AGREEMENT

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Exhibit 10.19

DECKER COAL COMPANY

        THIS AGREEMENT, made as of the first day of September, 1970, by and among Western Minerals, Inc., an Oregon Corporation, hereinafter referred to as "Western"; Wytana, Inc., a Delaware corporation, hereinafter referred to as "Wytana"; Montana Royalty Company, Ltd. (a limited partnership between Resource Development Co., Inc., a Washington Corporation, and Rosebud Coal Sales Company, Wyoming Corporation, as general partners, Peter Kiewit Sons' Co., a Nebraska Corporation, and Big Horn Construction Company, a Wyoming Corporation, as limited partners); and Peter Kiewit Sons', Inc., a Nebraska Corporation:

WITNESSETH

        WHEREAS, Montana Royalty Company, Ltd. (hereinafter referred to as "Montana Royalty") owns or has the right to acquire coal leases or coal deposits on lands, all situated near Decker, Montana, including the areas described in the attached Exhibit "1" and shown on the sketch map attached hereto as Exhibit "2" as Areas A and B, said leases and coal deposits being hereinafter referred to as the "Decker Properties"; and

        WHEREAS, Wytana and Western (hereinafter sometimes referred to as the parties) desire to undertake the development of the Decker Properties for the purpose of engaging in the business of developing, mining and selling the coal therein; and

        WHEREAS, Peter Kiewit Sons', Inc., desires to undertake the duties of managing the developing, mining and selling of the coal from the Decker Properties on behalf of Wytana and Western;

        NOW, THEREFORE, the parties hereto mutually agree as follows:

        1.     The Decker Coal Company.     Western and Wytana hereby create the Decker Coal Company (hereinafter sometimes referred to as "Decker Coal"), a joint venture, for the purpose of mining and selling coal from the properties known as the Decker Properties. Decker Coal shall be a joint venture, which is owned by Western and Wytana (hereinafter sometimes referred to as venturers) as equal venturers. Decker Coal shall either purchase or lease the improvements, machinery and other equipment necessary to commence and fully operate and mine the Decker Properties. Surface rights deemed necessary for the operation of Decker Coal shall be purchased or leased by Decker Coal from the owners of such rights upon terms and for prices to be agreed upon.

        2.     Lease From Montana Royalty.     Montana Royalty shall lease, sublease or assign to Decker Coal all of the coal reserves comprising the Decker Properties and held or to be held by Montana Royalty in consideration of the payment by Decker Coal of all royalties and overriding royalties (including but not limited to a 5¢ per ton overriding royalty payable to Rosebud Coal Sales Company on all coal mined from area B), taxes, insurance or other expenses incurred as a result of holding or operating the Decker Properties plus the following royalty or overriding royalty:

        (a)   with respect to federal coal leases, the maximum overriding royalty which, when added to the underlying royalty pertaining to that lease, does not cause the cumulative royalties pertaining to such lease to exceed the maximum permissible cumulative royalties applicable to that federal coal lease; and

        (b)   with respect to non-federal coal leases or deposits, a royalty or overriding royalty which when added to the underlying royalty, if any, pertaining to that lease or deposit causes the cumulative royalties to equal the higher of maximum cumulative royalties pertaining to any federal

 

lease in either the states of Wyoming or Montana having the then highest cumulative royalties, or the highest cumulative royalties charged by lessors and sublessors to coal operators, as determined by recent transactions in the states of Wyoming or Montana.

        (c)   Such royalty or overriding royalty to be paid by Decker Coal to Montana Royalty shall be determined annually on July 1 of each year, and shall be payable with respect to the year ending on the next succeeding June 30.

        Any and all royalties paid to Montana Royalty, or any other person, by Decker Coal shall be considered an operating expense of Decker Coal. The execution of this Agreement by Montana Royalty is for the sole and exclusive purpose of committing itself to convey the Decker Properties to Decker Coal as provided in this paragraph 2 and paragraph 3 and for no other purposes; and Montana Royalty shall not be deemed to be a co-venturer in Decker Coal.

        3.     Lessor Approval and Consent.     Western, Wytana and Montana Royalty either directly or through their affiliates shall immediately take such steps as may be necessary to apply for and seek to obtain the consent or approval of lessors of coal leases or lands held by Montana Royalty and leased, subleased or assigned to Decker Coal so as to effect such conveyances of Montana Royalty's interest in said leases or lands to Decker Coal, and each party shall cooperate with the other in seeking to obtain such consents or approvals.

        4.     Capital.     Western and Wytana hereby agree to contribute to Decker Coal the necessary capital to enable it to purchase and/or lease the equipment and facilities necessary to carry out the purposes of Decker Coal. Western and Wytana shall be given credit as a contribution to Decker Coal the costs incurred by each such party on behalf of Decker Coal prior to the execution of this Agreement. These costs shall be agreed upon and the deficient party will contribute to Decker Coal the money necessary to equalize the interests of the venturers, within sixty (60) days after the execution of this Agreement. Each venturer in Decker Coal further agrees that it will contribute 50% of the working cash capital of Decker Coal, to be deposited as provided for in paragraphs 12 and 17 hereof, and from time to time thereafter contribute fifty percent (50%) of such additional cash or other property and equipment as may be necessary to carry out the purposes of Decker Coal; provided that the failure of one venturer to make additional contributions of cash or other property and equipment for any reason may excuse the other venturer from making its contribution until such time as the first venturer's failure is cured; or such other venturer may make its contribution in addition to the contribution of the failing venturer, and until the capital contributions again become equal, the interest in profits of the venturer making an unequal contribution, for any period of unequal contribution in excess of 15 days, shall be adjusted in proportion to such venturer's interest in the total venture capital, provided however, that notwithstanding the additional contribution both venturers shall share losses equally. All contributions to Decker Coal shall be treated as contributions to capital and not as loans.

