Exhibit 10.16


                  United States Department of the Interior      Serial Number
                         Bureau of Land Management                WYW80954
                           Wyoming State Office
                                                              Date Lease Issued
                         COAL LEASE READJUSTMENT               October 1, 1982

PART I: LEASE RIGHTS GRANTED

This lease, entered into by and between the United States of America,
hereinafter called the lessor, through the Bureau of Land Management, and (Name
and Address)

                  RAG Wyoming Land Company
                  P.O. Box 3039
                  Gillette, Wyoming  82717-3039

hereinafter called the lessee, is readjusted, effective (Date) October 1, 2002,
for a period of 10 years and for so long thereafter as coal is produced in
commercial quantities from the leased lands, subject to readjustment of lease
terms at the end of each 10-year period.

Sec. 1. This lease readjustment is subject to the terms and provisions of the:

     [X]  Mineral Lands Leasing Act of 1920, Act of February 25, 1920, as
          amended, 41 Stat. 437, 30 U.S.C. 181-287, hereinafter referred to as
          the Act;

     [ ]  Mineral Leasing Act for Acquired Lands, Act of August 7, 1947, 61
          Stat. 913, 30 U.S.C. 351-359;

and to the regulations and formal orders of the Secretary of the Interior which
are now or hereafter in force, when not inconsistent with the express and
specific provisions herein.

Sec. 2. Lessor, in consideration of any rents and royalties to be paid, and the
conditions and covenants to be observed as herein set forth, hereby grants to
lessee the exclusive right and privilege to drill for, mine, extract, remove or
otherwise process and dispose of the coal deposits in, upon, or under the
following described lands in Campbell County:

                  T. 48 N., R. 71 W., 6th P.M., Wyoming
                  -------------------------------------
                      Sec. 29: Lots 2 thru 5, 9 thru 12;
                      Sec. 30: Lots 5 thru 20;
                      Sec. 31: Lots 5 thru 12;
                      Sec. 32: Lots 3 thru 6.

containing 1,465.950 acres, more or less, together with the right to construct
such works, buildings, plants, structures, equipment and appliances and the
right to use such on-lease rights-of-way which may be necessary and convenient
to the exercise of the rights and privileges granted, subject to the conditions
herein provided.




                                                                               2

PART II: TERMS AND CONDITIONS

Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor rental annually and in advance
for each acre or fraction thereof during the continuance of the lease at the
rate of $3.00 for each lease year.

(b) RENTAL CREDITS - Rental shall not be credited against either production or
advance royalties for any year.

Sec. 2. (a) PRODUCTION ROYALTIES - The royalty shall be 12 1/2 percent of the
value of the coal produced by strip or auger methods and 8 percent of the value
of the coal produced by underground mining methods. The value of the coal shall
be determined as set forth in 43 CFR 3480. Royalties are due to lessor the final
day of the month succeeding the calendar month in which the royalty obligation
accrues.

(b) ADVANCE ROYALTIES - Upon request by lessee, the authorized officer may
accept, for a total of not more than 10 years, the payment of advance royalties
in lieu of continued operation, consistent with the regulations. The advance
royalty shall be based on a percent of the value of a minimum number of tons
determined in the manner established by the advance royalty regulations in
effect at the time the lessee requests approval to pay advance royalties in lieu
of continued operation.

Sec. 3. BONDS - Lessee shall maintain in the proper office a lease bond in the
amount of $1,723,000.00. The authorized officer may require an increase in this
amount when additional coverage is determined appropriate.

Sec. 4. DILIGENCE - This lease is subject to the conditions of diligent
development and continued operation, except that these conditions are excused
when operations under the lease are interrupted by strikes, the elements, or
casualties not attributable to the lessee. The lessor, in the public interest,
may suspend the condition of continued operation upon payment of advance
royalties in accordance with the regulations in existence at the time of the
suspension. Lessee's failure to produce coal in commercial quantities at the end
of the 10 years shall terminate the lease. If not submitted already, lessee
shall submit an operation and reclamation plan pursuant to Section 7 of the Act
no later than 3 years after the effective date of this lease readjustment.

The lessor reserves the power to assent to or order the suspension of the terms
and conditions of this lease in accordance with, INTER ALIA, Section 39 of the
Mineral Leasing Act, 30 U.S.C. 209.

Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon approval by the lessor of the
lessee's application or at the direction of the lessor, this lease shall become
an LMU or part of an LMU, subject to the provisions set forth in the
regulations.

The stipulations established in an LMU approval in effect at the time of LMU
approval will supersede the relevant inconsistent terms of this lease so long as
the lease remains committed to the LMU. If the LMU of which this lease is a part
is dissolved, the lease shall then be subject to the lease terms which would
have been applied if the lease had not been included in an LMU.



                                                                               3

Sec. 6. DOCUMENTS, EVIDENCE AND INSPECTION - At such times and in such form as
lessor may prescribe, lessee shall furnish detailed statements showing the
amounts and quality of all products removed and sold from the lease, the
proceeds therefrom, and the amount used for production purposes or unavoidably
lost.

Lessee shall keep open at all reasonable times for the inspection of any duly
authorized officer of lessor, the leased premises and all surface and
underground improvements, works, machinery, ore stockpits, equipment, and all
books, accounts, maps, and records relative to operations, surveys, or
investigations on or under the leased lands.

Lessee shall allow lessor access to and copying of documents reasonably
necessary to verify lessee compliance with terms and conditions of the lease.

While this lease remains in effect, information obtained under this section
shall be closed to inspection by the public in accordance with the Freedom of
Information Act (5 U.S.C. 552).

Sec. 7. DAMAGES TO PROPERTY AND CONDUCT OF OPERATIONS - Lessee shall comply at
its own expense with all reasonable orders of the Secretary, respecting diligent
operations, prevention of waste, and protection of other resources.

Lessee shall not conduct exploration operations, other than casual use, without
an approved exploration plan. All exploration plans prior to the commencement of
mining operations within an approved mining permit area shall be submitted to
the authorized officer.

