Confidential
Treatment Requested
 
 Confidential
provisions of this document have been redacted and been filed separately with
the Commission







AGREEMENT
NO. 2 FOR PURCHASE AND SALE OF COAL


AMONG
GEORGIA POWER COMPANY,


JAMES RIVER COAL COMPANY,
AND JAMES RIVER COAL SALES, INC.





TABLE OF
CONTENTS




PageSection
      1:  Definitions
            1Section
      2:  General Provisions
            22.1  Mutual
      Obligations
            22.2  Prior
      Agreements
            22.3  Agent
      for Purchaser
            22.4  Seller's
      Warranties as to Coal Property
            32.5  Seller's
      Mining Plan
            3Section
      3:  Term of Agreement
            3Section
      4:  Base Price and Adjustments
            34.1  Base
      Price
            34.2  Price
      Adjustments
            44.3  Adjustments
      for Changes in Governmental Impositions
            44.4  Calorific
      Value Adjustments
            64.5  Excess
      Ash Adjustments
            74.6  Grindability
      Adjustments
            84.7  Sulfur
      Adjustments
            84.8  Calculation
      of Adjustments
            11Section
      5:  Quantity Requirements
            115.1  Annual
      Quantities
            115.2  Quarterly
      Amounts
            125.3  Shortfalls
      in Shipments
            12Section
      6:  Quality Requirements
            146.1  Coal
      Specifications
            146.2  Reimbursement
      for Equipment Damage
            156.3  Rejection
      of Shipments
            166.4  Suspension
      and Termination for Quality Variations
            176.5  Cancellation
      and Termination
            186.6  Costs
      Related to Termination
            186.7  Replacement
      Coal
            19Section
      7:  Weighing and Sampling
            197.1  Weighing
      of Shipments
            197.2  Collection
      and Preparation of Samples
            217.3  Analysis
      of Samples
            23








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PageSection
      8:  Arrangements for Shipments and Payments
            248.1  Scheduling
      of Shipments
            248.2  Loading
      of Shipments
            248.3  Shipping
      Notices
            258.4  "As
      Loaded" Coal Quality Analysis
            258.5  Freight
      Charges, Risk of Loss, and Passage of Title
            258.6  Loading
      Costs Chargeable to Seller
            268.7  Excess
      Freight Costs Chargeable to Seller
            268.8  Payment
      of Amount(s) Owed to Purchaser
            268.9  Invoices
      and Interim Payments
            268.10  Application
      of Adjustments to Billing Price
            278.11  Acceptance
      of Payments
            27Section
      9:  Termination of Agreement for Unremedied
    Default
            279.1  Notice
      of Termination
            279.2  Option
      to Forego Termination
            27Section
      10:  Excuse from Performance
            2810.1  Force
      Majeure
            2810.2  Changes
      in Environmental-Related Requirements
            29Section
      11:  Independent Contractor
            32Section
      12:  Effect of Certain Terminations
            32Section
      13:  Binding Effect and Assignments
            3213.1  Binding
      Effect
            3213.2  Assignments
            32Section
      14:  Purchaser's Rights of Inspection
            3314.1  Access
      to Seller's Records
            3314.2  Access
      to Coal Property
            33Section
      15:  Waiver
            34Section
      16:  Remedies
            34Section
      17:  Notices
            34Section
      18: Confidential and Proprietary Information
            34Section
      19: Compliance with Laws and Regulations
            35Section
      20:  Other Provisions
            3520.1  Captions
            35





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Page20.2  Governing
      Law
            3520.3  Time
      of Essence
            3520.4  Entire
      Agreement
            3520.5  Amendments
            3520.6  Survival
      of Certain Provisions
            3620.7  Multiple
      Counterparts
            36




Annex A – Maps of Coal
Property


Annex B – Computation of
Calorific Value Adjustments


Annex C – Computation of
Excess Ash Adjustments


Annex D – Computation of
Grindability Adjustments


Annex E – Computation of
Sulfur Adjustments


Annex F – Computation of
Rejection Adjustments


Annex G – Coal Sample
Preparation and Analysis Procedures


Annex H – Summary of Rail
Contract Provisions


Annex I – Laws and
Regulations








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AGREEMENT NO. 2 FOR PURCHASE
AND SALE OF COAL





This
AGREEMENT NO. 2 FOR PURCHASE AND SALE OF COAL ("Agreement") is entered into as
of May 15, 2008 ("Effective Date"), among Georgia Power Company, a
Georgia corporation ("Purchaser"), James River Coal Company, a
Virginia corporation ("Seller"), and James River Coal Sales, Inc.,
a Delaware corporation ("Sales Agent").  (Purchaser, Seller, and Sales
Agent are sometimes hereinafter referred to collectively as the "Parties" or
separately as a "Party.")




RECITALS:


WHEREAS,
Purchaser is an electric utility and owns and operates electric-generating
plants that are located in the State of Georgia and require quantities of coal
capable of being burned in such plants; and


WHEREAS,
Seller or its affiliates own or lease the Coal Property (as hereinafter defined)
from which Seller desires to supply coal to Purchaser for such
plants;


NOW,
THEREFORE, in consideration of the foregoing recitals and the promises contained
in this Agreement, the Parties hereby agree as follows:




Section
1:  Definitions


In
addition to other terms defined elsewhere in this Agreement, the following
definitions shall apply in this Agreement:


1.1  The
term "Base Price" means the price for coal that is set forth in Section
4.1(a).


1.2  The
term "Coal Property" means the real property, mineral interests, preparation
plant facilities, loading facilities, and other improvements located in Leslie
County, Knott County, Perry County, Harlan County, Pike County, Bell County, and
Letcher County, Kentucky, as outlined on the maps that are identified as Annex A, which is attached
hereto and made a part of this Agreement.


1.3  The
term "Contract Year" means each twelve-month period that begins on January 1 and
ends on December 31 during the term of this Agreement; provided, however, that the
first Contract Year shall begin on July 1, 2008, and end on December 31, 2008,
and shall consist of six months.


1.4  The
term "Designated Plant" or "Designated Plants" means one or more of the
following:  (i) Plant Bowen, which is located in Bartow County,
Georgia; (ii) Plant Branch, which is located in Baldwin County and Putnam
County, Georgia; (iii) Plant McDonough, which is located in Cobb County,
Georgia; and (iv) any other electric-generating plant that is owned and operated
by Purchaser or an affiliate of Purchaser.


1.5  The
term "Quarter" means each three-month period that occurs during a Contract
Year.  The first Quarter of each Contract Year shall begin on January
1 and end on March 31; the second Quarter of each Contract Year shall begin on
April 1 and end on June 30; the third Quarter of each Contract Year shall begin
on July 1 and end on September 30; and the fourth Quarter of each Contract Year
shall begin on October 1 and end on December 31.





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1.6  The
term "Quarterly Amount" means the quantity of coal scheduled to be supplied by
Seller to Purchaser during a Quarter.


1.7  The
term "Rail Carrier" means CSX Transportation, Inc.


1.8  The
term "Rail Contract" means that certain Solid Fuel Transportation Contract
between Purchaser and the Rail Carrier for the transportation of coal to Plant
Bowen, Plant Branch, and Plant McDonough.


1.9  The
term "Seller's Loading Facility" or "Seller's Loading Facilities" means one or
more of the railcar-loading facilities that are owned or controlled by Seller
and located at or near Hignite, Clover, Buckeye, Leatherwood, or Bevins Branch,
Kentucky.


1.10  The
term "Shipment" means one lot of coal, in sufficient quantities to fill a unit
train, loaded into railcars for delivery to Purchaser.


1.11  The
term "Shortfall Period" means either (i) a Quarter in which the quantity of coal
actually supplied by Seller to Purchaser during the Quarter is less than the
Quarterly Amount or (ii) a Contract Year in which the quantity of coal actually
supplied by Seller to Purchaser is less than the annual quantity for the
Contract Year.


1.12  The
term "Ton" or "ton" means an avoirdupois weight of 2,000 pounds.


1.13  The
term "Tonnage Shortfall" means, for a particular time period (whether calendar
month, Quarter, Contract Year, or other period) during the term of this
Agreement, the difference between (i) the quantity of coal scheduled to be
supplied by Seller to Purchaser during such time period and (ii) the quantity of
coal actually supplied by Seller to Purchaser during such time
period.




Section
2:  General Provisions


2.1  Mutual
Obligations.  Seller shall mine coal from the Coal Property and
sell such coal to Purchaser, and Purchaser shall buy such coal from Seller, on
the terms and conditions set forth in this Agreement.


2.2  Prior
Agreements.  The Parties previously entered into that certain
Agreement for Purchase and Sale of Coal dated March 11, 2004, as amended, and
certain other agreements for the supply of coal by Seller to Purchaser
(collectively, the "Prior Agreements").  Nothing contained in this
Agreement shall affect the Parties' respective rights, duties, obligations, and
interests under the Prior Agreements, which shall remain in effect, according to
their terms, after the execution and delivery of this Agreement.


2.3  Agent for Purchaser.
Purchaser has designated Southern Company Services, Inc., which is an affiliate
of Purchaser, to act on behalf of Purchaser in giving or receiving notices under
this Agreement, scheduling Shipments under this Agreement, and performing other
activities related to this Agreement as determined by Purchaser from time to
time.





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2.4  Seller's Warranties as to
Coal Property.


(a)  Seller
represents and warrants that:  (i) Seller owns or controls the Coal
Property; (ii) the Coal Property contains economically recoverable coal of a
quality and in quantities that, under present mining laws and practices, shall
be sufficient to satisfy the requirements of this Agreement; (iii) during the
term of this Agreement, Seller shall not use or sell coal from the Coal Property
in a way that shall reduce the economically recoverable balance of coal in the
Coal Property to an amount less than the quantity of coal to be supplied under
this Agreement; and (iv) all Shipments under this Agreement shall be mined from
the Coal Property.


(b)  Seller
further represents and warrants that Seller shall defend Purchaser's title with
respect to all coal sold under this Agreement and shall indemnify Purchaser
against all claims, demands, actions, suits, liabilities, and judgments asserted
against Purchaser by any third party with respect to such title and all damages,
costs, and expenses (including, without limitation, reasonable attorney's fees
and litigation expenses) incurred by Purchaser in defending such title; provided, however, that
Seller shall not be liable, except as otherwise provided in this Agreement, for
any special, indirect, or consequential damages, costs, or expenses incurred by
Purchaser.


(c)  Except
for the warranties set forth in Section 2.4, Seller makes no other express
warranties, no implied warranty of merchantability, and no implied warranty of
fitness for a particular purpose related to the coal to be supplied under this
Agreement.


2.5  Seller's Mining
Plan.  The Parties acknowledge that Seller has previously
provided a mining plan for the Coal Property as required by one of the Prior
Agreements.  Seller shall promptly notify Purchaser, from time to
time, of any substantial changes to the mining plan or Seller's mining
operations, coal-processing operations, or transportation arrangements as set
forth in the mining plan.




Section 3:  Term
of Agreement


The term
of this Agreement shall commence on the Effective Date and shall continue in
full force and effect through December 31, 2010, unless earlier terminated as
provided in this Agreement.  Shipments under this Agreement shall
begin on or about July 1, 2008.




Section 4:  Base
Price and Adjustments


4.1  Base
Price.


(a)  The
Base Price as of the Effective Date, is $* * *
per ton f.o.b. railcar at Seller's Loading Facility (whether located at Hignite,
Clover, Buckeye, Leatherwood, or Bevins Branch, Kentucky), which shall remain
firm through December 31, 2010, unless adjusted pursuant to Section
4.3.








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(b)  The
Base Price set forth in Section 4.1(a) includes, without limitation, all costs
for mining, processing, marketing, or quality control work necessary to satisfy
the requirements of this Agreement.


(c)  For
each of Seller's Loading Facilities, Purchaser shall promptly issue to Seller a
purchase order reflecting the Base Price for Shipments from such loading
facility; and from time to time thereafter, Purchaser shall issue change orders
to such purchase order(s) to reflect adjustments, where appropriate, to the Base
Price.  Such purchase order(s) and change orders are for
administrative and accounting purposes only and shall not constitute, nor be
deemed to result in, any amendment, change, or modification of the terms and
conditions of this Agreement.


