ALLIANCE RESOURCE PARTNERS LP, S-1/A, 1999-07-20

ALLIANCE RESOURCE PARTNERS LP
S-1/A, 1999-07-20
BITUMINOUS COAL & LIGNITE SURFACE MINING

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 20, 1999

REGISTRATION NO. 333-78845
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 2 TO

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
ALLIANCE RESOURCE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 1222 73-1564280
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

1717 SOUTH BOULDER AVENUE
TULSA, OKLAHOMA 74119
(918) 295-7600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

THOMAS L. PEARSON
SENIOR VICE PRESIDENT -- LAW AND ADMINISTRATION,
GENERAL COUNSEL AND SECRETARY
1717 SOUTH BOULDER AVENUE
TULSA, OKLAHOMA 74119
(918) 295-7600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:

<TABLE>
<S> <C>
ANDREWS & KURTH L.L.P. BAKER & BOTTS, L.L.P.
600 TRAVIS, SUITE 4200 ONE SHELL PLAZA
HOUSTON, TEXAS 77002 910 LOUISIANA
(713) 220-4200 HOUSTON, TEXAS 77002
ATTN: DAVID P. OELMAN (713) 229-1234
ATTN: JOSHUA DAVIDSON
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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<PAGE> 2

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below are the expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee, the NASD filing fee and the
NYSE filing fee, the amounts set forth below are estimates:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $62,168
NASD filing fee............................................. 22,863
Nasdaq listing fee.......................................... *
Printing and engraving expenses............................. *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Transfer agent and registrar fees........................... *
Miscellaneous............................................... *
-------
TOTAL............................................. $ *
=======
</TABLE>

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* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The section of the Prospectus entitled "The Partnership
Agreement -- Indemnification" is incorporated herein by this reference.
Reference is made to Section 7 of the Underwriting Agreement filed as Exhibit
1.1 to the Registration Statement. Subject to any terms, conditions or
restrictions set forth in the Partnership Agreement, Section 17-108 of the
Delaware Revised Uniform Limited Partnership Act empowers a Delaware limited
partnership to indemnify and hold harmless any partner or other person from and
against all claims and demands whatsoever.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Alliance Resource Partners issued to Alliance Resource GP, LLC, limited
partner interests in the Partnership in connection with the formation of the
Partnership on May 17, 1999 in an offering exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended. There have been no other
sales of unregistered securities within the past three years.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a. Exhibits:

<TABLE>
<C> <S>
+1.1 -- Form of Underwriting Agreement
+3.1 -- Form of Amended and Restated Agreement of Limited
Partnership of Alliance Resource Partners, L.P. (included
as Appendix A to the Prospectus)
3.2 -- Form of Agreement of Limited Partnership of Alliance
Resource Operating Partners, L.P.
3.3 -- Form of Amended and Restated Limited Liability Company
Agreement of Alliance Resource Management GP, LLC
3.4 -- Form of Amended and Restated Limited Liability Company
Agreement of Alliance Resource GP, LLC
+3.5 -- Certificate of Limited Partnership of Alliance Resource
Partners, L.P.
+3.6 -- Certificate of Formation of Alliance Resource GP, LLC
3.7 -- Certificate of Formation of Alliance Resource Management
GP, LLC
3.8 -- Certificate of Limited Partnership of Alliance Resource
Operating Partners, L.P.
+5.1 -- Form of Opinion of Andrews & Kurth L.L.P. as to the
legality of the securities being registered
+8.1 -- Form of Opinion of Andrews & Kurth L.L.P. relating to tax
matters
</TABLE>

II-1
<PAGE> 3

<TABLE>
<C> <S>
10.1 -- Form of Term Loan Facility
10.2 -- Form of Working Capital Facility
10.3 -- Form of Revolving Credit Facility
10.4 -- Form of Note Purchase Agreement
10.5 -- Form of Contribution and Assumption Agreement
10.6 -- Form of Alliance Resource GP, LLC Long-term Incentive
Plan
10.7 -- Form of Alliance Resource GP, LLC Short-term Incentive
Plan
10.8 -- Form of Employment Agreement
*10.9 -- Restated and Amended Coal Supply Agreement, dated
February 1, 1986, among Seminole Electric Cooperative,
Inc., Webster County Coal Corporation and White County
Coal Corporation (Portions of this agreement have been
omitted based on a request for confidential treatment.
Those omitted portions have been filed with the SEC).
*10.10 -- Contract for Purchase and Sale of Coal, dated January 31,
1995, between Tennessee Valley Authority and Webster
County Coal Corporation (Portions of this agreement have
been omitted based on a request for confidential
treatment. Those omitted portions have been filed with
the SEC).
*10.11 -- Assignment/Transfer Agreement between Andalex Resources,
Inc., Hopkins County Coal, LLC, Webster County Coal
Corporation and Tennessee Valley Authority, dated January
23, 1998, with Exhibit A -- Contract for Purchase and
Sale of Coal between Tennessee Valley Authority and
Andalex Resources, Inc., dated January 31, 1995 (Portions
of this agreement have been omitted based on a request
for confidential treatment. Those omitted portions have
been filed with the SEC).
*10.12 -- Contract for Purchase and Sale of Coal, dated July 7,
1998, between Tennessee Valley Authority and Webster
County Coal Corporation (Portions of this agreement have
been omitted based on a request for confidential
treatment. Those omitted portions have been filed with
the SEC).
*10.13 -- Contract for Purchase and Sale of Coal, dated July 7,
1998, between Tennessee Valley Authority and White County
Coal Corporation (Portions of this agreement have been
omitted based on a request for confidential treatment.
Those omitted portions have been filed with the SEC).
10.14 -- Agreement for the Supply of Coal to the Mt. Storm Power
Station, dated January 15, 1996, between Virginia
Electric Power Company and Mettiki Coal Corporation
21.1 -- List of subsidiaries of Alliance Resource Partners
23.1 -- Consent of Deloitte & Touche LLP (with respect to
Alliance Resource Partners, L.P.)
23.2 -- Consent of Deloitte & Touche LLP (with respect to
Alliance Resource Management GP, LLC)
+23.3 -- Consent of Weir International Mining Consultants
+23.4 -- Consent of Andrews & Kurth L.L.P. (contained in Exhibits
5.1 and 8.1)
+24.1 -- Powers of Attorney (included on the signature page)
+27.1 -- Financial Data Schedule.
</TABLE>

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

* Filed herewith.

+ Previously filed.

(b) Financial Statement Schedules

All financial statement schedules are omitted because the information is
not required, is not material or is otherwise included in the financial
statements or related notes thereto.

II-2
<PAGE> 4

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Tulsa, State of Oklahoma, on July 20, 1999.

ALLIANCE RESOURCE PARTNERS, L.P.

By: Alliance Resource GP, LLC

its general partner

By: /s/ THOMAS L. PEARSON
----------------------------------

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED BELOW.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

* President, Chief Executive Officer July 20, 1999
- ----------------------------------------------------- and Director (Principal
Joseph W. Craft, III Executive Officer)

* Senior Vice President and Chief July 20, 1999
- ----------------------------------------------------- Financial Officer (Principal
Michael L. Greenwood Financial Officer and Principal
Accounting Officer)

* Director July 20, 1999
- -----------------------------------------------------
John P. Neafsey

* Director July 20, 1999
- -----------------------------------------------------
Preston R. Miller, Jr.

* Director July 20, 1999
- -----------------------------------------------------
John J. MacWilliams

*By: /s/ THOMAS L. PEARSON
------------------------------------------------
as Power of Attorney
</TABLE>

II-4
<PAGE> 6

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>

+1.1 -- Form of Underwriting Agreement
+3.1 -- Form of Amended and Restated Agreement of Limited
Partnership of Alliance Resource Partners, L.P. (included
as Appendix A to the Prospectus)
3.2 -- Form of Agreement of Limited Partnership of Alliance
Resource Operating Partners, L.P.
3.3 -- Form of Amended and Restated Limited Liability Company
Agreement of Alliance Resource Management GP, LLC
3.4 -- Form of Amended and Restated Limited Liability Company
Agreement of Alliance Resource GP, LLC
+3.5 -- Certificate of Limited Partnership of Alliance Resource
Partners, L.P.
+3.6 -- Certificate of Formation of Alliance Resource GP, LLC
3.7 -- Certificate of Formation of Alliance Resource Management
GP, LLC
3.8 -- Certificate of Limited Partnership of Alliance Resource
Operating Partners, L.P.
+5.1 -- Form of Opinion of Andrews & Kurth L.L.P. as to the
legality of the securities being registered
+8.1 -- Form of Opinion of Andrews & Kurth L.L.P. relating to tax
matters
10.1 -- Form of Term Loan Facility
10.2 -- Form of Working Capital Facility
10.3 -- Form of Revolving Credit Facility
10.4 -- Form of Note Purchase Agreement
10.5 -- Form of Contribution and Assumption Agreement
10.6 -- Form of Alliance Resource GP, LLC Long-term Incentive
Plan
10.7 -- Form of Alliance Resource GP, LLC Short-term Incentive
Plan
10.8 -- Form of Employment Agreement
*10.9 -- Restated and Amended Coal Supply Agreement, dated
February 1, 1986, among Seminole Electric Cooperative,
Inc., Webster County Coal Corporation and White County
Coal Corporation (Portions of this agreement have been
omitted based on a request for confidential treatment.
Those omitted portions have been filed with the SEC).
*10.10 -- Contract for Purchase and Sale of Coal, dated January 31,
1995, between Tennessee Valley Authority and Webster
County Coal Corporation (Portions of this agreement have
been omitted based on a request for confidential
treatment. Those omitted portions have been filed with
the SEC).
*10.11 -- Assignment/Transfer Agreement between Andalex Resources,
Inc., Hopkins County Coal, LLC, Webster County Coal
Corporation and Tennessee Valley Authority, dated January
23, 1998, with Exhibit A -- Contract for Purchase and
Sale of Coal between Tennessee Valley Authority and
Andalex Resources, Inc., dated January 31, 1995 (Portions
of this agreement have been omitted based on a request
for confidential treatment. Those omitted portions have
been filed with the SEC).
*10.12 -- Contract for Purchase and Sale of Coal, dated July 7,
1998, between Tennessee Valley Authority and Webster
County Coal Corporation (Portions of this agreement have
been omitted based on a request for confidential
treatment. Those omitted portions have been filed with
the SEC).
*10.13 -- Contract for Purchase and Sale of Coal, dated July 7,
1998, between Tennessee Valley Authority and White County
Coal Corporation (Portions of this agreement have been
omitted based on a request for confidential treatment.
Those omitted portions have been filed with the SEC).
10.14 -- Agreement for the Supply of Coal to the Mt. Storm Power
Station, dated January 15, 1996, between Virginia
Electric Power Company and Mettiki Coal Corporation
21.1 -- List of subsidiaries of Alliance Resource Partners
23.1 -- Consent of Deloitte & Touche LLP (with respect to
Alliance Resource Partners, L.P.)
</TABLE>

<PAGE> 7

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
23.2 -- Consent of Deloitte & Touche LLP (with respect to
Alliance Resource Management GP, LLC)
+23.3 -- Consent of Weir International Mining Consultants
+23.4 -- Consent of Andrews & Kurth L.L.P. (contained in Exhibits
5.1 and 8.1)
+24.1 -- Powers of Attorney (included on the signature page)
+27.1 -- Financial Data Schedule.
</TABLE>

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

* Filed herewith.

+ Previously filed.

<PAGE> 1

EXHIBIT 10.9

2-1-86

RESTATED AND AMENDED

COAL SUPPLY AGREEMENT

BETWEEN

SEMINOLE ELECTRIC COOPERATIVE, INC.

AND

WEBSTER COUNTY COAL CORPORATION AND

WHITE COUNTY COAL CORPORATION

<PAGE> 2

INDEX

<TABLE>
<CAPTION>
ARTICLE TITLE PAGE NO.
<S> <C>

I Terms of Agreement ......................................................................................2

II Quantity ................................................................................................2

III Source ..................................................................................................6

IV Delivery ................................................................................................7

V Price - Dotiki Mine ....................................................................................10

VI Price - Pattiki Mine ..... .............................................................................11

VII Base Price Adjustments .................................................................................12

VIII Price Review ...........................................................................................19

IX Coal Specifications, Sampling and
BTU Value Adjustments ..................................................................................24

X Cancellation, Rejection and Suspension
by Purchaser ...........................................................................................27

XI Invoicing, Payments and Interest .......................................................................29

XII Records and Review .....................................................................................31

XIII Force Majeure ..........................................................................................32

XIV Governmental Authority .................................................................................34

XV Material Default .......................................................................................36

XVI Remedies ...............................................................................................36

XVII Arbitration ............................................................................................39

XVIII Price Controls..........................................................................................41

XIX Assignment and Delegation...............................................................................42
</TABLE>

<PAGE> 3

<TABLE>
<S> <C>
XX Indemnification.........................................................................................43

XXI Equal Employment Opportunity............................................................................43

XXII General ................................................................................................44

XXIII Entire Agreement .......................................................................................45

- -- Guaranty..................................................................................................

</TABLE>

<PAGE> 4

RESTATED AND AMENDED

COAL SUPPLY AGREEMENT

THIS AGREEMENT is effective the 1st day of February, 1986, by and
between SEMINOLE ELECTRIC COOPERATIVE, INC., a Florida corporation
("Purchaser"), and WEBSTER COUNTY COAL CORPORATION, a Kentucky corporation, and
WHITE COUNTY COAL CORPORATION, a Delaware corporation (hereinafter called
"Webster" and "White," respectively, and collectively or individually called
"Seller").

W I T N E S S E T H :

WHEREAS, the parties entered into a Coal Supply Agreement dated January
17, 1979 ("Coal Supply Agreement") and have agreed to hereby restate and amend
the Coal Supply Agreement; and

WHEREAS, Purchaser desires to secure a supply of coal of the quality
and quantities hereinafter set forth for use in the operation of Purchaser's
Plant Units 1 and 2 located in the State of Florida; and

WHEREAS, both Webster and White are wholly-owned subsidiaries of MAPCO
Coals Inc., a Delaware corporation with offices at 1717 South Boulder Avenue,
Tulsa, Oklahoma 74119 ("Agent"), which is Seller's agent for the administration
of this Agreement; and

WHEREAS, Agent is a wholly-owned subsidiary of MAPCO Inc., a Delaware
corporation with offices at 1800 South Baltimore Avenue, Tulsa, Oklahoma 74119.

WHEREAS, MAPCO Inc. by an attachment hereto, guarantees the performance
of the respective obligations of Seller under this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the

<PAGE> 5

parties agree to hereby restate and amend the Coal Supply Agreement and Seller
agrees to sell, and Purchaser agrees to purchase, coal of a quantity and quality
hereinafter specified, during the period, at the prices and upon the other terms
and conditions hereinafter set forth.

ARTICLE I

TERMS OF AGREEMENT

1.1 This Agreement restates and amends the Coal Supply Agreement as of
the date hereof and shall continue until December 31, 2010.

1.2 A "Contract Year" shall be the calendar year.

1.3 This Agreement is subject to the approval of the Administrator of
the Rural Electrification Administration.

ARTICLE II

QUANTITY

2.1 Dotiki Mine. Webster shall sell to Purchaser, and Purchaser shall
buy from Webster, from Webster's Dotiki Mine, during each Contract Year of this
Agreement ****** tons of coal commencing with the Contract year 1986 and
extending through the Contract Year 1989 and ****** tons of coal for each
Contract Year thereafter.

2.2 Pattiki Mine. White shall sell to Purchaser, and Purchaser shall
buy from White, from White's Pattiki Mine, during each Contract Year of this
Agreement, ****** tons of coal commencing with the Contract Year 1986 and
extending through the Contract Year 1989 and ****** tons of coal during each
Contract Year thereafter.

2.3 Purchaser may increase by as much as ******, the annual quantity to
be delivered pursuant to Section 2.1 and/or 2.2 hereof in any Contract Year by
giving written notice to Seller

<PAGE> 6

on or before July 1 of the previous Contract Year, provided Seller has
uncommitted production available for Purchaser. Beginning with Contract Year
1990, Purchaser may decrease by as much as ****** the annual quantity to be
delivered pursuant to Section 2.1 and/or 2.2 hereof in any Contract Year by
giving written notice to Seller on or before July 1 of the previous Contract
Year.

2.4 Purchaser from time to time during the term hereof may make written
request upon Seller to stockpile coal for Purchaser in an amount aggregating up
to ****** tons at the Dotiki Mine and ****** tons in the aggregate at the
Pattiki Mine, which amounts shall constitute a part of the annual tonnage
commitment set forth in Section 2.1 and/or 2.2, respectively, when stockpiled.
In the event of such request, Seller shall still be required on written notice
from Purchaser, to deliver such coal to Purchaser at the coal transfer facility
("Coal Transfer Facility") of Mt. Vernon Coal Transfer Company ("Mt. Vernon"),
in Indiana, near Mt. Vernon, Indiana or an alternate delivery point as
designated by Purchaser, and Purchaser shall pay to Seller the then Current
Price (as defined in Sections 5.2 or 6.2), together with an additional allowance
of 20 cents per ton, and any applicable taxes, for the coal so stockpiled when
and as such coal is stockpiled. Seller shall stockpile coal at the rate of up to
5,000 tons for each day Purchaser so requests. Seller shall notify Purchaser in
writing when the requested stockpile is completed. At any time after the
requested stockpile or the appropriate portion thereof has been held by Seller
for 6 months, Seller may, after 10 days written notice to Purchaser (such notice
shall include selling price and other terms of sale), sell coal from the
stockpile to others for Purchaser's account, unless Purchaser, within such 10
days, agrees to take immediate delivery or agrees in writing to assume the risk
of loss of the coal in the stockpile. Risk of loss of stockpiled coal shall

<PAGE> 7

otherwise be with Seller until such time as stockpiled coal is loaded for
shipment. Coal so stockpiled will be shipped by Seller upon written request from
Purchaser, to the extent that loading equipment is available after meeting
Seller's normal shipping requirements from the mine, and quality adjustments
shall apply to the coal when shipped. Seller shall maintain a running total of
stockpile weights for all coal stockpiled, adjusted to reflect deductions as
shipments are made upon Purchaser's request or sales are made by Seller pursuant
to this Section 2.4. In the event of sales by Seller as aforesaid to others from
the stockpile, Seller shall reim burse to Purchaser the actual sales price and
severance taxes, if any, received by Seller from third parties for such coal.

2.5 All coal shipped shall be weighed by Seller at the mine using
scales approved by the Southern Weighing Bureau, or succeeding agency, and
weights so obtained shall be binding upon both parties and govern any disputes
under this Agreement, subject to the further provisions of this Section 2.5.
Purchaser shall also weigh all coal received at its plant using scales approved
by the Southern Weighing Bureau, or succeeding agency. Purchaser or Seller may
observe the weighing and any scale testing. Seller and Purchaser shall each
inspect, test and calibrate their own scales semiannually and a party making
such inspection, testing or calibration shall send a report thereof to the other
party. Purchaser or Seller shall have the right, if it believes that any
weighing is not accurate, to designate an independent expert acceptable to
Seller and Purchaser, who shall check the equipment and procedures used in the
weighing of coal, and whose expense shall be borne equally by the parties. Any
dispute over the independent expert's report shall be subject to arbitration
under Article XVII. If all scales are tested and are accurate, and if it appears
that over .5 percent of shipments on a weighted quarterly average are being lost
due to

<PAGE> 8

windage, Seller agrees to use its best efforts to reduce such windage loss by
installing, at Seller's cost, a chemical spray system commonly used in the
industry.

2.6 If for any good faith business reason, other than a failure to
perform that is excused under Articles XIII and XIV of this Agreement, Purchaser
determines by reason of a reduction in its total annual requirement for coal
below the minimum quantities specified in this Agreement that it no longer needs
all or a portion of the coal to be supplied hereunder for Purchaser's Units 1
and 2, Purchaser shall provide written notice to Seller. Should such reduced
need continue for ****** consecutive months after receipt of written notice by
Seller, Purchaser may elect to reduce the total quantity of coal required to be
purchased under this Agreement, down to Purchaser's annual total requirement
which may be down to ****** tons. Such election shall be made in writing, shall
specify the good faith business reason for the reduced need and shall set forth
the new aggregate quantity of coal required to be purchased under this Agreement
for the Contract Year in which the election is being exercised. In the event
Purchaser makes such election to reduce the total quantity of coal required to
be purchased under this Agreement, then thereafter: (a) except as hereinafter
provided, Purchaser will purchase 100 percent of its coal requirements for its
Plant Units 1 and 2 from Seller; (b) Purchaser will notify Seller on or before
July 1 of each Contract Year of its requirements for coal for the next
succeeding Contract Year, and Seller shall not be obligated to deliver coal in
an amount greater than specified in such notice unless Seller has uncommitted
production available; (c) Seller shall have the right, at its sole discretion,
to deliver such reduced amount of coal from the Dotiki and Pattiki Mines in
whatever proportion Seller deems appropriate; (d) provided Purchaser is not
otherwise in default under this Agreement, Purchaser shall be obligated to pay
the then Current Price only for coal actually

<PAGE> 9

supplied; and (e) in the event Purchaser's actual requirements exceed the
quantity stated in Purchaser's notice under (b) above, and Seller does not have
uncommitted production available to supply the excess quantity, then Purchaser
may purchase such excess quantity from third parties.

In the event there is a reduction in deliveries under this Section 2.6
for any two Consecutive Contract Years on or after Purchaser's election to
reduce the total quantity required under this Agreement to an amount less than
****** of the annual minimum quantity which Purchaser was required to accept
under this Agreement except for application of this Section 2.6, Seller shall
have the right to cancel this Agreement and in such event neither party shall
have any further rights or obligations under this Agreement, other than with
respect to performance required hereunder prior to such cancellation.

ARTICLE III

SOURCE

3.1 The coal to be sold pursuant to Section 2.1 shall come from
Webster's Dotiki Mine. The coal to be sold pursuant to Section 2.2 shall come
from White's Pattiki Mine.

3.2 Seller represents and warrants that its total coal reserves in
Webster and White Counties contain more than sufficient quantities of coal of a
quality and in quantities recoverable by deep mining under present mining laws
and practices which will be sufficient to satisfy all of Seller's obligations
under this Agreement.

3.3 Seller warrants that it will not, without Purchaser's prior written
consent, use or sell coal meeting the quality specifications hereof from the
Dotiki or Pattiki reserves in any way that will reduce the balance of
recoverable reserves to an amount less than the total amount then remaining to
be supplied Purchaser hereunder. Subject to the provisions of this Agreement,

<PAGE> 10

Seller otherwise reserves the right to use coal or sell coal to others from the
reserves.

3.4 With the written consent of Purchaser, which consent may not be
unreasonably withheld, Seller may, but shall not be required to, supply from
sources other than the Dotiki Mine and the Pattiki Mine coal which conforms to
the quality requirements of this Agreement. In the event Seller elects to do so,
the price for any such substitute coal shall be the Current Price, as defined in
Section 5.2 or 6.2, as adjusted by Article IX, inclusive of any taxes described
in Section 5.3 or 6.3, adjusted by an amount of any difference, on a Btu basis,
between the transportation costs of the substitute coal to the Purchaser's
Seminole Plant Unit No. 1 or Unit No. 2, respectively, and the transportation
costs then in effect between the above mine(s) and Purchaser's plant units.

3.5 Seller's right to furnish substitute coal shall not affect its
right to claim a force majeure excuse because of events occurring at the
respective mines as provided in Article XIII hereof or to claim excuse pursuant
to Article XIV hereof; however, if Seller is actually furnishing substitute coal
under Section 3.4, and that substitute coal continues to be available to Seller,
Seller shall not claim that an event of force majeure occurring only at the
Dotiki Mine or the Pattiki Mine excuses it from continuing to provide the same
amount it has been supplying from such substitute source.

ARTICLE IV

DELIVERY

4.1 Seller shall be required to deliver the coal purchased hereunder,
and title to the coal purchased hereunder shall pass, to Purchaser, at the Mt.
Vernon Coal Transfer Company facility in Indiana, near Mt. Vernon, Indiana, or
at any other point that Purchaser may direct in its sole discretion.

<PAGE> 11

4.2 The risk of loss of the coal purchased hereunder shall pass to
Purchaser at the rail cars at the Dotiki Mine or the Pattiki Mine, respectively.

4.3 Unless varied by mutual agreement of Seller and Purchaser, each
unit train shipment shall be of such size so as to minimize transportation costs
which train size currently is approximately ****** tons of coal for deliveries
to Mt. Vernon Coal Transfer Company facilities or ****** tons of coal for direct
all rail shipments to Purchaser's Plants.

4.4 The amount of coal to be delivered under this Agreement shall be at
the rate, to the extent practicable and subject to variation for annual quantity
adjustments under Article II, of approximately ****** tons per month from the
Dotiki Mine and ****** tons per month from the Pattiki Mine, except for the
months in which a miner's vacation shall fall, in which months such amount shall
be reduced proportionately from the normal monthly amount; provided, however,
that for Contract Years 1986 through 1989 the monthly delivery rates shall
approximate ****** tons from the Dotiki Mine and ****** tons from the Pattiki
Mine. Seller shall be responsible for arranging all contracts for transportation
to the delivery point. Purchaser shall be a party to negotiation of such
contracts and such contracts shall be subject to Purchaser's approval, which
approval will not be unreasonably withheld. Seller shall load railroad cars on a
24-hour basis, 7 days per week at a minimum rate of ****** tons per hour,
continuously until a train is fully loaded. Purchaser shall reimburse Seller for
all transportation costs to the delivery point for coal purchased under this
Agreement, in accordance with Article XI and as provided for in the
Transportation Exhibit, Exhibit J-1. Seller shall be entitled to ship, and
Purchaser will accept delivery of as much as ****** tons in addition to the
monthly delivery rate, in any month, in

<PAGE> 12

order to make up amounts unshipped without excuse previously that Contract Year,
if such tonnage can be shipped and received with then existing shipping,
transloading and receiving facilities, but Purchaser shall not be required to
purchase in any Contract Year more than that Contract Year's commitment. If
Seller offers to ship more than the normal monthly amount during any month that
the said deficit exists, and said tonnage cannot be shipped and received with
the Purchaser's existing shipping and receiving facilities, Purchaser shall have
the option of stockpiling pursuant to the provisions of Section 2.4. In the
event Purchaser refuses to accept deliveries or so stockpile, Seller's annual
commitment under Sections 2.1 and/or 2.2 shall be reduced by the amount of said
deficit that Seller offers to ship in excess of the normal monthly amount which
is not accepted or so stockpiled by Purchaser.

4.5 Seller's loading facilities are designed to load railroad cars at
the rate of ****** tons per hour. In the event that, during the term of this
Agreement, Purchaser either elects shipments from the mine(s) under a tariff or
tariffs requiring changes in the design or operation of Seller's mining,
preparation or loading facilities, Seller shall use its best efforts to make
such changes as may be necessary; provided, however, that Purchaser and Seller,
before such changes are made, shall attempt to agree upon an adjustment to the
Base Price for the coal sold hereunder to reflect the cost to Seller of any such
changes as may be made under this Section 4.5. Purchaser's obligation to
purchase and Seller's obligation to sell under this Agreement shall not be
suspended or otherwise altered during negotiations or arbitration if no
agreement is reached.

<PAGE> 13

ARTICLE V

PRICE - DOTIKI MINE

5.1 The Base Price, as of February 1, 1986, for coal sold hereunder
from the Dotiki Mine is ****** per ton loaded in rail cars at the mine,
inclusive of Kentucky severance tax. The Base Price is subject to adjustments
from time to time for events occurring or having an effect on or after February
1, 1986, pursuant to Article VII, and for quality variations pursuant to Article
IX. The components of the February 1, 1986, Base Price are shown in Exhibit A. A
new Base Price may be established from time to time pursuant to the provisions
of Article VIII.

5.2 The "Current Price" under this Agreement for coal from the Dotiki
Mine shall be, at any given time, the "Base Price" provided for in Section 5.1
adjusted in accordance with the applicable provisions of this Agreement,
inclusive of severance taxes.

5.3 As the Base Price is adjusted under other provisions of the
Agreement, the Base Price will also be adjusted, effective at the same time as
the other adjustments are made, to reflect application of Kentucky severance tax
(or any other similar governmental tax on the severance, mining or sale of the
coal, hereinafter referred to as "severance tax"). The initial Kentucky net
effective severance tax rate is ******. Such severance tax rate shall be
adjusted annually to reflect the net Kentucky or other governmental severance
tax rate actually paid by Seller, using the mechanism and procedure set forth in
Exhibit G. As soon after each December 31, as Seller's annual severance tax
summary report has been filed with the appropriate governmental agency, the
actual monthly net effective severance tax rate calculated on the basis of that
return will be sent to Purchaser and used to adjust retroactively the severance
tax cost component of the Current Price invoiced for coal shipped during the
applicable month.

<PAGE> 14

For severance tax verification purposes, the Purchaser shall have the right to
review Seller's annual severance tax summary report, governmental audit results
and any records or other data necessary to verify the same.

ARTICLE VI

PRICE - PATTIKI MINE

6.1 The Base Price, as of February 1, 1986, for coal sold hereunder
from the Pattiki Mine is ****** per ton loaded in cars at the mine. A new Base
Price may be established from time to time pursuant to the provisions of Article
VIII. The Base Price is subject to adjustments from time to time for events
occurring or having an effect on or after February 1, 1986, pursuant to Article
VII and for quality variations pursuant to Article IX. The components of the
February 1, 1986, Base Price are shown on Exhibit A-1.

6.2 The "Current Price" under this Agreement for coal from the Pattiki
Mine shall be, at any given time, the "Base Price" provided for in Section 6.1
adjusted in accordance with the applicable provisions of this Agreement
inclusive of severance or similar taxes, if any.

6.3 A. the Base Price is adjusted under other provisions of this
Agreement, the Base Price will also be adjusted, effective at the same time as
the other adjustments are made, to reflect application of any applicable net
severance tax or similar tax, as set forth in Section 5.3 above. It is
understood that the Pattiki Mine February 1, 1986, Base Price does not include
any severance, sales, use or other similar taxes (such as by way of illustration
the Illinois Retailers Occupation Tax) that may be applicable or imposed on coal
supplied by Seller to Purchaser under this Agreement. In the event that after
February 1, 1986, such a tax or taxes be deemed to apply or be imposed on the
coal supplied under this Agreement, the amount of such tax or taxes

<PAGE> 15

shall be added to the Base Price or Current Price, whichever is applicable.

ARTICLE VII

BASE PRICE ADJUSTMENTS

The Base Price for coal from the Dotiki Mine and the Pattiki Mine shall
be subject to upward or downward adjustments quarterly (each January 1, April 1,
July 1 and October 1) after February 1, 1986, in accordance with Sections 7.1
through 7.3 or from time to time in accordance with the provisions of Sections
7.4 or 7.5 or Article VIII. The Base Price as of February 1, 1986, and the
individual components thereof for the Dotiki Mine are set forth on Exhibit A,
and Base Price as of February 1, 1986, and the individual components thereof for
the Pattiki Mine are set forth on Exhibit A-1. The parties agree that the dollar
amount of the components as set forth on Exhibit A and Exhibit A-1 shall form
the basis for price adjustments under this Agreement, whether or not those
dollar amounts reflect actual mining costs as of February 1, 1986. The February
1, 1986, per ton price component base levels for Labor and Benefits and
Materials and Supplies as set forth under Exhibits A and A-1 and the selection
of the Materials and Supplies base level indexes and establishment of related
weighting factors as set forth under Exhibits C and C-1 shall be adjusted and
new base values reestablished to reflect the percentage mix of the appropriate
mine's total year-to-date actual costs for such components and weighting factors
as prevailing on December 31, 1986. Establishment of the revised base component
levels and weighting factors shall be in accordance with the procedures set
forth under Section 8.6. Any amount due Seller or credit owed Purchaser for coal
supplied hereunder as a result of the reestablishment of the February 1, 1986,
price component base levels shall be paid within 30 days of the determination of
the amount due or credit owed.

<PAGE> 16

Adjustments calculated under Sections 7.1 through 7.3 shall apply to
all coal shipped during the calendar quarter beginning on the adjustment date.

7.1 Labor and Benefits. The Base Price(s) shall be adjusted quarterly
beginning on April 1, 1986, and on the first day of each subsequent calendar
quarter, to reflect the change in the cost of labor and benefits from the
assumed base cost component of ****** per ton for the Dotiki Mine and ****** per
ton for the Pattiki Mine. The adjusted base component on each adjustment date
will equal the product of ****** per ton for the Dotiki Mine and ****** per ton
for the Pattiki Mine, and a fraction, the numerator of which is the average of
the SIC-12 "final" hourly wage rate (1972 base and exclusive of seasonal
adjustment), for Bituminous and Lignite Hourly Wage Earners reported in the
Bureau of Labor Statistics' Employment and Earnings Publication (currently Table
C-2) as first published for the second calendar quarter preceding the intended
quarterly adjustment date, and the denominator of which is ******, the contract
base level average SIC-12 "final" hourly wage rate.

The average SIC-12 hourly rate for any calendar quarter shall be
calculated as the straight arithmetic average of the monthly average hourly
rates published. If such information is not published for any one or two of the
months comprising a quarter, the average shall be calculated as an arithmetic
average of the month(s) for which the values were published. If a UMWA strike
occurs during the entire quarter for calculating the average SIC-12 hourly rate,
or if no in formation is published for all of the months comprising a quarter,
there shall be no adjustment to the labor and benefits cost component for that
particular quarterly adjustment date. If during any month a UMWA strike occurs
for such month, the SIC-12 hourly rate for that month shall be treated as
unpublished. Exhibits B and B-1 set forth calculations of the SIC-12 contract
base

<PAGE> 17

hourly wage rate level and set forth examples for calculating the labor and
benefits quarterly adjustment.

7.2 Materials and Supplies. The Base Price(s) shall be adjusted
quarterly beginning on April 1, 1986, and on the first day of each subsequent
calendar quarter, to reflect the change in the cost of materials and supplies
from the assumed base component of ****** per ton for the Dotiki Mine and ******
per ton for the Pattiki Mine. The adjusted base component on each adjustment
date will equal the product of ****** per ton for the Dotiki Mine and ****** per
ton for the Pattiki Mine, and a fraction, the numerator of which is the weighted
average of the Consumer Price Index - Wage Earners and Clerical Workers (CPI-W)
and the "preliminary" Producer Price Indexes, Table 6, reported by the U.S.
Department of Labor, Bureau of Labor Statistics as first published for the
second, third and fourth months preceding the intended quarterly adjustment date
and the denominator(s) of which are 329.591 and 321.192, the contract base
weighted average index level for Dotiki and Pattiki, respectively.

The quarterly average index value for any index in any quarter shall be
calculated as the straight arithmetic average of the monthly values published
for that index. If such information is not published for any one or two of the
months comprising a quarter and the index has not been discontinued, the average
shall be calculated as an arithmetic average of the months for which values were
published. If such information is not published for all of the months comprising
a quarter and the index has not been discontinued, the average for the quarter
in question shall be set equal to the average calculated for the previous
quarter. If no information is published for all of the indexes for all of the
months comprising a quarter, there shall be no adjustment to the material and
supplies cost component for that particular quarterly adjustment date. Exhibits
C

<PAGE> 18

and C-1 set forth the contract base quarterly index values and related weight
factors for each of the pertinent indexes and set forth examples for calculating
the materials and supplies quarterly adjustment.

7.3 General and Administrative. The Base Price(s) shall be adjusted
quarterly beginning on April 1, 1986, and on the first day of each subsequent
calendar quarter, to reflect the change in the cost of general and
administrative costs from the assumed base cost component of ****** for the
Dotiki Mine and ****** per ton for the Pattiki Mine. The assumed base cost
component levels are calculated values being 5.5% of the respective February 1,
1986, Base Prices. The adjusted base component on each adjustment date will
equal the product of ****** per ton for the Dotiki Mine and ****** per ton for
the Pattiki Mine and a fraction, the numerator of which is the average of the
CPI-W Index as first published for the second, third and fourth months preceding
the intended quarterly adjustment date, and the denominator of which is 322.433,
the contract base average CPI-W index level. Exhibits D and D-1 set forth
calculation of the CPI-W contract base index level and set forth examples for
calculating the general and administrative quarterly adjustment.

7.4 Royalty. As the Base Price is adjusted under other provisions of
this Agreement, the Base Price shall also be adjusted, effective at the same
time as the other adjustments by an amount equal to ****** for Dotiki and ******
for Pattiki of the other adjusted base components to reflect the change in
royalty expenses from the assumed base cost component of ****** per ton for the
Dotiki Mine and ****** per ton for the Pattiki Mine. The royalty surcharge rates
of ****** for Dotiki and ****** for Pattiki were derived from base nominal rates
of ****** and ******, respectively, and take into account the compounding
effects of paying royalty on royalty

<PAGE> 19

collected. The nominal and contract royalty surcharge rates shall remain
unchanged for the duration of this Agreement. Exhibits E and E-1 set forth
calculation of the contract base royalty cost component levels and set forth
calculation of the contract royalty surcharge rates of ****** and ******.
Exhibits F and F-1 set forth examples of calculating royalty costs as other
adjustments are made under provisions of this Agreement.