Lessee shall carry on all operations in accordance with approved methods and
practices as provided in the operating regulations, having due regard for the
prevention of injury to life, health, or property, and prevention of waste,
damage, or degradation to any land, air, water, cultural, biological, visual,
and other resources, including mineral deposits and formations of mineral
deposits not leased hereunder, and to other land uses or users. Lessee shall
take measures deemed necessary by lessor to accomplish the intent of this lease
term. Such measures may include, but are not limited to, modification to
proposed siting or design of facilities, timing of operations and specification
of interim and final reclamation procedures. Lessor reserves to itself the right
to lease, sell or otherwise dispose of the surface or other mineral deposits in
the lands and the right to continue existing uses and to authorize future uses
upon or in the leased lands, including issuing leases for minerals deposits not
covered hereunder, and approving easements or rights-of-way. Lessor shall
condition such uses to prevent unnecessary or unreasonable interference with
rights of lessee as may be consistent with concepts of multiple use and multiple
mineral development.

Sec. 8. PROTECTION OF DIVERSE INTERESTS, AND EQUAL OPPORTUNITY - Lessee shall:
pay when due all taxes legally assessed and levied under the laws of the State
or the United States; accord all employees complete freedom of purchase; pay all
wages at least twice each month in lawful money of the United States; maintain a
safe working environment in accordance with standard industry practices;
restrict the workday to not more than 8 hours in any one day for underground
workers except in emergencies; and take measures necessary to protect the health
and safety of the public. No person under the age of 16 years shall be employed
in



                                                                               4

any mine below the surface. To the extent that laws of the State in which the
lands are situated are more restrictive than the provisions in the paragraph,
then the State laws apply.

Lessee will comply with all provisions of Executive Order No. 11246 of September
24, 1965, as amended, and the rules, regulations, and relevant orders of the
Secretary of Labor. Neither lessee nor lessee's subcontractors shall maintain
segregated facilities.

Sec. 9. (a) TRANSFERS

     [X]  This lease may be transferred in whole or in part to any person,
          association or corporation qualified to hold such lease interest.

     [ ]  This lease may be transferred in whole or in part to another public
          body, or to a person who will mine the coal on behalf of, and for the
          use of, the public body or to a person who for the limited purpose of
          creating a security interest in favor of a lender agrees to be
          obligated to mine the coal on behalf of the public body.

     [ ]  This lease may only be transferred in whole or in part to another
          small business qualified under 13 CFR 121.

Transfers of record title, working or royalty interest MUST be approved in
accordance with the regulations.

(b) RELINQUISHMENT - The lessee may relinquish in writing at any time all rights
under this lease or any portion thereof as provided in the regulations. Upon
lessor's acceptance of the relinquishment, lessee shall be relieved of all
future obligations under the lease or the relinquished portion thereof,
whichever is applicable.

Sec. 10. DELIVERY OF PREMISES, REMOVAL OF MACHINERY, EQUIPMENT, ETC. - At such
times as all portions of this lease are returned to lessor, lessee shall deliver
up to lessor the land leased, underground timbering, and such other supports and
structures necessary for the preservation of the mine workings on the leased
premises or deposits and place all workings in condition for suspension or
abandonment. Within 180 days thereof, lessee shall remove from the premises all
other structures, machinery, equipment, tools, and materials that it elects to
or as required by the authorized officer. Any such structures, machinery,
equipment, tools and materials remaining on the leased lands beyond 180 days or
approved extension thereof, shall become the property of the lessor, but lessee
shall either remove any or all such property or shall continue to be liable for
the cost of removal and disposal in the amount actually incurred by the lessor.
If the surface is owned by third parties, lessor shall waive the requirement for
removal, provided the third parties do not object to such waiver. Lessee shall,
prior to the termination of bond liability or at any other time when required
and in accordance with all applicable laws and regulations reclaim all lands the
surface of which has been disturbed, dispose of all debris or solid waste,
repair the offsite and onsite damage caused by lessee's activity or activities
incidental thereto, and reclaim access roads or trails.

Sec. 11. PROCEEDINGS IN CASE OF DEFAULT - If lessee fails to comply with
applicable laws, existing regulations, or the terms, conditions and stipulations
of this lease, and the noncompliance continues for 30 days after written notice
thereof, this lease shall be subject to



                                                                               5

cancellation by the lessor only by judicial proceedings. This provision shall
not be construed to prevent the exercise by lessor of any other legal and
equitable remedy, including waiver of the default. Any such remedy or waiver
shall not prevent later cancellation for the same default occurring at any other
time.

Sec. 12. HEIRS AND SUCCESSORS-IN-INTEREST - Each obligation of this lease shall
extend to and be binding upon, and every benefit hereof shall inure to, the
heirs, executors, administrators, successors, or assigns of the respective
parties hereto.

Sec. 13. INDEMNIFICATION - Lessee shall indemnify and hold harmless the United
States from any and all claims arising out of the lessee's activities and
operations under this lease.

Sec. 14. SPECIAL STATUTES - This lease is subject to the Federal Water Pollution
Control Act (33 U.S.C. 1151-1175), the Clean Air Act (42 U.S.C. 1857, et seq.),
and to all other applicable laws pertaining to exploration activities, mining
operations and reclamation, including the Surface Mining Control and Reclamation
Act of 1977 (30 U.S.C. 1201 et seq.).

Sec. 15. SPECIAL STIPULATIONS - In addition to observing the general obligations
and standards of performance set out in the current regulations, the lessee
shall comply with and be bound by the following special stipulations. These
stipulations are also imposed upon the lessee's agents and employees. The
failure or refusal of any of these persons to comply with these stipulations
shall be deemed a failure of the lessee to comply with the terms of the lease.
The lessee shall require his agents, contractors and subcontractors involved in
activities concerning this lease to include these stipulations in the contracts
between and among them. These stipulations may be revised or amended, in
writing, by the mutual consent of the lessor and the lessee at any time to
adjust to changed conditions or to correct an oversight.

