<PAGE>

                                       * CONFIDENTIAL MATERIAL HAS BEEN
                                         OMITTED AND FILED SEPARATELY WITH
                                         THE SECURITIES AND EXCHANGE
                                         COMMISSION. BRACKETS AND UNDERSCORES
                                         DENOTE SUCH OMISSIONS.

                                                                   EXHIBIT 10.27

                              COAL SALES AGREEMENT

      THIS COAL SALES AGREEMENT (this "Agreement"), dated the 17th day of
February, 2005, between ANKER WEST VIRGINIA MINING COMPANY, INC., a West
Virginia corporation with principal offices at 2708 Cranberry Square,
Morgantown, West Virginia 26508 ("Seller"), and ALLEGHENY ENERGY SUPPLY COMPANY,
LLC, a Delaware limited liability company with its principal offices at 4350
Northern Pike, Monroeville, Pennsylvania 15146-2841 and MONONGAHELA POWER
COMPANY, an Ohio corporation with its principal offices at 1310 Fairmont Avenue,
Fairmont, WV 26554 (hereinafter collectively referred to as "Buyer"). Allegheny
Energy Service Corporation is referred to in this Agreement as "Buyer's Agent".

                                   WITNESSETH:

      WHEREAS, Anker Energy Corporation ("Anker Energy"). The Sycamore Group,
LLC ("Sycamore") and Buyer are parties to that certain Coal Sales Agreement
dated May 25, 2004 (the "Sycamore Agreement") relating to the supply of coal
from Sycamore's Sycamore No. 1 Mine, located in Harrison County, West Virginia,
in U.S.B.M. Mine District No. 3, to Buyer's Harrison Power Station (the
"Station") at the rate of 50,000 tons per month, subject to periodic upward or
downward quarterly adjustments by Buyer within certain limits specified therein
(as so adjusted, the "Sycamore Adjusted Base Amount"), for a two year term
ending on April 30, 2006; and

      WHEREAS, Seller desires to sell, and Buyer desires to purchase additional
tons of coal from Seller's Harrison Division Sycamore No. 2 Mine (the "Source
Mine"), located in Harrison County, West Virginia, in U.S.B.M. Mine District No.
3, and accordingly Seller and Buyer desire to enter into this Agreement;

      NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, and intending to be legally bound, Seller and Buyer
hereby agree as follows:

1.0   TERM AND QUANTITY

      1.1   The term of this Agreement (the "Term") shall be the period
            commencing on the date hereof and ending on the date of exhaustion
            of the Reserve Commitment (as hereinafter defined) (the "Expiration
            Date").

      1.2   During the Term, Buyer agrees to buy, and Seller agrees to sell,
            [_ _ _ _] produced by the Source Mine from existing reserves, as
            identified on Schedule 1.2 hereto, currently estimated to be not
            less than [_ _ _ _], and from all additional reserves assigned to
            Seller for purposes of this Agreement by mutual consent of the
            parties (collectively, the "Reserve Commitment"), at the following
            annual rates (the "Annual Base Amount"):

<TABLE>
<CAPTION>
CALENDAR YEAR                        ANNUAL BASE AMOUNT
<S>                       <C>
    2005                      Actual production from the Source
                                Mine, estimated to be [_ _ _ _] tons

    2006                      Actual production from the Source
                                Mine, estimated to be [_ _ _ _] tons,
                          but at a production rate of not less than
</TABLE>

<PAGE>

                                       * CONFIDENTIAL MATERIAL HAS BEEN
                                         OMITTED AND FILED SEPARATELY WITH
                                         THE SECURITIES AND EXCHANGE
                                         COMMISSION. BRACKETS AND UNDERSCORES
                                         DENOTE SUCH OMISSIONS.

                                           [_ _ _ _] by October 1, 2006

2007-Expiration Date                       [_ _ _ _]

            Buyer shall have the option, upon not less than six (6) months'
            prior notice to Seller, to increase the Annual Base Amount (for
            calendar years occurring after 2005) by [_ _ _ _] (prorated in the
            case of the portion of the calendar year remaining after such
            increase takes effect) so as to increase the Annual Base Amount to
            [_ _ _ _], subject to availability of equipment at the Source Mine
            required by Seller to produce coal to be sold hereunder in such
            quantities ("Increased Production Equipment"). If Seller is unable
            to produce the increased Annual Base Amount due to unavailability of
            the Increased Production Equipment, Seller shall use commercially
            reasonable efforts to obtain the Increased Production Equipment
            (including, without limitation, by diverting equipment from other
            mines to the extent not currently in use or anticipated to be used
            in such other mines) prior to the expiration of such six month
            period, and in any event shall obtain the Increased Production
            Equipment prior to the expiration of eighteen (18) months after
            receipt of Buyer's notice. Once the Annual Base Amount is increased
            pursuant to this Section 1.2, it may not be decreased without the
            mutual consent of the parties. Seller shall not change the source of
            the coal supplied hereunder (the "Base Source Coal") without the
            prior written consent of Buyer's Agent. Seller represents to Buyer
            that the current assigned reserves of the Source Mine comprising the
            Reserve Commitment are as set forth in Schedule 1.2 hereto. Seller
            shall not reduce the assigned reserves of the Source Mine below that
            reflected in Schedule 1.2 without the prior written consent of
            Buyer's Agent.

      1.3   The Sycamore Adjusted Base Amount remaining to be delivered to Buyer
            under the Sycamore Agreement from the date hereof through April 30,
            2006, currently scheduled in the monthly quantities set forth in
            Schedule 1.3 hereto (the "Sycamore Monthly Scheduled Amounts"),
            shall continue to be delivered to the Station until the tonnage
            commitment under the Sycamore Agreement has been satisfied. If
            Sycamore fails to deliver the Sycamore Monthly Scheduled Amounts
            under the Sycamore Agreement (for any reason other than force
            majeure or a default by Buyer thereunder) for more than three months
            (consecutive or otherwise) in any six month period, or if the
            Sycamore Agreement is terminated for any reason other than Buyer's
            unexcused failure to accept deliveries of the Sycamore Adjusted Base
            Amount thereunder (including, without limitation, by reason of the
            rejection of such contract by Anker Energy or Sycamore (or any
            trustee on its or their behalf) in any case or proceeding commenced
            by or against Anker Energy or Sycamore under the United States
            Bankruptcy Code, 11 U.S.C. Section 101 et seq.), Buyer, at its
            option, may make up any deficiency in deliveries of the Sycamore
            Adjusted Base Amount under this Agreement. In such event, the
            applicable monthly quantities to be delivered by Seller hereunder in
            any month shall be determined based on the sum of the Sycamore
            Monthly Scheduled Amount for such month and the monthly scheduled
            quantity of coal to be delivered to Buyer for such month established
            pursuant to Section 2.1 of this Agreement, and Buyer will credit any
            tonnage (the "Sycamore Makeup Amount") delivered by Seller hereunder
            in any month up to the Sycamore Monthly Scheduled Amount for such
            month against Sycamore's tonnage commitment under the Sycamore
            Agreement, with any tonnage delivered by Seller hereunder in excess
            of the Sycamore Monthly Scheduled Amount being credited to the
            monthly scheduled quantity of coal to be delivered to Buyer for such
            month

                                        2
<PAGE>

            established pursuant to Section 2.1. The Sycamore Makeup Amount
            delivered by Seller hereunder shall be invoiced and paid for by
            Buyer in accordance with Section 7.4 at the applicable base price
            (expressed in cents/MMBtu) at the time of delivery set forth in the
            Sycamore Agreement (or, in the case of deliveries after April 30,
            2006, at the applicable base price in effect under the Sycamore
            Agreement on April 30, 2006).