7.5 Government Adjustment. Subject to the provisions of Article XIV,
there shall also be adjustments made from time to time in the Current Price to
reflect changes in Seller's actual costs as of the date incurred because of
government regulatory events occurring or continuing to have an effect on or
after February 1, 1986, which are beyond the direct control of Seller and which
after said date change Seller's expenses, require additional capital
expenditures, affect the productivity at Dotiki Mine or the Pattiki Mine or
otherwise change Seller's actual costs at Dotiki Mine or the Pattiki Mine, and
which are not otherwise provided for in Article VII. The Base Prices specified
in Sections 5.1 and 6.1 as of February 1, 1986, include the cost of compliance
with all laws and regulations currently in effect to the extent such laws and
regulations are currently being interpreted and enforced. Government regulatory
events shall include, by way of illustration, but not limitation: new or amended
or restated Federal, State or local legislation or regulation, or the
interpretation of application thereof by courts, administrative agencies, or any
other body having jurisdiction relating to mining, mine safety or environmental
matters, or otherwise affecting Seller's costs. If any such event increases or
decreases Seller's costs of producing coal from any of the two mines covered by
this Agreement, there shall be added to or subtracted from the Base Price from
time to time adjustments to reflect the full change in Seller's costs because of
such event or events, based on actual production costs and productivity

<PAGE> 20

experienced at the respective mine before and after the change. Should capital
items be affected by such a change, adjustments shall be based on Seller's
computation of actual expenditures (or reasonable estimates thereof) subject to
review under Section 12.2 for capital items, the useful life of such items,
interest relating to the purchase or carrying thereof and actual productivity
experienced at the mine before and after the change. For purposes of this
provision, there is a ****** per ton base cost component level for such costs as
of February 1, 1986, for both the Dotiki Mine and Pattiki Mine, which represents
the ****** per ton Federal Black Lung Fee and ****** per ton Federal Reclamation
Fee.

The parties recognize there may be government action claims for both
ongoing compliance costs and fixed per ton fees and/or taxes prevailing at such
time a new Base Price may be established under provisions of Article VIII. If
the parties agree that any or all portions of cost relating to claims for
ongoing compliance costs have reached a "normalized cost level" on a particular
January 1 new Base Price establishment date, by mutual agreement, the parties
may allocate such costs over all other remaining cost components when
establishing new Base Price base cost component levels under the methodology set
forth under Exhibits H and H-1. For any or all portions of ongoing compliance
costs that the parties do not wish to allocate, Seller shall continue to submit
claims on an actual cost basis for the remaining term of this Agreement or until
such time the parties agree to make an allocation to other cost components on a
subsequent January 1 new Base Price establishment date.

7.6 Fixed Portion. The fixed portion shall be calculated as ****** of
the Dotiki Mine and Pattiki Mine Base Price(s), inclusive of severance or
similar tax measured as a percentage of selling price. The contract base level
fixed portion effective February 1, 1986, is

<PAGE> 21

****** per ton for the Dotiki Mine and ****** per ton for the Pattiki Mine. The
aforemen tioned per ton contract base levels shall remain unchanged for duration
of the Agreement unless changed as a result of establishing a new Base Price
under the provision of Article VIII.

7.7 Calculations. Unless otherwise noted, all calculations shall be
carried at three decimal places, and rounded as specifically noted within the
Exhibits of this Agreement. To calculate the Current Price for each adjustment
date, the sum of all cumulative-to-date adjustments made pursuant to Articles
VII and XIV shall be rounded to two decimal places with a "5" in the third
decimal being rounded up if the preceding digit is odd and dropped if the
preceding digit is even. Exhibits B and B-1 through F and F-1 exemplify
adjustments which may be made under Articles VII and XIV in calculating the
Current Price.

7.8 Unavailability of or Changes in Any Index. Excluding SIC-12 hourly
rates with regard to being unavailable due to a UMWA strike, if an index ceases
to be published or is unavailable frequently (for three reference months or
longer) comparable index or indexes shall be substituted by mutual agreement of
the parties hereto and, if available, reconstructed to the latest adjustment
date for which the discontinued index was available and used in determining the
adjusted base cost component level. The resulting revised base index level shall
replace the previously used base index level as the denominator in subsequent
price adjustment calculations. The revised base price cost component to be used
in subsequent price adjustments shall be the last level which was calculated
using the index which was subsequently discontinued or frequently unavailable.
Should representative indexes cease to be published by the designated agency,
the most practical equivalent index, upon mutual agreement of the parties
hereto, shall be used for calculations to effectuate the intent of the parties.
In the event of a major change in

<PAGE> 22

the structure of any existing index used herein, a new base period index level
and related cost component level shall be established for use on the first
quarterly adjustment date thereafter in the manner as described above for
discontinuation of an index. No retroactive price adjustment will be made
because revised index levels are published. In the event an index is
discontinued or otherwise becomes unavailable, as addressed under this Section
7.8, Seller and Purchaser shall, after consulting with the Bureau of Labor
Statistics, undertake to agree upon a substitute index or a substitute method of
cost adjustment. If the parties fail to reach agreement on a substitute index or
method within thirty (30) days, the matter shall be submitted to arbitration
pursuant to Article XVII.

7.9 Exhibits. All exhibits attached hereto and referenced throughout
this Agreement are incorporated as an integral part of this Agreement.

ARTICLE VIII

PRICE REVIEW

8.1 The "Current Price" for each mine as defined in Articles 5.2 and
6.2 shall initially be subject to review for adjustment on January 1, 1989.
Later adjustments may be requested by either party as provided herein but such
later adjustments shall not be made more frequently than once every ******.
Either party may request an adjustment to be effective ******, and ******
thereafter until a new Base Price is established by agreement or arbitration.
Subsequently, either party may request further adjustment but such adjustment
shall not be effective until the passage of at least a ****** period following a
prior adjustment. Further requests for review and adjustment of the "Current
Price" may be requested by either party in the above-described manner until the
end of the term of this Agreement. This Article VIII shall apply separately in

<PAGE> 23

establishing new Base Prices to be effective under either Articles V or VI.

8.2 The new Base Price established under this Article VIII shall not be
more than ****** nor less than ****** of the "Current Price" in effect for each
mine as of October 1 of the year immediately preceding the year of adjustment
for any price adjustments effective ******, and shall not be more than ******
nor less than ****** of the "Current Price" in effect for each mine as of
October 1 of the year immediately preceding the year of adjustment for any price
adjustments effective on or after ******.

8.3 On or after October 1 but not later than November 1 of the year
preceding an adjustment year (the "Notice Year"), either party may propose a new
Base Price for coal from either or both mines to be effective January 1 of the
adjustment year. The new Base Price(s) proposed shall be within the limits set
forth in Section 8.2. If new Base Price(s) are proposed, but the parties after
discussion fail to reach agreement on or before November 30 of the Notice Year,
the determination of the new Base Price(s) shall be submitted to arbitration.

8.4 It is the intent of the parties that the new Base Price(s) that
should be in effect on January 1 of the adjustment year should, within the
limits specified in Section 8.2, be the market price which is defined as the
price which a willing and able Buyer would then be willing to buy and a willing
and able Seller would then be willing to sell coal: (a) produced from
underground mines located in the appropriate United States Bureau of Mines
producing districts of the Mines; (b) of the quality specified in Article IX of
the Coal Supply Agreement and in the total quantity specified in Article II of
the Coal Supply Agreement; and (c) for a term of years comparable to that
remaining under this Agreement. Reliable published information reflecting these
parameters is relevant, but not controlling, as to such prices. It is the intent
of the parties that the new

<PAGE> 24

market prices to be determined herein are to be term market prices based on the
parameters set forth above and not to be spot prices.

8.5 In the event of arbitration with respect to a price review, each
party shall select an Arbitrator and the two arbitrators shall select a third
who shall be a neutral arbitrator. The Arbitrators' award shall be a majority
vote. The parties shall both submit their proposed prices. In establishing the
new Base Price for a particular Mine, the Arbitrators must select either the
price submitted by Seller for that particular Mine or the price submitted by
Purchaser for that particular Mine. The arbitrators shall only consider the
information submitted by the parties in arriving at an award. It is understood
and agreed that the parties may submit for consideration by the Arbitrators any
information that a party considers relevant to the determination of market price
for coal sold hereunder in establishing a new Base Price as intended under
Section 8.4. The award shall be final and binding. Except as modified herein,
the provisions of Article XVII of this Agreement shall apply. Such new Base
Price(s) as determined by the Arbitrators shall be effective retroactive to
January 1 of the adjustment year and shall be subject to all adjustments as
provided for under this Agreement.

8.6 Establishment of New Base Cost Components. In the event a new Base
Price is established under provisions of this Article VIII, new base cost
component levels shall be established to equal the new Base Price. To
accommodate establishment of the new base cost components, new base index levels
shall also be established for all components which are adjusted by indexes. The
new base cost components and related new base index levels shall serve as the
bases from which to calculate adjustments during the remaining term of this
Agreement unless new base cost levels and index levels are established as a
result of a

<PAGE> 25

subsequent price review under this Article VIII. The new Base Price shall be
subject to all adjustments as provided for under this Agreement occurring on or
after that January 1 on which a new Base Price is established, except that
adjustments pursuant to Sections 7.1, 7.2 and 7.3 shall not be made until April
1 of that same year.

Establishment of new base cost components shall be conducted in the
following manner. From the new Base Price, there shall be subtracted the
appropriate per ton amounts for (i) severance or similar tax measured as a
percentage of selling price, (ii) the ****** fixed portion, (iii) royalty at the
nominal rate of ****** and ****** for Dotiki and Pattiki, respec tively, (iv)
general and administrative costs at ****** of the new Base Price and (v)
governmental action fees or taxes assessed on a fixed per ton amount basis. New
labor and benefit and material and supplies cost components shall also be
established to make up the balance of the new Base Price with their allocations
to be made by applying the balance of the new Base Price to the respective
percentages of these two components as determined from the total of Seller's
actual costs for these two components. Seller's actual cost levels to be used
for this determination shall be the appropriate Mine's total year-to-date actual
costs as prevailing on December 31 of the year preceding the January 1 new Base
Price establishment date.

At such time as new base cost components are established under
provisions of this Article VIII, it may be necessary for Seller to establish a
new mix of materials and supplies indexes and index weighting factors to more
accurately reflect the then existing material and supply cost structure at the
mine for which a new Base Price was established.

If Seller determines the Mine's costs for the cost review year are
distorted due to abnormal events materially affecting the Mine's cost structure,
the parties shall agree upon

<PAGE> 26

alternate cost review data, such as the forthcoming year's budgeted operating
cost structures or other information deemed relevant. Examples of events which
may prevent determination of normal operating costs include but are not limited
to conditions such as extended force majeure events, mine shutdown or
implementation of new mining techniques such as longwall mining.

If Purchaser disagrees with Seller's establishment of the labor and
benefits and materials and supplies new base data levels as provided for under
this Article VIII, the matter shall be submitted to a mutually agreeable
independent accounting or consulting firm for verification with the associated
costs to be shared equally between Purchaser and Seller. The independent firm
shall advise both parties of only the facts that the establishment of the labor
and benefits and materials and supplies new base cost component levels and
selection of new material and supplies indexes and related index weighting
factors are representative in the manner described herein of the percentage mix
breakdown of the appropriate mine's costs. The findings of such independent firm
shall be final and binding on the parties. The independent firm shall in no way
reveal to Purchaser the Mine's actual cost per ton for such components or the
Mine's total production cost unless otherwise agreed to in writing by Seller.

Exhibits H and H-1 set forth examples for establishing new base cost
components and related new base index levels as the result of establishment of a
new Base Price.

8.7 In the event Seller's actual cost per ton, excluding profits but
including indirect and overhead costs, in the aggregate, for coal sold hereunder
in any 24-month period is in excess of the then Current Price, per ton, in the
aggregate, for such coal during such 24-month period, Seller, upon 9 months'
written notice to Purchaser given within 3 months after the end of such 24-month
period, may elect to suspend its obligations under this Agreement and close the
Mine,

<PAGE> 27

in which event upon such suspension neither party shall have any further rights
or obligations under this Agreement, other than those with respect to
performance required hereunder prior to the effective date of such suspension.
In the event Seller plans to reopen the Mine during the term of this Agreement,
Seller shall notify Purchaser in writing at least six months prior to the date
coal produced from the Mine will be available for sale and delivery. Purchaser
shall have ninety (90) days after receipt of such notice to elect in writing to
purchase from the Mine the quantity of coal to be produced up to the quantity
set forth in Article II in accordance with the terms and at the then prevailing
price for such coal under this Agreement. If Purchaser fails to notify Seller
within ninety (90) days of receipt of notice of Seller's intent to reopen the
Mine, Seller shall have the right to sell the coal produced from the Mine to
other purchasers.

ARTICLE IX

COAL SPECIFICATIONS, SAMPLING

AND BTU VALUE ADJUSTMENTS

9.1 The coal supplied by Seller and purchased by Purchaser hereunder
from the Dotiki Mine shall undergo beneficiation as required to substantially
conform to the following analysis on an "as received" rather than "dry" basis:

<TABLE>
<CAPTION>
Coal Property Contract Specifications
------------- -----------------------
<S> <C>
Moisture ****** maximum
Ash ****** maximum
Sulphur ****** maximum
Heat Content ****** BTU/lb. minimum
Ash, Fusion (Fluid
Temperature reducing) ****** minimum
Grindability ****** Hardgrove
Chlorine ****** maximum
</TABLE>

<PAGE> 28

9.2 The coal supplied by Seller and purchased by Purchaser hereunder
from the Pattiki Mine shall undergo beneficiation as required to substantially
conform to the following analysis on an "as received" rather than "dry" basis:

9.3 Failure to meet the specifications in Sections 9.1 and 9.2 shall not
be deemed a breach of this Agreement unless the corresponding specifications in
Sections 10.2 and 10.3 are not met.

9.4 All coal supplied under this Agreement shall be ranked in the
category of high volatile bituminous as defined by ASTM Coal Classification
System.

All coal supplied hereunder shall be sampled by Seller at the mine in
accordance with ASTM procedures for continuous automatic sampling, and shall be
analyzed by a mutually designated laboratory in accordance with ASTM standards
and procedures. Purchaser and Seller may have a representative present during
any sampling or analysis.

9.5 Seller shall cause to be sent to Purchaser by mutually acceptable
means a report showing the results of the analysis of each coal sample analyzed
within two working days of sampling of each shipment and a separate weighted
average analysis of each month's shipment within 10 working day following the
end of each month. This report shall be the basis for

<PAGE> 29

adjustments under Section 9.8.

9.6 Seller shall retain a representative portion of each sample taken
for a period of 30 days from the date of sending to Purchaser the initial
shipment analysis report required by Section 9.5 hereof. In the event Purchaser
or Seller does not give written notice to the other that it disputes such report
within such 30-day period, the report shall be final. In the event within such
30-day period Seller receives Purchaser's written notice that Purchaser disputes
such report, or Seller disputes such report and so notifies Purchaser, the
representative sample retained by Seller shall be delivered by Seller to a
second mutually acceptable independent laboratory for analysis, whose results
shall be binding upon both parties. The charges for any such independent
analysis shall be borne by the party disputing such report unless the
independent analysis deviates from that reported by more than 5 percent, in
which event the cost shall be borne equally by Seller and Purchaser.

9.7 The Base Price for coal from the Dotiki Mine is based upon the coal
having a BTU value of ****** BTUs per pound "as received," and from the Pattiki
Mine, ****** BTUs per pound "as received."

9.8 Whenever the weighted average BTU value of the coal shipped during
any month, as determined under this Article IX, varies from ****** BTUs for coal
from the Dotiki Mine or from ****** BTUs for coal from the Pattiki Mine "as
received," a proportionate adjustment should be made to compensate for the
variation in BTU value, as in the examples which follow:

Example 1: Assume that the weighted average BTU value of coal shipped from the
Pattiki Mine during month X is ****** BTU/pound. Assume further a Current Price,
less severance tax, of ****** per ton, transportation costs of ****** per ton,
and ****** tons shipped:

<PAGE> 30

(****** - ******) x $(****** + ******) x ****** = *******
---------------------------------------------------------

****** Credit to
Purchaser, excl. of
severance taxes

Example 2: Assume that the weighted average BTU value of coal shipped from the
Pattiki Mine during month Y is 12,000 BTU/pound. Assume further a Current Price,
less severance tax, of ****** per ton, transportation costs of ****** per ton
and ****** tons shipped:

(****** - ******) x (****** + ******) x ****** - *******
--------------------------------------------------------
****** Owed to Seller
exclusive of
severance taxes

*Subject to adjustment for severance tax at the applicable rate(s).

ARTICLE X

CANCELLATION, REJECTION AND SUSPENSION BY PURCHASER

10.1 Cancellation for Inability to Burn Coal. Should the
characteristics of the coal which Seller supplies hereunder during any 60-day
period or a period during which at least ****** tons is received, whichever is
greater, be such that (i) it fails to meet the specifications of ****** percent
chlorine, or ash fusion (fluid temperature reducing atmosphere ****** minimum)
or iron in ash not to exceed ****** percent, or sodium in ash not to exceed
****** percent or (ii) because of grindability of less than ****** or because of
unforeseen adverse burning characteristics of the coal in Purchaser's boilers
which cannot be corrected by Purchaser with an expenditure of funds deemed by
Purchaser to be prudent and reasonable, then in such event Purchaser shall have
the right on fifteen (15) days written notice to suspend performance of this
Agreement until the Seller has established to Purchaser's satisfaction that the
coal supplied from Seller's Mine will, depending on the basis of the suspension,
conform to the specifications of this Agreement or will not have adverse burning
characteristics in Purchaser's boilers. If,

<PAGE> 31

within ninety (90) days from the date of such notice, Seller is unable to
furnish coal that will conform to the specifications of this Agreement or does
not have adverse burning characteristics in Purchaser's boilers, then Purchaser
may terminate this Agreement, in which event neither party shall have any
further rights or obligations under this Agreement other than those with respect
to performance required hereunder prior to the effective date of such
termination. If Purchaser does not elect to terminate, performance of this
Agreement shall be resumed.

10.2 Right to Reject Coal. In the event Seller shall make any shipment
of coal for which the shipment analysis pursuant to Article IX indicates any one
of the following:

(1) BTU content: Less than ****** BTU/lb. for the Pattiki
Mine and ****** BTU for the Dotiki Mine;

(2) Ash content: Greater than ******;

(3) Sulphur content: Greater than ******;

then Purchaser shall have the right to reject such shipment. In the event of
such rejection, Purchaser shall notify Seller promptly and segregate such
rejected coal from its regular stockpile. Purchaser and Seller shall thereupon
agree upon a disposition of coal. Any direct handling expenses including
demurrage resulting from such rejection over costs which would otherwise have
been borne by Purchaser shall be borne by Seller.

10.3 Right to Suspend Shipments. In the event Seller shall deliver coal
over any calendar month for which the analysis pursuant to Article IX, on a
weighted average basis, indicates any one of the following

(1) BTU content: Less than ****** BTU/lb. for the Pattiki
Mine and ****** BTU for the Dotiki Mine;

(2) Ash content: Greater than ******;

<PAGE> 32

(3) Sulphur content: Greater than ******;

then Purchaser shall either (a) notify Seller of the deviation but not suspend
shipments; or (b) notify Seller to suspend further shipments of coal until
Seller can supply coal conforming to the specification limitations set forth in
this Section 10.3.

Upon such notification by Purchaser under (a) or (b) above, Seller
shall immediately take economically prudent and reasonable measures to correct
such conditions under its control so as to comply with the specification
limitations of this Section 10.3 for future shipments. In the event of a
suspension and Seller believes it has corrected the conditions and can comply
with the said specification limitations and so notifies Purchaser, Purchaser and
Seller shall arrange for a test shipment; if the results of the analysis of the
said test shipment indicate that the coal in the test shipment complies with the
specification limitations set forth in this Section 10.3, then shipments shall
be resumed.

If after 6 months from Purchaser's notice under (a) or (b) above,
Seller is unable to meet the specification limitations of this Section 10.3 by
economically prudent and reasonable measures, on a weighted monthly average
basis, then this Agreement shall terminate, and in such event neither party
shall have any further rights or obligations under this Agreement, other than
with respect to performance required hereunder prior to such termination.

ARTICLE XI

INVOICING, PAYMENTS AND INTEREST

11.1 For each shipment of coal, Seller will promptly forward an invoice
to Purchaser showing the railroad car numbers and the shipping date, and the
applicable Current Price, to the extent that the Current Price is then
calculated by Seller in accordance with this Agreement, plus

<PAGE> 33

transportation costs to the delivery point. Purchaser shall pay all such
invoices within 20 days from receipt of invoice.

11.2 Seller will issue a separate invoice or credit memorandum for any
adjustment due to quality variations pursuant to Article IX promptly after the
monthly weighted average calorific value and the corresponding adjustment amount
is determined. The amount of a credit memorandum to Purchaser shall be deducted
from its next payment. An invoice to Purchaser for such adjustment shall be paid
within 20 days from receipt of invoice.

11.3 Any change in the Current Price under Article VII shall be
reflected in Seller's next invoice or credit memorandum issued promptly after
determination of the dollar amount of the change. The amount of a credit
memorandum for such adjustment shall be deducted from Purchaser's next payment.
Any invoice to Purchaser for such adjustment shall be paid not later than 20
days after the receipt of the invoice.

11.4 Payment shall have been made on the date of the postmark on
Purchaser's remittance unless Seller shall have established some other local
depository, in which event payment shall be made upon delivery to the local
depository.

11.5 The amount of any invoice, or portion thereof, not paid, or any
credit memorandum not issued, when due, shall bear interest from 30 days after
the date the invoice was issued, or in the case of a credit memorandum, from the
date it should have been applied, through the date the invoice is paid or the
credit memorandum is applied at a rate equal to the then prime rate charged by
the Chemical Bank of New York. Should Purchaser or Seller dispute the payment of
any portion of any invoice or the issuance of any portion of a credit mem
orandum, interest shall be payable only if the party making the claim prevails.

<PAGE> 34

ARTICLE XII

RECORDS AND REVIEWS

12.1 The parties shall keep accurate records and books of account
showing all payments, price revisions, credits, debits, weights, analyses and
all other data required of each of them to be kept for the purposes of this
Agreement.

12.2 Purchaser and Seller shall each have the right at all reasonable
times, upon reasonable prior written notice to the other, to examine, through
its agents, employees or any independent auditor or consultant satisfactory to
the other party, the appropriate records and books of the other pertaining to
shipments or other matters occurring within the previous four (4) Contract
Years, for the purpose of reviewing the determination of Current Price or the
other party's performance or nonperformance under this Agreement, or reviewing
other material and relevant matters subject to a dispute between the parties.

The cost adjustment provisions for which actual cost audit is
appropriate with regard to determination of Current Price are as follows:

o Section 5.3 - Kentucky severance or similar tax

o Section 6.3 - Illinois severance or similar tax

o Section 7.5 - Government Adjustment

o Section 14.3 - Governmental Authority

If any such audit discloses that any error has occurred and, as a
result thereof, an overpayment or an underpayment has been made, the amount
thereof shall promptly be paid to the party to whom it is owed by the other
party, provided that each party hereto has the right to contest the results of
such audit under Article XVII.

<PAGE> 35

12.3 Any information obtained through such review shall be confidential
and under no circumstances shall be disclosed to any third person unless
required by legal process or governmental authority. The party requesting an
independent audit shall direct its auditors or consultants similarly to protect
the information reviewed.

12.4 Nothing in this Article shall bar any rights of the parties under
this Agreement, other than the 4-year audit limitation.

ARTICLE XIII

FORCE MAJEURE

13.1 If, by reason of a "force majeure event," either party is wholly
or partially prevented from performing under this Agreement, and the party
affected gives prompt written notice to the other, the obligations of the party
giving notice shall be suspended or reduced to the extent caused by the force
majeure event. Neither party shall claim force majeure excuse for events lasting
the equivalent of three full operating days or less.

13.2 A "force majeure event" is any occurrence beyond the reasonable
control of the party claiming it and not due to its negligence or default, which
wholly or partially prevents the mining, preparing, loading, delivering or
selling of coal by the Seller or transporting, unloading, receiving or
utilization of coal by the Purchaser. Such force majeure events shall include,
by way of illustration but not by limitation: acts of God or of the public
enemy; insurrection or riots; strikes, organizational attempts or other labor
disputes, shortages of supplies or equipment; strike-related absenteeism;
floods; fires; adverse mining conditions; major equipment breakdowns or damage;
delays in completion of construction; interruptions or unavailability of
transportation; embargoes; orders of court or acts of civil or military
authorities or any other

<PAGE> 36

causes beyond the reasonable control of a party.

13.3 The party affected by a force majeure event shall use reasonable
efforts to eliminate the effects of the force majeure event as soon as
reasonably practicable.

13.4 For the purpose of any partial or total force majeure event
claimed by Seller under this Agreement, it will be presumed that, except for the
claimed force majeure, total production at the Mine would have occurred at a
rate per day equal to the annual contract quantity specified in Article II for
the particular calendar year divided by 241 which represents the average number
of work days at the Mine in a calendar year. For the purpose of any partial or
total force majeure event claimed by Purchaser under this Agreement, it will be
presumed that, except for the claimed force majeure, total shipments to
Purchaser from the Mine would have occurred at a rate per day equal to the
annual contract quantity specified in Article II for the particular calendar
year divided by 326. The number 326 used in reference to force majeures claimed
by Purchaser represents Purchaser's estimate of total operating days based on
365 days less 39 days of planned maintenance days. In the event a force majeure
claimed by Purchaser occurs during or continues through days previously
scheduled for planned maintenance, or if planned maintenance days are reduced as
the result of the force majeure event, such days shall not be considered part of
the force majeure for purposes of calculating the quantity of coal excused by
reason of the force majeure. Exhibit I sets forth examples for calculating
excused force majeure tonnage for both Purchaser and Seller.

13.5 Performance shall resume as soon as practicable after cessation of
the force majeure event. Subject to the provisions of Section 13.6, Seller shall
use reasonable efforts to make up force majeure excused deliveries to the extent
reasonably requested by Purchaser.

<PAGE> 37

13.6 Subject to Purchaser's rights under Section 2.4, Seller shall be
permitted to sell production normally intended for Purchaser during periods of
force majeure events claimed by Purchaser.

13.7 In the event of an instance of inability to perform in whole or in
substantial part because of a force majeure event lasting for a period of 6
consecutive months or more, the party not claiming force majeure shall have the
option of terminating this Agreement, exercisable by giving 30 days' written
notice to the party claiming the force majeure at any time after such inability
has continued for a period of 6 consecutive months and prior to the performance
or resumption of performance by the disabled party. In the event of such
termination, neither party shall have any further rights or obligations under
this Agreement other than those with respect to performance required hereunder
prior to the effective date of such termination.

13.8 A force majeure event which prevents Seller from producing or
delivering, or Purchaser from transporting, unloading, receiving or utilizing
the coal supplied hereunder, shall not excuse Purchaser from reimbursing Seller
for payment of all transportation costs incurred by Seller, including the
reimbursement of any minimum tonnage charges of the railroad.

13.9 Nothing in this Article shall be construed to allow the Purchaser
to tell the Seller how to produce coal hereunder.

ARTICLE XIV

GOVERNMENTAL AUTHORITY

14.1 "Governmental Authority" shall include the provisions of all
Federal, State and other governmental laws and all applicable orders,
regulations and rules thereunder, which have been or may at any time be, issued
by a governmental agency or made applicable by a court having jurisdiction.

<PAGE> 38

14.2 In the event of any exercise of Governmental Authority which
wholly or partially prevents the mining, preparing, loading, delivery or selling
of coal by the Seller or the transporting, unloading, receiving or utilization
of the coal by the Purchaser, the same shall be deemed an event of force majeure
subject to the provisions of Article XIII.

14.3 In the event that any exercise of Governmental Authority increases
Seller's costs, adversely affects the quality of the coal produced, or limits or
restricts the productive capacity of Seller's mining operation at the mine, to a
degree which, in Seller's sole judgment, permits continued performance hereunder
after taking into consideration proper adjustments to the Current Price, and/or
other rights and/or obligations of Seller hereunder, the then Current Price
shall be adjusted and this Agreement shall be amended so as to compensate Seller
fully for the effect upon it of such exercise. Any price or other contract
adjustment pursuant to this provision shall be effective as of the date the
effect of exercise of governmental authority is experienced, and subject to
audit under Article XII and/or arbitration under Article XVII of this Agreement.
If Seller makes the judgment provided for in the first sentence of this Section,
Seller shall specify the amendments and/or adjustments it considers necessary
for its continued performance hereunder and shall notify Purchaser promptly in
writing of those amendments and/or adjustments. Purchaser, in lieu of agreeing
to such amendments and/or adjustments, or Seller, should Purchaser fail to agree
to such amendments and/or adjustments, within 30 days of receipt of notice
thereof, may terminate this Agreement by notifying the other party in writing,
such termination to be effective not less than 30 days after delivery of the
notice first above described.

14.4 If either Purchaser or Seller elects to terminate this Agreement
under the

<PAGE> 39

provisions of this Article XIV, then neither party shall have, after the
effective date of such termination, any further rights or obligations under this
Agreement, other than those with respect to performance required hereunder prior
to the effective date of such termination.

ARTICLE XV

MATERIAL DEFAULT

15.1 Seller shall be in material default hereunder only if it should
fail to ship, without excuse under this Agreement, during any Contract Year at
least 85 percent of the coal shipments required to be shipped during such
period. Any deliveries excused by Articles XIII or XIV shall be considered as
shipments made by Seller.

15.2 Purchaser shall be in material default hereunder only if it should
fail to purchase or accept, or fail to cooperate in arranging, shipments,
without excuse under this Agreement, during any Contract Year, of at least 85
percent of the coal shipments which Purchaser is required to accept under this
Agreement, or should it fail to pay any invoice of Seller within 60 days of the
date payment is due hereunder and not later prevail on its dispute that such
payment was not due. Any purchase or receipts of shipments excused by Articles
XIII or XIV shall be considered as shipments accepted by Purchaser.

ARTICLE XVI

REMEDIES

16.1 In the event of material default by one party as defined in
Article XV, the other may elect to cancel this Agreement by giving 60 days'
prior written notice of its intention to do so within 30 days after the end of
the Contract Year in which the material default occurs, and thereafter recover
damages for nondelivery, nonacceptance or nonpayment as provided herein

<PAGE> 40

through the date of such cancellation. If Seller has given timely notice of
cancellation, it shall be entitled to recover from Purchaser a) with respect to
coal tendered for delivery which Purchaser has failed to accept or arrange for
delivery hereunder from the beginning of the Contract Year on account of which
the material default is claimed through the date of cancellation, the difference
between the Current Price hereunder the then actual price received for such coal
sold in a commercially reasonable manner, but without any incidental or
consequential damages whatsoever or b) with respect to coal supplied to
Purchaser but not paid for, the total amount owed for such coal, as provided in
Article XI. If Purchaser has given timely notice of cancellation, it shall be
entitled to recover from Seller, with respect to coal not delivered hereunder
from the beginning of the 12-month period on account of which the material
default is claimed through the date of cancellation, the difference between the
cost of obtaining replacement coal purchased in a commercially reasonable manner
and the Current Price of such coal Seller failed to deliver during such 12-month
period, including allowances for increased transportation charges, but without
any other incidental or consequential damages. The cancellation remedy herein
for Purchaser and Seller, respectively, shall be the sole and exclusive remedy
for the material default giving rise to the exercise of XVI do not apply to a
material default in bad faith and in the event of a material default committed
by a party in bad faith, the other party, in addition to the remedies provided
in this Article XVI, shall be entitled to any other remedies available in law or
in equity, but without incidental or consequential damages.

16.2 In the event the Seller shall fail to deliver during any Contract
Year the quantity of coal required by this Agreement and such failure is not
excused by this Agreement, and provided that Purchaser has not elected to cancel
under Section 16.1, Purchaser may either:

<PAGE> 41

(1) Elect to receive the quantity required, but not delivered
or excused, at the end of the term of this Agreement at the Current Price in
effect at the time the coal is shipped; or

(2) Elect to purchase coal, and actually purchase and accept
delivery of such coal, within 6 months of the end of the Contract Year, in a
commercially reasonable manner, in a quantity equal to that required to be
delivered during that Contract Year but not shipped or excused. Purchaser shall
thereafter be entitled to recover the difference between the cost of obtaining
such replacement coal and the Current Price of the coal Seller failed to deliver
during that Contract Year, including allowances for increased transportation
charges, but without any other incidental or consequential damages; or

(3) Elect to waive the default.

Purchaser shall notify Seller, in a writing dated within 60 days of the
expiration of the said Contract Year in which it claims Seller has failed to
deliver the required quantity of coal, of its election hereunder, or be barred
from any remedy.

16.3 In the event the Purchaser shall fail to accept, or fail to
cooperate in arranging shipments and such failure is not excused by this
Agreement, and provided Seller has not elected to cancel under Section 16.1,
Seller may:

(1) Elect to deliver the quantity required but not accepted or
excused, at the end of the term of this Agreement at the Current Price in effect
at the time the coal is shipped; or

(2) Elect to sell coal, and actually sell such coal within six
months of the end of the contract year, in a commercially reasonable manner, in
a quantity equal to that required to be accepted during that Contract Year but
not accepted or excused. Seller shall thereafter be entitled to recover from
Purchaser the difference between the amount obtained for such coal and

<PAGE> 42

the Current Price Seller would have received hereunder for such coal, but
without any other incidental or consequential damages; or

(3) Elect to waive the default.

Seller shall notify Purchaser, in a writing dated within 60 days of the
expiration of the said Contract Year in which it claims Purchaser has failed to
purchase or accept the required quantity of coal, of its election hereunder, or
be barred from any remedy.

16.4 Should either party fail to pay any sums required to be paid under
this Agreement, the other party shall, in addition to any remedy therefor
afforded by this Agreement, have the right to submit the claim to arbitration
under Article XVII to collect the same and any award rendered thereon shall
provide for interest as set forth in Section 11.5.

16.5 The remedies provided in this Article XVI shall be the sole and
exclusive remedies should Seller fail to deliver or Purchaser fail to purchase,
accept and pay for the quantity of coal required by this Agreement.

16.6 The adjustments provided in Article IX are liquidated remedies and
together with the remedies provided for in Article X shall be the Purchaser's
sole and exclusive remedies should the coal shipped not meet the specifications
of Article IX.

16.7 In the event of a cancellation pursuant to Section 16.1, neither
party shall have any further rights or obligations under this Agreement other
than those with respect to performance required hereunder prior to the effective
date of such cancellation.

ARTICLE XVII

ARBITRATION

17.1 Any dispute between the parties with respect to this Agreement
shall be submitted

<PAGE> 43

to arbitration under the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The arbitration proceeding shall be held
and conducted in Atlanta, Georgia, or such other location as may be mutually
agreed to by the parties. There shall be one arbitrator if the amount claimed in
the demand for arbitration is less than $1,000,000, and three arbitrators
otherwise. This Agreement to arbitrate shall be specifically enforceable. The
award of the arbitrators shall be final and binding, and judgment upon any award
rendered by said Arbitration Board may be entered in any court having
jurisdiction thereof. This provision shall survive the termination of this
Agreement.

17.2 In the event one of the parties gives to the other notice of
arbitration, the parties shall agree upon the arbitrator or arbitrators within
60 days from the date of such notice, and if they fail to do so, the arbitrator
or arbitrators shall be selected by the American Arbitration Association,
Atlanta, Georgia.

17.3 The reasonable compensation and expenses of any arbitrators and
the cost of the arbitration shall be shared equally by the parties. Each party
shall bear its own counsel fees and expenses. In each instance the decision of a
majority of the arbitrators shall be final and binding as to such matters as are
submitted to and determined by them. Each party hereto shall have full rights of
discovery with respect to all documentary information pertinent to the dispute
during such arbitration.

17.4 Any questions as to whether or not a party hereto has committed a
breach of contract or is guilty of a default so as to entitle the other party
hereto to terminate or cancel this Agreement shall not be the subject of
arbitration hereunder.