(a) CULTURAL RESOURCES

(1) Before undertaking any activities that may disturb the surface of the leased
lands, the lessee shall conduct a cultural resource intensive field inventory in
a manner specified by the authorized officer of the BLM or of the surface
managing agency, if different, on portions of the mine plan area and adjacent
areas, or exploration plan area, that may be adversely affected by lease-related
activities and which were not previously inventoried at such a level of
intensity. The inventory shall be conducted by a qualified professional cultural
resource specialist (i.e., archeologist, historian, historical architect, as
appropriate), approved by the authorized officer of the surface managing agency
(BLM, if the surface is privately owned), and a report of the inventory and
recommendations for protecting any cultural resources identified shall be
submitted to the Assistant Director of the Western Support Center of the Office
of Surface Mining, the authorized officer of the BLM, if activities are
associated with coal exploration outside an approved mining permit area
(hereinafter called Authorized Officer), and the Authorized Officer of the
surface managing agency, if different. The lessee shall undertake measures, in
accordance with instructions from the Assistant Director, or Authorized Officer,
to protect cultural resources on the leased lands. The lessee shall not commence
the surface disturbing activities until permission to proceed is given by the
Assistant Director or authorized officer.




                                                                               6

(2) The lessee shall protect all cultural resource properties within the lease
area from lease-related activities until the cultural resource mitigation
measures can be implemented as part of an approved mining and reclamation or
exploration plan.

(3) The cost of conducting the inventory, preparing reports, and carrying out
mitigation measures shall be borne by the lessee.

(4) If cultural resources are discovered during operations under this lease, the
lessee shall immediately bring them to the attention of the Assistant Director
or Authorized Officer, or the Authorized Officer of the surface managing agency,
if the Assistant Director is not available. The lessee shall not disturb such
resources except as may be subsequently authorized by the Assistant Director or
Authorized Officer.

Within two (2) working days of notification, the Assistant Director or
Authorized Officer will evaluate or have evaluated any cultural resources
discovered and will determine if any action may be required to protect or
preserve such discoveries. The cost of data recovery for cultural resources
discovered during lease operations shall be borne by the surface managing agency
unless otherwise specified by the Authorized Officer of the BLM or of the
surface managing agency, if different.

(5) All cultural resources shall remain under the jurisdiction of the United
States until ownership is determined under applicable law.

(b) PALEONTOLOGICAL RESOURCES - If paleontological resources, either large and
conspicuous, and/or of significant scientific value are discovered during
surface disturbing activities, the find will be reported to the Authorized
Officer immediately. Surface disturbing activities will be suspended within 250
feet of said find. An evaluation of the paleontological discovery will be made
by a BLM approved professional paleontologist within five (5) working days,
weather permitting, to determine the appropriate action(s) to prevent the
potential loss of any significant paleontological value. Operations within 250
feet of such discovery will not be resumed until written authorization to
proceed is issued by the Authorized Officer. The lessee will bear the cost of
any required paleontological appraisals, surface collection of fossils, or
salvage of any large conspicuous fossils of significant scientific interest
discovered during the mining operations.

(c) MULTIPLE MINERAL DEVELOPMENT - Operations will not be approved which, in the
opinion of the Authorized Officer, would unreasonably interfere with the orderly
development and/or production from a valid existing mineral lease issued prior
to this one for the same lands.

(d) OIL AND GAS/COAL RESOURCES - The BLM realizes that coal mining operations
conducted on Federal coal leases issued within producing oil and gas fields may
interfere with the economic recovery of oil and gas; just as Federal oil and gas
leases issued in a Federal coal lease area may inhibit coal recovery. BLM
retains the authority to alter and/or modify the resource recovery and
protection plans for coal operations and/or oil and gas operations on those
lands covered by Federal mineral leases so as to obtain maximum resource
recovery.




                                                                               7

(e) RESOURCE RECOVERY AND PROTECTION - Notwithstanding the approval of a
resource recovery and protection plan (R2P2) by the BLM, lessor reserves the
right to seek damages against the operator/lessee in the event (i) the
operator/lessee fails to achieve maximum economic recovery (MER) (as defined at
43 CFR 3480.0-5(21)) of the recoverable coal reserves or (ii) the
operator/lessee is determined to have caused a wasting of recoverable coal
reserves. Damages shall be measured on the basis of the royalty that would have
been payable on the wasted or unrecovered coal.

The parties recognize that under an approved R2P2, conditions may require a
modification by the operator/lessee of that plan. In the event a coalbed or
portion thereof is not to be mined or rendered unmineable by the operation, the
operator/lessee shall submit appropriate justification to obtain approval by the
authorized officer (AO) to leave such reserves unmined. Upon approval by the AO,
such coalbeds or portions thereof shall not be subject to damages as described
above. Further, nothing in this section shall prevent the operator/lessee from
exercising its rights to relinquish all or portion of the lease as authorized by
statute and regulation.

In the event the AO determines that the R2P2, as approved, will not attain MER
as the result of changed conditions, the AO will give proper notice to the
operator/lessee as required under applicable regulations. The AO will order a
modification if necessary, identifying additional reserves to be mined in order
to attain MER. Upon a final administrative or judicial ruling upholding such an
ordered modification, any reserves left unmined (wasted) under that plan will be
subject to damages as described in the first paragraph under this section.

Subject to the right to appeal hereinafter set forth, payment of the value of
the royalty on such unmined recoverable coal reserves shall become due and
payable upon determination by the AO that the coal reserves have been rendered
unmineable or at such time that the operator/lessee has demonstrated an
unwillingness to extract the coal.

The BLM may enforce this provision either by issuing a written decision
requiring payment of the MMS demand for such royalties, or by issuing a notice
of noncompliance. A decision or notice of noncompliance issued by the lessor
that payment is due under this stipulation is appealable as allowed by law.

(f) PUBLIC LAND SURVEY PROTECTION - The lessee will protect all survey
monuments, witness corners, reference monuments, and bearing trees against
destruction, obliteration, or damage during operations on the lease areas. If
any monuments, corners or accessories are destroyed, obliterated, or damaged by
this operation, the lessee will hire an appropriate county surveyor or
registered land surveyor to reestablish or restore the monuments, corners, or
accessories at the same location, using surveying procedures in accordance with
the "Manual of Surveying Instructions for the Survey of the Public Lands of the
United States." The survey will be recorded in the appropriate county records,
with a copy sent to the Authorized Officer.