4.2  Price
Adjustments.


(a)  The
Base Price shall be adjusted, when appropriate, as provided in Section
4.3.  The Base Price, with any adjustments pursuant to Section 4.3,
shall be referred to as the "Adjusted Base Price."


(b)  The
Base Price or the Adjusted Base Price, as the case may be, that applies to each
Shipment shall be referred to as the "Billing Price" for such
Shipment.  The Billing Price for each Shipment shall be subject to the
provisions of Sections 4.4 (calorific value adjustments), 4.5 (excess ash
adjustments), 4.6 (grindability adjustments), and 4.7 (sulfur
adjustments).


(c)  All
calculations of adjustments to the Base Price, the Adjusted Base Price, or the
Billing Price shall be carried to six decimal places and then rounded to four
decimal places.  No dispute concerning such adjustments shall in any
way relieve any Party of its respective obligations of performance under this
Agreement until such dispute is resolved.


4.3  Adjustments for Changes in
Governmental Impositions.


(a)  As
used in this Agreement, the term "Governmental Imposition," whether in the
singular or the plural, means taxes, fees, or obligations imposed on Seller by
any government or governmental agency, and resulting costs or savings, pursuant
to a law or regulation that directly affects the production, mining, or loading
of coal from the Coal Property.  Governmental Impositions include
taxes levied by a political subdivision, severance taxes on coal, and special
fund assessments related to worker's compensation; but Governmental Impositions
do not include
(for the purpose of illustration and not limitation) any of the
following:  ad valorem taxes on land or improvements, unmined mineral
taxes, assessments or premiums related to employee retirement or health benefits
or similar employee welfare benefits (other than worker's compensation), costs
incurred to comply with orders or decrees revoking Seller's self-insurance
privileges, or sales or use taxes (even if imposed on materials and supplies
used in the production of coal under this Agreement).





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(b)  The
Base Price set forth in Section 4.1(a) includes all costs of compliance by
Seller as of the Effective Date with all presently applicable taxes, fees, and
costs of compliance with any surface or underground mine regulatory statutes and
administrative regulations and rulings in effect as of the Effective
Date.  The Base Price set forth in Section 4.1(a) also includes all
costs of compliance with the Federal Mine Safety and Health Act of 1977, as
amended ("Mine Safety Act"), and the Surface Mining Control and Reclamation Act
of 1977, as amended ("Surface Mining Act"), both as currently interpreted and
enforced (collectively, the "Acts"), to the extent that either or both of the
Acts apply to the mine or mines that Seller currently operates or may develop on
the Coal Property, including (without limitation) all costs associated with the
following:  (i) environmental protection performance standards under
Sections 515 and 516 of the Surface Mining Act; (ii) inspection and monitoring
by state or federal regulatory authorities; (iii) obtaining permits; and (iv)
any performance bond that may be required under the Acts.  No price
adjustment shall be made under any provision of Section 4.3 for costs associated
with any presently applicable tax, fee, statute, regulation, or the like that
was in effect as of the Effective Date or was known as of the Effective Date
(but not effective until thereafter) or that is expressly included in the Base
Price as stated above in this Section 4.3(b), regardless of whether the Base
Price fully reflected such costs.


(c)  To
the extent not prohibited by or inconsistent with other provisions of Section
4.3, price adjustments shall be made for changes in Governmental Impositions
that directly affect coal actually mined for delivery to Purchaser under this
Agreement and result from the following:  (i) amendments after the
Effective Date to presently applicable statutes or administrative regulations or
rulings; (ii) requirements of entirely new statutes or administrative
regulations or rulings that are enacted or promulgated after the Effective Date;
or (iii) final judgments, orders, or decrees issued by any court that reflect
new and different interpretations of law; provided, however, that no
price adjustment shall be made for changes in Governmental Impositions that
result from the following:  (x) any civil or criminal fine or penalty
imposed as the result of Seller's failure to comply with any statute,
administrative regulation or ruling, or judgment, order, or decree of any court
(unless Purchaser shall have specifically authorized in writing the incurring of
such fine or penalty); or (y) any change in the millage rate or valuation of
property for purposes of assessing any existing ad valorem tax or unmined
mineral tax.


(d)  In
the event that after the Effective Date, any change in a statute or
administrative regulation or ruling imposes a new Governmental Imposition or
removes, increases, or decreases an existing Governmental Imposition, Seller
shall promptly give Purchaser written notice thereof and shall specify the
amount and effective date of any claimed adjustment to the Base Price or
Adjusted Base Price, as the case may be, that results from such
change.  In addition, such notice shall contain sufficient
documentation and data to enable Purchaser to review and quantify the effect of
such change on Seller's costs and to substantiate the amount of the claimed
adjustment.  Within sixty days after Purchaser has received the notice
from Seller as required by this Section 4.3(d), the Parties shall jointly
estimate and attempt to agree on the costs or savings resulting from such new
Governmental Imposition or such removal, increase, or decrease in an existing
Governmental Imposition during the remaining term of this
Agreement.  If the Parties agree on the amount of such costs or
savings, the Base Price or the Adjusted Base Price, as the case may be, shall be
further adjusted to reflect *** of the amount of such costs or
savings.  Purchaser shall have the right, but not the obligation, to
give Seller written notice of any such change and to seek an adjustment pursuant
to this Section 4.3(d).




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(e)  Any
adjustment pursuant to Section 4.3(d) that results in an increase to the Base
Price or the Adjusted Base Price, as the case may be, shall become effective on
the later of the following:  (i) the date on which the change in
Governmental Impositions takes effect; or (ii) the date on which Purchaser
received the written notice from Seller as required by Section
4.3(d).  Any adjustment pursuant to Section 4.3(d) that results in a
decrease in the Base Price or the Adjusted Base Price, as the case may be, shall
become effective on the date on which the change in Governmental Impositions
takes effect.


(f)  Notwithstanding
the provisions of Sections 4.2(c) and 4.3(d), Purchaser may terminate this
Agreement in the following events:  (i) a claimed adjustment pursuant
to Section 4.3(d), together with any prior adjustments pursuant to Section
4.3(d), would make the then-current Billing Price for Shipments under this
Agreement *** or more greater than the Base Price set forth in Section
4.1(a); and (ii) the Parties cannot reach agreement on a new Billing Price to
implement the claimed adjustment pursuant to Section 4.3(d).  If
Purchaser exercises its right of termination under this Section 4.3(f),
Purchaser shall give Seller written notice thereof, which shall specify the
effective date of termination and shall be given at least ninety days prior to
such date.


4.4  Calorific Value
Adjustments.


(a)  The
amount to be paid for Shipments under each purchase order issued by Purchaser
with respect to this Agreement shall be adjusted on a monthly basis according to
the actual monthly weighted average "as received" calorific value (hereinafter
referred to as "MWACV") of such Shipments, as determined from samples collected
and analyzed in accordance with Sections 7.2 and 7.3.  Each such
adjustment shall be calculated as follows:


(1)  The
MWACV (stated in Btu/lb.) of such Shipments shall first be divided by * * *
Btu/lb.  The resulting quotient shall be known as the "Calorific
Adjustment Factor" for such Shipments.


(2)  Next
the then-current Billing Price applicable to such Shipments (hereinafter
referred to as "Applicable Price") shall be determined and used to make the
following calculations:


(i)  If
the Calorific Adjustment Factor for such Shipments is greater than 1.0000, then
the Calorific Adjustment Factor shall be multiplied by the Applicable
Price.  The Applicable Price shall then be subtracted from the
resulting product, and the resulting difference shall be known as the "Calorific
Adjustment Amount" for such month.  The Calorific Adjustment Amount (a
positive number in this situation) shall then be added to the Applicable Price,
and the resulting sum shall be known as the "Calorific Value Adjusted Price" for
such month.




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(ii)  If
the Calorific Adjustment Factor for such Shipments is less than 1.0000, then the
Applicable Price shall be added to the actual transportation cost (stated on a
per-ton basis) borne by Purchaser (including, without limitation, railcar costs
if such Shipments were transported in railcars owned or leased by
Purchaser).  The resulting sum shall be known as the "Delivered
Cost."  The Delivered Cost shall then be multiplied by the Calorific
Value Adjustment Factor.  Next the Delivered Cost shall be subtracted
from the resulting product, and the resulting difference shall constitute the
Calorific Adjustment Amount for such month.  The Calorific Adjustment
Amount (a negative number in this situation) shall then be added to the
Applicable Price, and the resulting sum shall constitute the Calorific Value
Adjusted Price for such month.


(b)  Purchaser
shall calculate a separate Calorific Value Adjusted Price for Shipments made in
each calendar month under each purchase order issued by Purchaser with respect
to this Agreement.  The Adjustment mechanism set forth in Section
4.4(a) is further detailed and illustrated in Annex B, which is attached
hereto and made a part of this Agreement; and such adjustments shall be made in
accordance with Annex
B.


4.5  Excess Ash
Adjustments.


(a)  In
addition to other adjustments, the amount to be paid for Shipments under each
purchase order issued by Purchaser with respect to this Agreement shall be
adjusted on a monthly basis if the actual monthly weighted average "as received"
ash content (hereinafter referred to as "MWAAC") of such Shipments, as
determined from samples taken and analyzed in accordance with Sections 7.2 and
7.3, exceeds * * *.  Each
such adjustment shall be made after the calorific value adjustment (pursuant to
Section 4.4) for such Shipments and shall be calculated as follows:


(1)  From
the MWAAC (stated as a percentage) of such Shipments, * * *shall
first be subtracted.  The difference (stated as a percentage) shall be
multiplied by 100 (to eliminate the percentage in further calculations), and the
resulting product shall be known as the "Ash Adjustment Factor" for such
Shipments.


(2)  The
Ash Adjustment Factor for such Shipments shall then be multiplied by * * *
per ton; and the resulting product shall be subtracted from the Calorific Value
Adjusted Price for such Shipments.


(3)  No
adjustment under this Section 4.5(a) shall be made if the MWAAC of such
Shipments is less than or equal to * * *.






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(b)  The
adjustment mechanism set forth in Section 4.5(a) is further detailed and
illustrated in Annex C,
which is attached hereto and made a part of this Agreement; and such adjustments
shall be made in accordance with Annex C.


4.6  Grindability
Adjustments.


(a)  In
addition to other adjustments, the amount to be paid for a Shipment under any
purchase order issued by Purchaser with respect to this Agreement shall be
adjusted if the actual "as received" Hardgrove Grindability Index ("HGI") value
(hereinafter referred to as "HGIV") for such Shipment, as determined from
samples taken and analyzed in accordance with Sections 7.2 and 7.3, is more than
two units below * * *.  Each
such adjustment shall be made after the calorific value adjustment (pursuant to
Section 4.4) and any excess ash adjustment (pursuant to Section 4.5) for such
Shipment and shall be calculated as follows:


(1)  The
HGIV for such Shipment shall first be subtracted from * * *,
and the resulting difference shall be known as the "HGI Adjustment Factor" for
such Shipment.


(2)  The
HGI Adjustment Factor for such Shipment shall then be multiplied by * * *
per ton; and the resulting product shall be subtracted from the Calorific Value
Adjusted Price, as reduced by any excess ash adjustment (pursuant to Section
4.5), for such Shipment.


(3)  No
adjustment under this Section 4.6(a) shall be made if the HGIV for such Shipment
is greater than or equal to * * *.


(b)  The
adjustment mechanism set forth in Section 4.6(a) is further detailed and
illustrated in Annex D,
which is attached hereto and made a part of this Agreement; and such adjustments
shall be made in accordance with Annex D.


