Exhibit 10.18 THIS AGREEMENT AND DEED OF LEASE, made as of the 1st day of January, 1965, by and between THE CRAB ORCHARD COAL AND LAND COMPANY, a corporation organized and existing under the laws of the State of West Virginia, party of the first part,...

                                                                   Exhibit 10.18

            THIS AGREEMENT AND DEED OF LEASE, made as of the 1st day of January,
1965, by and between THE CRAB ORCHARD COAL AND LAND COMPANY, a corporation
organized and existing under the laws of the State of West Virginia, party of
the first part, hereinafter sometimes called "Lessor," and WINDING GULF COALS,
INC., a corporation likewise organized and existing under the laws of the State
of West Virginia, party of the second part, hereinafter sometimes called
"Lessee,"

                              W I T N E S S E T H :

            That for and in consideration of the sum of One Dollar ($1.00), cash
in hand paid to the Lessor by the Lessee, the receipt of which is hereby
acknowledged, and in further consideration of the rentals and royalties
hereinafter reserved by Lessor and to be paid by Lessee and of the faithful
performance by the Lessee of the terms, conditions, covenants and stipulations
hereinafter set forth to be performed and observed by Lessee, Lessor for the
term hereinafter set forth and upon the terms, conditions, covenants and
stipulations hereinafter contained does hereby DEMISE, LEASE and LET unto Lessee
for the purposes hereinafter set forth all of the coal in all of the seams
containing merchantable coal and particularly, but not by way of limitation, the
coal contained in what is known as the "Xxxxxx," "Beckley" and "Pocahontas No.
3" veins or seams of coal in, on and under the tracts or parcels of land situate
in Raleigh County, West Virginia, and more particularly described as follows:

            All those certain tracts or parcels of land aggregating
approximately 8,400 acres of coal land and approximately 3,600 acres of surface,
as shown upon maps or prints attached hereto, as follows:



            (1) A map or print marked, "Eastern Gas and Fuel Associates -
            Eccles, W. Va., No. 6 Xxxxxx Seam - Scale l" = 1000' - P. - 6 - 32A"
            (Revised), the exterior boundary lines of which are outlined with
            green thereon; the "Xxxxx Lines" pertaining to the Xxxxxx Seam,
            hereinafter referred to, are shown in xxxxx, and the "Corridor"
            pertaining to the Xxxxxx Seam, hereinafter referred to, in solid
            yellow.

            (2) A map or print marked, "Eastern Gas and Fuel Associates -
            Eccles, W. Va., No. 5 Beckley Seam - Scale 1" = 1000' - P - 6 - 32B"
            (Revised), the exterior boundary lines of which are outlined with
            green thereon; the "Xxxxx Lines" pertaining to the Beckley Seam,
            hereinafter referred to, are shown in xxxxx, and the "Corridor"
            pertaining to the Beckley Seam, hereinafter referred to, in solid
            yellow.

            (3) The Pocahontas No. 3 seam and other seams may underlie the
            entire property. Therefore, the exterior boundary lines shown in
            green upon the map referred to in (2) above, marked P - 6 - 32B,
            adequately defines and describes said Pocahontas No. 3 seam and
            other seams herein demised.

            Lessor also leases and lets to Lessee all of the rights and
privileges now vested in Lessor for mining said coal and for occupying the
surface of the above mentioned Leased Premises for all purposes whatsoever in
connection with mining, transporting, shipping, removing and marketing the said
coal from said Leased Premises, and the coal from adjacent, coterminous and
neighboring lands which Lessee may now have or may hereafter acquire by purchase
or lease, together with the improvements, shafts and other property now or
hereafter located on the Leased Premises and all of the rights of Lessor to use
the stone, sand, gravel, water and other materials, except timber, therein and
thereon for its mining purposes; and, to the extent Lessor has the right so to
grant, the right to take and remove said coal without liability for damages to
the overlying surface, water or water courses therein or thereon or to anything
therein or thereon by reason of such mining operations.

            It is recognized between the parties hereto that certain rights of
way and easements for pipelines, telephone and telegraph lines, electric
transmission lines, railroads,

                                      -2-


roads and similar rights as well as conveyances of surface, tenements, oil and
gas rights, etc. have heretofore been granted to other parties and this
Agreement and Deed of Lease is made and entered into subject in all respects
thereto. In addition thereto, this Agreement and Deed of Lease is also made
subject to all out-conveyances, leases, grants and other instruments which may
affect said Leased Premises which are of record in said County Clerk's office or
of which Lessee has knowledge including, but not by way of limitation,
conveyances, contracts to convey and agreements for the sale of surface lots and
tenements.

            This Agreement and Deed of Lease is further made upon and subject to
the following terms, conditions, stipulations and agreements which the Lessee
covenants to and with Lessor faithfully to perform and observe:

            ARTICLE ONE: Lessee agrees to pay to the Lessor for the rights and
privileges herein demised the sum of Fifteen Cents (15(cent)) per net ton of
2,000 pounds for all coal mined from the Xxxxxx and Beckley seams on said
premises; the further sum of Fifteen Cents (15(cent)) per net ton of 2,000
pounds for all coal mined from the Pocahontas No. 3 seam and other seams (except
the Xxxxxx and Beckley seams) herein demised during the period from January 1,
1965 until December 31, 1974; the sum of Sixteen Cents (16(cent)) per net ton of
2,000 pounds of coal mined from said Pocahontas No. 3 and other seams (except
the Xxxxxx and Beckley seams) during the period from January 1, 1975 until
December 31, 1984; and the sum of Seventeen Cents (17(cent)) per net ton of
2,000 pounds of coal mined from said Pocahontas No. 3 and other seams (except
the Xxxxxx and Beckley seams) for the period from January 1, 1985 until the
termination of this lease and all extensions and renewals thereof. Said tonnage
royalty for coal actually mined shall be paid quarterly, that is to say: For the
quarter extending from January 1 to

                                      -3-


March 31st, on April 25th next following; for the quarter extending from April
1st to June 30th, on July 25th next following; for the quarter extending from
July 1st to September 30th, on October 25th next following; and for the quarter
extending from October 1st to December 31st, on January 25th next following.

            It is understood that either through the process now employed in the
cleaning of the coal mined from the Demised Premises or by other cleaning plant
or plants erected thereon, there has already accumulated and will be produced in
the future certain slate, refuse and like by-products of mining and that some
commercial salvage or use may be made or obtained from said accumulations,
present and future, and such products sold or otherwise disposed of.
Accordingly, it is agreed that the Lessee shall pay to Lessor at the rate of
Fifteen Cents (15(cent)) per net ton for all such products so sold.

            ARTICLE TWO: Lessee further covenants and agrees to pay to Lessor as
a minimum rental or royalty on account of coal mined hereunder the following
sums:

            (1) For the year extending from January l, 1965 to December 31,
1965, the sum of Seventy-Five Thousand Dollars ($75,000.00), which shall be paid
in full on the 2nd day of January, 1965. The Lessee shall be entitled to credit
against the amount so paid the tonnage royalty at the rate of Fifteen Cents
(15(cent)) per net ton upon coal mined from the Xxxxxx and Beckley seams on the
demised premises only, during the year 1965, up to but not exceeding 500,000 net
tons mined in said year; provided, however, that no such credit shall be allowed
(a) for coal mined outside what is known as the "Xxxxx Lines," the locations of
which are familiar to the parties hereto; (b) coal mined from the so-called
corridors in said Beckley and Xxxxxx

                                      -4-


seams, with which the parties hereto are also familiar; or (c) any other credit
or recoupment therefrom.

            (2) For the year beginning January 1, 1966, and for each year
thereafter, the sum of Twenty-Five Thousand Dollars ($25,000.00) per year until
all of the merchantable and mineable coal shall have been mined and removed from
the Xxxxxx and Beckley seams on said Demised Premises or until the total amount
paid shall equal or exceed the number of net tons of merchantable and mineable
coal in said seams multiplied by Fifteen Cents (15(cent)), as hereinafter
provided.

            (3) For the period from January 1, 1966 to December 31, 1970, the
sum of Twenty-Five Thousand Dollars ($25,000.00) per year for all coal mined or
to be mined from the Pocahontas No. 3 seam or any other seam or seams than the
Xxxxxx and Beckley; for the period from January 1, 1971 to December 31, 1975,
the sum of Thirty Thousand Dollars ($30,000.00) per year; and for the period
from January 1, 1976, the sum of Thirty-Five Thousand Dollars ($35,000.00) per
year until all the merchantable and mineable coal in said Pocahontas No. 3 seam
and seams other than the Xxxxxx and Beckley, have been mined and removed or paid
for as hereinafter provided.

            (4) When the said sum of Twenty-Five Thousand Dollars ($25,000.00)
minimum rental mentioned in subparagraph (2) above shall cease to be paid, as
hereinafter provided, as minimum rental or royalty for coal mined from the
Beckley and Xxxxxx seams, then the respective amounts of minimum rental or
royalty above provided to be paid on account of the coal mined from the
Pocahontas No. 3 and other seams in subparagraph (3) above shall be increased by
the said sum of Twenty-Five Thousand Dollars ($25,000.00), that is to say, the
minimum on all coal hereby leased, let and demised shall not be less than the
sum of Fifty

                                      -5-


Thousand Dollars ($50,000.00) for the period from January 1, 1966 to December
31, 1970; the sum of Fifty-Five Thousand Dollars ($55,000.00) for the period
from January 1, 1971 to December 31, 1975; and the sum of Sixty Thousand Dollars
($60,000.00) for each and every year thereafter, subject to discontinuance and
recoupment as hereinafter provided.

            All said minimum rental or royalty shall be paid in quarterly
installments on the 25th day of the month following the end of each quarter or
three month's period in the same manner as hereinbefore provided for the payment
of tonnage royalty, whether or not the tonnage royalty on coal mined or dug
during the preceding three month's period equals said installment.

            In the event the tonnage royalty for any year during the term of
this lease is less than the minimum rental or royalty actually paid for such
year, Lessee shall have the right during any succeeding year or years of the
term hereof to mine and remove sufficient coal over and above the minimum rental
or royalty requirement for such succeeding year or years, without payment of
tonnage royalty, to make up the deficiency of said year but no excess of tonnage
royalty over and above the minimum rental or royalty from time to time paid
shall be credited upon or against any subsequent deficiency, however or whenever
occurring.

            Whenever in the opinion of the engineer of the Lessee and the
engineer of Lessor, or other proper officer of either of them, the quantity of
coal remaining to be recovered here-under in the Beckley and Xxxxxx seams at the
applicable rate of tonnage royalty, would produce an amount of royalties equal
to the aggregate amount of such payments as may have been made by Lessee to make
up deficiencies in minimum rental or royalty for the respective years, and for
which Lessee has not reimbursed itself by mining free from royalty as
hereinbefore provided in this Article, then, in that case, Lessee shall not be
required to make any further payments of minimum rental or royalty in respect of
said Xxxxxx and Beckley seams and shall have the

                                      -6-


privilege of mining free of tonnage royalty from said Xxxxxx and Beckley seams,
a quantity of coal sufficient at the rate of tonnage royalty to reimburse itself
for said aggregate amount of said minimum rental or royalty deficiency payments.
After Lessee ceases to pay said amount of minimum rental in respect of said
Xxxxxx and Beckley seams the same shall be used to increase the amounts of
minimum rental or royalty applicable to the Pocahontas No. 3 seam and other
seams, as hereinbefore provided.