                    UNITED STATES DEPARTMENT OF THE INTERIOR

                            BUREAU OF LAND MANAGEMENT
                              Wyoming State Office
                                  P.O. Box 1828
                           Cheyenne Wyoming 82003-1828

                                                           In Reply ______

                                                           3453
                                                           WYW0317682
                                                           WYW78629
                                                           WYW80954
                                                           WYW141568
                                                           (921MLove)
                                                           Phone No.: 307-______
                                                           Fax No.: 307-______

                                 D E C I S I O N

RAG Wyoming Land Company                :
Attn:  Steve Youngbauer                 :                   Federal Coal
P.O. Box 3039                           :                  Belle Ayr Mine
Gillette, WY 82717-3039                 :

                Qualifications Accepted; Name Changes Recognized;
             Logical Mining Unit Modified; Bond and Rider Accepted;
                         Period of Liability Terminated

On August 5, 1999, and October 12, 1999, we received documents evidencing the
merger of Cyprus Amax Coal Company into RAG American Coal Company with RAG
American Coal Company as the surviving entity, along with documentation of the
name change from Amax Land Company to RAG Wyoming Land Company. Additionally, we
received qualifications statements for RAG American Coal Company and RAG Wyoming
Land Company.

On August 20, 1999, we received a replacement logical mining unit bond (Numbers
210067-067, KA2990-067, 103198931-067) in the amount of $2,415,000 with RAG
Wyoming Land Company as principal, to provide coverage for Federal coal leases
WYW0317682, WYW789629, and WYW80954 included in the Belle Ayr Mine Logical
Mining Unit (LMU). The limits shared by the sureties are shown below:

              Surety Name                  Surety Bond Number    Liability Limit
              -----------                  ------------------    ---------------
National Union Fire Insurance
Insurance Co. of Pittsburgh                210067-067               $805,000



                                                                               2

St. Paul Fire and Marine Insurance
Company                                    KA2990-067               $805,000

Travelers Casualty and Surety Company      103198931-067            $805,000

On October 12, 1999, we received a rider to the above-described bond which
extends coverage of the bond to cover any and all liabilities that may be
outstanding on Bond Number 159015328, with AMAX Land Company as principal, and
National Fire Insurance Company of Hartford as surety.

The merger documents, qualifications statements, replacement bond, and rider
have been examined, found satisfactory, and are accepted effective October 12,
1999.

The period of Liability under LMU Bond Number 159015328, with National Fire
Insurance Company of Hartford as surety, and AMAX Land Company as principal, is
hereby terminated effective October 12, 1999, the acceptance date of the
replacement bond.

The records of this office have been changed to reflect that the lessee of
record for Federal coal leases WYW0317682, WYW78629, and WYW80954 is RAG Wyoming
Land Company. We have also changed our records to reflect that RAG Wyoming Land
Company is now the applicant for Federal coal lease application WYW141568 filed
March 20, 1997.

Additionally, RAG Wyoming Land Company has requested that the Belle Ayr Mine LMU
be modified to change the unit operator from AMAX Land Company to RAG Wyoming
Land Company. The LMU is hereby modified to reflect that RAG Wyoming Land
Company is the operator and will be responsible for operations under the LMU in
accordance with the LMU approval document.

If you have any questions concerning this decision, please contact Mavis Love in
the Minerals and Lands Authorization Group at 307-775-6258.

                                                /s/ Pamela J. Lewis
                                                Pamela J. Lewis
                                                Chief, Leasable Minerals Section

cc:
RAG American Coal Company, Attn: Eva Schrum, 9100 East Mineral Circle,
Englewood, CO 80112-3401

National Union Fire Insurance Company of Pittsburgh, PA,
     c/o Patricia Thurmond, Attorney-in-Fact, 70 Pine Street, New York, NY 10270





                       UNITED STATES                         Serial Number
                DEPARTMENT OF THE INTERIOR
                 BUREAU OF LAND MANAGEMENT

                        COAL LEASE                              W-80954



This lease is entered into on September 30, 1982, by the United States of
America, the lessor through the Bureau of Land Management and

         Meadow Farms, Inc.
         105 S. Meridian St.
         P. O. Box 967
         Indianapolis, Indiana 46206

                                                                   , the lessee.
and shall become effect on October 1, 1982, the lessee, (effective date).

Sec. 1. STATUTES AND REGULATIONS - This lease is issued pursuant and subject to
the terms and provisions of the Mineral Leasing Act of February 25, 1920, 41
Stat. 437, as amended, 30 U.S.C. Sections 181-287 and 90 Stat. 1063-1092,
hereafter referred to as the Act, and of the Surface Mining Control and
Reclamation Act of 1977, 30 U.S.C. Section 1201 et seq., and the Mining Leasing
Act for Acquired Lands of August 7, 1947, as amended, 30 U.S.C. 351-359 et seq.
This lease is also subject to all regulations of the Secretary of the Interior
(including but not limited to 30 CFR Part 211 and Chapter VII and 43 CFR Group
3400) which are now in force or (except as expressly limited herein) hereafter
in force, and all of such regulations are made a part hereof.

WITNESSETH:

Sec. 2. RIGHTS OF LESSEE - The lessor, in consideration of any bonus paid (or to
be paid if deferred), rents and royalties and other conditions hereinafter set
forth, hereby grants and leases to the lessee the exclusive right and privilege
to mine and dispose of all recoverable coal reserves in the following described
lands in Campbell County, Wyoming:

                  T. 48 N., R. 71 W., 6th P.M.
                  ----------------------------
                      sec. 29, W1/2;
                      sec. 30, lots 1, 2, 3, 4, E1/2, E1/2W1/2 (all);
                      sec. 31, lots 1, 2, NE1/4, E1/2NW1/4;
                      sec. 32, NW1/4





                                                                               2


STATE OF WYOMING     )
                     )   ss
Campbell County      )

Filed for record this 13th day of July A.D., 1983 at 9:08 o'clock A.M. and
recorded in Book 692 of Photos on page 88 Fees $10.00

/s/ Vivian E. Addison                             By
----------------------------------------------    Deputy /s/
County Clerk and Ex-Officio Register of Deeds.           -----------------------

     [X]  RECORDED
     [X]  ABSTRACTED
     [X]  INDEXED
     [X]  CHECKED

containing 1,433.17 acres, more or less and, subject to the conditions,
limitations and prohibitions provided in the lease and in applicable acts and
regulations, the right to construct all works, buildings, structures, equipment,
and appliances which may be necessary and convenient for the mining and
preparation of the coal for market, and, subject to the conditions herein
provided, to use so much of the surface as may reasonably be required in the
exercise of the rights and privileges herein granted for a period of 20 years
and so long thereafter as the condition of continued operation is met.