4.7  Sulfur
Adjustments.


(a)  In
addition to other adjustments, the amount to be paid for Shipments under this
Agreement shall be adjusted on an annual basis according to the actual annual
weighted average "as received" SO2 content
(stated in lbs. SO2/MMBtu)
(hereinafter referred to as "Annual SO2 Content")
of all Shipments made under this Agreement during a Contract
Year.  Each such adjustment shall be made after the calorific value
adjustment for such Shipments (pursuant to Section 4.4) and any excess ash and
grindability adjustments (pursuant to Sections 4.5 and 4.6) for such Shipments
and shall be calculated as follows:


(1)  For
purposes of the calculations pursuant to this Section 4.7(a), the actual annual
weighted average "as received" sulfur content (hereinafter referred to as
"AWASC") shall be stated as a percentage of sulfur; the actual annual weighted
average "as received" calorific value (hereinafter referred to as "AWACV") shall
be stated in Btu/lb.; the Annual SO2 Content
shall be stated in lbs. SO2/MMBtu; and
the sulfur adjustment shall be stated in $/ton of coal.  With respect
to the sulfur adjustment for Shipments under this Agreement during the first
Contract Year (2008), the AWASC, the AWACV, and the Annual SO2 Content of
such Shipments shall be determined from all Shipments that are supplied under
this Agreement during the period from July 1, 2008, through December 31,
2008.






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(2)  The
AWASC of all Shipments under this Agreement during the Contract Year and the
AWACV of such Shipments shall first be determined from samples taken and
analyzed in accordance with Sections 7.2 and 7.3.  Next the AWASC
(stated as a percentage) shall be multiplied by 100 (to eliminate the
percentage), and the resulting product shall be known as the "Sulfur Factor" for
such Shipments.  The Annual SO2 Content of
such Shipments shall then be determined from the following formula:


Annual
      SO2
      Content  =
            Sulfur
      Factor  x* * *lbs.SO2/MMBtu
              AWACV




(3)  After
the Annual SO2 Content of
all Shipments under this Agreement during the Contract Year has been determined,
* * *lbs.
SO2/MMBtu
shall be subtracted from the Annual SO2 Content of
such Shipments; and the resulting difference (whether positive or negative)
shall be stated in pounds alone and shall be known as the "SO2 Adjustment
Factor."  The sulfur adjustment shall then be calculated according to
the following formula:


Sulfur
      Adj.  =
            SO2Adjustment
      Factor
              * * *Btu
            x  AWACV  x  ASO2AV




Where:




Sulfur
      Adj.
              =
              sulfur
      adjustment (stated in $/ton of
coal)




AWACV
            =
            annual
      weighted average calorific value (stated in Btu/lb.) of all Shipments
      under this Agreement during the Contract Year
  involved




ASO2AV
            =
            average
      SO2
      allowance value (stated in $/ton of SO2) for
      the Contract Year involved, which shall be determined by calculating the
      average of the average prices of SO2
      allowances as shown in the Monthly Price Index published by Cantor
      Fitzgerald on or about the 25th day of each calendar month (January
      through December) for such Contract Year; provided, however, that
      with respect to the first Contract Year (2008), the average prices of
      SO2
      allowances for each calendar month from July through December, 2008 shall
      be used




Notwithstanding
the foregoing provisions of this Section 4.7(a)(3), in calculating the sulfur
adjustment, if any, for Shipments during the third Contract Year (2010) only,
Purchaser shall substitute the variable "ASO2AV x 2" in place of the variable
"ASO2AV" in such
formula.


(4)  If
the Annual SO2 Content of
all Shipments under this Agreement during the Contract Year exceeds * * *
lbs. SO2/MMBtu, the
amount of the sulfur adjustment (stated in $/ton of coal) for such Shipments
shall be subtracted from each of the
Calorific Value Adjusted Prices for Shipments during each calendar month of such
Contract Year, as reduced by any excess ash and grindability adjustments
(pursuant to Sections 4.5 and 4.6) for such Shipments.  If the Annual
SO2
Content of all Shipments under this Agreement during the Contract Year is less
than * * *
lbs. SO2/MMBtu, the
amount of the sulfur adjustment (stated in $/ton of coal) for such Shipments
shall be added
to each of the
Calorific Value Adjusted Prices for Shipments during each calendar month of such
Contract Year, as reduced by any excess ash and grindability adjustments
(pursuant to Sections 4.5 and 4.6) for such Shipments.






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(5)  No
adjustment under this Section 4.7(a) shall be made if the Annual SO2 Content of
all Shipments under this Agreement during the Contract Year is equal to * * *
lbs. SO2/MMBtu.


(b)  Notwithstanding
the provisions of Section 4.7(a), the following provisions shall apply to the
calculation of sulfur adjustments for Shipments under this Agreement during each
Contract Year:


(1)  In
calculating the Annual SO2 Content of
Shipments under this Agreement during each Contract Year and the amount of the
sulfur adjustment for such Shipments, Purchaser shall include the actual
weighted average "as received" sulfur content of each Shipment made under this
Agreement during such Contract Year and the actual weighted average "as
received" calorific value of each such Shipment; provided, however, that if
the Annual SO2 Content of
such Shipments is less than * * *
lbs. SO2/MMBtu,
then Purchaser, in applying the sulfur adjustment to Shipments during such
Contract Year, may exclude such portion of the Shipments that were transported
to a Designated Plant at which (i) a flue-gas desulfurization system (commonly
referred to as a "scrubber") has been installed on one or more of the generating
units at the Designated Plant (each such unit being hereinafter referred to as a
"Scrubber Unit") and placed in operation after December 31, 2007, and (ii) some
or all of the Shipments transported to the Designated Plant were used in a
Scrubber Unit.


(2)  For
purposes of administering the provisions of Section 4.7(b)(1) with respect to
each Contract Year, only a portion of all Shipments that were transported to the
Designated Plant during such Contract Year shall be excluded in applying the
sulfur adjustment for such Contract Year in the event that (i) the Scrubber
Units were placed in operation at the Designated Plant after the beginning of
such Contract Year or (ii) one or more of the Shipments transported to the
Designated Plant during such Contract Year were used in a generating unit on
which no "scrubber" was installed.  From the total quantity of coal in
all Shipments that were transported to the Designated Plant during such Contract
Year, Purchaser shall determine, in its reasonable discretion, what portion of
such Shipments were used in Scrubber Units at the Designated Plant during such
Contract Year.


(3)  If
Purchaser exercises its right to exclude Shipments from the application of the
sulfur adjustment for Shipments during a Contract Year as provided in Sections
4.7(b)(1) and 4.7(b)(2), then the Calorific Value Adjusted Prices for the
excluded Shipments shall not be increased pursuant to Section
4.7(a)(4).






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(c)  In
addition to other adjustments (including, without limitation, any adjustment
that may be available under Section 4.7(a)), Purchaser may adjust the amount to
be paid for any Shipment that is accepted by Purchaser in which the actual "as
received" sulfur content is greater than or equal to * * *%.  Each
such adjustment shall be subject to the following provisions:


(1)  The
amount of such adjustment shall be * * *%
of the then-current Billing Price applicable to the Shipment, and such amount
shall be deducted from the then-current Billing Price as liquidated damages for
administrative costs and other incidental expenses related to the handling and
disposition of the Shipment.  The Parties hereby agree that such
amount is a reasonable pre-loss estimate of Purchaser's damages, which are
difficult to measure, and that such amount is not intended as a
penalty.


(2)  Such
adjustment shall be made only if the Shipment is accepted by Purchaser; and
Seller acknowledges that the remedy provided in this Section 4.7(c) shall in no
way obligate Purchaser to accept the Shipment nor prevent Purchaser from
exercising other rights and remedies with respect to the Shipment (including,
without limitation, the right to reject the Shipment as provided in Section
6.3).


(d)  The
adjustment mechanisms set forth in Sections 4.7(a) and 4.7(c) are further
detailed and illustrated in Annex E, which is attached
hereto and made a part of this Agreement; and such adjustments shall be made in
accordance with Annex
E.


4.8  Calculation of
Adjustments.  Within sixty days after the end of each calendar
month, Purchaser shall calculate the adjustments to be made under Sections 4.4,
4.5, 4.6, and 4.7(c); and within sixty days after the end of each Contract Year,
Purchaser shall calculate the adjustment to be made under Section 4.7(a). For
each calendar month, Purchaser shall submit to Sales Agent a report showing the
calculation of the adjustment under Section 4.4 and any adjustments under
Sections 4.5, 4.6, and 4.7(c) for all Shipments during such calendar month under
each purchase order issued by Purchaser with respect to this Agreement; and for
each Contract Year, Purchaser shall submit to Sales Agent a report showing the
calculation of the adjustment under Section 4.7(a) for all Shipments during such
Contract Year.  Such reports shall include the analyses of Shipments
on which such calculations are based and shall state the amount to be paid by
Purchaser for such Shipments, as determined in accordance with the applicable
provisions of this Agreement.  The adjustments provided in Sections
4.4, 4.5, 4.6, and 4.7 are cumulative in nature and are in addition to any other
rights or remedies available to Purchaser under this Agreement, at law, or in
equity.




Section
5:  Quantity Requirements


5.1  Annual
Quantities.  Except as otherwise provided in this Agreement,
Seller shall supply to Purchaser, and Purchaser shall purchase from Seller, the
following quantities of coal during each Contract Year, which shall be supplied
in approximately equal monthly Shipments:




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First
      Contract Year (July through December, 2008)
            * * *
      tonsSecond
      Contract Year (January through December, 2009)
            * * *tonsThird
      Contract Year (January through December, 2010)
            * * *
      tons




5.2  Quarterly
Amounts.  The Quarterly Amount for each Quarter of each
Contract Year is as follows:  (i) * * *
tons for the third Quarter and the fourth Quarter of the first Contract Year;
and (ii) * * *
tons for each Quarter of the second and third Contract Years.


5.3  Shortfalls in
Shipments.


(a)  During
each Quarter of each Contract Year, Seller shall supply no less than (i) 90% of
the Quarterly Amount for such Quarter and (ii) the amount of the Tonnage
Shortfall, if any, for the immediately preceding Quarter.  (The sum of
the (i) amount and the (ii) amount is hereinafter referred to as the "Quarterly
Requirement.")  Notwithstanding the foregoing provisions of this
Section 5.3(a), the following provisions shall apply:


(1)  If
Seller supplies, during a Quarter, more than 100% of the Quarterly Requirement
for such Quarter, the amount by which the quantity actually supplied during such
Quarter exceeds the Quarterly Requirement for such Quarter shall be known as the
"Excess Amount."  Seller may reduce the Quarterly Requirement for any
subsequent Quarter by an amount up to (but not exceeding) the Excess Amount;
provided, however, that
Seller shall remain obligated to supply, during such subsequent Quarter, no less
than 90% of the Quarterly Amount for such subsequent Quarter.  If
Seller intends to reduce the Quarterly Requirement for a subsequent Quarter
pursuant to this Section 5.3(a)(1), Seller shall give Purchaser written notice
of such reduction within thirty days after the end of the Quarter in which the
Excess Amount was supplied; and such notice shall specify the amount of such
reduction and the subsequent Quarter in which such reduction shall
occur.


(2)  If
Purchaser exercises its right under Section 5.3(b) to buy replacement coal for
some or all of a Tonnage Shortfall, Seller shall be excused from its obligation
to supply that portion of the Tonnage Shortfall for which Purchaser has bought
replacement coal.


(b)  In
the event that (i) Seller fails to supply the Quarterly Requirement during any
Quarter and (ii) such failure does not result from an event of force majeure
(whether under the terms of Section 10.1 or under the Rail Contract) or a cause
or circumstance within Purchaser's control, then Purchaser may buy replacement
coal and hold Seller liable for the cost of such replacement coal as provided in
Section 5.3(d).


(c)  In
the event that (i) Seller fails to supply 100% of the annual quantity during any
Contract Year and (ii) such failure does not result from an event of force
majeure (whether under the terms of Section 10.1 or under the Rail Contract) or
a cause or circumstance within Purchaser's control, then Purchaser may buy
replacement coal and hold Seller liable for the cost of such replacement coal as
provided in Section 5.3(d).






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(d)  If
Purchaser exercises its right to buy replacement coal and hold Seller liable for
the cost of such replacement coal, the following provisions shall
apply:


(1)  Purchaser
shall first determine the amount of the Tonnage Shortfall for the Shortfall
Period involved and shall give Seller written notice of such
amount.  Purchaser may then buy replacement coal (of similar, but not
exactly the same, quality) from one or more third parties in an amount up to
(but not exceeding) the amount of the Tonnage Shortfall and arrange to have such
replacement coal supplied at such times as Purchaser deems appropriate during
the twelve-month period after the end of the Shortfall Period
involved.


