Document:

<PAGE>
                                                                   Exhibit 10.22

                                    GUARANTY

         THIS GUARANTY is dated July 31, 2001, (the "Guaranty"), and made by
ALLIANCE RESOURCE GP, LLC, a Delaware limited liability company ("Guarantor"),
in favor of the BANK OF OKLAHOMA, N.A. ("Lender").

         PRELIMINARY STATEMENT. Alliance Resource Partners, L.P., a Delaware
limited partnership (the "COMPANY" or "BORROWER"), is party to a Letter of
Credit Facility Agreement, dated as of June 29, 2001 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; the capitalized terms defined therein and not otherwise defined
herein being used herein as therein defined) with Lender. Guarantor shall
receive, directly or indirectly, a benefit from the issuance of the Letters of
Credit under the Credit Agreement and will derive substantial direct and
indirect benefits from the transactions contemplated by the Credit Agreement. It
is a condition precedent to issuing the Letters of Credit by the Lender under
the Credit Agreement from time to time that Guarantor shall have executed and
delivered this Guaranty.

         NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender to issue Letters of Credit from time to time, Guarantor, hereby
agrees as follows:

         Section 1. Guaranty; Limitation of Liability. (a) Guarantor hereby
absolutely, unconditionally and irrevocably guarantees the punctual payment when
due, whether at scheduled maturity or on any date of a required prepayment or by
acceleration, demand or otherwise, of all obligations of the Company now or
hereafter existing under or in respect of the Loan Documents (including, without
limitation, any extensions, modifications, substitutions, amendments or renewals
of any or all of the foregoing obligations) (such obligations being the
"Guaranteed Obligations"), and agrees to pay any and all reasonable expenses
(including, without limitation, reasonable fees and expenses of counsel)
incurred by the Lender in enforcing any rights under this Guaranty or any Loan
Document. To the extent permitted by law, without limiting the generality of the
foregoing, Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any other party to
Lender under or in respect of the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such other party.

                  (b) Guarantor and, by its acceptance of this Guaranty, Lender
hereby confirm that it is the intention of all such Persons that this Guaranty
and the Guaranteed Obligations of Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of or under any Debtor Relief
Laws (including the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent
Transfer Act) to the extent applicable to this Guaranty and the Guaranteed
Obligations of Guarantor hereunder. To effectuate the foregoing intention, the
Lender and the Guarantor hereby irrevocably agree that the Guaranteed
Obligations of Guarantor under this Guaranty at any time shall be limited to the
maximum amount as will result in the Guaranteed Obligations of such Guarantor
under this Guaranty not constituting a fraudulent transfer or conveyance.
<PAGE>
         Section 2. Guaranty Absolute. To the extent permitted by law, Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of Lender with respect thereto. To the extent permitted by law, the
obligations of Guarantor under or in respect of this Guaranty are independent of
the Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against Guarantor to enforce this Guaranty, irrespective of whether
any action is brought against the Borrower or any other Person guarantying or
pledging assets as collateral security for the Guaranteed Obligations or whether
the Borrower or any such other Person is joined in any such action or actions.
To the extent permitted by law, the liability of Guarantor under this Guaranty
shall be irrevocable, absolute and unconditional irrespective of, and Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

                  (a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;

                  (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations under or in
respect of the Loan Documents, or any other amendment or waiver of or any
consent to departure from any Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to Company or otherwise;

                  (c) any taking, exchange, release or non-perfection of any
collateral, or any taking, release or amendment or waiver of, or consent to
departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

                  (d) any manner of application of any collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any collateral for all or any of the Guaranteed
Obligations;

                  (e) any change, restructuring or termination of the corporate
structure or existence of Company;

                  (f) any failure of Lender to disclose to Company any
information relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of Company now or hereafter
known to Lender (Guarantor waiving any duty on the part of the Lender to
disclose such information); or

                  (g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
Lender that might otherwise constitute a defense available to, or a discharge
of, Company or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by
<PAGE>
Lender or any other Person upon the insolvency, bankruptcy or reorganization of
the Borrower or otherwise, all as though such payment had not been made.

         Section 3. Waivers and Acknowledgments. (a) To the extent permitted by
law, Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that Lender protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action against Company
or any other Person or any collateral.

                  (b) To the extent permitted by law, Guarantor hereby
unconditionally and irrevocably waives any right to revoke this Guaranty and
acknowledges that this Guaranty is continuing in nature and applies to all
Guaranteed Obligations, whether existing now or in the future.

                  (c) To the extent permitted by law, Guarantor hereby
unconditionally and irrevocably waives (i) any defense arising by reason of any
claim or defense based upon an election of remedies by Lender that in any manner
impairs, reduces, releases or otherwise adversely affects the subrogation,
reimbursement, exoneration, contribution or indemnification rights of Guarantor
or other rights of Guarantor to proceed against Company, any other guarantor or
any other Person or any collateral and (ii) any defense based on any right of
set-off or counterclaim against or in respect of the Guaranteed Obligations of
Guarantor hereunder.

                  (d) To the extent permitted by law, Guarantor hereby
unconditionally and irrevocably waives any duty on the part of Lender to
disclose to Guarantor any matter, fact or thing relating to the business,
condition (financial or otherwise), operations, performance, properties or
prospects of Company or any of its subsidiaries now or hereafter known by
Lender.