<PAGE> 44

ARTICLE XVIII

PRICE CONTROLS

18.1 In the event the price of the coal covered by this Agreement is
subject to governmental voluntary or mandatory price controls or is otherwise
fixed by law or governmental regulation, and such regulated price is more or
less than the then Current Price under this Agreement, the parties shall jointly
petition the proper governmental authority to have this Agreement or the prices
hereunder declared exempt or excepted from such law or regulation and/or to have
the prices specified in this Agreement approved. If such petition is denied or
otherwise dismissed, and if the regulated price is such as to result in a
decrease in the then Current Price, Purchaser will, if lawful, in some manner
compensate Seller for the difference between such regulated price and the price
Purchaser would have paid if such regulated price had not been imposed. Should
Seller's actual costs (excluding profits but including all direct costs but only
mine-level indirect and overhead costs) in producing coal sold during any period
a regulated price is in effect exceed the price paid for the same coal by
Purchaser by an aggregate amount equal to the "Loss Limit," Seller may elect to
terminate this Agreement after 6 months' prior written notice to the Purchaser.
In the event Seller sends such written notice of its election to terminate,
Purchaser shall have the right, for a period of 30 days after receipt of the
termination notice, to notify the Seller in writing of its election to purchase
the Seller's mines then producing coal for delivery under this Agreement,
including an allocation of reserves adequate to fulfill the requirements of this
Agreement, at a price equal to Seller's total investment in such mines and
reserves, less the accumulated cost depletion and depreciation applicable
thereto. Any such purchase shall close not later than 60 days after the date of
Seller's original

<PAGE> 45

notice of election to terminate. If Purchaser does not elect so to purchase
Seller's mines, neither party shall have any further rights or obligations under
this Agreement after termination, other than with respect to performance
required prior to termination. The "Loss Limit" shall from time to time be equal
to $2,000,000 multiplied by the ratio of (i) the "Consumer Price Index - Wage
Earners and Clerical Workers (CPI-W)" on the January 1 preceding the day the
notice of election to terminate is sent, to (ii) the CPI-W on January 1, 1979.

ARTICLE XIX

ASSIGNMENT AND DELEGATION

19.1 Without relieving the Purchaser of any of its performance
obligations hereunder, the Purchaser shall have the right to sell all or any
portion of the coal under this Agreement at any time, or to assign this
Agreement in its entirety to the United Sates Department of Agriculture, Rural
Electrification Administration.

19.2 Purchaser may from time to time designate in writing an agent or
agents for the purpose of specifying the quantity, destination and routing of
coal to be shipped from time to time to Purchaser hereunder, and for such other
purposes as Purchaser may elect.

19.3 Seller has designated MAPCO Coals Inc. as Seller's agent for the
administration of this Agreement.

19.4 Neither the rights nor obligations of either party hereunder shall
be otherwise assigned or delegated without the prior written consent of the
other party, which shall not be unreasonably withheld; provided, however, that
either party, without consent, may pledge or hypothecate this Agreement purely
for financial purposes or merge or consolidate with another corporation or sell
its assets to another corporation if the successor assumes all of the rights and

<PAGE> 46

obligations of the Purchaser or Seller. No assignment or other action permitted
under this Section shall alter or otherwise affect the obligations of the
parties to this Agreement.

19.5 Webster and White have previously agreed and consented to the
assignment of the Coal Supply Agreement dated January 17, 1979, by Purchaser to
CBT Trust Company of Florida, National Association, as trustee under an
agreement titled Assignment of Fuel Contracts, dated on or about December 6,
1984. This amendment and restatement of the Coal Supply Agreement shall not
alter the consents previously given and this restated and amended agreement, as
between the parties, shall be considered as included in consents executed by or
on behalf of Webster and White.

ARTICLE XX

INDEMNIFICATION

20.1 Seller shall indemnify, defend and hold Purchaser harmless from
and against any claim, demand, loss or damage for personal injury to a third
party caused by or resulting from any negligent act or omission of Seller.
Purchaser shall indemnify, defend and hold Seller harmless from and against any
claim, demand, loss or damage for personal injury to a third party caused by or
resulting from any negligent act or omission of Purchaser. Except as otherwise
provided by this Agreement, nothing herein shall affect any right of indemnity
otherwise affordable by law.

ARTICLE XXI

EQUAL EMPLOYMENT OPPORTUNITY

21.1 The Equal Employment Opportunity clause in Section 202, Paragraphs
1 through 7 of Executive Order 11246, as amended, relative to equal employment
opportunity, and the

<PAGE> 47

implementing Rules and Regulations of the Office of Federal Contract Compliance
are incorporated herein by specific reference, where applicable, with which
Purchaser and Seller agree to comply.

ARTICLE XXII

GENERAL

22.1 Unless otherwise specifically stated herein, the failure of either
party to insist on any one or more instances upon strict performance of any of
the provisions of this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of any such provisions or the
relinquishment of any such rights unless otherwise provided herein, but the same
shall continue and remain in full force and effect for the term of this
Agreement.

22.2 The validity, construction and performance of this Agreement shall
be determined in accordance with the laws of the State of Florida.

22.3 All notices under this Agreement shall be made in writing by
certified postage prepaid United States mail, addressed, if to Purchaser, at
16313 North Dale Mabry Highway, Tampa, Florida 33618, Attention: Director of
Procurement; and if to Seller, c/o MAPCO Coals Inc., 1717 South Boulder Avenue,
Tulsa, Oklahoma 74119, Attention: Vice President - Sales; or at such other
address as either party may designate in writing to the other.

22.4 This is an agreement for the purchase and sale of coal in which
the parties recognize and agree that Seller is not an agent or employee of
Purchaser but is independent of any managerial or other control or direction by
Purchaser in its work hereunder, and is free to perform by such means and in
such manner as Seller may choose, all work in pursuance of commitments
hereunder.

<PAGE> 48

22.5 The captions to sections hereof are for convenience only and shall
not be considered in construing the intent of the parties.

ARTICLE XXIII

ENTIRE AGREEMENT

23.1 This instrument contains the entire agreement between the parties
as to coal produced and sold hereunder and there are no representations,
understandings or agreements, oral or written, which are not included herein.
This Agreement cannot be changed except by duly authorized representatives of
both parties in writing. It is understood that Purchaser from time to time in
the administration of this Agreement may issue and transmit to Seller documents
designated as "Purchase Orders" and "Change Orders"; these documents serve
instructional or accounting functions only and are not amendments to or
constructions of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective proper officers thereunto duly authorized, in
duplicate counterparts, each of which shall be deemed to be an original, as of
the day and year first above written.

<PAGE> 49

PURCHASER: SEMINOLE ELECTRIC
COOPERATIVE, INC.

(CORPORATE SEAL)

ATTEST: By
-----------------------------
President

- -------------------------------
Secretary

SELLER: WEBSTER COUNTY
COAL CORPORATION

(CORPORATE SEAL)

ATTEST: By
-----------------------------
President

- -------------------------------
Secretary SELLER: WHITE COUNTY COAL
CORPORATION

(CORPORATE SEAL)

ATTEST: By
-----------------------------
President

- -------------------------------
Secretary

<PAGE> 1
EXHIBIT 10.10

Contract 95P05 - 129636

CONTRACT FOR PURCHASE AND SALE OF COAL

THIS AGREEMENT, is made and entered into this 31st day of January,
1995, by and between TENNESSEE VALLEY AUTHORITY, a corporation organized and
existing under an Act of Congress (hereinafter called "TVA"), and Webster County
Coal Corporation (hereinafter called "Contractor").

W I T N E S S E T H:

In consideration of the mutual covenants hereinafter stated, the
parties hereto agree as follows:

Definitions: "Contract Year" shall mean a twelve-month period
commencing with the first day of the calendar month in which the Delivery
Commencement Date (as hereinafter defined) occurs.

"Delivery Commencement Date" shall be that date set forth in Section 1
hereof for commencement of deliveries. Such date may be changed only by
supplement to this contract that expressly refers to the term "Delivery
Commencement Date." The actual date of commencement of deliveries shall not
affect the Delivery Commencement Date.

"Contract Quarter" shall mean any of the four quarters of a Contract
Year.

"Contract Administrator" shall be that TVA representative designated to
administer the contract on behalf of TVA. This TVA representative is identified
in Section 12, Notices.

"Destination Plant" shall mean that TVA fossil-fired power plant
designated in the Request for Proposals under which this contract was awarded or
such other destination as TVA may elect under Subsection 14.g. of this contract.

<PAGE> 2

1. CONTRACT TERM: Delivery Commencement Date shall be July 1,
1995 and, subject to the provisions of Subsection 1.b. of this contract,
deliveries shall continue for six (6) contract years unless terminated by
agreement or as otherwise provided herein.

b. This contract may be reopened by either party ****** prior
to the ****** of the Delivery Commencement Date (said ****** date being
hereinafter referred to as "Reopener Date") for the purpose of renogotiating
price and other terms and conditions, or solely for the purpose of terminating
deliveries. The party desiring to exercise such reopener shall give the other
party written notice at least ****** prior to the Reopener Date. If this
reopener provision has been exercised and the parties fail to reach written
agreement at least ****** prior to the said Reopener Date, then this contract
will terminate on the said anniversary date.

2. QUANTITY:

a. Subject to TVA's right to reduce or increase quantities to
be delivered, as hereinafter provided, the quantity of coal to be sold and
purchased hereunder during each Contract Year shall be ****** nominal tons.
which shall be divided into four (4) equal amounts to determine the quantity of
coal to be delivered per Contract Quarter; provided, however each Contract
Quarter TVA may either increase or decrease such purchases from Contractor by an
amount up to ****** of the quantity of coal per Contract Quarter by giving at
least thirty (30) days' written notice prior to the beginning of each Contract
Quarter (said nominated quantity being hereinafter referred to as the "Nominated
Quarterly Quantity"). Such notice shall also indicate the quantities to be
delivered each month for the Contract Quarter. In establishing such monthly
quantities, subject to meeting the Nominated Quarterly Quantity, TVA may elect
as much as ****** of the Nominated

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<PAGE> 3

Quarterly Quantity or as little as ****** of the Nominated Quarterly Quantity to
be delivered in any one month by providing notice in accordance with this
Section 2.a.

TVA shall not be required to accept any quantity of coal shipped during
a month that is in excess of the total monthly amount scheduled, but if TVA
accepts such excess quantity of coal, TVA may, upon written notice to
Contractor, require that such excess amount be deducted from the quantities to
be shipped during the following or subsequent month(s).

This contract is not and shall not be construed as a contract for all
of TVA's coal requirements for the Destination Plant. TVA reserves the right to
purchase coal from other suppliers in any amount during the term of this
contract.

b. Notwithstanding the provisions of a. above, if generation
of electricity at the Destination Plant is curtailed or interrupted for a period
of one week or more as a result of the operating requirements of TVA's
integrated electric generating system, including considerations of economic
dispatch of TVA's generating units, TVA may, from time to time, direct
Contractor to (i) suspend deliveries if the electric output of the Destination
Plant is interrupted or (ii) reduce scheduled shipments of coal by a percentage
equal to the percentage reduction in electric output of the Destination Plant
resulting from a curtailment. Such suspension or reduction in deliveries may
continue as long as generation at the Destination Plant is curtailed or
interrupted; provided, however, if TVA continues any such reduction or
suspension for more than one hundred eighty (180) days, Contractor may notify
TVA in writing of Contractor's intent to terminate this contract ninety (90)
days from the date of TVA's receipt of such written notice, and this contract
shall, upon the passing of such ninety-day (90-day) period, terminate without
further cost or obligation

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<PAGE> 4

to either party, unless TVA shall have directed resumption of the suspended or
reduced deliveries within forty-five (45) days of TVA's receipt of Contractor's
notice of termination.

Except as provided in the preceding sentence, suspensions or reductions
under this subsection shall not affect the enforceability of this contract, and,
on termination of the suspension or reduction, shipments shall resume pursuant
to the terms and conditions of this contract. Both TVA and Contractor shall be
excused from their respective obligations hereunder with respect to deliveries
suspended or reduced pursuant to this section and such deliveries shall not be
rescheduled for delivery except by mutual consent of the parties.

c. TVA may exercise the remedies afforded it under Section 11,
Remedies, or as otherwise provided by law, in the event Contractor fails to
deliver coal as provided in this Section 2 or Section 3, Scheduling; provided,
however, in lieu of other remedies, TVA may elect to rescheduled for delivery
any deficiencies. This rescheduled coal shall be delivered in accordance with
the provisions of this contract and at the price in effect at the time during
which such deficiencies occurred.

3. SCHEDULING:

a. TVA shall provide Contractor with a monthly shipment
schedule indicating the dates and quantities of coal to be delivered to TVA
consistent with TVA's Nominated Quarterly Quantity and the requirements of
Subsection 2.a. Such schedule will be provided by TVA no later than fifteen (15)
days prior to the beginning of the affected month. Contractor shall deliver all
coal in accordance with such schedules. Provided Contractor provides at least
one hundred fifty (150) days' notice to TVA of the holiday and vacation periods
for its sources, TVA

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<PAGE> 5

shall not schedule deliveries during such periods, unless such deliveries are
critical to the prudent operation of the plant(s) during such periods.

TVA maintains the right to coordinate all deliveries under this
contract and others for purposes of establishing a uniform daily delivery
schedule for placement at TVA plants.

b. Whether TVA or Contractor contracts for transportation
services necessary to transport coal purchased and sold hereunder to the
Destination Plant, unless otherwise agreed, it shall be Contractor's
responsibility to make timely arrangements for the availability of
transportation equipment for moving the coal at the scheduled rate of delivery.
Contractor shall be responsible for any demurrage that accrues at the loading
point as provided in Section 14, Transportation.

4. VARIATIONS, DELAYS, AND INTERRUPTIONS IN DELIVERIES:

a. Time of delivery is of major importance to TVA. Contractor
shall immediately notify TVA's Fuel Transportation department of any expected
deviation from the delivery schedule established in accordance with Section 2,
Quantity, and Subsection 3.a. of this contract and of the cause and extent of
deviation, except in the case of variations from schedule of up to ******.

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<PAGE> 6

accidents; major breakdown of equipment or facilities (including emergency
outages of equipment or facilities to make repairs to avoid breakdowns thereof
or damage thereto); fires; industry-wide shortages of carriers' equipment;
embargoes; orders or acts of civil or military authority; or industry-wide
shortages of materials and supplies. Nor shall TVA be obligated to take coal
hereunder so long as such causes wholly or partially prevent the unloading,
stockpiling, or burning of coal at the plant to which deliveries are consigned
at the time the cause occurs, in which case, TVA shall have no obligation to
consign deliveries to another plant. Nor shall the refusal of either party to
settle a strike on terms other than it considers satisfactory preclude the
strike from being considered an excusable cause. TVA shall have the right, but
not the obligation, to require Contractor to make up any tonnage not delivered
in accordance with this section.

Contractor's delays due to delays of its subcontractors will not be
excusable under this provision unless the delay of the subcontractor was also
due to causes beyond the control and without the fault of the subcontractor,
such as the causes listed above. The failure by Contractor or its subcontractor
to obtain and maintain all federal, state, and other regulatory agency coal
mining permits, certificates, and licenses shall not excuse Contractor from any
obligation under this contract. The provisions of this Subsection b. shall not
excuse a party unless such party failing to deliver or take coal shall give
written notice to the other of such failure and furnish full information as to
the cause and probable extent thereof within ten (10) calendar days after the
failure first occurs. In the case of the Contractor, said ten-day (10-day)
period shall begin with the day following that on which tonnage first becomes
deficient under the established delivery

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<PAGE> 7

schedule. In the case of TVA, this period shall begin on the day following that
on which TVA first fails to take coal duly and properly delivered. Failure to
give such notice and furnish such information within the time specified shall be
deemed a waiver of all rights under this provision with respect to tonnage
scheduled for delivery prior to the date such notice and information are
actually furnished.

In the event of partial failure to deliver, take, or unload coal which
is excusable under this subsection, the parties shall prorate deliveries or
receipts of coal in substantially the same proportion based upon contractual
commitments, (e.g. a fifty percent (50%) reduction in receiving or production
capacity would result in a fifty percent (50%) reduction in scheduled deliveries
for each supplier or consumer). However, the parties shall not be obligated to
prorate a reduction in receipts or deliveries under coal supply contracts not
affected by the failure because they have different modes of delivery or have
substantially different quality requirements, or because their scheduled
delivery dates are not affected by the failure. During the periods TVA may
experience such failures to take or unload coal, Contractor shall be permitted
to sell such coal normally intended for TVA. In the case of the period during
which Contractor may experience such failures to deliver coal, TVA may purchase
replacement coal. The disabling effects of such failures to deliver, take, or
unload coal shall be corrected by the party experiencing such failure as soon as
and to the extent reasonably practicable.

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<PAGE> 8

this contract. In the event of such a termination, neither party shall have any
further liability to the other except for those liabilities which may have
accrued with respect to performance or defaults prior to said termination.

c. TVA is currently planning to perform certain
maintenance/repairs to the plant(s) during the term of this agreement as set
forth in Appendix A. TVA, by providing at least forty-five (45) days' prior
written notice to Contractor, shall have the right to refuse any shipments
otherwise scheduled for delivery during such maintenance periods and shall have
no obligation to accept such shipments at a later time. If TVA is unable to
complete the maintenance/repairs to the plant during the period(s) set forth in
Appendix A, then TVA's failure to take coal during such extended period shall be
excused under Subsection 4.b.

5. SOURCE:

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<PAGE> 9

obtained. Contractor shall notify TVA in writing at least forty-five (45) days
in advance of its intention to deliver coal from any additional area(s) or mine
opening(s) in the Source Area which is not then authorized. TVA may, if it deems
it is in TVA's best interests, authorize such areas, but is under no obligation
to do so. TVA reserves the right to require Contractor to furnish any
information and/or any guarantees TVA deems necessary bearing on the ability of
the source to meet the requirements of this contract and to make that
information a part of this contract.

b. Contractor shall immediately notify TVA in writing of any
events affecting the size or location of the Authorized Source(s). All
Authorized Sources under this contract shall be in compliance with the Federal
Mine Safety and Health Act of 1977, as amended, all state and federal
reclamation laws, including the Surface Mining Control and Reclamation Act of
1977, as amended, and regulations issued under such laws. If Contractor fails to
comply with this requirement, whether or not coal from such Authorized Source is
then being delivered hereunder, TVA may exercise its rights under Section 11,
Remedies.

c. Contractor expressly assumes the risk that the Authorized
Source(s) will permit the production of coal in such quantities and of such
quality as will meet the requirements of this contract. Coal shall not be
delivered from any other source(s), or shipped from any other origin(s), or
mined by any other producer(s) or subcontractor(s), unless authorized by TVA in
writing prior to delivery.

d. Regardless of the cause of or reason for a request by
Contractor to approve a new Authorized Source, TVA shall be under no obligation
to approve the tendered source as an Authorized Source, and TVA may withhold its
approval on any basis or bases that TVA may deem appropriate, including purely
economic considerations.

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<PAGE> 10

6. PRICE:

a. TVA shall pay Contractor ****** (hereinafter referred to as
the Base Price) f.o.b. railcar Dotiki mine loadout for each net ton of coal
purchased and delivered under this contract, plus or minus such adjustments as
herein provided. The Base Price remains constant.

7. SAMPLING AND ANALYSIS:

a. The sampling location shall be the Destination Plant unless
TVA notifies Contractor in writing that samples will be taken at other
locations. TVA shall determine how much coal is to be sampled and the lot size
of each sample. Contractor may be present at the taking of samples, but TVA
shall be under no obligation to notify Contractor to be present.

b. Sampling and analysis shall be conducted generally in
accordance with the methods described in the latest published edition of the
Annual Book of ASTM Standards, volume 05.05. Contractor has observed the
sampling equipment and facilities at the Destination Plant or has taken such
other steps as Contractor deems appropriate to familiarize itself with such
equipment and facilities, and Contractor waives any claim, demand, defense, or
objection thereto based on any lack of conformance of such equipment and
facilities to the requirements of this Section 7, provided they are properly
maintained during the term of this contract.

c. Analysis data shall be promptly made available to
Contractor through access to a computer system or, at TVA's option, such data
may be provided by other means. Moisture, ash, and sulfur values shall be
reported to the nearest hundredth (.01) of a percent. Heat content in Btu/lb
shall be reported to the nearest whole Btu/lb. SO2 content shall be calculated
and reported to the nearest hundredth (.01) of a pound.

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<PAGE> 11

d. All samples (except washability samples) collected by TVA
shall be divided into at least two parts and put in suitable airtight
containers, the first container in each case to be used by TVA, or its
designated commercial laboratory, and the second container in each case to be
held available by TVA for a period of not less than forty-five (45) days from
actual sampling date of the coal by TVA, properly sealed and labeled, to be
analyzed if a dispute arises between TVA and Contractor. If Contractor wishes to
dispute a sample or analysis, it shall notify TVA in writing within such
forty-five day (45-day) period. If Contractor fails to provide such notice of
dispute within such forty-five day (45-day) period, Contractor shall be deemed
to have waived any claim or defense based on errors or omissions in the sampling
or analysis operations as to the affected samples. TVA reserves the right to
collect sample(s) of coal delivered for washability analysis at any time. TVA,
subsequent to the loading and release of the train by Contractor, will endeavor,
but is not required, to notify Contractor that samples will be collected from
such train for the purpose of performing a washability analysis. Any such
washability sample shall be taken by an independent third party laboratory in
accordance with the latest annual book of ASTM standards.

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<PAGE> 12

after the appropriate analysis is received. Contractor shall be responsible for
any demurrage charges incurred by TVA as the result of Contractor's failure to
transmit the analyses when and as required. TVA may reject coal based on these
analyses; however, nothing in this Subsection e. shall affect in any way TVA's
rights to appropriate contractual actions and adjustments for quality based on
samples collected and analyzed in accordance with Subsections a. and b. of this
Section 7.

f. In the event TVA does not sample at least forty percent
(40%) of the tonnage received for a quarterly adjustment, the Contractor's
samples shall be used for the quality adjustment(s) for such quarter under
Section 8, Adjustments for Quality, provided all Contractor samples for such
quarter meet all criteria below:

(2) Sample system shall have been bias tested at least every
twelve (12) months. The testing procedure and precision must be approved by TVA.

(3) Sample analysis and other data required by TVA to match
data with shipment shall be provided to TVA in a format approved by TVA.

(4) The lot size for each sample shall be by barge for barge
coal, by trainload for rail coal, and by daily delivery for truck coal.

(5) Analysis for each sample shall have been received by TVA
by electronic data interchange within seven (7) days of collection of said
sample.

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<PAGE> 13

(6) The sampling system shall be located in an area acceptable
to TVA such that the sample collected for shipment is collected only from coal
that is loaded for said shipment.

If TVA samples ten percent (10%) or more but less than forty percent
(40%) of the tonnage received, and if any of Contractor's samples for the
affected quarter do not meet all of the above criteria, TVA samples shall be
used for said quarterly adjustment(s). If TVA samples less than ten percent
(10%) of the tonnage received and any of Contractor's samples do not meet all of
the above criteria, no adjustment for quality will be made for said quarter.

8. ADJUSTMENT FOR QUALITY:

a. As used in this Section 8, a "Quarterly Average Value"
shall mean the weighted average value of the appropriate quality component
determined from all samples collected in accordance with Subsections 7.a. and
7.b. during a calendar quarter based, at TVA's election, on the tonnage, number
of railcars, or barges represented by the samples.

b. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest cent per ton and using the Base Price,
shall be applied to the contract price to account for variations in the
Quarterly Average Value for as-received Btu/lb compared to the Guaranteed
Specification for as-received Btu/lb. This adjustment shall in no way be
affected by contract price adjustments under Section 10, Contract Price
Adjustments hereof. (See Exhibit I for example of calculations.)

c. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest cent per ton at a rate of ****** per ton
for each percentage point the Quarterly Average Value of ash (on a dry basis)
exceeds the Guaranteed Average Specification for ash. The

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<PAGE> 14

calculation shall be prorated to cover any fractional percentage (see Exhibit I
for example of calculations).

d. As soon as practicable after the end of each calendar
quarter, TVA shall submit to Contractor a report showing the Quarterly Average
Values and any adjustments determined under this Section 8 of the contract. The
number of tons of coal received by TVA which are subject to adjustment shall be
multiplied by said adjustments, and any resulting amount shall be paid promptly
(or credited to the extent of any offsetting debit) to the party to whom it is
due. The assessment of adjustments in accordance with the foregoing does not in
any way impair TVA's rights under the contract or at law with respect to any
failure by Contractor to meet the Guaranteed Analysis that gives rise to such
adjustments.

9. QUALITY AND SPECIFICATIONS:

a. Contractor guarantees that all coal delivered under this
contract shall conform to the following specifications as determined by sampling
and analyses performed in accordance with Section 7, Sampling and Analysis:

<TABLE>
<CAPTION>
GUARANTEED SUSPENSION/REJECTION
SPECIFICATIONS SPECIFICATIONS
<S> <C> <C> <C>
Total Moisture Not more than ******% ******%
---------- ----------------
Sulfur (as-received) Not more than ******% ******%
---------- ----------------
Sulfur (as -received) Not less than ******% ******%
---------- ----------------
Ash (dry basis) Not more than ******% ******%
---------- ----------------
Btu/lb (as-received) Not less than ****** ******
---------- ----------------
</TABLE>

b. The coal as-received shall have a top size not greater
than two ****** or less than ******, with at least ****** of the product larger
than ******, and with at least ****** of the product larger than ******. Such
sizes shall be determined by using screens

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<PAGE> 15

with square openings. Coal shall not exhibit a temperature in excess of ******,
and it, for a raw coal prior to washing, shall be substantially free from mining
impurities and scrap such as drill bits, pieces of scrap metal or plate,
plastic, rubber, rope, cloth, wire, cable, bone, slate, earth, rock, pyrite,
wood, or water, which can be kept out or removed with the exercise of reasonable
care during mining and loading. It shall be loaded in a manner that will ensure
reasonably uniform consistency as to size and quality and shall not contain
slurry pond material (washer tailings), gob pile material (mine refuse),
petroleum-coke, oxidized coal, or blends of such materials, or create excessive
amounts of dust during the unloading and transferring to storage.

c. Contractor guarantees that all coal delivered under this
contract shall conform to the following Washability Specifications determined by
sampling and analyses performed in accordance with Section 7, Sampling and
Analysis:

<TABLE>
<CAPTION>
WASHABILITY
SPECIFICATIONS
<S> <C> <C>
Lbs. of SO2 per million Btu (1) Not more than ******
-------------------
Sulfur (dry) Not more than ******%
-------------------
Sulfur (dry) Not less than ******%
-------------------
Ash (dry) Not more than ******%
-------------------
Btu/lb (dry) Not less than ******
-------------------
Volatile Matter (dry) Not less than ******%
-------------------
Chlorine (dry) Not more than ******%
-------------------
Btu Recovery Not less than ******%
-------------------
Product Yield Not less than ******%
-------------------
Grindability (Hardgrove Index) Not less than ******
-------------------
</TABLE>

Add fusion temperature reducing atmosphere

<TABLE>
<S> <C> <C>
Initial Not less than ******o
-------------
Softening Not less than ******o
-------------
Hemispherical Not less than ******o
-------------
Fluid Not less than ******o
-------------
Fluid Not more than ******o
-------------

Specific Gravity ******
(1) at ******
</TABLE>

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<PAGE> 16

d. If any coal (barge, trainlot, or daily delivery for trucks)
delivered fails to meet the Suspension/Rejection Specifications of Subsections
9.a., or the requirements of Subsection 9.b. on the basis of visual inspection
or laboratory analysis, TVA may reject the coal at the source, loading point, or
Destination Plant. TVA's acceptance of any amount of coal which does not meet
these requirements shall not constitute a waiver of any right which TVA may have
under this contract or as provided by law on account of the delivery of such
coal. Any such coal accepted shall be assessed liquidated damages at the rate of
****** per ton plus any additional adjustments resulting from its inclusion in
determining the quarterly average values. In case of rejection of any coal in
accordance with this section, TVA will immediately notify Contractor of the
rejection and of the cause of rejection. In the case of coal rejected after
loading, unless the cause for rejection is corrected, Contractor shall promptly
remove the coal from the carrier's equipment or from TVA premises, as the case
may be, at Contractor's expense. Contractor shall reimburse TVA for any
additional transportation costs, demurrage, equipment repair costs, or handling
expenses incurred by TVA in connection with any such rejection. TVA shall not be
under any obligation or liability to assist Contractor in any corrective actions
required to remedy the cause for rejection.

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<PAGE> 17

until Contractor provides assurance satisfactory to TVA that Contractor will
comply with the requirements of Subsection 9.a, b, and c. Such assurance must be
given in writing within seven (7) days after the beginning of such suspension.
If Contractor (1) fails to provide such assurance within the time specified, (2)
provides such assurance but does not correct the deficiencies that resulted in
the breach of Subsection 9.a. or Subsection 9.b. within seven (7) days after
giving such assurance, or (3) fails on two (2) occasions in any twelve (12)
month period to meet the Washability Specifications set forth in Subsection 9.c,
TVA may then terminate Contractor's right to make further deliveries under this
contract. Contractor shall be responsible for all costs or damages incurred by
TVA resulting from Contractor's failure to comply with the contract
requirements. Damages or excess reprocurement cost may be determined in
accordance with Section 11, Remedies.

f. If the normal operations in conformance with the design
capabilities of the Destination Plant cannot be accomplished with the coal
delivered hereunder, although the coal complies with the quality and size
requirements of this Section 9, TVA may then terminate Contractor's right to
make further deliveries, and this contract shall be canceled without further
obligation or liability to either party. In the event of such a termination, the
Contractor may be given a reasonable opportunity to remedy the cause for
termination, which may include the offer of replacement coal. However, TVA is
not obligated to accept offers of replacement coal.

10. CONTRACT PRICE ADJUSTMENTS

a. Effective the first day of the second Contract Year and
each such first day of each Contract Year thereafter, the then current adjusted
price of coal shipped under this contract

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<PAGE> 18

will be increased by ****** of the Base Price specified in Section 6, Price, as
such price may be modified under Subsection d. or e., below.

b. (1) In the event of enactment or amendment, after the
proposal closing date for the requisition under which this contract was awarded
(or in the case of establishment of a new Base Price under Subsection l.b. or
Subsections d. or e., below, after the effective date of such new Base Price),
of a federal or state statute that assesses on a per ton basis a tax, fee, or
other similar charge on the coal delivered hereunder ("Law Changes "),
Contractor shall notify TVA of such Law Changes and supply from its records
information satisfactory to TVA showing the effect, if any, of these Law Changes
upon the cost per ton of furnishing coal under this contract. If a Law Change
increases Contractor's cost of providing coal to TVA, a contract price increase
shall be made by TVA for such Law Changes effective on the later of (a) the date
TVA receives Contractor's notice of the Law Change or (b) the date Contractor's
cost of providing coal is increased by the Law Change. If a Law Change decreases
Contractor's cost of providing coal to TVA, a price decrease shall be made by
TVA for such Law Change effective on the date such Law Change could be utilized
to reduce Contractor's costs whether or not Contractor actually reduces such
costs on such date. This Section 10.b. (1) does not apply to (i) promulgation or
amendment of rules and regulations except to the extent such promulgation or
amendment results from a Law Change, or (ii) to implementation of statutes or
amendments to statutes that are enacted on or before the proposal closing date
as described above.

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<PAGE> 19

contract that collectively come into effect during any one-year period would
result in a contract increase exceeding ****** of the Base Price, then TVA may,
at its sole discretion, terminate the contract upon sixty (60) days' written
notice given after such an adjustment(s) is requested by Contractor.

c. The increase or decrease under each subsection shall be
calculated separately to the nearest one-tenth (1/10) cent per ton. Any changes
(including a recalculation of a previously granted tentative price adjustment)
considered applicable by Contractor shall be reported to TVA by Contractor with
appropriate data necessary to verify the change. Contractor must furnish such
supporting evidence as may be requested by TVA. A request for a price adjustment
considered applicable by Contractor must be submitted to TVA with appropriate
documentation within one hundred eighty (180) days of the date Contractor incurs
a cost change. Failure to do so shall constitute a waiver of Contractor's right
to any upward adjustment. No items of adjustment shall be duplicated or included
under more than one of the adjustment provisions. Any overpayment made under
these provisions may be deducted from any amounts otherwise due Contractor.

Contractor agrees that, in the event TVA reimburses Contractor under
this Section 10 for a cost incurred by Contractor and it is later determined
that Contractor is entitled to recover such cost from a third party, at TVA's
request Contractor shall use its best efforts to recover such cost and upon such
recovery shall reimburse TVA for amounts previously paid by TVA based on said
cost. Reasonable costs incurred by Contractor in pursuing such recovery at TVA's
request shall be reimbursed by TVA; provided that where Contractor and/or other
purchasers from Contractor also receive a benefit from pursuing such recovery,
the cost thereof shall be equitably shared.

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<PAGE> 20

d. If at any time TVA determines that the adjusted price in
effect under this contract exceeds by ****** or more the Fair Market Price for
coal under agreements similar to this contract with respect to term, quality,
and quantity, TVA may reopen this contract for the purpose of establishing a new
price which does not exceed the Fair Market Price. The determination of Fair
Market Price for the purpose of invoking this provision shall be made by TVA
based on available pricing information with respect to Transactions and Offers,
as hereinafter defined. In the event TVA invokes this provision, both parties
will, in good faith, attempt to renegotiate the contract price to Fair Market
Price within thirty (30) days of TVA's notification.

If the parties fail to reach agreement within said 30-day period, a new
price will be determined under this contract through arbitration. A panel of
three (3) arbitrators shall be appointed consisting of one (1) arbitrator
appointed by each of the parties and the two (2) arbitrators so chosen
appointing a third disinterested person to act as chair of the panel of
arbitrators. In the event the two (2) arbitrators cannot agree upon a third
arbitrator, the third arbitrator shall be selected by the parties from a list of
arbitrators furnished by the American Arbitration Association. If the parties
cannot agree on the third arbitrator from such list within ten (10) days after
receipt of the list, the third arbitrator shall be selected by the American
Arbitration Association from such list.

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<PAGE> 21

hereunder, which coal is to be supplied during the period for which the
redetermined price is to be effective, in quantities and under terms and
conditions substantially similar to those of this contract. The arbitrators
shall also consider reasonably probable conditions of the market for coal of
this quality and quantity during that period and other pertinent information as
they may deem necessary. As soon as practicable, the arbitrators shall report
the per ton Fair Market Price as agreed by at least two (2) of them and said
Fair Market Price shall become the contract price retroactive to the date
determined by the arbitrators as appropriate. If at least two (2) of the
arbitrators cannot agree, the arbitrators shall report as the determined price,
the median of the three (3) prices as fair market by the respective arbitrators,
and the median price so reported shall become the Base Price effective as of the
date of TVA's notice. Contractor and TVA shall equally share the cost of
arbitration.

e. In the event TVA's transportation cost for shipment of coal
delivered hereunder increases during any one-year period at a rate greater than
****** of the transportation cost in effect at the time of contract award, TVA
may terminate the Contractor's right to proceed under this contract without
further obligation or liability to either party hereunder or at law by giving
Contractor sixty (60) days' advance notice of such cancellation any time within
one year after TVA begins incurring such cost increase. However, in lieu of
termination, Contractor may elect to reduce the Base Price of coal to cover the
increased portion of the transportation cost above the aforementioned limit, in
which case the contract shall remain in full force and effect. Contractor's
election must be set forth in writing within thirty (30) days of TVA's notice of
termination. Such election by Contractor shall be irrevocable and binding for
that increase and,

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shall be effective as of the date of notification by TVA of the cost increase.
TVA may invoke the provisions of this Subsection e. each and every time its
costs exceed the limit set forth above.

11. REMEDIES:

a. This Subsection 11.a. does not apply to a situation where
another contract provision provides a different procedure, such as Subsection
9.e. If TVA in good faith believes that Contractor has failed to comply with any
term or condition of this contract, the Contract Administrator shall give
Contractor oral notice, to be followed by written confirmation, of any such
violation.

(i) If Contractor fails to correct a curable contract
violation within seven (7) days of first notice, TVA shall have the right to
suspend Contractor's right to make further deliveries until Contractor provides
adequate assurance to TVA that Contractor will comply with all provisions of
this contract, such assurance to be given in writing within seven (7) days after
such suspension. If Contractor fails to provide such adequate assurance within
the time specified or timely provided such assurance but Contractor does not
correct the curable contract violation(s) within seven (7) days after giving
such assurance, TVA shall have the right, but not the obligation, to terminate
Contractor's right to make further deliveries under this contract.

(2) In the case of a contract violation by
Contractor that is not curable (including, but not limited to, violations of
Section 5, Source, of this contract, or of Section 6, Officials Not to Benefit
of the General Long-Term Contract Conditions), upon providing notice as
described above, TVA shall have the immediate right, but not the obligation, to
terminate or suspend for up to thirty (30) days, Contractor's right to make
further deliveries under this contract. If TVA suspends Contractor's right to
make further deliveries, then, upon expiration of

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said thirty (30-day) period, TVA shall either direct Contractor to continue
performance of this contract or terminate Contractor's right to make further
deliveries.

b. Contractor shall be responsible for all costs or damages
incurred by TVA resulting from Contractor's failure to comply with the contract
requirements. TVA may, at its option, purchase in the open market or by contract
or otherwise procure coal to replace all or any part of that which the
Contractor has failed to deliver, or that as to which its right to deliver was
terminated or suspended. Except as provided in Section 4, Variations, Delays,
and Interruptions in Deliveries Subsection b., Contractor shall be liable to TVA
for the excess cost occasioned by such purchase(s) and any other loss or damage
caused by Contractor's breach of the contract, including, but without limitation
to, liability incurred by TVA with respect to the transportation or other
handling of the coal. In the alternative, TVA may determine the loss or damage
sustained by Contractor's breach of contract by other methods as provided by
law. In addition to all other means of recovery, TVA may deduct any such excess
costs and damages from any amount otherwise due Contractor.