            Whenever in the opinion of the engineer of Lessor and the engineer
of the Lessee, or other proper officer of either of them, the quantity of coal
remaining to be recovered hereunder in the pocahontas No. 3 seam and in seams
other than the Xxxxxx and Beckley seams, shall be such as at the rate of tonnage
royalty hereinbefore provided in respect of said Pocahontas No. 3 seam and said
other seams, will produce an amount of royalties equal to the aggregate amount
of such payments as may have been made by Lessee to make up deficiencies in
minimum rental royalty for the respective years, and for which Lessee has not
reimbursed itself by mining free from royalty as hereinbefore provided in this
Article, then, and in that case, Lessee shall not be required to make any
further payments on account of minimum rental or royalty and shall have the
privilege of mining free of royalty a quantity of coal sufficient, at the rate
of tonnage royalties applicable at the time the deficiencies were incurred, as
hereinbefore provided in respect to the Pocahontas No. 3 and said other seams,
to reimburse itself for said aggregate amount of said minimum rental or royalty
deficiency payments.

            Lessee shall, on or before the 25th day of each April, July, October
and January furnish to Lessor a report showing the quantity of coal mined
hereunder during the three preceding calendar months, using the weights
furnished by the company over whose railway the coal is shipped for all coal so
mined and shipped by rail; provided, however, that if any coal

                                      -7-


mined hereunder is, before or upon loading the same into railroad cars, mixed or
commingled with other coal mined by Lessee from adjoining or adjacent premises,
then the quantity thereof shall be ascertained either (a) through railroad
weights [by prorating such railroad weights in proportion to the weights of the
mine cars loaded from the Leased Premises and from said other premises], or (b)
by mine weights which shall be, at all reasonable times, subject to check by
Lessor, or its authorized representative, or (c) by some other manner
satisfactory to such person as may, by written notice given by Lessor to Lessee,
be designated as the authorized representative of Lessor for the purposes of
this and certain other paragraphs hereof, such person being herein for
convenience referred to as the engineer of Lessor. A separate record shall be
kept of the coal mined from each of the seams on the Demised Premises.

            In the event the coal mined hereunder shall be mixed or mingled with
other coal, it is recognized between the parties hereto that the coal from the
Leased Premises and such other coal may be dissimilar in character and quality
and that when processed for market the impurities or refuse so removed from said
coal may vary; and, in such case, it is understood and agreed that an equitable
method of ascertaining the reduction in tonnage due to the removal of impurities
or refuse shall then be determined and agreed upon.

            ARTICLE THREE: Lessee shall keep and preserve, for a period of six
(6) years from and after the mining in fact, books of account of the mining,
using and shipping of coal mined hereunder, and records of all analyses made by
it of coal mined hereunder, and said books and records shall be open at all
reasonable times for inspection by Lessor, its agents or attorneys, or other
persons in its behalf, for the purpose of comparing and verifying the reports
rendered by

                                       -8-


Lessee under ARTICLE TWO hereof, or any other provision of this Agreement and
Deed of Lease.

            If Lessor shall not, within two (2) years next after receiving from
Lessee any quarterly statement of rent and royalty rendered under the terms of
ARTICLE ONE and ARTICLE TWO hereof, and the payment to be made in accordance
therewith, question the accuracy of such statement and payment, such statement
and payment shall be regarded as final and conclusive upon Lessor and Lessee and
the same may not thereafter be disputed or questioned by either Lessor or
Lessee.

            ARTICLE FOUR: If Lessee shall locate any additional mine openings,
shafts, buildings, railway sidings, highways or other improvements for use in
its operations on the Leased Premises, they shall be located in accordance with
plans approved by the engineer of Lessor, which approval shall not be
unreasonably withheld, it being understood and agreed that said additional
improvements, subject to certain exceptions hereinafter contained, shall be
located on the Leased Premises so that the same will become a part thereof if
this Agreement and Deed of Lease should become forfeited, cancelled or
terminated for any reason.

            ARTICLE FIVE: Any dumps for disposal of refuse or waste material of
whatever nature which are to be located on the Leased Premises shall be located
with the approval of the engineer of Lessor, and shall comply with any rules and
regulations that reasonably may be prescribed by said engineer in respect to the
disposal of such refuse and waste material.

                                      -9-


            ARTICLE SIX: Lessee covenants and agrees that it will conduct and
prosecute its mining operations on said property in an approved and skillful
manner so as to mine and produce from the Leased Premises all of the
merchantable and mineable coal that can be mined and produced at a profit by
approved and modern methods, machinery and appliances and that it will not mine
out such portions of the coal in the Leased Premises as will jeopardize or make
more difficult the mining and removal of the remaining portions thereof;
provided, however, that as to the mining in the Beckley and Xxxxxx seams only,
the size, kind and type of mining equipment is to be exclusively determined by
Lessee.

            It is understood that some time may elapse before the Lessee in the
course of orderly mining shall desire to open and develop mining operations in
the Pocahontas No. 3 seam in said premises. It is, therefore, agreed that the
Lessee may defer the opening, development and mining of said Pocahontas No. 3
seam for such period as it may desire, not exceeding eighteen (18) years from
the date of this Agreement and Deed of Lease. When, however, operations are
started in said Pocahontas No. 3 seam, Lessee agrees to prosecute the same
diligently and to conduct its mining operations in an approved and skillful
manner as hereinabove provided.

            Whenever the Lessee shall pay the aggregate amounts of minimum
rental or royalties equal to the estimated amount of merchantable and mineable
coal in the Leased Premises at the applicable tonnage royalty rates aforesaid
and shall, therefore, have ceased to pay any further minimum rents or royalties
to Lessor, Lessee covenants and agrees to pay a rental for the use of Lessor's
property, the sum of Fifteen Thousand Dollars ($15,000.00) per year until this
lease shall have been terminated or surrendered.

                                      -10-


            ARTICLE SIX-A: The original term of this lease shall be for a period
of thirty-one (31) years, extending from January 1, 1965 to December 31, 1995.
It is agreed, however, that if the Lessee shall have kept and performed all of
the terms and conditions hereof it shall have the privilege and option of
renewing this Lease for an additional period of thirty (30) years from and after
January 1, 1996 and in like manner and under the same conditions, the Lessee
shall have the option and privilege of further renewing this Lease for a third
term of fourteen (14) years after the expiration of said second thirty (30) year
period; provided, however, that in each instance the Lessee shall give to the
Lessor at least one (1) year's written notice before expiration of the then
current term of its election to extend said lease for each additional period.

            ARTICLE SEVEN: Lessee shall not at any time, except with the written
consent of Lessor, drive any draft, tunnel, slope, shaft, room, entry or air
course within sixty (60) feet of any of the outside boundaries of the Leased
Premises, or lands now or hereafter acquired, except along the common boundary
line between the Leased Premises and other adjoining and coterminous coal
property now owned or hereafter acquired by Lessee by purchase, lease or
otherwise.

            Lessor does hereby waive the prohibition against mining coal within
five (5) feet of the boundary lines of the adjoining coal properties which
Lessee may now own or hereafter acquire by purchase, lease or otherwise.

            ARTICLE EIGHT: Lessee shall conduct its mining operations in the
Leased Premises in such manner as to absolve the Lessor from liability due to
air pollution, pollution or discoloration of streams fed by waters from the
Demised Premises, or because of interference

                                      -11-


with the beds of such streams or their natural flow and in accordance with the
laws and regulations of the State of West Virginia and of the United States of
America and as its operations are permitted under the mining rights, liberties
and privileges owned by Lessor and hereby leased and let. Lessee shall indemnify
and save harmless Lessor from all claims, demands, damages, suits, judgments,
awards, costs and expenses whatsoever suffered or incurred by Lessor (other than
any so suffered or incurred through any defects in Lessor's titles), and due to,
caused by, or arising in any manner out of, the possession, use and occupancy by
Lessee of the premises or property of Lessor.

            ARTICLE NINE: The Lessee shall work and mine the coal in accordance
with general and detailed plans of mining and description thereof, both
inclusive, which shall be pre-pared by the Lessee and submitted to the Engineer
of the Lessor who shall act upon the same with reasonable diligence. Said plan
shall not be put in operation unless and until the same has been approved in
writing by said Engineer, who shall not unreasonably refuse to approve it. No
change in, or modification of, or departure from any plan so approved, shall be
made in the development or operation of the mine except as requested by the
Lessee and approved in writing by said Engineer, or as requested by said
Engineer and approved in writing by the Lessee, any such request from either the
Lessee or said Engineer to be accompanied by plans illustrating such change,
modification or departure.

            ARTICLE TEN: Lessee shall employ an experienced and competent
Engineer whose duty it shall be to make surveys, determine elevations, prepare
the plans and maps provided for in ARTICLES FOUR, FIVE and NINE hereof, give
directions and courses for all

                                      -12-


entries, airways, rooms and other mine workings, and prepare and keep up, on a
scale of one hundred (100) feet to one (1) inch, a map of the vein or seam of
coal being mined by Lessee, which map shall be posted every three (3) months,
and shall show accurately and completely, on true meridian, the boundaries of
the Leased Premises, the height and thickness of said coal, the location of all
railway tracks, streams, roads, buildings and other improvements within the
boundaries of said lands, and all mine workings within the boundaries of said
lands, together with elevations on tide-water datum in the mine workings and on
the surface, and any additional information that can be practicably obtained,
and that may be necessary to the safe and proper conduct of the operations
hereunder, or that may reasonably be required by the Engineer of Lessor. Two (2)
copies of said map shall be sent to said Engineer, which map shall be
supplemented on or before the 25th day of January, April, July and October of
each year by Lessee furnishing to said Engineer the postings (two (2) copies),
mapped for the three (3) months ending on the last day of the calendar month
immediately preceding; and Lessor, its agents, engineers, or other persons in
its behalf, shall at all reasonable times have access to the maps, plans and
tracings of Lessee prepared in connection with operations of Lessee hereunder,
and may take therefrom copies of such portions as may be desired.

            The Engineer of Lessee shall furnish to the Engineer of Lessor on or
before the 25th day of January of each year an annual statement showing the
acreage of coal mined for the twelve (12) month's period ending on the last day
of the calendar month immediately preceding.

            If Lessee shall fail to furnish the said map or maps for thirty (30)
days after written demand therefor shall have been made by the Engineer of
Lessor, Lessor may at its option employ a competent Engineer to make surveys and
prepare such map or maps, and Lessee shall pay to Lessor the full amount of the
expense so incurred, such amount to be recovered, on

                                      -13-


default of prompt payment, in the manner provided for the collection of rents
and royalties hereinafter mentioned.

            ARTICLE ELEVEN: During the term of this Agreement and Deed of Lease,
and during any extension or extensions thereof, Lessee shall pay all taxes and
assessments (exclusive of Income or Excess Profits taxes of Lessor, or any taxes
payable by Lessor upon royalties under the provisions of any present or future
tax law of the State of West Virginia or of the United States of America) that
may be levied or assessed against Lessor or Lessee on account of ownership of
the Leased Premises, or the improvements thereon, or the coal mined therefrom,
or the severance, processing, transportation or sale of said coal, or the
products manufactured from said coal and if any such taxes and assessments are
paid by Lessor, Lessee shall repay to Lessor the amount thereof, such amount to
be recovered, in default of prompt payment, in the manner provided in ARTICLE
FOURTEEN hereof. Should Lessee consider excessive any taxes or assessments for
which it is liable under this Agreement and Deed of Lease, Lessor shall upon
request from Lessee, protest or appeal such excessive taxes or assessments at
the expense of Lessee.

            ARTICLE TWELVE: Lessor, its agents, engineers, or other persons in
its behalf, shall at all reasonable times have the right and privilege of
entering the works and mines of Lessee in, upon or beneath the surface of the
Leased Premises, in order to inspect, examine, survey or measure the same or any
part thereof and for such purposes to use freely the means of access to the said
works and mines without hindrance or molestation. It is understood and agreed
that said agents, engineers, or other persons in behalf of Lessor, when in and
on the

                                      -14-


Leased Premises for any purpose, shall not be regarded under the law, or
otherwise, as employees of Lessee.

            ARTICLE THIRTEEN: Lessee shall not mortgage or assign, convey,
lease, underlet, sublet, or set over any of its estate, interest, or rights
hereunder, or any part thereof, to any person or persons whomsoever, or any
corporation whatsoever, without the license and consent of Lessor in writing for
that purpose being first had and obtained, which consent shall not be
unreasonably withheld.