        5.     Limit of Participation.     This Agreement between the parties shall be limited solely to the creation of the Decker Coal Company joint venture, and shall be limited solely to the development of the Decker Properties and the conduct of mining operations to produce and sell coal therefrom in accordance with the terms of this Agreement. This Agreement shall be construed for the sole purpose of creating a joint venture for the purposes set forth herein and nothing herein shall be construed to create a general partnership between the parties, or their affiliates, for any other purpose or to authorize any party to act as agent for any other party except as herein provided, or to permit any party to undertake the development of any other property on behalf of the other parties, or to permit any party to undertake the conduct of any other business on behalf of the other parties, or to create a "mining partnership" as defined in Montana Rev. Code Chapter 63-1001 et seq .

        Each party recognizes that the other party, or a corporation or corporations affiliated with such other party, has interests in coal resources other than the Decker Properties, and nothing in this Agreement shall be deemed in any way to apply to such other coal resources. The parties, on behalf of themselves and their affiliates, agree that such coal resources may be developed or the coal therefrom

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disposed of as the owner thereof may in its sole discretion determine and each shall be free to develop or dispose of such other coal resources without obligation to the other.

        No party shall have the right to borrow money or incur obligations on behalf of Decker Coal, to use the credit of any other party or of the venture hereby created, for any purpose, or to pledge, assign, or otherwise encumber the assets of the venture, except as herein provided, without the prior written consent of the other party; provided, that any party may place a lien on its interest in the venture as security for indebtedness incurred by such venturer for the purpose of providing all or a portion of its share of the capital requirements of the venture.

        6.     Term and Termination.     

        (a)   The term of this Agreement and the Decker Coal Company venture shall be for a period of 30 years or until the coal resources of the Decker Properties have been fully mined or until the parties mutually agree to terminate the venture and this Agreement, whichever event shall first occur. The chief executive officers of the parties or their representatives shall meet prior to the expiration of each succeeding five year period during the continuance of this Agreement for the purpose of determining whether to terminate the venture and this Agreement.

        (b)   Upon termination or this Agreement whether or not prior to the time that the coal reserves are fully exhausted, such reserves remaining, if any, shall be distributed to the venturers in the same proportion as they shared in the venture profits of Decker Coal Company immediately prior to the termination. The reserves shall be held by the parties as tenants in common, until they can be equitably divided or disposed of as may be mutually agreed. In the event that the venturers cannot mutually agree as to the disposal of the venture reserves, equipment, and improvements, within a period of sixty (60) days from the date of termination, the following procedures shall be utilized: Each venturer shall select an appraiser of its choice who is a member of the Appraisal Institute (MAI) and each appraiser shall promptly arrive at an appraised value of each venturer's interest in the properties, and the results of each appraisal shall be disclosed to each venturer. For a period of 30 days from the rendering of the last appraisal each party shall be given the right to submit a sealed bid to purchase the interest of the other. Each sealed bid shall be delivered to the Trust Department, Denver United States National Bank, and shall be opened at a mutually agreeable time and the high bidding venturer shall purchase the interest of the other venturer, in cash, for the bid price within 30 days from the opening of the bids. If neither venturer submits a bid the venturers hereby agree to sell the venture property to third parties upon the best obtainable terms and prices.

        7.     Interest in Capital, Income and Expenses.     The interest of the venturers in and to (a) the Decker Properties; (b) the coal mined by Decker Coal from the Decker Properties and the proceeds of sale of such coal, as well as the properties and equipment acquired in connection with the development thereof, and any and all assets of Decker Coal; (c) the obligations and liabilities of Decker Coal in connection with the development of the Decker Properties and the conduct of the operations of said entity; and (d) the gross income, expenses and net income or losses incurred in connection with Decker Coal, shall be equal except as provided in Paragraph 4.

        8.     Right to Purchase Coal.     In the event of termination of all mining operations in the Acme Area of Wyoming by the Big Horn Coal Company, a wholly-owned subsidiary of Peter Kiewit Sons', Inc. (PKS), or the reduction in mining in such area to below 400,000 tons per year, if such termination or reduction is as the result of the exhaustion of coal reserves controlled by Big Horn or the inability of Big Horn to continue to mine said reserves at a profit, PKS is hereby given the right to designate one of its subsidiaries who shall have the right to purchase coal from Decker Coal in an amount not to exceed 400,000 tons of coal per year for the remainder of the term of this Agreement, at a price to be agreed upon by the parties, for the purpose of selling coal to those present customers of Big Horn listed on Exhibit 3 hereto. The price at which such coal shall be purchased shall reimburse Decker Coal for its total direct and indirect costs incurred and allocable to such coal, in mining and

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preparing such coal for shipment. Such price shall also be fixed at a level to allow a 15% return (after Federal income tax) on the capital invested by the venturers in Decker Coal. "Capital invested" is defined as the venturers' equity at the end of the preceding calendar year to be taken from the certified accountants' report as of December 31 of each year. In the event that such price does not enable Decker Coal to fully obtain the benefits of percentage depletion, then PKS or the designated subsidiary shall pay directly to Western an amount which will equal, after income taxes, the lost benefit of percentage depletion.