Sec. 3. DILIGENT DEVELOPMENT AND CONTINUED OPERATION - The lessee shall engage
in the diligent development of the coal resources subject to the lease. After
diligent development is achieved, the lessee shall maintain continued operation
of the mine or mines on the leased lands. The terms diligent development and
continued operation are defined in the applicable regulations in Titles 30 and
43 of the Code of Federal Regulations.

Sec. 4. BONDS - The lessee shall file with the appropriate Bureau of Land
Management office a lease bond in the amount of $5,000.00 for the use and
benefit of the United States, to insure payment of deferred bonus payments,
rentals and royalties and to insure compliance with all other items of their
lease, the regulations and the Act (except for reclamation within the area
covered by a surface mining permit issued under the permanent regulatory program
by the regulatory authority) and, if appropriate, for the protection of the
interests of the surface owners on the leased lands. An increase in the amount
of the lease bond may be required by the lessor at any time during the life of
the lease to reflect changed conditions.

Sec. 5. RENTAL - An annual rental of $3.00 for each acre or fraction thereof
shall be paid in advance on or before the anniversary date of this lease. This
section shall not be subject to revision except in the course of lease
readjustment.

Sec. 6. PRODUCTION ROYALTY - The lessee shall pay a production royalty of 12 1/2
percent of the value of coal produced by strip or sugar methods and 8 percent of
the value of coal produced by underground mining methods. The value of coal
shall be determined as set forth in 30 CFR 211. Production royalties paid for a
calendar month shall be reduced by the amount of any advance royalties paid
under this lease to the extent that such advance royalties have not been used to
reduce production royalties in a previous month. However, production royalties



                                                                               3

payable after the 20th year of the lease shall not be reduced by advance
royalties paid during the first 20 years of the lease. Production royalties
shall be payable the final day of the month succeeding the calendar month in
which the coal is sold, unless otherwise specified in 30 CFR 211. The royalty
rates provided in this section shall not be subject to revision except in the
course of lease readjustment.

Sec. 7. ADVANCE ROYALTY - Upon request by the lessee the District Mining
Supervisor may accept, for a total of not more than 10 years, the payment of
advance royalties in lieu of the condition of continued operation consistent
with the regulations in 43 CFR 3473 and 30 CFR 211. The advance royalty shall be
based on a percent of the value of a minimum number of tons which shall be
determined in the manner established by the regulation in 30 CFR 211.

Sec. 8. METHOD OF PAYMENTS - The lessee shall make rental payments to the
appropriate Bureau of Land Management office until production royalties become
payable. Thereafter, all rentals, production royalties and advance royalties
shall be paid to the appropriate office of United States Minerals Management
Service.

Sec. 9. EXPLORATION PLAN - The lessee shall not commence any exploration, except
casual use, on the leased lands without an approved exploration plan.
Exploration plans for leased lands covered by an approved mining permit shall be
submitted to the Regional Director of the Office of Surface Mining in accordance
with the regulations in 30 CFR Chapter VII. Exploration plans for leased lands
not covered by an approved mining permit shall be submitted to the District
Mining Supervisor in accordance with the regulations in 30 CFR 211.

Sec. 10. MINING PLAN - In accordance with the regulations in 30 CFR 211 and
Chapter VII, the lessee shall submit a mining and reclamation plan not more than
three years after the effective date of this lease. Mining operations shall not
commence until after the mining and reclamation plan is approved. The mining and
reclamation shall be conducted in accordance with the approved mining and
reclamation plan. Exploration activities which were not included in the approved
mining and reclamation plan require submittal of exploration plans in accordance
with Section 9 of this lease.

Sec. 11. LOGICAL MINING UNIT (LMU) - This lease is automatically an LMU. At the
request of the lessee or at the direction of the District Mining Supervisor, the
lessee shall become an LMU, subject to the provisions set forth in 30 CFR 211.
If the LMU of which this lease is a part is dissolved, the lease will not
automatically be terminated unless requested in writing by the lessee to the
appropriate office of the Bureau of Land Management or directed in writing by
the District Mining Supervisor.

Sec. 12. OPERATIONS ON LEASED LANDS - (a) in accordance with conditions of this
lease, the exploration and mining and reclamation plans, the permit issued
pursuant to 30 CFR Chapter VII, and all applicable acts and regulations, the
lessee shall exercise reasonable diligence, skill, and care in all operations on
leased lands. (b) The lessee shall minimize to the maximum extent possible
wasting of the coal deposits and other mineral and nonmineral resources,
including, but not limited to, surface resources which may be found in, upon, or
under such lands.



                                                                               4

Sec. 13. SPECIAL STATUTES - The lessee shall comply with the provisions of the
Federal Water Pollution Control Act (33 U.S.C. 1151-1175) and he Clean Air Act
(42 U.S.C. 7401 et seq.).

Sec. 14. AUTHORIZATION OF OTHER USES AND DISPOSITION OF LEASED LANDS -(a) The
lessor reserves the right to authorize other uses of the leased lands by
regulation or by issuing, in addition to the lease, leases, licenses, permits,
easements, or rights-of-way, including leases for the development of minerals
other than coal under the Act. The lessor may authorize any other uses of the
leased lands that do not unreasonably interfere with the exploration and mining
operations of the lessee, and the leasee shall make all reasonable efforts to
avoid interference with such authorized uses.