            Any transfer by operation or process of law, whether in a proceeding
at law, or in equity, or in bankruptcy, or insolvency shall be deemed an
assignment within the meaning of this provision and a violation of this
covenant. But this covenant shall not be deemed to apply to or prevent the
leasing by Lessee of any house or building of part thereof to others for
business or residential purposes in connection with said mining operations.

            If Lessee shall make an assignment for the benefit of its creditors,
or voluntarily go into bankruptcy, or file an application under Chapter X of the
Bankruptcy Act or an answer admitting the allegations of an application filed by
others thereunder, or shall voluntarily go into or suffer or permit a
receivership of its property, then Lessor may, at its option, forthwith forfeit
and declare null and void this Agreement and Deed of Lease.

            ARTICLE FOURTEEN: It is further agreed and understood that all
rentals and royalties herein provided to be paid by Lessee shall be deemed and
considered as rent reserved upon contract by Lessor, and all remedies now or
hereafter given by the laws of West Virginia to landlords for the collection of
rents shall exist in favor of Lessor for the collection of all such

                                      -15-


rentals and royalties to be paid under this Agreement and Deed of Lease, and a
lien is hereby expressly reserved, given, granted and imposed upon the leasehold
estate hereby created, to secure the payment of all said rents and royalties
when and as they occur until the same are paid; and it is further agreed and
understood that if any of the rents or royalties remain unpaid for thirty (30)
days after the same shall become due and payable as herein provided, Lessor
shall have the right to enforce the payment thereof by the remedies given to
landlords by law and by the remedies herein given.

            And Lessor shall have the further right, at its option, if said
rentals and royalties shall not be paid within said period of thirty (30) days
after the same become due and payable, respectively, upon at least thirty (30)
days' written notice to Lessee of such default, and, if such default be not
remedied by Lessee within thirty (30) days from receipt of such notice, then and
in such event, unless Lessee shall have within such thirty (30) days' period
resorted to arbitration, Lessor may declare this Agreement and Deed of Lease to
be thenceforth null and void, and this Agreement and Deed of Lease shall
thereupon, with all the rights and privileges of Lessee hereunder, cease and
determine, and thereupon Lessor shall have the right by its officers, or agents,
to enter upon the Leased Premises without further notice and take possession of
the same, and the right of possession of Lessor shall thereupon be complete to
every intent and purpose as if this Agreement and Deed of Lease had not been
made. But the exercise of this right to end and terminate this Agreement and
Deed of Lease shall not be held to release or impair any accrued obligation of
Lessee under this Agreement and Deed of Lease.

            The neglect of Lessor at any time to avail itself of rights or
remedies hereunder shall not be construed as a waiver of its rights and
privileges to avail itself of each and every of such rights and remedies
whenever and so often as any new ground therefor may arise.

                                      -16-


            The remedies given in this Article are merely cumulative and shall
not deprive Lessor of any of its legal or equitable remedies.

            ARTICLE FIFTEEN: All of the preceding terms, conditions, covenants,
stipulations and agreements to be performed and observed by Lessee, and the
covenants of Lessee to perform and observe the same, shall inure to the benefit
of Lessor, and Lessor may, by proper action at law or suit in equity, or other
proper proceedings specifically enforce any and all of said terms, conditions,
covenants, stipulations and agreements and the covenants of Lessee to perform
and observe the same. In case Lessee shall fail in the performance or observance
of any of the said terms, conditions, covenants, stipulations and agreements, or
shall use the Leased Premises contrary to the provisions and limitations hereof,
and any such failure shall continue for a period of thirty (30) days after
Lessor shall have given to Lessee written notice of such default, then Lessor
may, at its option, forfeit this Agreement and Deed of Lease under the terms of
this Article, then and in such event, unless Lessee shall have within such
thirty (30) days' period resorted to arbitration, the term and leasehold
interest hereby created and all of the rights and privileges of Lessee hereunder
shall forthwith cease and determine, and Lessor shall be entitled to re-enter
the Leased Premises and to exclude Lessee therefrom and to hold said lands as of
its former estate; and a waiver by Lessor of

            The neglect of Lessor at any time to avail itself of rights or
remedies hereunder shall not be construed as a waiver of its rights and
privileges to avail itself of each and every of such rights and remedies
whenever and so often as any new ground therefor may arise.

            The remedies given in this Article are xxxxx cumulative and shall
not deprive Lessor of any of its legal or equitable remedies.

                                      -17-


            ARTICLE FIFTEEN: All of the preceding terms, conditions, covenants,
stipulations and agreements to be performed and observed by Lessee, and the
covenants of Lessee to perform and observe the same, shall inure to the benefit
of Lessor, and Lessor may, by proper action at law or suit in equity, or other
proper proceedings specifically enforce any and all of said terms, conditions,
covenants, stipulations and agreements and the covenants of Lessee to perform
and observe the same. In case Lessee shall fail in the performance or observance
of any of the said terms, conditions, covenants, stipulations and agreements, or
shall use the Leased Premises contrary to the provisions and limitations hereof,
and any such failure shall continue for a period of sixty.(60) days after Lessor
shall have given to Lessee written notice of such default, then Lessor may, at
its option, forfeit this Agreement and Deed of Lease under the terms of this
Article, then and in such event, unless Lessee shall have within such sixty (60)
days' period resorted to arbitration, the term and leasehold interest hereby
created and all of the rights and privileges of Lessee hereunder shall forthwith
cease and determine, and Lessor shall be entitled to re-enter the Leased
Premises and to exclude Lessee therefrom and to hold said lands as of its former
estate; and a waiver by Lessor of any particular cause of forfeiture shall not
prevent the forfeiture and cancellation of this Agreement and Deed of Lease for
any other cause of forfeiture or for the same cause occurring at any other time.
It is understood and agreed between the parties hereto that if it should be
impossible or impractical for Lessee to correct any such default by actual
compliance, then Lessee shall be entitled to pay to the Lessor money damages to
correct such default. If the parties cannot agree upon said money damages, then
the matter may be arbitrated under ARTICLE NINETEEN hereof.

            The remedies given in this Article are merely cumulative and shall
not deprive Lessor of any of its other legal or equitable remedies.

                                      -18-


            ARTICLE SIXTEEN: During the term of this Agreement and Deed of
Lease, or any extension of term as hereinabove provided, Lessee agrees to keep
all fixed items now on said Leased Premises or hereafter placed by it on said
Leased Premises in good operating condition and repair and which said fixed
items shall include all shafts, tipples, buildings, structures, tracks, fans,
main pumps, pipelines, feeder and trolley lines and other fixed items which are
necessary to maintain and operate said mines.

            Upon the expiration or sooner termination of this Agreement and Deed
of Lease, Lessee will turn over and deliver or cause to be turned over and
delivered to Lessor all such fixed items or their equivalent in good operating
condition and repair, which said fixed items shall be and become the property of
the Lessor, free and clear of all claims of any person, firm or corporation.

            In the event all of the merchantable and mineable coal in the Leased
Premises shall have been mined and removed or upon the date of the termination
of this Agreement and Deed of Lease, or any extension thereof, then Lessee shall
be entitled to take and remove within six (6) months from the date thereof all
movable machinery, equipment and supplies used by it in connection with the
mining of coal from the Leased Premises.

            In the event all of the merchantable and mineable coal in the Leased
Premises shall not have been mined and removed at the termination of this
Agreement and Deed of Lease or any extension thereof, then Lessee shall be
entitled to take and remove within six (6) months from the date of such
termination all store merchandise, store supplies, store equipment, expendable
mine supplies, all loading equipment such as coal loading machines, rock loading
machines and continuous mining machines, all haulage equipment such as shuttle
cars, caterpillar equipment trucks, locomotives and mine cars, all drilling
equipment such as rock

                                      -19-


drills, coal drills and impact wrenches, all conveyors, such as belt conveyors,
chain conveyors, elevators, shaker conveyors inside the mines, and mine car
hoists, except two main line motors, four gathering motors and eighty mine cars
(that is to say, one main line motor, two gathering motors and forty mine cars
for the mine in the Xxxxxx seam of coal and one main line motor, two gathering
motors and forty mine cars for the mining of the Beckley seam of coal), all in
good operating condition. Each and every provision of this paragraph shall in
like manner apply to all such equipment, facilities and appliances used or
useful in the mining of the Pocahontas No. 3 seam.

            In the event this Agreement and Deed of Lease should become
terminated by default on the part of Lessee in the payment of rentals or
royalties or in the performance of the covenants and conditions herein required
to be kept and performed by Lessee, then, and in such event, all said mobile
movable machinery, equipment and supplies shall thereupon become the property of
Lessor in addition to the fixed items hereinabove mentioned.

            Notwithstanding anything to the contrary herein contained, Lessee
shall have the right to remove or dispose of any item of improvements, equipment
and appliances on said Leased Premises which may have become worn out,
destroyed, obsolete, or not useful in the operation of the mines operated by
Lessee on said Leased Premises, provided such property is replaced by other
property of equal value and usefulness (before said replaced property became
worn out, destroyed, obsolete or not useful) in the operations of said mines.
When in the course of mining it shall appear, in the opinion of the engineer of
the Lessor and the engineer of the Lessee, that the merchantable and mineable
coal in the Leased Premises is nearing exhaustion, the Lessee shall be required
to keep in repair and to replace only so much of the property aforesaid as may
be necessary or useful in the mining of such remaining coal.

                                      -20-


            ARTICLE SEVENTEEN: Lessee shall, at its own expense, keep the
tipple, tipple facilities and all other insurable improvements insured, in a
reasonably adequate amount, against fire, with an extended coverage endorsement
thereon, in recognized insurance companies of financial integrity authorized to
do business in West Virginia. In the event the tipple or other improvements are
destroyed, or partially destroyed, by any of the hazards insured against, the
insurance proceeds, to the extent necessary, shall be used for repairing,
rebuilding, restoring or replacing the insured property, or so much thereof as
may be reasonably required to handle the then remaining unmined coal covered by
this Agreement and Deed of Lease, or, in lieu thereof, to substitute another
tipple, tipple facilities or other improvements for such purposes. It is
understood and agreed that the proceeds of the said insurance money obtained by
Lessee, as aforesaid, and not used by Lessee for repairing, rebuilding,
restoring or replacing the insured property, shall be paid to Lessor.

            ARTICLE EIGHTEEN: The giving of any notice to or the making of any
demand on Lessee under the provisions hereof, shall be sufficient, if in writing
addressed to Lessee, and sent by Registered or Certified Mail to Lessee at its
office at Tams, West Virginia, or such other address as may be hereafter
designated by Lessee for that purpose by letter of advice addressed to Lessor
and any such notice to Lessor shall be sufficient if in writing addressed to
Lessor and sent by Registered or Certified Mail to it at Kanawha Banking & Trust
Company Building, Charleston, West Virginia, or such other address as may be
hereafter designated by Lessor for that purpose, by letter of advice addressed
to Lessee. Unless otherwise herein specifically provided, ten (10) days shall be
considered reasonable notice.

