<PAGE>

                                                                 EXHIBIT 10.77

                                                           CONTRACT #96-439-026

                             COAL SUPPLY AGREEMENT

        This is a coal supply agreement (the "Agreement") dated January 1,
1997 between LOUISVILLE GAS AND ELECTRIC COMPANY, a Kentucky corporation, 220
West Main Street, Louisville, Kentucky 40202 ("Buyer") and Lafayette Coal
Company, an Illinois corporation, 200 Frontage Road, Burr Ridge, Illinois
60521 ("Seller").

        The parties hereto agree as follows:

        SECTION 1.  GENERAL.  Seller will sell to Buyer and Buyer will buy
from  Seller  steam coal under all the terms and conditions of this Agreement.

        SECTION 2. TERM.  The term of this  Agreement  shall  commence  on
January 1, 1997 and shall continue through December 31, 2000, subject to the
provisions of SECTION 8.3.

        SECTION 3.  QUANTITY.

        SECTION 3.1 QUANTITY. Seller shall sell and deliver and Buyer shall
purchase and accept delivery of the following annual quantity of coal
("Quantity"):

<TABLE>
<CAPTION>

               YEAR                 BASE QUANTITY (TONS)
               ----                 --------------------
               <S>                  <C>
               1997                 600,000

               1998                 1,000,000

               1999                 1,000,000

               2000                 1,000,000
</TABLE>

        SECTION 3.2 DELIVERY SCHEDULE. By December 1 of each year (except for
1997, within 10 business days after this Agreement becomes fully executed),
Buyer shall specify in writing to Seller the quantities to be delivered in each
month of the following year pursuant to mutual agreement of Buyer and Seller a
reasonable schedule. Such quantities shall be shipped in


<PAGE>
                                                        CONTRACT #96-439-026

accordance with such schedule. Time is of the essence with respect to the
schedule so established; and failure by Seller to deliver in a timely fashion
shall constitute a material breach within the meaning of SECTION 15 of this
Agreement.

SECTION 4. SOURCE.

        SECTION 4.1 SOURCE. The coal sold hereunder shall be supplied from
the geological seam Pittsburgh #8, Powhatan #4 Mine, Monroe County, Ohio and
Shoemaker Mine and McElroy Mine, Marshall County, West Virginia (the "Coal
Property").

        SECTION 4.2 ASSURANCE OF OPERATION AND RESERVES. Seller represents
and warrants that the operator of the Coal Property (the "Operator") has
provided Seller with representations and warranties that the Coal Property
contains economically recoverable coal of a quality and in quantities which
will be sufficient to satisfy all the requirements of this Agreement. Seller
represents and warrants that the Operator has provided Seller with agreements
and warranties that it will have at the Coal Property adequate machinery,
equipment and other facilities to produce, prepare and deliver coal in the
quantity and of the quality required by this Agreement. Seller further
represents and warrants that the Operator has provided Seller with agreements
to operate and maintain such machinery, equipment and facilities in
accordance with good mining practices so as to efficiently and economically
produce, prepare and deliver such coal. Seller represents and warrants that
the Operator has provided Seller with

                                      2
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                                                       CONTRACT #96-439-026

agreements that Buyer is not providing any capital for the purchase of such
machinery, equipment and/or facilities and that Operator shall operate and
maintain same at its sole expense, including all required permits and
licenses. Seller hereby represents and warrants that the Operator has
provided Seller with agreements that it dedicates to this Agreement
sufficient reserves of coal meeting the quality specifications hereof and
lying on or in the Coal Property so as to fulfill the quantity requirements
hereof.

        SECTION 4.3 NON-DIVERSION OF COAL. Seller represents and warrants that
the Operator has provided Seller with agreements and warranties it will not,
without Buyer's express prior written consent, use or sell coal from the Coal
Property in a way that will reduce the economically recoverable balance of coal
in the Coal Property to an amount less than that required to be supplied to
Buyer hereunder.

        SECTION 4.4 PRODUCER CONTRACT. It is a condition to the obligations of
Seller hereunder that the operator of the Coal Property will enter into and
execute a Coal Purchase Contract with Seller in the form of Exhibit A attached
hereto. Seller will deliver to Buyer within 10 days after this Agreement is
executed a fully executed copy of this Coal Purchase Contract. If Seller fails
to deliver said Coal Purchase Contract, then Buyer shall have the right to
declare this Agreement void.

        SECTION 4.5 SUBSTITUTE COAL. Notwithstanding the above
representations and warranties, in the event that Seller is unable to obtain
coal from the Coal Property in the quantity and of the quality required by
this Agreement, and such inability is not caused by a force majeure event as
defined in SECTION 10, then Buyer will have the option of requiring that
Seller supply substitute coal from other facilities and mines under all the
terms and conditions of this Agreement including, but not limited to, the
price provisions of SECTION 8, the quality specifications of SECTION 6.1, and
the provisions of SECTION 5 concerning reimbursement to Buyer for increased
transportation costs. Seller's delivery of coal

                                      3
<PAGE>
                                                          CONTRACT #96-439-026

not produced from the Coal Property without having received the express
written consent of Buyer, which consent shall not be unreasonably withheld,
shall constitute a material breach of this Agreement.

        SECTION 5.  DELIVERY.

        The coal shall be delivered to Buyer F.O.B. barge at mile point 115.6
on the Ohio River (the "Delivery Point"). Seller may deliver the coal at a
location different from the Delivery Point, provided, however, that Seller
shall reimburse Buyer for any resulting increases in the cost of transporting
the coal to Buyer's generating stations. Any resulting savings in such
transportation costs shall be retained by Buyer.