      1.4   If, during any calendar year, Seller fails to deliver, or Buyer
            fails to accept, other than by reason of force majeure, the Annual
            Base Amount to be delivered during such calendar year, the party not
            at fault shall have the right to schedule the shortfall for delivery
            in the following calendar year. Such party shall provide written
            notice to the other party within thirty (30) days after the end of
            such calendar year of the shortfall tonnage it elects to deliver or
            accept in such following calendar year; provided, however, that in
            no event shall Seller be obligated to produce and deliver, nor shall
            Buyer be obligated to accept, aggregate deliveries of coal as a
            result of such rescheduled deliveries in excess of the applicable
            limitation set forth in Section 2.1.

2.0   DELIVERY AND BILLING WEIGHT

      2.1   Buyer's Agent and Seller shall develop monthly and weekly delivery
            schedules for each calendar year which are consistent with the
            Annual Base Amount for such calendar year and the Station's annual
            scheduled maintenance outages. No later than 30 days in advance of
            each calendar year, Buyer's Agent will provide Seller with the
            monthly delivery schedule for each month of such calendar year for
            the Annual Base Amount to be delivered; provided, however, that in
            no event shall Seller be obligated to produce and deliver an
            aggregate quantity of coal in such calendar year in excess of the
            Annual Base Amount if such excess production is greater than what
            the Source Mine can reasonably accommodate based on existing Source
            Mine equipment and existing permits, nor shall Buyer be obligated to
            schedule or accept delivery of an aggregate quantity of coal in
            excess of the annual tonnage commitment under both the Sycamore
            Agreement and this Agreement if such excess deliveries are greater
            than what the Station can reasonably accommodate based on existing
            Station equipment and existing permits. In the event of any
            conflict, the tonnage to be delivered under the Sycamore Agreement
            shall have priority.

      2.2   Buyer reserves the right to designate a destination other than
            Harrison Power Station for delivery of coal to be supplied by Seller
            hereunder and to consign shipments to such alternate destination. In
            the event Buyer's Agent designates an alternate destination for
            delivery of any coal supplied by Seller hereunder, Buyer's Agent
            shall designate the method of delivery to such alternate
            destination. Arrangements and charges for transportation and
            delivery of the coal from the applicable delivery point to the
            destination designated by Buyer shall be the sole responsibility of
            Buyer. Buyer shall not be required to ship tonnage to an alternate
            destination. Seller shall not be responsible for any transportation
            arrangements to an alternate destination.

      2.3   Buyer reserves the right, at any time, and from time to time, at its
            sole discretion, to sell any or all coal purchased by Buyer under
            this Agreement to any person, firm, or corporation designated by
            Buyer (a "Third Party Purchaser"): provided, however, that Buyer's
            Agent shall give Seller not less than ten (10) days' notice of any
            proposed sale to a Third Party Purchaser (including the terms of
            such sale) and Seller shall have the right, at any time prior to the
            expiration of such ten (10)

                                        3
<PAGE>

                                       * CONFIDENTIAL MATERIAL HAS BEEN
                                         OMITTED AND FILED SEPARATELY WITH
                                         THE SECURITIES AND EXCHANGE
                                         COMMISSION. BRACKETS AND UNDERSCORES
                                         DENOTE SUCH OMISSIONS.

            day period, to either release Buyer from its commitment to purchase
            such coal from Seller or to repurchase such coal from Buyer at the
            same price offered by the Third Party Purchaser. Buyer's Agent will
            designate the destination and method of delivery to any Third Party
            Purchaser and Buyer shall be responsible for any additional
            transportation arrangements or costs associated therewith.

      2.4   Seller shall deliver the coal to be sold hereunder by truck, unless
            otherwise agreed by Buyer and Seller. Title to and risk of loss of
            any coal delivered to Buyer pursuant to this Agreement shall pass to
            Buyer when such coal has been delivered to Buyer F.O.B. the Station,
            or if Buyer designates an alternate destination for delivery of coal
            pursuant to Section 2.2 or 2.3, when such coal has been delivered to
            Buyer F.O.B. such other delivery point as Seller and Buyer may
            agree.

3.0   QUALITY AND SPECIFICATIONS

      3.1   The coal to be supplied by Seller hereunder shall meet the following
            specifications on a composite "as-received" basis averaged over each
            Sample Period specified in Article 4.0:

<TABLE>
<S>                              <C>
Btu (Btu/#) .................    Not less than [_ _ _ _]
Total Moisture (%) ..........    Not to exceed [_ _ _ _]
Ash (#Ash/MMBtu) ............    Not to exceed [_ _ _ _]
Sulfur (#/MMBtu) ............    Not less than [_ _ _ _], and
                                 not to exceed [_ _ _ _]
Volatile Ranking ............    [_ _ _ _]
Grindability ................    Not less than [_ _ _ _]
Size ........................    Not to exceed [_ _ _ _]
</TABLE>

            If the quality specifications specified above are to be met by the
            blending of coals with different characteristics, such blending must
            take place off Station property.

      3.2   In addition, the coal shall not contain a prohibitive amount of
            fines and shall be free of other extraneous materials or any other
            matter affecting coal quality, including earth, rock, wood, bone,
            metal, sulfur balls or other impurities which would adversely affect
            the operation of Buyer's equipment.

4.0   WEIGHING, SAMPLING AND ANALYSIS

      4.1   The final determination of the actual quantity of coal delivered to
            Buyer hereunder shall be made by Buyer's weighing of the coal on the
            truck scales at the Station or any alternate destination designated
            by Buyer's Agent, or such other method as the parties may mutually
            agree upon. Buyer shall record such weights in Buyer's transaction
            receipt and report or weight ticket for each shipment. Absent
            manifest error, the scale weights recorded in the transaction
            receipt and report or weight ticket prepared by Buyer shall be
            controlling as to the quantity of coal delivered.

      4.2   Except as otherwise provided in Section 4.5, sampling and analysis
            of coal delivered pursuant to this Agreement shall be determined by
            analyses of representative samples collected by Buyer of the coal
            supplied by Seller, which analyses shall be performed by Buyer's
            Agent in accordance with methods and standards approved by the
            American Society for Testing and Materials

                                        4

<PAGE>

            ("ASTM"), or such other methods and standards as the parties may
            mutually agree upon. If the results of the analyses performed to
            determine compliance with the quality specifications set forth in
            Article 3.0 indicate concentration levels for any specification that
            are within the precision and bias limits applicable for the ASTM
            test method utilized, then the coal shall be deemed to comply with
            such specification.

      4.3   Each calendar month during the Term shall be divided into three
            sample periods. The first period shall be the 1st through the 10th
            day of the month; the second period the 11th through 20th day of the
            month; and the third period the 21st through the last day of the
            calendar month (each such period being referred to herein as a
            "Sample Period"). Buyer's Agent shall separately determine a
            weighted average "as-received" analysis of the coal delivered over
            each Sample Period based on daily samples taken during such Sample
            Period (calculated as the weighted average results of the daily "as
            received" analyses and the associated weights of the samples
            analyzed). As soon as practicable after the end of each Sample
            Period, Buyer's Agent shall advise Seller in writing of the results
            of the analysis for such Sample Period. Seller may observe the
            collection and preparation of samples, and, upon written request of
            Seller, Buyer shall make available to Seller a representative
            portion of each daily sample.