                  (e) Guarantor acknowledges that it will receive substantial
direct and indirect benefits from the financing arrangements contemplated by the
Loan Documents and that the waivers set forth in Section 2 and this Section 3
are knowingly made in contemplation of such benefits.

         Section 4. Subrogation. Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower that arise from the existence, payment, performance
or enforcement of Guarantor's obligations under or in respect of this Guaranty
or any Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of Lender against the Borrower, or any other
insider guarantor whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without limitation, the right
to take or receive from the Borrower, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have been paid in full
in cash and the Letter of Credit Commitment shall have expired or been
terminated. If any amount shall be paid to
<PAGE>
Guarantor in violation of the immediately preceding sentence at any time prior
to the later of (a) the payment in full in cash of the Guaranteed Obligations
and all other amounts payable under this Guaranty, and (b) the Termination Date,
such amount shall be received and held in trust for the benefit of Lender, shall
be segregated from other property and funds of Guarantor and shall forthwith be
paid or delivered to the Lender in the same form as so received (with any
necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) Guarantor shall
make payment to Lender of all or any part of the Guaranteed Obligations, (ii)
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, and (iii) the Termination Date
shall have occurred, the Lender will, at Guarantor's request and expense,
execute and deliver to Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to Guarantor of an interest in the Guaranteed Obligations resulting
from such payment made by such Guarantor pursuant to this Guaranty.

         Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all
payments made by any Guarantor under or in respect of this Guaranty or any Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes (other than any taxes that are imposed on the Lender's
overall net income by the United States and taxes that are imposed on the
Lender's overall net income (and franchise taxes imposed in lieu thereof) by the
state or other jurisdiction under the laws of which the Lender is organized or
any political subdivision thereof) (the "Taxes"). If Guarantor shall be required
by law to deduct any Taxes from or in respect of any sum payable under or in
respect of this Guaranty or any Loan Document to Lender, (i) the sum payable by
Guarantor shall be increased as may be necessary so that after Guarantor and the
Lender have made all required deductions (including deductions applicable to
additional sums payable under this Section 5), the Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
Guarantor shall make all such deductions, and (iii) Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

                  (b) In addition, Guarantor agrees to pay any present or future
other Taxes that arise from any payment made by or on behalf of Guarantor under
or in respect of this Guaranty or any Loan Document or from the execution,
delivery or registration of, performance under, or otherwise with respect to,
this Guaranty and the Loan Documents.

                  (c) Guarantor will indemnify Lender for and hold it harmless
against the full amount of Taxes, and for the full amount of taxes of any kind
imposed by any jurisdiction on amounts payable under this Section 5, imposed on
or paid by Lender and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date Lender makes written
demand therefor.

                  (d) Within 30 days after the date of any payment of Taxes by
or on behalf of Guarantor, Guarantor shall furnish to the Lender, at its address
referred to in Section 9, the
<PAGE>
original or a certified copy of a receipt evidencing such payment. In the case
of any payment hereunder by or on behalf of Guarantor through an account or
branch outside the United States or by or on behalf of Guarantor by a payor that
is not a United States person, if Guarantor determines that no taxes are payable
in respect thereof, Guarantor shall furnish, or shall cause such payor to
furnish, to the Lender, at such address, an opinion of counsel acceptable to the
Lender stating that such payment is exempt from taxes. For purposes of
subsection (d) of this Section 5, the terms "UNITED STATES" and "UNITED STATES
PERSON" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.

         Section 6. Representations and Warranties. Guarantor hereby represents
and warrants that Guarantor has, independently and without reliance upon Lender
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Guaranty, and Guarantor
has established adequate means of obtaining from the Borrower on a continuing
basis information pertaining to, and is now and on a continuing basis will be
completely familiar with, the business, condition (financial or otherwise),
operations, performance, properties and prospects of the Borrower. In addition,
the Guarantor further represents and warrants to the Lender as follows:

                  (a) All financial statements heretofore delivered to Lender
relating to Guarantor are true and correct in all material respects, have been
prepared in accordance with Guarantor's past practices consistently applied, and
fairly present (subject to year-end audit adjustments) the financial conditions
reflected therein without material changes since the respective dates thereof;

                  (b) There are not actions, suits or proceedings pending or, to
the knowledge of Guarantor, threatened against or affecting Guarantor, or
involving the validity or enforceability of this Guaranty at law or in equity,
or before or by any governmental authority, except actions, suits and
proceedings fully covered by insurance or for which adequate reserves exist or
which, if adversely determined, would not substantially impair the ability of
Guarantor to pay when due any amounts which may become payable in respect of
this Guaranty; and to Guarantor's knowledge, Guarantor is not in default with
respect to any order, writ, injunction, decree or demand of any court or any
governmental authority;

                  (c) The consummation of the transaction hereby contemplated
and the performance of this Guaranty by Guarantor will not result in any breach
of, or constitute a default under, any indenture, mortgage, lease, loan or
credit agreement or any other material instrument or agreement to which
Guarantor is a party or by which Guarantor may be bound or affected; and

                  (d) No default presently exists under this Guaranty and no
event has occurred and is continuing which, with notice or the passage of time,
or both, would constitute a default under this Guaranty.