        9.     Management Committee.     Overall executive supervision, control and management of Decker Coal Company shall be vested in a Management Committee, the members of which are to be appointed as follows: Three members to be selected by Western and three members to be selected by Wytana. In the event that a member of the committee is unable to perform his duties, and such member was appointed by Wytana or Western, such entity appointing said member shall be given the right to appoint a replacement. No decision with regard to the operation of Decker Coal regarding the development of the Decker Properties, construction of improvements, mining operations, reclamation plans, acquisition of equipment or property, or sales or other disposition of coal mined by Decker Coal shall be made except by and through the Management Committee (other than as provided for in Paragraph 21 hereof); provided, however that the sale, lease or other disposition or right to use equipment or property of Decker Coal shall not be made by the Management Committee without the written consent of the parties. The Management Committee will establish guidelines and/or procedures to govern the activities and permissible scope of authority of Decker Coal and the Manager (see Paragraph 10 hereof) and within these guidelines and/or procedures, the Manager may make such decisions as may be consistent with this Agreement without approval of the Management Committee. The appointment of representatives by Western and Wytana to the Management Committee shall be made in writing and such writing shall be conclusive evidence of the appointed representative's power to act on behalf of such appointing party. The Management Committee shall meet from time to time (but no less frequently than quarterly) as it shall determine in order to act on all necessary matters pertaining to Decker Coal. All decisions relating to the activities of Decker Coal shall be arrived at solely upon the consent of the majority of the Management Committee.

        In the event that the Management Committee is unable to arrive at a consensus and a majority upon a particular matter, the six members of, the Committee agree to appoint a seventh member, who is experienced in the matter which has not been resolved by the other six members. In the event the six members are unable to unanimously agree on the seventh member, the Management Committee shall attempt to unanimously agree upon a method by which to break the deadlock. In the event the six members are unable to agree upon such a method which breaks the deadlock within a period of thirty days, the representatives of Western and Wytana shall each place in a hat, two names of people who are experienced in the matter to be resolved, with one of the four names to be drawn from said hat, that person to act as the seventh member. The seventh member shall serve on the Management Committee solely for the purpose of consulting and advising the Management Committee as to the proper course to be followed. In the event that the six members of the Management Committee are still deadlocked, the seventh member shall be given the right to vote in order to break the tie. Immediately thereafter, the seventh member shall cease being a member of the Management Committee. The seventh member selected by the Management Committee or the four persons whose names are to be placed in a [illegible] in accordance with the above procedure shall not be employees of any of the parties or corporations or entities which are affiliated with any of the parties.

        10.     Decker Coal Management.     

        (a)   The parties hereto hereby designate Peter Kiewit Sons', Inc. (PKS) as the Manager of Decker Coal. The Manager shall have the responsibility of seeing to it that Decker Coal performs its mining operation and performs reclamation work as may be directed by Western under Paragraph 11 hereof, that Decker Coal maintains the buildings and equipment used in connection with the mining operation, that all necessary personnel are hired and that operating and

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maintenance expenses are paid for, including labor, payroll, fuel, water, power, materials and supplies. The Manager shall appoint a General Manager, subject to the prior approval of the Management Committee, who, subject to the direction of the Manager and the Management Committee, shall have general responsibility for administering this Agreement and supervising the mining, sale and delivery of the coal mined. The Manager shall cause Decker Coal to employ or employ a mining superintendent, a competent engineer, office manager, technical personnel, foremen and workmen as necessary to mine the Decker Properties in a good and workmanlike manner and in accordance with sound mining practices at the lowest reasonable cost, and shall hire and supervise such sales personnel as may be reasonably required to sell the coal for the best prices and upon the best terms as are obtainable. All persons employed in the operation and maintenance shall be the employees of Decker Coal. The Manager shall have the primary responsibility for negotiating any contract entered into with a union, or unions, in accordance with the provisions of applicable state and federal laws. The Manager shall see to it that Decker Coal complies with all federal and state laws, regulations and rules pertaining to fair employment practices and shall see to it that all sums due employees, governmental or other agencies are paid promptly and shall not permit Decker Coal to have any labor claims becoming liens against the property it owns or leases other than claims that are being contested in good faith. The Manager shall develop and sponsor and see to it that Decker Coal implements an adequate safety program for the protection of personnel and equipment. The Manager shall also see to it that good housekeeping shall be practiced, that the fire protection system is regularly tested, and that Decker Coal develops a program to train personnel in expeditiously controlling fires.

        (b)   The Manager with the prior approval of the Management Committee agrees to provide the same fringe benefits to the non-union employees of Decker Coal as the Manager offers to all its own non-union employees, with the cost thereof to be borne by Decker Coal.

        (c)   The Manager at all times shall supervise and be responsible for (subject to the direction of the Management Committee) the mining, production, sale and delivery of coal, and shall keep the Management Committee at all times advised as to the operations of Decker Coal in such detail as is requested.