(2)  Seller
shall be liable to Purchaser for the difference between (i) the actual delivered
cost incurred by Purchaser (including, without limitation, the costs of
transportation, SO2 emission
allowances, NOx emission allowances, and taxes) to obtain such replacement coal
and (ii) the delivered cost of Seller's coal (including, without limitation, the
costs of transportation, SO2 emission
allowances, NOx emission allowances, and taxes) as of the end of the Shortfall
Period involved.


(e)  After
Purchaser has determined the amounts for which Seller is liable under Section
5.3(d)(2), Purchaser shall promptly prepare and submit to Seller an invoice for
such amounts.  Seller shall pay the amounts reflected in such invoice
within fourteen days after Seller has received such invoice.  If
Seller fails to pay such amounts within such fourteen-day period, Purchaser may
immediately set off such amounts against, and deduct such amounts from, one or
more payments due from Purchaser to Seller or Sales Agent under this
Agreement.  Purchaser may retain all sums deducted from such payments
pursuant to this Section 5.3(e) as satisfaction of the amounts owed by Seller to
Purchaser under Section 5.3(d)(2) and may recover any remaining amounts from
Seller as provided by law.


(f)  Notwithstanding
the provisions of Section 5.3(c), Purchaser may elect, in its sole discretion,
to require Seller to make up the Tonnage Shortfall for any Contract Year under
the following circumstances and conditions:


(1)  Purchaser
may exercise such right in the event that (i) Seller fails to supply 100% of the
annual quantity during any Contract Year and (ii) such failure does not result
from an event of force majeure (whether under the terms of Section 10.1 or under
the Rail Contract) or a cause or circumstance within Purchaser's
control.


(2)  Purchaser
shall calculate the difference between (i) the amount of the annual quantity for
the Contract Year involved and (ii) the actual quantity of coal supplied under
this Agreement during such Contract Year.  (Such difference is
hereinafter referred to as "Annual Shortfall.")  Within sixty days
after the end of the Contract Year in which the Annual Shortfall occurred
("Shortfall Year"), Purchaser shall give Sales Agent written notice that
Purchaser has decided to make up some or all of the Annual
Shortfall.  Such notice shall specify the quantity of the Annual
Shortfall that Purchaser has decided to have made up ("Makeup Quantity") and
shall set forth a proposed loading schedule for the Makeup
Quantity.  Upon Sales Agent's receipt of such notice, the Parties
shall immediately enter into discussions in a good-faith effort to establish a
loading schedule for the Makeup Quantity to be supplied during the twelve-month
period after the end of the Shortfall Year.









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(3)  If
the Parties establish a loading schedule for the Makeup Quantity as provided in
Section 5.3(f)(2), Seller shall supply the Makeup Quantity according to such
schedule.  The Billing Price for all portions of the Makeup Quantity
shall be determined according to the Billing Price in effect at the end of the
Shortfall Year.


(4)  If
the Parties fail to establish, within ninety days after the end of the Shortfall
Year, a loading schedule that is mutually acceptable to the Parties, Purchaser
may buy, at any time during the twelve-month period after the end of the
Shortfall Year, replacement coal and hold Seller liable for the cost of
replacement coal as provided in Section 5.3(d), in which event no additional
notice from Purchaser to Seller under Section 5.3(d)(1) shall be
required.




Section
6:  Quality Requirements


6.1  Coal
Specifications.


(a)  Each
Shipment under this Agreement shall be either "run-of-mine" or "washed
run-of-mine" coal or a blend of "run-of-mine" and "washed run-of-mine" coal;
shall be three inches and under in size (3" x 0"), as defined in the
then-current American Society for Testing and Materials ("ASTM") D-4749
"Standard Test Method for Performing the Sieve Analysis of Coal Designating Coal
Size"; shall not contain more than *** of particles less than 1/4 inch in
size (if, in Purchaser's sole judgment, coal-handling problems occur at a
Designated Plant because of size consistency, Seller shall take reasonable
corrective action acceptable to Purchaser); and shall be prepared so as to be
free from excess quantities of pond fines, washer fines and refuse, bone, slate,
shale, fireclay, rock, loose clay, and extraneous materials (including, without
limitation, plastic, rubber, iron, wood, and other waste
materials).  In addition, Shipments shall conform to the following
analysis (all percentages shown being percentages by weight):




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Specifications
            "As
      Received"
              Monthly
      Weighted
              Average
      Requirements*
            "As
      Received"
              Suspension
      Limits
              (Per Unit
      Train)
            "As
      Received"
              Rejection
      Limits
              (Per Unit
      Train)Maximum
      Moisture (total)
            * * *
            * * *
            * * *Maximum
      Ash
            * * *
            * * *
            * * *Maximum
      Pounds SO2
            * * *
            * * *
            * * *Minimum
      Volatile Matter
            * * *
            * * *
            * * *Minimum
      Ash Fusion Temperature-
              Softening
      (H=W reducing atmosphere)
            * * *
            * * *
            * * *Minimum
      Grindability
              (Hardgrove
      Grindability Index)
            * * *
            * * *
            * * *Minimum
      Calorific Value
            * * *
            * * *
            * * *




*These
parameters are monthly weighted average requirements, except as otherwise
noted.




(b)  In
the event that Purchaser experiences operational difficulties due to excessive
impurities or contaminants in the coal supplied under this Agreement, Purchaser
shall promptly give written notice to Seller; and the Parties shall work in good
faith to identify and eliminate the cause(s) of such problems and to develop a
mutually acceptable plan for continuation of Shipments.


(c)  In
order to comply with the nitrogen oxide ("NOx") provisions of the Clean Air Act
Amendments of 1990, as amended, judicial and administrative interpretations
thereof, and regulations promulgated thereunder ("Clean Air Requirements"),
Purchaser may analyze the coal supplied under this Agreement to determine (in
Purchaser's sole judgment) whether Seller's coal, when used at one or more of
the Designated Plants, causes a Designated Plant to exceed applicable NOx
emission limitations of the Clean Air Requirements.  In performing
such analysis, Purchaser may evaluate the combination of (i) the percent
nitrogen, (ii) the ratio of fixed carbon to volatile matter, and (iii) other
coal quality characteristics of Seller's coal by using an Electric Power
Research Institute product referred to as the EPRI NOx/LOI Predictor (EPRI
TR-109208 or subsequent versions).  Purchaser may also consider its
actual operating experience with Seller's coal and the amount of NOx emissions
produced by using Seller's coal at the Designated Plant.


(d)  In
the event that Purchaser determines, as provided in Section 6.1(c), that
Seller's coal has caused or is causing one or more of the Designated Plants to
exceed applicable NOx emission limitations of the Clean Air Requirements, then
Purchaser may terminate this Agreement by giving Seller written notice thereof,
which shall specify the effective date of termination and shall be given at
least thirty days prior to such date.


6.2  Reimbursement for Equipment
Damage.  Seller shall reimburse Purchaser for all damage to
Purchaser's equipment directly caused by any extraneous material loaded with any
Shipment, as well as for damages to Purchaser's equipment caused by any Shipment
that fails to meet the specifications set forth in Section 7.1; provided, however, that
Seller shall not be liable for lost generating capacity or lost production of
electricity.






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6.3  Rejection of
Shipments.


(a) In
addition to and not as a limitation on Purchaser's other rights or remedies
under this Agreement, Purchaser may reject any Shipment under any one or more of
the following circumstances: (i) the Shipment fails to comply with one or more
of the "As Received" Rejection Limits set forth in Section 6.1(a); (ii) the
Shipment fails to comply with the coal size specifications set forth in Section
6.1(a); (iii) the Shipment contains extraneous material as described in Section
6.1(a); (iv) the Shipment fails to comply with the loading requirements set
forth in Section 8.2; or (v) the Shipment contains coal that was mined or
produced from a source other than the Coal Property without obtaining
Purchaser's prior written consent.  Purchaser shall give Seller prompt
notice, orally or in writing, of the rejection of a Shipment.  After
receipt of such notice, Seller shall not resume Shipments under this Agreement
until the coal quality or other deficiency has been corrected to Purchaser's
satisfaction.  In the event that Purchaser rejects a Shipment, then
Seller shall immediately remove, at Seller's expense, the Shipment from
Purchaser's facilities or from transportation equipment and shall reimburse
Purchaser for all charges and costs (including, without limitation,
transportation costs) incurred by Purchaser in connection with the
equipment.


(b)  In
the event that Purchaser, in its sole discretion, accepts any Shipment for which
the "as received" analysis exceeds any one or more of the "As Received"
Rejection Limits set forth in Section 6.1(a), then the following price
adjustments shall apply and shall be in addition to (i) the calorific value and
any excess ash adjustments (pursuant to Sections 4.4 and 4.5) for the Shipment
and (ii) any other adjustment (pursuant to Section 4.6 or 4.7) for the
Shipment:




Calorific
Value Adjustment:   * * *
per ton for each 100 Btu or fraction thereof less than * * *Btu/lb.


Ash
Adjustment:    * * *
per ton for each 1% or any fraction thereof greater than * * *ash


The price
adjustment mechanisms set forth in this Section 6.3(b) are further detailed and
illustrated in Annex F,
which is attached hereto and made a part of this Agreement.


(c)  Purchaser's
election to accept a Shipment that fails to comply with any one or more of the
"As Received" Rejection Limits set forth in Section 6.1(a) and to apply one or
more of the price adjustments under Section 6.3(b) shall not affect any of
Purchaser's other rights and remedies under this Agreement (including, without
limitation, Purchaser's right to reject subsequent Shipments that fail to comply
with any one or more of the "As Received" Rejection Limits set forth in Section
6.1(a)).




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(d)  In
addition to the provisions set forth in Section 7.2 regarding sampling,
Purchaser may collect samples of one or more Shipments while they are in transit
and may analyze such samples for the purpose of determining whether to accept or
to reject such Shipment(s) for failure to comply with the specifications set
forth in Section 6.1 or other terms and conditions of this
Agreement.  In the case of any Shipment that is accepted, the samples
of the Shipment taken in transit and the results of such analyses shall not be
used for other purposes; and the provisions in Sections 7.2 and 7.3 shall
apply.


6.4  Suspension and Termination
for Quality Variations.


(a) In
addition to and not as a limitation on Purchaser's other rights or remedies
under this Agreement, Purchaser may suspend Shipments immediately, by giving
written notice to Seller, under any one or more of the following
circumstances:  (i) any Shipment fails to comply with one or more of
the "As Received" Suspension Limits set forth in Section 6.1(a); (ii) any
Shipment contains extraneous material as described in Section 6.1(a); (iii) any
Shipment fails to comply with the loading requirements set forth in Section 8.2;
or (iv) any Shipment contains coal that was mined or produced from a source
other than the Coal Property without obtaining Purchaser's prior written
consent.  Purchaser, at its sole option, may accept any Shipment(s) in
transit at the time such notice is given.  Three or more suspensions
under this Agreement during any consecutive ninety-day period shall be deemed a
material breach of this Agreement, for which Purchaser, in its sole discretion,
may terminate this Agreement immediately by giving Seller written notice
thereof, which shall specify the effective date of termination.


(b)  After
a notice of suspension is given pursuant to Section 6.4(a), Purchaser may
terminate this Agreement, as provided in Section 6.4(c), unless Seller gives
adequate assurance, within fifteen days after Seller has received such notice,
that Seller can and will comply with the specifications set forth in Section 6.1
and the other requirements of this Agreement.  Such assurance may, at
Purchaser's sole option, be provided by means of a complying test Shipment
scheduled and sampled by such method as is acceptable to
Purchaser.  Seller shall bear all special handling costs associated
with any test Shipment (including, without limitation, costs related to
transportation and stockpile segregation).  Any Tonnage Shortfall
resulting from a suspension under Section 6.4(a) shall not be supplied at a
later time unless Purchaser, in its sole discretion, directs Seller to make up
the Tonnage Shortfall.  If Purchaser elects to make up the Tonnage
Shortfall, the Parties shall agree on a schedule that shall allow the Tonnage
Shortfall to be supplied within a period no longer than twelve months after
Shipments have resumed; and the term of this Agreement may be extended to
accommodate such schedule.  The price to be paid for any such makeup
tons shall be determined according to the Billing Price in effect during the
period in which Shipments were suspended.