         Section 7. Covenants; Delivery of Financial Information. Guarantor
covenants and agrees that, so long as any part of the Guaranteed Obligations
shall remain unpaid or the Letter of Credit Commitment shall be in effect,
Guarantor will:
<PAGE>
                  (a) perform and observe all of the terms, covenants and
         agreements set forth in the Loan Documents on its part to be performed
         or observed or that the Borrower has agreed to cause Guarantor to
         perform or observe;

                  (b) deliver to the Lender, as soon as available but within 60
         days following the end of each of the Guarantor's fiscal quarters
         (other than the last fiscal quarter of any fiscal year), an internally
         prepared balance sheet, income statement and statement of cash flows of
         the Guarantor for the fiscal quarter then ended, prepared in accordance
         with GAAP except to the extent deviated therefrom in accordance with
         the Guarantor's past practices;

                  (c) deliver to the Lender, as soon as available but within 120
         days following the end of the Guarantor's fiscal year, an internally
         prepared balance sheet, income statement and statement of cash flows of
         the Guarantor for the fiscal year then ended, prepared in accordance
         with GAAP except to the extent deviated therefrom in accordance with
         the Guarantor's past practices; and

                  (d) deliver to the Lender, as soon as available but within 60
         days following the end of each of the initial three quarters of the
         Guarantor's fiscal year and within 120 days following the end of the
         Guarantor's fiscal year, a statement demonstrating and computing
         compliance by the Guarantor with the covenants required to be
         maintained by the Guarantor pursuant to Sections 6.8 (Liquidity) and
         6.9 (Net Asset Position) of the Credit Agreement for the period then
         ended.

         The financial statements and compliance certificate required to be
delivered pursuant to clauses (b), (c) and (d) of this Section 7 shall be
accompanied by a certificate of the Chief Financial Officer or Treasurer of the
Guarantor to the effect that the information contained therein is true and
accurate as of the date of such certificate.

         Section 8. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

         Section 9. Notices, Etc. All notices, consents, waivers, and other
communications required or permitted to be given under this Guaranty must be in
writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):

         To Guarantor
<PAGE>

                  Alliance Resource GP, LLC
                  1717 South Boulder Avenue
                  Tulsa, Oklahoma 74119
                  Attn: Cary Marshall, Director, Corporate Finance
                  Telefax: (918) 295-7357

                  with a copy to:

                  Alliance Resource Partners, L.P.
                  c/o Alliance Resource Management GP, LLC
                  1717 South Boulder Avenue
                  Tulsa, Oklahoma 74119
                  Attn:  Thomas L. Pearson, Senior Vice President -
                         Law and Administration,
                         General Counsel and Secretary
                  Telefax: (918) 295-7361

                  and to:

                  Katten Muchin Zavis
                  1025 Thomas Jefferson Street, NW
                  East Lobby, Suite 700
                  Washington, DC 20007
                  Attn:  Steven C. Schnitzer, Esq.
                  Telefax: (202) 298-7570

                  To Lender:

                  Bank of Oklahoma, National Association
                  BOK Tower, 8 Southeast
                  1 Williams Center
                  Tulsa, Oklahoma  74172
                  Attn: Robert D. Mattax, Senior Vice President
                  Telefax: (918) 295-0400

                  with copy to:

                  Riggs, Abney, Neal, Turpen, Orbison & Lewis
                  502 West Sixth Street
                  Tulsa, Oklahoma  74119
                  Attn: Harley W. Thomas, Esq.
                  Telefax: (918) 584-1603
<PAGE>
or at such other address of which it shall have notified the party giving such
notice in writing. Notices to in-house counsel or outside counsel of a party
hereto shall not constitute sufficient notice to such party.

         Section 10. No Waiver; Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         Section 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Default, and (b) the delivery of the notice and expiration of
the Cure Period provided by Section 6 of the Credit Agreement, the Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Lender, to or for the credit or the account of Guarantor
against any and all of the Guaranteed Obligations of Guarantor now or hereafter
existing under the Loan Documents, irrespective of whether Lender shall have
made any demand under this Guaranty or any Loan Document and although such
Guaranteed Obligations may be unmatured. Lender agrees promptly to notify
Guarantor after any such set-off and application; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of Lender under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that Lender may have.

         Section 12. Indemnification. (a) Without limitation on any other
Guaranteed Obligations of Guarantor or remedies of the Lender under this
Guaranty, Guarantor shall, to the fullest extent permitted by law, indemnify,
defend and save and hold harmless Lender and its respective officers, directors,
employees, agents and advisors (each, an "INDEMNIFIED PARTY") from and against,
and shall pay on demand, any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted or awarded against any Indemnified
Party in connection with or as a result of any failure of any Guaranteed
Obligations to be the legal, valid and binding obligations of Company
enforceable against Company in accordance with their terms.

                  (b) Guarantor hereby also agrees that none of the Indemnified
Parties shall have any liability (whether direct or indirect, in contract, tort
or otherwise) to the Guarantor or any of their respective officers, directors,
employees, agents and advisors, and Guarantor hereby agrees not to assert any
claim against any Indemnified Party on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Loan Documents, the actual or proposed use of the proceeds under the Loan
Documents or any of the transactions contemplated by the Loan Documents.