(b) The leasor reserves the right: (i) to sell or otherwise dispose of the
surface of the leased lands under existing law or laws hereinafter enacted
insofar as said surface is not necessary to the use of the lessee in the
extraction and removal of the coal therein, or (ii) to dispose of any resource
in such lands if such disposal will not unreasonably interfere with the
exploration and mining operations of the lessee.

(c) If the leased lands have been or shall hereafter be disposed of under laws
reserving to the United States the deposits of coal therein, the lessee shall
comply with all conditions as are or may hereafter be provided by the laws and
regulations reserving such coal.

Sec. 15. EQUAL OPPORTUNITY CLAUSE - The lessee will comply with all provisions
of Executive Order No. 11246 of September 24, 1965, as amended, and the rules,
regulations and relevant orders of the Secretary of Labor.

Sec. 16. CERTIFICATION OF NONSEGREGATED FACILITIES - By entering into this
lease, the lessee certifies that he does not and will not maintain or provide
for his employees any segregated facilities at any of his establishments, and
that he does not and will not permit his employees to perform their services at
any location under his control where segregated facilities are maintained. The
lessee agrees that a breach of this certification is a violation of the Equal
Opportunity clause of this lease. As used in this certification, the term
"segregated facilities" means, but is not limited to, any waiting rooms, work
areas, rest rooms and wash rooms, restaurants and other eating areas, time
clocks, locker rooms and other storage or dressing areas, parking lots, drinking
fountains, recreation or entertainment areas, transportation, and housing
facilities provided for employees which are segregated by explicit directive or
are in fact segregated on the basis of race, color, religion, or national
origin, because of habit, local custom, or otherwise. Leasee further agrees that
(except where lessee has obtained identical certifications from proposed
contractors and subcontractors for specific time periods) lessee will obtain
identical certifications from proposed contractors and subcontractors prior to
award of contracts or subcontracts exceeding $10,000 which are not exempt from
the provisions of the Equal Opportunity clause; that lessee will retain such
certification in leasee's files; and that lessee will forward the following
notice to such proposed contractors and subcontractors (except where proposed
contractor or subcontractor has submitted identical certificates for specific
time periods). Notice to prospective contractors and subcontractors of
requirement for certification of nonsegregated facilities. A Certification of
Nonsegregated Facilities, as required by the May 9, 1967, order (32 F.R. 7439,
May 19, 1967) on Elimination of Segregated Facilities, by the



                                                                               5

Secretary of Labor, must be submitted prior to the award of a contract excluding
$10,000 which is not exempt from the provisions of the Equal Opportunity clause.
Certification may be submitted either for each contract and subcontract or for
all contracts and subcontracts during a period (i.e., quarterly semiannually, or
annually).

Sec. 17. EMPLOYMENT PRACTICES - The lessee shall pay all wages due persons
employed on the leased lands at least twice each month in lawful money of the
United States. The lessee shall grant all miners and other employees complete
freedom to purchase goods and service of their own choice. The lessee shall
restrict the workday to not more than 8 hours in any one day for underground
workers, except in case of emergency. The lessee shall employ no person under
the age of 16 years in any mine below the surface. If the laws of the State in
which the lands are situated conflict with this paragraph, then the State laws
apply.

Sec. 18. MONOPOLY AND FAIR PRACTICES - The lessor reserves full authority to
promulgate and enforce orders and regulations under the provisions of Sections
30 and 32 of the Act (30 U.S.C. Sections 187 and 189) necessary to insure that
any sale of the production from the leased lands to the United States or to the
public is at reasonable prices, to prevent monopoly, and to safeguard the public
welfare, and such orders and regulations shall upon promulgation be binding upon
the lessee.

Sec. 19. TRANSFERS -

     [X]  This lease may be transferred in whole or in part to any person,
          association or corporation qualified under 43 CFR 3472.1-1 to hold a
          lease.

     [ ]  This lease may only be transferred in whole or in part to another
          public body, or to a person who will mine the coal on behalf of and
          for the use of the public body, or to a person for the limited purpose
          of creating a security interest in favor of a lender who agrees to be
          obligated to mine the coal on behalf of the public body. The
          transferee must be qualified under 43 CFR 3472.

     [ ]  This lease may only be transferred in whole or in part to other small
          businesses qualifying under 13 CFR 121 and 43 CFR 347222(c).

Any transfer of this lease in whole or in part is subject to the procedures and
requirements for approval in the relevant regulations in 43 CFR 3400. A transfer
will become effective on the first day of the month following its approval by
the authorized officer, or, if the transferee requests, the first day of the
month of the approval.

Sec. 20. RELINQUISHMENTS OF LEASE - The lessee may be a relinquishment of the
entire lease, a legal subdivision or aliquot part thereof, but not less than 10
acres, or any bed of the coal deposits therein. The relinquishment shall be
filed in triplicate with the authorized officer. Upon the determination by the
authorized officer that the public interest shall not be impaired, that all
accrued rentals and royalties have been paid and that all of the obligations of
the lessee under the regulations and the lease terms have been met, the
relinquishment shall be accepted effective the date filed.




                                                                               6

Sec. 21. NONCOMPLIANCE - Any failure to comply with the conditions of this
lease, the approved exploration and mining and reclamation plans, the
regulation, or applicable acts shall be dealt with in accordance with the
procedures set forth in the regulations.

Sec. 22. WAIVER OF CONDITIONS - The lessor reserves the right to waive any
breach of the conditions contained in this lease, except the breach of such
conditions as are required by the Act, but any such waiver shall extend only to
the particular breach so waived and shall not limit the rights of the lessor
with respect to any future breach; nor shall the waiver of a particular breach
prevent cancellation of this lease for any other cause, or for the same cause
occurring at another time.