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termination or contract expiration, such part of the highest priced coal (of
comparable quality under one or more Contracts) for which TVA awards spot
contracts in the week following each such deficiency, for delivery to any plant
in the TVA system, as equals the quantity of Contractor's deficiency shall be
deemed to have been purchased as replacement coal for Contractor's account. If
no spot coal was purchased before contract termination or expiration, TVA shall
determine damages for all unexcused deficiencies in the manner provided in item
(1) above, whether such deficiencies accrued before or after termination or
expiration.

c. If TVA suspends or terminates Contractor's right to make
further deliveries hereunder or under any other provision of this contract and
such suspension or termination is finally determined in accordance with Section
18, Disputes, to have been improper, then Contractor's sole remedy for such
improper termination or suspension shall be to require rescheduling of all coal
Contractor was prevented from delivering due to such termination or suspension,
such coal to be rescheduled for delivery on dates acceptable to both parties,
but in any event not later than contract expiration. The price to be paid for
such rescheduled coal shall be that in effect at the time of delivery.

12. NOTICES: Unless otherwise provided for in the Agreement, any
contractual notice required to be given to either party shall be deemed duly
given by registered, certified, or first-class mail, telecopy or telegram, to
the intended party at the following address or at such changed address as may
from time to time be designated in a notice similarly delivered or mailed.
Except as expressly provided herein, any notice shall be deemed to have been
given when sent. Communications by telecopy, or telegram shall be confirmed by
depositing a copy of

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the same in the post office for transmission by registered, certified, or
first-class mail in any envelope properly addressed as follows:

In the case of Contractor to:

General Manager - Central Region Sales

Webster County Coal Company
In Care of Mapco Coal Inc.
1717 South Boulder Avenue
Tulsa, Oklahoma 74119

In the case of TVA to:

Ms. Tammy Quinn, Contract Administrator
Tennessee Valley Authority
Fossil Fuels
1101 Market Street, LP 5G
Chattanooga, Tennessee 37402-2801

Either party may, by written notice to the other, change the representative or
the address to which such notices and communications are to be sent.

13. SHIPPING NOTICES:

a. For all rail-delivered coal Contractor shall forward to the
Plant Manager a daily notification, in duplicate, as to coal shipped. This
shipping notice must include the contract number, traffic control numbers,
railcar numbers, origin, name of mine, size of coal, shipping date, and
approximate date of arrival. In addition, Contractor must complete the bill of
lading (provided by TVA), and forward this document to the railroad and plant
for proper identification. TVA shall have the right to require Contractor to
transmit all of the above-referenced information via electronic data transfer
direct to TVA's computer system.

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<PAGE> 26

b. For all barge-delivered coal Contractor shall forward to
the individual named in the consigning instructions, Plant Manager, and Terminal
Supervisor, if applicable, a daily notification, in duplicate, as to coal
shipped. This shipping notice must include the contract number, barge numbers,
origin, name of mine, size of coal, shipping date, and approximate date of
arrival. TVA shall have the right to require Contractor to transmit all of the
above-referenced information via electronic data transfer direct to TVA's
computer system.

c. Contractor must take whatever steps are necessary to ensure
that shipping notices arrive at the plant prior to delivery of the coal. The
plant will not unload coal until a correct shipping notice is received and
Contractor will be responsible to carrier or TVA for any demurrage charges
resulting from delays due to late notification.

d. By 10:00 a.m. Eastern Time each Monday, Contractor must
forward by fax a weekly shipping notice to the Contract Administrator. This
shipping notice shall include the contract number, release number, tonnage
shipped by day for the previous week, and mine name. If TVA's weights govern,
estimated weights are satisfactory. Any difference from the schedule established
by TVA pursuant to Section 3 must be explained.

14. TRANSPORTATION:

a. TVA reserves the right to specify reasonable limitations on
the type and size of transportation equipment, the method of transportation
(including trainload lots and bargeload lots where lots are necessary to provide
the lowest transportation rate possible), and the exact routing to be used even
though transportation charges are prepaid. TVA may reject any shipment made in
disregard of such specifications. If the contract is awarded upon the basis of a
price or prices which include transportation charges in whole or in part to
destination (f.o.b. destination

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<PAGE> 27

contract), title to the coal (except in the case of accelerated payments to
Small Coal Operators) and risk of loss and damage shall remain with Contractor
until delivery in acceptable condition by the carrier at destination.

b. For all coal to be delivered hereunder, it shall be
Contractor's responsibility to furnish loading devices which shall be suitable
and fit for the purpose contemplated in this contract. Contractor shall be
governed by carrier's instructions regarding the height and distribution of the
load, weight of cargo, and other instructions which carrier deems necessary for
safe transportation. Contractor shall allow carrier's inspection of loaded
equipment to assure compliance with carrier's loading instructions.

c. For all coal purchased, it shall be Contractor's
responsibility to visually inspect the transportation equipment prior to each
loading and ascertain that the equipment is empty and suitable for loading. Any
equipment found mechanically unsound for loading or contaminated with material
shall not be loaded. Contractor shall be responsible for all costs incurred by
TVA, including the cost of any coal lost in transit, resulting from Contractor's
failure to exercise such diligence.

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<PAGE> 28

maximum, it shall be Contractor's responsibility to correct the load at
Contractor's expense, including but not limited to, Contractor's payment to the
carrier of a per car switching charge, as well as any demurrage charges which
may accrue while the car or cars await correction in load.

e. For all coal to be delivered hereunder, whether f.o.b.
origin or f.o.b. Destination Plant, Contractor shall be responsible for any
demurrage that accrues at any loading point as a result of Contractor or its sub
Contractors not being prepared to load the coal as scheduled. The carrier shall
invoice Contractor and Contractor shall pay said carrier for all origin
demurrage charges which accrue at the loading point(s). TVA has contracted for
the transportation services, the free time and demurrage requirements are set
out in CSX's Tariff CSXT 8200-E, as amended from time to time.

f. The explicit obligation of this contract is that it will be
performed in accordance with all applicable laws. Therefore, transportation of
coal by Contractor to barge or rail loading facilities or, if applicable, to the
Destination Plant shall comply with applicable highway laws and regulations
governing the weight of vehicles. If any Contractor fails to comply with such
laws or regulations, TVA shall have the same rights provided under Section 9.
Quality and Specifications, for failure to meet the requirements thereof,
including but not limited to the right to reject coal delivered in overweight
trucks. To insure compliance with this provision and to help protect the roads
and highways, TVA may require that Contractor furnish a copy of the "certified"
truck weight ticket. Regardless of the actual weight of any truck coal received,
the maximum gross weight that can be recorded for a single truck will be limited
to the applicable maximum weight enforced by law. Any weight exceeding that
maximum weight may be deducted from the total weight of coal used for payment
purposes.

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g. TVA reserves the right to ship to any plant any coal
purchased f.o.b. any shipping point. For coal purchased f.o.b. any plant or
shipping point, TVA may from time to time direct deliveries to any other plant
or shipping point, and if such deliveries cause an increase or decrease in the
transportation cost borne by Contractor in performing this contract, an
adjustment shall be made in the contract price to reflect the changes in such
cost. In addition, for coal purchased f.o.b. railcar and/or f.o.b. barge, TVA
may, by giving prior written notice to Contractor as soon as possible but not
later than thirty (30) days in advance, change the transportation mode of
delivery.

15. PAYMENTS, INVOICES: Payments under this contract are subject to the
provisions of the Prompt Payment Act (31 U.S.C. Sections 3901-3907). Payments as
are provided for in the contract or by law will be made by check or Electronic
Fund Transfer (EFT) if a participation agreement has been established between
TVA and Contractor. Except as provided for under TVA's Small Coal Operators
Assistance Program, EFTs will be made not more than thirty-four (34) calendar
days, and checks will be mailed not more than thirty (30) calendar days; after
the later of (1) receipt of a proper invoice(s) by TVA at the Accounts Payable
Department, P.O. Box 15500, Knoxville, Tennessee 37901-5500 or (2) receipt and
unloading of the coal at TVA's fossil plants. In preparing invoices, Contractor
shall multiply the number of tons delivered by the Base Price applicable at the
f.o.b. point of delivery plus or minus any adjustments that have been made
effective under contract provisions.

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shipping date, mine at which the coal was produced, together with any
documentation required to be submitted therewith by any other provision of the
contract.

16. WEIGHTS

a. Unless TVA determines circumstances require determination
by other methods, all coal delivered to destination by barge shall be weighed by
TVA on belt scales which are maintained and periodically calibrated by TVA or
third parties for accuracy.

b. Where at TVA's election coal is weighed by Contractor at
origin, Contractor shall notify TVA immediately upon the occurrence of
inaccurate weighing or absence of actual weighing. Contractor shall certify such
notification in writing to TVA within seven (7) working days of the date of each
such occurrence. Such certification shall identify each affected coal shipment
by contract number, breakdown code, shipping point, traffic control number,
shipping date, and car or barge number(s). Contractor's account shall be
adjusted for any coal inaccurately weighed, or not weighed, and by the amount of
the carrier's weighing charge in effect at the time of shipment. Such adjustment
to be made at whatever time such occurrence(s) becomes known to TVA. In the
absence of scale weights from Contractor, TVA and Contractor will mutually agree
by what means the weight of coal delivered hereunder shall be determined.
Contractor shall reimburse TVA for any cost or expense charged to or incurred by
TVA as a result of the absence of appropriate scale weights from Contractor.
While TVA may not undertake to weigh all coal received, it may at its option,
check weigh any coal received. In the event billed (invoiced) weights vary from
TVA weights by more than one and one-half percent (1-1/2%), TVA's weights will
govern.

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<PAGE> 31

If TVA has elected to have Contractor weigh the coal pursuant to
Subsection b., scale tests shall be performed more often than quarterly when
requested by TVA. TVA shall be responsible for the cost of additional requested
tests unless the results thereof show that the scale failed to conform to
certification standards, in which event Contractor shall be responsible for such
costs. The aggregate weights determined during any payment period shall be
acceptable as the quantity of coal sold and purchased during such period for
which invoices are to be rendered and payments to be made.

TVA shall have the right to have a representative present at any and
all times during TVA loadings to observe determination of weights. If TVA should
at any time question the accuracy of the weights thus determined, TVA shall so
advise Contractor and Contractor shall permit TVA's representatives to test
Contractor's weighing devices or methods. If such tests show the weighing
devices to be in error, or if the weighing devices otherwise are determined to
be in error, the weighing devices shall be adjusted to an accurate condition. In
the event TVA and Contractor are unable to agree upon such tests and
adjustments, or the devices or methods thereof, the weighing devices and methods
shall be tested and adjusted to a condition of accuracy by a qualified third
party, mutually chosen by TVA and Contractor, and the cost of the testing and
adjusting by such third party shall be shared equally by TVA and Contractor.

If Contractor's weighing devices or methods are determined to be in
error over 0.5%, an appropriate adjustment shall be made to the affected weights
and related invoices and payments. Such adjustments shall be made retroactively
to a date midway between the date on which the weighing devices were last tested
and calibrated and the date on which the inaccuracy in

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weighing methods or devices was first questioned and prospectively until the
date on which the weighing methods and devices are corrected.

c. All scales used to determine the governing weight of coal
shall be maintained and operated in accordance with the National Institute of
Standards and Technology Handbook 44.

17. CONTRACT ADMINISTRATOR/CONTRACTING OFFICER: The Vice President
of Fuel Supply and Engineering has designated the Contract Administrator who
administers this contract for TVA as his/her duly authorized representative to
act on behalf of TVA for all purposes in the administration of this contract,
such designation to continue until revoked or modified by the Vice President of
Fuel Supply and Engineering. The Contract Administrator shall serve as TVA's
"Contracting Officer" with respect to matters arising under terms of this
contract that provide for action by the Contracting Officer.

18. DISPUTES:

a. This contract is subject to the Contract Disputes Act
of 1978, Public Law No. 95-563, 92 Stat. 2383 ("the Act"), and TVA's
implementing regulations published at 18 C.F.R. pt. 1308 as they may be amended
from time to time.

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<PAGE> 33

implementing regulations. The Disputes Contracting Officer shall reduce his/her
decision to writing and promptly mail or otherwise furnish a copy thereof to
Contractor. Within ninety (90) calendar days from the receipt of such copy,
Contractor may appeal to the TVA Board of Contract Appeals by mailing or
otherwise furnishing the Disputes Contracting Officer a written notice of
appeal. Following the filing of a notice of appeal, the TVA Board of Contract
Appeals shall arrange for the decision of the appeal in accordance with the Act
and TVA's implementing regulations. The decision of the IVA Board of Contract
Appeals on any question of law shall not be final or conclusive, but the
decision on any question of fact shall be final and conclusive, unless
determined by a court of competent jurisdiction to have been fraudulent, or
arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad
faith, or not supported by substantial evidence.

c. In lieu of an appeal to the TVA Board of Contrast Appeals
from the decision of the Disputes Contracting Officer, Contractor may bring an
action against TVA directly on the claim in a United States District Court with
proper jurisdiction and venue pursuant to 28 U.S.C. Section 1337. Such an action
shall be brought within twelve (12) months from the date of receipt by
Contractor of the Disputes Contracting Officer's decision hereunder.

d. Pending final decision of an appeal, an action, or final
settlement, the decision of the Disputes Contracting Officer shall govern the
respective rights and obligations of the parties as to the matter in dispute
and, if directed to do so in the decision, Contractor shall proceed diligently
with the performance of the contract in accordance with the Disputes Contracting
Officer's decision; provided, that the decision of the Disputes Contracting
Officer

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<PAGE> 34

shall be final and conclusive and not subject to review by any forum, tribunal,
or Government agency, unless an appeal or action is timely commenced as
authorized herein.

e. Contractor agrees that TVA's termination or suspension of
Contractor's right to make deliveries under the contract, TVA's withholding of
monies due under the contract, or TVA's pursuit of other remedies specifically
provided for herein shall not constitute relief under TVA's implementing
regulations at 18 C.F.R. part 1308, as to which TVA must initiate the disputes
process prior to or after effecting; provided, however, nothing in this
Subsection e. shall restrict Contractor from pursuing its right to a Contracting
Officer's decision and other relief available pursuant to this Section 18 with
respect to any such termination, suspension, withholding, setoff, or other
remedy exercised by TVA.

19. CLEAN AIR ACT AND OTHER ENVIRONMENTAL REQUIREMENTS: In the event of
enactment, implementation, amendment, or enforcement of the Clean Air Act
including the 1990 Clean Air Act Amendments, or any other applicable federal,
state, or local air pollution control or environmental law, rule, or requirement
which causes the continued use of the coal purchased under this contract to be
inconsistent with (i) TVA's air pollution control strategies, as they may be
modified for meeting such air pollution control or environmental requirements,
or (ii) an administrative or judicial order, TVA may cancel this contract with
no further obligation or liability hereunder or at law by giving Contractor
ninety (90) days' advance notice of such cancellation. In the case of
inconsistency with TVA's air pollution control strategies, the parties will
attempt to renegotiate the contract during such notice period to provide for
delivery of coal that will be of a quality consistent with TVA's new air
pollution control strategies. In the event

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the parties do not reach agreement on such a renegotiated contract within the
90-day notice period, the cancellation notice given by TVA shall remain in
effect and the contract shall terminate at the end of such period. In no event
will TVA be obligated to divert deliveries to any alternate coal-fired fossil
plant in TVA's system.

20. CONTRACT COMPONENTS: The attached Term Coal Proposal; General
Long-Term Contract Conditions; Appendix A; :Exhibit I; Requirement for
Certificate of Procurement Integrity (ID- 49B); Requirement for Certificate of
Procurement Integrity (ID-50); Subcontracting Plan; and Specific Location
Map(s), constitute parts of this contract.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the aforesaid date by their duly authorized representatives.

ATTEST: Contractor:

By:
- -------------------- -------------------------
Title:
----------------------

ATTEST: TENNESSEE VALLEY AUTHORITY

By:
- -------------------- -------------------------
Title:
----------------------

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EXHIBIT 10.11

AGREEMENT

THIS AGREEMENT entered into as of January 23rd, 1998, by and among
ANDALEX RESOURCES, INC., a Delaware corporation with offices at Suite 401, 45
West 1000 South, Sandy, Utah 84070 (hereinafter referred to as the
"Transferor"); HOPKINS COUNTY COAL LLC, a Delaware limited liability company
with offices at 1205 Nebo Road, P.O. Box 711, Madisonville, Kentucky 42431
(hereinafter referred to as the "Transferee"); WEBSTER COUNTY COAL CORPORATION,
a Kentucky corporation with offices at 1951 Barrett Court, Suite 110, Henderson,
Kentucky 42420 (hereinafter referred to as the "Guarantor"); and the TENNESSEE
VALLEY AUTHORITY, a corporate agency and instrumentality of the United States
Government with offices at 1101 Market Street, LP 5G, Chattanooga, Tennessee
37402-2801 (hereinafter referred to as "TVA").

W I T N E S S E T H:

1. WHEREAS, TVA has entered into a Contract for Purchase and Sale of
Coal, Contract 95P05-129559, dated January 31, 1995, with the Transferor, herein
incorporated by reference, and the term the "Contract" as hereafter used means
the above Contract as amended and including modifications thereto hereafter made
in accordance with the terms and conditions of such Contract; and

2. WHEREAS, upon the closing of that certain Agreement for Purchase and
Sale of Assets by and among Transferor, Transferor's subsidiary and Transferee
(the "Effective Date"), which closing is to take place on or before January 31,
1998 (TVA may, at its option, extend the Effective Date of this Agreement), the
Transferor has or will assign, convey, and transfer to the Transferee all its
right, title and interest in and to the Contract to Transferee; and

3. WHEREAS, as of the Effective Date by virtue of said assignment,
conveyance, and transfer, the Transferee has or will acquire all of the
Transferor's right, title and interest in and to the Contract; and

4. WHEREAS, by virtue of said assignment, conveyance, and transfer, the
Transferee has or will assume all duties and obligations of the Transferor under
the Contract from and after the Effective Date; and

5. WHEREAS, the Transferee is in a position to fully perform the
requirements of the Contract and such duties and obligations as may exist
thereunder from and after the Effective date; and

6. WHEREAS, insofar as (i) the Transferor has caused its affiliate to
afford TVA a right of set off under the Contract for any liabilities that may
accrue or have accrued under the Contract with respect to performance or failure
to perform under the Contract prior to the Effective Date of

<PAGE> 2

this Agreement and (ii) the Transferee's performance of the Contract will be
guaranteed by the Guarantor, it is consistent with TVA's interest to recognize
the Transferee as the successor party to the Contract;

NOW, THEREFORE, in consideration of these premises, on and as of the
Effective Date, the parties hereto agree as follows:

1. The Transferor hereby confirms said assignment, conveyance, and
transfer to the Transferee and does hereby release and discharge TVA from, and
does hereby waive, any and all claims, demands, and rights against TVA which it
now has or may hereafter have in connection with the Contract.

2. The Transferee hereby assumes, agrees to be bound by, and undertakes
to perform each and every one of the terms, covenants, and conditions contained
in the Contract first arising from and after the Effective Date.

3. The Transferee, as to TVA but not the Transferor, hereby waives any
objection to all actions heretofore taken by the Transferor with respect to the
Contract and such actions shall have the same force and effect as if the action
had been taken by the Transferee.

4. TVA hereby recognizes the Transferee as the Transferor's successor
in interest from and after the Effective Date in and to the Contract. The
Transferee hereby becomes entitled to all right, title, and interest of the
Transferor in and to the Contract in all respects on and after the Effective
Date as if the Transferee were the original party to the Contract. The term
"contractor" as used in the Contract shall be deemed to refer to the Transferee
rather than to the Transferor on and after the Effective Date. The Transferor
shall have no further rights, obligations, or liabilities with respect to
performance of the Contract first arising on or after the Effective Date.

5. The Guarantor agrees to guarantee the performance of the Transferee
of the Contract. Upon a failure of Transferee to provide coal pursuant to the
Contract and in accordance with its terms, which failure is not caused by a
force majeure, upon demand by TVA for payment of damages or performance in
connection with such failure, Guarantor shall, at its election, either pay such
damages or cure Transferee's default by providing coal that complies with the
specifications of the Contract from the Guarantor's Dotiki Mine in Webster
County, Kentucky to TVA. Payment of damages shall be made within 30 days of
receipt of TVA's demand and cure, if elected, shall be commenced within ten
business days after receipt of TVA's demand and shall be thereafter diligently
prosecuted.

6. Except as expressly provided herein, nothing in this Agreement shall
be construed as a waiver of any rights of TVA against the Transferor with
respect to obligations arising under the Contract prior to the Effective Date.

2
<PAGE> 3

7. Notwithstanding the foregoing provisions, all payments and
reimbursements heretofore made by TVA to the Transferor and all other actions
heretofore taken by TVA pursuant to its obligations under the Contract shall be
deemed to have discharged pro tanto TVA's obligations under the Contract. TVA
shall continue to pay the Transferor after the Effective Date for any coal
delivered prior to the Effective Date. All payments and reimbursements made by
TVA inadvertently or erroneously after the date of this Agreement in the name of
or to the Transferor with respect to performance on or after the Effective Date
shall have the same force and effect as if made to said Transferee and shall
constitute a complete discharge of TVA's obligations under the Contract, to the
extent of the amounts so paid or reimbursed. The Transferor hereby agrees to
promptly remit all such amounts to the Transferee.

8. The Transferor and the Transferee hereby agree that TVA shall not be
obligated to pay or reimburse either of them for, or otherwise give effect to,
any costs, taxes, or other expenses, or any increases therein, directly or
indirectly, arising out of or resulting from (a) said assignment, conveyance, or
transfer or (b) this Agreement, other than those which TVA, in the absence of
said assignment, conveyance, and transfer, or this Agreement, would have been
obligated to pay or reimburse under the terms of the Contract.

9. TVA hereby agrees, represents and warrants for the benefit of
Transferor and Transferee as follows:

A. The Contract is in full force and effect and has not been
amended or modified except as provided in Exhibit B and such modifications are
binding on the parties and are a part of the Contract. The attached Exhibit A
(the original Contract) and Exhibit B together constitute a true, accurate and
complete copy of the Contract.

B. TVA is not aware of any current default by Transferor pursuant
to any provision of the Contract.

C. TVA is not aware of any act or omission which would with
notice or the passage of time constitute a default pursuant to the terms of the
Contract.

D. The assignment of the Contract by the Transferor to the
Transferee will not, in and of itself, constitute a default pursuant to the
terms of the Contract.

10. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be mailed by first-class,
registered, or certified mail, postage prepaid, or sent via overnight courier
service, or delivered personally at the addresses in the introduction of this
Agreement or to such other address of which the addressee shall have notified
the sender in writing. Notices mailed in accordance with this section shall be
deemed given when mailed and notices sent by overnight courier service shall be
deemed given when placed in the hands of a representative of such service.

3
<PAGE> 4

11. As between the Transferee and Transferor, this Agreement shall at
all times be governed by and construed in accordance with the laws of the
Commonwealth of Kentucky, without regard to the choice of law principles
thereof.

12. This Agreement, the Contract and a contract supplement effectuating
the right of set off described in the sixth recital contain the entire agreement
by and among the parties hereto with respect to the subject matter hereof and
the Contract, and supersede all prior or contemporaneous representations,
understandings or agreements, oral or written between TVA and the Transferor,
which pertain to the subject matter hereof, and are not included herein. This
Agreement and the Contract contain the entire agreement by and among TVA, the
Transferee and the Guarantor with respect to the subject matter hereof and the
Contract, and supersede all prior or contemporaneous representations,
understandings or agreements, oral or written between such parties, which
pertain to the subject matter hereof, and are not included herein. This
Agreement may not be changed or modified in any manner except by an instrument
in writing duly executed by the authorized officer or representative of each of
the parties hereto.

13. If the closing referred to in the second recital has not occurred
on or before January 31, 1998, TVA may cancel this Agreement, and upon any such
cancellation this Agreement shall be void ab initio. Transferee and Transferor
shall immediately notify TVA in writing when closing occurs.

14. Except as herein modified, the Contract shall remain in full force
and effect.

IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the day and year first above written.

TENNESSEE VALLEY AUTHORITY

By:
------------------------------------
Title:
---------------------------------

ANDALEX RESOURCES, INC.

By:
------------------------------------
Title:
---------------------------------

4
<PAGE> 5

HOPKINS COUNTY COAL LLC

By:
------------------------------------
Title:
---------------------------------

WEBSTER COUNTY
COAL CORPORATION

By:
------------------------------------
Title:
---------------------------------

CERTIFICATE

I, ______________________ certify that I am the Secretary or Assistant
Secretary of the Tennessee Valley Authority named above; that _______________,
who signed this Agreement on behalf of said corporation, was then
_______________ of said corporation; and that this agreement was duly signed for
and on behalf of said corporation by authority of its governing body and within
the scope of its corporate powers.

Witness my hand and seal of said corporation this _____ day of
January, 1998.

By:
------------------------------------
(Corporate Seal)

CERTIFICATE

I, G. CHRISTOPHER VAN BEVER, certify that I am the Secretary of ANDALEX
Resources, Inc. named above; that Douglas Smith, who signed this Agreement on
behalf of said corporation, was then President of said corporation; and that
this agreement was duly signed for and on behalf of said corporation by
authority of its governing body and within the scope of its corporate powers.

Witness my hand and seal of said corporation this _____ day of _______,
1999

By:
------------------------------------
(Corporate Seal)

5
<PAGE> 6

CERTIFICATE

I, THOMAS J. DOSTART, certify that I am the Assistant Secretary of
Hopkins County Coal LLC named above; that W. Dell Jaggers, who signed this
Agreement on behalf of said limited liability company, was then Vice President,
of said limited liability company; and that this agreement was duly signed for
and on behalf of said limited liability company by authority of its governing
body and within the scope of its corporate powers.

Witness my hand and seal of said corporation this _____ day of January,
1998.

By:
------------------------------------
(Corporate Seal)

CERTIFICATE

I, THOMAS J. DOSTART; certify that I am the Assistant Secretary of
Webster County Coal Corporation named above; that W. Dell Jaggers, who signed
this Agreement on behalf of said corporation, was then Vice President of said
corporation; and that this agreement was duly signed for and on behalf of said
corporation by authority of its governing body and within the scope of its
corporate powers.

Witness my hand and seal of said corporation this _____ day of January,
1998.

By:
------------------------------------
(Corporate Seal)

6
<PAGE> 7

EXHIBIT A

<PAGE> 8

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page

<S> <C>
Definitions...........................................................2
1. Contract Term.........................................................3
2. Quantity..............................................................3
3. Scheduling............................................................5
4. Variations, Delays, and Interruptions in Deliveries...................5
5. Source................................................................8
6. Price.................................................................9
7. Sampling and Analysis.................................................9
8. Adjustment for Quality...............................................12
9. Quality and Specifications...........................................13
10. Contract Price Adjustments...........................................16
11. Remedies.............................................................19
12. Notices..............................................................21
13. Shipping Notices.....................................................22
14. Transportation.......................................................23
15. Payments, Invoices...................................................25
16. Weights..............................................................26
17. Contract Administrator/Contracting Officer...........................28
18. Disputes.............................................................28
19. Clean Air Act and Other Environmental Retirements....................29
20. Contract Components..................................................30
Exhibit I..............................................................
</TABLE>

<PAGE> 9

CONTRACT 95B05-129559

CONTRACT FOR PURCHASE AND SALE OF COAL

THIS AGREEMENT, is made and entered into this 31st day of January,
1995, by and between TENNESSEE VALLEY AUTHORITY, a corporation organized and
existing under an Act of Congress (hereinafter called "TVA"), and Andalex
Resources, Inc. (hereinafter called "Contractor").

W I T N E S S E T H:

In consideration of the mutual covenants hereinafter stated, the
parties hereto agree as follows:

Definitions: "Contract Year" shall mean a twelve-month period
commencing with the first day of the calendar month in which the Delivery
Commencement Date (as hereinafter defined) occurs.

"Delivery Commencement Date" shall be that date set forth in
Section 1 hereof for commencement of deliveries. Such date may be changed only
by supplement to this contract that expressly refers to the term "Delivery
Commencement Date." The actual date of commencement of deliveries shall not
affect the Delivery Commencement Date.

"Contract Quarter" shall mean any of the four quarters of a
Contract Year.

"Contract Administrator" shall be that TVA representative
designated to administer the contract on behalf of TVA. This TVA representative
is identified in Section 12, Notices.

2
<PAGE> 10

1. Contract Term: Delivery Commencement Date shall be July 1, 1995,
and deliveries shall continue for five (5) contract years unless terminated by
agreement or as otherwise provided herein.

2. Quantity:

a. Subject to TVA's right to reduce or increase quantities to be
delivered, as hereinafter provided, the quantity of coal to be sold and
purchased hereunder during each Contract Year shall be ****** nominal tons,
which shall be divided into four (4) equal amounts to determine the quantity of
coal to be delivered per Contract Quarter; provided, however each Contract
Quarter TVA may either increase or decrease such purchases from Contractor by an
amount up to ****** of the quantity of coal per Contract Quarter by giving at
least thirty (30) days' written notice prior to the beginning of each Contract
Quarter (said nominated quantity being hereinafter referred to as the "Nominated
Quarterly Quantity"). Such notice shall also indicate the quantities to be
delivered each month for the Contract Quarter. In establishing such monthly
quantities, subject to meeting the Nominated Quarterly Quantity, TVA may elect
as much as ****** of the Nominated Quarterly Quantity or as little as ****** of
the Nominated Quarterly Quantity to be delivered in any one month by providing
notice in accordance with this Section 2.a.

TVA shall not be required to accept any quantity of coal
shipped during a month that is in excess of the total monthly amount scheduled,
but if TVA accepts such excess quantity of coal, TVA may, upon written notice to
Contractor, require that such excess amount be deducted from the quantities to
be shipped during the following or subsequent month(s).

3
<PAGE> 11

This contract is not and shall not be construed as a contract
for all of TVA's coal requirements for the Destination Plant. TVA reserves the
right to purchase coal from other suppliers in any amount during the term of
this contract.

b. Notwithstanding the provisions of a. above, if generation of
electricity at the Destination Plant is curtailed or interrupted for a period of
one week or more as a result of the operating requirements of TVA's integrated
electric generating system, including considerations of economic dispatch of
TVA's generating units, TVA may, from time to time, direct Contractor to (i)
suspend deliveries if the electric output of the Destination Plant is
interrupted or (ii) reduce scheduled shipments of coal by a percentage equal to
the percentage reduction in electric output of the Destination Plant resulting
form a curtailment. Such suspension or reduction in deliveries may continue as
long as generation at the Destination Plant is curtailed or interrupted;
provided, however, if TVA continues any such reduction or suspension for more
than one hundred eighty (180) days, Contractor may notify TVA in writing of
Contractor's intent to terminate this contract ninety (90) days from the date of
TVA's receipt of such written notice, and this contract shall, upon the passing
of such ninety-day (90-day) period, terminate without further cost or obligation
to either party, unless TVA shall have directed resumption of the suspended or
reduced deliveries within forty-five (45) days of TVA's receipt of Contractor's
notice of termination.

Except as provided in the preceding sentence, suspensions or
reductions under this subsection shall not affect the enforceability of this
contract, and, on termination of the suspension or reduction, shipments shall
resume pursuant to the terms and conditions of this contract. Both TVA and
Contractor shall be excused from their respective obligations hereunder with
respect to deliveries suspended or reduced pursuant to this section and such
deliveries shall not be rescheduled for delivery except by mutual consent of the
parties.

c. TVA may exercise the remedies afforded it under Section 11,
Remedies, or as otherwise provided by law, in the event Contractor fails to
deliver coal as provided in this Section 2 or Section 3, Scheduling; provided,
however, in lieu of other remedies, TVA may elect to reschedule for delivery any
deficiencies. This rescheduled coal shall be delivered in

4
<PAGE> 12

accordance with the provisions of this contract and at the price in effect at
the time during which such deficiencies occurred.

3. Scheduling:

a. TVA shall provide Contractor with a monthly shipment schedule
indicating the dates and quantities of coal to be delivered to TVA consistent
with TVA's Nominated Quarterly Quantity and the requirements of Subsection 2.a.
Such schedule will be provided by TVA no later than fifteen (15) days prior to
the beginning of the affected month. Contractor shall deliver all coal in
accordance with such schedules. Provided Contractor provides at least one
hundred fifty (150) days' notice to TVA of the holiday and vacation periods for
its sources, TVA shall not schedule deliveries during such periods, unless such
deliveries are critical to the prudent operation of the plant(s) during such
periods.

TVA maintains the right to coordinate all deliveries under
this contract and others for purposes of establishing a uniform daily delivery
schedule for placement at TVA plants.

4. Variations, Delays, and Interruptions in Deliveries:

5
<PAGE> 13

b. Subject to the conditions hereinafter stated, neither party
shall be liable to the other for failure to mine, deliver, take, or unload coal
as provided for in this contract if such failure was due to supervening causes
beyond its control and not due to its own negligence, and which cannot
reasonably be overcome by the exercise of due diligence. Such causes shall
include by way of illustration, but not limitation: acts of God or of the public
enemy; insurrection; riots; strikes; nuclear disaster; partial or total outages
of coal-fired units; floods; accidents; major breakdown of equipment or
facilities (including emergency outages of equipment or facilities to make
repairs to avoid breakdowns thereof or damage thereto); fires; industry-wide
shortages of carriers' equipment; embargoes; orders or acts of civil or military
authority; or industry-wide shortages of materials and supplies. Nor shall TVA
be obligated to take coal hereunder so long as such causes wholly or partially
prevent the unloading, stockpiling, or burning of coal at the plant to which
deliveries are consigned at the time the cause occurs, in which case, TVA shall
have no obligation to consign deliveries to another plant. Nor shall the refusal
of either party to settle a strike on terms other than it considers satisfactory
preclude the strike from being considered an excusable cause. TVA shall have the
right, but not the obligation, to require Contractor to make up any tonnage not
delivered in accordance with this section.

Contractor's delays due to delays of its sub Contractors will
not be excusable under this provision unless the delay of the sub Contractor was
also due to causes beyond the control and without the fault of the sub
Contractor, such as the causes listed above. The failure by Contractor or its
sub Contractor to obtain and maintain all federal, state, and other regulatory
agency coal mining permits, certificates, and licenses shall not excuse
Contractor from any obligation under this contract. The provisions of this
Subsection b. shall not excuse a party unless such party failing to deliver or
take coal shall give written notice to the other of such failure and furnish
full information as to the cause and probable extent thereof within ten (10)
calendar days after the failure first occurs. In the case of the Contractor,
said ten-day (10-day) period shall begin with the day following that on which
tonnage first becomes deficient under the established delivery schedule. In the
case of TVA, this period shall begin on the day following that on which TVA
first fails to take coal duly and properly delivered. Failure to give such
notice and furnish such information within

6
<PAGE> 14

the time specified shall be deemed a waiver of all rights under this provision
with respect to tonnage scheduled for delivery prior to the date such notice and
information are actually furnished.

In the event of partial failure to deliver, take, or unload
coal which is excusable under this subsection, the parties shall prorate
deliveries or receipts of coal in substantially the same proportion based upon
contractual commitments, (e.g. a fifty percent (50%) reduction in receiving or
production capacity would result in a fifty percent (50%) reduction in scheduled
deliveries for each supplier or consumer). However, the parties shall not be
obligated to prorate a reduction in receipts or deliveries under coal supply
contracts not affected by the failure because they have different modes of
delivery or have substantially different quality requirements, or because their
scheduled delivery dates are not affected by the failure. During the periods TVA
may experience such failures to take or unload coal, Contractor shall be
permitted to sell such coal normally intended for TVA. In the case of the period
during which Contractor may experience such failures to deliver coal, TVA may
purchase replacement coal. The disabling effects of such failures to deliver,
take, or unload coal shall be corrected by the party experiencing such failure
as soon as and to the extent reasonably practicable.

If a party's excused failure to deliver or receive coal in
amounts substantially in conformance with the schedule established under Section
2, Quantity, and Subsection 3.a. continues for a period exceeding one-hundred
eighty (180) days, the other party may terminate this contract. In the event of
such a termination, neither party shall have any further liability to the other
except for those liabilities which may have accrued with respect to performance
or defaults prior to said termination.

c. TVA is currently planning to perform certain maintenance/
repairs to the plant(s) during the term of this agreement as set forth in
Appendix A. TVA, by providing at least forty-five (45) days' prior written
notice to Contractor, shall have the right to refuse any shipments otherwise
scheduled for delivery during such maintenance periods and shall have no
obligation to accept such shipments at a later time. If TVA is unable to
complete the maintenance/repairs to the plant during

7
<PAGE> 15

the period(s) set forth in Appendix A, then TVA's failure to take coal during
such extended period shall be excused under Subsection 4.b.