                  (c) Without prejudice to the survival of any of the other
agreements of Guarantor under this Guaranty, the agreements and obligations of
Guarantor contained in Section 1(a) (with respect to enforcement expenses), the
last sentence of Section 2, Section 5 and this
<PAGE>
Section 12 shall survive the payment in full of the Guaranteed Obligations and
all of the other amounts payable under this Guaranty.

         Section 13. Subordination. Guarantor hereby subordinates any and all
debts, liabilities and other obligations owed to Guarantor by Company (the
"Subordinated Obligations") to the Guaranteed Obligations to the extent and in
the manner hereinafter set forth in this Section 13:

                  (a) Prohibited Payments, Etc. Except during the continuance of
any Matured Default (including the commencement and continuation of any
proceeding under any Debtor Relief Law relating to the Company), Guarantor may
receive regularly scheduled payments from Company on account of the Subordinated
Obligations. After the occurrence and during the continuance of any Matured
Default (including the commencement and continuation of any proceeding under any
Debtor Relief Law relating to Company), however, unless the Lender otherwise
agrees, Guarantor shall not demand, accept or take any action to collect any
payment on account of the Subordinated Obligations.

                  (b) Prior Payment of Guaranteed Obligations. In any proceeding
under any Debtor Relief Law relating to Company, Guarantor agrees that the
Lender shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (including all interest and expenses accruing after the commencement
of a proceeding under any Debtor Relief Law, whether or not constituting an
allowed claim in such proceeding ("POST PETITION INTEREST") before Guarantor
receives payment of any Subordinated Obligations.

                  (c) Turn-Over. After the occurrence and during the continuance
of any Matured Default (including the commencement and continuation of any
proceeding under any Debtor Relief Law relating to the Company), Guarantor
shall, if the Lender so requests, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Lender and deliver
such payments to the Lender on account of the Guaranteed Obligations (including
all Post Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty.

                  (d) Lender Authorization. After the occurrence and during the
continuance of any Matured Default (including the commencement and continuation
of any proceeding under any Debtor Relief Law relating to the Company), the
Lender is authorized and empowered (but without any obligation to so do), in its
discretion, (i) in the name of Guarantor, to collect and enforce, and to submit
claims in respect of, Subordinated Obligations and to apply any amounts received
thereon to the Guaranteed Obligations (including any and all Post Petition
Interest), and (ii) to require Guarantor (A) to collect and enforce, and to
submit claims in respect of, Subordinated Obligations and (B) to pay any amounts
received on such obligations to the Lender for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

         Section 14. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) the Termination Date, (b) be binding upon the Guarantor, its successors
<PAGE>
and assigns and (c) inure to the benefit of and be enforceable by the Lender and
its successors, permitted transferees and permitted assigns. Without limiting
the generality of clause (c) of the immediately preceding sentence, the Lender
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Letter of Credit Commitment, the Advances owing to it and the
Note held by it) to any other Person to the extent permitted by and in
accordance with Section 8.5 of the Credit Agreement, and such other permitted
transferee shall thereupon become vested with all the benefits in respect
thereof granted to Lender herein or otherwise. Guarantor shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Lender.

         Section 15. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by difference parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

         Section 16. Governing Law. This Guaranty shall be deemed to be a
contract made under the laws of the State of Oklahoma, and shall be construed by
and governed in accordance with the laws of the State of Oklahoma, without
giving effect to principles of conflicts of laws. Guarantor hereby submits
itself to the jurisdiction and venue of the Tulsa County District Court, or
Federal Court (Northern District) situated in Oklahoma, at Lender's election,
except to the extent local law (if different) is required in connection with a
foreclosure action.

         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by or on its behalf as of the date first above written.

                                      ALLIANCE RESOURCE GP, LLC

                                      By         /s/ Michael L. Greenwood
                                         ---------------------------------------
                                         Name:   Michael L. Greenwood
                                         Title:  Senior Vice President - Chief
                                                 Financial Officer and Treasurer<PAGE>

                                                                   Exhibit 10.23

                       LETTER OF CREDIT FACILITY AGREEMENT

         This Letter of Credit Facility Agreement is dated as of this 30th day
of August, 2001 by and between FIFTH THIRD BANK, an Ohio banking corporation
("Lender"), and ALLIANCE RESOURCE PARTNERS, L.P., a Delaware limited partnership
("Borrower").

                                    RECITALS

         A. Borrower has requested a $10,000,000 line of credit ("Loan") from
Lender for the issuance from time to time of Letters of Credit (defined below).

         B. Subject to Borrower's compliance with all of the terms, conditions
and covenants hereinafter set forth and predicated on Borrower's representations
and warranties, each of which is material and is being relied upon by Lender,
Lender agrees to issue from time to time Letters of Credit for the account of
Borrower and for the benefit of Borrower and its subsidiaries in the amount and
on the terms hereinafter set forth up to the total of the Letter of Credit
Commitment.