        Title to and risk of loss of coal sold will pass to Buyer and the
coal will be considered to be delivered when barges containing the coal are
disengaged by Buyer's barging contractor from the loading dock. Buyer or its
contractor shall furnish suitable barges in accordance with a delivery
schedule provided by Buyer to Seller. Seller shall arrange and pay for all
costs of transporting the coal from the mines to the loading docks and
loading and trimming the coal into barges to the proper draft and the proper
distribution within the barges. Buyer shall arrange for transporting the coal
by barge from the loading dock to its generating station(s) and shall pay for
the cost of such transportation. For delays caused by Seller in handling the
scheduling of shipments with Buyer's barging contractor, Seller shall be
responsible for any demurrage or other penalties assessed by said barging
contractor (or assessed by Buyer) which accrue at the Delivery Point,
including the demurrage, penalties for loading less than the specified
minimum tonnage per barge, or other penalties assessed for barges not loaded
in conformity with applicable

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                                                          CONTRACT #96-439-026

requirements. Buyer shall be responsible to deliver barges in as clean and
dry condition as practicable. Seller shall require of the loading dock
operator that the barges and towboats provided by Buyer or Buyer's barging
contractor be provided convenient and safe berth free of wharfage, dockage
and port charges; that while the barges are in the care and custody of the
loading dock, all U.S. Coast Guard regulations and other applicable laws,
ordinances, rulings, and regulations shall be complied with, including
adequate mooring and display of warning lights; that the loading operations
be performed in a workmanlike manner and in accordance with the reasonable
loading requirements of Buyer and Buyer's barging contractor; and that the
loading dock operator carry landing owners or wharfinger's insurance with
basic coverage of not less than $300,000.00 and total of basic coverage and
excess liability coverage of not less than $1,000,000.00, and provide
evidence thereof to Buyer in the form of a certificate of insurance from the
insurance carrier or an acceptable certificate of self-insurance with
requirement for 30 days advance notification of Buyer in the event of
termination of or material reduction in coverage under the insurance.

        SECTION 6. QUALITY.

        SECTION 6.1  SPECIFICATIONS.  The coal delivered hereunder shall
conform to the following specifications on an "as received" basis:

<TABLE>
<CAPTION>

                              Guaranteed Monthly     Rejection Limits
        Specifications        Weighted Average        (per shipment)
------------------------------------------------------------------------
<S>                            <C>                 <C>
        BTU/LB.                     min. 12,000    LESS THAN    11,600

        LBS/MMBTU:
        MOISTURE                    max. 6.25      GREATER THAN   9.00

</TABLE>

                                        5

<PAGE>

<TABLE>
<CAPTION>

                                                          CONTRACT #96-439-026

                              Guaranteed Monthly     Rejection Limits
        Specifications        Weighted Average        (per shipment)
------------------------------------------------------------------------
<S>                            <C>                 <C>
        ASH                         max. 8.50      GREATER THAN  11.25
        SULFUR                      max. 3.75      GREATER THAN   4.25
        SULFUR                      min. 1.8       LESS THAN      1.8
        CHLORINE                    max.  .03      GREATER THAN    .05
        NITROGEN                    max. 1.0       GREATER THAN   1.6

        ASH/SULFUR RATIO            min. 2.2       LESS THAN      2.0

        SIZE (3" x 0"):
           Top size (inches)*       max. 3.0"      GREATER THAN   3.0"
           Fines (% by wgt)
           Passing 1/4" screen      max.  45       GREATER THAN    50

        % BY WEIGHT:
        VOLATILE                    max.  38       GREATER THAN     39
        VOLATILE                    min.  33       LESS THAN        32
        FIXED CARBON                max.  44       GREATER THAN     47
        FIXED CARBON                min.  42       LESS THAN        40
        GRINDABILITY (HGI)          min.  54       LESS THAN        52

        BASE ACID RATIO (B/A)
        SLAGGING FACTOR**           max. 2.9       GREATER THAN     3.3
        FOULING FACTOR***           max. 0.4       GREATER THAN     0.5

        ASH FUSION TEMPERATURE (DEG.F) (ASTM D1857)

        REDUCING ATMOSPHERE
        Initial Deformation         min. 1985      min. 1960
        Softening (H=W)             min. 2020      min. 1985
        Softening (H=1/2W)          min. 2125      min. 2100
        Fluid                       min. 2220      min. 2200

        OXIDIZING ATMOSPHERE
        Initial Deformation         min. 2475      min. 2400
        Softening (H=W)             min. 2520      min. 2470
        Softening (H=1/2W)          min. 2540      min. 2510
        Fluid                       min. 2560      min. 2540
</TABLE>

        * All the coal will be of such size that it will pass through a
screen having circular perforations three (3) inches in diameter, but shall
not contain more than fifty percent (50%) by

                                      6
<PAGE>
                                                        CONTRACT #96-439-026

weight of coal that will pass through a screen having circular perforations
one-quarter (1/4) of an inch in diameter.

        **     Slagging Factor (R(s))=(B/A) x (Percent Sulfur by Weight(Dry))
        ***    Fouling Factor (R(f))=(B/A) x (Percent Na(2)0 by Weight(Dry))

        The Base Acid Ratio (B/A) is herein defined as:
        BASE ACID RATIO (B/A) =

                             (Fe(2)0(3) + Ca0 + Mg0 +  Na(2)0 + K(2)0)
                             -----------------------------------------
                                (Si0(2) + Al(2)0(3) + Tl0(2))

        Note:  As used herein GREATER THAN      means greater than:
                                      LESS THAN means less than.


        SECTION 6.2 DEFINITION OF "SHIPMENT". As used herein, a "shipment"
shall mean one barge load or a barge lot load, in accordance with Buyer's
sampling and analyzing practices.

        SECTION 6.3  REJECTION.

        Buyer has the right, but not the obligation, to reject any shipment
which fail(s) to conform to the Rejection Limits set forth in SECTION 6.1 or
contains extraneous materials. Buyer must reject such coal within seventy-two
(72) hours of receipt of the coal analysis provided for in SECTION 7.2 or
such right to reject is waived. In the event Buyer rejects such
non-conforming coal, title to and risk of loss of the coal shall be
considered to have never passed to Buyer and Buyer shall return the coal to
Seller or, at Seller's request, divert such coal to Seller's designee, all at
Seller's cost and risk. Seller shall replace the rejected coal within five
(5) working days from notice of rejection with coal conforming to the
Rejection Limits set forth in SECTION 6.1. If Seller fails to replace the
rejected coal within such five (5) working day period or the replacement coal
is rightfully

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<PAGE>

                                                        CONTRACT #96-439-026

rejected, Buyer may purchase coal from another source in order to replace the
rejected coal. Seller shall reimburse Buyer for (i) any amount by which the
actual price plus transportation costs to Buyer of such coal purchased from
another source exceed the price of such coal under this Agreement plus
transportation costs to Buyer from the Delivery Point; and (ii) any and all
transportation, storage, handling, or other expenses that have been incurred
by Buyer for rightfully rejected coal. This remedy is in addition to all of
Buyer's other remedies under this Agreement and under applicable law and in
equity for Seller's breach.