5. Source:

a. The source of coal delivered under this contract is of major
importance to TVA. The provisions of this contract pertaining to coal quality
and quantity requirements, price adjustments, federal and state legislation, and
other matters are directly related to the source of coal. As used in this
Section 5, "Source Area" shall mean the total coal reserve areas outlined in the
Specific Location Map(s) provided with the Term Coal Proposal; provided, that,
within the Source Area, only the area(s), for surfaced-mined coal, or mine
opening(s), for underground-mined coal, covered by the mining permit(s) listed
in the Term Coal Proposal is an "Authorized Source" of coal for delivery under
this contract. The mine area(s) and/or opening(s) located within the Source Area
shown on the Specific Location Map(s), but not covered by the mining permit(s)
listed in the Term Coal Proposal, may become an Authorized Source under the
following procedures as mining progresses and the appropriate permit(s) and
license(s) are obtained. Contractor shall notify TVA in writing at least
forty-five (45) days in advance of its intention to deliver coal from any
additional area(s) or mine opening(s) in the Source Area which is not then
authorized. TVA may, if it deems it is in TVA's best interests, authorize such
areas, but is under no obligation to do so. TVA reserves the right to require
Contractor to furnish any information and/or any guarantees TVA deems necessary
bearing on the ability of the source to meet the requirements of this contract
and to make that information a part of this contract.

8
<PAGE> 16

c. Contractor expressly assumes the risk that the Authorized
Source(s) will permit the production of coal in such quantities and of such
quality as will meet the requirements of this contract. Coal shall not be
delivered from any other source(s), or shipped from any other origin(s), or
mined by any other producer(s) or subContractor(s), unless authorized by TVA in
writing prior to delivery.

6. Price:

a. TVA shall pay Contractor ****** (hereinafter referred to as
the Base Price) f.o.b. railcar at the Cimmaron loadout for each net ton of coal
purchased and delivered under this contract, plus or minus such adjustments as
herein provided. The Base Price remains constant.

7. Sampling and Analysis:

9
<PAGE> 17

c. Analysis data shall be promptly made available to Contractor
through access to a computer system or, at TVA's option, such data may be
provided by other means. Moisture, ash, and sulfur values shall be reported to
the nearest hundredth (.01) of a percent. Heat content in Btu/lb shall be
reported to the nearest whole Btu/lb. SO2 content shall be calculated and
reported to the nearest hundredth (.01) of a pound.

d. All samples (except washability samples) collected by TVA
shall be divided into at least two parts and put in suitable airtight
containers, the first container in each case to be used by TVA, or its
designated commercial laboratory, and the second container in each case to be
held available by TVA for a period of not less than forty-five (45) days from
actual sampling date of the coal by TVA, properly sealed and labeled, to be
analyzed if a dispute arises between TVA and Contractor. If Contractor wishes to
dispute a sample or analysis, it shall notify TVA in writing within such
forty-five day (45-day) period. If Contractor fails to provide such notice of
dispute within such forty-five day (45-day) period, Contractor shall be deemed
to have waived any claim or defense based on errors or omissions in the sampling
or analysis operations as to the affected samples. TVA reserves the right to
collect sample(s) of coal delivered for washability analysis at any time. Any
such washability sample shall be taken in accordance with the latest annual book
of ASTM standards.

e. Contractor shall also sample and analyze, or obtain services
of a third party to sample and analyze, all shipments of coal to TVA under this
contract. These analyses shall specify, at a minimum, the total moisture
content, the ash content (as-received), the heat content Btu/lb (as-received),
and the sulfur content (as-received), and must be electronically transmitted to
both the Destination Plant and the Contract Administrator in a format acceptable
to TVA. These analyses are required in order to provide information on the
contents of coal received by TVA prior to unloading. TVA reserves the right not
to unload coal at the Destination Plant until after the appropriate analysis is
received. Contractor shall be responsible for any demurrage charges incurred by
TVA as the result of Contractor's failure to transmit the analyses when and as
required. TVA may reject coal based on these analyses; however, nothing in this
Subsection e. shall affect in any way

10
<PAGE> 18

TVA's rights to appropriate contractual actions and adjustments for quality
based on samples collected and analyzed in accordance with Subsections a. and b.
of this Section 7.

f. In the event TVA does not sample at least forty percent (40%)
of the tonnage received for a quarterly adjustment, the Contractor's samples
shall be used for the quality adjustment(s) for such quarter under Section 8,
Adjustments for Quality, provided all Contractor samples for such quarter meet
all criteria below:

(2) Sample system shall have been bias tested at least every
twelve (12) months. The testing procedure and precision must be approved by TVA.

(3) Sample analysis and other data required by TVA to match
data with shipment shall be provided to TVA in a format approved by TVA.

(4) The lot size for each sample shall be by barge for barge
coal, by trainload for rail coal, and by daily delivery for truck coal.

(5) Analysis for each sample shall have been received by TVA
by electronic data interchange within seven (7) days of collection of said
sample.

(6) The sampling system shall be located in an area
acceptable to TVA such that the sample collected for shipment is collected only
from coal that is loaded for said shipment.

If TVA samples ten percent (10%) or more but less than forty
percent (40%) of the tonnage received, and if any of Contractor's samples for
the affected quarter do not meet all of

11
<PAGE> 19

the above criteria, TVA samples shall be used for said quarterly adjustment(s).
If TVA samples less than ten percent (10%) of the tonnage received and any of
Contractor's samples do not meet all of the above criteria, no adjustment for
quality will be made for said quarter.

8. Adjustment for Quality:

a. As used in this Section 8, a "Quarterly Average Value" shall
mean the weighted average value of the appropriate quality component determined
from all samples collected in accordance with Subsections 7.a. and 7.b. during a
calendar quarter based, at TVA's election, on the tonnage, number of railcars,
or barges represented by the samples.

b. For the coal accepted in each calendar quarter, an adjustment,
calculated to the nearest cent per ton and using the Base Price, shall be
applied to the contract price to account for variations in the Quarterly Average
Value for as-received Btu/lb compared to the Guaranteed Specification for
as-received Btu/lb. This adjustment shall in no way be affected by contract
price adjustments under Section 10, Contract Price Adjustments hereof. (See
Exhibit I for example of calculations.)

c. For the coal accepted in each calendar quarter, an adjustment,
calculated to the nearest cent per ton at a rate of ****** per ton for each
percentage point the Quarterly Average Value of ash (on a dry basis) exceeds the
Guaranteed Specification for ash. The calculation shall be prorated to cover any
fractional percentage (see Exhibit I for example of calculations).

d. As soon as practicable after the end of each calendar quarter,
TVA shall submit to Contractor a report showing the Quarterly Average Values and
any adjustments determined under this Section 8 of the contract. The number of
tons of coal received by TVA which are subject to adjustment shall be multiplied
by said adjustments, and any resulting amount shall be paid promptly (or
credited to the extent of any offsetting debit) to the party to whom it is due.
The assessment of adjustments in accordance with the foregoing does not in any
way impair TVA's rights under the contract or at law with respect to any failure
by Contractor to meet the Guaranteed Analysis that gives rise to such
adjustments.

12
<PAGE> 20

9. Quality and Specifications:

<TABLE>
<CAPTION>
Guaranteed Suspension/Rejection
Specifications Specifications
-------------- --------------------
<S> <C> <C>

Total Moisture Not more than ****** % ****** %
-------------- --------------------

Sulfur (as-received) Not more than ****** % ****** %
-------------- --------------------

Sulfur (as-received) Not less than ****** % ****** %
-------------- --------------------

Ash (dry) Not more than ****** % ****** %
-------------- --------------------

Btu/lb (as-received) Not less than ****** ******
-------------- --------------------
</TABLE>

b. The coal as-received shall have a top size not greater than
****** or less than ******, with at least ****** of the product larger than
******, and with at least ****** of the product larger than ******. Such sizes
shall be determined by using screens with square openings. Coal shall not
exhibit a temperature in excess of ******, and it shall be substantially free
from mining impurities and scrap such as drill bits, pieces of scrap metal or
plate, plastic, rubber, rope, cloth, wire, cable, bone, slate, earth, rock,
pyrite, wood, or water, which can be kept out or removed with the exercise of
reasonable care during mining and loading. It shall be loaded in a manner that
will ensure reasonably uniform consistency as to size and quality and shall not
contain slurry pond material (washer tailings), gob pile material (mine refuse),
petroleum-coke, oxidized coal or blends of such materials, or create excessive
amounts of dust during the unloading and transferring to storage.

13
<PAGE> 21

<TABLE>
<CAPTION>
Washability
Specifications
--------------

<S> <C>
Lbs. of SO(2) per million Btu (1) Not more than ******
--------------

Sulfur (dry) Not more than ****** %
--------------

Sulfur (dry) Not less than ****** %
--------------

Ash (dry) Not more than ****** %
--------------

Btu/lb (dry) Not less than ****** %
--------------

Volatile Matter (dry) Not less than ****** %
--------------

Chlorine (dry) Not more than ****** %
--------------

Btu Recovery Not less than ****** %
--------------

Product Yield Not less than ****** %
--------------

Gindability (Hardgrove Index) Not less than ******
--------------
</TABLE>

Ash fusion temperature reducing atmosphere

<TABLE>

<S> <C>
Initial Not less than ****** o
--------------
Softening Not less than ****** o
--------------
Hemispherical Not less than ****** o
--------------
Fluid Not less than ****** o
--------------
Fluid Not more than ****** o
--------------
</TABLE>

Specific Gravity ******
--------------

(1) at ******

14
<PAGE> 22

Contractor shall promptly remove the coal from the carrier's equipment or from
TVA premises, as the case may be, at Contractor's expense. Contractor shall
reimburse TVA for any additional transportation costs, demurrage, equipment
repair costs, or handling expenses incurred by TVA in connection with any such
rejection. TVA shall not be under any obligation or liability to assist
Contractor in any corrective actions required to remedy the cause for rejection.

e. If any coal (barge, trainlot, or daily delivery for trucks)
delivered fails to meet the Suspension/Rejection Specifications stated in
Subsection 9.a, the requirements of Subsection 9.b, or the Washability
Specifications in Subsection 9.c, TVA shall have the right to refuse to accept
further deliveries from any or all mine sources authorized under the contract
until Contractor provides assurance satisfactory to TVA that Contractor will
comply with the requirements of Subsection 9.a, b, and c. Such assurance must be
given in writing within seven (7) days after the beginning of such suspension.
If Contractor (1) fails to provide such assurance within the time specified, (2)
provides such assurance but does not correct the deficiencies that resulted in
the breach of Subsection 9.a. or Subsection 9.b. within seven (7) days after
giving such assurance, or (3) fails on two (2) occasions in any twelve (12)
month period to meet the Washability Specifications set forth in Subsection 9.c,
TVA may then terminate Contractor's right to make further deliveries under this
contract. Contractor shall be responsible for all costs or damages incurred by
TVA resulting from Contractor's failure to comply with the contract
requirements. Damages or excess reprocurement cost may be determined in
accordance with Section 11, Remedies.

15
<PAGE> 23

10. Contract Price Adjustments:

a. Effective the first day of the second Contract Year and each
such first day of each Contract Year thereafter, the then current adjusted price
of coal shipped under this contract will be increased by ****** of the Base
Price specified in Section 6, Price, as such price may be modified under
Subsections d. or e., below.

b. (1) In the event of enactment or amendment, after the proposal
closing date for the requisition under which this contract was awarded (or in
the case of establishment of a new Base Price under Subsections d. or e., below,
after the effective date of such new Base Price), of a federal or state statute
that assesses on a per ton basis a tax, fee, or other similar charge on the coal
delivered hereunder ("Law Changes"), Contractor shall notify TVA of such Law
Changes and supply from its records information satisfactory to TVA showing the
effect, if any, of these Law Changes upon the cost per ton of furnishing coal
under this contract. If a Law Change increases Contractor's cost of providing
coal to TVA, a contract price increase shall be made by TVA for such Law Changes
effective on the later of (a) the date TVA receives Contractor's notice of the
Law Change or (b) the date Contractor's cost of providing coal is increased by
the Law Change. If a Law Change decreases Contractor's cost of providing coal to
TVA, a price decrease shall be made by TVA for such Law Change effective on the
date such Law Change could be utilized to reduce Contractor's costs whether or
not Contractor actually reduces such costs on such date. This Section 10.b.(1)
does not apply to (i) promulgation or amendment of rules and regulations except
to the extent such promulgation or amendment results from a Law Change, or (ii)
to implementation of statutes or amendments to statutes that are enacted on or
before the proposal closing date as described above.

(2) If (i) a price adjustment requested by Contractor under
this Subsection b. would result in a contract price increase exceeding ****** of
the Base Price, or (ii) a combination of price adjustments under this Subsection
b. and any other provision of this contract that collectively come into effect
during any one-year period would result in a contract increase exceeding ******
of the Base Price, then TVA may, at its sole discretion, terminate the contract
upon sixty (60) days' written notice given after such an adjustment(s) is
requested by Contractor.

16
<PAGE> 24

Contractor agrees that, in the event TVA reimburses Contractor
under this Section 10 for a cost incurred by Contractor and it is later
determined that Contractor is entitled to recover such cost from a third party,
at TVA's request Contractor shall use its best efforts to recover such cost and
upon such recovery shall reimburse TVA for amounts previously paid by TVA based
on said cost. Reasonable costs incurred by Contractor in pursuing such recovery
at TVA's request shall be reimbursed by TVA; provided that where Contractor
and/or other purchasers from Contractor also receive a benefit from pursuing
such recovery, the cost thereof shall be equitably shared.

17
<PAGE> 25

If the parties fail to reach agreement within said 30-day
period, a new price will be determined under this contract through arbitration.
A panel of three (3) arbitrators shall be appointed consisting of one (1)
arbitrator appointed by each of the parties and the two (2) arbitrators so
chosen appointing a third disinterested person to act as chair of the panel of
arbitrators. In the event the two (2) arbitrators cannot agree upon a third
arbitrator, the third arbitrator shall be selected by the parties from a list of
arbitrators furnished by the American Arbitration Association. If the parties
cannot agree on the third arbitrator from such list within ten (10) days after
receipt of the list, the third arbitrator shall be selected by the American
Arbitration Association from such list.

The panel of arbitrators shall determine the per ton Fair
Market Price of coal scheduled for delivery hereunder, taking into consideration
Transactions entered into and Offers made during the 90 days preceding the date
of TVA's notice. "Transactions" and "Offers" shall mean transactions and offers
for sale and purchase of coal of quality comparable to that to be supplied
hereunder, which coal is to be supplied during the period for which the
redetermined price is to be effective, in quantities and under terms and
conditions substantially similar to those of this contract. The arbitrators
shall also consider reasonably probable conditions of the market for coal of
this quality and quantity during that period and other pertinent information as
they may deem necessary. As soon as practicable, the arbitrators shall report
the per ton Fair Market Price as agreed by at least two (2) of them and said
Fair Market Price shall become the contract price retroactive to the date
determined by the arbitrators as appropriate. If at least two (2) of the
arbitrators cannot agree, the arbitrators shall report as the determined price,
the median of the three (3) prices as fair market by the respective arbitrators,
and the median price so reported shall become the Base Price effective as of the
date of TVA's notice. Contractor and TVA shall equally share the cost of
arbitration.

18
<PAGE> 26

the Base Price of coal to cover the increased portion of the transportation cost
above the aforementioned limit, in which case the contract shall remain in full
force and effect. Contractor's election must be set forth in writing within
thirty (30) days of TVA's notice of termination. Such election by Contractor
shall be irrevocable and binding for that increase and, shall be effective as of
the date of notification by TVA of the cost increase. TVA may invoke the
provisions of this Subsection e. each and every time its costs exceed the limit
set forth above.

11. Remedies:

(2) In the case of a contract violation by Contractor that is
not curable (including, but not limited to, violations of Section 5, Source, of
this contract, or of Section 6, Officials Not to Benefit of the General
Long-Term Contract Conditions), upon providing notice as described above, TVA
shall have the immediate right, but not the obligation, to terminate or suspend
for up to thirty (30) days, Contractor's right to make further deliveries under
this contract. If TVA suspends Contractor's right to make further deliveries,
then, upon expiration of said thirty (30-day) period, TVA shall either direct
Contractor to continue performance of this contract or terminate Contractor's
right to make further deliveries.

19
<PAGE> 27

Unless TVA determines that the following method of calculating
damages is not practical and TVA notifies the Contractor in writing that TVA's
damages will be calculated in some other commercially reasonable manner, (1)
such part of the highest priced coal (of comparable quality under one or more
contracts) which TVA purchases at the next awarding of term or spot contracts
for delivery to any fossil plant in the TVA system as would be required to
replace coal which was scheduled for delivery under this contract after the date
the Contractor's right to make deliveries under this contract was terminated
shall be deemed to have been purchased as replacement coal for Contractor's
account; and (2) for unexcused deficiencies occurring before termination or
contract expiration, such part of the highest priced coal (of comparable quality
under one or more contracts) for which TVA awards spot contracts in the week
following each such deficiency, for delivery to any plant in the TVA system, as
equals the quantity of Contractor's deficiency shall be deemed to have been
purchased as replacement coal for Contractor's account. If no spot coal was
purchased before contract termination or expiration, TVA shall determine damages
for all unexcused deficiencies in the manner provided in item (1) above, whether
such deficiencies accrued before or after termination or expiration.

c. If TVA suspends or terminates Contractor's right to make
further deliveries hereunder or under any other provision of this contract and
such suspension or termination is finally

20
<PAGE> 28

determined in accordance with Section 18, Disputes, to have been improper, then
Contractor's sole remedy for such improper termination or suspension shall be to
require rescheduling of all coal Contractor was prevented from delivering due to
such termination or suspension, such coal to be rescheduled for delivery on
dates acceptable to both parties, but in any event not later than contract
expiration. The price to be paid for such rescheduled coal shall be that in
effect at the time of delivery.

12. Notices: Unless otherwise provided for in the Agreement, any
contractual notice required to be given to either party shall be deemed duly
given by registered, certified, or first-class mail, telecopy or telegram, to
the intended party at the following address or at such changed address as may
from time to time be designated in a notice similarly delivered or mailed.
Except as expressly provided herein, any notice shall be deemed to have been
given when sent. Communications by telecopy, or telegram shall be confirmed by
depositing a copy of the same in the post office for transmission by registered,
certified, or first-class mail in any envelope properly addressed as follows:

In the case of Contractor to:

Mr. Darrell Mahone

Andalex Resources, Inc.
9300 Shelbyville Road, Suite 1200
Louisville, Kentucky 40222

In the case of TVA to:

Ms. Tammy Quinn, Contract Administrator

Tennessee Valley Authority
Fossil Fuels
1101 Market Street, LP 5G
Chattanooga, Tennessee 37402-2801

Either party may, by written notice to the other, change the
representative or the address to which such notices and communications are to be
sent.

21
<PAGE> 29

13. Shipping Notices:

b. For all barge-delivered coal Contractor shall forward to the
individual named in the consigning instructions, Plant Manager, and Terminal
Supervisor, if applicable, a daily notification, in duplicate, as to coal
shipped. This shipping notice must include the contract number, barge numbers,
origin, name of mine, size of coal, shipping date, and approximate date of
arrival. TVA shall have the right to require Contractor to transmit all of the
above-referenced information via electronic data transfer direct to TVA's
computer system.

d. By 10:00 a.m. Eastern Time each Monday, Contractor must
forward by fax a shipping notice to the Contract Administrator. This shipping
notice shall include the contract number, release number, tonnage shipped by
day, and mine name. If TVA's weights govern, estimated weights are satisfactory.
Any difference from the schedule established by TVA pursuant to Section 3 must
be explained.

14. Transportation:

a. TVA reserves the right to specify reasonable limitations on
the type and size of transportation equipment, the method of transportation
(including trainload lots and bargeload lots

22
<PAGE> 30

where lots are necessary to provide the lowest transportation rate possible),
and the exact routing to be used even though transportation charges are prepaid.
TVA may reject any shipment made in disregard of such specifications. If the
contract is awarded upon the basis of a price or prices which include
transportation charges in whole or in part to destination (f.o.b. destination
contract), title to the coal (except in the case of accelerated payments to
Small Coal Operators) and risk of loss and damage shall remain with Contractor
until delivery in acceptable condition by the carrier at destination.

d. For all coal purchased for delivery by rail, whether f.o.b.
railcar or f.o.b. destination fossil plant, Contractor shall be responsible for
loading each car to the appropriate capacity as required by the rail carrier. In
addition, each trainload shipment tendered under this contract shall be loaded
to the minimum trainload weight as required by the rail carrier. Contractor's
account will be charged with any penalties assessed to TVA because of
Contractor's failure to observe any minimum weight loading requirements. The
gross weight of each car shall not exceed the maximum allowed by the carrier. If
cars are found to be loaded in excess of such maximum, it shall be Contractor's
responsibility to correct the load at Contractor's expense, including but not

23
<PAGE> 31

limited to, Contractor's payment to the carrier of a per car switching charge,
as well as any demurrage charges which may accrue while the car or cars await
correction in load.

e. For all coal to be delivered hereunder, whether f.o.b. origin
or f.o.b. Destination Plant, Contractor shall be responsible for any demurrage
that accrues at any loading point as a result of Contractor or its sub
Contractors not being prepared to load the coal as scheduled. The carrier shall
invoice Contractor and Contractor shall pay said carrier for all origin
demurrage charges which accrue at the loading point(s). TVA has contracted for
the transportation services, the free time and demurrage requirements are set
out in CSX's Tariff CSXT 8200-E, as amended from time to time.

f. The explicit obligation of this contract is that it will be
performed in accordance with all applicable laws. Therefore, transportation of
coal by Contractor to barge or rail loading facilities or, if applicable, to the
Destination Plant shall comply with applicable highway laws and regulations
governing the weight of vehicles. If any Contractor fails to comply with such
laws or regulations, TVA shall have the same rights provided under Section 9,
Quality and Specifications, for failure to meet the requirements thereof,
including but not limited to the right to reject coal delivered in overweight
trucks. To insure compliance with this provision and to help protect the roads
and highways, TVA may require that Contractor furnish a copy of the "certified"
truck weight ticket. Regardless of the actual weight of any truck coal received,
the maximum gross weight that can be recorded for a single truck will be limited
to the applicable maximum weight enforced by law. Any weight exceeding that
maximum weight may be deducted from the total weight of coal used for payment
purposes.

g. TVA reserves the right to ship to any plant any coal purchased
f.o.b. any shipping point. For coal purchased f.o.b. any plant or shipping
point, TVA may from time to time direct deliveries to any other plant or
shipping point, and if such deliveries cause an increase or decrease in the
transportation cost borne by Contractor in performing this contract, an
adjustment shall be made in the contract price to reflect the changes in such
cost. In addition, for coal purchased f.o.b. railcar and/or f.o.b. barge, TVA
may, by giving prior written notice to Contractor as soon as possible but not
later than thirty (30) days in advance, change the transportation mode of
delivery.

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<PAGE> 32

15. Payments, Invoices: Payments under this contract are subject to the
provisions of the Prompt Payment Act (31 U.S.C. Sections 3901-3907). Payments as
are provided for in the contract or by law will be made by check or Electronic
Fund Transfer (EFT) if a participation agreement has been established between
TVA and Contractor. Except as provided for under TVA's Small Coal Operators
Assistance Program, EFTs will be made not more than thirty-four (34) calendar
days, and checks will be mailed not more than thirty (30) calendar days, after
the later of (1) receipt of a proper invoice(s) by TVA at the Accounts Payable
Department, P.O. Box 15500, Knoxville, Tennessee 37901-5500 or (2) receipt and
unloading of the coal at TVA's fossil plants. In preparing invoices, Contractor
shall multiply the number of tons delivered by the Base Price applicable at the
f.o.b. point of delivery plus or minus any adjustments that have been made
effective under contract provisions.

For purposes of this provision only, "proper invoice " shall mean a
numbered and dated invoice containing the complete name of Contractor, agent's
name (if any), contract number, breakdown code, total amount due, correct
weights (as defined below), traffic control number, shipping date, mine at which
the coal was produced, together with any documentation required to be submitted
therewith by any other provision of the contract.

16. Weights:

a. Unless TVA determines circumstances require determination by
other methods, all coal delivered to destination by barge shall be weighed by
TVA on belt scales which are maintained and periodically calibrated by TVA or
third parties for accuracy.

25
<PAGE> 33

Such adjustment to be made at whatever time such occurrence(s) becomes known to
TVA. In the absence of scale weights from Contractor, TVA and Contractor will
mutually agree by what means the weight of coal delivered hereunder shall be
determined. Contractor shall reimburse TVA for any cost or expense charged to or
incurred by TVA as a result of the absence of appropriate scale weights from
Contractor. While TVA may not undertake to weigh all coal received, it may at
its option, check weigh any coal received. In the event billed (invoiced)
weights vary from TVA weights by more than one and one-half percent (1-1/2%),
TVA's weights will govern.

If TVA has elected to have Contractor weigh the coal pursuant
to Subsection b., scale tests shall be performed more often than quarterly when
requested by TVA. TVA shall be responsible for the cost of additional requested
tests unless the results thereof show that the scale failed to conform to
certification standards, in which event Contractor shall be responsible for such
costs. The aggregate weights determined during any payment period shall be
acceptable as the quantity of coal sold and purchased during such period for
which invoices are to be rendered and payments to be made.

TVA shall have the right to have a representative present at
any and all times during TVA loadings to observe determination of weights. If
TVA should at any time question the accuracy of the weights thus determined, TVA
shall so advise Contractor and Contractor shall permit TVA's representatives to
test Contractor's weighing devices or methods. If such tests show the weighing
devices to be in error, or if the weighing devices otherwise are determined to
be in error, the weighing devices shall be adjusted to an accurate condition. In
the event TVA and Contractor are unable to agree upon such tests and
adjustments, or the devices or methods thereof, the weighing devices and methods
shall be tested and adjusted to a condition of accuracy by a qualified third
party, mutually chosen by TVA and Contractor, and the cost of the testing and
adjusting by such third party shall be shared equally by TVA and Contractor.

If Contractor's weighing devices or methods are determined be
in error over 0.5%, an appropriate adjustment shall be made to the affected
weights and related invoices and payments. Such adjustments shall be made
retroactively to a date midway between the date on which the

26
<PAGE> 34

weighing devices were last tested and calibrated and the date on which the
inaccuracy in weighing methods or devices was first questioned and prospectively
until the date on which the weighing methods and devices are corrected.

c. All scales used to determine the governing weight of coal
shall be maintained and operated in accordance with the National Institute of
Standards and Technology Handbook 44.

17. Contract Administrator/Contracting Officer: The Vice President of
Fuel Supply and Engineering has designated the Contract Administrator who
administers this contract for TVA as his/her duly authorized representative to
act on behalf of TVA for all purposes in the administration of this contract,
such designation to continue until revoked or modified by the Vice President of
feel Supply and Engineering. The Contract Administrator shall serve as TVA's
"Contracting Officer" with respect to matters arising under terms of this
contract that provide for action by the Contracting Officer

18. Disputes:

a. This contract is subject to the Contract Disputes Act of 1978,
Public Law No. 95-563, 92 Stat. 2383 ("the Act"), and TVA's implementing
regulations published at 18 C.F.R. pt. 1308 as they may be amended from time to
time.

b. Any dispute relating to this contract, whether arising before
or after completion of performance, including disputes as to alleged violation
or breach thereof, which is not settled or disposed of by agreement of the
parties shall be decided by the Disputes Contracting Officer (who shall be
appointed by the TVA Vice President of Fuel Supply and Engineering) on the basis
of the contract file and any other facts which he/she may deem pertinent. Any
claim by Contractor shall be submitted in accordance with the Act and TVA's
implementing regulations. The Disputes Contracting Officer shall reduce his/her
decision to writing and promptly mail or otherwise furnish a copy thereof to
Contractor. Within ninety (90) calendar days from the receipt of such copy,
Contractor may appeal to the TVA Board of Contract Appeals by mailing or
otherwise furnishing the Disputes Contracting Officer a written notice of
appeal. Following the filing of a notice of

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<PAGE> 35

appeal, the TVA Board of Contract Appeals shall arrange for the decision of the
appeal in accordance with the Act and TVA's implementing regulations. The
decision of the TVA Board of Contract Appeals on any question of law shall not
be final or conclusive, but the decision on any question of fact shall be final
and conclusive, unless determined by a court of competent jurisdiction to have
been fraudulent, or arbitrary, or capricious, or so grossly erroneous as to
necessarily imply bad faith, or not supported by substantial evidence.

c. In lieu of an appeal to the TVA Board of Contract Appeals from
the decision of the Disputes Contracting Officer, Contractor may bring an action
against TVA directly on the claim in a United States District Court with proper
jurisdiction and venue pursuant to 28 U.S.C. Section 1337. Such an action shall
be brought within twelve (12) months from the date of receipt by Contractor of
the Disputes Contracting Officer's decision hereunder.

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<PAGE> 36

19. Clean Air Act and Other Environmental Retirements: In the event of
enactment, implementation, amendment, or enforcement of the Clean Air Act
including the 1990 Clean Act Amendments, or any other applicable federal, state,
or local air pollution control or environmental law, rule, or requirement which
causes the continued use of the coal purchased under this contract to be
inconsistent with (i) TVA's air pollution control strategies, as they may be
modified for meeting such air pollution control or environmental requirements,
or (ii) an administrative or judicial order, TVA may cancel this contract with
no further obligation or liability hereunder or at law by giving Contractor
ninety (90) days' advance notice of such cancellation. In the case of
inconsistency with TVA's air pollution control strategies, the parties will
attempt to renegotiate the contract during such notice period to provide for
delivery of coal that will be of a quality consistent with TVA's new air
pollution control strategies. In the event the parties do not reach agreement on
such a renegotiated contract within the 90-day notice period, the cancellation
notice given by TVA shall remain in effect and the contract shall terminate at
the end of such period. In no event will TVA be obligated to divert deliveries
to any alternate coal-fired fossil plant in TVA's system.

20. Contract Components: The attached Term Coal Proposal; General
Long-Term Contract Conditions; Appendix A; Exhibit I; Requirements for
Certificate of Procurement Integrity (ID-49B); Requirement for Certificate of
Procurement Integrity (ID-50); Subcontracting Plan; and Specific Location
Map(s), constitute parts of this contract.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the aforesaid date by their duly authorized representatives.

ATTEST: Contractor:

By:
- --------------- ------------------------------------
Title:
---------------------------------

ATTEST: TENNESSEE VALLEY AUTHORITY

By:
- --------------- ------------------------------------
Title:
- --------------- ---------------------------------

<PAGE> 1
EXHIBIT 10.12

WEBSTER COUNTY COAL CORPORATION

TERM COAL CONTRACT

(Dotiki)

July 7, 1998

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
1. Contract Term .......................................................................................2

2. Quantity.................................................................................................2

3. Scheduling...............................................................................................4

4. Variations, Delays, and Interruptions in Deliveries......................................................5

5. Source...................................................................................................7

6. Price....................................................................................................8

7. Sampling and Analysis....................................................................................8

8. Adjustment for Quality..................................................................................11

9. Quality and Specifications..............................................................................13

10. Contract Price Adjustments..............................................................................15

11. Remedies................................................................................................17

12. Notices.................................................................................................19

13. Shipping Notices........................................................................................20

14. Transportation..........................................................................................21

15. Payments, Invoices......................................................................................23

16. Weights.................................................................................................24

17. Contract Administrator/Contracting Officer..............................................................25

18. Disputes................................................................................................26

19. Clean Air Act and Other Environmental Requirements......................................................27

20. Unilateral Termination Right............................................................................28

21. Contract Components.....................................................................................28
</TABLE>

<PAGE> 3

CONTRACT FOR PURCHASE AND SALE OF COAL DATED JULY 7.1998
BETWEEN TVA AND WEBSTER COUNTY COAL CORPORATION
(CONTRACT NO. 98P05-239541 RELEASE NO. 1273714)

LISTING OF INITIALED CHANGES

1. Subsection 10.B. Page 17: In the third line down, deleted reference to
"Subsection e." as there is no such subsection.

2. Section 20, Page 30: In the second line down, corrected reference to
"Section 2" versus "Section 5 or under Subsection 3.a".

<PAGE> 4

Contract No. 98P05-239541

Release No. 1273714

CONTRACT FOR PURCHASE AND SALE OF COAL

THIS AGREEMENT, is made and entered into this 7 day of July, 1998, by
and between TENNESSEE VALLEY AUTHORITY, a corporation organized and existing
under an Act of Congress (hereinafter called "TVA"), and Webster County Coal
Corporation (hereinafter called "Contractor").

W I T N E S S E T H:

In consideration of the mutual covenants hereinafter stated, the
parties hereto agree as follows:

Definitions: "Contract Year" shall mean a twelve-month period
commencing with the first day of the calendar month in which the Delivery
Commencement Date (as hereinafter defined) occurs.

"Delivery Commencement Date" shall be that date set forth in
Section 1 hereof for commencement of deliveries. Such date may be changed only
by supplement to this contract that expressly refers to the term "Delivery
Commencement Date." The actual date of commencement of deliveries shall not
affect the Delivery Commencement Date.

"Contract Quarter" shall mean any of the four quarters of a
Contract Year; i.e., January - March -April - June, etc. In the event deliveries
commence at a time other than the beginning of a Contract Quarter, the first
Contract Quarter shall be the period up to the beginning of the next Contract
Quarter, e.g., February - March.

"Contract Administrator" shall be that TVA representative
designated (in the contract award letter) to administer the contract on behalf
of TVA.

"Destination Plants" shall mean that TVA fossil-fired power
plant or plants designated in the Request for Proposals under which this
contract was awarded, a blending facility, if the coal is to be blended at a
site remote from a TVA plant, or such other destination as TVA may elect under
Subsection 14.g. of this contract. Coal delivered hereunder may have a
Destination Plant for blending, and one or more Destination Plants that are
power plants. The Destination Plant(s) shall be identified by TVA from time to
time.

<PAGE> 5

1. Contract Term: The Delivery Commencement Date shall be July 1, 1998,
and deliveries shall continue for five years unless terminated by agreement or
as otherwise provided herein. Provided, however, this contract maybe reopened by
either party ****** prior to the ****** anniversary of the Delivery Commencement
Date for the purpose of renegotiating price and other terms and conditions or
for the sole purpose of terminating deliveries. The party desiring to exercise
such reopener shall give the other party written notice at least (9) months
prior to the anniversary date and may, but shall not be required to, specify the
purpose of such reopening. Nothing herein is intended to require a party who has
commenced renegotiations hereunder to continue such renegotiations if, for any
reason, such party determines it is not in its interests to do so. If the
reopener provision has been exercised, this contract will terminate on the said
****** anniversary date unless TVA and the Contractor have mutually agreed in
writing six (6) months prior to the said anniversary date to continue this
contract. Neither party shall be under any obligation or liability to continue
this contract beyond said termination or have any liability for refusing to do
so, if either party desires to terminate deliveries in accordance herewith.

The Contract Administrator's agreement to any modification arising out
of such renegotiations (including contract extension) shall be subject to
approval by TVA's Board of Directors.

2. Quantity:

a. Subject to TVA's right to reduce or increase quantities to
be delivered, as hereinafter provided, the quantity of coal to be sold and
purchased hereunder during each Contract year shall be ****** nominal ton, which
shall be delivered at a rate of ****** tons per week ******. TVA may from time
to time, either increase or decrease the weekly schedule by an amount up to
****** of the weekly schedule by giving at least thirty (30) days' written
notice (said nominated quantity being hereinafter referred to as the "Nominated
Quantity"). Such notice shall also indicate the quantities to be delivered until
further notice.

TVA shall not be required to accept any quantity of coal
shipped during a month that is in excess of the total amount scheduled, but if
TVA accepts such excess quantity of coal, TVA may, upon written notice to
Contractor, require that such excess amount be deducted from the quantities to
be shipped during the following or subsequent month(s).

<PAGE> 6

If at the expiration of the term of the contract less
than the maximum tonnage has been scheduled for delivery, the parties may by
agreement extend the term of this contract for a period sufficient to permit
delivery of tonnage in an amount up to the difference between the maximum
tonnage and the total scheduled. Neither party shall be obligated to agree to
such an extension.