                                    AGREEMENT

         For valuable consideration received and in consideration of the
premises and of the mutual covenants and agreements contained herein, the
parties hereto hereby agree to the following:

         1. Definitions. The following terms shall have the meanings given.

                  1.1. "Advance" means the disbursement by Lender under a Letter
         of Credit to the beneficiary thereof for the account of Borrower.

                  1.2. "Agreement" means this Letter of Credit Facility
         Agreement, as amended, amended and restated, modified or supplemented
         from time to time in accordance with the terms hereof.

                  1.3. "Alliance Resource GP, LLC" means Alliance Resource GP,
         LLC, a Delaware limited liability company.

                  1.4. "AROP" means Alliance Resource Operating Partners, L.P.,
         a Delaware limited partnership.

                  1.5. "Borrower Authority Documents" means the following
         documents as to the Borrower and the General Partner: (i) Certificate
         of Good Standing, dated within five (5) Business Days of the Effective
         Date, issued by the State in which the Borrower was formed; (ii)
         Certificate of Good Standing, dated within five (5) Business Days of
         the Effective Date,
<PAGE>
         issued by the State in which the General Partner was formed; and (iii)
         Certificate, dated the Effective Date, from the Secretary or Assistant
         Secretary of the General Partner, substantially in form and substance
         as set forth on Schedule "1.5" hereto, to which shall be attached (A)
         the Certificate of Limited Partnership of the Borrower and the
         Certificate of Formation of the General Partner, in each case certified
         by the Secretary of State of the State of Delaware as of a date that is
         within five (5) Business Days of the Effective Date, and (B) a copy of
         the fully executed limited partnership agreement of the Borrower and
         the limited liability company operating agreement of the General
         Partner, in each case together with all amendments thereto, if any.

                  1.6. "Business Day" means any day other than a Saturday,
         Sunday or other day on which commercial banks in Cincinnati, Ohio are
         authorized or required to close under the laws of the State of Ohio.

                  1.7. "Capital Stock" shall mean, with respect to any Person,
         any and all shares, units representing interests, participations,
         rights in or other equivalents (however designated) of such Person's
         capital stock, including (a) with respect to partnerships, partnership
         interests (whether general or limited) and any other interest or
         participation that confers upon a Person the right to receive a share
         of the profits and losses of, or distributions of assets of, such
         partnership, (b) with respect to limited liability companies, member
         interests, and (c) with respect to any Person, any rights (other than
         debt securities convertible into capital stock), warrants or options
         exchangeable for or convertible into such capital stock.

                  1.8. "Cash Equivalents" means any of the following: (a) cash;
         (b) marketable securities of any issuer (including, without limitation,
         any corporation or governmental authority) and, if applicable, of any
         duration; (c) common and subordinated units issued by Borrower and
         beneficially owned by the Guarantor; and (d) any other item determined
         in accordance with GAAP to constitute cash or cash equivalents.

                  1.9. "Consolidated Subsidiary" means, with respect to any
         Person at any time for any period, any Subsidiary the accounts of which
         would be consolidated with those of such first Person in its
         consolidated financial statements as of such time.

                  1.10. "Consolidated EBITDA" means, with respect to the
         Borrower and its Consolidated Subsidiaries for any period, net income
         plus (i) interest expense, (ii) depreciation, obsolescence and
         amortization of property, (iii) capitalized lease expenses, (iv) the
         non-cash portion of advance royalties and any non-cash employee
         compensation expenses, and (v) tax expenses, all as determined in
         accordance with GAAP; provided, however, that net income shall exclude
         any net income or gain or loss during such period from (x) any change
         in accounting principles in accordance with GAAP, (y) any prior period
         adjustments resulting from any change in accounting principles in
         accordance with GAAP, and (z) any extraordinary or unusual items.

                                       -2-
<PAGE>
                  1.11. "Consolidated Funded Debt" means, with respect to the
         Borrower and its Consolidated Subsidiaries, long-term and short-term
         interest bearing obligations that would be required to be classified
         and accounted for as such in the consolidated balance sheet of the
         Borrower and its Consolidated Subsidiaries prepared in accordance with
         GAAP.

                  1.12. "Cure Period" shall have the meaning set forth in
         Section 7 hereof.

                  1.13. "Debtor Relief Laws" shall mean the Bankruptcy Code of
         1978 (Title 11 of the United States Code), as the same may be amended
         from time to time and any successor statute thereto (the "Federal
         Bankruptcy Code"), together with other applicable federal and state
         liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
         insolvency, reorganization or similar laws affecting the rights and
         remedies of creditors generally, as in effect from time to time.

                  1.14. "Default" shall mean the occurrence of any of the events
         described in Section 6 hereof.

                  1.15. "Effective Date" shall have the meaning set forth in
         Section 3 hereof.

                  1.16. "Federal Bankruptcy Code" shall have the meaning set
         forth in the definition of Debtor Relief Laws contained herein.

                  1.17. "GAAP" means generally accepted accounting principles as
         in effect from time to time.

                  1.18. "General Partner" means Alliance Resource Management GP,
         LLC, a Delaware limited liability company.

                  1.19. "Governmental Requirements" means all laws, orders,
         decrees, ordinances, rules and regulations of any Governmental
         Authority.