      4.4   In the event Buyer's Agent designates an alternate destination for
            any coal supplied by Seller hereunder, then, unless otherwise agreed
            by the parties, said coal shall be weighed on scales at the
            alternate destination designated by Buyer's Agent, or by such other
            method as the parties may mutually agree upon, and shall be sampled
            and analyzed in accordance with the procedures set forth in Sections
            4.2 and 4.3 based on samples taken at such alternate destination.

      4.5   In the event of any sale by Buyer of any coal purchased by Buyer
            hereunder to a Third Party Purchaser, Seller's weights and analyses
            shall govern for the purpose of determining the quantity of such
            coal, its compliance with the quality specifications and any
            adjustments to the purchase price payable by Buyer to Seller based
            therein, provided such weights and analyses shall be performed in
            compliance with ASTM methods and standards or such other methods and
            standards as the parties may agree upon, and shall be subject to
            Buyer's rights to examine Seller's weight and analysis records and
            to have a representative present when such weighing, sampling and
            analyses are performed.

5.0   REJECTION OF SHIPMENTS

      5.1   Buyer shall have the right, in its sole discretion, to reject
            individual shipments of coal which it or Buyer's Agent judges to be:

            5.1.1 Oversize, or

            5.1.2 Finer or wetter than that which existing station equipment is
                  capable of handling or burning efficiently, or

            5.1.3 Considered to contain excess amounts of rock, wood, bone,
                  metal, sulfur balls, or other impurities which would adversely
                  affect the operation of Buyer's equipment, or

                                        5

<PAGE>

            5.1.4 Not homogeneously blended in each delivery in a manner that
                  will ensure reasonably uniform consistency as to size and
                  quality.

      5.2   If Buyer rejects any coal shipment in accordance with Section 5.1,
            Buyer or Buyer's Agent shall notify Seller of its rejection and
            Seller, at its expense, shall remove such rejected coal within seven
            (7) calendar days after rejection and reimburse Buyer for all
            transportation, demurrage and handling charges, if any, incurred by
            Buyer associated with such rejected shipment. The provisions of this
            Section 5.2 shall survive termination of this Agreement.

      5.3   Tonnage deficiencies in any calendar year resulting from Buyer's
            rejection of any coal shipment may, at Buyer's option, be deducted
            from the Annual Base Amount for such calendar year.

6.0   SUSPENSION AND TERMINATION

      6.1   Buyer may, at its option, immediately suspend deliveries hereunder
            until such time as Seller can provide Buyer's Agent with assurances
            satisfactory to Buyer's Agent that Seller will fully perform its
            obligations hereunder if:

            6.1.1 The coal delivered fails to meet any of the quality
                  specifications or ratios set forth in Article 3.0 on a
                  composite "as-received" basis averaged over each Sample Period
                  for two (2) Sample Periods (consecutive or otherwise) during
                  any two (2) month period, or

            6.1.2 The coal delivered on any two days (consecutive or otherwise)
                  during any Sample Period exceeds by 10% or more the maximum
                  permitted ratios for sulfur and/or ash content set forth in
                  Article 3.0, or

            6.1.3 The quantity of coal delivered during any two consecutive
                  calendar months does not approximate, other than by reason of
                  force majeure, the delivery schedule mutually agreed to by
                  Buyer's Agent and Seller as provided in Section 2.1.

      6.2   Should inventories of coal at the Station or other applicable
            destination, in the judgment of Buyer's Agent, increase beyond
            desired levels, Buyer may reduce or suspend scheduled deliveries
            until such time as inventories return to acceptable levels, provided
            Seller is given an opportunity to make up deliveries within the
            following calendar year, subject to the limitation set forth in
            Section 2.1. Subject to Buyer's obligations under contracts in
            existence on the date hereof, Buyer shall reduce or suspend spot
            purchases before reducing or suspending scheduled deliveries by
            Seller under this Section 6.2, and shall reduce or suspend
            deliveries by Seller under this Section 6.2 proportionally with all
            other suppliers of coal to the Station based on Seller's and such
            other suppliers' respective tonnage commitments.

      6.3   If within ten (10) calendar days of suspension Seller does not
            provide assurances, in writing, reasonably satisfactory to Buyer's
            Agent that it will fully perform its obligations hereunder, or if
            Seller fails to meet either the required specification criteria or
            delivery schedule at any time during the next thirty-day delivery
            period after Buyer's Agent's authorization to resume deliveries
            (except for de minimus noncompliance), Buyer may terminate this
            Agreement.

                                        6

<PAGE>

                                       * CONFIDENTIAL MATERIAL HAS BEEN
                                         OMITTED AND FILED SEPARATELY WITH
                                         THE SECURITIES AND EXCHANGE
                                         COMMISSION. BRACKETS AND UNDERSCORES
                                         DENOTE SUCH OMISSIONS.

      6.4   During periods of suspension pursuant to Section 6.1, Buyer shall
            have the right to buy replacement coal of similar quality and in
            such quantities (not exceeding the suspended quantities) as Buyer
            deems necessary to maintain operations and desired levels of
            inventories, and Seller shall be responsible for all additional
            costs Incurred by Buyer associated therewith.

      6.5   Except as provided in Section 6.2, tonnage deficiencies in any
            calendar year resulting from any suspension of deliveries may, at
            Buyer's option, be deducted from the Annual Base Amount for such
            calendar year.

7.0   PRICING AND PAYMENT

      7.1   Buyer shall pay to Seller, subject to the quality adjustments
            contained herein, a base purchase price per million BTU for all coal
            delivered hereunder (the "Base Price") at the rate of [_ _ _ _]. If
            Buyer exercises its option to increase the Annual Base Amount
            pursuant to Section 1.2, then the Base Price less the transportation
            cost allowance set forth in Section 8.5 (as each may be adjusted in
            accordance with Article 8.0) (such remainder, the "Base Mine Price")
            applicable to all coal delivered to Buyer thereafter shall be
            reduced by an amount equal to [_ _ _ _] of the Base Mine Price then
            in effect.

      7.2   The Base Price is based on such coal meeting the individual quality
            specifications set forth in Article 3.0 as received by Buyer.
            Whenever the coal delivered during any Sample Period does not
            conform to such quality-specifications, the Base Price shall be
            adjusted as follows:

            7.2.1 Moisture Content. If the weighted average moisture content
                  of the coal received for any Sample Period exceeds [_ _ _ _],
                  the Base Price payable for such coal shall be reduced by
                  [_ _ _ _].

            7.2.2 Ash/Btu Content. If the weighted average ash content of
                  the coal received for any Sample Period exceeds [_ _ _ _],
                  the Base Price payable for such coal shall be reduced
                  by [_ _ _ _].

            7.2.3 Sulfur/Btu Content. If the weighted average sulfur content of
                  the coal received for any Sample Period exceeds the ratios
                  specified below, the Base Price payable for such coal shall be
                  reduced according to the following schedule:

<TABLE>
<CAPTION>
# Sulfur/MMBtu                Adjustment
--------------                ----------
<S>                           <C>
[_ _ _ _]                     [_ _ _ _]
[_ _ _ _]                     [_ _ _ _]
[_ _ _ _]                     [_ _ _ _]
</TABLE>

      7.3   Each of the adjustments set forth in Section 7.2 are independent of
            one another, and the applicable Base Price for any Sample Period
            shall be reduced by the cumulative total of all applicable quality
            adjustments for such Sample Period (the Base Price, as so adjusted,
            being referred to herein as the "Adjusted Base Price").