(c)  If
(i) Purchaser does not receive, within thirty days after Seller's receipt of a
notice of suspension pursuant to Section 6.4(a), adequate assurance of Seller's
ability to supply coal that complies with the requirements of this Agreement or
(ii) a test Shipment under Section 6.4(b) fails to comply with such
requirements, Purchaser shall notify Seller of such circumstance.  At
the same time, Purchaser may cancel the remaining Shipments to be supplied under
this Agreement and may terminate this Agreement immediately by giving Seller
written notice thereof, which shall specify the effective date of
termination.







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(d)  In
the event that Purchaser suspends Shipments pursuant to Section 6.4(a) or
terminates this Agreement pursuant to Section 6.4(a) or 6.4(c), Seller shall
reimburse Purchaser for all freight charges or other costs that are caused by
such suspension and are incurred by Purchaser as a result of reduced tonnages
transported under the Rail Contract.  The payment obligation imposed
on Seller by this Section 6.4(d) is in the nature of a cost adjustment and is
without prejudice to, and in addition to, such other rights or remedies that
Purchaser may have under other provisions of this Agreement or at law or in
equity.


6.5  Cancellation and
Termination.


(a)  In
addition to and not as a limitation on Purchaser's other rights or remedies
under this Agreement, Purchaser may cancel the remaining Shipments to be
supplied under this Agreement and may terminate this Agreement immediately under
any one or more of the following circumstances:  (i) 30% or more of
all Shipments during a thirty-day period, following a notice of suspension
pursuant to Section 6.4(a), fail to comply with one or more of the "As Received"
Monthly Weighted Average Requirements set forth in Section 6.1(a) with respect
to moisture, ash, volatile matter, and calorific value or with one or more of
the per-Shipment requirements set forth in Section 6.1(a) with respect to AFT
and grindability; (ii) Shipments, when averaged over two consecutive calendar
months, fail to comply with one or more of the "As Received" Monthly Weighted
Average Requirements set forth in Section 6.1(a) with respect to moisture, ash,
volatile matter, and calorific value or with one or more of the per-Shipment
requirements set forth in Section 6.1(a) with respect to AFT and grindability;
(iii) the SO2 content of
Shipments, when averaged over two consecutive Contract Years, * * *;
(iv) Seller fails to supply at least 75% of the Quarterly Amount to be supplied
during any Quarter and such failure is not excused by force majeure (whether
under the terms of Section 10.1 or under the Rail Contract) or a cause or
circumstance within Purchaser's control; (v) any Shipment contains coal that was
mined or produced from a source other than the Coal Property without obtaining
Purchaser's prior written approval; or (vi) Seller has engaged in any fraudulent
or illegal conduct in connection with its performance under this
Agreement.


(b)  Purchaser
shall exercise its right of termination under Section 6.5(a) by giving Seller
written notice thereof, which shall specify the effective date of
termination.


6.6  Costs Related to
Termination.  In the event that Purchaser terminates this
Agreement under Section 6.4, 6.5, or 9.1, then Seller shall reimburse Purchaser
for all charges or costs actually incurred by Purchaser under the Rail Contract
as a result of the termination of this Agreement.  Purchaser's rights
of termination under Sections 6.4, 6.5, and 9.1 and reimbursement under this
Section 6.6 are in addition to any other rights or remedies provided to
Purchaser under Section 6.7 or available to Purchaser at law or in equity for
Seller's failure to supply coal that complies with the requirements of this
Agreement.




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6.7  Replacement
Coal.  In the event that Purchaser terminates this Agreement
under Section 6.4, 6.5, or 9.1, then Purchaser may buy replacement coal and hold
Seller liable for the cost of replacement coal under the following circumstances
and conditions:


(a)  Purchaser
shall first determine the remaining quantity of coal to be supplied under this
Agreement (calculated according to the quantities set forth in Section 5.1) as
of the effective date of termination ("Remaining Quantity") and shall give
Seller written notice of the Remaining Quantity.  Purchaser may then
buy, from time to time, replacement coal (of similar, but not exactly the same,
quality) from one or more third parties in an amount up to (but not exceeding)
the amount of the Remaining Quantity and arrange to have such replacement coal
supplied at such times as Purchaser deems appropriate prior to December 31,
2010.


(b)  Seller
shall be liable to Purchaser for the difference between (i) the actual delivered
cost incurred by Purchaser (including, without limitation, the costs of
transportation, SO2 emission
allowances, NOx emission allowances, and taxes) to obtain such replacement coal
and (ii) the delivered cost of Seller's coal (including, without limitation, the
costs of transportation, SO2 emission
allowances, NOx emission allowances, and taxes) as of the effective date of
termination.  Seller shall also be liable to Purchaser for charges and
costs related to such termination as provided in Section 6.6.


(c)  After
Purchaser has determined the amounts for which Seller is liable under Section
6.7(b), Purchaser shall promptly prepare and submit to Seller an invoice for
such amounts.  Seller shall pay the amounts reflected in such invoice
within fourteen days after Seller has received such invoice.  If
Seller fails to pay such amounts within such fourteen-day period, Purchaser may
immediately set off such amounts against, and deduct such amounts from, one or
more payments due from Purchaser to Seller or Sales Agent under this
Agreement.  Purchaser may retain all sums deducted from such payments
pursuant to this Section 6.7(c) as satisfaction of the amounts owed by Seller to
Purchaser under Section 6.7(b) and may recover any remaining amounts from Seller
as provided by law.




Section
7:  Weighing and Sampling


7.1  Weighing of
Shipments.


(a)  Unless
the Parties otherwise agree, Seller shall determine the net weight of each
Shipment under this Agreement on a certified scale at Seller's Loading
Facility.  Seller shall bear all costs related to obtaining an
acceptable weight for each Shipment and shall report the weight on the shipping
notice provided for the Shipment pursuant to Section 8.3.  Stenciled
tare weights shall not be used in calculating the net weight of any
Shipment.  Purchaser shall have the option, which may be exercised at
any time during the term of this Agreement, to weigh Shipments, for governing
purposes and at Purchaser's expense, on a certified scale at the destination
plant or such other point as is specified by Purchaser.





-19-





(b)  Seller
shall operate its weighing system in a manner that is acceptable to Purchaser
and the Rail Carrier and shall maintain and test the weighing system in
accordance with the rules and regulations contained in (i) the then-current
Association of American Railroads "Scale Handbook" and (ii) the National
Institute of Standards and Technology "Handbook 44" entitled "Specifications,
Tolerances and Other Technical Requirements for Commercial Weighing and
Measuring Devices."  The following provisions shall also apply to the
operation of the weighing system:


(1)  The
weighing system shall be tested and certified on a semiannual basis and shall be
maintained at all times as close as practicable to the condition established
during the certification tests.  If a coupled-in-motion ("CIM") track
scale is used, an initial "as used" test shall be performed using the number of
railcars normally tendered.  The "as used" test shall be conducted in
two parts:  (i) the test shall first be performed to certify the CIM
scale to weigh a unit train with empty railcars; and (ii) the test shall then be
performed to certify the CIM scale to weigh a unit train with loaded
railcars.  Subsequent certification tests utilizing a smaller number
of railcars may be acceptable if such tests are demonstrated to represent the
"as used" test.


(2)  Seller
shall promptly notify Purchaser, orally or in writing, of all maintenance work
on the weighing system, other than routine maintenance activities, or any
modifications to the system.


(3)  Purchaser
or its representative may observe the weighing of any Shipment under this
Agreement.


(4)  In
the event that the weighing system ceases to operate properly, then Seller shall
immediately notify Purchaser or its representative, orally or in writing, to
determine the course of action to be taken concerning subsequent Shipments under
this Agreement; and Purchaser's representative may direct Seller to delay or
stop the loading of any one or more Shipments under this
Agreement.  After any such direction is given, the following
provisions shall apply:


(i)  Seller
shall immediately delay or stop, as the case may be, the loading of such
Shipment(s); and Seller shall pay all charges and costs incurred by Purchaser as
a result of such delay or stoppage in the loading of such
Shipment(s).


(ii)  Seller
shall repair the weighing system as soon as practical, and Shipments under this
Agreement shall not resume until (i) such repair is completed or (ii) the
Parties mutually agree on a method for weighing Shipments under this
Agreement.


(c)  In
the event that Seller fails to provide the weight of any Shipment, then
Purchaser shall determine the method by which the weight of the Shipment shall
be obtained; and such method may not be the same as that required under the Rail
Contract.





-20-





(d)  In
addition to its own representative, Purchaser may have members of regulatory
bodies having jurisdiction over Seller's weighing system present to observe the
weighing of any Shipment under this Agreement.  If Purchaser at any
time questions the accuracy of the weight of any Shipment, Purchaser shall
promptly notify Seller, orally or in writing; and Seller shall then permit
Purchaser's representative to test Seller's weighing system or weighing
methods.  If such tests show that the weighing system is out of
tolerance (as established by the applicable standards), Seller shall take
appropriate steps to adjust the weighing system to an accurate
condition.  In the event that the Parties are unable to agree upon
such tests and adjustments to the weighing system and weighing methods, then a
qualified third party, mutually chosen by the Parties, shall test and adjust the
weighing system and weighing methods to a condition of accuracy; and the Parties
shall bear equally the cost of such testing and adjustment.


(e)  If
the tests conducted pursuant to Section 7.1(d) show that Seller's weighing
system is out of tolerance (as established by the applicable standards),
Purchaser shall make an appropriate adjustment to the affected weights and
related invoices and payments.  Such adjustment shall be made (i)
retroactively to a date midway between the date on which the weighing system was
last certified and the date on which the accuracy of weights related to the
out-of-tolerance condition was first questioned and (ii) prospectively until the
date on which the out-of-tolerance condition is corrected.


7.2  Collection and Preparation
of Samples.


(a)  Unless
the Parties otherwise agree, Seller shall collect a sample of each Shipment
under this Agreement as the Shipment is loaded and shall bear all costs related
to obtaining an acceptable sample of the Shipment.  Purchaser shall
have the option, which may be exercised at any time during the term of this
Agreement, to obtain samples of Shipments, for governing purposes and at
Purchaser's expense, at the destination plant or such other point as is
specified by Purchaser.


(b)  At
each of Seller's Loading Facilities, Seller shall provide a mechanical sampling
system and shall use the sampling system to collect a representative sample of
each Shipment.  The following provisions shall apply to each sampling
system used by Seller to collect samples of Shipments under this
Agreement:


(1)  The
design and operation of the sampling system and the procedures used for sample
preparation shall meet the requirements of ASTM D-7256 "Standard Practice for
Mechanical Collection and Within-System Preparation of a Gross Sample of Coal
from Moving Streams" and ASTM D-2013 "Standard Practice for Preparing Coal
Samples for Analysis."  The sampling system shall be enclosed to
minimize moisture loss and shall be designed for one stage of sample crushing to
the No. 8 sieve size (as determined by Purchaser based on ASTM
D-4749).  The sample flow rates through the sampling system shall be
sufficient to minimize moisture loss.  The Parties shall use their
best efforts to agree on modification of procedures and equipment to meet future
revisions of ASTM D-7256 and ASTM D-2013.





-21-





(2)  All
sample increments collected at all stages of sampling in the sampling system
shall cut the full stream of coal presented.  Upon Purchaser's
request, Seller shall make available to Purchaser the values of current
measurements of sampling system cutter openings, cutter velocities, and sample
flow rates, which shall be subject to Purchaser's review and
acceptance.


(3)  Seller
shall monitor the sampling ratio of the sampling system in a manner that is
acceptable to Purchaser and, upon Purchaser's request, shall make sampling ratio
data available to Purchaser.


(4)  Using
bias test procedures approved by Purchaser, Seller shall cause the sampling
system to be tested periodically, at Purchaser's request and at Seller's
expense, for bias against stopped-belt reference samples.  Seller
shall give Purchaser written notice of the scheduled date of each bias test; and
Purchaser or its representative may be present during such test and may observe
and inspect sample collection, sample preparation, and laboratory analysis of
bias test samples.  If a bias is detected by the test, Seller shall
immediately take all reasonable measures to correct or remove the source of the
bias; and Purchaser may suspend Shipments under this Agreement until (i) the
source of the bias is removed and (ii) the sampling system is re-tested for
bias.