                  1.20. "Guarantor" means Alliance Resource GP, LLC.

                  1.21. "Guarantor Authority Documents" means the following
         documents as to the Guarantor: (i) Certificate of Good Standing, dated
         within five (5) Business Days of the Effective Date, issued by the
         state in which the Guarantor was formed; and (ii) Certificate, dated
         the Effective Date, from the Secretary or Assistant Secretary of the
         Guarantor, substantially in form and content as set forth on Schedule
         "1.21" hereto, to which shall be attached a complete copy of the
         Certificate of Formation of the Guarantor, certified by the Secretary
         of State of the State of Delaware as of a date that is within five (5)
         Business Days of the Effective Date, and a copy of the Operating
         Agreement of the Guarantor, together with all amendments, if any.

                                       -3-
<PAGE>
                  1.22. "Guaranty Agreement" means the Guaranty, dated on or
         prior to the Effective Date, executed by the Guarantor, substantially
         in form and content as set forth on Schedule "1.22" hereto, as the same
         may be amended, amended and restated, modified or supplemented from
         time to time in accordance with the terms thereof.

                  1.23. "Letter of Credit" means any letter of credit issued
         pursuant to Section 2.1, for which, when issued, a Letter of Credit Fee
         shall be paid, as the same may be amended, modified or supplemented
         from time to time in accordance with the terms thereof.

                  1.24. "Letter of Credit Action" means the issuance,
         supplement, amendment, renewal, extension, modification or other action
         (other than an Advance) relating to a Letter of Credit.

                  1.25. "Letter of Credit Commitment" means the commitment of
         the Lender to issue Letters of Credit in an amount up to $10,000,000,
         as the same may be reduced in accordance with Sections 2.4 and 7.1(iii)
         hereof.

                  1.26. "Letter of Credit Fee" means, with respect to any Letter
         of Credit, a fee of .80% per annum (calculated on the basis of a
         360-day year and the actual number of days elapsed) on the daily
         average of the maximum amount available to be drawn from time to time
         under such Letter of Credit issued or renewed after the date hereof,
         payable quarterly in arrears.

                  1.27. "Letter of Credit Issuance Fee" means a fee equal to
         that which is reasonable and customarily charged by Lender for issuing,
         reviewing and generally processing Letters of Credit.

                  1.28. "Letter of Credit Usage" means, as of any date of
         determination, the maximum amount available to be drawn under all
         outstanding Letters of Credit plus the aggregate amount of all drawings
         under the Letters of Credit honored by Lender and not reimbursed to
         Lender by the Borrower.

                  1.29. "Leverage Ratio" means, as of any date of determination,
         the ratio of Consolidated Funded Debt to Consolidated EBITDA of the
         Borrower and its Consolidated Subsidiaries, calculated for the four (4)
         consecutive fiscal quarters ending on the last day of the fiscal
         quarter most recently completed.

                  1.30. "Matured Default" means any Default provided that any
         requirement for the giving of notice, the lapse of time, or both
         (including the expiration of the Cure Period, if applicable), or any
         other condition has been satisfied.

                                       -4-
<PAGE>
                  1.31. "Opinion of Borrower's and Guarantor's Counsel" shall
         mean an opinion from Borrower's and Guarantor's counsel, dated the
         Effective Date and addressed to Lender, substantially in form and
         content as set forth on Schedule "1.31" hereto.

                  1.32. "Person" means any individual, partnership, corporation
         (including a business trust), limited liability company, joint stock
         company, trust, unincorporated association, joint venture or other
         entity, or a government or any political subdivision or agency thereof.

                  1.33. "Prime Rate" shall have the meaning set forth in Section
         2.3 hereof.

                  1.34. "Subsidiary" means, with respect to any Person, any
         corporation limited liability company, partnership, joint venture,
         association, trust or other entity of which (or in which) more than 50%
         of (a) the issued and outstanding Capital Stock having ordinary voting
         power to elect a majority of the board of directors of such corporation
         (irrespective of whether at the time Capital Stock of any other class
         or classes of such corporation shall or might have voting power upon
         the occurrence of any contingency), (b) the interests in the capital or
         profits of such partnership, limited liability, joint venture or
         association with ordinary voting power to elect a majority of the board
         of directors (or Person performing similar functions) of such
         partnership, limited liability company, joint venture or association,
         or (c) the beneficial interests in such trust or other entity with
         ordinary voting power to elect a majority of the board of trustees (or
         Persons performing similar functions) of such trust or other entity, is
         at the time directly or indirectly owned or controlled by such Person,
         by such Person and one or more of its Subsidiaries, or by one or more
         of such Person's Subsidiaries.

                  1.35. "Termination Date" shall mean the one-year anniversary
         of the Effective Date; provided, however, that the Termination Date
         shall be automatically extended for successive periods of one-year each
         without the requirement of notice or otherwise unless the Lender shall
         have given written notice to the Borrower at least sixty (60) days'
         prior to then applicable Termination Date that it has elected not to
         extend the term of this Agreement for a successive one-year period.