                                      -21-


            ARTICLE NINETEEN: In the event Lessee should be dissatisfied with
any of the rulings, decisions or determinations of the Engineer of Lessor
hereunder, or in the event any dispute or difference of any kind should arise
between Lessor and Lessee, which the parties are not able to adjust within ten
(10) days after the subject of such dissatisfaction, dispute or difference has
been brought to the attention of the other in writing, either of the parties
hereto may elect to submit such dissatisfaction, dispute or difference to a
Board of Arbitration, consisting of three (3) reputable disinterested persons
with practical experience in coal mining. One Arbitrator to be chosen by Lessor
and one by Lessee within ten (10) days after notice from either party to the
other, and an umpire to be selected promptly thereafter by the arbitrators so
chosen, and upon default by either party to so appoint an arbitrator within said
ten (10) days, any Judge of a Federal Court having jurisdiction of the County of
Raleigh, State of West Virginia, shall have power, upon application by the other
party, to appoint such arbitrator, and in the event of the failure of such
arbitrators when so appointed to select an umpire promptly, then any such Judge
shall have power, upon the application of either party, to appoint such umpire,
and such Board so constituted shall have full and complete authority to proceed
with the arbitration and fully and completely decide the disagreement or dispute
as if appointed by said parties. The decision of the Board of Arbitration shall
be set forth in writing and shall be such as to permit the subject of such
dissatisfaction, dispute or difference to be corrected by a reasonable
compliance of the same by the party in default; provided, however, if it should
be impossible or impractical to correct such default by actual compliance, then
money damages shall be determined and assessed in lieu thereof. The arbitrators
shall determine the costs of the arbitration, including reasonable compensation
to the arbitrators, and by whom such costs shall be paid. Such costs may be
assessed against either or both parties; provided, however, it is agreed that
each party

                                      -22-


shall pay all costs which it may incur for counsel fees, witness fees, traveling
fees and similar costs. In the event either party hereto has resorted to
arbitration, as aforesaid, pending the decision of the Board of Arbitrators, the
remedies given Lessor for the forfeiture of this Agreement and Deed of Lease and
re-entry by reason of any alleged default on the part of Lessee, except the
payment of rent or royalty on the coal actually mined and removed from the
Leased Premises during the arbitration, shall be suspended but such remedies
shall again become and be immediately available to Lessor if Lessee shall not,
within thirty (30) days after the decision of the arbitrators, comply therewith.
The parties shall accept as final, conclusive and binding any award so made by
the arbitrators, unless either party shall, within thirty (30) days after the
award is made, institute an appropriate suit or action in a court of competent
jurisdiction to determine the matters covered by the award.

            ARTICLE TWENTY: Lessee covenants and agrees that at the final
termination of this Lease, or any renewal or extension thereof, it will convey
to the Lessor any interest it, the Lessee, may have acquired in and to any
surface lands lying within the exterior boundaries of the Leased Premises.

            ARTICLE TWENTY-ONE: Lessee covenants and agrees to pay unto Lessor,
in addition to the rentals and royalties hereinabove specified, a rental of Two
Cents (2(cent)) for each and every net ton of two thousand (2,000) pounds of
coal mined from adjacent, coterminous and neighboring lands and hauled and
transported through, on or over the Leased Premises, the same to be paid and
accounted for at the times set forth in ARTICLE ONE herein in respect of tonnage
royalty.

                                      -23-


            ARTICLE TWENTY-TWO: Lessor reserves the right to operate, sell,
lease or otherwise use or dispose of any part or parts of the land, surface,
oil, gas or other minerals, or any interest therein except coal which the Lessee
has the right to mine as provided herein, without applying for or obtaining the
further consent of Lessee; provided, however, that any deed, lease or other
instrument evidencing such sale, lease or other disposition, shall in each
instance reserve therefrom such mining and transportation rights and privileges
as may be necessary or convenient for the full and complete exercise of Lessee's
rights to mine and remove said coal, including a waiver of subjacent and lateral
support of the surface. When such sale, lease or other disposition shall be made
by the Lessor, all obligations and liability of Lessee with respect to the area
or areas so sold, leased or disposed of from time to time shall terminate and
Lessee shall be relieved of the payment of property taxes upon all such areas.

            Lessor reserves the right to grant and convey such rights of way and
easements over and across said lands as it may desire to grant and convey for
roads, railways, pipelines, power lines, telephone and telegraph lines and like
facilities, except that Lessor shall not make any such grant or conveyance which
will damage Lessee or unreasonably interfere with Lessee's mining operations or
of its plant improvements and facilities.

            ARTICLE TWENTY-THREE: Except as otherwise expressly provided in this
Agreement and Deed of Lease, all of the covenants, promises, undertakings and
stipulations contained herein and all of the benefits derived therefrom, shall
inure to the benefit of and extend to and be binding upon Lessor and Lessee,
their respective successors and assigns.

                                      -24-


            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ X. X. Xxxxxx
                                         ---------------------------------
                                             President

ATTEST:

/s/  J. R. Xxxxx, Jr.
--------------------------------
     Secretary

                                      WINDING GULF COALS, INC.

                                      By /s/ W. A. Haslam
                                         ---------------------------------
                                             President

ATTEST:

/s/  C. A. Xxxxx
-------------------------------
     Secretary

                                      -00-


XXXXX XX XXXX XXXXXXXX,

XXXXXX XX XXXXXXX, TO-WIT:

            I, Xxxxxx Xxxx Xxxxx, a Notary Public in and for said county, do
certify that X. X. Xxxxxx, who signed the writing hereto annexed, bearing date
January 1, 1965, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in my
said county, before me, acknowledged the said writing to be the act and deed of
said corporation.

      Given under my hand and notarial seal this 30th day of December, 1964.

      My commission expires January 23, 1969.

(NOTARIAL SEAL)                                 /s/ Xxxxxx Xxxx Xxxxx
                                         -----------------------------------
                                                    Notary Public

STATE OF WEST VIRGINIA,

COUNTY OF KANAWHA, TO-WIT:

            I, Xxxxxx Xxxx Xxxxx, a Notary Public in and for said county, do
certify that W. A. HASLAM, who signed the writing above, bearing date January 1,
1965, for WINDING GULF COALS, INC., has this day in my said county, before me,
acknowledged the said writing to be the act and deed of said corporation.

      Given under my hand and notarial seal this 30th day of December, 1964.

      My commission expires January 23, 1969.

(NOTARIAL SEAL)                                 /s/ Xxxxxx Xxxx Xxxxx
                                         -----------------------------------
                                                    Notary Public

                                      -26-


OFFICE OF THE CLERK OF THE COUNTY COMMISSION

OF RALEIGH COUNTY, WEST VIRGINIA                             Feb 14 1978 3:41 AM

      The forgoing Instrument of Writing, together with the certificate of
acknowledgement thereon, was this day presented in said office and admitted to
record.

      RETURN TO:

      /s/ Xxxxxx Xxxxx                                                     CLERK
  ----------------------------                            ----------------------

                                      -27-


            THIS MODIFICATION AND AMENDMENT OF AGREEMENT AND DEED OF LEASE, made
as of this 28th day of December, 1970, by and between THE CRAB ORCHARD COAL AND
LAND COMPANY, a corporation organized and existing under the laws of The State
of West Virginia, party of the first part, hereinafter sometimes called
"Lessor," and WINDING GULF COALS, INC., a corporation likewise organized and
existing under the laws of the State of West Virginia, party of the second part,
hereinafter sometimes called "Lessee,"

            WHEREAS, Lessor and Lessee are parties to a certain Agreement and
Deed of Lease dated as of January 1, 1965 with respect to the mining and removal
of coal on the property of Lessor in Raleigh County, West Virginia; and

            WHEREAS, ARTICLE TWO of said agreement and deed of lease contains
certain covenants and agreements between the parties with respect to the
payments of minimum rentals and royalties thereunder; and

            WHEREAS, Lessor and Lessee mutually desire to modify and amend
subparagraphs (3) and (4) of said ARTICLE TWO,

            NOW, THEREFORE, THIS AGREEMENT WITNESSETH:

            That in consideration of the premises and for the sum of One Dollar
($1.00), cash in hand paid by each party to the other and other good and
valuable considerations, the receipt of all of which is hereby acknowledged by
both Lessor and Lessee, Lessor and Lessee mutually covenant and agree as
follows:

            1. Subparagraphs (3) and (4) of ARTICLE TWO of said agreement and
deed of lease between them dated January 1, 1965, shall be and said
subparagraphs are hereby modified and amended to read and provide as follows:



            (3) For the period from January 1, 1966 to December 31, 1970, the
sum of Twenty-Five Thousand Dollars ($25,000.00) per year for all coal mined or
to be mined from the Pocahontas No. 3 seam or any other seam or seams than the
Xxxxxx and Beckley; and for the period from January 1, 1971, the sum of
Thirty-Five Thousand Dollars ($35,000.00) per year until all the merchantable
and mineable coal in said Pocahontas No. 3 seam and seams other than the Xxxxxx
and Beckley, have been mined and removed or paid for as hereinafter provided.

            (4) When the said sum of Twenty-Five Thousand Dollars ($25,000.00)
minimum rental mentioned in subparagraph (2) above shall cease to be paid, as
hereinafter provided, as minimum rental or royalty for coal mined from the
Beckley and Xxxxxx seams, then the respective amounts of minimum rental or
royalty above provided to be paid on account of the coal mined from the
Pocahontas No. 3 and other seams in subparagraph (3) above shall be increased by
the said sum of Twenty-Five Thousand Dollars ($25,000.00), that is to say, the
minimum on all coal hereby leased, let and demised shall not be less than the
sum of Fifty Thousand Dollars ($50,000.00) for the period from January 1, 1965
to December 31, 1970; the sum of Sixty Thousand Dollars ($60,000.00) from
January 1, 1971, and the sum of Sixty Thousand Dollars ($60,000.00) for each and
every year thereafter, subject to discontinuance and recoupment as hereinafter
provided.

            2. Said subparagraphs (3) and (4) of said ARTICLE TWO, as so
modified and amended and as above set forth are hereby made a part of said
agreement and deed of lease dated January 1, 1965 in the place and stead of
subparagraphs (3) and (4) as the same now appear in said agreement and deed of
lease, in the same manner and to the same effect as of said amended paragraphs
had been originally included in said agreement and deed of lease.

            3. Except as herein modified and amended, said agreement and deed of
lease dated January 1, 1965 shall be and remain in full force and effect.

            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                       -2-


                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ J. Xxx Xxxxxx
                                         ---------------------------------------
                                             President

ATTEST:

      /s/ X. X. Xxxxx, Xx.
-----------------------------
       Secretary

(CORPORATE SEAL)

                                      WINDING GULF COALS, INC.

                                      By /s/ X. X. Xxxxxx
                                         ---------------------------------------
                                             President

(CORPORATE SEAL)

ATTEST:

      /s/ X. X. XxXxxxxxx
-------------------------------------
        Assistant Secretary

ATTEST:

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

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to-wit:

            I, X. X. Xxxxxx, a Notary Public in and for said county, do certify
that J. Xxx Xxxxxx, who signed the writing hereto annexed, bearing date December
28, 1970, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in my said
county, before me, acknowledged the said writing to be the act and deed of said
corporation.

            Given under my hand this 29th day of December, 1970.

            My commission expires 24th day of August, 1971.

                                      /s/ X. X. Xxxxxx
                                      ----------------------------------
                                      Notary Public

STATE OF WEST VIRGINIA

COUNTY OF RALEIGH, to-wit:

            I, __________________, a Notary Public in and for said county, do
certify that X. X. Xxxxxx who signed the writing hereto annexed, bearing date
December 28, 1970, for WINDING GULF COALS, INC., has this day in my said county,
before me, acknowledged the said writing to be the act and deed of said
corporation.

                                       -3-


            Given under my hand this 28th day of December, 1970.

            My commission expires March 6, 1972.

                                      ----------------------------------
                                      Notary Public

This instrument was prepared by Xxxxxxxxx X. Xxxxxx, Xx., Attorney at Law,
Charleston, West Virginia.