        (d)   PKS may unilaterally resign as the Manager, at any time, upon giving 180 days prior notice and any transfer by Wytana under Section 20 (f) hereof shall be deemed to be a resignation by PKS upon the effective date of such transfer. Further, in the event that PKS fails as the Manager to see to it that Decker Coal performs in a manner meeting the requirements of any coal sales or disposition contracts which it has entered into so that with reasonable probability it may come into default thereunder or, alternatively, if PKS or its subsidiaries are in default under any agreement secured by its interest in Decker Coal (and fails to remedy such default within fifteen (15) days after written notice of such default is given by Western to PKS), PKS shall, upon demand by Western, cease being the Manager; provided, however, that the right to remove PKS as Manager shall not be effective if the act causing the alleged default of PKS was committed or participated in by Western by way of actions jointly taken or decisions jointly made by Western and PKS or the Management Committee, or by Western alone or in conjunction with another person. Upon PKS resigning or being removed as Manager, the Management Committee shall meet, as soon as is practical, for the purpose of selecting a new Manager to act under the terms of this Agreement. Upon PKS resigning or being removed as Manager, PKS and corporations affiliated therewith shall be ineligible to be selected as Manager for three (3) years from the date of such default or removal.

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        (e)   Not later than the twentieth (20) day of each month, PKS shall furnish to the Management Committee a job cost report showing the results of the prior month's activities of Decker Coal, and promptly after the end of each calendar year, shall provide to the venturers a certified financial statement of Decker Coal, including a balance sheet and a statement of profit and loss, for the preceding year; said financial statements to be prepared in accordance with decisions reached by the Management Committee and within generally accepted accounting principles. Additionally, the Manager shall cause to be prepared the necessary income tax returns, both state and federal, as well as any other tax return which must be filed by Decker Coal, and shall submit such returns to the Management Committee for its approval prior to their being filed.

        11.     Reclamation.     Subject to the authority of the Management Committee over reclamation plans, Western shall have sole authority to supervise, control and direct all Decker Coal activities related to reclamation of stripped lands and maintenance of the environment, including the establishment of policies, representation before courts or governmental regulatory agencies, and actual implementation of such policies, except insofar as Western may, in its discretion, delegate any such activities to Decker Coal or the Manager. Any expenses incurred by Western in such activities shall be reimbursed to it by Decker Coal and Western shall account for such expenses in like manner as the Manager under Section 12 hereof.

        12.     Operation and Maintenance Expenses and Accounting.     

        (a)   The Manager will receive all its funds and deposit them in the Decker Coal bank account and will pay all its expenses for operation and maintenance by drawing drafts or checks upon the bank account. On or before the 20th day of each month, the Manager, through the General Manager, shall render to the Management Committee a statement showing for the preceding calendar month:

(i)

All operation and maintenance expenses paid or incurred by the Manager on behalf of Decker Coal during the preceding calendar month including but not limited to:

(a)

all royalties to be paid with regard to coal mined by Decker Coal, including royalties and overriding royalties to Montana Royalty;

(b)

PKS' fee provided for by Section 14 hereof;

(c)

Decker Coal's payroll (not including the General Manager and any sales personnel), including related employee benefit costs such as Social Security, taxes, unemployment insurance expenses, group life insurance, group hospitalization and medical insurance, pension funding expense, Workmen's Compensation and other insurance, paid leave, and any other fringe benefits approved by the Management Committee;

(d)

materials and supplies;

(e)

any purchased power costs or purchased water costs;

(f)

taxes;

(g)

freight costs borne by Decker Coal;

(h)

other miscellaneous costs.

(ii)

Depreciation and cost depletion.

(iii)

All proceeds from the sale of coal and miscellaneous receipts.

(iv)

The number of tons mined, sold, stockpiled and shipped.

(v)

The balance in Decker Coal bank account according to the books of Decker Coal as of the end of the calendar month.

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(vi)

Accounts receivable and accounts payable of Decker Coal as of the end of the calendar month.

Such expenses, proceeds and balances will in each case be set forth on the statement with the amounts budgeted for these items adjacent thereto for comparison purposes.

        Each venturer shall provide for payment of cash expenses by depositing in the Decker Coal bank account not later than ten (10) days after receipt of such statement a sum equal to one-half of the amount which would have been necessary to bring the balance in the Decker Coal bank account equal to $10,000 at the close of the preceding calendar month. Cash in excess of $10,000 shall be distributed to the parties monthly, or more often as may be determined by the Management Committee. In lieu of calling for monthly cash contributions by the venturers, the Management Committee may authorize short term borrowing, provided, however, that such borrowings shall not exceed $200,000.

        13.     Cash Operating and Maintenance Budgets.     A reasonable length of time prior to the commencement of continuous mining operations by Decker Coal, the Manager will submit to the Management Committee a budget of all expenditures by months until the expected date of commencement of continuous mining operations. At least six (6) months prior to the commencement of continuous mining operations, the Manager shall submit to the Management Committee a budget by months from the expected date of commencement of continuous mining operations to the next succeeding January 1. Such budget shall include proceeds from anticipated sales, operation and maintenance expenditures, capital expenditures and a statement of cash flow. Thereafter, not later than September 1 of each year during the continuation of this Agreement a similar budget of expenditures by months for the succeeding calendar year shall be prepared.