         2.       LETTERS OF CREDIT.

                  2.1. The Letter of Credit Commitment; Letter of Credit Fee.
         Subject to the terms and conditions hereof, at any time and from time
         to time from the Effective Date through the date that is three (3)
         Business Days prior to the Termination Date, the Lender shall take such
         Letter of Credit Actions as the Borrower may request; provided,
         however, that (i) the aggregate outstanding Letter of Credit Usage
         shall not exceed the Letter of Credit Commitment at any time, and (ii)
         each Letter of Credit Action shall be in a form reasonably acceptable
         to Lender and shall not violate any policies of Lender. Each Letter of
         Credit will be a nontransferable standby letter of credit to support
         payment and/or performance obligations of the Borrower or any of its
         Subsidiaries. No Letter of Credit shall expire more than 365 days after
         the date of issuance except that, at the request of

                                       -5-
<PAGE>
         Borrower, such Letter of Credit shall provide that it shall be
         automatically renewed for a one-year period unless the Lender, as
         issuer of such Letter of Credit, shall give at least 90 days' advance
         notice to the beneficiary thereof that such Letter of Credit shall not
         be automatically renewed. If any Letter of Credit shall remain
         outstanding after the Termination Date or other date upon which
         Lender's Letter of Credit Commitment expires pursuant to the terms
         hereof, the Borrower shall, not later than sixty (60) days thereafter
         with respect to all such then outstanding Letters of Credit, (i)
         deposit cash or Cash Equivalents in an amount equal to one hundred and
         two percent (102%) of the Letter of Credit Usage as of the date such
         deposit shall be required in a collateral account with the Lender
         (which account shall, with respect to all cash collateral, bear
         interest for the account of the Borrower or be invested in Cash
         Equivalents at the direction, and for the account, of the Borrower), or
         (ii) cause the then outstanding Letters of Credit to be replaced and
         terminated. In the case of each Letter of Credit issued hereunder, a
         Letter of Credit Issuance Fee shall be payable to the Lender on the
         issuance date thereof and the Letter of Credit Fee with respect thereto
         shall be payable quarterly, in arrears. Following the expiration of any
         quarterly period during which any Letter of Credit shall remain
         outstanding, the Lender shall deliver to the Borrower a statement
         showing the Letter of Credit Fee due for the quarterly period then
         ended, and the Borrower shall pay the Letter of Credit Fee then due not
         later than five (5) Business Days following receipt of such statement.

                  2.2. Requesting Letter of Credit Actions. The Borrower may
         irrevocably request a Letter of Credit Action by delivering a written
         request therefor to Lender, not later than 2:00 p.m. (Tulsa time) on
         the date which is two (2) Business Days prior to the date of the
         requested action therefor. Such written request shall specify (a) the
         name and address of the beneficiary of the Letter of Credit to which
         such request relates, (b) the date on which the Borrower requires the
         Lender to issue such Letter of Credit, (c) the expiration date of such
         Letter of Credit, (d) the face amount of such Letter of Credit and (e)
         such other matters as shall be appropriate. Unless Lender determines
         that such Letter of Credit action is contrary to any requirement of law
         or policies of Lender or does not otherwise conform to the requirements
         of this Agreement, Lender shall effect such Letter of Credit Action.

                  2.3. Reimbursement of Payments Under Letters of Credit. The
         Borrower shall reimburse Lender for any payment that Lender makes under
         a Letter of Credit on or before the date of such payment except to the
         extent that such payment resulted from the Lender's gross negligence or
         willful misconduct. In the event that the Lender shall request
         reimbursement prior to such date of payment under a Letter of Credit,
         the Borrower shall not be required to deliver to the Lender such
         reimbursed amount more than three (3) Business Days prior to such date
         of payment. In the event that the Borrower shall have failed to
         reimburse the Lender not later than such date of payment, the Borrower
         shall pay to the Lender interest on the amount required to be
         reimbursed to the Lender. With respect to any payment made by the
         Lender under a Letter of Credit and

                                       -6-
<PAGE>
         not so reimbursed by the Borrower on or prior to the date of such
         payment, interest shall accrue thereon per annum at the Prime Rate (as
         defined below) plus four percent (4%) from the date of such payment to
         (but not including) the date of reimbursement hereunder and shall be
         computed based on a 360-day year, actual number of days elapsed. If any
         payment shall be due on a day that is not a Business Day, such payment
         shall be due and payable on the next succeeding Business Day and
         interest shall accrue to such day. "Prime Rate" shall mean a
         fluctuating interest rate per annum as in effect from time to time,
         which interest rate per annum shall at all times be equal to the rate
         of interest announced publicly from time to time (whether or not
         charged in each instance) by the Lender at its principal office ("Rate
         Bank"), as its base rate or general reference rate. Each change in the
         Prime Rate (or any component thereof) shall become effective hereunder
         without notice to the Borrower (which notice is hereby expressly waived
         by the Borrower), on the effective date of each such change. Should the
         Rate Bank abolish or abandon the practice of announcing or publishing a
         Prime Rate, then the Prime Rate used shall be that interest rate or
         other general reference rate then in effect at the Rate Bank which,
         from time to time, in the reasonable judgment of Lender, most
         effectively approximates the initial definition of the "Prime Rate."
         The Borrower acknowledges that Lender may, from time to time, extend
         credit to other borrowers at rates of interest varying from, and having
         no relationship to, the Prime Rate. The rate of interest payable upon
         any such unreimbursed payment under a Letter of Credit shall not,
         however, at any time exceed the maximum rate of interest permitted
         under the laws of the State of Ohio for loans of the type and character
         outstanding hereunder.