                                      -4-


            THIS SECOND MODIFICATION AND AMENDMENT OF AGREEMENT AND DEED OF
LEASE, made as of this 22nd day of August, 1974, by and between THE CRAB ORCHARD
COAL AND LAND COMPANY, a corporation organized and existing under the laws of
the State of West Virginia, party of the first part, hereinafter sometimes
called "Lessor," and XXXXXXXXXXXX COAL COMPANY, a corporation likewise organized
and existing under the laws of the State of West Virginia, party of the second
part, hereinafter sometimes called "Lessee,"

            WHEREAS, Lessor and Winding Gulf Coals, Inc. are parties to a
certain Agreement and Deed of Lease dated as of January l, 1965, with respect to
the mining and removal of coal on the property of Lessor in Raleigh County, West
Virginia; and

            WHEREAS, Xxxxxxxxxxxx Coal Company, party of the first part herein,
is the successor to said Winding Gulf Coals, Inc. and is now the Lessee under
said Agreement and Deed of Lease; and

            WHEREAS, ARTICLE THREE and ARTICLE TEN of said Agreement and Deed of
Lease contains certain covenants and agreements between the parties with respect
to the preparation of reports and maps and examination thereof; and

            WHEREAS, Lessor and Lessee mutually desire to modify and amend said
ARTICLE THREE and ARTICLE TEN,

            NOW, THEREFORE, THIS AGREEMENT WITNESSETH:

            That in consideration of the premises and for the sum of One Dollar
($1.00), cash in hand paid by each party to the other and other good and
valuable considerations, the receipt of all of which is hereby acknowledged by
both Lessor and Lessee, Lessor and Lessee mutually covenant and agree as
follows:

            1. ARTICLE THREE of said Agreement and Deed of Lease dated January
1, 1965, shall be and it is hereby modified and amended to read and provide as
follows:



            ARTICLE THREE: Lessee shall keep and preserve, for a period of six
(6) years from and after the mining in fact, books of account of the mining,
using and shipping of coal mined hereunder, and records of all analyses made by
it of coal mined here-under, and said books and records shall be open at all
reasonable times for inspection by Lessor, its agents or attorneys, or other
persons in its behalf, for the purpose of comparing and verifying the reports
rendered by Lessee under ARTICLE TWO hereof, or any other provision of this
Agreement and Deed of Lease.

            If Lessor shall not, within three (3) years next after receiving
from Lessee any quarterly statement of rent and royalty rendered under the terms
of ARTICLE ONE and ARTICLE TWO hereof, and the payment to be made in accordance
therewith, question the accuracy of such statement and payment, such statement
and payment shall be regarded as final and conclusive upon Lessor and Lessee and
the same may not thereafter be disputed or questioned by either Lessor or
Lessee.

            2. ARTICLE TEN of said Agreement and Deed of Lease dated January l,
1965, shall be and it is hereby modified and amended to read and provide as
follows:

            ARTICLE TEN: Lessee shall employ an experienced and competent
Engineer whose duty it shall be to make surveys, determine elevations, prepare
the plans and maps provided for in ARTICLES FOUR, FIVE and NINE hereof, give
directions and courses for all entries, airways, rooms and other mine workings,
and prepare and keep up, on a scale of one hundred (100) feet to one (1) inch, a
map of the vein or seam of coal being mined by Lessee, which map shall be posted
every six (6) months, and shall show accurately and completely, on true
meridian, the boundaries of the Leased Premises, the height and thickness of
said coal, the location of all railway tracks, streams, roads, buildings and
other improvements within the boundaries of said lands, and all mine workings
within the boundaries of said lands, together with elevations on tide-water
datum in the mine workings and on the surface, and any additional information
that can be practicably obtained, and that may be necessary to the safe and
proper conduct of the operations hereunder, or that may reasonably be required
by the Engineer of Lessor. Two (2) copies of said map shall be sent to said
Engineer, which map shall be

                                       -2-


supplemented on or before the 25th day of January and July of each year by
Lessee furnishing to said Engineer the postings (two (2) copies), mapped for the
six (6) months ending on the last day of the calendar month immediately
preceding; and Lessor, its agents, engineers, or other persons in its behalf,
shall at all reasonable times have access to the maps, plans and tracings of
Lessee prepared in connection with operations of Lessee hereunder, and may take
therefrom copies of such portions as may be desired.

            The Engineer of Lessee shall furnish to the Engineer of Lessor on or
before the 25th day of January of each year an annual statement showing the
acreage of coal mined for the twelve (12) months' period ending on the last day
of the calendar month immediately preceding.

            If Lessee shall fail to furnish the said map or maps for thirty (30)
days after written demand therefor shall have been made by the Engineer of
Lessor, Lessor may at its option employ a competent Engineer to make surveys and
prepare such map or maps, and Lessee shall pay to Lessor the full amount of the
expense so incurred, such amount to be recovered, on default of prompt payment,
in the manner provided for the collection of rents and royalties hereinafter
mentioned.

            3. Said ARTICLE THREE and ARTICLE TEN, as so modified and amended
and as above set forth are hereby made a part of said Agreement and Deed of
Lease dated January 1, 1965, in the place and stead of said articles as they now
appear in said Agreement and Deed of Lease, in the same manner and to the same
effect as if said amended paragraphs had been originally included in said
Agreement and Deed of Lease.

            4. Except as herein modified and amended, said Agreement and Deed of
Lease dated January 1, 1965, shall be and remain in full force and effect.

                                      -3-


            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ J. Xxx Xxxxxx
                                         ---------------------------------------
(CORPORATE SEAL)                             President

ATTEST:

/s/ X. X. Xxxxx, Xx.
--------------------------------
    Secretary

                                      XXXXXXXXXXXX COAL COMPANY

                                      By /s/ Xxxxxx X. Xxxx
                                         ---------------------------------------
(CORPORATE SEAL)                             Exec. Vice President

ATTEST:

/s/ X. X. Xxxxxx
--------------------------------
    Secretary

                                      -0-


XXXXX XX XXXX XXXXXXXX

XXXXXX XX XXXXXXX, to-wit:

            I, Xxxx X. Xxxxx, a notary public in and for said county, do certify
that J. Xxx Xxxxxx, who signed the writing hereto annexed, bearing date the 22nd
day of August, 1974, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in
my said county, before me, acknowledged the said writing to be the act and deed
of said corporation.

            Given under my hand this 29th day of August, 1974.

            My commission expires: April 27, 1982.

                                      /s/ Xxxx X. Xxxxx
                                      -------------------------------------
                                      Notary Public

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

            I, Xxxxxxxxxx X. Xxxxx, a notary public in and for said county, do
certify that Xxxxxx X. Xxxx, Executive Vice President, who signed the writing
hereto annexed, bearing date the 22nd day of August, 1974, for XXXXXXXXXXXX COAL
COMPANY, has this day in my said county, before me, acknowledged the said
writing to be the act and deed of said corporation.

            Given under my hand this 18th day of March, 1975.

            My commission expires: November 10, 1975

                                      /s/ Xxxxxxxxxx X. Xxxxx
                                      -------------------------------------
                                      Notary Public

This instrument was prepared by Xxxxxxxxx X. Xxxxxx, Xx., Attorney at Law,
Charleston, West Virginia.

                                      -5-


      THIS AGREEMENT AND PARTIAL SURRENDER AND RELEASE, dated October 13, 1980,
by and between XXXXXXXXXXXX COAL COMPANY, a Delaware corporation, hereinafter
referred to as "Xxxxxxxxxxxx"; and THE CRAB ORCHARD COAL AND LAND COMPANY, a
West Virginia corporation, hereinafter referred to as "Crab Orchard".

      WHEREAS, Crab Orchard has leased unto Xxxxxxxxxxxx all of the coal in all
of the seams containing merchantable coal (specifically including, but not
limited to the Xxxxxx, Beckley and Pocahontas #3 Seams) in, on and under various
tracts or parcels of land situate in Raleigh County, West Virginia, pursuant to
that certain document entitled "Agreement and Deed of Lease" dated January 1,
1965 by and between Crab Orchard and Winding Gulf Coals, Inc., which
Xxxxxxxxxxxx acquired via merger in 1970.

      WHEREAS, Crab Orchard also leased to Xxxxxxxxxxxx pursuant to that same
Agreement and Deed of Lease all of the rights and privileges for mining said
coal and for occupying the surface of the tracts or parcels leased and described
therein for all purposes whatsoever in connection with mining, transporting,
shipping, removing and marketing the coal from the Leased Premises.

      WHEREAS, Crab Orchard and Xxxxxxxxxxxx have agreed that Xxxxxxxxxxxx may
surrender to Crab Orchard all its rights and interests in and to all the coal in
the Xxxxxx seam only in, on and under a small area of the Leased Premises and
Crab Orchard has agreed to accept such surrender.

      NOW, THEREFORE, in consideration of the premises and covenants herein
contained, Xxxxxxxxxxxx and Crab Orchard agree and covenant as follows:

      1. Xxxxxxxxxxxx surrenders and releases to Crab Orchard all of its right,
title and interest in and to all the coal in the Xxxxxx Seam (and no other seam)
in, on and under that certain area of land containing 2.77 acres as shown
colored in red or pink on that certain map entitled "Application For Incidental
Surface Mine Permit Pavex, Inc. Town District-Raleigh County-West Virginia
Scale: 1" = 500' September 16, 1980 Contour Interval: 40'" prepared by Southern
Surveying & Engineering Co., Inc. of Beckley, West Virginia, which such map is
attached hereto and hereby made a part hereof and reference to which is made for
a further description of said surrendered area.



      2. Xxxxxxxxxxxx specifically reserves all its right, title and interest in
and to all the other coal (and all other rights and privileges leased to
Xxxxxxxxxxxx in connection with such coal) in, on and under the remainder of the
Leased Premises as described and set forth in the aforementioned Agreement and
Deed of Lease (unless any other areas thereof have heretofore been released and
surrendered by Xxxxxxxxxxxx to Crab Orchard).

      3. Crab Orchard hereby accepts the surrender of the coal described in the
first numbered paragraph hereof and hereby releases Xxxxxxxxxxxx from any
further obligations, liabilities and/or responsibilities of whatever nature or
form concerning such coal whether such obligations, liabilities and/or
responsibilities arise under or as a result of the aforementioned Agreement and
Deed of Lease or otherwise. Crab Orchard does hereby also remise, release and
forever discharge Xxxxxxxxxxxx, its agents, employees, successors and assigns of
and from all manner of actions and causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, agreements, judgments, claims and demands
whatsoever in law or equity relating in any way to the coal surrendered and
released to it by Xxxxxxxxxxxx herein which against Xxxxxxxxxxxx Crab Orchard
ever had, now has or shall have at any time in the future or which it or its
successors, assigns, insurers, subrogees, or anyone claiming through or on
behalf of it, hereafter can, shall or may have, for, or by reason of any cause,
matter or thing whatsoever, from the beginning of the world to the end of the
world.

      IN TESTIMONY WHEREOF, Xxxxxxxxxxxx and Crab Orchard have caused this
Agreement and Partial Surrender and Release to be signed in their respective
corporate names by their respective officers thereunto duly authorized.

                                      XXXXXXXXXXXX COAL COMPANY

                                      By: /s/ Xxxxxx X. Xxxx
                                          --------------------------------------
                                          X. X. Xxxx, President

                                      CRAB ORCHARD COAL AND LAND COMPANY

                                      By: /s/ J. Xxx Xxxxxx
                                          --------------------------------------
                                          Title:  President

                                      -0-


XXXXX XX XXXXXXXXXXXX

XXXXXX XX XXXXXXXXXXXX, to-wit:

      I, Xxxxx X. X'Xxxx, a Notary Public in and for the County aforesaid, do
certify that X. X. Xxxx, whose name is signed to the above writing dated October
13, 1980, as President of Xxxxxxxxxxxx Coal Company, has this day in my said
County, before me acknowledged the said writing to be the act and deed of said
corporation.

      GIVEN under my hand and official seal of office this 31st day of October,
1980.

      My Commission Expires: March 5, 1984

                                      /s/ Xxxxx X. X'Xxxx
                                      ---------------------------------
                                      Notary Public

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to wit:

            I, Xxxxxx X. Xxxxx, a Notary Public in and for the County aforesaid,
do hereby certify that, Xxxx Xxx Xxxxxx whose name is signed to the foregoing
writing dated October 13, 1980, as President of Crab Orchard Coal and Land
Company, has this day in my said County, before me acknowledged the said writing
to be act and deed of said corporation.

