16.13 hereof with respect to Coteau's mining operations; provided, however, that such suggestions or recommendations are consistent with sound engineering and design practices and in accordance with applicable laws, rules and regulations, unless Coteau shall have responded in writing to Dakota setting forth the reasons for not implementing such recommendations and such reasons must be based on prudent management practices.
Section 16.6    Insurance.
Coteau shall obtain and maintain insurance, to the extent available, with such coverage and of such types, limits and amounts as may be from time to time required and approved by Dakota, including but not limited to public liability, fire insurance with extended coverage and additional extended coverage, insurance covering physical damage to equipment and mine restoration.
Section 16.7    Third Party Beneficiaries.
Coteau and Dakota acknowledge and agree that this Agreement is intended to directly benefit the Affiliates of Dakota, including Basin Electric and DGC, and the Affiliates of Coteau, including North American Coal, which are third party beneficiaries to this Agreement.
Section 16.8    Table of Contents and Headings.
The table of contents, titles and headings of the Articles and Sections of this Agreement have been inserted for the convenience of reference only, are not to be considered part hereof and shall in no way modify or restrict the meaning of the terms or provisions hereof. As used herein, any gender shall include any other gender, the singular shall include the plural and the plural shall include the singular, wherever appropriate.
Section 16.9    Governing Law.
This Agreement and the rights and obligations of the Parties to this Agreement shall be governed and construed in accordance with the laws of the State of North Dakota.
Section 16.10    Amendments.
This Agreement may not be amended, except in each instance pursuant to a written document executed by the Parties.
Section 16.11    Representations and Warranties.

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	a) 
	Coteau represents and warrants to Dakota that: (i) Coteau is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio qualified to do business in the State of North Dakota, (ii) the execution and delivery of this Agreement by Coteau and the performance of its obligations hereunder have been duly authorized by all requisite corporate action, (iii) neither the execution and delivery of this Agreement nor the performance of its obligations hereunder by Coteau shall, or after the lapse of time or with the giving of notice shall, conflict with, violate or result in a breach of, or constitute a default under the Articles of Incorporation or Regulations of Coteau or any law, statute, rule or regulation applicable to it, or except as set forth in that certain letter agreement dated August 3, 1990 among the Parties, North American Coal and Basin Electric conflict with, violate or result in a breach of or constitute a default under any material agreement to which it is a party or by which it or any of its properties is bound, or any judgment, order, award or decree to which Coteau is a party or by which it is bound, or, except as set forth in Section 16.15 hereof require any approval, consent, authorization or other action by any court, governmental authority or regulatory body or any creditor of Coteau or any other person or entity and (iv) this Agreement constitutes a valid and binding obligation of Coteau and this Agreement is enforceable against Coteau in accordance with its terms.

		
	b) 
	Dakota represents and warrants to Coteau that: (i) Dakota is a corporation duly organized, validly existing and in good standing under the laws of the State of North Dakota, (ii) the execution and delivery of this Agreement by Dakota and the performance of its obligations hereunder have been duly authorized by all requisite corporate action, (iii) neither the execution and delivery of this Agreement nor the performance of its obligations hereunder by Dakota shall, or after the lapse of time or giving of notice shall, conflict with, violate or result in the breach of, or constitute a default under the Articles of Incorporation or Bylaws of Dakota or any law, statute, rule or regulation applicable to it, or except as set forth in that certain letter agreement dated August 3, 1990 among the Parties, North American Coal and Basin Electric conflict with, violate or result in the breach of or constitute a default under any material agreement to which it is a party or by which it or any of its properties is bound, or any judgment, order, award or decree to which Dakota is a party or by which it is bound, or except as set forth in Section 16.15 hereof require any approval, consent, authorization or other action by any court, governmental authority or regulatory body or any creditor of Dakota or any other person or entity and (iv) this Agreement constitutes a valid and binding obligation of Dakota and this Agreement is enforceable against Dakota in accordance with its terms.

Section 16.12    Counterparts. 
This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.
Section 16.13    Notices.
Coteau and Dakota each shall appoint a designee to receive and give on behalf of Coteau and Dakota all notices and other communications required or permitted under this Agreement.
Except as otherwise expressly stated in this Agreement, any such notice or other communication shall be in writing to the other Party and shall be deemed to have been duly given when delivered in person or posted by United States registered or certified mail, with postage prepaid, addressed to the designated representatives of Coteau and Dakota as follows:
a) To Coteau:
The Coteau Properties Company 
P.O. Box 1089 
Beulah, ND  58523 

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Attention: President

with copies to:

The Coteau Properties Company 
2000 Schafer Street 
Box No. 5500 
Bismarck, ND 58502-5500 
Attention: Chairman 

and

The North American Coal Corporation 
13140 Coit Road 
Suite 400 
Dallas, TX 75240-5784 
Attention:  President and 
       Chief Executive Officer 

		
	b)
	To Dakota: 

Dakota Coal Company 
1600 East Interstate Avenue Bismarck, NO 58501-0561 Attention: Vice President and Chief Operating Officer

c) To such other address or addresses as the Parties may from time to time
designate in writing.
Section 16.14    Prior Agreement.
Coteau and Dakota, as assignee of ANG’s rights, interests and obligations under the Coal Sales Agreement, hereby agree that, effective as of the date hereof, the Coal Sales Agreement is hereby terminated and shall be of no further force and effect; provided, however, that Section 5.6 and Section 5.7 of the Coal Sales Agreement are not terminated hereby but shall survive such termination hereunder and shall remain in full force and effect until such time as the Coal Reserve Agreement is of no further force and effect; and provided further, however, that any and all liabilities and obligations of Coteau, ANG and Dakota under the Coal Sales Agreement which have accrued prior to such termination are not terminated hereby but shall survive such termination.
Section 16.15    REA Approval.
The effectiveness of this Agreement is subject to the approval of the Administrator of the Rural Electrification Administration, United States Department of Agriculture, or his designee.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed on their behalf by their respective authorized representatives as of the day first written above.
THE COTEAU PROPERTIES COMPANY

By:

/s/ H. D. Jacot
Chairman

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ATTEST:

/s/ Thomas A. Koza
Secretary

DAKOTA COAL COMPANYY

By:

/s/ Robert L. McPhail
President and Chief
Executive Officer

ATTEST:

/s/ Signature Illegible
Secretary

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Exhibits A - I
[* * *]

* * * Confidential Treatment Requested

32

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