This contract is not and shall not be construed as a
contract for all of TVA's coal requirements for any Destination Plant. TVA
reserves the right to purchase coal from other suppliers in any amount during
the term of this contract.

b. Notwithstanding the provisions of a. above, if generation
of electricity at a Destination Plant is curtailed or interrupted for a period
of one week or more as a result of the operating requirements of TVA's
integrated electric generating system, including considerations of economic
dispatch of TVA's generating units, TVA may, from time to time, direct
Contractor to (i) suspend deliveries scheduled for such Destination Plant if the
electric output of such Destination Plant is interrupted or (ii) reduce
shipments of coal scheduled to such Destination Plant by a percentage equal to
the percentage reduction in electric output of the Destination Plant resulting
from a curtailment. Such suspension or reduction in deliveries may continue as
long as generation at the Destination Plant is curtailed or interrupted;
provided, however, if TVA continues any such reduction or suspension for more
than one hundred eighty (180) days, Contractor may notify TVA in writing of
Contractor's intent to terminate its obligation to deliver coal scheduled for
the affected Destination Plant, ninety (90) days from the date of TVA's receipt
of such written notice, and this contract shall, upon the passing of such
ninety-day (90-day) period, terminate as to the tonnage scheduled for the
affected Destination Plant, without further cost or obligation to either party,
unless TVA shall have directed resumption of the suspended or reduced deliveries
within forty-five (45) days of TVA's receipt of Contractor's notice of
termination.

Except as provided in the preceding sentence, suspensions
or reductions under this subsection shall not affect the enforceability of this
contract, and, on termination of the suspension or reduction, shipments shall
resume pursuant to the terms and conditions of this contract. Both TVA and
Contractor shall be excused from their respective obligations hereunder with
respect to deliveries suspended or reduced pursuant to this section and such
deliveries shall not be rescheduled for delivery except by mutual consent of the
parties.

<PAGE> 7

c. Except in the case of any failure to deliver that is
excused under Subsection 4.b., TVA may exercise the remedies afforded it under
Section 11, Remedies, or as otherwise provided by law, in the event Contractor
fails to deliver coal as provided in this Section 2 or Section 3, Scheduling;
provided, however, in lieu of other remedies, TVA may elect to reschedule for
delivery any deficiencies. This rescheduled coal shall be delivered in
accordance with the provisions of this contract and at the price in effect at
the time during which such deficiencies occurred.

3. Scheduling:

a. Contractor agrees to load railroad trains or barging
companies' barges on arrival at Contractor's loading point in accordance with
the terms and conditions of TVA's rail or barge transportation agreement(s). TVA
maintains the right to coordinate all deliveries under this contract and others
for the purposes of establishing a uniform delivery schedule for placement at
either transloading and blending docks or TVA plants.

b. Whether TVA or Contractor contracts for transportation
services necessary to transport coal purchased and sold hereunder to the
transloading or blending facilities or the Destination Plants, unless otherwise
agreed, it shall be Contractor's responsibility to make timely arrangements for
the scheduling of transportation equipment for moving the coal at the scheduled
rate of delivery. Contractor shall be responsible for any demurrage that accrues
at the loading point as provided in Section 14, Transportation.

4. Variations, Delays, and Interruptions in Deliveries:

<PAGE> 8

accidents; major breakdown of equipment or facilities (including emergency
outages of equipment or facilities to make repairs to avoid breakdowns thereof
or damage thereto); fires; industry-wide shortages of carriers' equipment;
embargoes; orders or acts of civil or military authority; or industry-wide
shortages of materials and supplies. Nor shall TVA be obligated to take coal
hereunder at a Destination Plant so long as such causes wholly or partially
prevent the transloading and/or blending of the coal or wholly or partially
prevent the handling, unloading, stockpiling, or burning of coal at the
Destination Plant to which deliveries are consigned at the time the cause
occurs, in which case, TVA shall have the right but not the obligation to
consign deliveries to another plant or facility not affected by the excusable
cause. Nor shall the refusal of either party to settle a strike on terms other
than it considers satisfactory preclude the strike from being considered an
excusable cause. TVA shall have the right, but not the obligation, to require
Contractor to make up any tonnage not delivered in accordance with this section.

A party's delays due to delays of its subcontractors will not
be excusable under this provision unless the delay of the subcontractor was also
due to causes beyond the control and without the fault of the subcontractor,
such as the causes listed above. The failure by Contractor or its subcontractor
to obtain and maintain all federal, state, and other regulatory agency coal
mining permits, certificates, and licenses shall not excuse Contractor from any
obligation under this contract. The provisions of this Subsection b. shall not
excuse a party unless such party failing to deliver or take coal shall give
written notice to the other of such failure and furnish full information as to
the cause and probable extent thereof within ten (10) calendar days after the
failure first occurs. In the case of the Contractor, said ten-day (10-day)
period shall begin with the day following that on which tonnage first becomes
deficient under the established delivery schedule. In the case of TVA, this
period shall begin on the day following that on which TVA first fails to take
coal duly and properly delivered. Failure to give such notice and furnish such
information within the time specified shall be deemed a waiver of all rights
under this provision with respect to tonnage scheduled for delivery prior to the
date such notice and information are actually furnished.

<PAGE> 9

fifty percent (50%) reduction in scheduled deliveries for each supplier or
consumer). Similarly, for coal delivering under this contract to multiple
Destination Plants, the failure or partial failure to take or unload coal at one
of the Destination Plants that is excusable under this subsection shall result
in a pro rata reduction in the tonnage scheduled for such Destination Plant
under this contract at the time of the commencement of the supervening cause in
substantially the same proportion as the reduction in total receipts at such
Destination Plant resulting from the supervening cause. However, the parties
shall not be obligated to prorate a reduction in receipts or deliveries under
coal supply contracts not affected by the failure because they have different
modes of delivery or have substantially different quality requirements, or
because their scheduled delivery dates are not affected by the failure. During
the periods TVA may experience such failures to take or unload coal, Contractor
shall be permitted to sell such coal normally intended for TVA. In the case of
the period during which Contractor may experience such failures to deliver coal,
TVA may purchase replacement coal. The disabling effects of such failures to
deliver, take, or unload coal shall be corrected by the party experiencing such
failure as soon as and to the extent reasonably practicable.

If a party's excused failure to deliver or receive coal
in amounts substantially in conformance with the schedule established under
Section 2, Quantity, and Subsection 3.a. continues for a period exceeding
one-hundred eighty (180) days, the other party may terminate this contract. In
the event of such a termination, neither party shall have any further liability
to the other except for those liabilities which may have accrued with respect to
performance or defaults prior to said termination.

c. TVA, by providing at least forty-five (45) days' prior
written notice to Contractor, shall have the right to refuse any shipments
otherwise scheduled for delivery to a Destination Plant during plant maintenance
or repair periods at such Destination Plant and shall have no obligation to
accept such shipments at a later time.

5. Source:

<PAGE> 10

that, within the Source Area, only the area(s), for surfaced-mined coal, or mine
opening(s), for underground-mined coal, covered by the mining permit(s) listed
in the Term Offer is an "Authorized Source " of coal for delivery under this
contract. The mine area(s) and/or opening(s) located within the Source Area
shown on the Specific Location Map(s), but not covered by the mining permit(s)
listed in the Term Offer, may become an Authorized Source under the following
procedures as mining progresses and the appropriate permit(s) and license(s) are
obtained. Contractor shall notify TVA in writing at least forty-five (45) days
in advance of its intention to deliver coal from any additional area(s) or mine
opening(s) in the Source Area which is not then authorized. TVA may, if it deems
it is in TVA's best interests, authorize such areas, but is under no obligation
to do so. TVA reserves the right to require Contractor to furnish any
information and/or any guarantees TVA deem necessary bearing on the ability of
the source to meet the requirements of this contract and to make that
information a part of this contract.

<PAGE> 11

6. Price:

a. TVA shall pay Contractor ****** f.o.b. barges at Kanipe
Dock or ****** f.o.b. rail cars at Dotiki Mine (hereinafter referred to as the
Base Prices) for each net ton of coal purchased and delivered under this
contract, plus or minus such adjustments as herein provided. The Base Price
remains constant.

7. Sampling, and Analysis:

a. The sampling location shall be the Destination Plant unless
TVA notifies Contractor in writing that samples will be taken at other
locations, including blending facilities. TVA shall determine how much coal is
to be sampled and the lot size of each sample. Contractor may be present at the
taking of samples, but TVA shall be under no obligation to notify Contractor to
be present.

b. Sampling and analysis shall be conducted generally in
accordance with the methods described in the latest published edition of the
Annual Book of ASTM Standards, volume 05.05. Plants which receive coal by rail
may collect samples during unloading of a car by means of uniformly spaced tubes
located on the car bumper. Contractor has observed the TVA sampling equipment
and facilities at the Destination Plant or has taken such other steps as
Contractor deems appropriate to familiarize itself with such equipment and
facilities, and Contractor waives any claim, demand, defense, or objection
thereto based on any lack of conformance of such equipment and facilities to the
requirements of this Section 7, provided they are properly maintained during the
term of this contract.

<PAGE> 12

TVA in writing within such forty-five day (45-day) period. If Contractor fails
to provide such notice of dispute within such forty-five day (45-day) period,
Contractor shall be deemed to have waived any claim or defense based on errors
or omissions in the sampling or analysis operations as to the affected samples.

Upon receipt of a notice of a dispute over the result or
method of such sampling or analysis, TVA shall review and inspect the sampling
and analysis equipment and procedures, and, if such dispute is in good faith,
the second sample split will be analyzed by a third party commercial laboratory
to check for reproducibility. The third party lab will follow the same ASTM
analysis procedures outlined in Subsection b and the reproducibility limits in
those same standards will be used to judge reproducibility. If the review of the
sampling and/or analysis indicates the sampling or analysis was improperly
performed or the results of the second analysis are not within ASTM
reproducibility limits, the original analysis report shall be declared
erroneous, and both the original and the second analysis report shall be
ignored. Otherwise, the original analysis report shall remain in full force and
effect.

e. Contractor shall also sample and analyze, or obtain
services of a third party to sample and analyze, all shipments of coal to TVA
under this contract. These analyses shall specify, at a minimum, the total
moisture content, the ash content (as-received), the heat content Btu/lb
(as-received), and the sulfur content (as-received), and must be electronically
transmitted to both the Destination Plant and the Contract Administrator in a
format acceptable to TVA. These analyses are required in order to provide
information on the contents of coal received by TVA prior to unloading. TVA
reserves the right not to unload coal at the Destination Plant until after the
appropriate analysis is received. Contractor shall be responsible for any
demurrage charges incurred by TVA as the result of Contractor's failure to
transmit the analyses when and as required. TVA may reject coal based on these
analyses; however, nothing in this Subsection e. shall affect in any way TVA's
rights to appropriate contractual actions and adjustments for quality based on
samples collected and analyzed in accordance with Subsections a. and b. of this
Section 7.

<PAGE> 13

(1) One-hundred percent (100%) of shipments shall have been
sampled and analyzed in accordance with the methods described in the latest
published edition of the Annual Book of ASTM Standards, volume 05.05. Samples
must have been collected utilizing mechanical systems meeting ASTM D 2234 Type
I, Condition B, which have been shown to be free of bias within the past year.
The bias testing procedure and precision used must be approved by TVA. Systems
will be subject to a critical inspections according to ASTM D4702 prior to
approval.

Analysis procedures used should be as follows unless otherwise
approved in writing by TVA:

<TABLE>
<CAPTION>
Parameter Method
--------- ------
<S> <C>
Residual Moisture ASTM D 5142

Ash ASTM D 5142

Sulfur ASTM D 4239

Btu ASTM D 1989
</TABLE>

(2) Sample analysis and other data required by TVA to match
data with shipment shall be provided to TVA in a format approved by TVA.

(3) The lot size for each sample shall be by barge for barge
coal, by trainload for rail coal, and by daily delivery for truck coal.

(4) Analysis for each sample shall have been received by TVA
by electronic data interchange within seven (7) days of collection of said
sample.

(5) The sampling system shall be located in an area acceptable
to TVA such that the sample collected for shipment is collected only from coal
that is loaded for said shipment.

If TVA samples twenty percent (20%) or more but less than
fifty percent (50%) of the tonnage received, and if any of Contractor's samples
for the affected quarter do not meet all of the above criteria, TVA samples
shall be used for said quarterly adjustment(s). If TVA samples less than twenty
percent (20%) of the tonnage received and any of Contractor's samples do not
meet all of the above criteria, no adjustment for quality will be made for said
quarter.

<PAGE> 14

8. Adjustment for Quality:

a. As used in this Section 8, a "Quarterly Average Value "
shall mean the weighted average value of the appropriate quality component
determined from all samples collected in accordance with Subsections 7.a. and
7.b. during a calendar quarter based, at TVA's election, on the tonnage, number
of railcars, or barges represented by the samples.

b. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest cent per ton and using the Base Price,
shall be applied to the contract price to account for variations in the
Quarterly Average Value for as-received Btu/lb, compared to the Typical Analysis
for as-received Btu. This adjustment shall in no way be affected by contract
price adjustments under Section 10, Contract Price Adjustments, hereof. (See
Exhibit I for example of calculations)

c. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest tenth of a cent per ton at a rate of
either (1) ****** per ton (decrease) for each percentage point the Quarterly
Average Value for ash (as-received basis) exceeds the Typical Analysis for ash,
or (2) ****** per ton (increase) for each percentage point for the Quarterly
Average Value for ash (on an as-received basis) is less than the Typical
Analysis for ash recalculation shall be prorated to cover any fractional
percentage. (See Exhibit I for example of calculations.)

d. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest tenth of a cent per ton at a rate of
either (1) ****** per ton (decrease) for each percentage point the Quarterly
Average Value of moisture exceeds the Typical Analysis for Moisture, or (2)
****** per ton (increase) for each percentage point the Quarterly Average Value
for Moisture is less than the Typical Analysis for Moisture. The calculation
shall be prorated to cover any fractional percentage. (See Exhibit I for example
of calculations.)

e. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest cent per ton at a rate of either (1)
****** per ton (decrease) for each tenth (1/10) of a pound per million BTUs the
Quarterly Average Value of sulfur dioxide exceeds the Typical Analysis for
sulfur dioxide, or (2) ****** per ton (increase) for each tenth (1/10) of a
pound per million BTUs the Quarterly Average Value for sulfur dioxide is less

<PAGE> 15

that the Typical Analysis for sulfur dioxide. The calculation shall be prorated
to cover any fractional amount tenth (1/10) of a pound. (See Exhibit I for
example of calculations.)

In lieu of accepting any sulfur dioxide penalty for any
calendar quarter, the Contractor may choose to transfer sulfur dioxide emission
allowances as follows. A choice to transfer emission allowances must be made in
writing to TVA's contract administrator. As soon as practicable after the end of
each calendar quarter, TVA shall provide to Contractor a statement showing the
weighted average sulfur dioxide content (in pounds per million BTUs) for all
deliveries under this contract during the quarter (including any option
tonnage). If the quarterly average sulfur dioxide content exceeds the Typical
analysis, Contractor shall provide TVA a completed EPA Allowance Transfer form,
within seven working days after Contractor's receipt of such average sulfur
dioxide quality data. This EPA Allowance Transfer form shall authorize transfer
of sufficient sulfur dioxide emission allowances to bring the actual deliveries
for such quarter into compliance with the Typical sulfur dioxide specification
value as referenced in Section 9.a. This transfer shall be from an EPA account
designated by Contractor to an EPA account designated by TVA.]

f. As soon as practicable after the end of each calendar quarter, TVA
shall submit to Contractor a report showing the Quarterly Average Values and any
adjustments determined under this Section 8 of the contract. The number of tons
of coal received by TVA which are subject to adjustment shall be multiplied by
said adjustments, and any resulting amount shall be paid promptly (or credited
to the extent of any offsetting debit) to the party to whom it is due. The
assessment of adjustments in accordance with the foregoing does not in any way
impair TVA's rights under the contract or at law with respect to any failure by
Contractor to meet the Guaranteed Analysis that gives rise to such adjustments.

9. Quality and Specifications:

a. All coal delivered under this contract shall conform to the
following Typical Analyses on a quarterly average as determined by sampling and
analyses performed in accordance with Section 7, Sampling and Analysis:

<PAGE> 16

<TABLE>
<CAPTION>
TYPICAL REJECTION/SUSPENSION
ANALYSIS(1) SPECIFICATIONS(3)
<S> <C> <C> <C> <C> <C>
Lbs of SO2 per million Btu (2) ****** lbs Not more than ****** lbs
Total Moisture ****** % Not more than ****** %
Sulfur (as-received max.) ****** % Not more than ****** %
Sulfur (as-received min.) ****** % Not less than ****** %
Ash (as-received) ****** % Not more than ****** %
Ash (dry basis) ****** % Not more than ****** %
Btu/lb (as-received) ****** Not less than ******
Ash fusion temperance
reducing atmosphere
Initial ****** (degree)F Not [more/less] than ****** (degree)F
Softening (Hemispherical) ****** (degree)F Not [more/less] than ****** (degree)F
Fluid ****** (degree)F Not [more] than ****** (degree)F
Volatile Matter (dry basis) ****** % Not less than ****** %
Grindability (Hardgrove Index) ****** Not less than ******
Chlorine (dry basis) ****** % Not more than ****** %
</TABLE>

(1) The Typical Analysis shall be used for the quality adjustment under
Section 8.

(2) At ******

(3) Failure to comply with any of these specifications shall be basis
for rejections and suspensions or termination pursuant to
Subsections 9.c. and 9.d.

b. The coal as-received shall have a top size not greater than
****** or less than ******, with at least ****** of the product larger than
******, and with at least ****** of the product larger than ******. Such sizes
shall be determined by using screens with square openings. Coal shall not
exhibit a temperature in excess of ****** and it shall be substantially free
from mining impurities and scrap such as drill bits, pieces of scrap metal or
plate, plastic, rubber, rope, cloth, wire, cable, bone, slate, earth, rock,
pyrite, wood, or water, which can be kept out or removed with the exercise of
reasonable care during mining, preparation, and loading. It shall be loaded in a
manner that will ensure reasonably uniform consistency as to size and quality
and shall not contain

<PAGE> 17

slurry pond material (washer tailings), gob pile material (mine refuse),
petroleum-coke, oxidized coal, or blends of such materials, or create excessive
amounts of dust during the unloading and transferring to storage.

c. If any coal delivered fails to meet any of the
Rejection/Suspension Specifications on the basis of visual inspection or
laboratory analysis, TVA may reject the coal at the source, loading point, any
transloading or Destination Plant. TVA's acceptance of any amount of coal which
does not meet these requirements shall not constitute a waiver of any right
which TVA may have under this contract or as provided by law on account of the
delivery of such coal. In case of rejection of any coal in accordance with this
section, TVA will immediately notify Contractor of the rejection and of the
cause of rejection. In the case of coal rejected after loading, unless the cause
for rejection is corrected, Contractor shall promptly remove the coal from the
carrier's equipment or from TVA premises, as the case may be, at Contractor's
expense. Contractor shall reimburse TVA for any additional transportation costs,
demurrage, equipment repair costs, or handling expenses incurred by TVA in
connection with any such rejection. TVA shall not be under any obligation or
liability to assist Contractor in any corrective actions required to remedy the
cause for rejection.

d. If any coal delivered fails to meet the
Rejection/Suspension Specifications stated in Subsection 9.a. or the
requirements of Subsection 9.b., TVA shall have the right to refuse to accept
further deliveries from any or all mine sources authorized under the contract
until Contractor provides assurance satisfactory to TVA that Contractor will
comply with the Rejection/Suspension Specifications and the Subsection 9.b.
requirements. Such assurance must be given in writing within seven (7) days
after the beginning of such suspension. If Contractor fails to provide such
assurance within the time specified or provides such assurance but does am
correct the deficiencies that resulted in the breach of Subsection 9.a. or
Subsection 9.b. within seven (7) days after giving such assurance, TVA may then
terminate Contractor's right to make further deliveries under this contract.
However, if TVA has suspended Contractors' right to make further deliveries
under the above provision two (2) times during any twelve-month period of the
contract term, TVA shall have the immediate right, at its option, upon the third
such violation, to terminate Contractors' right to make further deliveries under
this contract. Contractor shall be responsible for all costs or damages incurred
by TVA resulting from Contractor's failure to

<PAGE> 18

comply with the contract requirements. Damages or excess reprocurement cost may
be determined in accordance with Section 11, Remedies.

e. If the normal operations in conformance with the design
capabilities of the Destination Plant cannot be accomplished with the coal
delivered hereunder, although the coal complies with the quality and size
requirements of this Section 9, TVA may then terminate Contractor's right to
make further deliveries, and this contract shall be canceled without further
obligation or liability to either party. In the event of such a termination, the
Contractor may be given a reasonable opportunity to remedy the cause for
termination, which may include the offer of replacement coal. However, TVA is
not obligated to accept offers of replacement coal for the Destination Plants.
In the case of multiple Destination Plants, a termination under this subsection
e. shall be effective only and to the tonnage scheduled for the affected plant
at the time it is determined that normal operations cannot be accomplished.

10. Contract Price Adjustments:

a. Effective the first day of the second Contract Year and
each such first day of each Contract Year thereafter, the then current adjusted
price of coal shipped under this contract will be increased by ****** of the
Base Price specified in Section 6, Price, as such price may be modified under
Section I, Subsection 10.b. or Subsection 10.d., below.

b. (1) In the event of enactment or amendment, after the
proposal closing date for the requisition under which this contract was awarded
(or in the case of establishment of a new Base Price under Section I or
Subsections d. or e., below, after the effective date of such new Base Price),
of a federal or state statute that assesses on a per-ton basis a tax, fee, or
other similar charge on the coal delivered hereunder ("Law Changes "),
Contractor shall notify TVA of such Law Changes and supply from its records
information satisfactory to TVA showing the effect, if any, of these Law Changes
upon the cost per ton of furnishing coal under this contract. If a Law Change
increases Contractor's cost of providing coal to TVA, a contract price increase
shall be made by TVA for such Law Changes effective on the later of (a) the date
TVA receives Contractor's notice of the Law Change or (b) the date Contractor's
cost of providing coal is increased by the Law Change. If a Law Change decreases
Contractor's cost of providing coal to TVA, a price decrease shall be made by
TVA for such Law Change effective

<PAGE> 19

on the date such Law Change could be utilized to reduce Contractor's costs,
whether or not Contractor actually reduces such costs on such date. This Section
10.b.(1) does not apply to (i) promulgation or amendment of rules and
regulations except to the extent such promulgation or amendment results from a
Law Change, or (ii) to implementation of statutes or amendments to statutes that
are enacted on or before the proposal closing date as described above.

c. The increase or decrease under each subsection shall be
calculated separately to the nearest one-tenth (1/10) cent per ton. Any changes
(including a recalculation of a previously granted tentative price adjustment)
considered applicable by Contractor shall be reported to TVA by Contractor with
appropriate data necessary to verify the change. Contractor must furnish such
supporting evidence as may be requested by TVA. A request for a price adjustment
considered applicable by Contractor must be submitted to TVA with appropriate
documentation within one hundred eighty (180) days of the date Contractor incurs
a cost change. Failure to do so shall constitute a waiver of Contractor's right
to any upward adjustment. Any overpayment made under these provisions may be
deducted from any amounts otherwise due Contractor.

Contractor agrees that, in the event TVA reimburses
Contractor under this Section 10 for a cost incurred by Contractor and it is
later determined that Contractor is entitled to recover such cost from a third
party, at TVA's request Contractor shall use its best efforts to recover such
cost and upon such recovery shall reimburse TVA for amounts previously paid by
TVA based on said cost. Reasonable costs incurred by Contractor in pursuing such
recovery at TVA's request shall be reimbursed by TVA; provided that where
Contractor and/or other purchasers from Contractor also receive a benefit from
pursuing such recovery, the cost thereof shall be equitably shared.

<PAGE> 20

d. In the event TVA's transportation cost for shipment of coal
delivered hereunder increases during any one-year period at a rate greater than
****** of the transportation cost in effect at the time of contract award, TVA
may terminate the Contractor's right to proceed under this contract without
further obligation or liability to either party hereunder or at law by giving
Contractor sixty (60) days' advance notice of such termination any time within
one year after TVA begins incurring such cost increase. However, in lieu of
termination, Contractor may elect to reduce the Base Price of coal to cover the
increased portion of the transportation cost above the aforementioned limit, in
which case the contract shall remain in full force and effect. Contractor's
election must be set forth in writing within thirty (30) days of TVA's notice of
termination. Such election by Contractor shall be irrevocable and binding for
that increase and, shall be effective as of the date of notification by TVA of
the cost increase. TVA may invoke the provisions of this Subsection d. each and
every time its costs exceed the limit set forth above.

II. Remedies:

a. This Subsection 11.a. does not apply to a situation where
another contract provision provides a different procedure, such as Subsection
9.d. If TVA in good faith believes that Contractor has failed to comply with any
term or condition of this contract, the Contract Administrator shall give
Contractor oral notice, to be followed by written confirmation, of any such
violation.

(i) If Contractor fails to correct a curable contract
violation within seven (7) days of first notice, TVA shall have the right to
suspend Contractor's right to make further deliveries until Contractor provides
adequate assurance to TVA that Contractor will comply with all provisions of
this contract, such assurance to be given in writing within seven (7) days after
such suspension. If Contractor fails to provide such adequate assurance within
the time specified or timely provides such satisfactory assurance but Contractor
does not correct the curable contract violation(s) within seven (7) days after
giving such assurance, TVA shall have the right, but not the obligation, to
terminate Contractor's right to make further deliveries under this contract.

<PAGE> 21

but not the obligation, to terminate or suspend for up to thirty (30) days,
Contractor's right to make further deliveries under this contract. If TVA
suspends Contractor's right to make further deliveries, then, upon expiration of
said thirty-day period, TVA shall either direct Contractor to continue
performance of this contract or terminate Contractor's right to make further
deliveries.

b. Contractor shall be responsible for all costs or damages
incurred by TVA resulting from Contractor's failure to comply with the contract
requirements. TVA may, at its option, purchase in the open market or by contract
or otherwise procure coal to replace all or any part of that which the
Contractor has failed to deliver, except as provided in Subsection b. of Section
4, Variations, Delays, and Interruptions in Deliveries, or that as to which its
right to deliver was terminated or suspended. Contractor shall be liable to TVA
for the excess cost occasioned by such purchase(s) and any other loss or damage
caused by Contractor's breach of the contract, including, but without limitation
to, liability incurred by TVA with respect to the transportation or other
handling of the coal. In the alternative, TVA may determine the loss or damage
sustained by Contractor's breach of contract by other methods as provided by
law. In addition to all other means of recovery, TVA may deduct any such excess
costs and damages from any amount otherwise due Contractor.

Unless TVA determines that the following method of
calculating damages is not practical and TVA notifies the Contractor in writing
that TVA's damages will be calculated in some other commercially reasonable
manner, (1) such part of the highest priced coal (of comparable quality under
one or more contracts) which TVA purchases at the next awarding of term or spot
contracts for delivery to any fossil plant in the TVA system as would be
required to replace coal which was scheduled for delivery under this contract
after the date the Contractor's right to make deliveries under this contract was
terminated shall be deemed to have been purchased as replacement coal for
Contractor's account; and (2) for unexcused deficiencies occurring before
termination or contract expiration, such part of the highest priced coal (of
comparable quality under one or more contracts) for which TVA awards spot
contracts in the week following each such deficiency, for delivery to any plant
in the TVA system, as equals the quantity of Contractor's deficiency shall be
deemed to have been purchased as replacement coal for Contractor's account. If
no spot coal was purchased before contract termination or expiration, TVA shall

<PAGE> 22

determine damages for all unexcused deficiencies in the manner provided in item
(1) above, whether such deficiencies accrued before or after termination or
expiration.

In the case of Contractor to:

MAPCO Coal Sales Inc.
1717 So. Boulder Avenue
Tulsa, Oklahoma 47121
Attn: Gary Rathburn

In the case of TVA to:

Ms. Tamara Quinn, Contract Administrator
Tennessee Valley Authority
Fossil Fuels
1101 Market Street, LP 5G
Chattanooga, Tennessee 37402-2801

In addition, Contractor shall send a duplicate copy of every
such notice and communication to TVA's Contract Administrator as designated by
TVA from time to time. Either party may, by

<PAGE> 23

written notice to the other, change the representative or the address to which
such notices and communications are to be sent.

13. Shipping Notices:

a. For all rail-delivered coal Contractor shall forward to the
Destination Plant Manager(s) and Contract Administrator a daily notification, in
duplicate, as to coal shipped. This shipping notice must include the contract
number, traffic control numbers, railcar numbers, origin, name of mine, size of
coal, shipping date, and approximate date of arrival. In addition, Contractor
must complete the bill of lading (provided by TVA), and forward this document to
the railroad and plant for proper identification. TVA shall have the right to
require Contractor to transmit all of the above-referenced information via
electronic data transfer direct to TVA's computer system.

b. For all barge-delivered coal Contractor shall forward to
the individual named in the consigning instructions, Destination Plant
Manager(s), and Terminal Supervisor, if applicable, a daily notification, in
duplicate, as to coal shipped. This shipping notice must include the contract
number, barge numbers, origin, name of mine, size of coal, shipping date, and
approximate date of arrival. TVA shall have the right to require Contractor to
transmit all of the above-referenced information via electronic data transfer
direct to TVA's computer system.

14. Transportation:

<PAGE> 24

destination (f.o.b. destination contract), title to the coal (except in the case
of accelerated payments to Small Coal Operators) and risk of loss and damage
shall remain with Contractor until delivery in acceptable condition by the
carrier at destination.

e. For all coal to be delivered hereunder, whether f.o.b.
origin or f.o.b. Destination Plant, Contractor shall be responsible for any
demurrage that accrues at any loading point as a result of Contractor or its
subcontractors not being prepared to load the coal as scheduled. The carrier
shall invoice Contractor and Contractor shall pay said carrier for all origin
demurrage charges which accrue at the loading point(s).

<PAGE> 25

f. The explicit obligation of this contract is that it will be
performed in accordance with all applicable laws. Therefore, transportation of
coal by Contractor to barge or rail loading facilities or, if applicable, to the
Destination Plant shall comply with applicable highway laws and regulations
governing the weight of vehicles. If any Contractor fails to comply with such
laws or regulations, TVA shall have the same rights provided under Section 9,
Quality and Specifications, for failure to meet the requirements thereof,
including but not limited to the right to reject coal delivered in overweight
trucks. To insure compliance with this provision and to help protect the roads
and highways, TVA may require that Contractor furnish a copy of the "certified"
truck weight ticket. Regardless of the actual weight of any truck coal received,
the maximum gross weight that can be recorded for a single truck will be limited
to the applicable maximum weight enforced by law. Any weight exceeding that
maximum weight may be deducted from the total weight of coal used for payment
purposes.

g. TVA reserves the right to ship to any plant or blending
facility any coal purchased f.o.b. any shipping point. For coal purchased f.o.b.
any plant, or blending facility, or shipping point, TVA may from time to time
direct deliveries to any other plant, blending facility, or shipping point, and
if such deliveries cause an increase or decrease in the transportation cost
borne by Contractor in performing this contract, an adjustment shall be made in
the contract price to reflect the changes in such cost. In addition, for coal
purchased f.o.b. railcar and/or f.o.b. barge, where practicable to do so, TVA
may, by giving prior written notice to Contractor as soon as possible but not
later than thirty (30) days in advance, change the transportation mode of
delivery, and if such change in mode causes an increase or decrease in the
loading costs borne by Contractor in performing this contract, an adjustment
shall be made in the contract price to reflect the changes in such costs.

15. Payments, Invoices: Payments under this contract are subject to the
provisions of the Prompt Payment Act (31 U.S.C. Sections 3901-3907). Payments as
are provided for in the contract or by law will be made by check, or Electronic
Fund Transfer (EFT), if a participation agreement has been established between
TVA and Contractor, Electronic Fund Transfer (EFT). Except as provided for under
TVA's Small Coal Operators Assistance Program, EFTs will be made not more than
thirty-four (34) calendar days, and checks will be mailed not more than thirty
(30) calendar days, after the later of (1) receipt of a proper invoice(s) by TVA
at the Accounts Payable Department, P.O. Box 15500, Knoxville, Tennessee
37901-5500 or (2) receipt and unloading of the coal at TVA's

<PAGE> 26

fossil plants. In preparing invoices, Contractor shall multiply the number of
tons delivered by the Base Price applicable at the f.o.b. point of delivery plus
or minus any adjustments that have been made effective under contract
provisions.

For purposes of this provision only, "proper invoice"
shall mean a numbered and dated invoice containing the complete name of
Contractor, agent's name (if any), contract number, breakdown code, total amount
due, correct weights (as defined below), traffic control number, shipping date,
mine at which the coal was produced, together with any documentation required to
be submitted therewith by any other provision of the contract.

16. Weights:

a. Unless TVA determines circumstances require determination
by other methods, all coal delivered to destination by barge shall be weighed by
TVA, or the blending facility, on belt scales which are maintained and
periodically calibrated by TVA or third parties for accuracy.

b. Where at TVA's election coal is weighed by Contractor at
origin, Contractor shall notify TVA immediately upon the occurrence of
inaccurate weighing or absence of actual weighing. Contractor shall certify such
notification in writing to TVA within seven (7) working days of the date of each
such occurrence. Such certification shall identify each affected coal shipment
by contract number, breakdown code, shipping point, traffic control number,
shipping date, and car or barge number(s). Contractor's account shall be
adjusted for any coal inaccurately weighed, or not weighed, and by the amount of
the carrier's weighing charge in effect at the time of shipment, such adjustment
to be made at whatever time such occurrence(s) becomes known to TVA. In the
absence of scale weights from Contractor, TVA and Contractor will mutually agree
by what means the weight of coal delivered hereunder shall be determined.
Contractor shall reimburse TVA for any cost or expense charged to or incurred by
TVA as a result of the absence of appropriate scale weights from Contractor.
While TVA may not undertake to weigh all coal received, it may at its option,
check weigh any coal received. In the event billed (invoiced) weights vary from
TVA weights by more than one and one-half percent (1-1/2%), TVA's weights will
govern.

<PAGE> 27

If TVA has elected to have Contractor weigh the coal
pursuant to Subsection b., scale tests shall be performed quarterly or more
often than quarterly when requested by TVA. TVA shall be responsible for the
cost of additional requested tests unless the results thereof show that the
scale failed to conform to certification standards, in which event Contractor
shall be responsible for such costs. The aggregate weights determined during any
payment period shall be acceptable as the quantity of coal sold and purchased
during such period for which invoices are to be rendered and payments to be
made.

TVA shall have the right to have a representative
present at any and all times during TVA loadings to observe determination of
weights. If TVA should at any time question the accuracy of the weights thus
determined, TVA shall so advise Contractor and Contractor shall permit TVA's
representatives to test Contractor's weighing devices or methods. If such tests
show the weighing devices to be in error, or if the weighing devices otherwise
are determined to be in error, the weighing devices shall be adjusted to an
accurate condition. In the event TVA and Contractor are unable to agree upon
such tests and adjustments, or the devices or methods thereof, the weighing
devices and methods shall be tested and adjusted to a condition of accuracy by a
qualified third party, mutually chosen by TVA and Contractor, and the cost of
the testing and adjusting by such third party shall be shared equally by TVA and
Contractor.

If Contractor's weighing devices or methods are
determined to be in error over 0.5%, an appropriate adjustment shall be made to
the affected weights and related invoices and payments. Such adjustments shall
be made retroactively to a date midway between the date on which the weighing
devices were last tested and calibrated and the date on which the inaccuracy in
weighing methods or devices was first questioned and prospectively until the
date on which the weighing methods and devices are corrected.

c. All scales used by Contractor to determine the governing
weight of coal shall be maintained and operated in accordance with the National
Institute of Standards and Technology Handbook 44.

<PAGE> 28

Administrator shall serve as TVA's "Contracting Officer" with respect to matters
arising under terms of this contract that provide for action by the Contracting
Officer.

18. Disputes:

a. This contract is subject to the Contract Disputes Act of
1978, Public Law No. 95-563, 92 Stat. 2383 ("the Act "), and TVA's implementing
regulations published at 18 C.F.R. pt. 1308, as they may be amended from time to
time.

b. Any dispute relating to this contract, whether arising
before or after completion of performance, including disputes as to any alleged
violation or breach thereof, which is not settled or disposed of by agreement of
the parties shall be decided by the Disputes Contracting Officer (who shall be
appointed by the TVA Vice President of Fuel Supply and Engineering) on the basis
of the contract file and any other facts which he/she may deem pertinent. Any
claim by Contractor shall be submitted in accordance with the Act and TVA's
implementing regulations. The Disputes Contracting Officer shall reduce his/her
decision to writing and promptly mail or otherwise furnish a copy thereof to
Contractor. Within ninety (90) calendar days from the receipt of such copy,
Contractor may appeal to the TVA Board of Contract Appeals by mailing or
otherwise furnishing the Disputes Contracting Officer a written notice of
appeal. Following the filing of a notice of appeal, the TVA Board of Contract
Appeals shall arrange for the decision of the appeal in accordance with the Act
and TVA's implementing regulations. The decision of the TVA Board of Contract
Appeals on any question of law shall not be final or conclusive, but the
decision on any question of fact shall be final and conclusive, unless
determined by a court of competent jurisdiction to have been fraudulent, or
arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad
faith, or not supported by substantial evidence.

c. In lieu of an appeal to the TVA Board of Contract Appeals
from the decision of the Disputes Contracting Officer, Contractor may bring an
action against TVA directly on the claim in a United States District Court with
proper jurisdiction and venue pursuant to 28 U.S.C. Section 1337. Such an action
shall be brought within twelve (12) months from the date of receipt by
Contractor of the Disputes Contracting Officer's decision hereunder.