            GIVEN under my hand and official seal of office this 18th day of
      October, 1980.

            My Commission Expires: July 12, 1989

                                      /s/ Xxxxxx X. Xxxxx
                                      ---------------------------------
                                      Notary Public

                                      -3-



      This is an AMENDMENT effective as of January 1, 1983, between THE CRAB
ORCHARD COAL AND LAND COMPANY, a West Virginia corporation ("Lessor"), and
XXXXXXXXXXXX COAL COMPANY, a Delaware corporation ("Lessee").

      The BACKGROUND of this Amendment is as follows:

      A. Lessor and Winding Gulf Coals, Inc., predecessor to Lessee, entered
into an Agreement and Deed of Lease made as of January 1, 1965 (the "Lease").
Article Six of the Lease allows Lessee to defer the opening, development and
mining of the Pocahontas No. 3 seam of coal on the leased premises for a period
not exceeding eighteen years from the date of the Lease. It also provides that
when operations are started in the seam, Lessee is to prosecute them diligently.

      B. Lessee in fact began work in preparation for mining in the Pocahontas
No. 3 seam, but was forced to suspend the work due to depressed market
conditions for the type of coal to be produced from the seam.

      X. Xxxxxx and Lessee have agreed that Lessee should be permitted to defer
further development of the seam, and that certain other provisions of the Lease
should be amended.

      The TERMS of this Amendment are as follows:

      1.ARTICLE ONE of the Lease is amended by deleting the first sentence
thereof and substituting the following:

            "Until the termination of this lease and all extensions and renewals
            thereof, Lessee agrees to pay to the Lessor for the rights and
            privileges herein demised the sum of Fifteen Cents ($.15) per net
            ton of two thousand (2,000) pounds for all coal mined from the
            Xxxxxx and Beckley seams on said premises. For all coal mined from
            the Pocahontas No. 3 seam and other seams and certain slate, refuse
            and like by-products of mining (except the Xxxxxx and Beckley
            seams), Lessee agrees to pay Lessor a royalty on the coal mined from
            those seams during the



            preceding calendar quarter, which shall be determined by multiplying
            the gross sales proceeds of such coal, without deductions, by 3.5%.
            Lessee's right of recoupment as provided in Article 4 of the Lease
            shall be calculated on the basis of the royalty rates applicable to
            the respective seams from which coal is mined and removed."

      2. ARTICLE TWO of the Lease is amended by deleting Section (3) thereof and
substituting the following:

            "For all coal mined or to be mined from the Pocahontas No. 3 seam or
            other seams (except the Xxxxxx and Beckley seams), the sum of
            Seventy-Five Thousand Dollars ($75,000) per year until all the
            merchantable and mineable coal in said Pocahontas No. 3 seam and
            such other seams have been mined and removed or paid for as
            hereinafter provided."

      3. ARTICLE TWO of the Lease is further amended by deleting the language
following the phrase "that is to say" in the first paragraph of Section (4)
thereof and substituting the following:

            "the minimum on all coal hereby leased, let and demised shall not be
            less than the sum of One Hundred Thousand Dollars ($100,000) for
            each and every year after January 1, 1983, subject to adjustment,
            discontinuance and recoupment as hereinafter provided."

      4. ARTICLE TWO of the Lease is further amended by adding the following new
Section (4) at the end thereof:

            "(4) The minimum rentals or royalties payable under this ARTICLE TWO
            shall be adjusted annually beginning with the calendar year 1984 to
            reflect the average change in the Producer Price Index - All
            Commodities Table 6 for the preceding twelve-month period, using as
            a base the index for December 1982."

      5. ARTICLE SIX of the Lease is amended by deleting the phrase "for such
period as it may desire, not exceeding eighteen (18) years from the date of this
Agreement and Deed of Lease." from the second paragraph thereof and substituting
the phrase "until January 1, 1993."

      6. ARTICLE THIRTEEN of the Lease is amended by adding the following
language at the end of the first paragraph thereof:

                                      -2-


            "Notwithstanding the foregoing, should Lessee assign all or any part
            of its estate, interests or rights hereunder on or before January 1,
            1993, the economic terms of this Lease shall not be subject to
            negotiation as a condition of Lessor's consent thereto, provided
            that Lessee remains responsible to Lessor for the assignee's
            performance of the terms of this Lease."

      7.ARTICLE TWENTY-ONE of the Lease is amended by deleting the Article in
its entirety and substituting the following:

            "ARTICLE TWENTY-ONE: Lessee covenants and agrees to pay unto Lessor
            a rental for each and every net ton of two thousand (2,000) pounds
            of coal mined from adjacent, coterminous and neighboring lands and
            hauled and transported through, on or over the Leased Premises, the
            same to be paid and accounted for at the times set forth in ARTICLE
            ONE herein in respect of tonnage royalty. The amount of such rental
            shall be determined by multiplying the gross sales proceeds for such
            coal, without deductions, by the applicable percentage from the
            following schedule:


                                                         
January 1, 1983 through December 31, 1983                   .l%
January 1, 1984 through December 31, 1984                   .2%
January 1, 1985 through December 31, 1985                   .3%
After December 31, 1985                                     .35%"


      8. Lessor agrees not to make any claim or demand whatsoever against Lessee
based upon any event of alleged noncompliance with the terms of the Lease
arising on or before the date of this Amendment, other than for rentals and
royalties earned prior to that date but not yet paid.

                                      -3-


      9. Except as modified herein, the Lease shall remain in full force and
effect as previously amended.

      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1983.

ATTEST:                               THE CRAB ORCHARD COAL AND LAND COMPANY

/s/ Xxxxxxx X. Xxxxx                  By /s/ J. Xxx Xxxxxx
-------------------------------          ---------------------------------------
Secretary                                President

ATTEST:                               XXXXXXXXXXXX COAL COMPANY

/s/ Xxxxxxx X. Xxxxxxxx               By /s/ Xxxxxx X. Xxxx
-------------------------------          ---------------------------------------
Secretary                                Vice Chairman

                                      -0-


XXXXX XX XXXX XXXXXXXX,

XXXXXX XX XXXXXXX, TO-WIT:

      I, Xxxxx Xxx Xxxxxx, a Notary Public in and for said county, do certify
that J. Xxx Xxxxxx, and Xxxxxxx X. Xxxxx who signed the writing hereto annexed,
dated January 1, 1983, for THE CRAB ORCHARD COAL AND LAND COMPANY, have this day
in my said county, before me, acknowledged the said writing to be the act and
deed of said corporation.

      Given under my hand and notarial seal this 25 day of January, 1983.

      My commission expires Feb. 18, 1987.

(NOTARIAL SEAL)                                /s/ Xxxxx Xxx Xxxxxx
                                        -------------------------------------
                                                   Notary Public

COMMONWEALTH OF PENNSYLVANIA,

COUNTY OF PHILADELPHIA, TO-WIT:

      I, Xxxxx X. X'Xxxx, a Notary Public in and for said county, do certify
that Xxxxxx X. Xxxx, and Xxxxxxx X. Xxxxxxxx who signed the writing hereto
annexed, dated January 1, 1983, for XXXXXXXXXXXX COAL COMPANY, have this day in
my said county, before me, acknowledged the said writing to be the act and deed
of said corporation.

      Given under my hand and notarial seal this 18th day of January, 1983.

      My commission expires March 5, 1984.

(NOTARIAL SEAL)                                /s/ Xxxxx X. X'Xxxx
                                        -------------------------------------
                                                   Notary Public

                                      -5-


      This AMENDMENT, effective as of January 1, 1986, by and between THE CRAB
ORCHARD COAL AND LAND COMPANY, a West Virginia corporation ("Lessor"); and
XXXXXXXXXXXX COAL COMPANY, a Delaware corporation ("Lessee").

      WHEREAS, Lessor and Winding Gulf Coals, Inc., predecessor to Lessee,
entered into an Agreement and Deed of Lease made as of January 1, 1965 (the
"Lease"); and

      WHEREAS, the Lease has been modified and amended from time to time for
various purposes and was most recently so modified and amended by an Amendment
made effective as of January 1, 1983; and

      WHEREAS, Lessor and Lessee have further agreed to amend the Lease
concerning minimum rental or royalty payments due thereunder and for certain
other purposes.

      NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, Lessor and Lessee agree and covenant as follows:

      1. The minimum rental or royalty payments, payable quarterly, under
ARTICLE TWO of the Lease, as modified and amended, shall each be reduced by
twenty-five percent (25%) during the period beginning on January 1, 1986, and
ending on December 31, 1990 (that is to say that the minimum rental or royalty
attributable to the Xxxxxx and Beckley seams and the



minimum rental or royalty attributable to the Pocahontas No. 3 seam or any other
seam or seams than the Xxxxxx and Beckley shall both be so reduced), SUBJECT to
the following:

            (a) In the event Lessee at any time commences mining operations
      under the Lease during the period beginning on January 1, 1986, and ending
      on December 31, 1990, there shall be no such twenty-five percent (25%)
      reduction in the minimum rentals or royalties payable to the Lessor from
      and after the time of the commencement of such mining operations (but such
      reduction shall be fully applicable up to and until the time of the
      commencement of such mining operations).

            (b) In the event Lessor, Lessee and Methane Drainage Ventures, a
      California general partnership (or some other related entity), enter into
      an agreement or agreements for the commercial development and production
      of methane gas ["Methane Drainage Agreement(s)"] from the premises covered
      by the Lease, then Lessee shall pay to Lessor during the period beginning
      on January 1, 1986, and ending on December 31, 1990, an amount of money
      from the rentals, royalties or other monies that Lessee receives pursuant
      to the Methane Drainage Agreement(s) up to, but not in any event to
      exceed, an amount equal to such twenty-five percent (25%) reduction in the
      minimum rentals or royalties payable to Lessor by Lessee under the Lease,
      as modified and amended, as provided for above during the period beginning
      on January 1, 1986, and ending on December 31, 1990.

                                      -2-


      2. The minimum rentals or royalties payable under ARTICLE TWO of the
Lease, as modified and amended, shall be increased to one hundred and
twenty-five percent (125%) of the original minimum rentals or royalties payable
as of January 1, 1986, for the period beginning on January 1, 1991, and ending
on December 31, 1995, if and only if Lessee is actively engaged in mining
operations on and producing coal from the leased premises after January 1, 1991.
If Lessee is not actively engaged in mining operations on and producing coal
from the leased premises after January 1, 1991, then there shall be no such
increase in the original minimum rentals or royalties during the period
beginning January 1, 1991, and ending on December 31, 1995, and the minimum
rentals or royalties payable during such period shall be equal to the original
minimum rentals or royalties payable as of January 1, 1986 (subject to any
adjustments to reflect the average change in the Producer Price Index - All
Commodities Table 6 as provided for in the Amendment effective as of January 1,
1983).

      3. ARTICLE SIX of the Lease, as modified and amended, particularly by the
Amendment effective as of January 1, 1983, is further amended by deleting the
date "January 1, 1993" from the second sentence of the second paragraph thereof
and substituting the date "December 31, 1995" in its place.

      4. ARTICLE THIRTEEN of the Lease, as modified and amended, particularly by
the Amendment effective as of January 1, 1983, is further amended by deleting
the date "January 1, 1993," from the second or last sentence of the first
paragraph thereof (which such sentence was added to the Lease by the Amendment
effective as of January 1, 1983) and substituting the date "December 31, 1995,"
in its place.

                                      -3-


      5. Except as amended and modified herein, the Lease shall remain in full
force and effect as previously amended and modified.