        If Buyer fails to reject a shipment of non-conforming coal which it
had the right to reject for failure to meet any or all of the Rejection
Limits set forth in SECTION 6.1 or because such shipment contained extraneous
materials, then such non-conforming coal shall be deemed accepted by Buyer;
however, the quantity Seller is obligated to sell to Buyer under the
Agreement may or may not be reduced by the amount of each such non-conforming
shipment at Buyer's sole option and the shipment shall nevertheless be
considered "rejectable" under SECTION 6.4. Further, for shipments containing
extraneous materials, which include, but are not limited to, slate, rock,
wood, corn husks, mining materials, metal, steel, etc., the estimated weight
of such materials shall be deducted from the weight of that shipment.

        SECTION 6.4 SUSPENSION AND TERMINATION. If the coal sold hereunder
fails to meet one or more of the Discount Points set forth in 8.2, except for
excess moisture and related effect on BTU values caused by weather
conditions, for any three (3) consecutive months in a six (6) month period,
or, except for excess moisture and related effect on BTU values caused by
weather conditions, if nine (9) barge shipments in a 30 day period are
rejectable by Buyer, Buyer may


                                      8
<PAGE>

                                                        CONTRACT #96-439-026

upon notice confirmed in writing and sent to Seller by certified mail,
suspend future shipments except shipments already loaded into barges. Seller
shall, within 10 days, provide Buyer with reasonable assurances that
subsequent monthly deliveries of coal shall meet or exceed the Discount
Points set forth in SECTION 8.2 and that the source will exceed the rejection
limits set forth in 6.1. If Seller fails to provide such assurances within
said 10 day period, Buyer may terminate this Agreement by giving written
notice of such termination at the end of the 10 day period. A waiver of this
right for any one period by Buyer shall not constitute a waiver for
subsequent periods. If Seller provides such assurances to Buyer's reasonable
satisfaction, shipments hereunder shall resume and any tonnage deficiencies
resulting from suspension may be made up at Buyer's sole option. Buyer shall
not unreasonably withhold its acceptance of Seller's assurances, or delay the
resumption of shipment. If Seller, after such assurances, fails to meet any
of the Discount Points for any one (1) month within the next six (6) months
or if three (3) barge shipments are rejectable within any one (1) month
during such six (6) month period, then Buyer may terminate this Agreement and
exercise all its other rights and remedies under applicable law and in equity
for Seller's breach.

        SECTION 7.    WEIGHTS, SAMPLING AND ANALYSIS.

        SECTION 7.1 WEIGHTS. The weight of the coal delivered hereunder shall
be determined on a per shipment basis by Buyer on the basis of scale weights
at the generating station(s) unless another method is mutually agreed upon by
the parties. Such scales shall be duly reviewed by an appropriate testing
agency and maintained in an accurate condition. Seller shall have the right,
at Seller's expense and upon reasonable notice, to have the scales checked
for accuracy at any

                                      9
<PAGE>

                                                        CONTRACT #96-439-026

reasonable time or frequency. If the scales are found to be over or under the
tolerance range allowable for the scale based on industry accepted standards,
either party shall pay to the other any amounts owed due to such inaccuracy
for a period not to exceed thirty (30) days before the time any inaccuracy of
scales is determined.

        SECTION 7.2 SAMPLING AND ANALYSIS. The sampling and analysis of the
coal delivered hereunder shall be performed by Buyer and the results thereof
shall be accepted and used for the quality and characteristics of the coal
delivered under this Agreement. All analyses shall be made in Buyer's
laboratory at Buyer's expense in accordance with industry-accepted standards.
Samples for analyses shall be taken by any industry-accepted standard,
mutually acceptable to both parties, may be composited and shall be taken
with a frequency and regularity sufficient to provide reasonably accurate
representative samples of the deliveries made hereunder. Seller represents
that it is familiar with Buyer's sampling and analysis practices, and finds
them to be acceptable. Buyer shall notify Seller in writing of any
significant changes in Buyer's sampling and analysis practices. Any such
changes in Buyer's sampling and analysis practices shall, except for industry
accepted changes in practices, provide for no less accuracy than the sampling
and analysis practices existing at the time of the execution of this
Agreement, unless the Parties otherwise mutually agree.

        Each sample taken by Buyer shall be divided into 4 parts and put into
airtight containers, properly labeled and sealed. One part shall be used for
analysis by Buyer; one part shall be used by Buyer as a check sample, if
Buyer in its sole judgment determines it is necessary; one part shall be
retained by Buyer until the 25th of the month following the month of
unloading (the

                                      10
<PAGE>

                                                        CONTRACT #96-439-026

"Disposal Date") and shall be delivered to Seller for analysis if Seller so
requests before the Disposal Date; and one part ("Referee Sample") shall be
retained by Buyer until the Disposal Date. Seller shall be given copies of
all analyses made by Buyer by the 12th day of the month following the month
of unloading. Seller, on reasonable notice to Buyer shall have the right to
have a representative present to observe the sampling and analyses performed
by Buyer. Unless Seller requests a Referee Sample analysis before the
Disposal Date, Buyer's analysis shall be used to determine the quality of the
coal delivered hereunder. The Monthly Weighted Averages shall be determined
by utilizing the individual shipment analyses.

        If any dispute arises before the Disposal Date, the Referee Sample
retained by Buyer shall be submitted for analysis to an independent
commercial testing laboratory ("Independent Lab") mutually chosen by Buyer
and Seller. For each coal quality specification in question, a dispute shall
be deemed not to exist and Buyer's analysis shall prevail and the analysis of
the Independent Lab shall be disregarded if the analysis of the Independent
Lab differs from the analysis of Buyer by an amount equal to or less than:

                      (i) 0.50% moisture
                     (ii) 0.50% ash on a dry basis
                    (iii) 100 Btu/lb. on a dry basis
                     (iv) 0.10% sulfur on a dry basis.