<PAGE> 29

e. Contractor agrees that TVA's termination or suspension of
Contractor's right to make deliveries under the contract, TVA's withholding of
monies due under the contract, or TVA's pursuit of other remedies specifically
provided for herein shall not constitute relief, under TVA's implementing
regulations at 18 C.F.R. part 1308, as to which TVA must initiate the disputes
process prior to or after effecting; provided, however, nothing in this
Subsection e. shall restrict Contractor from pursuing its right to a Contracting
Officer's decision and other relief available pursuant to this Section 18 with
respect to any such termination, suspension, withholding, setoff, or other
remedy exercised by TVA.

19. Clean Air Act and Other Environmental Requirements: In the event of
enactment, implementation, amendment, or enforcement of the Clean Air Act, as
amended, or any other applicable federal, state, or local air pollution control
or environmental law, rule, or requirement which causes the continued use of the
coal purchased under this contract to be inconsistent with (i) TVA's air
pollution control strategies, as they may be modified for meeting such air
pollution control or environmental requirements, or (ii) an administrative or
judicial order, TVA may cancel this contract with no further obligation or
liability hereunder or at law by giving Contractor ninety (90) days' advance
notice of such cancellation. In the case of inconsistency with TVA's air
pollution control strategies, the parties will attempt to renegotiate the
contract during such notice period to provide for delivery of coal that will be
of a quality consistent with TVA's new air pollution control strategies. In the
event the parties do not reach agreement on such a renegotiated contract within
the 90-day notice period, the cancellation notice given by TVA shall remain in
effect and the contract shall terminate at the end of such period. In no event
will TVA be obligated to divert deliveries from any affected Destination
Plant(s) to any alternate coal-fired fossil plant in TVA's system.

<PAGE> 30

20. Unilateral Termination Right: In addition to any other termination
rights provided in this contract or at law, TVA expressly reserves the right,
upon 60 days' prior written notice to Contractor, to unilaterally terminate this
contract; provided, however, that TVA shall pay to Contractor an amount equal to
ten (10) percent of the Base Price, multiplied by the remaining number of tons
scheduled for delivery from the effective termination date herein through the
earliest applicable date for termination pursuant to the reopening provisions
under Section 1, Contract Term; or if there is no renegotiation provision
capable of effectuation after the date of termination under this section 20;
then through the date of expiration of this contact, provided further, that the
remaining number of tons scheduled for delivery shall be based on the minimum
Base Weekly Schedule provided in Section 2, as said schedule has been adjusted
under Section 5 or under Subsection 3.a. Said payment by TVA to Contractor shall
constitute Contractor's sole remedy against TVA for any loss, cost, or damage
incurred by Contractor as a result of TVA's termination under this section. TVA
shall have no further obligation or liability under the contract or at law
except with respect to coal delivered prior to said termination date as
otherwise provided in Section 8, Adjustment for Quality, Section 15, Payment and
Invoices, and Section 16, Weights.

21. Contract Components: The attached Section I-III of the Request for
Proposals; Exhibit 1; Term Coal Proposal; General Long-Term Contract Conditions;
Contractor's letters dated August 27, 1997, December 19, 1997, February 9, 1998,
Limitation on Use of Outside Influence (ID-67); Coal Producer's Statement(s);
and the Subcontracting Plan (on file) constitute parts of this contract.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the aforesaid date by their duly authorized representatives.

ATTEST: Contractor:

By:
- ----------------------------------- --------------------------------
(Signature)

Title:
-----------------------------

<PAGE> 31

ATTEST: TENNESSEE VALLEY AUTHORITY

BY:
- ---------------------------- ---------------------------------
(OGC)

Title:
------------------------------

<PAGE> 32

GENERAL LONG-TERM CONTRACT CONDITIONS

1. Verification of Data, Inspection of Records and Mine Sources: TVA,
its employees, agents, or representatives, shall have the right, after prior
notice and at a reasonable time to inspect Contractor's or, if applicable, its
producer's records and mines and related facilities to verify the accuracy of
the data supplied by Contractor to support its request for price adjustments or
to establish Contractor's actual cost change under section 10, Contract Price
Adjustments, in the Base Contract and for purposes of determining Contractor's
compliance with the provisions of this contract. Information obtained by TVA,
its employees, agents, or representatives, in examining Contractor's or its
producer's records or inspecting Contractor's or its producer's mines shall not
be disclosed to third parties without the Contractor's consent, unless
disclosure is ordered by a court of competent jurisdiction, is made for purposes
of any litigation or proceeding (judicial, administrative, or investigatory)
revolving this contract, or is otherwise required by law.

2. Coal Mining Reclamation and Conservation Requirements.. The
following TVA reclamation and conservation requirements are applicable to all
spot contracts for the purchase of coal:

a. TVA Policy On Areas From Which Coal Will Be Procured: Coal Mining
- - Land and Water Resource Protection. TVA accepts no coal mined from locations
in or near areas officially designated by state or federal agencies, or
identified by TVA, as wild or scenic river areas, wild, wilderness, natural,
scenic, public recreation areas or under study pursuant to legislative authority
for any such official designation, except where special circumstances exist. No
coal will be accepted from locations in or near areas designated under
legislative authority as potential sites for the above uses unless, after
coordination with the appropriate agencies, TVA determines that the coal can be
mined without substantially adversely affecting the area's potential for such
use. In such cases and also in cases involving offerings of coal from mines in
or near other visually important areas such as major highways or population
centers, special provisions designed to protect aesthetic values may be
incorporated in the purchase contracts. No coal will be accepted from areas in
which, in TVA's judgment, mining would adversely affect a public water supply
and such adverse effect cannot be avoided by proper reclamation.

<PAGE> 33

b. Contractor agrees that all sources of coal delivered shall be in
full compliance with all state and federal reclamation laws, including the
Surface Mining Control and Reclamation Act of 1977 and all regulations issued
thereunder. Violations of any such law or regulation shall constitute a breach
of contract, entitling TVA to exercise its remedies under this contract or as
provided by law. TVA will not accept coal mined from any source, stockpile, or
otherwise during any period when the source is subject to a cessation order
issued by the Office of Surface Mining and Reclamation (OSM) or any state
reclamation enforcement agency for violation of reclamation requirements. TVA
also reserves the right to either terminate this contract or suspend deliveries
under the contract from any source whatsoever when any authorized source listed
in the contract, or as it may hereafter be amended, is subject to a cessation
order. Coal which is not delivered due to such cessation order or suspension
shall not be considered excusable, and TVA may purchase replacement coal for the
Contractor's account. If, upon appeal by the Contractor under OSM's or the
appropriate state's regulations, a cessation order is held to have been
improperly issued, the Contractor shall not be liable for the cost of
replacement coal, and any coal not delivered due to the order or suspension may,
at Contractor's option, be canceled or rescheduled upon delivery terms
reasonably acceptable to TVA. This constitutes Contractor's exclusive remedy
against TVA in the event of a wrongful issuance of a cessation order by OSM or a
state agency.

c. TVA reserves the right to require and Contractor agrees to
perform over and above the requirements specified by law any special or
additional reclamation work which TVA deems necessary to ensure that the mining
operation complies with TVA's overall policy for protection and enhancement of
the environment. TVA agrees to compensate Contractor for the performance of such
work in an amount to be mutually agreed upon before the commencement of work. No
work performed by Contractor shall be deemed special or additional reclamation
work for the purposes hereof unless it is so designated in writing by the
Contract Administrator.

d. TVA, its agents, and assigns shall have the right to enter upon
any of the land affected by Contractor's mining operation, at any time and
without the necessity of giving notice, for any purpose related to enforcing
these reclamation and conservation requirements or to observe mining or
reclamation completed or in progress.

<PAGE> 34

e. TVA will not accept coal from sources mined under the 16-2/3
percent exemption allowed under P.L. 95-87, unless it can be documented that the
source will be mined and reclaimed to the performance standards established
under P.L. 95-87, and furthermore, that the operation has the concurrence of the
coal mining and regulatory, (primacy) authority established by this law in the
state from which the coal is to be mined.

3. RELATIONSHIP OF PARTIES - PRODUCER'S STATEMENT:

a. Regardless of whether the Contractor is the producer of the coal
to be furnished or is the sales agent of one or more producer, the Contractor
binds and obligates itself for the full and faithful performance of the contract
in its entirety.

b. If the Contractor is not the producer of the coal to be delivered
hereunder, Contractor represents that it has contracted directly with the
producer(s) who has (have) executed the Coal Producer's Statement(s) for the
delivery of the coal to TVA.

4. NONASSIGNABILITY; SUBCONTRACTS; DESIGNATION AND TERMINATION OF
AGENT:

a. Neither this contract nor any interest herein or any payments
hereunder shall be assigned without the written consent of TVA, which consent
TVA may withhold in its sole discretion. In the event TVA shall give such
consent, the same shall not be construed as a waiver of this provision with
regard to any subsequent assignment. TVA may assign its rights under this
contract to any responsible party.

b. The Contractor shall, on request, file with TVA copies of all
subcontracts and terms of all commitments with subcontractors, and TVA shall
have the right to disapprove any thereof within five (5) days after receipt of
such information.

c. No designation of any agent by the Contractor to submit invoices,
receive payments, or take any other action in connection with the performance or
administration of this contract shall be effective or recognized by TVA until
the Contractor has given written notice of such designation and TVA has given
Contractor specific written notice of its approval thereof.

d. If Contractor notifies TVA in writing of the termination of any
agent that Contractor may have therefore designated to administer this contract
on its behalf, TVA may thereafter rely on such notice of termination in all
dealings with Contractor or a successor agent.

<PAGE> 35
5. WAIVERS. No waiver of any breach of this contract shall be held to
be a waiver of any other breach. Unless a remedy is expressly designated as
exclusive, all remedies afforded under the contract shall be in addition to
every other remedy provided herein or by law.

6. OFFICIALS NOT TO BENEFIT. No member of or delegate to Congress or
Resident Commissioner, or any officers, employee, special Government employee,
or agent of TVA shall be admitted to any share or part of this contract or to
any benefit that may arise therefrom unless it be made with a corporation for
its general benefit; nor shall the Contractor offer or give, directly or
indirectly, to any officer, employee, special Government employee, or agent of
TVA any gift, gratuity, favor, entertainment, loan, or any other thing of
monetary value, except as provided in 5 C.F.R. part 2635. Breach of this
provision shall constitute a material breach of this contract and TVA shall have
the right to exercise all remedies provided in this contract or at law.

7. CONTINGENT FEES. The Contractor warrants that no person or selling
agency has been employed or retained to solicit or secure this contract upon an
agreement or understanding for a commission, percentage, brokerage, or
contingent fee, excepting bona fide employees or bona fide established
commercial or selling agencies maintained by the Contractor for the purpose of
securing business. For breach or violation of this warranty, TVA shall have the
right to terminate this contract without liability or in its discretion to
deduct from the contract price or consideration the full amount of such
commission, percentage, brokerage, or contingent fee.

8. CONVICT LABOR. Contractor shall not employ in the performance of
this contract any person undergoing sentence of imprisonment at hard labor.

9. WALSH-HEALEY ACT. All the representations and stipulations in 41
C.F.R.,Section 50-201, are incorporated by reference.

10. DISCRIMINATION ON THE BASIS OF AGE. Contractor shall comply with
Executive Order 11141.

11. SMALL BUSINESS POLICY. The requirements of 15 U.S.C Section 637(d)
are incorporated by reference.

12. LIQUIDATED DAMAGES FOR SUBCONTRACTING PLANS.

<PAGE> 36

BUSINESS SUBCONTRACTING PLAN (attached to this contract and made a part hereof)
or willful or intentional action to frustrate the plan.

b. If, at contract completion, or in the case of a commercial
products plan, at the close of the fiscal year for which the plan is applicable,
the Contractor has failed to meet its subcontracting goals and the Contracting
Officer decides in accordance with paragraph (c) of this clause that the
Contractor failed to make a good-faith effort to comply with its subcontracting
plan the Contractor shall pay TVA liquidate damages in an amount equal to the
actual dollar amount by which the Contractor failed to achieve each subcontract
goal or, in the case of a commercial products plan, that portion of the dollar
amount allocable to government contracts by which the Contractor failed to
achieve each subcontract goal.

c. Before the Contracting Officer makes a final decision that the
Contractor has failed to make such good-faith effort, the Contracting Officer
shall give the Contractor written notice specifying the failure and permitting
the Contractor to demonstrate what good-faith efforts have been made. Failure to
respond to the notice may be taken as an admission that no valid explanation
exists. If, after consideration of all the pertinent data, the Contracting
Officer finds that the Contractor failed to make a good-faith effort to comply
with the subcontracting plan, the Contracting Officer shall issue a final
decision to that effect and require that the Contractor pay the government
liquidated damages as provided in paragraph b. of this section.

d. With respect to commercial products plans, i.e., company-wide or
division-wide subcontracting plans, the Contracting Officer of the agency that
originally approved the plan will exercise the functions of the Contracting
Officer under this clause on behalf of all agencies that awarded contracts
covered by that commercial products plan.

e. The Contractor shall have the right of appeal, under the section
in this contract titled DISPUTES, from any final decision of the Contracting
Officer.

f. Liquidated damages shall be in addition to any other remedies
that TVA may have.

13. UTILIZATION OF WOMAN-OWNED BUSINESS CONCERNS. It is the policy of
the United States Government that woman-owned businesses shall have the maximum
practicable opportunity to participate in the performance of contracts awarded
by any federal agency.

<PAGE> 37
The Contractor agrees to use its best efforts to carry out this policy
in the award of subcontracts to the fullest extent consistent with the efficient
performance of this contract. As used in this contract, a "woman-owned business"
concern means a business that is at least 51% owned by a woman or women who also
control and operate it. "Control" in this context means exercising the power to
make policy decisions. "Operate" in this context means being actively involved
in the day-to-day management.

14. AFFIRMATIVE ACTION AND EQUAL OPPORTUNITY. To the extent applicable,
this contract incorporates by reference the "Affirmative Action for Disabled
Veterans and Veterans of the Vietnam Era" clause, 41 C.F.R. Section 60- 250.4;
the "Affirmative Action for Handicapped Workers" clause, 41 C.F.R. Section
60-741.4; and the "Equal Opportunity" clause, 41 C.F.R. Section 60-1.4.
Contractor shall comply with applicable regulatory requirements, including
information reports and affirmative action programs. By submitting its offer,
offeror, applicant, or subcontractor certifies it does not maintain segregated
facilities at its establishments; does not permit employees to perform their
services at any location, under its control, where segregated facilities are
maintained; will not maintain segregated facilities; and will not permit
employees to perform their services at locations, under its control, where
segregated facilities are maintained. It agrees that breach of this
certification violates this section. Segregated facilities means any waiting
rooms, work areas, restrooms, restaurants and other eating areas, time clocks,
locker rooms and other storage or dressing areas, parking lots, drinking
fountains, recreation or entertainment areas, transportation, housing facilities
provided for employees which are segregated by explicit directive or are in fact
segregated on the basis of race, religion, color, or national origin, because of
habit, local custom, or otherwise. It further agrees that it will obtain
identical certifications from proposed subcontractors prior to award of
subcontracts exceeding $10,000 which are not exempt from this section; will
retain such certifications; and will forward the following notice to such
proposed subcontractors (except where proposed subcontractors have submitted
identical certifications for specific time periods):

Notice to Prospective Subcontractors of Requirement for
Certifications of Nonsegregated Facilities. A Certification of
Nonsegregated Facilities must be submitted prior to award of a
subcontract exceeding $10,000 which is not exempt from this clause.
Certification may be submitted for each subcontract or for all
subcontracts during a period (i.e., quarterly, semiannually, or
annually). NOTE: The penalty for making false statements in offers
is prescribed in 18 U.S.C. Section 1001.

<PAGE> 38

15. ENVIRONMENTAL PROTECTION AGENCY (EPA) REGULATIONS. In accordance
with regulations issued by the EPA pursuant to implementation of Section 306 of
the Clean Air Act, Section 508 of the Federal Water Pollution Control Act, and
Executive Order 11738, the section titled "Environmentally Acceptable
Facilities; Clean Air and Water" shall be made a part of this contract.

16. SAFETY AND HEALTH. All sources supplying coal purchased under this
contract shall be in full compliance with the Federal Mine Safety and Health Act
of 1977 and regulations issued thereunder. Failure to comply shall constitute a
breach of contract, permitting TVA to exercise its remedies under this contract
or as provided by law.

17. ANTI-KICKBACK PROCEDURES. In its operations and business
relationships, Contractor shall have in place and follow reasonable procedures
designed to prevent and detect possible violations of the Anti-Kickback Act of
1986 (4 l U.S.C. Section 51 -58), (Act). If Contractor believes a violation of
the Act may have occurred, it shall promptly give TVA's Inspector General
written notice. Contractor shall cooperate fully with TVA or any other federal
agency investigating a possible violation of the act. Contractor agrees to
incorporate the substance of this section, including this sentence, in all
subcontracts under this contract.

18. DRUG-FREE WORKPLACE. In submitting its offer, Contractor certifies
it will comply with Public Law No. 100-690, the Drug-Free Workplace Act of 1988.

19. ENVIRONMENTALLY ACCEPTABLE FACILITIES; CLEAN AIR AND WATER.
Contractor hereby stipulates and agrees as follows:

(1) That Contractor included in its offer a statement listing any
facilities or facilities to be utilized in performance of this contract or any
subcontract enabling the performance of this contract which are listed on the
Environmental Protection Agency's List of Violating Facilities issued pursuant
to Section 15.20 of Title 40, Code of Federal Regulations. If no such list is
included in accordance with the foregoing, then submission of a offer shall
constitute certification by the offeror that any facility or facilities to be
utilized in performance of this contract or any subcontract enabling the
performance of this contract are not listed on the Environmental Protection
Agency's List of Violating Facilities issued pursuant to Section 15.20 of Title
40, Code of Federal Regulations.

<PAGE> 39

as all other requirements specified in Section 114 and Section 308 of the Clean
Air Act and the Federal Water Pollution Control Act, respectively, and all
regulations and guidelines issued thereunder.

(3) That Contractor shall notify the awarding official of the
receipt of any communication from the Director, Office of Federal Activities,
U.S. Environmental Protection Agency, indicating that a facility to be utilized
for this contract is under consideration to be listed on the EPA List of
Violating Facilities. Prompt notification shall be required prior to contract
award.

(4) That Contractor will include or cause to be included the
criteria and requirements in subparagraphs (1) through (4) of this provision in
all subcontracts of $100,000 or more and all subcontracts for indefinite
quantities which may be $100,000 or more in any year, and Contractor will take
such action as TVA may direct as a means of enforcing such provisions.
Contractor shall not award a subcontract without the prior written approval of
TVA to any subcontractor whose performance would involve the use of any facility
or facilities which are listed on the Environmental Protection Agency's List of
Violating Facilities.

<PAGE> 1

EXHIBIT 10.13

WHITE COUNTY COAL COMPANY

TERM COAL CONTRACT

(PATTIKI)

August 5, 1998

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
1. Contract Term..................................................2

2. Quantity.......................................................3

3. Scheduling.....................................................4

4. Variations, Delays, and Interruptions in Deliveries............5

5. Source.........................................................7

6. Price..........................................................8

7. Sampling and Analysis..........................................8

8. Adjustment for Quality........................................11

9. Quality and Specifications....................................13

10. Contract Price Adjustments....................................16

11. Remedies......................................................18

12. Notices.......................................................19

13. Shipping Notices..............................................20

14. Transportation................................................21

15. Payments, Invoices............................................23

16. Weights.......................................................24

17. Contract Administrator/Contracting Officer....................25

18. Disputes......................................................25

19. Clean Air Act and Other Environmental Requirements............27

20. Unilateral Termination Right..................................27

21. Contract Components...........................................28
</TABLE>

<PAGE> 3

CONTRACT FOR PURCHASE AND SALE OF COAL DATED JULY 7, 1998
BETWEEN TVA AND WHITE COUNTY COAL CORPORATION
(CONTRACT NO. 98P05-239553 RELEASE NO. 1273880)

LISTING OF INITIALED CHANGES

1. Cover Page: Changed "White County Coal Company" to "White County Coal
Corporation" and changed date from "August 5, 1998" to "July 7, 1998"
to coincide with proper contractor name and effective date as shown on
page 1 of the Contract.

2. Subsection 2.A, Page 3: Within the second line, struck the word "each"
as reference is to only the Contract Year 1998. Also, inserted last
sentence to the first paragraph which addresses TVA's right to increase
or decrease weekly schedule by an amount up to ****** upon providing 30
days notice.

3. Subsection 10.B, Page 17: In the third line down, deleted reference to
"Subsection e." as there is no such subsection.

4. Section 20, Page 29: Within the fourth line from the bottom of the
page, corrected reference to "Section 2" versus "Section 5 or under
Subsection 3.a".

<PAGE> 4

Contract No. 98P05-239553
Release No. 1273880

CONTRACT FOR PURCHASE AND SALE OF COAL

THIS AGREEMENT, is made and entered into this 7th day of July, 1998, by
and between TENNESSEE VALLEY AUTHORITY, a corporation organized and existing
under an Act of Congress (hereinafter called "TVA"), and White County Coal
Corporation (hereinafter called "Contractor").

W I T N E S S E T H:

In consideration of the mutual covenants hereinafter stated, the
parties hereto agree as follows:

Definitions: "Contract Year" shall mean a twelve-month period
commencing with the first day of the calendar month in which the Delivery
Commencement Date (as hereinafter defined) occurs.

"Delivery Commencement Date" shall be that date set forth in
Section 1 hereof for commencement of deliveries. Such date may be changed only
by supplement to this contract that expressly refers to the term "Delivery
Commencement Date." The actual date of commencement of deliveries shall not
affect the Delivery Commencement Date.

"Contract Quarter" shall mean any of the four quarters of a
Contract Year: i.e.. January - March - April - June, etc. In the event
deliveries commence at a time other than the beginning of a Contract Quarter,
the first Contract Quarter shall be the period up to the beginning of the next
Contract Quarter, e.g. February - March.

"Contract Administrator" shall be that TVA representative
designated (in the contract award letter) to administer the contract on behalf
of TVA.

<PAGE> 5

1. Contract Term: The Delivery Commencement Date shall be July 1, 1998,
and deliveries shall continue for five years unless terminated by agreement or
as otherwise provided herein. Provided. however, this contract may be reopened
by either party ****** prior to the ****** anniversary of the Delivery
Commencement Date for the purpose of renegotiating price and other terms and
conditions or for the sole purpose of terminating deliveries. The party desiring
to exercise such reopener shall give the other party written notice at least
****** prior to the anniversary date and may, but shall not be required to.
specify the purpose of such reopening. Nothing herein is intended to require a
party who has commenced renegotiations hereunder to continue such renegotiations
if, for any reason, such party, determines it is not in its interests to do so.
If the reopener provision has been exercised, this contract will terminate on
the said ****** anniversary date unless TVA and the Contractor have mutually
agreed in writing ****** prior to the said anniversary date to continue this
contract. Neither party shall be under any obligation or liability to continue
this contract beyond said termination or have any liability for refusing to do
so, if either party desires to terminate deliveries in accordance herewith.

<PAGE> 6

The Contract Administrator's agreement to any modification arising out
of such renegotiations (including contract extension) shall be subject to
approval by TVA's Board of Directors.

2. Quantity:

a. Subject to TVA's right to reduce or increase quantities to
be delivered, as hereinafter provided, the quantity of coal to be sold and
purchased hereunder during each Contract Year 1998 shall be ****** tons of which
****** tons shall be delivered during the period of July 1, 1998 through
December 31, 1998 and ****** tons shall be delivered during the period January
1, 1999 through June 30, 1999. Commencing effective July 1, 1999, the annual
contract quantity is ****** tons per Contract Year. The weekly delivery rate
shall be ****** tons per week during the period of July 1, 1998 though December
31, 1998, and ****** tons per week starting January 1999.

If at the expiration of the term of the contract less than the
maximum tonnage has been scheduled for delivery, the parties may by agreement
extend the term of this contract for a period sufficient to permit delivery of
tonnage in an amount up to the difference between the maximum tonnage and the
total scheduled. Neither party shall be obligated to agree to such an extension.

This contract is not and shall not be construed as a contract
for all of TVA's coal requirements for any Destination Plant. TVA reserves the
right to purchase coal from other suppliers in any amount during the term of
this contract.

<PAGE> 7

electric output of such Destination Plant is interrupted or (ii) reduce
shipments of coal scheduled to such Destination Plant by a percentage equal to
the percentage reduction in electric output of the Destination Plant resulting
from a curtailment. Such suspension or reduction in deliveries may continue as
long as generation at the Destination Plant is curtailed or interrupted;
provided, however, if TVA continues any such reduction or suspension for more
than one hundred eighty (180) days, Contractor may notify TVA in writing of
Contractor's intent to terminate its obligation to deliver coal scheduled for
the affected Destination Plant, ninety (90) days from the date of TVA's receipt
of such written notice, and this contract shall, upon the passing of such
ninety-day (90-day) period, terminate as to the tonnage scheduled for the
affected Destination Plant, without further cost or obligation to either party,
unless TVA shall have directed resumption of the suspended or reduced deliveries
within forty-five (45) days of TVA's receipt of Contractor's notice of
termination.

Except as provided in the preceding sentence, suspensions or
reductions under this subsection shall not affect the enforceability of this
contract, and, on termination of the suspension or reduction, shipments shall
resume pursuant to the terms and conditions of this contract. Both TVA and
Contractor shall be excused from their respective obligations hereunder with
respect to deliveries suspended or reduced pursuant to this section and such
deliveries shall not be rescheduled for delivery except by mutual consent of the
parties.

3. Scheduling:

a. Contractor agrees to load railroad trains or barging
companies' barges on arrival at Contractor's loading point in accordance with
the terms and conditions of TVA's rail or barge

<PAGE> 8

transportation agreement(s). TVA maintains the right to coordinate all
deliveries under this contract and others for the purposes of establishing a
uniform delivery schedule for placement at either transloading and blending
docks or TVA plants.

4. Variations, Delays, and Interruptions in Deliveries:

b. Subject to the conditions hereinafter stated, neither party
shall be liable to the other for failure to mine, deliver, take, or unload coal
as provided for in this contract if such failure was due to supervening causes
beyond its control and not due to its own negligence, and which cannot
reasonably be overcome by the exercise of due diligence. Such causes shall
include by way of illustration, but not limitation: acts of God or of the public
enemy; insurrection; riots; strikes; nuclear disaster; partial or total outages
of coal-fired units; floods; accidents; major breakdown of equipment or
facilities (including emergency outages of equipment or facilities to make
repairs to avoid breakdowns thereof or damage thereto) fires; industry-wide
shortages of carriers' equipment embargoes; orders or acts of civil or military
authority; or industry-wide shortages of materials and supplies. Nor shall TVA
be obligated to take coal hereunder at a Destination Plant so long as such
causes wholly or partially prevent the transloading and/or blending of the coal
or wholly or partially prevent the handling, unloading, stockpiling, or burning
of coal at the Destination Plant to which deliveries are consigned at the time
the cause occurs, in which case, TVA shall have the right but not the obligation
to consign deliveries to another plant or facility not affected by the excusable
cause. Nor shall the refusal of either party to settle a strike on terms other
than

<PAGE> 9

it considers satisfactory preclude the strike from being considered an excusable
cause. TVA shall have the right, but not the obligation, to require Contractor
to make up any tonnage not delivered in accordance with this section.

In the event of partial failure to deliver, take, or unload
coal that is excusable under this subsection, the parties shall prorate
deliveries or receipts of coal in substantially the same proportion based upon
contractual commitments, (e.g. a fifty percent (50%) reduction in receiving or
production capacity would result in a fifty percent (50%) reduction in scheduled
deliveries for each supplier or consumer). Similarly. for coal delivering under
this contract to multiple Destination Plants, the failure or partial failure to
take or unload coal at one of the Destination Plants that is excusable under
this subsection shall result in a pro rata reduction in the tonnage scheduled
for such Destination Plant under this contract at the time of the commencement
of the supervening cause in substantially the same proportion as the reduction
in total receipts at such Destination Plant resulting from the supervening
cause. However, the parties shall not be obligated to prorate a reduction in
receipts or deliveries under coal supply contracts not affected by the failure
because they have different modes of delivery or have substantially different
quality requirements, or because their scheduled delivery dates are not affected
by the failure. During the periods TVA may experience such failures to take or
unload coal, Contractor shall be permitted to sell such coal

<PAGE> 10

normally intended for TVA. In the case of the period during which Contractor may
experience such failures to deliver coal, TVA may purchase replacement coal. The
disabling effects of such failures to deliver, take, or unload coal shall be
corrected by the party experiencing such failure as soon as and in the extent
reasonably practicable.

If a party's excused failure to deliver or receive coal in amounts
substantially in conformance with the schedule established under Section 2.
Quantity, and Subsection 3.a. continues for a period exceeding one-hundred
eighty (180) days the other party may terminate this contract. In the event of
such a termination, neither party shall have any further liability to the other
except for those liabilities which may have accrued with respect to performance
or defaults prior to said termination.

c. TVA, by providing at least forty-five (45) days' prior
written notice to Contractor shall have the right to refuse any shipments
otherwise scheduled for delivery to a Destination Plant during plant maintenance
or repair periods at such Destination Plant and shall have no obligation to
accept such shipments at a later time.

5. Source:

a. The source of coal delivered under this contract is of
major importance to TVA. The provisions of this contract pertaining to coal
quality and quantity requirements, price adjustments, federal and state
legislation, and other matters are directly related to the source of coal. As
used in this Section 5, "Source Area" shall mean the total coal reserve areas
outlined in the Specific Location Map(s) identified in Appendix B; provided,
that, within the Source Area, only the area(s), for surfaced-mined coal, or mine
opening(s), for underground-mined coal, covered by the mining permit(s) listed
in the Term Offer is an "Authorized Source" of coal for delivery under this
contract. The mine area(s) and/or opening(s) located within the Source Area
shown on the Specific Location Map(s), but not covered by the mining permit(s)
listed in the Term Offer, may become an Authorized Source under the following
procedures as mining progresses and the appropriate permit(s) and license(s) are
obtained. Contractor shall notify TVA in writing at least forty-five (45) days
in advance of its intention to deliver coal from any additional area(s) or mine
opening(s) in the Source Area which is not then authorized. TVA may, if it deems
it is in TVA's best interests, authorize such areas, but is under no obligation
to do so. TVA reserves the right to require

<PAGE> 11

Contractor to furnish any information and/or any guarantees TVA deems necessary
bearing on the ability of the source to meet the requirements of this contract
and to make that information a part of this contract.

b. Contractor shall immediately notify TVA in writing of any
events affecting the size or location of the Authorized Source(s). All
Authorized Sources under this contract shall be in compliance with the Federal
Mining Safety and Health Act of 1977, as amended, all state and federal
reclamation laws, including the Surface Mining Control and Reclamation Act of
1977, as amended, and regulations issued under such laws. If Contractor fails to
comply with this requirement, whether or not coal from such Authorized Source is
then being delivered hereunder, TVA may exercise its rights under Section 11,
Remedies.

6. Price:

a. TVA shall pay Contractor ****** f.o.b barges at Mount
Vernon Coal Terminal or ****** f.o.b rail cars at Pattiki Mine (hereinafter
referred to as the Base Prices) for each net ton of coal purchased and delivered
under this contract, plus or minus such adjustments as herein provided. The Base
Price remains constant.

7. Sampling and Analysis:

8
<PAGE> 12

coal is to be sampled and the lot size of each sample. Contractor may be present
at the taking of samples, but TVA shall be under no obligation to notify
Contractor to be present.

b. Sampling and analysis shall be conducted generally in
accordance with the methods described in the latest published edition of the
Annual Book of ASTM Standards, volume 05.05. Plants which receive coal by rail
may collect samples during unloading of a car by means of uniformly spaced tubes
located on the car bumper. Contractor has observed the TVA sampling equipment
and facilities at the Destination Plant or has taken such other steps as
Contractor deems appropriate to familiarize itself with such equipment and
facilities, and Contractor waives any claim, demand, defense, or objection
thereto based on any lack of conformance of such equipment and facilities to the
requirements of this Section 7, provided they are properly maintained during the
term of this contract.

c. Analysis data shall be promptly made available to
Contractor through access to a computer system, or at TVA's option, such data
may be provided by other means. Moisture, ash, and sulfur values shall be
reported to the nearest hundredth (.01) of a percent. Heat content in Btu/lb
shall be reported to the nearest whole Btu/lb. SO2 content shall be calculated
and reported to the nearest hundredth (.01) of a pound.

d. All samples collected by TVA, or others at its direction,
shall be divided into at least two parts and put in suitable airtight
containers, the first container in each case to be used by TVA, or its
designated commercial laboratory, and the second container in each case to be
held available by TVA for a period of not less than forty-five (45) days from
actual sampling date of the coal by TVA, properly sealed and labeled, to be
analyzed if a dispute arises between TVA and Contractor. If Contractor wishes to
dispute a sample or analysis, it shall notify TVA in writing within such
forty-five day (45-day) period. If Contractor fails to provide such notice of
dispute within such forty-five day (45-day) period, Contractor shall be deemed
to have waived any claim or defense based on errors or omissions in the sampling
or analysis operations as to the affected samples.

<PAGE> 13

limits in those same standards will be used to judge reproducibility. If the
review of the sampling and/or analysis indicates the sampling or analysis was
improperly performed or the results of the second analysis are not within ASTM
reproducibility limits, the original analysis report shall be declared
erroneous, and both the original and the second analysis report shall be
ignored. Otherwise, the original analysis report shall remain in full force and
effect.

e. Contractor shall also sample and analyze, or obtain
services of a third party to sample and analyze, all shipments of coal to TVA
under this contract. These analyses shall specify, at a minimum, the total
moisture content, the ash content (as-received), the heat content Btu/lb
(as-received), and the sulfur content (as- received), and must be electronically
transmitted to both the Destination Plant and the Contract Administrator in a
format acceptable to TVA. These analyses are required in order to provide
information on the contents of coal received by TVA prior to unloading. TVA
reserves the right not to unload coal at the Destination Plant until after the
appropriate analysis is received. Contractor shall be responsible for any
demurrage charges incurred by TVA as the result of Contractor's failure to
transmit the analyses when and as required. TVA may reject coal based on these
analyse; however, nothing in this Subsection e, shall affect in any way TVA's
rights to appropriate contractual actions and adjustments for quality based on
samples collected and analyzed in accordance with Subsections a. and b. of this
Section 7.

<PAGE> 14

Analysis procedures used should be as follows unless otherwise
approved in writing by TVA:

<TABLE>
<CAPTION>
Parameter Method
--------- ------
<S> <C>
Residual Moisture ASTM D 5142
Ash ASTM D 5142
Sulfur ASTM D 4239
Btu ASTM D 1989
</TABLE>

(2) Sample analysis and other date required by TVA to match
data with shipment shall be provided to TVA in a format approved by TVA.

(3) The lot size for each sample shall be by barge for barge
coal, by trainload for rail coal, and by daily delivery for truck coal.

(4) Analysis for each sample shall have been received by TVA
by electronic data interchange within seven (7) days of collection of said
sample.

(5) The sampling system shall be located in an area acceptable
to TVA such that the sample collected for shipment is collected only from coal
that is loaded for said shipment.

8. Adjustment for Quality:

<PAGE> 15
Average Value for as-received Btu/lb compared to the Typical Analysis for
as-received Btu. This adjustment shall in no way be affected by contract price
adjustments under Section 10, Contract Price Adjustments, hereof. (See Exhibit I
for example of calculations)

c. For the coal accepted in each calendar quarter, an
adjustment, calculated to the nearest tenth of a cent per ton at a rate of
either (1) ****** per ton (decrease) for each percentage point the Quarterly
Average Value for ash (as-received basis) exceeds the Typical Analysis for ash,
or (2) ****** per ton (increase) for each percentage point for the Quarterly
Average Value for ash (on an as-received basis) is less than the Typical
Analysis for ash. The calculation shall be prorated to cover any fractional
percentage. (See Exhibit I for example of calculations.)

d. For the coat accepted in each calendar quarter, an
adjustment, calculated to the nearest tenth of a cent per ton at a rate of
either (1) ****** per ton (decrease) for each percentage point the Quarterly
Average Value of moisture exceeds the Typical Analysis for Moisture, or (2)
****** per ton (increase) for each percentage point the Quarterly Average Value
for Moisture is less than the Typical Analysis for Moisture. The calculation
shall be prorated to cover any fractional percentage. (see Exhibit I for example
of calculations.)