                                      -4-


      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1986.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ F. L. Xxxxxx, Jr.
                                         -----------------------------------
                                         Its  President

      ATTEST:

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

                                      XXXXXXXXXXXX COAL COMPANY

                                      By /s/ Pemberton Xxxxxxxxxx
                                         -----------------------------------
                                         Its  President

      ATTEST:

      /s/ W. E. Xxxxxxxx              Date: September 19, 1986
      --------------------------
      W.E. Xxxxxxxx, Secretary

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to-wit:

      I, Xxxxx X. Xxxx, a Notary Public in and for the County of Kanawha, in the
State of West Virginia, do hereby certify that F.L. Xxxxxx, Jr., whose name is
signed to the foregoing instrument effective as of January 1, 1986, as President
of Crab Orchard Coal and Land Company, and Xxxx X. Xxxxxx whose name is likewise
signed thereto as Secretary of said Company have each acknowledged the same
before me in my County aforesaid.

      GIVEN under my hand and official seal of office this 10th day of
September, 1986.

      My Commission Expires: August 13, 1994

                                      /s/ Xxxxx X. Xxxx
                                      ---------------------------------
                                      Notary Public

                                      -5-

COMMONWEALTH OF PENNSYLVANIA
COUNTY OF PHILADELPHIA

COUNTY OF PHILADELPHIA, to-wit:

      I, Xxxxxxx Xxxxxxx, a Notary Public in and for the County of Philadelphia,
in the Commonwealth of Pennsylvania, do hereby certify that Pemberton
Xxxxxxxxxx, whose name is signed to the foregoing instrument effective as of
January 1, 1986, as President of Xxxxxxxxxxxx Coal Company, and W. E. Xxxxxxxx
whose name is likewise signed thereto as Secretary of said Company have each
acknowledged the same before me in my County aforesaid.

      GIVEN under my hand and official seal of office this 19th day of
September, 1986.

      My Commission Expires: April 3, 1989

                                      /s/ Xxxxxxx Xxxxxxx
                                      ---------------------------------
                                      Notary Public

                                      -6-


                               AMENDMENT OF LEASE

      This AMENDMENT, dated and effective as of January 1, 1991, although
executed by the parties at a later date, by and between THE CRAB ORCHARD COAL
AND LAND COMPANY, a West Virginia corporation ("Lessor"); and XXXXXXXXXXXX COAL
COMPANY, a Delaware corporation ("Lessee").

      WHEREAS, Lessor and Winding Gulf Coals, Inc., predecessor to Lessee,
entered into an Agreement and Deed of Lease made as of January 1, 1965 (the
"Lease"); and

      WHEREAS, the Lease has been modified and amended from time to time for
various purposes including December 28, 1970, August 22, 1974, October 13, 1980,
and January 1, 1983, and was most recently so modified and amended by an
Amendment made effective as of January 1, 1986; and

      WHEREAS, Lessor and Lessee have further agreed to amend the Lease
concerning minimum rental or royalty payments due thereunder and for certain
other purposes.

      NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, Lessor and Lessee agree and covenant as follows:

      1. The minimum rental or royalty payments, payable quarterly, under
ARTICLE TWO of the Lease, as modified and amended, as previously reduced by
twenty-five percent (25%) during the period beginning on January 1, 1986, and
ending on December 31, 1990 shall continue to be so reduced by twenty-five
percent (25%) during the period beginning January 1, 1991, and ending on
December 31, 2000, (that is to say that the minimum rental or royalty
attributable to the Xxxxxx and Beckley seams and the minimum rental or royalty
attributable to the Pocahontas No. 3 seam or any other seam or seams than the
Xxxxxx and Beckley shall both be so reduced), SUBJECT to the following:

            (a) In the event Lessee at any time commences mining operations
under the Lease during the period beginning on January 1, 1991, and ending on
December 31, 2000, minimum rentals or royalties payable to the Lessor from and
after the time of the commencement of such mining operations shall be increased
to one hundred twenty five percent (125%) of the minimum rentals or royalties
payable as of January 1, 1991, under the original lease terms (but such
reduction shall be fully applicable up to and until the time of the commencement
of such mining operations).

            (b) If Lessee is not actively engaged in mining operations on and
producing coal from the leased  premises after January 1, 2001, then there shall
be no such  increase in the original  minimum  rentals or  royalties  during the
period  beginning  January 1, 2001,  and ending on December  31,  2010,  and the
minimum  rentals or royalties  payable  during such period shall be equal to the
original minimum rentals or royalties  payable as of January 1, 1986 (subject to
any  adjustments to reflect the average change in the Producer Price Index - All
Commodities Table 6 as provided for in the Amendment  effective as of January 1,
1983).



      2. ARTICLE SIX of the Lease, as modified and amended, particularly by the
Amendments effective as of January 1, 1983, and January 1, 1986, is further
amended by deleting the date "December 31, 1995" from the second sentence of the
second paragraph thereof and substituting the date "December 31, 2010" in its
place.

      3. ARTICLE SIX-A of the Lease is amended by deleting that article in its
entirety and substituting therefor the following:

            "ARTICLE SIX-A: The original term of this Lease shall be for a
            period of forty-six (46) years, extending from January 1, 1965, to
            December 31, 2010, or until all mineable and merchantable coal
            leased hereunder has been mined, whichever shall occur first. It is
            agreed, however, that if the Lessee shall have kept and performed
            all of the terms and conditions hereof it shall have the privilege
            and option of renewing this Lease for an additional period of
            fifteen (15) years from and after January 1, 2011, and in like
            manner and under the same conditions the Lessee shall have the
            option and privilege of further renewing this Lease for a third term
            of fifteen (15) years after the expiration of said first fifteen
            (15) year extension; provided, however, that in each instance the
            Lessee shall give to the Lessor at least one (1) year's written
            notice before expiration of the then current term of its election to
            extend this Lease for each additional period; and provided further
            that this Lease shall terminate if all mineable and merchantable
            coal leased thereunder has been mined during any such extension.

      4. ARTICLE THIRTEEN of the Lease, as modified and amended, particularly by
the Amendments effective as of January 1, 1983, and January 1, 1986, is further
amended by deleting the date "December 31, 1995" from the second or last
sentence of the first paragraph thereof (which such sentence was added to the
Lease by the Amendment effective as of January 1, 1983 and which date was
changed to January 1, 1995 by the Amendment effective as of January 1, 1986) and
substituting the date "December 31, 2010" in its place.

      5. Except as amended and modified herein, the Lease shall remain in full
force and effect as previously amended and modified.



      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1991.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By  /s/ F. L. Xxxxxx, Jr.
                                          -------------------------------------
                                      Its President

      ATTEST:

      /s/ J. R. Xxxxx
      --------------------------

                                      XXXXXXXXXXXX COAL COMPANY

                                      By  /s/ Pemberton Xxxxxxxxxx
                                          -------------------------------------
                                      Its President & Chief Executive Officer

      ATTEST:

      /s/ Xxxxxx X. Xxxxxxxxx         Date: December 19, 1991
      --------------------------



STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to wit:

            I, Xxxx Xxxxxxxxxx, a Notary Public in and for the County of
Kanawha, in the State of West Virginia, do hereby certify that F. L. Xxxxxx,
Jr., whose name is signed to the foregoing instrument effective as of January 1,
1991 as President of Crab Orchard Coal and Land Company, and X.X. Xxxxx whose
name is likewise signed thereto as Secretary of said Company have each
acknowledged the same before me in my County aforesaid.

            GIVEN under my hand and official seal of office this 8th day of
      January, 1992.

            My Commission Expires: September 7, 1994

                                      /s/ Xxxx Xxxxxxxxxx
                                      ------------------------------------
                                      Notary Public

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit

      I, Xxxxxxx Xxxxxxx, a Notary Public in and for the County of Philadelphia,
in the Commonwealth of Pennsylvania, do hereby certify that Pemberton
Xxxxxxxxxx, whose name is signed to the foregoing instrument effective as of
January 1, 1991, as President & Chief Executive Officer of Xxxxxxxxxxxx Coal
Company, and Xxxxxx X. Xxxxxxxxx whose name is likewise signed thereto as
Secretary of said Company have each acknowledged the same before me in my County
aforesaid.

      GIVEN under my hand and official seal of office this 19th day of December,
1991.

      My Commission Expires: May 10, 1993

                                      /s/ Xxxxxxx Xxxxxxx
                                      ------------------------------------
                                      Notary Public



      THIS AGREEMENT OF CONSENT is made and entered into effective as of the
27th day of October, 1994, by and among XXXXXXXXXXXX COAL COMPANY, a Delaware
corporation authorized to do business in the State of West Virginia, hereinafter
referred to as "Xxxxxxxxxxxx", THE CRAB ORCHARD COAL AND LAND COMPANY, a West
Virginia corporation, hereinafter referred to as "Crab Orchard", and PINE VALLEY
COAL COMPANY, INC., a West Virginia corporation, hereinafter referred to as
"Pine Valley".

                                   WITNESSETH:

      WHEREAS, Xxxxxxxxxxxx'x predecessors in title and Crab Orchard have
previously entered into a Lease as of January 1, 1965, which Lease was amended
on December 28, 1970, August 22, 1974, October 13, 1980, January 1, 1983,
January 1, 1986 and January 1, 1991 (hereinafter referred to as "Coal Lease"),
and

      WHEREAS, Xxxxxxxxxxxx wishes to assign its rights and obligations under
the Coal Lease and all amendments to Pine Valley, and Crab Orchard is willing to
consent thereto on the terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises,

      1. Crab Orchard hereby consents to the assignment by Xxxxxxxxxxxx of all
      of Xxxxxxxxxxxx'x right, title, and interest in and to the Coal Lease and
      all amendments to Pine Valley on the condition that Pine Valley agrees
      upon such assignment to assume full responsibility for performance of all
      of the terms, conditions, and obligations, past, present, and future, of
      "Lessee" thereunder and to be liable for any nonperformance of the same,
      and further upon such assignment and assumption, Crab Orchard hereby
      releases Xxxxxxxxxxxx from all liabilities, responsibilities and
      obligations under the Coal Lease.

      2. Crab Orchard and Xxxxxxxxxxxx acknowledge that the Coal Lease is duly
      executed, validly existing, and enforceable in accordance with its terms,
      and Crab Orchard and Xxxxxxxxxxxx have no knowledge of any default by any
      party to the Coal Lease or any event which with notice or the passage of
      time or both would constitute such a default thereunder.

      3. Crab Orchard agrees that Xxxxxxxxxxxx has paid $1,692,448.14 in minimum
      royalties and that this amount is fully recoupable in accordance with the
      terms and conditions of the Lease.

      4. This consent of Crab Orchard shall not be construed as a waiver of the
      right of Crab Orchard to deny any future assignment of the Coal Lease.

      5. This Agreement shall be effective when executed by and delivered to all
      parties but may be executed in counterpart with the same effect as if
      executed by all parties on one agreement.



      WITNESS the following signatures of duly authorized officers of these
parties, all as of the 27th day of October, 1994.

                                         THE CRAB ORCHARD COAL AND
                                         LAND COMPANY

                                         By: /s/ Xxxxxx X. Xxxxxx
                                             -----------------------------------
                                             Its President

                                         PINE VALLEY COAL COMPANY, INC.

                                         By: /s/ Xxxxx Xxxxxx
                                             -----------------------------------
                                             Name  Xxxxx Xxxxxx
                                             Title President

                                         XXXXXXXXXXXX COAL COMPANY

                                         By: /s/ Xxxxxx X. Xxxxxx
                                             -----------------------------------
                                             Name  Xxxxxx X. Xxxxxx
                                             Title Sr. Vice President

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, TO-WIT:

      I, Xxxxxxx X. Xxxxxxxxx, a Notary Public of the said County of Kanawha, in
and for the State and County aforesaid, do certify that Xxxxxx X. Xxxxxx,
President, of THE CRAB ORCHARD COAL AND LAND COMPANY, who signed the writing
above, bearing the 27th day of October, 1994, for The Crab Orchard Coal and Land
Company, has this day in my said County, before me, acknowledged said writing to
be the act and deed of said corporation.