(5)  Prior
to the installation of any new sampling system at any of Seller's Loading
Facilities or a modification of an existing sampling system at any of Seller's
Loading Facilities, Seller shall submit design drawings, specifications, and
sample extraction parameters for the new or modified sampling system to
Purchaser for its approval, which shall not be unreasonably
withheld.


(c)  Using
an enclosed riffle and following the procedures of ASTM D-2013 with respect to
each Shipment, Seller shall divide the final sample of No. 8 sieve size into at
least four laboratory sample splits, with each split weighing a minimum of 1,000
grams.  Seller shall promptly send one laboratory sample to
Purchaser's designated laboratory and shall promptly analyze one laboratory
sample to provide the "as loaded" coal quality analysis as required by Section
8.4.  Seller shall retain the two remaining laboratory samples as
reserve samples for at least thirty days after the date of the
Shipment.


(d)  Purchaser
or its representative may observe any sampling or sample preparation performed
by Seller; and Seller may observe any sampling or sample preparation performed
by Purchaser's designated laboratory.


(e)  In
the event that Seller's sampling system ceases to operate properly, then Seller
shall immediately notify Purchaser or its representative, orally or in writing,
to determine the course of action to be taken concerning subsequent Shipments
under this Agreement.  If the sampling system malfunctions during the
loading of any Shipment, Purchaser may, at its option, use a weighted average
analysis of the last two Shipments loaded prior to such malfunction to determine
the analysis of the Shipment being loaded at the time of such
malfunction.  If the sampling system ceases to operate in accordance
with the requirements of this Agreement,  Purchaser's representative
may direct Seller to delay or stop the loading of any one or more Shipments
under this Agreement.  After any such direction is given, the
following provisions shall apply:





-22-





(1)  Seller
shall immediately delay or stop, as the case may be, the loading of such
Shipment(s); and Seller shall pay all charges and costs incurred by Purchaser as
a result of such delay or stoppage in the loading of such
Shipment(s).


(2)  Seller
shall repair the sampling system as soon as practical, and Shipments under this
Agreement shall not resume until such repair is completed.


7.3  Analysis of
Samples.


(a)  Purchaser,
at its expense, shall analyze the laboratory samples sent to Purchaser's
designated laboratory in accordance with the procedures set forth in Annex G, which is attached
hereto and made a part of this Agreement; and the results of such analyses shall
be used for the governing purposes of this Agreement.  Annex G delineates laboratory
sample preparation and analytical procedures that are in accordance with ASTM
and industry standards and shall be used by the Parties as provided in this
Agreement.  Purchaser shall mail a copy of each such analysis to Sales
Agent within three working days after the sample is received at the designated
laboratory, which may be Purchaser's Central Laboratory in Smyrna, Georgia, or
an independent coal-testing laboratory selected by Purchaser.  If
Purchaser elects to employ an independent coal-testing laboratory, Seller shall
not be liable for any costs incurred by Purchaser except as otherwise provided
in this Agreement.


(b)  Seller
or its representative may observe any sample preparation or sample analysis
performed at Purchaser's designated laboratory.


(c)  If
Seller disputes the results of Purchaser's analysis of any Shipment, Seller
shall give Purchaser written notice thereof within thirty days after Seller has
received the Shipment's analysis from Purchaser.  Promptly after
giving such notice, Seller shall send one of the reserve samples of the Shipment
to a qualified independent laboratory (selected jointly by the Parties), which
shall conduct a referee analysis of such reserve sample in accordance with Annex G.  The
Parties shall bear equally the cost of any such analysis.  With
respect to a dispute over the calorific value analysis, Purchaser's analysis
shall be deemed to have been confirmed, and no further adjustment in billing
calculations shall be made, if the dry basis calorific value analysis by such
independent laboratory differs from Purchaser's analysis by no more than 100
Btu/lb. With respect to disputes over other items of analysis, Purchaser's
analysis shall be deemed to have been confirmed, and no further adjustment in
billing calculations shall be made, if the analysis by such independent
laboratory and the analysis by Purchaser's designated laboratory are within the
tolerances specified in the then-current ASTM standards.





-23-







Section
8:  Arrangements for Shipments and Payments


8.1  Scheduling of
Shipments.  The Parties anticipate that all Shipments under
this Agreement shall be transported by rail from one or more of Seller's Loading
Facilities to one or more of the Designated Plants or other electric-generating
plants owned or operated by Purchaser or other parties.  Prior to the
first day of each calendar month during the term of this Agreement, the Parties
shall establish a loading schedule for all Shipments to be made during such
month.  Such schedule shall include, without limitation, loading dates
and loading points for such Shipments and shall be established by the Parties'
respective transportation coordinators in accordance with the quantity
requirements set forth in Section 5.


8.2  Loading of
Shipments.


(a)  Seller
shall provide rail trackage sufficient for efficient and dependable loading of
unit trains at each of Seller's Loading Facilities and shall be prepared to
operate such loading facility 24 hours per day, seven days per week and in
compliance with the Rail Contract.  (A summary of the relevant
provisions of the Rail Contract in effect as of the date of the execution of
this Agreement is attached hereto as Annex H and made a part of
this Agreement.)


(b)  Seller
shall load all Shipments under this Agreement in accordance with the Rail
Contract in effect on the Effective Date or as thereafter amended, supplemented,
or replaced.  Notwithstanding any other provision of this Agreement,
if the Rail Contract, as amended, supplemented, or replaced, imposes loading
terms, conditions, or duties on Seller that are more onerous than those set
forth in Section 8.2(a), Purchaser shall reimburse Seller for additional costs
incurred by Seller to perform such more onerous loading terms, conditions, or
duties within thirty days after Purchaser has received from Seller a written
statement itemizing such costs (which may include Seller's additional costs for
labor, materials, or amortization of capital items or a combination of such
costs) and providing information necessary to enable Purchaser to verify such
costs.


(c)  Seller
shall provide loading facilities capable of loading unit trains at an effective
rate of 10,000 tons in a four-hour loading period and shall load railcars in a
timely manner that coincides with the loading times specified in the Rail
Contract.  Seller agrees that no existing or future agreement between
Seller and any other party concerning the joint use of surface facilities shall
interfere with or impair Seller's obligations under this Agreement.


(d)  Seller
shall use reasonable efforts (i) to optimize the usage of railcars provided by
Purchaser for transporting Shipments under this Agreement and (ii) to ensure
that any extraneous material, foreign substances, or debris is removed from each
railcar prior to loading.





-24-





8.3  Shipping
Notices


(a)  Promptly
after loading each Shipment, Seller shall prepare a shipping notice (in the form
of a 404 Bill of Lading) for the Shipment.  Seller shall deliver one
copy of such notice to the Rail Carrier prior to the time the railcars
containing such Shipment depart from Seller's Loading Facility, shall retain one
copy of such notice for Seller's records, shall transmit one copy of such notice
electronically to Purchaser, and shall transmit one copy by fax to each of the
following:




(1)
            Southern
      Company Services, Inc.
            (2)
            Southern
      Company Services, Inc.Fuel
      Services Department
            
            Fuel
      Services DepartmentAtlanta,
      Georgia
            
            Birmingham,
      AlabamaFax:  404-506-6948
            
            Fax:  205-257-7288(3)
            Plant
      Fuel Handling (as designated by Purchaser in the applicable purchase
      order)





(b)  With
respect to each Shipment, Seller shall utilize Automatic Equipment
Identification ("AEI") to correctly identify and list all railcars in a computer
system during the loading process.  The weight for each railcar or
total train weight shall be automatically entered into the computer system if
mine weights govern.  Upon completion of loading and prior to the
train's departure from the loading facility, Seller shall cause the 404 Bill of
Lading to be transmitted to the Rail Carrier and then to Purchaser via a
computerized Electronic Data Interchange ("EDI").


(c)  The
404 Bill of Lading shall provide the following information: carrier name,
Seller's name, loading facility name and FSAC number, Purchaser's purchase order
number, destination, amount of tons in the Shipment, number of railcars (with
quantity of steel and aluminum cars separately stated), transportation contract
number, SES train number, train arrival date/time, loading start date/time,
loading finish date/time, total loading time, date/time of bill of lading
release to rail carrier, and total train consist (including report marks and
railcar numbers).


8.4  "As Loaded" Coal Quality
Analysis.  In addition to the shipping notice required under
Section 8.3, Seller shall prepare an "as loaded" coal quality analysis of each
Shipment and shall transmit such analysis by fax to Purchaser, at the locations
specified in Section 8.3(a), prior to the Shipment's arrival at the Designated
Plant.  Purchaser shall not be obligated to unload any Shipment until
Purchaser has received the shipping notice required under Section 8.3 and the
"as loaded" coal quality analysis required under this Section 8.4 with respect
to the Shipment, and Seller shall reimburse Purchaser for any demurrage or
expenses incurred as a result of Seller's failure to provide such notice and
such analysis to Purchaser.


8.5  Freight Charges, Risk of
Loss, and Passage of Title.  Subject to the provisions of
Sections 8.6 and 8.7, Purchaser shall pay all freight and other charges imposed
by the Rail Contract and shall bear the risk of loss of or damage to each
Shipment after it has been properly loaded into railcars; but title to each
Shipment shall not pass to Purchaser until the Shipment has arrived at the
Designated Plant.  Notwithstanding the foregoing provisions of this
Section 8.5, Seller shall bear all expenses and costs associated with the
delivery of coal to, and the loading of coal into railcars at, Seller's Loading
Facilities and shall indemnify Purchaser against all claims, demands, actions,
suits, liabilities, and judgments related to such delivery and loading of coal
under this Agreement.





-25-





8.6  Loading Costs Chargeable to
Seller.  If Seller fails to satisfy the loading requirements of
the Rail Contract and such failure is not excused pursuant to the force majeure
provisions of the Rail Contract, Seller shall pay Purchaser any resulting
car-detention charges, demurrage, or other charges for railcars loaded in excess
of capacity that are imposed on Purchaser under the Rail
Contract.  Seller shall also pay the per-ton transportation rate, as
specified in the Rail Contract, for all tons not loaded to the minimum loading
capacity per railcar.  Seller shall conform to the Rail Carrier's
restrictions relating to maximum allowable gross railcar weights.  If
railcars are found to be overloaded, Seller shall be responsible for any
associated costs for reducing the weight of railcars to comply with the Rail
Carrier's restrictions and shall be obligated to provide Purchaser with
corrected governing weight documentation.  Notwithstanding anything to
the contrary in Section 8.5, Seller shall be responsible for any damage
resulting from overloaded railcars.


8.7  Excess Freight Costs
Chargeable to Seller.  If (i) Seller fails to tender sufficient
coal to satisfy the quantity requirements set forth in Section 5, and thereby
causes non-compliance with the tonnage requirements of the Rail Contract, and
(ii) such failure is not excused pursuant to the force majeure provisions of
this Agreement or the Rail Contract, Seller shall pay Purchaser any resulting
freight charges that Purchaser is required to pay the Rail Carrier over the
amount of such charges otherwise payable.


8.8  Payment of Amount(s) Owed to
Purchaser.  Seller shall remit to Purchaser any payment that is
required under Section 6.2, 6.3(a), 6.4(b), 6.4(d), 6.6, 7.1(b)(4), 7.2(e), 8.4,
8.6, or 8.7 within fourteen days after Seller has received from Purchaser a
written statement concerning the amount(s) owed.  If Seller fails to
pay such amount(s) within such fourteen-day period, Purchaser may immediately
set off such amount(s) against, and deduct such amount(s) from, one or more
payments due from Purchaser to Seller or Sales Agent under this
Agreement.  Purchaser may retain all sums deducted from such payments
pursuant to this Section 8.8 as satisfaction of the amount(s) owed by Seller to
Purchaser under Section 6.2, 6.3(a), 6.4(b), 6.4(d), 6.6, 7.1(b)(4), 7.2(e),
8.4, 8.6, or 8.7, as the case may be, and may recover any remaining amounts from
Seller as provided by law.