In lieu of accepting any sulfur dioxide penalty for any
calendar quarter, the Contractor may choose to transfer sulfur dioxide emission
allowances as follows: A choice to transfer allowances must be made in writing
to TVA's Contract Administrator. As soon as practicable after the end of each
calendar quarter, TVA shall provide to Contractor a statement showing the
weighted average sulfur dioxide content (in pounds per million BTUs) for all
deliveries under this contract during the quarter (including any option
tonnage). If the quarterly average sulfur dioxide content exceeds the Typical
analysis, Contractor shall provide TVA a completed EPA

<PAGE> 16

Allowance Transfer form, within seven working days after Contractor's receipt of
such average sulfur dioxide quality data. This EPA Allowance Transfer form shall
authorize transfer of sufficient sulfur dioxide emission allowances to bring the
actual deliveries for such quarter into compliance with the Typical sulfur
dioxide specification value as referenced in Section 9.a. This transfer shall be
from an EPA account designated by Contractor to an EPA account designated by
TVA.

f. As soon as practicable after the end of each calendar
quarter, TVA shall submit to Contractor a report showing the Quarterly Average
Values and any adjustments determined under this Section 8 of the contract. The
number of tons of coal received by TVA which are subject to adjustment shall be
multiplied by said adjustments, and any resulting amount shall be paid promptly
(or credited to the extent of any offsetting debit) to the party to whom it is
due. The assessment of adjustments in accordance with the foregoing does not in
any way impair TVA's rights under the contract or at law with respect to any
failure by Contractor to meet the Guaranteed Analysis that gives rise to such
adjustments.

9. Quality and Specifications:

<TABLE>
<CAPTION>
TYPICAL REJECTION/SUSPENSION
ANALYSIS (1) SPECIFICATIONS (3)
------------ --------------------
<S> <C> <C> <C>
Lbs of SO(2) per million Btu (2) ****** lbs Not more than ****** lbs
Total Moisture ****** % Not more than ****** %
Sulfur (as-received max.) ****** % Not more than ****** %
Sulfur (as received min.) ****** % Not less than ****** %
Ash (as-received) ****** % Not more than ****** %
Ash (dry basis) ****** % Not more than ****** %
Btu/lb (as-received) ****** Not less than ******
Ash fusion temperature reducing
atmosphere
Initial ****** degree F Not [more/less] than ****** degree F
Softening (Hemispherical) ****** degree F Not [less] than ****** degree F
Fluid ****** degree F Not [more/less] than ****** degree F
Volatile Matter (dry basis) ****** % Not less than ****** %
Grindability (Hardgrove Index) ****** Not less than ******
Chlorine (dry basis) ****** % Not more than ****** %
</TABLE>

<PAGE> 17

(1) The Typical Analysis shall be used for the quality
adjustment under Section 8.

(2) At ******.

(3) Failure to comply with any of these specifications shall
be basis for rejections and suspensions or termination pursuant Subsections 9.c.
and 9.d.

b. The coal as-received shall have a top size not greater than
****** or less than ******, with at least ****** of the product larger than
******, and with at least ****** of the product larger than ******. Such sizes
shall be determined by using screens with square openings. Coal shall not
exhibit a temperature in excess of ******, and it shall be substantially free
from milling impurities and scrap such as drill bits, pieces of scrap metal or
plate, plastic, rubber, rope, cloth, wire, cable, bone, slate, earth, rock,
pyrite, wood or water, which can be kept out or removed with the exercise of
reasonable care during mining, preparation, and loading. It shall be loaded in a
manner that will ensure reasonably uniform consistency as to size and quality
and shall not contain slurry pond material (washer tailings), gob pile material
(mine refuse), petroleum-coke, oxidized coal, or blends of such materials, or
create excessive amounts of dust during the unloading and transferring to
storage.

c. If any coal delivered fails to meet any of the
Rejection/Suspension Specifications on the basis of visual inspection or
laboratory, analysis. TVA may reject the coal at the source, loading point, any
transloading or Destination Plant. TVA's acceptance of any amount of coal which
does not meet these requirements shall not constitute a waiver of any right
which TVA may have under this contract or as provided by law on account of the
delivery of such coal. In case of rejection of any coal in accordance with this
section, TVA will immediately notify Contractor of the rejection and of the
cause of rejection. In the case of coal rejected after loading, unless the cause
for rejection is corrected, Contractor shall promptly remove the coal from the
carrier's equipment or from TVA premises, as the case may be at Contractor's
expense. Contractor shall reimburse TVA for any additional transportation costs,
demurrage, equipment repair costs, or handling expenses incurred by TVA in
connection with any such rejection. TVA shall not be under any obligation or
liability to assist Contractor in any corrective actions required to remedy the
cause for rejection.

d. If any coal delivered fails to meet the
Rejection/Suspension Specifications stated in Subsection 9.a. or the
requirements of Subsection 9.b., TVA shall have the right to refuse to accept
further

<PAGE> 18

deliveries from any or all mine sources authorized under the contract until
Contractor provides assurance satisfactory to TVA that Contractor will comply
with the Rejection/Suspension Specifications and the Subsection 9.b.
requirements. Such assurance must be given in writing within seven (7) days
after the beginning of such suspension. If Contractor fails to provide such
assurance within the time specified or provides such assurance but does not
correct the deficiencies that resulted in the breach of Subsection 9.a. or
Subsection 9.b. within seven (7) days after giving such assurance, TVA may then
terminate Contractor's right to make further deliveries under this contract.
However, if TVA has suspended Contractors' right to make further deliveries
under the above provision two (2) times during any twelve-month period of the
contract term, TVA shall have the immediate right, at its option, upon the third
such violation, to terminate Contractors' right to make further deliveries under
this contract. Contractor shall be responsible for all costs or damages incurred
by TVA resulting from Contractor's failure to comply with the contract
requirements. Damages or excess reprocurement cost may be determined in
accordance with Section 11, Remedies.

e. If the normal operations in conformance with the design
capabilities of the Destination Plant cannot be accomplished with the coal
delivered hereunder, although the coal complies with the quality and size
requirements of this Section 9, TVA may then terminate Contractor's right to
make further deliveries, and this contract shall be canceled without further
obligation or liability to either party. In the event of such a termination. the
Contractor may be given a reasonable opportunity to remedy the cause for
termination, which may include the offer of replacement coal. However, TVA is
not obligated to accept offers of replacement coal for the Destination Plants.
In the case of multiple Destination Plants, a termination under this subsection
e. shall be effective only and to the tonnage scheduled for the affected plant
at the time it is determined that normal operations cannot be accomplished.

10. Contract Price Adjustments:

<PAGE> 19

****** of the Base Price specified in Section 6, Price, as such price may be
modified under Section I, Subsection 10.b. or Subsection 10d., below.

b. (1) In the event of enactment or amendment, after the
proposal closing date for the requisition under which this contract was awarded
(or in the case of establishment of a new Base Price under Section I or
Subsection(s) d or e., below, after the effective date of such new Base Price),
of a federal or state statute that assesses on a per-ton basis a tax, fee, or
other similar charge on the coal delivered hereunder ("Law Changes"), Contractor
shall notify TVA of such Law Changes and supply from its records information
satisfactory to TVA showing the effect, if any, of these Law Changes upon the
cost per ton of furnishing coal under this contract. If a Law Change increases
Contractor's cost of providing coal to TVA, a contract price increase shall be
made by TVA for such Law Changes effective on the later of (a) the date TVA
receives Contractor's notice of the Law Change or (b) the date Contractor's cost
of providing coal is increased by the Law Change. If a Law Change decreases
Contractor's cost of providing coal to TVA, a price decrease shall be made by
TVA for such Law Change effective on the date such Law Change could be utilized
to reduce Contractor's costs, whether or not Contractor actually reduces such
costs on such date. This Section 10.b.(l) does not apply to (i) promulgation or
amendment of rules and regulations except to the extent such promulgation or
amendment results from a Law Change, or (ii) to implementation of statutes or
amendments to statutes that are enacted on or before the proposal closing date
as described above.

<PAGE> 20

necessary to verify the change. Contractor must furnish such supporting evidence
as may be requested by TVA. A request for a price adjustment considered
applicable by Contractor must be submitted to TVA with appropriate documentation
within one hundred eighty (180) days of the date Contractor incurs a cost
change. Failure to do so shall constitute a waiver of Contractor's right to any
upward adjustment. Any overpayment made under these provisions may be deducted
from any amounts otherwise due Contractor.

Contractor agrees that, in the event TVA reimburses Contractor
under this Section 10 for a cost incurred by Contractor and it is later
determined that Contractor is entitled to recover such cost from a third party,
at TVA's request Contractor shall use its best efforts to recover such cost and
upon such recovery shall reimburse TVA for amounts previously paid by TVA based
on said cost. Reasonable costs incurred by Contractor in pursuing such recovery
at TVA's request shall be reimbursed by TVA; provided that where Contractor
and/or other purchasers from Contractor also receive a benefit from pursuing
such recovery, the cost thereof shall be equitably shared.

d. In the event TVA's transportation cost for shipment of coal
delivered hereunder increases during any one-year period at a rate greater than
****** of the transportation cost in effect at the time of contract award, TVA
may terminate the Contractor's right to proceed under this contract without
further obligation or liability to either party hereunder or at law by giving
Contractor sixty (60) days' advance notice of such termination any time within
one year after TVA begins incurring such cost increase. However, in lieu of
termination Contractor may elect to reduce the Base Price of coal to cover the
increased portion of the transportation cost above the aforementioned limit, in
which case the contract shall remain in full force and effect. Contractor's
election must be set forth in writing within thirty (30) days of TVA's notice of
termination. Such election by Contractor shall be irrevocable and binding for
that increase and shall be effective as of the date of notification by TVA of
the cost increase. TVA may invoke the provisions of this Subsection d. each and
every time its costs exceed the limit set forth above.

11. Remedies:

a. This Subsection 1l.a. does not apply to a situation where
another contract provision provides a different procedure, such as Subsection
9.d. If TVA in good faith believes that Contractor has failed to

<PAGE> 21

comply with any term or condition of this contract, the Contract Administrator
shall give Contractor oral notice, to be followed by written confirmation, of
any such violation.

(i) If Contractor fails to correct a curable contract
violation within seven (7) days of first notice, TVA shall have the right to
suspend Contractor's right to make further deliveries until Contractor provides
adequate assurance to TVA that Contractor will comply with all provisions of
this contract, such assurance to be given in writing within seven (7) days after
such suspension. If Contractor fails to provide such adequate assurance within
the time specified or timely provides such satisfactory assurance but Contractor
does not correct the curable contract violation(s) within seven (7) days after
giving such assurance, TVA shall have the right, but not the obligation, to
terminate Contractor's right to make further deliveries under this contract.

(ii) In the case of a contract violation by
Contractor that is not curable (including, but not limited to, violations of
Section 5, Source, of this contract or of Section 6, Officials Not to Benefit,
of the General Long-Term Contract Conditions), upon providing notice as
described above, TVA shall have the immediate right, but not the obligation, to
terminate or suspend for up to thirty (30) days, Contractor's right to make
further deliveries under this contract. If TVA suspends Contractor's right to
make further deliveries, then, upon expiration of said thirty-day period, TVA
shall either direct Contractor to continue performance of this contract or
terminate Contractor's right to make further deliveries.

(b) Contractor shall be responsible for all costs or damages
incurred by TVA resulting from Contractor's failure to comply with the contract
requirements. TVA may, at its option, purchase in the open market or by contract
or otherwise procure coal to replace all or any part of that which the
Contractor has failed to deliver, except as provided in Subsection b. of Section
4, Variations, Delays, and Interruptions in Deliveries, or that as to which its
right to deliver was terminated or suspended. Contractor shall be liable to TVA
for the excess cost occasioned by such purchase(s) and any other loss or damage
caused by Contractor's breach of the contract, including, but without limitation
to, liability incurred by TVA with respect to the transportation or other
handling of the coal. In the alternative, TVA may determine the loss or damage
sustained by Contractor's breach of contract by other methods as provided by
law. In addition to all other means of recovery, TVA may deduct any such excess
costs and damages from any amount otherwise due Contractor.

<PAGE> 22

Unless TVA determines that the following method of calculating
damages is not practical and TVA notifies the Contractor in writing that TVA's
damages will be calculated in some other commercially reasonable manner, (1)
such part of the highest priced coal (of comparable quality under one or more
contracts) which TVA purchases at the next awarding of term or spot contracts
for delivery to any fossil plant in the TVA system as would be required to
replace coal which was scheduled for delivery under this contract after the date
the Contractor's right to make deliveries under this contract was terminated
shall be deemed to have been purchased as replacement coal for Contractor's
account; and (2) for unexcused deficiencies occurring before termination or
contract expiration, such part of the highest priced coal (of comparable quality
under one or more contracts) for which TVA awards spot contracts in the week
following each such deficiency, for delivery to any plant in the TVA system, as
equals the quantity of Contractor's deficiency shall be deemed to have been
purchased as replacement coal for Contractor's account. If no spot coal was
purchased before contract termination or expiration. TVA shall determine damages
for all unexcused deficiencies in the manner provided in item (1) above, whether
such deficiencies accrued before or after termination or expiration.

<PAGE> 23

the post office for transmission by registered, certified, or first-class mail
in any envelope properly addressed as follows:

In the case of Contractor to:

MAPCO Coal Inc.
1717 So. Boulder Avenue
Tulsa, OK 47121
Attn: Gary Rathburn

In the case of TVA to:

Ms. Tamara Quinn, Contract Administrator
Tennessee Valley Authority
Fossil Fuels
1101 Market Street, LP 5G
Chattanooga, Tennessee 37402-2801

In addition, Contractor shall send a duplicate copy of every
such notice and communication to TVA's Contract Administrator as designated by
TVA from time to time. Either party may, by written notice to the other, change
the representative or the address to which such notices and communications are
to be sent.

13. Shipping Notices:

<PAGE> 24

of mine, size of coal, shipping date, and approximate date of arrival. TVA shall
have the right to require Contractor to transmit all of the above-referenced
information via electronic data transfer direct to TVA's computer system.

14. Transportation:

a. TVA reserves the right to specify reasonable limitations on
the type and size of transportation equipment, the method of transportation
(including train load lots and barge load lots where lots are necessary to
provide the lowest transportation rate possible), and the exact routing to be
used even though transportation charges are prepaid. TVA may reject any shipment
made in disregard of such specifications. If the contract is awarded upon the
basis of a price or prices which include transportation charges in whole or in
part to destination (f.o.b. destination contract), title to the coal (except in
the case of accelerated payments to Small Coal Operators) and risk of loss and
damage shall remain with Contractor until delivery in acceptable condition by
the carrier at destination.

c. For all coal purchased, it shall be Contractor's
responsibility to visually inspect the transportation equipment prior to each
loading and ascertain that the equipment is empty and suitable for loading. Any
equipment found mechanically unsound for loading or contaminated with material
shall not be loaded. Contractor shall be responsible for all costs incurred by
TVA, including the cost of any coal lost in transit resulting from Contractor's
failure to exercise such diligence.

<PAGE> 25

d. For all coal purchased for delivery by rail. whether f.o.b.
railcar or f.o.b, destination fossil plant. Contractor shall be responsible for
loading each car to the appropriate capacity as required by the rail carrier. In
addition, each trainload shipment tendered under this contract shall be loaded
to the minimum trainload weight as required by the rail carrier. Contractor's
account will be charged with any penalties assessed to TVA because of
Contractor's failure to observe any minimum weight loading requirements. The
gross weight of each car shall not exceed the maximum allowed by the carrier. If
cars are found to be loaded in excess of such maximum, it shall be Contractor's
responsibility to correct the load at Contractor's expense, including but not
limited to, Contractor's payment to the carrier of a per car switching charge,
as well as any demurrage charges which may accrue while the car or cars await
correction in load.

e. For all coal to be delivered hereunder, whether f.o.b.
origin or f.o.b. Destination Plant, Contractor shall be responsible for any
demurrage that accrues at any loading point as a result of Contractor or its
subcontractors not being prepared to load the coal as scheduled. The carrier
shall invoice Contractor and Contractor shall pay said carrier for all origin
demurrage charges which accrue at the loading point(s).

f. The explicit obligation of this contract is that it will be
performed in accordance with all applicable laws. Therefore, transportation of
coal by Contractor to barge or rail loading facilities or, if applicable, to the
Destination Plant shall comply with applicable highway laws and regulations
governing the weight of vehicles. If any Contractor fails to comply with such
laws or regulations, TVA shall have the same rights provided under Section 9,
Quality and Specifications, for failure to meet the requirements thereof,
including but not limited to the right to reject coal delivered in overweight
trucks. To insure compliance with this provision and to help protect the roads
and highways, TVA may require that Contractor furnish a copy of the "certified"
truck weight ticket. Regardless of the actual weight of any truck coal received,
the maximum gross weight that can be recorded for a single truck will be limited
to the applicable maximum weight enforced by law. Any weight exceeding that
maximum weight may be deducted from the total weight of coal used for payment
purposes.

<PAGE> 26

increase or decrease in the transportation cost borne by Contractor in
performing this contract, an adjustment shall be made in the contract price to
reflect the changes in such cost. In addition, for coal purchased f.o.b. railcar
and/or f.o.b. barge, where practicable to do so, TVA may, by giving prior
written notice to Contractor as soon as possible but not later than thirty (30)
days in advance, change the transportation mode of delivery, and if such change
in mode causes an increase or decrease in the loading costs borne by Contractor
in performing this contract, an adjustment shall be made in the contract price
to reflect the changes in such costs.

15. Payments, Invoices: Payments under this contract are subject to the
provisions of the Prompt Payment Act (31 U.S.C. Sections 3901-3907). Payments as
are provided for in the contract or by law will be made by check, or Electronic
Fund Transfer (EFT), if a participation agreement has been established between
TVA and Contractor, Electronic Fund Transfer (EFT). Except as provided for under
TVA's Small Coal Operators Assistance Program. EFTs will be made not more than
thirty-four (34) calendar days, and checks will be mailed not more than thirty
(30) calendar days, after the later of (1) receipt of a proper invoice(s) by TVA
at the Accounts Payable Department, P.O. Box 15500, Knoxville, Tennessee
37901-5500 or (2) receipt and unloading of the coal at TVA's fossil plants. In
preparing invoices, Contractor shall multiply the number of tons delivered by
the Base Price applicable at the f.o.b. point of delivery plus or minus any
adjustments that have been made effective under contract provisions.

For purposes of this provision only, "proper invoice" shall
mean a numbered and dated invoice containing the complete name of Contractor,
agent's name (if any), contract number, breakdown code, total amount due,
correct weights (as defined below), traffic control number, shipping date, mine
at which the coal was produced, together with any documentation required to be
submitted therewith by any other provision of the contract.

16. Weights:

<PAGE> 27

b. Where at TVA's election coal is weighed by Contractor at
origin, Contractor shall notify TVA immediately upon the occurrence of
inaccurate weighing or absence of actual weighing. Contractor shall certify such
notification in writing to TVA within seven (7) working days of the date of each
such occurrence. Such certification shall identify each affected coal shipment
by contract number, breakdown code, shipping point, traffic control number,
shipping date, and car or barge number(s). Contractor's account shall be
adjusted for any coal inaccurately weighed, or not weighed, and by the amount of
the carrier's weighing charge in effect at the time of shipment, such adjustment
to be made at whatever time such occurrence(s) becomes known to TVA. In the
absence of scale weights from Contractor, TVA and Contractor will mutually agree
by what means the weight of coal delivered hereunder shall be determined.
Contractor shall reimburse TVA for any cost or expense charged to or incurred by
TVA as a result of the absence of appropriate scale weights from Contractor.
While TVA may not undertake to weigh all coal received, it may at its option,
check weigh any coal received. In the event billed (invoiced) weights vary from
TVA weights by more than one and one-half percent (1-1/2%), TVA's weights will
govern.

If TVA has elected to have Contractor weigh the coal pursuant
to Subsection b., scale tests shall be performed quarterly or more often than
quarterly when requested by TVA. TVA shall be responsible for the cost of
additional requested tests unless the results thereof show that the scale failed
to conform to certification standards, in which event Contractor shall be
responsible for such costs. The aggregate weights determined during any payment
period shall be acceptable as the quantity of coal sold and purchased during
such period for which invoices are to be rendered and payments to be made.

TVA shall have the right to have a representative present at
any and all times during TVA loadings to observe determination of weights. If
TVA should at any time question the accuracy of the weights thus determined, TVA
shall so advise Contractor and Contractor shall permit TVA's representatives to
test Contractor's weighing devices or methods. If such tests show the weighing
devices to be in error, or if the weighing devices otherwise are determined to
be in error, the weighing devices shall be adjusted to an accurate condition. In
the event TVA and Contractor are unable to agree upon such tests and
adjustments, or the devices or methods thereof, the weighing devices and methods
shall be tested and adjusted to a condition of accuracy by a qualified third
party,

<PAGE> 28

mutually chosen by TVA and Contractor, and the cost of the testing and adjusting
by such third party shall be shared equally by TVA and Contractor.

If Contractor's weighing devices or methods are determined to
be in error over 0.5%, an appropriate adjustment shall be made to the affected
weights and related invoices and payments. Such adjustments shall be made
retroactively to a date midway between the date on which the weighing devices
were last tested and calibrated and the date on which the inaccuracy in weighing
methods or devices was first questioned and prospectively until the date on
which the weighing methods and devices are corrected.

c. All scales used by Contractor to determine the governing
weight of coal shall be maintained and operated in accordance with the National
Institute of Standards and Technology Handbook 44.

17. Contract Administrator/Contracting Officer: The Vice President of
Fuel Supply and Engineering has designated the Contract Administrator who
administers this contract for TVA as his/her duly authorized representative to
act on behalf of TVA for all purposes in the administration of this contract,
such designation to continue until revoked or modified by the Vice President of
Fuel Supply and Engineering. The Contract Administrator shall serve as TVA's
"Contracting Officer" with respect to matters arising under terms of this
contract that provide for action by the Contracting Officer.

18. Disputes:

a. This contract is subject to the Contract Disputes Act of
1978. Public Law No. 95-563, 92 Stat. 2383 ("the Act"), and TVA's implementing
regulations published at 18 C.F.R. pt. 1308, as they may be amended from time to
time.

<PAGE> 29

implementing regulations. The Disputes Contracting Officer shall reduce his/her
decision to writing and promptly mail or otherwise furnish a copy thereof to
Contractor. Within ninety (90) calendar days from the receipt of such copy,
Contractor may appeal to the TVA Board of Contract Appeals by mailing or
otherwise furnishing the Disputes Contracting Officer a written notice of
appeal. Following the filing of a notice of appeal, the TVA Board of Contract
Appeals shall arrange for the decision of the appeal in accordance with the Act
and TVA's implementing regulations. The decision of the TVA Board of Contract
Appeals on any question of law shall not be final or conclusive, but the
decision on any question of fact shall be final and conclusive, unless
determined by a court of competent jurisdiction to have been fraudulent, or
arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad
faith, or not supported by substantial evidence.

c. In lieu of an appeal to the TVA Board of Contract Appeals
from the decision of the Disputes Contracting Officer, Contractor may bring an
action against TVA directly on the claim in a United States District Court with
proper jurisdiction and venue pursuant to 28 U.S.C. Section 1337. Such an action
shall be brought within twelve (12) months from the date of receipt by
Contractor of the Disputes Contracting Officer's decision hereunder.

e. Contractor agrees that TVA's termination or suspension of
Contractor's right to make deliveries under the contract, TVA's withholding of
monies due under the contract, or TVA's pursuit of other remedies specifically
provided for herein shall not constitute relief, under TVA's implementing
regulations at 18 C.F.R. part 1308, as to which TVA must initiate the disputes
process prior to or after effecting; provided, however, nothing in this
Subsection e. shall restrict Contractor from pursuing its right to a Contracting
Officer's decision and

<PAGE> 30

other relief available pursuant to this Section 18 with respect to any such
termination, suspension, withholding, setoff, or other remedy exercised by TVA.

20. Unilateral Termination Right: In addition to any other termination
rights provided in this contract or at law, TVA expressly reserves the right,
upon 60 days' prior written notice to Contractor, to unilaterally terminate this
contract; provided, however, that TVA shall pay to Contractor an amount equal to
****** of the Base Price, multiplied by the remaining number of tons scheduled
for delivery from the effective termination date herein through the earliest
applicable date for termination pursuant to the reopening provisions under
Section l, Contract Term; or if there is no renegotiation provision capable of
effectuation after the date of termination under this section 20, then through
the date of expiration of this contact; provided further, that the remaining
number of tons scheduled for delivery shall be based on the minimum Base Weekly
Schedule provided in Section 2 as said schedule has been adjusted under Section
5 or under Subsection 3.a. Said payment by TVA to Contractor shall constitute

<PAGE> 31

Contractor's sole remedy against TVA for any loss, cost, or damage incurred by
Contractor as a result of TVA's termination under this section. TVA shall have
no further obligation or liability under the contract or at law except with
respect to coal delivered prior to said termination date as otherwise provided
in Section 8, Adjustment for Quality, Section 15, Payment and Invoices, and
Section 16, Weights.

21. Contract Components: The attached Section I-III of the Request for
Proposals; Exhibit I; Term Coal Proposal; General Long-Term Contract Conditions;
Contractor's letters dated August 27. 1997, December 5, 1997, December 19, 1997,
and February 9, 1998; Limitation on Use of Outside influence (ID-67); Coal
Producer's Statement(s); and the Subcontracting Plan (on file) constitute parts
of this contract.

IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the aforesaid date by their duly authorized representatives.

ATTEST: Contractor:

By:
- --------------------- -----------------------
(Signature)

Title:

ATTEST: TENNESSEE VALLEY AUTHORITY

By:
- --------------------- -----------------------
(Signature)

Title:

<PAGE> 32

GENERAL LONG-TERM CONTRACT CONDITIONS

2. Coal Mining Reclamation and Conservation Requirements.. The
following TVA reclamation and conservation requirements are applicable to all
spot contracts for the purchase of coal:

a. TVA Policy On Areas From Which Coal Will Be Procured: Coal
Mining - Land and Water Resource Protection. TVA accepts no coal mined from
locations in or near areas officially designated by state or federal agencies,
or identified by TVA, as wild or scenic river areas, wild, wilderness, natural,
scenic, public recreation areas or under study pursuant to legislative authority
for any such official designation, except where special circumstances exist. No
coal will be accepted from locations in or near areas designated under
legislative authority as potential sites for the above uses unless, after
coordination with the appropriate agencies, TVA determines that the coal can be
mined without substantially adversely affecting the area's potential for such
use. In such cases and also in cases involving offerings of coal from mines in
or near other visually important areas such as major highways or population
centers, special provisions designed to protect aesthetic values may be
incorporated in the purchase contracts. No coal will be accepted from areas in
which, in TVA's judgment, mining would adversely affect a public water supply
and such adverse effect cannot be avoided by proper reclamation.

<PAGE> 33

b. Contractor agrees that all sources of coal delivered shall
be in full compliance with all state and federal reclamation laws, including the
Surface Mining Control and Reclamation Act of 1977 and all regulations issued
thereunder. Violations of any such law or regulation shall constitute a breach
of contract, entitling TVA to exercise its remedies under this contract or as
provided by law. TVA will not accept coal mined from any source, stockpile, or
otherwise during any period when the source is subject to a cessation order
issued by the Office of Surface Mining and Reclamation (OSM) or any state
reclamation enforcement agency for violation of reclamation requirements. TVA
also reserves the right to either terminate this contract or suspend deliveries
under the contract from any source whatsoever when any authorized source listed
in the contract, or as it may hereafter be amended, is subject to a cessation
order. Coal which is not delivered due to such cessation order or suspension
shall not be considered excusable, and TVA may purchase replacement coal for the
Contractor's account. If, upon appeal by the Contractor under OSM's or the
appropriate state's regulations, a cessation order is held to have been
improperly issued, the Contractor shall not be liable for the cost of
replacement coal, and any coal not delivered due to the order or suspension may,
at Contractor's option, be canceled or rescheduled upon delivery terms
reasonably acceptable to TVA. This constitutes Contractor's exclusive remedy
against TVA in the event of a wrongful issuance of a cessation order by OSM or a
state agency.

d. TVA, its agents, and assigns shall have the right to enter
upon any of the land affected by Contractor's mining operation, at any time and
without the necessity of giving notice, for any purpose related to enforcing
these reclamation and conservation requirements or to observe mining or
reclamation completed or in progress.

<PAGE> 34

e. TVA will not accept coal from sources mined under the
16-2/3 percent exemption allowed under P.L. 95-87, unless it can be documented
that the source will be mined and reclaimed to the performance standards
established under P.L. 95-87, and furthermore, that the operation has the
concurrence of the coal mining and regulatory, (primacy) authority established
by this law in the state from which the coal is to be mined.

3. RELATIONSHIP OF PARTIES - PRODUCER'S STATEMENT:

a. Regardless of whether the Contractor is the producer of the
coal to be furnished or is the sales agent of one or more producer, the
Contractor binds and obligates itself for the full and faithful performance of
the contract in its entirety.

b. If the Contractor is not the producer of the coal to be
delivered hereunder, Contractor represents that it has contracted directly with
the producer(s) who has (have) executed the Coal Producer's Statement(s) for the
delivery of the coal to TVA.

4. NONASSIGNABILITY; SUBCONTRACTS; DESIGNATION AND TERMINATION OF
AGENT:

a. Neither this contract nor any interest herein or any
payments hereunder shall be assigned without the written consent of TVA, which
consent TVA may withhold in its sole discretion. In the event TVA shall give
such consent, the same shall not be construed as a waiver of this provision with
regard to any subsequent assignment. TVA may assign its rights under this
contract to any responsible party.

b. The Contractor shall, on request, file with TVA copies of
all subcontracts and terms of all commitments with subcontractors, and TVA shall
have the right to disapprove any thereof within five (5) days after receipt of
such information.

c. No designation of any agent by the Contractor to submit
invoices, receive payments, or take any other action in connection with the
performance or administration of this contract shall be effective or recognized
by TVA until the Contractor has given written notice of such designation and TVA
has given Contractor specific written notice of its approval thereof.

<PAGE> 35

d. If Contractor notifies TVA in writing of the termination of
any agent that Contractor may have therefore designated to administer this
contract on its behalf, TVA may thereafter rely on such notice of termination in
all dealings with Contractor or a successor agent.

5. WAIVERS. No waiver of any breach of this contract shall be held to
be a waiver of any other breach. Unless a remedy is expressly designated as
exclusive, all remedies afforded under the contract shall be in addition to
every other remedy provided herein or by law.

7. CONTINGENT FEES. The Contractor warrants that no person or selling
agency has been employed or retained to solicit or secure this contract upon an
agreement or understanding for a commission, percentage, brokerage, or
contingent fee, excepting bona fide employees or bona fide established
commercial or selling agencies maintained by the Contractor for the purpose of
securing business For breach or violation of this warranty, TVA shall have the
right to terminate this contract without liability or in its discretion to
deduct from the contract price or consideration the full amount of such
commission, percentage, brokerage, or contingent fee.

8. CONVICT LABOR. Contractor shall not employ in the performance of
this contract any person undergoing sentence of imprisonment at hard labor.

9. WALSH-HEALEY ACT. All the representations and stipulations in 41
C.F.R., Section 50-20l, are incorporated by reference.

10. DISCRIMINATION ON THE BASIS OF AGE. Contractor shall comply with
Executive Order 11141.

11. SMALL BUSINESS POLICY. The requirements of 15 U.S.C Section 637(d)
are incorporated by reference.

12. LIQUIDATED DAMAGES FOR SUBCONTRACTING PLANS.

<PAGE> 36

a. Failure to make a good-faith effort to comply with the
subcontracting plan, as used in this clause, means a willful or intentional
failure to perform in accordance with the requirements of the subcontracting
plan approved under the section of the Request for Proposals titled SMALL
BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN (attached to this
contract and made a part hereof) or willful or intentional action to frustrate
the plan.

c. Before the Contracting Officer makes a final decision that
the Contractor has failed to make such good-faith effort, the Contracting
Officer shall give the Contractor written notice specifying the failure and
permitting the Contractor to demonstrate what good-faith efforts have been made.
Failure to respond to the notice may be taken as an admission that no valid
explanation exists. If, after consideration of all the pertinent data, the
Contracting Officer finds that the Contractor failed to make a good-faith effort
to comply with the subcontracting plan, the Contracting Officer shall issue a
final decision to that effect and require that the Contractor pay the government
liquidated damages as provided in paragraph b. of this section.

d. With respect to commercial products plans, i.e.,
company-wide or division-wide subcontracting plans, the Contracting Officer of
the agency that originally approved the plan will exercise the functions of the
Contracting Officer under this clause on behalf of all agencies that awarded
contracts covered by that commercial products plan.

e. The Contractor shall have the right of appeal, under the
section in this contract titled DISPUTES, from any final decision of the
Contracting Officer.

f. Liquidated damages shall be in addition to any other
remedies that TVA may have.

<PAGE> 37

The Contractor agrees to use its best efforts to carry out this policy
in the award of subcontracts to the fullest extent consistent with the efficient
performance of this contract. As used in this contract, a "woman-owned business"
concern means a business that is at least 51% owned by a woman or women who also
control and operate it. "Control" in this context means exercising the power to
make policy decisions. "Operate" in this context means being actively involved
in the day-to-day management.

14. AFFIRMATIVE ACTION AND EQUAL OPPORTUNITY. To the extent applicable,
this contract incorporates by reference the "Affirmative Action for Disabled
Veterans and Veterans of the Vietnam Era" clause, 41 C.F.R. Section 60-250.4;
the "Affirmative Action for Handicapped Workers" clause, 41 C.F.R. Section
60-741.4; and the "Equal Opportunity" clause, 41 C.F.R. Section 60-1.4.
Contractor shall comply with applicable regulatory requirements, including
information reports and affirmative action programs. By submitting its offer,
offeror, applicant, or subcontractor certifies it does not maintain segregated
facilities at its establishments; does not permit employees to perform their
services at any location, under its control, where segregated facilities are
maintained; will not maintain segregated facilities; and will not permit
employees to perform their services at locations, under its control, where
segregated facilities are maintained. It agrees that breach of this
certification violates this section. Segregated facilities means any waiting
rooms, work areas, restrooms, restaurants and other eating areas, time clocks,
locker rooms and other storage or dressing areas, parking lots, drinking
fountains, recreation or entertainment areas, transportation, housing facilities
provided for employees which are segregated by explicit directive or are in fact
segregated on the basis of race, religion, color, or national origin, because of
habit, local custom, or otherwise. It further agrees that it will obtain
identical certifications from proposed subcontractors prior to award of
subcontracts exceeding $10,000 which are not exempt from this section; will
retain such certifications; and will forward the following notice to such
proposed subcontractors (except where proposed subcontractors have submitted
identical certifications for specific time periods):

<PAGE> 38

Notice to Prospective Subcontractors of Requirement for Certifications
of Nonsegregated Facilities. A Certification of Nonsegregated
Facilities must be submitted prior to award of a subcontract exceeding
$10,000 which is not exempt from this clause. Certification may be
submitted for each subcontract or for all subcontracts during a period
(i.e., quarterly, semiannually, or annually). NOTE: The penalty for
making false statements in offers is prescribed in 18 U.S.C. Section
1001.

17. ANTI-KICKBACK PROCEDURES. In its operations and business
relationships, Contractor shall have in place and follow reasonable procedures
designed to prevent and detect possible violations of the Anti-Kickback Act of
1986 (4 l U.S.C. Sections 51-58), (Act). If Contractor believes a violation of
the Act may have occurred, it shall promptly give TVA's Inspector General
written notice. Contractor shall cooperate fully with TVA or any other federal
agency investigating a possible violation of the act. Contractor agrees to
incorporate the substance of this section, including this sentence, in all
subcontracts under this contract.

18. DRUG-FREE WORKPLACE. In submitting its offer, Contractor certifies
it will comply with Public Law No. 100-690, the Drug-Free Workplace Act of 1988.

19. ENVIRONMENTALLY ACCEPTABLE FACILITIES; CLEAN AIR AND WATER.
Contractor hereby stipulates and agrees as follows:

35
<PAGE> 39

Code of Federal Regulations. If no such list is included in accordance with the
foregoing, then submission of a offer shall constitute certification by the
offeror that any facility or facilities to be utilized in performance of this
contract or any subcontract enabling the performance of this contract are not
listed on the Environmental Protection Agency's List of Violating Facilities
issued pursuant to Section 15.20 of Title 40, Code of Federal Regulations.

(2) To comply with all the requirements of Section 114 of the
Clean Air Act and Section 308 of the Federal Water Pollution Control Act
relating to inspection, monitoring, entry, reports, and information, as well as
all other requirements specified in Section 114 and Section 308 of the Clean Air
Act and the Federal Water Pollution Control Act, respectively, and all
regulations and guidelines issued thereunder.