        14.     Manager's Fee.     It is the intent of the parties that the Manager's fee shall fully compensate PKS for its "off job" costs of managing Decker Coal, which costs are not otherwise borne by Decker Coal, but without profit in addition thereto. PKS agrees to design an accounting method to determine its reasonable "off-job" costs of managing the Venture. Any allocations of PKS costs shall be made pursuant to the theory that such costs should be allocated to the Venture in relation to the administrative burden placed upon PKS by the Venture. The Management Committee shall be given a full explanation of the method of determining costs and said method shall be agreeable to the Management Committee. Western, its representatives, accountants, consultants and counsel shall be given access to all reasonably necessary accounting records of PKS for the purpose of analyzing the costs to PKS of managing Decker Coal.

        During the term of this Agreement or until PKS resigns or is removed as Manager, PKS shall receive a management fee as follows:

        (a)   From September 1, 1970 to the date of first commercial shipment (as hereafter defined), $40,000 per month. Within a reasonable time after the date of first commercial shipment such fee shall be adjusted upwards or downwards to equal the costs of managing the Venture during this period if such costs exceed, or are less than, the fee paid by 15% or more.

        (b)   From the date of first commercial shipment (as hereafter defined), for five years thereafter, 7% of the gross sales price of coal (FOB mine) mined and sold by the Venture, such fee to be paid quarterly. The percentage fee for the last two years of such five year period shall be subject to adjustment upward or downward to that percentage, rounded to the nearest full percentage point, which the total costs of managing the Venture for such five years are of the gross dollar volume of sales for such period; provided that no adjustment shall be made unless the difference between such percentage, before rounding, and 7% is at least 1.0%. Such adjusted fee as demonstrated on Exhibit 4 shall be credit or charged to the next quarterly fee payment or payments due after the determination of such adjustment.

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        (c)   For each five year period thereafter, a fee to be based upon the relationship of the Manager's "off job" costs to gross dollar volume of sales for the immediately preceding five year period; provided however that said relationship may be adjusted for known past or future abnormal events.

        The "date of first commercial shipment" shall be the date on which the first shipment of coal leaves the Decker Coal mine under a coal contract in reliance upon which the venturers have committed capital in sufficient amount to acquire equipment necessary to meet the buyer's coal requirements under such contract.

        15.     Books of Account.     Decker Coal, through its Manager, shall keep books of account showing in reasonable detail all costs incurred in connection with the development of the coal field, conduct of mining operations and sale and delivery of coal or coal products and all matters pertaining to Decker Coal, at the main office of Decker Coal. Such books of account shall be kept in a manner consistent with the accounting and financial reporting procedures established and approved by the Management Committee. All such books of account and other records of Decker Coal shall be open for inspection by authorized employees of Western and Wytana, and by their respective auditors and legal counsel at all times. A periodic certified audit of such books shall be made by such national accounting firm as may be determined by the Management Committee, but no less than once a year. Additionally, the Manager shall provide to the venturers copies of federal and state partnership income tax returns, as filed for each year of operation or part thereof.

        16.     Records.     The Manager shall cause to be kept adequate records of coal mining operations as necessary to reflect the efficiency of operations and of equipment use and maintenance programs, to reflect production and delivery of coal, engineering and geological data and such other records as may be required by any governmental authority. Such records shall be made available for inspection as desired by any party hereto.

        17.     Banking.     Funds of Decker Coal, including proceeds from the sale of coal, shall be kept in a separate account designated in a manner, and deposited with a bank, to be determined by the Management Committee. Such funds may be withdrawn upon checks or drafts signed by authorized Decker Coal or Manager personnel, provided that the Manager shall not make distributions of cash to the parties without authorization of the Management Committee. The Management Committee shall designate those employees of Decker Coal and the Manager who shall have authority to draw drafts or checks on the Decker Coal bank account, which employees shall be bonded in an amount to be determined by the Management Committee. When additional funds are required to carry on the business, each venturer will deposit fifty percent (50%) of the funds required and in the event any venturer advances more than fifty percent (50%) of the additional funds required on any occasion, it shall be promptly reimbursed by the other venturer for the advances in excess of fifty percent (50%), without interest, if repaid within fifteen (15) days of request, otherwise, in addition to the change in the profit formula as provided in Section 4, interest shall run at the prime rate then prevailing for preferred commercial customers of The Morgan Guaranty Bank, New York City, New York.

        18.     Contracts for the Sale or Disposition of Coal.     Decker Coal shall enter into such contracts for the sale or disposition of coal from the Decker Properties as may be consistent with this Agreement and such authorization as may have been received from the Management Committee. Any such contracts shall be in the name of Decker Coal.

        19.     Insurance.     The Manager, on behalf of Decker Coal shall at all times:

        (a)   comply fully with the Workmen's Compensation Laws of the State of Montana;

        (b)   maintain in effect public liability and property damage insurance with such limits and subject to such exclusions and deductibles as the Management Committee may agree, naming the Manager, the venturers, their corporate parents and Decker Coal as insureds; and

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        (c)   maintain continuously in effect physical damage insurance coverage on Decker Coal properties (whether owned or leased) and properties or facilities belonging to the venturers and used by the Manager or Decker Coal in connection with all of Decker Coal's operations, naming Decker Coal, the parties, and the venturers as insureds as their interest may appear with such limits and subject to such exclusions and deductibles as the Management Committee may agree.