                                        7

<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.

      7.4   Buyer shall, on a [_ _ _ _] basis, calculate the cumulative payment
            due Seller for each of the [_ _ _ _] Sample Periods which comprise
            such [_ _ _ _] in accordance with the provisions of this Agreement,
            and shall submit an invoice to Seller for all coal delivered and
            accepted hereunder during such [_ _ _ _], showing the quantity of
            coal purchased for each Sample Period to which it relates
            (accompanied by supporting documentation which shall include a
            detailed log of daily delivery transactions) and the Adjusted Base
            Price applicable thereto. Payment to Seller will be made on or
            before [_ _ _ _]. Absent manifest error, the invoices prepared by
            Buyer shall be controlling as to the amounts due Seller hereunder.
            Seller shall not readdress or object to a payment issued by Buyer
            after [_ _ _ _] days has elapsed from the date of the original
            invoice.

8.0   BASE PRICE ESCALATION ADJUSTMENTS

      8.1   As of the date hereof, the Base Price is comprised of the following
            base dollar amounts (the "Base Dollar Amounts") of the following
            components and subcomponents of Seller's cost to mine and produce
            coal. The Base Price and the Base Dollar Amounts shall be adjusted
            to reflect changes in such components and subcomponents, such that
            the resulting Base Price applicable to any coal consigned for
            shipment on and after the effective date of any such adjustment
            shall remain in effect until the Base Price is again adjusted
            pursuant to this Section. All such adjustments shall be accompanied
            by appropriate documentation (which shall be furnished by Seller to
            Buyer) and shall be subject to verification by Buyer.

<TABLE>
<CAPTION>
                                     Base Dollar
                        Sub-          Amount Per
   Component         component      Ton(as(1/1/05)         Index or Method
---------------     ------------    --------------    ---------------------------
<S>                 <C>             <C>               <C>
Labor               Esc.- Ref.        $ [_ _ _ _]     Bituminous coal and lignite
                    Benchmark                         surface mining, Average
                                                      Hourly Earnings of
                                                      Production Workers (CEU
                                                      Series ID: CEU1021211106)

Medical             Esc.- Ref.        $ [_ _ _ _]     CPI -- All Urban Wage
                    Benchmark                         Earners Medical Care
                                                      (CPI Series ID:
                                                      CWUR0000SAM)

Steel Supplies      Esc.- Ref.        $ [_ _ _ _]     Fabricated Metal
                    Benchmark                         Products (PPI Series
                                                      ID: PCU331--331--

Fuel &              Esc.- Ref.        $ [_ _ _ _]     Petroleum Products,
Lubricants          Benchmark                         Refined (PPI Series ID:
                                                      WPU057)

Subtotal                              $ [_ _ _ _]     Subject to Supplemental
(Variable Cost                                        Adjustment
Components)

Supplies            Esc. - Index      $ [_ _ _ _]     Industrial Commodities,
                    Based                             Less Fuels and Related
                                                      Products and Power (PPI
                                                      Series ID: WPU03T15M05)

Repairs &           Esc. - Index      $ [_ _ _ _]     Mining Machinery Equipment
Maintenance         Based                             (PPI Series ID: WPU1192)

Electric Power      Esc. - Index      $ [_ _ _ _]     Industrial Power (PPI
                    Based                             Series ID: WPU0543)

Subtotal (All                         $ [_ _ _ _]
Escalating
Components)
</TABLE>

                                        8

<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.

<TABLE>
<S>                 <C>                <C>            <C>
Governmental        Pass               $   [_ _ _ _]  Federal Black Lung Excise Tax
Assessment          Through
Components                             $   [_ _ _ _]  Federal Reclamation Fees

                                       $   [_ _ _ _]  WV Severance Tax

                                       $   [_ _ _ _]  WV Workers Comp

Fixed Component                        $   [_ _ _ _]  Fixed for the Term and not
                                                      subject to adjustment


Total-All                              $   [_ _ _ _]  Base Mine Price
Components

Trucking                               $   [_ _ _ _]  Base Transportation Cost

                                       $   [_ _ _ _]  Base Price (FOB Station)
</TABLE>

      8.2   The Labor, Medical, Steel Supplies and Fuel & Lubricants components
            of the Base Mine Price set forth above (collectively, the "Variable
            Cost Components"), as well as the Supplies, Repairs & Maintenance
            and Electric Power components of the Base Price set forth above,
            shall be adjusted [_ _ _ _] effective [_ _ _ _] (each such date, an
            "Adjustment Date"), commencing [_ _ _ _]. The first adjustment
            effective as of [_ _ _ _] shall be determined by comparing the
            average value of each respective index for [_ _ _ _] to the average
            value of each respective index for [_ _ _ _]. As of each Adjustment
            Date thereafter, the average value of each respective index for the
            [_ _ _ _] preceding such Adjustment Date shall be compared to the
            average value of each such index for the [_ _ _ _] preceding such
            Adjustment Date. For example, the [_ _ _ _] adjustment shall compare
            the average value of each respective index for [_ _ _ _] to the
            average value of each such index for [_ _ _ _]. In each such case,
            [_ _ _ _] of the respective change (carried out to four decimal
            places, e.g., 6.124% shall be 0.0612) in each such index shall be
            multiplied by the last previously effective Base Dollar Amount of
            the component or subcomponent correlative thereto. The net amounts
            of increase or decrease so obtained shall be added to or subtracted
            from, as the case may be, such last previously effective Base Dollar
            Amount of the component or subcomponent correlative thereto and the
            resulting amount per ton (rounded to the nearest whole cent) shall
            become the then effective Base Dollar Amount of such component or
            subcomponent of the Base Mine Price. A sample calculation of
            adjustments to such components and subcomponents of the Base Mine
            Price pursuant to this Section 8.2 is attached hereto as Schedule
            8.2.

      8.3   If the Base Mine Price is reduced pursuant to the last sentence of
            Section 7.1, such reduction shall be applied to all components and
            subcomponents of the Base Mine Price then in effect (other than the
            Governmental Assessment Components portion thereof), pro rata in
            accordance with the respective Base Dollar Amounts of such
            components and subcomponents then in effect, so as to reduce the
            aggregate Base Dollar Amounts of all of such components and
            subcomponents by an amount equal to [_ _ _ _] of the Base Mine Price
            then in effect (before giving effect to such reduction). A sample
            calculation of adjustments to such components and subcomponents of
            the Base Mine Price pursuant to this Section 8.3 is attached hereto
            as Schedule 8.3.

                                        9

<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.


      8.4   The Base Dollar Amounts of the Governmental Assessment Components of
            the Base Mine Price set forth above shall be adjusted for changes in
            federal black lung excise tax, federal reclamation fees, West
            Virginia severance tax and West Virginia workers' compensation
            (which for this purpose shall be limited to base rates, exclusive of
            experience premiums and other adjustments not applicable to
            employers in the mining industry generally) occurring after
            [_ _ _ _], effective as of [_ _ _ _] following the effective date of
            any such change (except when such change is effective on the first
            day of a month, in which case such adjustment shall be effective as
            of such date). The parties agree that the proposed West Virginia
            severance tax, regardless of the form in which it is enacted, will,
            if enacted, be deemed to constitute an additional item of the
            Governmental Assessment Components for purposes of this Section.
            Such amounts shall be adjusted for any related tax credits or other
            credits allowed to Seller. For the purpose of calculating
            adjustments to the Base Mine Price pursuant to this Section 8.4, all
            such adjustments shall be deemed to be based on those governmental
            assessments applicable to underground mining. A sample calculation
            of adjustments to the Governmental Assessment Components of the Base
            Mine Price pursuant to this Section 8.4 is attached hereto as
            Schedule 8.4.