        For each coal quality specification in question, if the analysis of the
Independent Lab differs from the analysis of Buyer by an amount more than the
amounts listed above, then the analysis of the Independent Lab shall prevail and
Buyer's analysis shall be disregarded. The cost

                                      11
<PAGE>
                                                        CONTRACT #96-439-026

of the analysis made by the Independent Lab shall be borne by Seller to the
extent that Buyer's analysis prevails and by Buyer to the extent that the
analysis of the Independent Lab prevails.

        SECTION 8.    PRICE.

        SECTION 8.1 BASE PRICE. Subject to SECTION8.3 and SECTION8.5, the
base price ("Base Price") of the coal to be sold hereunder will be
$0.7750/MMBtu.

        SECTION 8.2   QUALITY PRICE DISCOUNTS.

        (a) The Base Price is based on coal meeting or exceeding the
Guaranteed Monthly Weighted Average specifications as set forth in SECTION
6.1. Quality price discounts shall be applied for each specification each
month to reflect failures to meet the Guaranteed Monthly Weighted Averages
set forth in SECTION 6.1, as determined pursuant to SECTION 7.2, subject to
the provisions set forth below. The discount values used are as follows:

<TABLE>
<CAPTION>

                                 DISCOUNT VALUES
                                 ----------------
                             <S>            <C>
                                            $/LB./MMBTU
                             SULFUR           0.1250
                             ASH              0.0350
</TABLE>

        (b)    Notwithstanding  the foregoing, for each specification each
month, there shall be no discount if the actual Monthly Weighted  Average
meets the applicable Discount Point set forth  below.  However, if the
actual Monthly Weighted  Average  fails to meet such applicable Discount
Point, then the discount shall apply. For sulfur, the discount shall be
calculated on the basis of the  difference between the actual Monthly
Weighted Average AND THE GUARANTEED MONTHLY WEIGHTED AVERAGE pursuant to
the methodology shown below. For ash, the discount

                                      12
<PAGE>
                                                        CONTRACT #96-439-026

shall be calculated on the basis of the difference between the actual Monthly
Weighted Average and the Discount Point.

<TABLE>
<CAPTION>

                          GUARANTEED MONTHLY
                          WEIGHTED AVERAGE
                          --------------------
                                                DISCOUNT POINT
                                                --------------

LB/MMBTU:
---------
<S>                       <C>                   <C>
SULFUR                    max. 3.75             4.00


ASH                       max. 8.50             9.17

</TABLE>

        For example if the actual Monthly Weighted Average of sulfur equals
4.05  lb/MMBTU, then  the  applicable  discount would be (4.05  lb.  -  3.75
lb.)  x   $.1250/lb/MMBTU  = $.03750/MMBTU.  And,  for  example,  if  the
Monthly  Weighted  Average  of ash  equals  9.40 lb/MMBTU,  then the
applicable  discount would be (9.40 lb. - 9.17 lb.) x  $.0350/lb/MMBTU  =
$.00805/MMBTU.

        SECTION 8.3 PRICE REVIEW. The Base Price and all other terms and
conditions of this Agreement shall be subject to review for any reason at the
request of either party for revisions to become effective on January 1 of any
year hereunder. The party requesting such a review shall give written notice
of its request to the other party on or before any October 1. The parties
then shall negotiate an agreement on new prices and/or other terms and
conditions between October 1 and December 1. If the parties do not reach an
agreement by December 1, then this Agreement will terminate as of December 31
of that year without liability due to such termination for either party.

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                                                        CONTRACT #96-439-026

       SECTION 8.4 PAYMENT CALCULATION. Exhibit B attached hereto shows the
methodology for calculating the coal payment and quality price discounts for
the month Seller's coal was unloaded by Buyer. If there are any such
discounts, Buyer shall apply credit to amounts owed Seller for the month the
coal was unloaded.

       SECTION 8.5 GOVERNMENTAL IMPOSITIONS. Seller shall pay when due, and
the Base Price set forth in SECTION 8 of this Agreement without any
adjustments is inclusive of all federal, state, municipal and local taxes,
fees and costs of any kind whether arising from government law, rule,
regulation or otherwise including, without limitation, all costs of
conforming to federal and state mining and reclamation laws, rules and
regulations and all other and/or additional mining and operating costs and
expenses in effect on the effective date of this Agreement.

        In the event of any one enactment, promulgation or change in any
statute, regulations, or the like or of any one governmental imposition
(collectively "Governmental Imposition") enacted or promulgated after the
effective date of this Agreement, Seller shall give Buyer prompt written
notice thereof, including the amount of increase or decrease in Seller's cost
of performance caused by such Governmental Imposition. If Buyer and Seller
are unable to come to agreement on the increase or decrease of the Base Price
with regard to such change in cost within fifteen (15) days from notice, then
either Party may terminate this Agreement upon the latter of fifteen (15)
days from date of notice or the effective date of such Governmental
Imposition. In no event shall the increase or decrease in Base Price be more
than the increase or decrease in Seller's change in cost of performance per
MMBTU caused by such Governmental Imposition.

                                      14
<PAGE>
                                                        CONTRACT #96-439-026

        SECTION 9.    INVOICES, BILLING AND PAYMENT.

        SECTION 9.1  INVOICING ADDRESS.  Invoices will be sent to Buyer at
the following address:

               Louisville Gas and Electric Company
               220 West Main Street
               P.O. Box 32010
               Louisville, KY  40232
               Attention:  Director, Fuels Procurement and Delivery

               With a copy to:

               Louisville Gas and Electric Company
               220 West Main Street
               P.O. Box 32010
               Louisville, KY  40232
               Attention:  Manager, Accounts Payable

        SECTION 9.2 INVOICE PROCEDURES FOR COAL SHIPMENTS. Seller shall
invoice Buyer at the Base Price, minus any quality price discounts, for all
coal unloaded in a calendar month by the fifteenth of the following month.