8.9  Invoices and Interim
Payments.  For each Shipment, Purchaser shall use a copy of the
shipping notice transmitted by Seller pursuant to Section 8.3 to prepare an
invoice for the Shipment.  In connection with the processing of and
payment for Shipments under each purchase order issued by Purchaser with respect
to this Agreement, Purchaser shall make interim payments to Sales Agent for each
Shipment at the then-current Billing Price stated in such purchase order(s)
* * *.  The
address to which such payments shall be remitted shall be specified in such
purchase order(s).






*** -
confidential material redacted and filed separately with the
commission.


-26-





8.10  Application of Adjustments
to Billing Price.  After preparing each report concerning
adjustments as provided in Section 4.8, Purchaser shall adjust the interim
payment(s) previously remitted to Sales Agent for Shipments during the calendar
month or Contract Year involved.  If such adjustment results in an
underpayment by Purchaser, Purchaser shall remit the difference between (i) the
amount that should have been paid for such Shipments and (ii) the amount of such
interim payment(s).  If such adjustment results in an overpayment by
Purchaser, Purchaser shall deduct the amount of the overpayment from any sum
owed by Purchaser to Seller or Sales Agent under this Agreement.


8.11  Acceptance of
Payments.  Purchaser's payment for each Shipment shall be
complete when appropriate adjustments with respect to the Shipment have been
made as provided in Sections 4.8 and 8.10 and have been applied to Seller's
account; provided,
however, that such payment shall be subject to later adjustment pursuant
to Sections 7.1(e), 7.3(c), and 14.1.  Seller's acceptance of the
amounts paid by Purchaser for the Shipment shall constitute full and final
settlement of any and all claims by Seller for costs and expenses (including,
without limitation, taxes, fees, Governmental Impositions, assessments,
premiums, and penalties) incurred or paid by Seller, either while this Agreement
is in effect or at any time in the future, with respect to the mining,
processing, production, or sale of coal under this Agreement.  Seller
shall indemnify Purchaser against, and hold Purchaser harmless with respect to,
any claim or liability related to such costs and expenses.




Section
9:  Termination for Unremedied Default


9.1  Notice of
Termination.  In the event that a Party defaults in performing
one or more of its obligations under this Agreement ("Defaulting Party"), then
the Party not in default ("Non-Defaulting Party") may notify the Defaulting
Party, in writing, that the Non-Defaulting Party intends to terminate this
Agreement.  The notice shall specify the default and the proposed
effective date of termination.  If the Defaulting Party fails to cure
such default within 120 days after the date of the notice, the Non-Defaulting
Party may terminate this Agreement immediately by giving the Defaulting Party
written notice thereof, which shall specify the effective date of
termination.  The provisions of this Section 9.1 shall not apply to a
termination under any other provision of this Agreement.


9.2  Option to Forego
Termination.  In addition to and not as a limitation upon the
Non-Defaulting Party's other rights under this Agreement, the Non-Defaulting
Party may elect to forego its right to terminate this Agreement pursuant to
Section 9.1 and may require the Defaulting Party to perform its obligations
under this Agreement.





-27-







Section 10
:  Excuse from Performance


10.1  Force
Majeure.


(a)  The
term "Seller's Force Majeure," as used herein, means a cause reasonably beyond
the control of Seller whether foreseen or unforeseen that, wholly or in
substantial part, directly or indirectly prevents or restricts the mining,
processing, loading, or delivery of Seller's coal.  The term
"Purchaser's Force Majeure," as used herein, means a cause reasonably beyond the
control of Purchaser whether foreseen or unforeseen that, wholly or in
substantial part, directly or indirectly prevents or restricts the delivery,
unloading, storing, or burning of Seller's coal at the destination
plant.  Examples (without limitation) of force majeure are the
following: acts of God; acts of the public enemy; insurrections; riots; strikes;
labor disputes; work stoppages; fires; explosions; floods; adverse geological
conditions that substantially impair production of coal; electric power
failures; breakdowns of or damage to generating or preparation plants;
interruptions to or contingencies of transportation (including, without
limitation, force majeure as defined in the Rail Contract); embargoes; and
orders or acts of civil or military authority (including, without limitation, a
city or county ordinance, an act of a state legislature, or an act of the United
States Congress); provided,
however, that for purposes of this Agreement, force majeure shall not
include, and no Party shall be excused from performance because of, (i) the
development or existence of economic conditions that may adversely affect the
anticipated profitability of a Party's activities under this Agreement, (ii)
acts or omissions of a Party that constitute mismanagement or fraud on the part
of such Party, or (iii) reduced productivity of labor employed by a Party in its
activities under this Agreement.


(b)  If,
because of Purchaser's Force Majeure, Purchaser is unable to carry out its
obligations under this Agreement and if Purchaser gives Seller written notice of
such force majeure, the obligations of Purchaser and the corresponding
obligations of Seller shall be suspended to the extent made necessary by and
during the continuance of such force majeure; provided, however, that the
disabling effects of such force majeure shall be eliminated as soon as and to
the extent possible (except that Purchaser, in its sole discretion, may settle
any of its own labor disputes or strikes or terminate any of its own
lockouts).


(c)  If,
because of Seller's Force Majeure, Seller is unable to carry out its obligations
under this Agreement and if Seller gives Purchaser written notice of such force
majeure, the obligations of Seller and the corresponding obligations of
Purchaser shall be suspended to the extent made necessary by and during the
continuance of such force majeure; provided, however,that the
disabling effects of such force majeure shall be eliminated as soon as and to
the extent possible (except that Seller, in its sole discretion, may settle any
of its own labor disputes or strikes or terminate any of its own
lockouts).


(d)  After
an event of force majeure has ended, the Parties shall mutually determine
whether to make up any Tonnage Shortfall that is caused by such
event.  If the Parties elect to make up the Tonnage Shortfall, the
Parties shall agree to a schedule that shall allow the Tonnage Shortfall to be
supplied within a twelve-month period after the end of such event; and the term
of this Agreement may be extended to accommodate such schedule.  The
price for any such makeup tons shall be determined according to the Billing
Price that was in effect during the force majeure event(s) related to the
Tonnage Shortfall.





-28-





(e)  Notwithstanding
the other provisions of Section 10.1, no cause shall excuse Seller from
performing its obligations under Sections 8.6 and 8.7 unless the cause is one
that is an event of force majeure under the provisions of the Rail
Contract.  The Parties acknowledge and agree that for the purposes of
Sections 8.6 and 8.7, the construction, interpretation, and application of the
force majeure provisions of the Rail Contract by the responsible official of the
Rail Carrier shall be binding upon the Parties, subject to any administrative or
judicial challenge by Seller, at its expense, with Purchaser's
cooperation.


(f)  The
Parties acknowledge and agree that if any valid law, ordinance, or regulation of
a municipality, county, state, or United States government or any final judicial
decision, judgment, or order is adopted, passed, or issued after the Effective
Date that either (i) directly prohibits the mining, processing, or loading of
coal as contemplated under this Agreement or (ii) directly prohibits the burning
or use of such coal at the Designated Plants, then the existence and
implementation of such law, ordinance, regulation, decision, judgment, or order
shall constitute an event of permanent force majeure; and the Party so affected
may then terminate this Agreement by giving the other Party written notice
thereof, which shall specify the effective date of termination.


(g)  Notwithstanding
the other provisions of Section 10.1, a Party not claiming force majeure may
terminate this Agreement whenever all of the following circumstances
exist:  (i) a condition of force majeure occurs that causes the
Parties' mutual obligations to be suspended with respect to the total quantity
of coal to be supplied under this Agreement; (ii) such condition, alone or
extended by other conditions of force majeure, continues so that the Parties'
mutual obligations remain suspended for a period of six consecutive months; and
(iii) at the end of such six-month period or at any time thereafter during the
continuance of such condition, the Party not claiming force majeure concludes,
in its reasonable judgment, that there is little likelihood of ending the
condition(s) in the immediate future.  The Party not claiming force
majeure may exercise such right of termination by giving the other Party written
notice thereof, which shall specify the effective date of termination and shall
be given at least ninety days prior to such date.


10.2  Changes in
Environmental-Related Requirements.


(a)  The
term "Environmental-Related Requirement," whether in the singular or the plural,
means the following:




(1)
            any
      environmentally related prohibition, restriction, or limitation regarding
      the burning of coal at one or more of the Designated
    Plants;





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(2)
            any
      prohibition, restriction, or limitation regarding (i) the quality of coal
      that Purchaser may burn (including, without limitation, any constituent
      specification) at one or more of the Designated Plants or (ii) the type or
      amount of emissions from such
plant(s);




(3)
            any
      rule or requirement affecting the permissible means for complying with any
      such prohibition, restriction, or limitation;
or




(4)
            any
      imposition of a cost, fee, tax, or other economic burden on Purchaser
      related to (i) the production of electricity (either generally or by means
      of coal-fired electric generation), (ii) the quantity of coal purchased or
      burned by Purchaser at one or more of the Designated Plants, (iii) any
      constituent specification of coal purchased or burned by Purchaser at such
      plant(s), (iv) the type or amount of emissions from such plant(s), or (v)
      the installation of any type of environmental-related equipment required
      by any regulatory authority to which Purchaser is
  subject.




In
addition, the term shall be deemed to include Purchaser's strategy, as
determined by Purchaser in its reasonable judgment, for compliance with
Environmental-Related Requirements.


(b)  A
change in Environmental-Related Requirements shall be deemed to have occurred in
any one or more of the following circumstances:  (i) there is any
increase or decrease in existing Environmental-Related Requirements; (ii)
Purchaser decides, in its reasonable judgment, to change its strategy for
compliance with any existing Environmental-Related Requirements; or (iii) a new
Environmental-Related Requirement is imposed on Purchaser as a result of any
federal or state law, administrative regulation or ruling, local ordinance,
court order or decision, or any revision in the interpretation or implementation
of such law, regulation, ruling, ordinance, order, or decision.  The
Parties acknowledge and agree that a change in Environmental-Related
Requirements may occur even though (i) such requirement is stated as a
restriction, limitation, or obligation imposed on Purchaser and its affiliates
or some other group of utilities or (ii) such requirement affects Purchaser in a
general way and is not directed at specific plants, fuels, fuel supplies, or
other operating conditions.


(c)  The
Parties acknowledge and agree that the provisions of Section 10.2 are intended
to provide rights in addition to the rights provided in Section 10.1 and that
the price, specifications, quantity, and destination(s) of coal to be supplied
under this Agreement are predicated on Environmental-Related Requirements that
were known and in effect as of the Effective Date.  For purposes of
this Section 10.2(c), an Environmental-Related Requirement shall not be deemed to be
"known" if it relates to any federal or state law, administrative regulation or
ruling, local ordinance, or court order or decision or interpretation of such
law, regulation, ruling, ordinance, order, or decision (collectively, "Legal
Requirements") that was being challenged in any administrative or judicial
proceeding ("Legal Proceeding") as of the Effective Date. Upon the final
resolution of the Legal Proceeding (including any appeals related to the Legal
Proceeding), Purchaser shall determine, in its reasonable judgment, if the Legal
Requirements (whether changed or unchanged as a result of the Legal Proceeding)
constitute a change in Environmental-Related Requirements.





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(d)  In
the event that a change in Environmental-Related Requirements occurs after the
Effective Date, then Purchaser shall determine, in its reasonable judgment, (i)
how to comply with such change and (ii) whether such change has had or may have
an adverse impact on Purchaser's use of coal to be supplied under this Agreement
at one or more of the Designated Plants.  Any change in
Environmental-Related Requirements that has one or more of the following effects
shall be deemed to have an adverse impact on Purchaser's use of coal to be
supplied under this Agreement at such plant(s), even though such requirements
may allow Purchaser a choice of options for complying with such requirement
(which choice may include, for example, the payment of a fee or tax in lieu of
the installation of equipment, the use of coal of different constituent
specifications, or the reduction in the overall use of coal at such
plant(s)):




(1)
            the
      change imposes a cost, fee, tax, or other economic burden on Purchaser
      concerning (i) the constituent specifications of coal purchased for or
      burned at such plant(s) or (ii) the type or amount of emissions from such
      plant(s);




(2)
            the
      change directly prevents or restricts Purchaser from using coal to be
      supplied under this Agreement at such
plant(s);




(3)
            the
      change requires Purchaser to install equipment (including, without
      limitation, flue gas desulfurization equipment, selective catalytic
      reduction equipment, selective non-catalytic reduction equipment,
      equipment for co-firing with natural gas, or particulate removal
      equipment) at such plant(s) in order to comply with such change;
      or




(4)
            the
      change requires or permits Purchaser to use coal of a quality (including,
      without limitation, sulfur) different from the specifications set forth in
      Section 6.1.