Sec. 23. READJUSTMENT OF TERMS AND CONDITIONS - (a) The lease is subject to
readjustment on the 20th year after the effective date and on each 10th year
thereafter. In order that the lease may be readjusted as close as possible to
the dates when it becomes subject to readjustment, the lessor may propose the
terms of readjustment of any conditions of this lease, including rental and
royalty rates, before the 20th year after the effective date and before each 10
year interval thereafter. The authorized officer shall notify the lessee whether
he intends to readjust the terms and conditions of the lease and, if he intends
to readjust, the nature of the readjustments in accordance with the regulations
in 43 CFR 3451. Unless the leasee, within 60 days after receipt of the proposed
readjustment terms, files with the lessor an objection to the proposed
readjusted conditions or relinquishes the lease as of the effective date of the
readjustment, the lessee shall be deemed conclusively to have agreed to such
conditions.

(b) If the lessee files objections to the proposed readjustment conditions, the
existing conditions shall remain in effect until there has been an agreement
between the lessor and the lessee on the new conditions to be incorporated in
the lease, or until the lessee has exhausted his rights of appeal under Section
29 of this lease, or until the lease is relinquished, except that the authorized
officer may provide in the notice of readjusted lease terms that the
readjustment or any part thereof is effective pending the outcome of the appeal.
If the readjusted royalty provisions are subsequently rescinded or amended, the
lessee shall be permitted to credit any excess royalty payments against
royalties subsequently due to the lessor.

Sec. 24. DELIVERY OF PREMISES - Upon termination of this lease for any reason,
or relinquishment of a part of this lease, the lessee shall deliver to the
lessor in good order and condition all or the appropriate part of the leased
lands. Delivery of the leased lands shall include underground timbering and such
other supports and structures as are necessary for the reservation of the mine
or deposit, and shall be in accordance with all other applicable provisions of
the regulations including 30 CFR 211 and Chapter VII, for the completion of
operations and abandonment.

Sec. 25. PROPRIETARY INFORMATION - Geological and geophysical data and
information including maps, trade secrets and commercial and financial
information which the lessor obtains from the lessee shall be treated in
accordance with 43 CFR Part 2, 30 CFR 211.6 and other applicable regulations.
Total lease reserve figures developed from this information will not be
confidential.




                                                                               7

Sec. 26. LESSEE LIABILITY TO LESSOR - (a) The lessee shall be liable to the
United States for any damage suffered by the United States in any way arising
from or connected with the lessee's activities and operations under this lease,
except where damage is caused by employees of the United States acting within
the scope of their authority.

     (b) The lessee shall indemnify and hold harmless the United States from any
and all claims arising from or connected with the lessee's activities and
operations under this lease.

     (c) In any case where liability without fault is imposed on the lessee
pursuant to this section, and the damages involved were caused by the action of
a third party, the rules of subrogation shall apply in accordance with the law
of the jurisdiction where the damages occurred.

Sec. 27. INSPECTIONS AND INVESTIGATIONS - (a) All books and records maintained
by the lessee showing information required by this lease or regulations must be
kept current and in such manner that the books and records can be readily
checked at the mine, upon request, by the Regional Director or District Mining
Supervisor or their representative.

     (b) The lessee shall permit any duly authorized officer or representative
of the lessor at any reasonable time (1) to inspect or investigate the leased
lands, the exploration and mining and reclamation operations, and all surface
and underground improvements, works, machinery, and equipment and all books and
records pertaining to the lessee's obligations to the lessor under this lease
and regulations and (2) to copy, and make extracts form any such books and
records.

Sec. 28. UNLAWFUL INTEREST - No member of, or Delegate to, Congress, or Resident
Commissioner, after his election or appointment, either before or after he has
qualified and during his continuance in office, and no officer, or employee of
the Department of the Interior, except as provided in 43 CFR 7.4(a)(3), shall
hold any share or part in this lease or derive any benefit therefrom. The
provisions of Section 3741 of the Revised Statutes, as amended, 41 U.S.C.
Section 22, and the Act of June 25, 1948. 62 Stat. 702, as amended. 18 U.S.C.
Sections 431-433, relating to contracts, enter into and form a part of this
lease insofar as they may be applicable.

Sec. 29. APPEALS - The lessee shall have the right to appeal (a) under 43 CFR
3000.4 from an action or decision of any official of the Bureau of Land
Management, (b) under 30 CFR Part 290 from an action, order, or decision of any
official of the Minerals Management Service, or (c) under applicable regulation
from any action or decision of any other official of the Department of the
Interior arising in connection with this lease, including any action or decision
pursuant to Section 23 of this lease with respect to the readjustment of
conditions.

Sec. 30. DEFERRED BONUS - This lease is issued subject to the payment of
$3,490,448.00 by the lessee as a deferred bonus. Payment of the deferred bonus
by the lessee shall be made on a schedule specified in Section 31 (Special
Stipulations) of this lease.

Sec. 31. SPECIAL STIPULATIONS - In addition to observing the general obligations
and standards of performance set out in the current regulations, the Lessee
shall comply with and be bound by the following special stipulations. These
stipulations are also imposed upon the Lessee's agents and employees. The
failure or refusal of any of these persons to comply with



                                                                               8

these stipulations shall be deemed a failure of the Lessee to comply with the
terms of this lease. The Lessee shall require his agents, contractors and
subcontractors involved in activities concerning this lease to include those
stipulations in the contracts between and among them. These stipulations may be
revised or amended, in writing, by the mutual consent of the Lessor and the
Lessee at any time to adjust to changed conditions or to correct an oversight.
The Lessor may amend these stipulations at any time without the consent of the
Lessee in order to make them consistent with any new federal or state statutes
and the regulations promulgated under authority or new statutes.

(a) Cultural Resources - (1) Before undertaking any activities that may disturb
the surface of the leased lands, the leasee shall conduct a cultural resource
intensive field inventory in a manner specified by the authorized officer of the
BLM or of the surface managing agency (if different) on portions of the mine
plan area and adjacent areas, or exploration plan area that may be adversely
affected by lease-related activities and which were not previously inventoried
at such a level of intensity. The inventory shall be conducted by a qualified
professional cultural resource specialist (i.e. archeologist, historian or
historical architect, as appropriate), approved by the authorized officer of the
surface managing agency (BLM if the surface is privately owned) and a report of
the inventory and recommendations for protecting any cultural resources
identified shall be submitted to the Regional Director of the Office of Surface
Mining (or the District Mining Supervisor if activities are associated with coal
exploration outside an approved mining permit area) and the authorized officer
of the BLM or the surface managing agency (if different). The lessee shall
undertake measures, in accordance with instructions from the Regional Director
for the District Mining Supervisor if activities are associated with coal
exploration outside an approved mining permit area), to protect cultural
resources on the leased land. The lessee shall not commence the surface
disturbing activities until permission to proceed is given by the Regional
Director (or the District Mining Supervisor if activities are associated with
coal exploration outside an approved mining permit area).