      8.5   The Base Price is also subject to adjustments to the Base
            Transportation Cost (as hereinafter defined) based on changes in
            trucking costs. Such adjustments, if applicable, shall be determined
            and computed in accordance with the methodology set forth in
            Schedule 8.5 attached hereto, shall be paid separately and shall not
            be taken into account in computing any other adjustments to the Base
            Price hereunder. As of the date hereof, the Base Price includes an
            allowance of [_ _ _ _] for truck transportation costs (the "Base
            Transportation Cost"). [_ _ _ _]

      8.6   If upon agreement or final determination, an adjustment to the cost
            per ton is found to be appropriate in accordance with Section 8.2,
            8.3, 8.4 or 8.7, an appropriate credit for such amount (converted to
            an equivalent delivered cents/MMBtu basis), for all coal delivered
            hereunder on and after the effective date of any such adjustment,
            shall be made to the party to whom the benefit of such credit is
            due.

      8.7   [_ _ _ _]

                                       10
<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.



      8.8   The indices utilized in calculations made pursuant to this Agreement
            shall be the indices as they are first published. In the event that
            the current base or any index referred to in Section 8.1 or 8.3 is
            converted to a new base, or should the United States Department of
            Labor convert an index from the Standard Industrial Classification
            System to the North American Industry Classification System, then
            conversion tables published by the United State Department of Labor,
            Bureau of Labor Statistics, or the United State Department of
            Commerce, Bureau of Economic Analysis, as the case may be, shall be
            used in re-computing the level of any such index. Should publication
            of any index be discontinued, an index which is as nearly as
            practicable equivalent shall be substituted by mutual agreement of
            the parties. In the event that supervening events or circumstances
            shall render inapplicable any of the methods set forth in this
            Article 8.0 for computing adjustments to the Base Price, the parties
            shall meet promptly to consider and agree upon new or revised
            methods appropriate to the circumstances then prevailing.

      9.0   RE-OPENER

      9.1   [_ _ _ _] during any calendar year after [_ _ _ _] shall exceed
            [_ _ _ _] of the Base Mine Price then in effect (as the same may
            have been adjusted in accordance with Article 8.0), then Seller
            shall have the right at any time within ninety (90) days after the
            end of such calendar year to give Buyer written notice of its
            election to negotiate an adjustment to the Base Price pursuant to
            this Article 9.0; provided, however, that if any such

                                       11
<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.


             increase occurs prior to [_ _ _ _] as a result of a change in law
             described in Section 12.2, Seller may give a notice to Buyer
             pursuant to this Section within ninety (90) days after the end of
             the calendar year in which such increase occurs. Seller shall
             furnish to Buyer, upon request therefor, sufficient information
             [_ _ _ _] (other than information the disclosure of which would
             breach any confidentiality agreement or other legal requirement by
             which Seller may be bound) to enable Buyer to verify whether such
             condition has been met. Subject to such limitations, Buyer shall
             have the right at its expense to examine, or cause an audit to be
             made of, the records and books of account of Seller with respect to
             its [_ _ _ _].

       9.2   If the market price of coal available to Buyer (F.O.B. Station)
             during any calendar year after [_ _ _ _], as determined by
             responses to Buyer's bid solicitations pursuant to Qualifying Bids
             for coal of similar quality to that required by this Agreement,
             shall be less than [_ _ _ _]% of the Base Price then in effect (as
             the same may have been adjusted in accordance with Article 8.0),
             then Buyer shall have the right at any time within ninety (90) days
             after the end of such calendar year to give Seller written notice
             of its election to negotiate an adjustment to the Base Price
             pursuant to this Article 9.0. Buyer's Agent shall determine a
             weighted average annual price per ton of coal (converted to an
             equivalent delivered cents/MMBtu basis) based on all Qualifying
             Bids received. For purposes of this Section 9.2, "Qualifying Bids"
             must meet the following criteria:

            9.2.1 Each bid must be submitted by a single coal producer (or one
                  or more affiliates of such producer), or direct sales agent
                  of such a coal producer (who possesses reasonably
                  satisfactory evidence of its right to sell such coal), or a
                  coal marketer, who is not an affiliate of Buyer;

            9.2.2 The quality of the coal must meet the quality specifications
                  set forth in Article 3.0 on a composite "as-received" basis,
                  or the bid price shall be appropriately adjusted to take into
                  account differentials between the average Btu, ash and sulfur
                  content per pound, and moisture content, of coal under the bid
                  and the corresponding specifications set forth in Section 3.1
                  and the additional costs (including, but not limited to,
                  emission allowance costs), if any, to Buyer of utilizing such
                  coal; and

            9.2.3 The bids submitted must be for an aggregate tonnage of not
                  less than [_ _ _ _].

            Buyer's Agent shall furnish to Seller, upon request therefor,
            sufficient information concerning its bid solicitations and
            Qualifying Bids (other than information that would fail to maintain
            confidentiality of the bidders, or the disclosure of which would
            breach any confidentiality agreement or other legal requirement by
            which Buyer or Buyer's Agent may be bound) to enable Seller to
            verify whether such condition has been met. Subject to such
            limitations, Seller shall have the right at its expense to examine,
            or cause an audit to be made of, the records and books of account of
            Buyer and Buyer's Agent with respect to the calculation of the
            weighted average price per ton of coal available to Buyer under this
            Section 9.2.

      9.3   If Seller gives a notice to Buyer pursuant to Section 9.1, or Buyer
            gives a notice to Seller pursuant to Section 9.2, the parties shall
            negotiate in good faith to reach agreement on an appropriate
            adjustment to the Base Price, taking into

                                       12
<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.


            consideration all relevant factors, [_ _ _ _]

      9.4   If, within ninety (90) days after receipt by Buyer of Seller's
            notice pursuant to Section 9.1 or Seller's receipt of Buyer's notice
            pursuant to Section 9.2, as the case may be, the parties have been
            unable to reach agreement on a new Base Price in accordance with
            Section 9.3, then either party shall have the right to terminate
            this Agreement upon not less than [_ _ _ _] prior written
            notice to the other party.

10.0  RESERVES AND SOURCES

      Seller represents and warrants to Buyer that Seller now owns, leases or
      controls mining and/or processing operations with sufficient reserves of
      coal to enable Seller to supply Buyer with the total quantity of coal
      specified in this Agreement for the Term of this Agreement. Seller will
      not sell or agree to sell to others coal from such reserves which would
      jeopardize Seller's ability to supply the total Reserve Commitment during
      the Term of this Agreement. At Buyer's Agent's reasonable request, Seller
      shall continue to demonstrate throughout the term of the Agreement the
      availability of these quantities, qualities or capacities.

11.0  CONFIDENTIALITY AND NON-DISCLOSURE

      11.1  The terms and conditions of this Agreement shall only be disclosed
            to Buyer's and/or Seller's employees and representatives on a "need
            to know" basis and shall not be disclosed to any third party. Such
            terms and conditions shall under no circumstances be disclosed to a
            competitor of Seller or Buyer.