        20.     Assignment.     The rights of the Manager herein may not be assigned or otherwise transferred without the written consent of the venturers, other than as provided in Section 10(d) hereof. No venturer shall voluntarily sell, assign, pledge, or in any manner transfer or encumber its interest, or any part thereof, in Decker Coal without first obtaining the written consent of the other venturer thereto, except as follows:

        (a)   Pursuant to and subject to the provisions of Section 5 hereof, to any mortgagee, trustee or secured party as security for bonds or other indebtedness and to any purchaser from a mortgagee or secured party having realized upon its security by foreclosure or otherwise.

        (b)   To any corporation or entity, the majority interest in which is owned by Pacific Power & Light Company or PKS.

        (c)   By Wytana or Western to PKS or Pacific Power & Light Company respectively, or any successors thereof.

        (d)   In the event of an assignment of or transfer of Wytana's interest among PKS entities under Paragraph 20(b), (c) and (e), PKS shall remain as the Manager under this Agreement.

        (e)   To any corporation or entity into which or with which such venturer may be merged, consolidated or liquidated, provided that either PKS, Pacific Power & Light Company or any of their affiliates are the owner of a majority of the stock of the successor corporation.

        (f)    Any purchaser or assignee for cash if prior to such sale the venturer proposing such sale or assignment shall have given sixty (60) days written notice to the other venturer of a bona fide offer of the third party and such other venturer shall have not tendered the equivalent consideration on equivalent terms to the venturer intending to sell or assign within five (5) days before the expiration of such 60 day notice period. In the event the other venturer makes such a tender, the venturer desiring to sell or assign shall then sell or assign to the other party. In the event of a merger, consolidation or liquidation and PKS, Pacific Power & Light Company or any of their affiliates is not the owner of a majority of the stock of the successor, such an event shall be deemed to be an offer to sell for cash equal to the fair market value of such venturer's interest. Fair market value shall be determined by three appraisers, all of whom are members of the Appraisal Institute (MAI); one appraiser shall be appointed by each venturer, and the third shall be appointed by the two appraisers. The appraised fair market value shall be determined by the appraisers or the average value determined by the three appraisers if no one value is agreed upon. Such fair market value shall be set forth in a notice to the other venturer, and the other venturer shall have 60 days after receipt of such notice within which to accept such offer.

        Any sale, assignment, pledge, transfer or encumbrance by agreement or operation of law shall be subject to this Agreement and shall not relieve the venturer or successor of any obligation hereunder except to the extent agreed in writing by the other venturer.

        21.     Transfer or Insolvency.     Other than as provided herein, in the event of an attempted transfer, sale, assignment, pledge, encumbrance of a venturer's interest in Decker Coal or in the event of the bankruptcy or insolvency of a venturer under bankruptcy or reorganization, composition or arrangement statutes or a transfer under paragraph 20(a), or in the event of a refusal to follow and implement the provisions of Paragraph 9 above, then, from and after such date, such refusing venturer (hereinafter referred to as the "defaulting party") (anything in this Agreement to the contrary

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notwithstanding) shall cease to have any voice in the management of Decker Coal or the Management Committee. The defaulting party's interest in the capital of Decker Coal shall immediately and exclusively (paragraph 20 notwithstanding) vest, in trust, in the nondefaulting venturer. Thereafter, Decker Coal shall be managed exclusively by the nondefaulting venturer until termination as provided in Section 6. Notwithstanding the foregoing, the defaulting venturer shall remain liable to its and the creditors of Decker Coal as herein provided and shall continue to bear its share of losses and be entitled to receive its share of profits, provided, however, that the nondefaulting venturer, as trustee, may pay such profits to a proper designee of the defaulting party or to that person designated by a court of competent jurisdiction to receive such profits on behalf of the creditors of the defaulting party.

        In acting as trustee, the nondefaulting venturer shall have absolute discretion and no action taken by the trustee shall subject it to a claim for breach of trust, on the ground of conflict of interest, negligence or any other theory, except fraud or gross negligence.

        22.     Law to Govern.     The parties agree to comply with local, state and federal laws, rules and regulations applying or pertaining in any manner to the operations of Decker Coal saving to each party or venturer any right to protest or contest, any law, rule or regulation or the enforcement thereof, any party shall have the right to join in the prosecution or defense of such litigation.

        The laws of the State of Montana, as determined at the time of any dispute shall govern all matters pertaining to the validity, execution and interpretation of this Agreement.

        23.     Successors.     This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns.

        24.     Notice.     Any notice or appointment required to be given under Decker Coal shall be signed by the president or a vice president of the notifying party and given by certified or registered mail to the parties as follows:

(a)

Western Minerals, Inc.
1500 Public Service Building
Portland, Oregon 97204

Attention: C. P. Davenport, Vice President

(b)

Wytana, Inc.
P. O. Box 724
Sheridan, Wyoming 82801

(c)

Montana Royalty Company, Ltd.
1000 Kiewit Plaza
Omaha, Nebraska 68131

(d)

Peter Kiewit Sons', Inc.
1000 Kiewit Plaza
Omaha, Nebraska 68131

Attention: William L. Crewcock

        Any change in the above addresses shall be made by certified mail addressed to the other party at the above address.

        25.     Modification.     This document constitutes the sole and complete understanding of the parties with respect to Decker Coal. Any modification thereof shall not be effective until reduced to writing and signed by all of the parties hereto.

10

        IN WITNESS WHEREOF, Wytana, Western, Montana Royalty Company, by its general partners, and PKS have executed the foregoing Agreement effective as of the date and year above written.