(2) The lessee shall protect all cultural resources properties within the lease
area from lease-related activities until the cultural resource mitigation
measures can be implemented as part of an approved mining and reclamation plan
or exploration plan.

(3) The cost of conducting the inventory, preparing reports, and carrying out
mitigation measures shall be borne by the lessee.

(4) If cultural resources are discovered during operations under this lease, the
lessee shall immediately bring them to the attention of the Regional Director
(or the District Mining Supervisor if activities are associated with coal
exploration outside an approved mining permit area), or the authorized officer
of the surface managing agency if the Regional Director, or District Mining
Supervisor, as appropriate, is not available. The lessee shall not disturb such
resources except as may be subsequently authorized by the Regional Director (or
the District Mining Supervisor if activities are associated with coal
exploration outside an approved mining permit area). Within two (2) working days
of notification, the Regional Director (or the District Mining Supervisor if
activities are associated with coal exploration outside an approved mining
permit area) will evaluate or have evaluated any cultural resources discovered
and will determine if any action may be required to protect or preserve such
discoveries. The cost of data recovery for cultural resources discovered during
lease operations shall be borne by the surface managing



                                                                               9

agency unless otherwise specified by the authorized officer of the BLM or of the
surface managing agency (if different).

(5) All cultural resources shall remain under the jurisdiction of the United
States until ownership is determined under applicable law.

(b) Paleontological Resources - (1) Before undertaking any activities that may
disturb the surface of the leased lands, the lessee shall contact the Bureau of
Land Management to determine whether the authorized officer will require the
lessee to conduct a paleontological appraisal of the mine plan and adjacent
areas, or exploration plan areas, that may be adversely affected by
lease-related activities. If the authorized officer determines that one is
necessary, the paleontological appraisal shall be conducted by a qualified
paleontological approved by the authorized officer of the surface managing
agency (BLM if the surface is privately owned), using the published literature
and, where appropriate, field appraisals for determining the possible existence
of larger and more conspicuous fossils of scientific significance. A report of
the appraisal and recommendations for protecting any larger and more conspicuous
fossils of significant scientific interest on the leased lands so identified
shall be submitted to the authorized officer of the surface managing agency (BLM
if the surface is privately owned). When necessary to protect and collect the
larger and more conspicuous fossils of significant scientific interest on the
leased lands, the lessee shall undertake the measures provided in the approval
of the mining and reclamation plan or exploration plan.

(2) The lessee shall not knowingly disturb, alter, destroy or take any larger
and more conspicuous fossils of significant scientific interest, and shall
protect all such fossils in conformance with the measures included in the
approval of the mining and reclamation plan or exploration plan.

(3) The lessee shall immediately bring any such fossils that might be altered or
destroyed by his operation to the attention of the Regional Director or the
District Mining Supervisor, as appropriate. Operations may continue as long as
the fossil specimen or specimens would not be seriously damaged or destroyed by
the activity. The Regional Director or the District Mining Supervisor, as
appropriate, shall evaluate or have evaluated such discoveries brought to his
attention and, within five (5) working days, shall notify the lessee what action
shall be taken with respect to such discoveries.

(4) All such fossils of significant scientific interest shall mean under the
jurisdiction of the United States until ownership is determined under applicable
law. Copies of all paleontological resource data generated as a result of the
lease term requirements will be provided to the Regional Director or the
District Mining Supervisor, as appropriate.

(5) The cost of any required salvage of such fossils shall be borne by the
United States.

(6) These conditions apply to all such fossils of significant scientific
interest discovered within the lease area whether discovered in the overburden,
interburden, or coal seam or seams.

     (c) The Lessee will protect all survey monuments, witness corners,
reference monuments, and bearing trees against destruction, obliteration, or
damage



                                                                              10

during operations on the lease area. If any monuments, corners, or accessories
are destroyed, obliterated, or damaged by this operation, the Lessee will hire
an appropriate county surveyor or registered land surveyor to reestablish or
restore the monuments, corners or accessories, at the same location, using
surveying procedures in accordance with the "Manual of Surveying Instructions
for the Survey of the Public Lands of the United States," and will record the
survey in the appropriate county records, with a copy sent to the Authorized
Officer.

(d) The lessee shall comply with all valid and applicable laws and regulations
of Federal, State, and local governmental authority.

DEFERRED BONUS PAYMENT SCHEDULE:

Total Amount of Bid $4,363,060.00

1/5 in the amount of $872,612.00 from investment credit to Meadowlark Farms,
Inc. pursuant to exchange agreement of December 31, 1981. (Balance is due and
payable in equal annual installments on the first four anniversary dates of the
lease.)

1/5 in the amount of $872,612.00 due on October 1, 1983.

1/5 in the amount of $872,612.00 due on October 1, 1984.

1/5 in the amount of $872,612.00 due on October 1, 1985.

1/5 in the amount of $872,612.00 due on October 1, 1986.

                                             THE UNITED STATES OF AMERICA


                                             By:       /s/ Marla B. Bohl
                                                 -------------------------------
                                                       (Signing Officer)

                                                 Marla B. Bohl
                                                 Chief, Lands and Mining Section
                                                 -------------------------------
                                                            (Title)

                                                 September 30, 1982
                                                 -------------------------------
                                                            (Date)

                                             Meadowlark Farms, Inc.

WITNESS TO SIGNATURE OF LESSEE

     /s/                                     By:  /s/
     --------------------------------            -------------------------------
     Assistant Secretary                              (Signature of Lessee)



     --------------------------------            -------------------------------
                                                      (Signature of Lessee)



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