        SECTION 9.3 PAYMENT PROCEDURES FOR COAL SHIPMENTS. Payment for coal
unloaded in a calendar month shall be mailed by the 25th of the month
following the month of unloading or within ten days after receipt of Seller's
invoice, whichever is later. Buyer shall mail all payments to Seller's
account at Lafayette Coal Company, P.O. Box 74761, Chicago, Illinois 60694.

        SECTION 9.4 WITHHOLDING. Buyer shall have the right to withhold from
payment of any billing or billings (i) any sums which it is not able in good
faith to verify or which it otherwise in good faith disputes, (ii) any damages
resulting from or likely to result from any breach of this Agreement by Seller,
and (iii) any amounts owed to Buyer from Seller. Buyer shall notify Seller

                                      15
<PAGE>
                                                        CONTRACT #96-439-026

promptly in writing of any such issue, stating the basis of its claim and the
amount it intends to withhold.

        Payment by Buyer, whether knowing or inadvertent, of any amount in
dispute shall not be deemed a waiver of any claims or rights by Buyer with
respect to any disputed amounts or payments made.

        SECTION 10.   FORCE MAJEURE.

        SECTION 10.1 GENERAL FORCE MAJEURE. If either party hereto is delayed in
or prevented from performing any of its obligations or from utilizing the coal
sold under this Agreement due to acts of God, war, riots, civil insurrection,
acts of the public enemy, strikes, lockouts, fires, floods or earthquakes, which
are beyond the reasonable control and without the fault or negligence of the
party affected thereby, then the obligations of both parties hereto shall be
suspended to the extent made necessary by such event; provided that the affected
party gives written notice to the other party as early as practicable of the
nature and probable duration of the force majeure event. The party declaring
force majeure shall exercise due diligence to avoid and shorten the force
majeure event and will keep the other party advised as to the continuance of the
force majeure event.

        During any period in which Seller's ability to perform hereunder is
affected by a force majeure event, Seller shall not deliver any coal to any
other buyers to whom Seller's ability to supply is similarly affected by such
force majeure event unless contractually committed to do so at the beginning of
the force majeure event; and further shall deliver to Buyer under this Agreement
at least a pro rata portion (on a per ton basis) of its total contractual
commitments to all its buyers to whom Seller's ability to supply is similarly
affected by such force majeure event



                                      16
<PAGE>

                                                        CONTRACT #96-439-026

in place at the beginning of the force majeure event. An event which affects
the Seller's ability to produce or obtain coal from a mine other than the
Coal Property will not be considered a force majeure event hereunder.

        During any period in which Buyer's ability to perform hereunder is
affected by a force majeure event, Buyer shall not take delivery of any coal
from any other sellers from whom Buyer's ability to take delivery is similarly
affected by such force majeure event unless contractually committed to do so at
the beginning of the force majeure event; and further shall take delivery from
Seller under this Agreement of at least a pro rata portion (on a per ton basis)
of its total contractual commitments to all its sellers from whom Buyer's
ability to purchase is similarly affected by such force majeure event in place
at the beginning of the force majeure event.

        Tonnage deficiencies resulting from a force majeure event shall be made
up by mutual agreement of Buyer and Seller.

        SECTION 10.2 ENVIRONMENTAL LAW FORCE MAJEURE. The parties recognize
that, during the continuance of this Agreement, legislative or regulatory bodies
or the courts may adopt environmental laws, regulations, policies and/or
restrictions which will make it impossible or commercially impracticable for
Buyer to utilize this or like kind and quality coal which thereafter would be
delivered hereunder. If as a result of the adoption of such laws, regulations,
policies, or restrictions, or change in the interpretation or enforcement
thereof, Buyer decides that it will be impossible or commercially impracticable
(uneconomical) for Buyer to utilize such coal, Buyer shall so notify Seller, and
thereupon Buyer and Seller shall promptly consider whether corrective

                                      17
<PAGE>
                                                        CONTRACT #96-439-026

actions can be taken in the mining and preparation of the coal at Seller's
mine and/or in the handling and utilization of the coal at Buyer's generating
station; and if in Buyer's sole judgment such actions will not, without
unreasonable expense to Buyer, make it possible and commercially practicable
for Buyer to so utilize coal which thereafter would be delivered hereunder
without violating any applicable law, regulation, policy or order, Buyer
shall have the right, upon the later of 60 days notice to Seller or the
effective date of such restriction, to terminate this Agreement without
further obligation hereunder on the part of either party.

        SECTION 11. CHANGES. Buyer may, by mutual agreement with Seller, at
any time by written notice pursuant to SECTION 12 of this Agreement, make
changes within the general scope of this Agreement in any one or more of the
following: quality of coal or coal specifications, quantity of coal, method
or time of shipments, place of delivery (including transfer of title and risk
of loss), method(s) of weighing, sampling or analysis and such other
provision as may affect the suitability and amount of coal for Buyer's
generating stations.

        If any such changes makes necessary or appropriate an increase or
decrease in the then current price per ton of coal, or in any other provision
of this Agreement, an equitable adjustment shall be made in: price, whether
current or future or both, and/or in such other provisions of this Agreement
as are affected directly or indirectly by such change, and the Agreement
shall thereupon be modified in writing accordingly.

        Any claim by the Seller for adjustment under this SECTION 11 shall be
asserted within thirty (30) days after the date of Seller's receipt of the
written notice of change, it being understood, however that Seller shall not
be obligated to proceed under this Agreement as changed until an

                                      18
<PAGE>
                                                        CONTRACT #96-439-026

equitable adjustment has been agreed upon. The parties agree to negotiate
promptly and in good faith to agree upon the nature and extent of any
equitable adjustment.

        SECTION 12.   NOTICES.