      GIVEN under my hand and official seal, this 27th day of October.

                                         /s/ Xxxxxxx X. Xxxxxxxxx
                                         ---------------------------------------
                                         Notary Public

My Commission Expires:

      August 30, 1999



STATE OF VIRGINIA

COUNTY OF WISE, TO-WIT:

      I, Xxxxx X. Xxxxxx, a Notary Public of the said County of Wise, in and for
the State and County aforesaid, do certify that Xxxxx Xxxxxx, President of PINE
VALLEY COAL COMPANY, INC., who signed the writing above, bearing the 27th day of
October, 1994, for the said Pine Valley Coal Company, Inc., has this day in my
said County, before me, acknowledged said writing to be the act and deed of said
corporation.

      GIVEN under my hand and official seal, this 27th day of October, 1994.

                                         /s/ Xxxxx X. Xxxxxx
                                         ---------------------------------------
                                         Notary Public
My Commission Expires:

      00-00-00

XXXXX XX XXXXXXXX

XXXXXX XX XXXX, XX WIT:

      I, Xxxxx X. Xxxxxx, a Notary Public of the said County of Wise, in and for
the State and County aforesaid, do certify that Xxxxxx X. Xxxxxx, Senior Vice
President of XXXXXXXXXXXX COAL COMPANY, who signed the writing above, bearing
the 27th day of October, 1994, for the said Xxxxxxxxxxxx Coal Company, has this
day in my said County, before me, acknowledged said writing to be the act and
deed of said corporation.

      GIVEN under my hand and official seal, this 27th day of October, 1994.

                                         /s/ Xxxxx X. Xxxxxx
                                         ---------------------------------------
                                         Notary Public

My Commission Expires:

      11-30-96


                                   ACCEPTANCE

      Pine Valley Coal Company, Inc. ("Pine Valley") hereby assumes all of the
covenants, obligations and liabilities, except as to any Retained Liabilities in
the Asset Purchase Agreement of even date hereof, and agrees perform all of the
covenants contained in the Lease dated January 1, 1965 and all amendments
thereto between The Crab Orchard Coal and Land Company and Xxxxxxxxxxxx Coal
Company's predecessors in title ("Xxxxxxxxxxxx") in accordance with the terms
and conditions of the Asset Purchase Agreement.

      This Acceptance shall be effective from and after October 31, 1994.

      IN TESTIMONY WHEREOF, Pine Valley Coal Company, Inc. has caused its name
to be signed hereto by its proper officer, thereunto duly authorized, on the 31
day of October, 1994.

                                        PINE VALLEY COAL COMPANY, INC.

                                        By  /s/ Xxxxx Xxxxxx
                                            ------------------------------------
                                            Name  Xxxxx Xxxxxx
                                            Title President



                            INSTRUMENT OF ASSIGNMENT

      WHEREAS, pursuant to the Asset Purchase Agreement dated as of October 28,
1994, (the "Agreement") between Xxxxxxxxxxxx Coal Company, a Delaware
corporation ("Seller") and Pine Valley Coal Company, Inc., a West Virginia
corporation ("Buyer"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller does hereby sell, assign,
transfer, convey and deliver unto Buyer, its successors and assigns, each and
all of the Assets (as such term is defined in the Agreement), intending hereby
to convey all of the right, title and interest of Seller therein; provided,
however, as to any lease, contract, agreement, or other authorization included
in the Assets which cannot be sold, transferred, assigned, conveyed or delivered
effectively without the consent of a third party, which consent has not been
obtained, this instrument shall be of no force or effect until such requisite
consent is obtained, whereupon this instrument shall become of full force and
effect with respect thereto.

      Seller hereby covenants and agrees to and with Buyer, its successors and
assigns, to do, execute, acknowledge and deliver to, or to cause to be done,
executed, acknowledged and delivered to, Buyer, its successors and assigns, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances that may be reasonably requested by Buyer for the better
selling, assigning, transferring, conveying, delivering, assuring and confirming
to Buyer, its successors or assigns, any or all of the Assets.

      This Instrument of Assignment shall be binding upon the successors and
assigns of Seller and shall inure to the benefit of the successors and assigns
of Buyer. Each capitalized term used herein but not defined herein is used as
defined in the Agreement.

      IN WITNESS WHEREOF, Seller has caused this Instrument of Assignment to be
duly executed and delivered this 31 day of October, 1994.

                                        XXXXXXXXXXXX COAL COMPANY

                                        By  /s/ Xxxxxx X. Xxxxxx
                                            ----------------------------------
                                            Name   Xxxxxx X. Xxxxxx
                                            Title  Sr. Vice President Operations





                               AMENDMENT OF LEASE

            THIS AMENDMENT OF LEASE (this "Amendment") is made and entered into
this 31st day of October, 1994, by and between THE CRAB ORCHARD COAL AND LAND
COMPANY, a West Virginia corporation ("Lessor"), and PINE VALLEY COAL COMPANY,
INC., a West Virginia corporation ("Lessee").

                              W I T N E S S E T H :

            WHEREAS, by Agreement and Deed of Lease dated January 1, 1965 (the
"Lease"), Lessor leased, let and demised unto Winding Gulf Coals, Inc. ("Winding
Gulf") certain tracts or parcels of land situate in Raleigh County, West
Virginia, aggregating approximately 8,400 acres of coal land and approximately
3,600 acres of surface, for the purpose of mining, transporting, shipping,
removing and marketing all of the coal in, on or underlying such tracts or
parcels of land, including coal in the Xxxxxxx, Xxxxxx and Pocahontas No. 3
seams;

            WHEREAS, the Lessor and Winding Gulf subsequently amended the Lease
as of December 28, 1970;

            WHEREAS, by merger dated on or about December 31, 1970, Xxxxxxxxxxxx
Coal Company, a Delaware corporation ("Xxxxxxxxxxxx") acquired all of Winding
Gulf's right, title and interest in and to the Lease; and

            WHEREAS, Lessor and Xxxxxxxxxxxx subsequently modified the Lease by
various amendments dated as of August 22, 1974, October 13, 1980, January 1,
1983, January 1, 1986, and January 1, 1991; and

            WHEREAS, by Assignment of Lease of even date herewith, Xxxxxxxxxxxx
assigned all of its right, title and interest in and to the Lease to Lessee; and



            WHEREAS, Lessor and Lessee have agreed to amend the Lease as set
forth herein.

            NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Lessor and Lessee agree as follows:

            1. Article One of the Lease, as amended, is hereby amended by
deleting the first two sentences of the first paragraph and substituting in
place thereof the following:

            Until termination of the Lease and all extensions and renewals
      thereof, Lessee agrees to pay to the Lessor a royalty on all coal mined
      from the leased premises during the preceding calendar quarter, which
      shall be determined by multiplying the gross sales proceeds, FOB mine, of
      such coal, without deductions, by 3.5%.

            2. Article Two of the Lease, as amended, is hereby amended by adding
the following paragraph to the end of such Article:

                  Notwithstanding anything in this Lease, as amended, to the
      contrary, all minimum rentals or royalties paid by Lessee to Lessor after
      the date of this Amendment shall be allocated for purposes of recoupment
      by Lessee to the Pocahontas No. 3 seam.

            3. Article Two of the Lease, as amended, is hereby amended by
inserting the following paragraph after the paragraph beginning "[a]ll said
minimum rental or royalty shall be paid . . . " and before the paragraph
beginning "[i]n the event the tonnage royalty for any year . . . ":



                  Notwithstanding anything in this Lease, as amended, to the
      contrary, Lessor and Lessee hereby expressly agree that beginning on
      January 1, 1995, and until termination of the Lease, as amended, and all
      extensions and renewals thereof, Lessee shall be entitled to apply all
      tonnage royalties paid by it in any calendar quarter under Article One
      against any minimum rental or royalty due for such calendar quarter,
      regardless of the seam of coal. In the event the tonnage royalty paid by
      Lessee under Article One for any calendar quarter exceeds the minimum
      rental or royalty for such calendar quarter, Lessee may apply such excess
      tonnage royalty against any minimum rental or royalty due in any
      subsequent calendar quarter in that year.

            4. The paragraph in Article Two of the Lease, as amended, beginning
"[i]n the event the tonnage royalty for any year . . . " is hereby amended in
full as follows:

                  In the event the tonnage royalty paid under Article One for
      any year during the term of this Lease is less than the minimum rental or
      royalty paid under Article Two for such year (the "Deficiency"), Lessee
      shall have the right during any succeeding year or years of the term
      hereof to mine and remove sufficient coal over and above the minimum
      rental or royalty requirement for such succeeding year or years to fully
      recoup, at the rate of 75%, the Deficiency of said preceding year or
      years. In the event the minimum rentals or royalties paid hereunder with
      respect to a particular seam are fully recouped, Lessee shall be



      entitled to fully recoup any minimum rental or royalty paid under the
      Lease on other seams at the rate of 25%.

            4. The Lease is hereby amended by adding a new Article Twenty-Four
thereto, which Article shall read in its entirety as follows:

                  ARTICLE TWENTY-FOUR: Lessee shall have the right to dispose of
      coal combustion by-products ("ash") from any source on any area on the
      Leased Premises that is currently permitted for refuse disposal. On or
      before the 25th day of the month following the end of each calendar
      quarter, Lessee shall pay Crab Orchard a sum equal to the total number of
      tons of ash disposed on the Leased Premises and any surface property owned
      by Lessee located within the external boundaries of the Leased Premises
      during the calendar quarter times the greater of: (i) three and a half
      cents ($0.035); or (ii) one-tenth of one percent (0.10%) of the average
      gross selling price per ton, FOB mine, for all "local coal" sold by Lessee
      during said calendar quarter. For purposes of this paragraph, the term
      "local coal" shall mean coal mined by Lessee within Raleigh County, West
      Virginia. In the event Lessee has not sold any local coal in the same
      calendar quarter in which it disposes of ash, the average gross selling
      price per ton, FOB mine, for the most recent calendar quarter in which
      Lessee sold local coal shall be used for purposes of (ii) above. Lessee
      shall be entitled to a credit against the sum to be paid to Lessor
      hereunder by reducing the total number of tons of ash disposed on the
      Leased Premises and any surface property owned by Lessee located within
      the external boundaries of the Leased premises by an amount equal to the
      average percentage of ash content of all coal mined and sold by Lessee



      from the Leased Premises during the prior calendar quarter times the
      number of tons of such coal.

            5. Except as amended herein, the Lease shall remain in full force
and effect as previously amended.

            IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective duly authorized agents as of the day and year first
above written.

                                         THE CRAB ORCHARD COAL AND LAND COMPANY

                                         By: /s/ Xxxxxx X. Xxxxxx
                                             -----------------------------------
                                             Its President

                                         PINE VALLEY COAL COMPANY, INC.

                                         By: /s/ Xxxxx X. Xxxxx
                                             -----------------------------------
                                             Its Secretary



STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, TO-WIT:

            The foregoing instrument was acknowledged before me this 7th day of
November, 1994, by Xxxxxx X. Xxxxxx, the President of CRAB ORCHARD COAL AND LAND
COMPANY, on behalf of said corporation, as its duly authorized agent.

            My commission expires        August 30, 1999.

                                         /s/ Xxxxxxx X. Xxxxxxxxx
                                         ---------------------------------------
                                         Notary Public

[NOTARIAL SEAL]

STATE OF WEST VIRGINIA

COUNTY OF _______________, TO-WIT:

            The foregoing instrument was acknowledged before me this ____ day of
October, 1994, by Xxxxx X. Xxxxx, the Secretary of PINE VALLEY COAL COMPANY,
INC., on behalf of said corporation, as its duly authorized agent.

            My commission expires        July 21, 2003

                                         /s/ Xxxxx X. Xxxxxx
                                         ---------------------------------------
                                         Notary Public

[NOTARIAL SEAL]