ATTEST:		WYTANA, INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				Vice President
ATTEST:		WESTERN MINERALS, INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				President
		MONTANA ROYALTY COMPANY, LTD.
ATTEST:		By		Resource Development Co., Inc.
/s/ [ILLEGIBLE]				By		/s/ [ILLEGIBLE]
Secretary						Vice President
ATTEST:		By		Rosebud Coal Sales Company
/s/ [ILLEGIBLE]				By		/s/ [ILLEGIBLE]
Asst. Secretary						Vice President
						General Partners
ATTEST:		PETER KIEWIT SONS', INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				Vice President

11

EXHIBIT "1"

DESCRIPTION OF DECKER PROPERTIES
DECKER COAL CO.—JOINT VENTURE
DECKER AREA, MONTANA

AREA "A"

AREA "B"

EXHIBIT 3

BIG HORN COAL COMPANY —INDUSTRIAL ACCOUNTS (1967 - 1968)

DOMESTIC COAL

EXHIBIT 4

Mr. C. P. Davenport
Pacific Power & Light Company
920 S. W. 6th
Portland, Oregon 97204

Dear Ted:

        Western Minerals, Inc., an Oregon corporation, and Wytana, Inc., a Delaware corporation, created the Decker Coal Company, a joint venture, on September 1, 1970, for the purpose of mining and selling coal from the Decker Properties.

        Pursuant to said Agreement, Decker Coal assumed the payment of all royalties and overriding royalties including but not limited to a five cents (.05¢) per ton overriding royalty payable to Rosebud Coal Sales Company (Rosebud) on all coal mined from Area B, as consideration for the coal lease assignment from Montana Royalty Company, Ltd.

        However, since Rosebud is not the proper recipient of the overriding royalty payable on all of the coal lease assignments, there should be inserted, immediately after Rosebud Coal Sales Company, the names of the other record holders of the particular leases described in Area B of the Decker Properties prior to the assignment of said coal leases to Montana Royalty Company, Ltd.

        Therefore, the parenthetical clause of paragraph 2 of the Decker Agreement should read as follows:

"...(including but not limited to a 5¢ per ton overriding royalty on all coal mined from Area B, payable to Rosebud Coal Sales Company on coal leases MWRB, H1 and H2; to Peter Kiewit Sons' Co. on coal leases M-073093, 530, 822, 823 and 919; and to Big Horn Construction Company on coal leases 531 and 918)."

        If you are in full agreement with the foregoing amendment to the Decker Coal Company Agreement, please have this Letter Agreement executed in quintuplicate for and on behalf of Decker Coal Company and Montana Royalty Company, Ltd., pursuant to paragraph 25 of said Agreement.

        The foregoing amendment to the Decker Coal Company Agreement is hereby approved and accepted.

ATTEST:		WYTANA, INC.
/s/ [ILLEGIBLE]		By:		/s/ [ILLEGIBLE]
				President
ATTEST:		WESTERN MINERALS, INC.
/s/ [ILLEGIBLE]		By:		/s/ [ILLEGIBLE]
SECRETARY				Vice President
		MONTANA ROYALTY COMPANY, LTD.
ATTEST:		By:		Resource Development Co., Inc.
/s/ [ILLEGIBLE]		By:		/s/ [ILLEGIBLE]
SECRETARY				Vice President
ATTEST:		By:		Rosebud Coal Sales Company
/s/ [ILLEGIBLE]		By:		/s/ [ILLEGIBLE]
				President
				General Partners
ATTEST:		PETER KIEWIT SONS', INC.
/s/ [ILLEGIBLE]		By:		/s/ [ILLEGIBLE]
				President

2

SUPPLEMENT TO
DECKER COAL COMPANY AGREEMENT

        By this Supplement, which shall be effective from and after the 1st day of January, 1974, the parties to the Decker Coal Company Agreement dated September 1, 1970, being WESTERN MINERALS, INC., an Oregon corporation ("Western"); WYTANA, INC., a Delaware corporation ("Wytana"); MONTANA ROYALTY COMPANY, LTD. (a limited partnership between Resource Development Co., Inc., a Washington corporation and Rosebud Coal Sales Company, a Wyoming corporation, as general partners and Peter Kiewit Sons' Co., a Nebraska corporation and Big Horn Construction Company, a Wyoming corporation, as limited partners); and PETER KIEWIT SONS', INC., a Nebraska corporation ("PKS") do hereby agree that said Decker Coal Company Agreement shall be and hereby is supplemented and amended as follows:

        1.     Section 14 (Manager's Fee) of said Decker Coal Company Agreement shall be revised to read in its entirety as follows:

        "14.     Manager's Fee.     During the remaining term of this agreement or until PKS resigns or is removed as manager, PKS shall receive a management fee to compensate it for its costs of managing Decker Coal, which costs are not otherwise borne by Decker Coal, as follows:

        (a)   For the calendar year 1974, an amount equal to six percent (6%) of the gross sales price of all coal (f.o.b. mine) sold and delivered by Decker Coal Company during said calendar year;

        (b)   For the calendar year 1975, an amount equal to five percent (5%) of the gross sales price of all coal (f.o.b. mine) sold and delivered by Decker Coal Company during said calendar year;

        (c)   For the calendar year 1976, an amount equal to three percent (3%) of the gross sales price of all coal (f.o.b. mine) sold and delivered by Decker Coal Company during said calendar year; and