        SECTION 12.1 FORM AND PLACE OF NOTICE. Any official notice, request
for approval or other document required to be given under this Agreement
shall be in writing, unless otherwise provided herein, and shall be deemed to
have been sufficiently given when delivered in person, transmitted by
facsimile or other electronic media, delivered to an established mail service
for same day or overnight delivery, or dispatched in the United States mail,
postage prepaid, for mailing by first class, certified, or registered mail,
return receipt requested, and addressed as follows:

        If to Buyer:         Louisville Gas and Electric Company
                             220 West Main Street
                             P.O. Box 32010
                             Louisville, Kentucky 40232
                             Attn.:  Director, Fuels Procurement and Delivery

        with a copy to:      Louisville Gas and Electric Company
                             820 West Broadway
                             P.O. Box 32020
                             Louisville, Kentucky 40232
                             Attn.:  Manager, Procurement Services

        If to Seller:        Lafayette Coal Company
                             200 Frontage Road
                             Burr Ridge, Illinois 60521

        SECTION 12.2 CHANGE OF PERSON OR ADDRESS. Either party may change the
person or address specified above upon giving written notice to the other
party of such change.

                                      19
<PAGE>
                                                        CONTRACT #96-439-026

        SECTION 12.3 ELECTRONIC DATA TRANSMITTAL. Seller hereby agrees, at
Seller's cost, to electronically transmit shipping notices and/or other data
to Buyer in a format acceptable to and established by Buyer upon Buyer's
request. Buyer shall provide Seller with the appropriate format and will
inform Seller as to the electronic data requirements at the appropriate time.

        SECTION 13.   RIGHT TO RESELL.  Buyer shall have the unqualified
right to sell all or any of the coal purchased under this Agreement.

        SECTION 14.   INDEMNITY AND INSURANCE.

        SECTION 14.1 INDEMNITY. Seller agrees to indemnify and save harmless
Buyer, its officers, directors, employees and representatives from any
responsibility and liability for any and all claims, demands, losses, legal
actions for personal injuries, property damage and pollution (including
reasonable inside and outside attorney's fees) (i) relating to the barges or
railcars provided by Buyer or Buyer's contractor while such barges or
railcars are in the care and custody of the loading dock or loading facility,
(ii) due to any failure of Seller to comply with laws, regulations or
ordinances, or (iii) due to the acts or omissions of Seller in the
performance of this Agreement.

        SECTION 14.2 INSURANCE. Seller represents and warrants that the
Operator has agreed to carry insurance coverage with minimum limits as
follows:

               (1) Commercial General Liability, including Completed
Operations and Contractual Liability, $1,000,000 single limit liability.

               (2) Automobile General Liability, $1,000,000 single limit
liability.

                                      20
<PAGE>
                                                        CONTRACT #96-439-026

               (3) In addition, Seller shall carry excess liability insurance
covering the foregoing perils in the amount of $4,000,000 for any one
occurrence.

               (4) Workers' Compensation and Employer's Liability with statutory
limits.

        If any of the above policies are written on a claims made basis, then
the retroactive date of the policy or policies will be no later than the
effective date of this Agreement. Certificates of Insurance satisfactory in
form to the Buyer and signed by the Seller's insurer shall be supplied by the
Seller to the Buyer evidencing that the above insurance is in force and that
not less than 30 calendar days written notice will be given to the Buyer
prior to any cancellation or material reduction in coverage under the
policies. The Seller shall cause its insurer to waive all subrogation rights
against the Buyer respecting all losses or claims arising from performance
hereunder. Evidence of such waiver satisfactory in form and substance to the
Buyer shall be exhibited in the Certificate of Insurance mentioned above.
Seller's liability shall not be limited to its insurance coverage.

        SECTION 15.   TERMINATION FOR DEFAULT.

        Subject to SECTION 6.4, if either party hereto commits a material
breach of any of its obligations under this Agreement at any time, then the
other party has the right to give written notice describing such breach and
stating its intention to terminate this Agreement no sooner than 30 days
after the date of the notice (the "notice period"). If such material breach
is curable and the breaching party cures such material breach within the
notice period, then the Agreement shall not be terminated due to such
material breach. If such material breach is not curable or the breaching
party fails to cure such material breach within the notice period, then this
Agreement shall

                                      21
<PAGE>

                                                        CONTRACT #96-439-026

terminate at the end of the notice period in addition to all the other rights
and remedies available to the aggrieved party under this Agreement and at law
and in equity.

        SECTION 16.   DOCUMENTATION AND RIGHT OF AUDIT.

        Seller shall maintain all records and accounts pertaining to
payments, quantities, quality analyses, and source for all coal supplied
under this Agreement for a period lasting through the term of this Agreement
and for two years thereafter. Buyer shall have the right at no additional
expense to Buyer to audit, copy and inspect such records and accounts at any
reasonable time upon reasonable notice during the term of this Agreement and
for 2 years thereafter.

        SECTION 17. EQUAL EMPLOYMENT OPPORTUNITY. To the extent applicable,
Seller shall comply with all of the following provisions which are
incorporated herein by reference: Equal Opportunity regulations set forth in
41 CRF SECTION 60-1.4(a) and (c) prohibiting discrimination against any
employee or applicant for employment because of race, color, religion, sex,
or national origin; Vietnam Era Veterans Readjustment Assistance Act
regulations set forth in 41 CRF SECTION 50-250.4 relating to the employment
and advancement of disabled veterans and veterans of the Vietnam Era;
Rehabilitation Act regulations set forth in 41 CRF SECTION 60-741.4 relating
to the employment and advancement of qualified disabled employees and
applicants for employment; the clause known as "Utilization of Small Business
Concerns and Small Business Concerns Owned and Controlled by Socially and
Economically Disadvantaged Individuals" set forth in 15 USC SECTION
637(d)(3); and subcontracting plan requirements set forth in 15 USC SECTION
637(d).

        SECTION 18. COAL PROPERTY INSPECTIONS. Buyer and its representatives,
and others as may be required by applicable laws, ordinances and regulations

                                      22
<PAGE>
                                                        CONTRACT #96-439-026

shall have the right at all reasonable times and at their own expense to
inspect the Coal Property, including the loading facilities, scales, sampling
system(s), wash plant facilities, and mining equipment for conformance with
this Agreement. Seller shall undertake reasonable care and precautions to
prevent personal injuries to any representatives, agents or employees of
Buyer (collectively, "Visitors") who inspect the Coal Property. Any such
Visitors shall make every reasonable effort to comply with Seller's
regulations and rules regarding conduct on the work site, made known to
Visitors prior to entry, as well as safety measures mandated by state or
federal rules, regulations and laws. Buyer understands that underground mines
and related facilities are inherently high-risk environments. Buyer's failure
to inspect the Coal Property or to object to defects therein at the time
Buyer inspects the same shall not relieve Seller of any of its
responsibilities nor be deemed to be a waiver of any of Buyer's rights
hereunder.