      11.2  Except as provided below, neither party shall, without the express
            written permission of the other, disclose this Agreement or the
            terms hereof to any third party, provided, however, that each party
            may disclose information related to this Agreement to any Federal,
            state or local governmental agency, authority or commission, or any
            court, tribunal or arbitrator (collectively, "Official Bodies") as
            required by law, including those which regulate Buyer's business.
            With respect to such disclosure to Official Bodies, the parties each
            agree: (1) to appropriately limit their respective requests and/or
            requirements for the disclosure or delivery of such confidential
            information to the minimum necessary to comply with applicable law;
            (2) to provide to the other timely notice of any Official Body's
            disclosure requirement so that the party seeking protection of such
            information can contest such disclosure requirement to the fullest
            extent allowed by law, and (3) to undertake such steps as may be
            available pursuant to law or regulation to provide for the
            confidentiality of any such confidential information released or
            disclosed to any Official Body. To the extent that the disclosure of
            any such confidential information to a third party (other than to
            Official Bodies, as described above) is necessary, each of the
            parties agrees to give notice thereof to the other party and request
            that the party seeking protection of such information shall have the
            right to obtain from such third parties any enforceable

                                       13
<PAGE>
                                          * CONFIDENTIAL MATERIAL HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION. BRACKETS AND UNDERSCORES
                                            DENOTE SUCH OMISSIONS.

            confidentiality agreements providing for protection at least as
            stringent as those provided hereby. Except as to information which
            may become public through means other than the action or inaction of
            the party charged with improper disclosure, this Agreement shall
            remain in effect for a period of five years after the term of this
            Agreement expires

      11.3  Any reference to Buyer, this Agreement, the quantities of coal
            purchased by Buyer hereunder or other data relating to such
            purchases or the Station for Seller's advertising or reporting
            purposes shall be promptly reviewed by Buyer prior to release and
            shall not be released without the prior written consent of Buyer,
            which consent shall not be unreasonably withheld or delayed. Any
            reference to Seller, this Agreement, the quantities of coal sold to
            Buyer hereunder or other data relating to such sales or the Source
            Mines for Buyer's advertising or reporting purposes shall be
            promptly reviewed by Seller prior to release and shall not be
            released without the prior written consent of Seller, which consent
            shall not unreasonably be withheld or delayed.

12.0  LEGISLATION, REGULATIONS AND ORDERS

      12.1  Seller shall comply with the provisions of all Federal, State and
            other governmental laws and any applicable orders and/or regulations
            or any amendments or supplements thereto relating to the sale of
            coal hereunder which have been or may at any time during the Term of
            this Agreement be issued by a governmental agency having appropriate
            jurisdiction. Seller warrants that it and its subcontractors are in
            compliance with all such laws, orders and/or regulations now in
            effect.

             12.2  If the cost to Seller of producing, processing and delivering
             coal hereunder shall have increased (or decreased) as a result of
             any new or amended, or a change in the interpretation or
             enforcement of any, Federal, state or local law, rule, regulation,
             order or tax occurring after the date hereof (each, a "regulatory
             change"), Seller shall notify Buyer of such event promptly after
             Seller becomes aware thereof and shall specify in such notice the
             amount of any increase (or decrease) to the Base Price payable
             under this Agreement necessary as a result of such regulatory
             change. Buyer shall notify Seller within twenty (20) days after
             receipt of such notice from Seller whether Buyer agrees to Seller's
             proposed adjustment to the Base Price. If Buyer agrees to such
             adjustment, the Base Price shall be changed accordingly. If Buyer
             does not agree to such adjustment, the Base Price shall be adjusted
             by [_ _ _ _] as a result of such regulatory change, as verified by
             supporting documentation to be submitted by Seller as hereinafter
             provided. Seller shall furnish to Buyer, upon request therefor,
             sufficient information concerning Seller's costs to enable Buyer to
             verify Seller's calculation of any change in Seller's costs
             incurred as a result of such regulatory change and the resulting
             new Base Price. Buyer shall have the right at its expense to
             examine, or cause an audit to be made of, the records and books of
             account of Seller with respect to any change in Seller's costs as a
             result of such regulatory change and the calculation of any
             adjustment to the Base Price pursuant to this Section 12.2.
             Notwithstanding the foregoing, the Base Price shall not be changed
             pursuant to this Section 12.2 as a result of any change in
             corporate net income taxes or taxes, fees or other impositions
             levied on or measured by, in whole or in part, capital, retained
             earnings or any other similar measure, or any business privilege,
             value added, general franchise or other similar taxes imposed on
             Seller or its properties or assets, or as a result of any change
             for which Seller has already

                                       14
<PAGE>

            received a transportation cost adjustment pursuant to Section 8.5 or
            a Supplemental Adjustment pursuant to Section 8.7. For the purpose
            of calculating adjustments to the Base Price pursuant to Article
            8.0, any adjustment to the Base Price pursuant to this Section 12.2
            shall be subtracted from the corresponding Base Dollar Amounts of
            the components or subcomponents of the Base Price affected by such
            regulatory change (pro rata in accordance with the respective Base
            Dollar Amounts of such components or subcomponents).

      12.3  In the event of the enactment after the date hereof of any Federal,
            State or other governmental law, regulation or order which may
            prohibit, make economically unfeasible, or restrict so as to
            effectively prohibit Buyer's use of the coal specified in this
            Agreement, Buyer shall notify Seller of such event promptly after
            Buyer becomes aware thereof and this Agreement shall no longer be
            binding after the effective date of such law, regulation, or order;
            provided, however, that Buyer shall exert good faith efforts to
            secure relief from such governmental restrictions. In the event of a
            conflict in interpretation of applicable governmental laws,
            regulations, and orders, then, for purposes of this Agreement, any
            reasonable interpretation which prohibits, makes economically
            unfeasible, or restricts so as to effectively prohibit Buyer's use
            of the coal specified herein shall be sufficient to permit Buyer to
            cancel this Agreement.

      12.4  In the event of the enactment after the date hereof of any Federal,
            State, or other governmental law, regulation or order which may
            prohibit or restrict so as to effectively prohibit Seller's mining,
            processing, or shipping of the coal specified in this Agreement,
            Seller shall notify Buyer of such event promptly after Seller
            becomes aware thereof and this Agreement shall no longer be binding
            after the effective date of such law, regulation, or order to the
            extent that such legislation has affected the production,
            processing, or shipping of coal under this Agreement; provided,
            however, that Seller shall exert good faith efforts to secure relief
            from such governmental restrictions. An increase in Seller's
            economic costs alone and which are not addressed in this Agreement
            shall not be sufficient cause to modify or terminate this Agreement
            or to suspend deliveries hereunder. In the event of a conflict in
            interpretation of applicable governmental laws, regulations, and
            orders, then, for purposes of this Agreement, any reasonable
            interpretation which prohibits or restricts so as to effectively
            prohibit Seller's mining, processing, or shipping of the coal
            specified herein shall be sufficient to permit Seller to cancel this
            Agreement.

13.0  FORCE MAJEURE

      13.1  As used herein, "force majeure" means any causes or circumstances
            beyond the reasonable control and without fault or negligence of the
            party affected thereby or of its subcontractors or carriers, such
            as, acts of God, governmental regulation, war, acts of terrorism,
            weather, floods, fires, accidents, strikes, major breakdowns of
            equipment, shortages of carrier's equipment, accidents of
            navigation, interruptions to transportation, embargoes, orders of
            civil or military authority, or other causes, whether of the same or
            different nature, existing or future, foreseen or unforeseeable,
            which wholly or partly prevent the mining, processing, shipment
            and/or loading of the coal by Seller, or the receiving, transporting
            and/or delivery of the coal by any carrier, or the accepting,
            utilizing and/or unloading of the coal by Buyer, but specifically
            excluding economic factors alone.