        (d)   For the calendar year 1977 and for each succeeding calendar year thereafter, an amount equal to twelve cents (12¢) per ton of coal sold and delivered by Decker Coal Company during such calendar year; PROVIDED, HOWEVER, that such sums shall be subject to the following adjustment: At the beginning of each calendar quarter, the basic fee of twelve cents (12¢) per ton shall be increased or decreased, using December 31, 1973 as the base period date, as follows:

        (i)    Fifty percent (50%) of twelve cents (12¢) shall be multiplied by the percentage increase or decrease, from the base period date, in the quarterly average value as determined for such calendar quarter of the Consumer Price Index, All Items (1967 equals 100) of the U.S. Department of Labor's Bureau of Labor Statistics, and

        (ii)   Fifty percent (50%) of twelve cents (12¢) shall be multiplied by the percentage increase or decrease, from the base period date, in the quarterly average value as determined for such calendar quarter of Gross Hourly Earnings of Non-Supervisory Workers on Private Non-Agricultural Payrolls, as reported in the U.S. Department of Labor's Employment and Earnings Report (Total Private).

        The total sum derived by adding the product of (i) and (ii) shall be the adjustment in the basic fee. The increase or decrease in the basic fee as computed above shall be rounded to the nearest ¹ / 10 of 1¢ per ton, or if there is no nearest ¹ / 10 , to the closest even ¹ / 10 of 1¢ per ton.

        The quarterly average value of the Consumer Price Index and Gross Hourly Earnings shall be computed for each calendar quarter from the Monthly Bureau of Labor Statistics Consumer Price Index and the Monthly Department of Labor's Employment and Earnings Report. The three monthly values shall be arithmetically averaged to determine a quarterly average value.

        (e)   Such management fee shall be paid quarterly within 30 days after the end of each calendar quarter, and shall be based on the gross sales price or quantity of coal (as may be appropriate) sold and delivered during the previous calendar quarter. PKS shall furnish the Management Committee a detailed accounting of the sales price or quantity on which such fee is based, and shall permit Western, its representatives, accountants, consultants and counsel to inspect the accounting records of Decker Coal Company for the purpose of verifying the same."

        2.     Exhibit 4 to said Decker Coal Company Agreement shall be of no further force and effect from and after January 1, 1974.

        3.     Exhibit 1 to said Decker Coal Company Agreement shall be revised to reflect the acquisition of certain coal leases which Decker Coal Company has agreed to acquire from Pacific Power & Light Company, by substitution therefor of revised Exhibit 1 as attached hereto and by this reference made a part hereof.

        IN WITNESS WHEREOF, Wytana, Western, Montana Royalty Company (by its general partners) and PKS have executed the foregoing agreement effective as of the day and year first above written.

ATTEST:		WYTANA, INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				President
ATTEST:		WESTERN MINERALS, INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				Vice President
		MONTANA ROYALTY COMPANY, LTD.
ATTEST		By		Resource Development Co., Inc
/s/ [ILLEGIBLE]				By		/s/ [ILLEGIBLE]
Secretary						Vice President
ATTEST:		By		Rosebud Coal Sales Company
/s/ [ILLEGIBLE]				By		/s/ [ILLEGIBLE]
Secretary						President
						General Partners
ATTEST:		PETER KIEWIT SONS', INC.
/s/ [ILLEGIBLE]		By		/s/ [ILLEGIBLE]
Secretary				Vice President

2

REVISED EXHIBIT "1"

DESCRIPTION OF DECKER PROPERTIES
DECKER COAL CO.-JOINT VENTURE
DECKER AREA, MONTANA

AREA "A"

AMENDMENT NO. 2
TO
DECKER COAL COMPANY AGREEMENT

        AGREEMENT, made as of this 1st day of December, 1977, between and among WESTERN MINERALS, INC., an Oregon corporation, WYTANA, INC., a Delaware corporation, MONTANA ROYALTY COMPANY LIMITED (a limited partnership between Resource Development Co., Inc., a Washington corporation, and Rosebud Coal Sales Company, a Wyoming corporation, as General Partners, Peter C. Kiewit Sons' Co., a Nebraska corporation, and Big Horn Construction Company, a Wyoming corporation, as Limited Partners), and PETER KIEWIT SONS', INC., a Nebraska corporation.

RECITALS:

        A.    The parties entered into the Decker Coal Company Agreement (the "Joint Venture Agreement"), dated as of the 1st day of September, 1970, and first amended such Agreement by a Supplement dated as of January 1, 1974.

        B.    The parties now desire to amend the Joint Venture Agreement to extend the term of the joint venture.

        The parties therefore agree as follows:

        1.     Section 6(a) of the Joint Venture Agreement shall be amended to read in its entirety as follows:

        "6(a)    The term of this Agreement and the Decker Coal Company venture shall be for a period of 35 years from the date hereof or until the parties mutually agree to terminate the venture and this Agreement, whichever event shall first occur. The chief executive officers of the parties or their representatives shall meet prior to the expiration of each succeeding 5-year period during the continuance of this Agreement for the purpose of determining whether to terminate the venture and this Agreement."

        2.     Except as modified by this second amendment, the Joint Venture Agreement, as previously amended, is hereby ratified and confirmed in all respects.

        IN WITNESS WHEREOF, the parties have executed the foregoing Agreement effective as of the day and year first above written.

		WYTANA, INC.
		By		/s/