        SECTION 19.   MISCELLANEOUS.

        SECTION 19.1 APPLICABLE LAW. This Agreement shall be construed in
accordance with the laws of the State of Kentucky, and all questions of
performance of obligations hereunder shall be determined in accordance with
such laws.

        SECTION 19.2 HEADINGS. The paragraph headings appearing in this
Agreement are for convenience only and shall not affect the meaning or
interpretation of this Agreement.

        SECTION 19.3 WAIVER. The failure of either party to insist on strict
performance of any provision of this Agreement, or to take advantage of any
rights hereunder, shall not be construed as a waiver of such provision or
right.

                                      23
<PAGE>
                                                        CONTRACT #96-439-026

        SECTION 19.4 REMEDIES CUMULATIVE. Remedies provided under this
Agreement shall be cumulative and in addition to other remedies provided
under this Agreement or by law or in equity.

        SECTION 19.5 SEVERABILITY. If any provision of this Agreement is
found contrary to law or unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms,
unless such unlawful or unenforceable provision is material to the
transactions contemplated hereby, in which case the parties shall negotiate
in good faith a substitute provision.

        SECTION 19.6  BINDING  EFFECT.  This  Agreement  shall bind and inure
to the  benefit of the parties and their successors and assigns.

        SECTION 19.7 ASSIGNMENT. Neither party may assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
other party, which consent shall not be unreasonably withheld or denied;
provided, however, that Buyer shall have the right, without consent of
Seller, to assign all or any part of this Agreement to any company,
controlling, controlled by, or under common control with Buyer.

        SECTION 19.8 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties as to the subject matter hereof, and there are
no representations, understandings or agreements, oral or written, which are
not included herein.

        SECTION 19.9 AMENDMENTS. Except as otherwise provided herein, this
Agreement may not be amended, supplemented or otherwise modified except by
written instrument signed by both parties hereto.

                                      24
<PAGE>
                                                        CONTRACT #96-439-026

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.

<TABLE>
<CAPTION>


<S>                                           <C>
LOUISVILLE GAS AND ELECTRIC
COMPANY                                      LAFAYETTE COAL COMPANY

By:    ___________________________           By:    ___________________________
       Chris Hermann, Vice President &
       General Manager, Wholesale Electric   Title: ___________________________
       Business
Date:  ___________________________           Date:  ___________________________

</TABLE>

                                         25
<PAGE>
                                                        CONTRACT #96-439-026

<TABLE>
<CAPTION>

                                                                                     Exhibit A
                                                                                   Page 1 of 2

                                 EXHIBIT A MID-SULFUR EXAMPLE
                               SAMPLE COAL PAYMENT CALCULATIONS
                    TOTAL EVALUATED COAL COSTS FOR CONTRACT NO. 96-440-026
------------------------------------------------------------------------------------------------------

For contracts supplied from multiple "origins", each "origin will be
calculated individually.

<S>                                                                <C>
                SECTION I                                               BASE DATA
        --------------------------                                 ---------------------

1)      Base F.O.B. price per ton:                                      $ 18.93     /ton
                                                                    ----------------

1a)     Tons of coal delivered:                                                      tons
                                                                    ----------------

2)      Guaranteed average heat content:                                 11,400      BTU/LB.
                                                                    ----------------

2r)     As received monthly avg. heat content:                                      BTU/LB.
                                                                    ----------------

2a)     Energy delivered in MMBTU:                                                  MMBTU
                                                                    ----------------

[(Line 1a) *2,000 lb./ton*(Line 2r)] *MMBTU/1,000,000 BTU
[(     ) *2,000 lb./ton*(     )]*MMBTU/1,000,000 BTU

2b)     Base F.O.B. price per MMBTU:                                   $0.83026     /MMBTU
                                                                    ----------------

{[(Line 1)/(Line 2)]*(1 ton/2,000 lb.)]}*1,000,000 BTU/MMBTU
{[(     /ton)/(           BTU/LB)]*(1 ton/2,000 lb.)}*1,000,000 BTU/MMBTU


3)      Guaranteed monthly avg. max. sulfur                                3.40     LBS./MMBTU
                                                                    ----------------

3r)     As received monthly avg. sulfur                                             LBS./MMBTU
                                                                    ----------------

4)      Guaranteed monthly avg. ash                                     13.50       LBS./MMBTU
                                                                    ----------------

4r)     As received monthly avg. ash                                                LBS./MMBTU
                                                                    ----------------

5)      Guaranteed monthly avg. max. moisture                           9.00        LBS./MMBTU
                                                                    ----------------

5r)     As received monthly avg. moisture                                            LBS./MMBTU
                                                                    ----------------

                      SECTION II                                        DISCOUNTS
        -------------------------------------------                 ----------------
        Assign a (-) to all discounts (round to (5) decimal places)

6d)     SULFUR: If line 3r is greater than 3.40 lbs./MMBTU [1-[(line 3r)-(line
        3)]}*0.1232/lb. sulfur
        [1-[(   )/(   ]}*0.1232=                                       $               /MMBTU
                                                                        --------------

7d)     ASH: If line 4r is greater than 13.50 lbs./MMBTU [1-[(line 4r)-(line
        4)]}*0.0083/MMBTU
        [1-[(   )/(   ]}*0.0083=                                       $               /MMBTU
                                                                        --------------

8d)     MOISTURE: If line 5r is greater than 10.00 lbs./MMBTU [1-[(line
        5r)-(line 5)]}*0.0016/MMBTU
        [1-[(   )/(   ]}*0.0016=                                       $               /MMBTU
                                                                        --------------

                                       26
<PAGE>
                                                        CONTRACT #96-439-026

                                                                                     Exhibit A
                                                                                   Page 2 of 2