      13.2  If, by reason of force majeure, either party is unable, wholly or
            partially, to perform its obligations under this Agreement, the
            affected party shall promptly

                                       15
<PAGE>

            give the other party notice of such force majeure and full
            information concerning the causes or circumstances claimed to
            constitute such force majeure and, if such notice is given, the
            obligations of the party giving such notice shall be suspended (or
            reduced to the extent made necessary by such force majeure) during
            the continuance of such force majeure or its effects. The party
            claiming such force majeure shall exert due diligence to remove the
            causes or circumstances constituting such force majeure as soon as
            and to the extent reasonably practicable, and shall promptly notify
            the other party when the causes or circumstances constituting such
            force majeure have terminated. The other party shall have the right
            to investigate the causes or circumstances claimed by the affected
            party to constitute such force majeure.

      13.3  The requirement that the causes or circumstances constituting force
            majeure shall be removed by the affected party with all reasonable
            dispatch shall not require the settlement of strikes, lockouts or
            other labor disputes.

      13.4  No suspension or reduction for reason of force majeure shall
            invalidate the remainder of this Agreement, but, on removal of the
            causes or circumstances constituting such force majeure, deliveries
            of coal hereunder shall resume at the applicable Annual Base Amount
            rate; provided, however, that if either party suffers an extended
            period of force majeure, whether whole or partial, lasting six (6)
            months or longer, the other party shall have the right to terminate
            this Agreement upon thirty (30) days' prior notice. Tonnage
            deficiencies caused by force majeure shall not be made up, except by
            mutual consent.

14.0  EMPLOYMENT STANDARDS

      Seller shall (and shall cause its subcontractors, if any, to) comply with
      all applicable federal, state and local rules and regulations governing
      labor or employee relations, including Sections 6, 7,12 and 14 of the Fair
      Labor Standards Act, as amended. Seller agrees that Seller shall be
      subject to all applicable contract clauses required by federal, state or
      local law, rule or regulation to be included in this Agreement, including
      but not limited to the following clauses, which are incorporated by
      reference herein: Equal Opportunity Clause (41 C.F.R. Section60-1.4);
      Affirmative Action Clause for Disabled Veterans and Veterans of the
      Vietnam Era (41 C.F.R. Section60-250.4); Affirmative Action Clause for
      Handicapped Workers (41 C.F.R. Section60-741.4); the Certification of
      Nonsegregated Facilities Clause (41 C.F.R. Section60-1.8; 41 C.F.R.
      Section1-12.803.10); and the Nondiscrimination Clause (16 Pa. Code
      Section49.101). In addition, Seller certifies, if applicable, that it has
      developed a written affirmative action compliance program [41 C.F.R.
      Section60-1.40(a)] and will annually file Standard Form 100 (EEO-1) [41
      C.F.R. Section60-1.7(a)].

15.0  DRUG AND ALCOHOL ABUSE

      Seller shall be solely responsible for its employees and subcontractors,
      and their employees, regarding drug and alcohol abuse. Controlled
      substances and alcohol are prohibited on Buyer's properties. The use,
      possession or sale of controlled substances or alcohol while on Buyer's
      properties will result in disciplinary action, including removal from the
      job site. The use of controlled substances and/or alcohol while off
      Buyer's property in a manner that adversely affects an employee's job
      performance or public perception of Buyer is not acceptable and will
      result in disciplinary action, including removal from the job site. Cost
      of testing shall be borne by Seller.

                                       16
<PAGE>

16.0  GOVERNING LAW

      This Agreement and the rights and obligations of the parties hereto shall
      be governed by the laws of the State of West Virginia.

17.0  ASSIGNMENT

      No party hereto may assign this Agreement or any portion hereof without
      the advance written consent of the other party, except that no such
      consent shall be required for (a) an assignment is made to any subsidiary
      or affiliate of Buyer, (b) an assignment in connection with a sale of
      Buyer's Harrison Power Station or other destination designated by Buyer or
      of all or substantially all of the assets or business of Buyer, or (c) an
      indirect assignment by reason of a change in control of Seller's parent,
      Anker Coal Group, Inc. In addition, Buyer may assign this Agreement
      without the consent of Seller to a third party for the purpose of
      manufacturing synthetic fuel for use at the applicable destination, but no
      such assignment shall relieve Buyer of its obligations under this
      Agreement unless such assignee provides Seller with security reasonably
      satisfactory to Seller to secure performance of all of the obligations of
      the purchaser of coal under this Agreement. Sale or lease of Seller's
      property, coal processing, or loadout facilities which service this
      Agreement is considered an assignment and therefore requires the prior
      written consent of Buyer. In all instances in which consent of the other
      party to any assignment is required, such consent shall not be
      unreasonably withheld or delayed.

18.0  NON-WAIVER

      The failure of any party to insist in any one or more instances upon
      strict performance of any obligation of another party under this Agreement
      shall not be deemed to be a waiver of the performance of any such
      obligation or a relinquishment of any rights hereunder for the future.
      Without limiting the foregoing, Buyer's acceptance of any coal that does
      not meet the quality specifications specified in this Agreement shall not
      be deemed a waiver of any right Buyer may have hereunder. The respective
      rights and remedies of the parties hereunder are cumulative and not
      exclusive of any rights or remedies which any party would otherwise have.

19.0  INDEMNIFICATION AND DAMAGES

      19.1  Seller shall indemnify, save harmless, and defend Buyer(s), Buyer's
            Agent, and their respective employees, agents and representatives
            (collectively "Buyer Indemnified Parties") from and against all
            claims, losses, liabilities, costs, settlements, awards, and
            expenses (including attorneys' fees and expenses) growing out of
            personal injury, death, or damage to property (including property of
            any Buyer Indemnified Party) arising out of or in any way connected
            with Seller's, its or their respective subcontractors' and/or
            carriers' performance or non-performance hereunder (negligent or
            otherwise), suffered or claimed to have been suffered by any person,
            corporation or entity (including any Buyer Indemnified Party) except
            to the extent due to the negligence or willful misconduct of any
            Buyer Indemnified Party.

      19.2  Under no circumstances, whether arising in contract, equity, or tort
            (including negligence), shall Seller be responsible for or liable to
            Buyer for consequential, incidental, punitive, exemplary or indirect
            damages, including lost profits.

                                       17
<PAGE>

20.0  INSURANCE

      20.1  Prior to rendering any service hereunder, Seller shall, at its own
            expense, procure and thereafter keep in effect until service has
            been performed:

            20.1.1 Worker's Compensation Insurance for its employees engaged in
                   this work, sufficient to comply fully with requirements and
                   coverages specified by laws of each jurisdiction in which
                   work shall be performed.

            20.1.2 Employer's Liability insurance with limits of not less than
                   $1,000,000 per occurrence.

            20.1.3 Comprehensive automobile liability with limits of not less
                   than $1,000,000 combined single limits.

            20.1.4 Commercial General Liability with limits of not less than
                   $5,000,000 combined single limits per occurrence, including
                   Pollution Liability, liabilities arising under the Federal
                   Employees Liability Act (FELA), Protection and Indemnity
                   Insurance as may be applicable, and Contractual Liability
                   covering all liability of Seller under this Agreement.

            20.1.5 Such other specific insurances and/or limits determined to
                   Buyer's Agent to be appropriate for work to be performed.