(e)  If
Purchaser determines that a change in Environmental-Related Requirements has had
or may have, at a future date, an adverse impact on the use of coal to be
supplied under this Agreement, Purchaser shall so notify Seller in
writing.  Upon receipt of such notice, Seller shall have the option to
propose, within thirty days after receipt of such notice, any steps available to
Seller in its mining and processing of the coal, in the supply of substitute
coal, or other measure that would result in as low a delivered cost of fuel at
the Designated Plant(s) as Purchaser could obtain by purchasing reasonably
available substitute fuel, taking into consideration any fees, taxes, costs, or
other economic burdens imposed on the use of coal at such
plant(s).  In the event that Purchaser determines, in its reasonable
judgment, that Seller cannot achieve this result, then Purchaser may terminate
this Agreement by giving Seller written notice thereof, which shall specify the
effective date of termination and shall be given at least ninety days prior to
such date.  Purchaser may give such notice either before or after a
change in Environmental-Related Requirements becomes effective.


(f)  If,
at any time during the term of this Agreement and regardless of whether a change
in Environmental-Related Requirements has occurred, Purchaser determines, in its
reasonable judgment, that any operational or environmental compliance problem at
one or more of the Designated Plants has resulted from the components or
characteristics of Seller's coal or the products of its combustion (including,
without limitation, nitrogen oxide emissions, mercury emissions, chlorine
emissions, particulate emissions, and carbon emissions) or any other constituent
or property of the coal not otherwise specified herein, the Parties shall
immediately enter into discussions in a good-faith effort to resolve the
problem.  If such discussions fail to resolve such problem in a manner
that, in Purchaser's judgment, is reasonable and would not impose an
unreasonable additional expense on Purchaser, then Purchaser may terminate this
Agreement by giving Seller written notice thereof, which shall specify the
effective date of termination and shall be given at least ninety days prior to
such date.  No expense contemplated by this Section 10.2(f) or any
other provision of Section 10.2 shall be deemed reasonable if it would result in
a delivered cost of coal under this Agreement that exceeds the delivered cost of
competitive fuels or sources then available to Purchaser.





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Section
11:  Independent Contractor


The Parties acknowledge and agree that
this Agreement is a contract for the sale and purchase of coal, that the
relationship between Purchaser, on the one hand, and Seller and Sales Agent, on
the other hand, is an independent contractor relationship, and that neither this
Agreement nor the purchase and sale of coal under this Agreement shall create a
partnership, joint venture, joint enterprise, or agency
relationship.  The Parties further acknowledge and agree that neither
Seller nor Sales Agent is an agent or employee of Purchaser and that Seller and
Sales Agent are independent of any managerial or other control or direction by
Purchaser and are free to perform, by such means and in such manner as Seller
and Sales Agent may choose, all work in pursuance of their commitments under
this Agreement.




Section
12:  Effect of Certain Terminations


A
termination of this Agreement pursuant to Section 4.3(f), 6.1(d), 10.1(f),
10.1(g), 10.2(e), or 10.2(f) shall not be construed as, or deemed to be, a
default or breach under this Agreement; and upon such termination, no Party
shall have any further obligations or liability under this Agreement, except
with respect to (i) Shipments made prior to the effective date of such
termination or (ii) other obligations or liability that may have accrued prior
to the effective date of such termination.




Section
13:  Binding Effect and Assignments


13.1  Binding
Effect.  This Agreement shall bind, and inure to the benefit
of, the Parties and their successors and assigns, as permitted under Section
13.2.


13.2  Assignments.


(a)  A
Party may not assign its rights, duties, obligations, or interests under and in
this Agreement without the non-assigning Party's prior written consent, which
shall not be unreasonably withheld.  Any purported assignment without
such consent shall be null and void.  Such restrictions shall also
apply to any successor of a Party.





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(b)  Notwithstanding
the provisions of Section 13.2(a), Seller may assign its rights, duties,
obligations, and interests under and in this Agreement to a parent, subsidiary,
affiliate, or sister corporation; provided, however, that
Seller shall not be thereby relieved of its duties or obligations under this
Agreement. Seller may also assign monies due or to become due under this
Agreement in connection with any financing transactions.  In addition,
Purchaser may assign its rights, duties, obligations, and interests under and in
this Agreement to a subsidiary, affiliate, or sister corporation and may sell
any portion of the coal purchased under this Agreement to any other person or
entity; provided,
however, that Purchaser shall not be thereby relieved of its duties or
obligations under this Agreement.


(c)  Nothing
in Section 13.2 shall be construed to limit or restrict Purchaser's right under
Section 8.1 to direct Shipments to destinations other than the Designated Plants
without Seller's consent and at no additional cost to Seller.




Section
14:  Purchaser's Rights of Inspection


14.1  Access to Seller's
Records.  Seller shall maintain accurate records relating to
Shipments under this Agreement in accordance with generally accepted accounting
principles and shall retain such records for at least three years after this
Agreement is terminated or expires.  Seller shall make such records
available to Purchaser, its accountants, auditors, or other authorized
representatives, who shall be given access to and be permitted to examine such
records at reasonable times.  If an audit determines that any payments
previously made under this Agreement ("Previous Payments") were not properly
calculated, adjustments shall be made promptly in amounts to be paid in the
future for Shipments under this Agreement ("Future Payments") to reflect the
proper amount of such adjustments; or if no Future Payments are then due,
payments shall be promptly made to reflect the difference between the Previous
Payments and the proper amounts determined by audit.


14.2  Access to Coal
Property.  Purchaser or its representative shall have the right
at all times during normal Coal Property operation to enter upon the Coal
Property or other appropriate locations, at Purchaser's sole risk and expense,
for any of the following purposes:  (a) to inspect and examine the
method and manner of mining, producing, washing, storing, loading, unloading,
transporting, sampling, weighing, analyzing, or handling of coal to be supplied
under this Agreement; (b) to take samples of coal for Purchaser's analyses; or
(c) in connection with any accounting, audit, or examination of Seller's
records.  Prior to entering the Coal Property, Purchaser's
representative shall check in with appropriate personnel at the entrance to the
Coal Property.  No such inspection by Purchaser shall be deemed a
waiver of any of Purchaser's rights or relieve Seller of any obligations under
this Agreement.





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Section
15:  Waiver


The
waiver by a Party of any provision or condition of this Agreement shall not be
construed as, or deemed to be, a waiver of any other provision or condition of
this Agreement, nor a waiver of a subsequent breach of the same provision or
condition, unless such waiver is expressed in writing and signed by the
Parties.  The failure of a Party to enforce, in one or more instances,
any right under this Agreement shall not be construed as, or deemed to be, a
waiver of such right in the future.


Section
16:  Remedies


All
remedies provided under this Agreement shall be cumulative and in addition to
other remedies available at law or in equity.


Section
17:  Notices


Except
for shipping notices (to be provided as required by Section 8.3) and "as loaded"
coal quality analyses (to be provided as required by Section 8.4) and except as
otherwise provided in this Agreement, any notice, request, demand, report, or
statement (collectively, "Notice") given by one Party to another Party
concerning this Agreement shall be in writing and shall be sent by overnight
courier (in which case the Notice shall be deemed to have been received on the
next business day after it is sent) or by certified mail (in which case the
Notice shall be deemed to have been received on the third business day after it
is sent) to the appropriate address(es) listed in this Section 17.




(a)  Each
      Notice to Purchaser shall be sent
      to:
            Vice
      President
              Fuel Services 14N-8160

                Southern
      Company Services, Inc.
                P.O.
      Box 2641
                Birmingham,
      AL  35291-8160




with
      a copy to:
            Manger,
      Fuel Services
              Southern
      Company Services, Inc.
                Bin
      10171
                241
      Ralph McGill Boulevard, N.E.
                Atlanta,
      GA  30308-3374







or
      to such other address as Purchaser designates by a Notice to Sales
      Agent.




(b)
            Each
      Notice is to Seller or Sales Agent shall be sent to:
            James
      River Coal Sales, Inc.
              901
      East Byrd Street
                Suite
      1600
                Richmond,
      VA  23219-4080







or
      to such other address as Sales Agent designates by a Notice to
      Purchaser.




Section
18:  Confidential and Proprietary Information


The terms
and conditions (including, without limitation, prices) set forth in this
Agreement are considered by the Parties to be confidential and proprietary
information.  No Party shall disclose any such information to any
third party without the other Parties' prior written consent, which shall not be
unreasonably withheld; provided, however, that no
such consent shall be needed where such disclosure (i) is required by law,
regulation, or regulatory agencies having jurisdiction over one of the Parties
or (ii) is necessary in connection with a Party's assertion of a claim or
defense in a judicial or administrative proceeding, and that in either of these
events, the Party intending to make such disclosure shall advise the other
Parties in advance and cooperate to the extent practicable to minimize the
disclosure of any such information.  Notwithstanding the foregoing
provisions of this Section 18, a Party may disclose any information contained in
this Agreement to a prospective purchaser of the stock or assets of that Party;
provided, however, that
any such prospective purchaser shall be bound by the provisions of this Section
18.  For purposes of this Section 18, the term "third party" shall not
include (i) a Party's parent, subsidiary, affiliate, or sister corporation or
(ii) the Parties' respective officers, directors, employees, legal advisers,
accountants, or consultants.





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Section 19: Compliance with
Laws and Regulations


In
connection with its performance under this Agreement, Seller shall comply in all
material respects with applicable laws and regulations (including, without
limitation, those set forth in Annex I, which is attached
hereto and made a part of this Agreement.)  Seller shall acquire and
maintain, in a timely manner, all licenses and permits required by governmental
authorities to enable Seller to perform its obligations under this
Agreement.




Section 20:  Other
Provisions


20.1  Captions.  The
captions to sections of this Agreement are for convenience only and shall not be
considered in construing the intent of the Parties.


20.2  Governing
Law.  All questions concerning the execution, construction,
performance, breach, or enforcement of this Agreement shall be governed by, and
all provisions hereof shall be construed in accordance with, the substantive
laws of the State of Georgia without regard to the Georgia rules concerning
conflicts of law.


20.3  Time of
Essence.  Time is of the essence in the performance of this
Agreement.


20.4  Entire
Agreement.  This Agreement contains the entire agreement
between the Parties with respect to the subject matter hereof; and all prior
agreements, promises, representations, understandings, negotiations, and
communications, whether oral or in writing, among the Parties with respect to
the subject matter hereof (other than the Prior Agreements) are merged into and
superseded by this Agreement.


20.5  Amendments.  No
amendment, modification, or revision of the terms and conditions of this
Agreement shall be effective or binding on either Party unless such amendment,
modification, or revision is reduced to writing and signed by an authorized
representative of each Party.





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20.6  Survival of Certain
Provisions.  The provisions of Sections 2.4(b), 4.8 (and all
provisions referenced therein), 5.3, 6.7, 7.3, 8.5, 8.8 (and all provisions
referenced therein), 8.11, 14.1, and 17 and all provisions of Section 20 shall
survive the termination or expiration of this Agreement.


20.7  Multiple
Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be an original; but such counterparts shall
constitute one and the same instrument.




IN
WITNESS WHEREOF, the Parties, intending to be bound hereby, have caused this
Agreement to be executed by their respective authorized officers as of the date
first above written.




Witness:
            GEORGIA
      POWER COMPANY/s/
      John D.
      Sills
            By: 
      /s/ Douglas E.
      JonesIts: 
      Senior Vice PresidentWitness:
            JAMES
      RIVER COAL COMPANY/s/
      James T.
      Ketron
            By: 
      /s/ Michael E.
      WeberIts:
      Sr. VP and CCOWitness:
            JAMES
      RIVER COAL SALES, INC./s/
      James T.
      Ketron
            By: 
      /s/ Michael E.
      WeberIts:
      President








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