                                                                  TOTAL PRICE
                      SECTION III                                 ADJUSTMENTS
        --------------------------------------                    -------------
        Determine total Discounts as follows:

        Assign a (-) to all discounts (round to (5) decimal places)

        Line 6d:                                                 $------------- /MMBTU

        Line 7d                                                  $------------- /MMBTU

        Line 8d                                                  $------------- /MMBTU

10)     Total Discounts (-):

        Algebraic sum of above:                                  $------------- /MMBTU

11)     Total evaluated coal price = (line 2b) + (line 10)

12)     Total discount price adjustment for Energy delivered:
        (line 2a) * (line 10) (-)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

13)     Total base cost of coal
        (line 2a) * (line 2b)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

14)     Total coal payment for month
        (line 12) + (line 13)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

                                            27
<PAGE>

                                                        CONTRACT #96-439-026

                                                                                     EXHIBIT B
                                                                                   PAGE 1 OF 2
                                          EXHIBIT B
                               SAMPLE COAL PAYMENT CALCULATIONS
                    TOTAL EVALUATED COAL COSTS FOR CONTRACT NO. 96-440-026
------------------------------------------------------------------------------------------------------

For contracts supplied from multiple "origins", each "origin will be calculated
individually.

                      SECTION I                                           BASE DATA
        ----------------------------------                              --------------
1)      Base F.O.B. price per ton:                                         $ 18.60     /ton
                                                                        --------------

1a)     Tons of coal delivered:                                                         tons
                                                                        --------------
2)      Guaranteed average heat content:                                    12,000     BTU/LB.
                                                                        --------------
2r)     As received monthly avg. heat content:                                         BTU/LB.
                                                                        --------------
2a)     Energy delivered in MMBTU:                                                     MMBTU
                                                                        --------------
[(Line 1a) *2,000 lb./ton*(Line 2r)] *MMBTU/1,000,000 BTU
[(     ) *2,000 lb./ton*(     )]*MMBTU/1,000,000 BTU

2b)     Base F.O.B. price per MMBTU:                                       $0.77500   /MMBTU
                                                                        --------------

{[(Line 1)/(Line 2)]*(1 ton/2,000 lb.)]}*1,000,000 BTU/MMBTU
{[(     /ton)/(           BTU/LB)]*(1 ton/2,000 lb.)}*1,000,000 BTU/MMBTU

3)      Guaranteed monthly avg. max. sulfur                                3.75       LBS./MMBTU
                                                                        --------------

3r)     As received monthly avg. sulfur                                               LBS./MMBTU
                                                                        --------------

4)      Guaranteed monthly avg. ash                                        8.50       LBS./MMBTU
                                                                        --------------
4r)     As received monthly avg. ash
                                                                                      LBS./MMBTU
                                                                        --------------

5)      Guaranteed monthly avg. max. moisture                              6.25       LBS./MMBTU
                                                                        --------------
5r)     As received monthly avg. moisture
                                                                                      LBS./MMBTU
                                                                        --------------

                      SECTION II                                        DISCOUNTS
        -------------------------------------------              ----------------
        Assign a (-) to all discounts (round to (5) decimal places)

6d)     SULFUR:  If line 3r is greater than 4.00 lbs./MMBTU
        [1-[(line 3r)-(line 3)]}*0.1250/lb. Sulfur
        [1-[(   )/(   ]}*0.1250=                                        $               /MMBTU
                                                                         --------------

7d)     ASH: If line 4r is greater than 9.17 lbs./MMBTU
        [1-[(line 4r)-(9.17)]}*0.0350/MMBTU
        [1-[(   )/(9.17]}*0.0350=                                       $               /MMBTU
                                                                         --------------

                                      28
<PAGE>

                                                        CONTRACT #96-439-026

                                                                                     Exhibit B
                                                                                   Page 2 of 2
                                                                  TOTAL PRICE
                      SECTION III                                 ADJUSTMENTS
        -----------------------------------------                -------------
        Determine total Discounts as follows:

        Assign a (-) to all discounts (round to (5) decimal places)

        Line 6d:                                                 $------------- /MMBTU

        Line 7d                                                  $------------- /MMBTU

10)     Total Discounts (-):

        Algebraic sum of above:                                  $------------- /MMBTU

11)     Total evaluated coal price = (line 2b) + (line 10)

12)     Total discount price adjustment for Energy delivered:
        (line 2a) * (line 10) (-)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

13)     Total base cost of coal
        (line 2a) * (line 2b)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

14)     Total coal payment for month
        (line 12) + (line 13)
        $------- /MMBTU                    +                      $------------- /MMBTU = $-------

</TABLE>

                                       29
<PAGE>


                                                          CONTRACT #96-439-026

                                                                   AMENDMENT #1

                          AMENDMENT TO CONTRACT

THIS AMENDMENT IS entered into, effective as of April 28, 1997, by and between
LOUISVILLE GAS AND ELECTRIC COMPANY (hereinafter referred to as "LG&E"), whose
address is: 220 W. Main Street, Louisville, Kentucky 40202 and Lafayette Coal
Company, an Illinois corporation, 200 Frontage Road, Burr Ridge, Illinois 60521
("Seller"). In consideration of the agreements herein contained, the parties
hereto agree as follows:

1.0     AMENDMENTS

        The Agreement heretofore entered into by the parties, dated effective
January 1, 1997 and identified by the Contract Number set forth above,
(hereinafter referred to as "Agreement"), is hereby amended as follows:

               1.1 In Section 3.1 QUANTITY, the base quantity (tons) of coal for
                   1997 is changed from 600,000 to 670,000.

2.0     STATUS OF AGREEMENT

        As amended herein, the Agreement shall continue in full force and
effect.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year below written, but effective as of the day and year first set
forth above.

<TABLE>
<CAPTION>

<S>                                         <C>
LOUISVILLE GAS AND ELECTRIC                 LAFAYETTE COAL COMPANY
COMPANY

By  ________________________                By ___________________________
        George Basinger
        Senior Vice President               Title  EXECUTIVE VICE PRESIDENT
        Power Operations

Date           6/5/97                       Date          6/12/97
     ________________________                   _____________________________

</TABLE>