      20.2  All insurance required to be provided under Section 20.1 shall be
            issued by insurers rated A-/XI or better by A. M. Best Company (or
            A-/IX or better in the case of insurers whose parent companies are
            rated A-/XI or better) or who maintain comparable ratings assigned
            by another reputable and recognized rating agency approved by
            Buyer's Agent.

      20.3  Allegheny Energy Supply Company, LLC, Monongahela Power Company, and
            Allegheny Energy Service Corporation shall be named as additional
            insureds for each of the insurance coverages listed in items 20.1.3
            and 20.1.4 above. These are "minimum" required limits and are in no
            way intended to be a limitation of Seller's liability. Seller shall
            furnish Buyer's Agent (Attention: Event Risk Manager) with
            certificates of insuring companies showing such insurance to be in
            effect and the expiration dates and agreeing to give thirty (30)
            days written notice to Buyer's Agent in advance of any change in or
            cancellation of such insurance.

21.0  CERTAIN REMEDIES OF BUYER

      It is expressly recognized and understood between the parties that prompt
      and full deliveries by Seller in accordance with this Agreement are
      essential to Buyer. Time is of the essence with respect to such
      deliveries. Therefore, the parties agree that in addition to, and not in
      limitation of, any and all other remedies to which Buyer may be entitled
      by law, Buyer shall have the right to require specific performance of this
      Agreement by Seller, and Buyer shall have the right, if necessary, to
      enter any appropriate judicial forum and, without bond or other security,
      to obtain injunctions and/or other appropriate relief against Seller to
      prevent deliveries of any Source Mine coal by Seller to any third parties
      while Seller is in default of or threatens default in the delivery of coal
      to Buyer that conforms to the specifications required under this
      Agreement.

                                       18
<PAGE>

22.0  NOTICES

      All notices under this Agreement shall be in writing and shall be deemed
      to have been given or made when sent by facsimile transmission (telecopy),
      recognized overnight delivery service, or first class United States mail
      postage prepaid, addressed to Seller, Buyer or Buyer's Agent, as the case
      may be, at its address specified below, or at such other address as any
      such party may specify by notice to the other parties:

       If to Seller:                Anker West Virginia Mining Company, Inc.
                                    2708 Cranberry Square
                                    Morgantown, West Virginia 26508
                                    Attn: President

       If to Buyer or Buyer's       Allegheny Energy Service Corporation
       Agent:                       4350 Northern Pike
                                    Monroeville, Pennsylvania 15146-2841
                                    Attn: Attention: General Manager, Fuel
                                          Logistics and Operations

                                    with copies to:

                                    Allegheny Energy Service Corporation
                                    4350 Northern Pike
                                    Monroeville, Pennsylvania 15146-2841
                                    Attn: Attention: General Manager, Fuel
                                          Procurement

                                    and:

                                    Allegheny Energy Supply
                                    800 Cabin Hill Drive
                                    Greensburg, Pennsylvania 15601
                                    Attn: Attention: General Counsel

23.0  AUTHORITY OF BUYER'S AGENT

      Whenever any action or determination under this Agreement is permitted or
required to be taken or made by Buyer, or any right or remedy may be exercised
by Buyer under this Agreement, such action or determination may be taken or
made, and such right or remedy may be exercised, on behalf of Buyer by Buyer's
Agent. Any such action or determination communicated by Buyer's Agent to Seller
shall be binding on Buyer as fully as if such action or determination had been
taken or made directly by Buyer.

24.0  COUNTERPARTS

      This Agreement may be executed in counterparts, which shall, in the
aggregate, when signed by all parties constitute one and the same instrument,
and, thereafter, each counterpart shall be deemed an original instrument as
against any party who has signed it. Facsimile signatures shall be enforceable
as original signatures.

                         [Signatures begin on next page]

                                       19
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.

                                       ANKER WEST VIRGINIA MINING
                                       COMPANY, INC.
                                       (Seller)

                                       By: /s/ D. LYNN SHANKS
                                           -------------------------------------
                                       Name:  D. LYNN SHANKS
                                       Title: PRESIDENT, ANKER WEST VIRGINIA
                                              MINING COMPANY, INC.

                                       ALLEGHENY ENERGY SUPPLY
                                       COMPANY, LLC
                                       (Buyer)

                                       By: /s/ John P. Campbell /DGF
                                           -------------------------------------
                                       Name:  John P. Campbell
                                       Title: President, Allegheny Energy Supply

                                       MONONGAHELA POWER COMPANY
                                       (Buyer)

                                       By: /s/ Joseph H. Richardson /DGF
                                           -------------------------------------
                                       Name:  Joseph H. Richardson
                                       Title: President, Allegheny Power

<PAGE>

                                    GUARANTEE

      ANKER COAL GROUP, INC., a Delaware corporation ("ACGI"), hereby guarantees
the full and timely payment and performance by Anker West Virginia Mining
Company, Inc., a West Virginia corporation ("Anker Mining"), and its successors
and assigns, of all duties, obligations and liabilities of Anker Mining under or
arising from the Coal Sales Agreement dated the 17th day of February, 2005,
between Anker Mining, as Seller, and Allegheny Energy Supply Company, LLC, a
Delaware limited liability company ("AESC"), and Monongahela Power Company, a
West Virginia corporation ("MPC"), as Buyer (the "Agreement"), and agrees that
AESC and MPC shall have the right to demand payment and performance of Seller's
obligations, duties and liabilities under the Agreement directly from ACGI as
fully as if ACGI were a party to the Agreement, it being understood that this
Guarantee shall bind ACGI and it successors and assigns, and inure to the
benefit of AESC and MPC and their respective successors and assigns.

                                          ANKER COAL GROUP, INC.

                                          By: /s/ Raymond J. McElhaney
                                              ---------------------------------
                                          Name:  Raymond J. McElhaney
                                          Title: President
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                                  Schedule 1.2


[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                                  Schedule 1.3
                          Sycamore Agreement Deliveries

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.2
                      Example of How Base Price is Adjusted

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.2
                      Example of How Base Price is Adjusted

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.2
                      Example of How Base Price is Adjusted

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.2
                      Example of How Base Price is Adjusted

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.3
                      Example of How Base Price is Adjusted
             after exercising option to increase Annual Base Tonnage

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                  Schedule 8.4
                      Example of How Base Price is Adjusted
                for change in a Governmental Assessment Component

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                                  Schedule 8.5

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(a)(1)
      Calculation of Total Costs Incurred in Producing Source Mine Coal for
                                  Section 8.7

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(a)(2)
            Example of how to determine if Supplemental Adjustment to
                        Variable Cost Components applies

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(b)(1)
            Example of How Labor Variable Cost Component is Adjusted
                          In accordance with Article 8

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(b)(2)
           Example of How Medical Variable Cost Component is Adjusted
                          In accordance with Article 8

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(b)(3)
        Example of How Steel Supplies Variable Cost Component is Adjusted
                          In accordance with Article 8

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(b)(4)
      Example of How Fuel & Lubricants Variable Cost Component is Adjusted
                          In accordance with Article 8

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                               Schedule 8.7(b)(5)
                          Variable Cost Component Basis

[ _ _ _ _ ]
<PAGE>
                                           *CONFIDENTIAL MATERIAL HAS BEEN
                                           OMITTED AND FILED SEPARATELY WITH THE
                                           SECURITIES AND EXCHANGE COMMISSION.
                                           BRACKETS AND UNDERSCORES DENOTE SUCH
                                           OMISSIONS.


                              Coal Sales Agreement
                                 Schedule 8.7(c)
         Example of Supplemental Adjustment to Variable Cost Components

[ _ _ _ _ ]