                  2.4. Voluntary Reduction of Letter of Credit Commitment. At
         the written request of the Borrower from time to time, the Borrower
         shall have the right, at its option, to reduce the Letter of Credit
         Commitment from the then current amount of the Letter of Credit
         Commitment to an amount not less than $1,000,000.00; provided, however,
         that (i) the Borrower shall be in compliance with the terms and
         conditions contained herein and no Default shall have occurred and be
         continuing, (ii) the Letter of Credit Commitment shall not be reduced
         to an amount that is less than the Letter of Credit Usage then in
         effect and (iii) the Letter of Credit Commitment, as so reduced, may
         not thereafter be increased without the written consent of the Lender.
         Any such reduction of the Letter of Credit Commitment shall effect a
         reduction in the liquidity covenant required to be complied with on the
         part of the Guarantor as contemplated by Section 6.8 hereof.

         3. CONDITIONS PRECEDENT TO LENDER'S OBLIGATION TO ISSUE INITIAL LETTER
OF CREDIT. It is expressly agreed that Lender shall not be obligated to issue
the initial Letter of Credit hereunder until the date (which must be a Business
Day) on which all of the conditions set forth in Sections 3.1, 3.2 and 3.3
hereof shall have been satisfied, unless waived by Lender at its sole discretion
(such date the "Effective Date"); provided that such conditions shall be deemed
satisfied if the Lender shall have issued the initial Letter of Credit hereunder
except to the extent expressly reserved by the Lender in writing on or prior to
the Effective Date; provided, further, that if the Effective Date shall not have
occurred by August 31,

                                       -7-
<PAGE>
2001, the obligation of the Lender hereunder to issue any Letter of Credit, and
this Agreement, shall terminate. In the event Lender elects to waive any
requirements or conditions contemplated by this Section 3, such waiver shall not
preclude Lender from thereafter requiring full and complete performance of all
terms, conditions and requirements hereof with regard to the issuance of any
subsequent Letter of Credit.

                  3.1. Documents. Lender has received the following original,
         executed documents:

                           3.1.1. The Guaranty Agreement;

                           3.1.2. Borrower Authority Documents;

                           3.1.3. Guarantor Authority Documents; and

                           3.1.4. Opinion of Borrower's and Guarantor's Counsel.

                  3.2. Representations and Warranties. The representations and
         warranties set forth under Section 5 hereof shall be true and correct
         in all material respects on and as of the Effective Date except to the
         extent such representations and warranties relate solely to an earlier
         date, in which case such representations and warranties shall be true
         and correct in all material respects on and as of such earlier date.

                  3.3. No Default. No Default exists under this Agreement.

         4. FURTHER CONDITIONS PRECEDENT TO LENDER'S OBLIGATION TO ISSUE EACH
LETTER OF CREDIT. The obligation of the Lender to issue any Letter of Credit
hereunder shall be subject to the fulfillment of the conditions set forth in
Sections 4.1 and 4.2 hereof unless waived by the Lender at its sole discretion;
provided that such conditions shall be deemed satisfied if the Lender shall have
issued such Letter of Credit except to the extent expressly reserved by the
Lender in writing on or prior to the date of issuance of such Letter of Credit.
In the event the Lender elects to waive any such conditions contemplated by this
Section 4, such waiver shall not preclude Lender from thereafter requiring full
and complete performance of all terms, conditions and requirements hereof with
regard to the issuance of any subsequent Letter of Credit.

                  4.1. Representations and Warranties. The representations and
         warranties set forth under Section 5 hereof shall be true and correct
         in all material respects on and as of the date of the issuance of such
         Letter of Credit with the effect as if made on such date except to the
         extent such representations and warranties relate solely to an earlier
         date, in which case such representations and warranties shall be true
         and correct in all material respects on and as of such earlier date.

                                       -8-
<PAGE>
                  4.2. No Default. No Default exists under this Agreement.

         5. BORROWER REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender as of the Effective Date as follows:

                  5.1. Financial Statements. All financial statements heretofore
         delivered to Lender relating to the Borrower and Guarantor are true and
         correct in all material respects, have been prepared in accordance with
         Borrower's and Guarantor's past practices consistently applied, and
         fairly present (subject to year-end audit adjustments) the financial
         conditions reflected therein without material changes since the
         respective dates thereof.

                  5.2. Litigation. There are no actions, suits or proceedings
         pending or, to the knowledge of Borrower, threatened against or
         affecting Borrower, or involving the validity or enforceability of this
         Agreement at law or in equity, or before or by any governmental
         authority, except actions, suits and proceedings fully covered by
         insurance or for which adequate reserves exist or which, if adversely
         determined, would not substantially impair the ability of Borrower to
         pay when due any amounts which may become payable hereunder; and to
         Borrower's knowledge, Borrower is not in default with respect to any
         order, writ, injunction, decree or demand of any court or any
         governmental authority.

                  5.3. Other Agreements. The consummation of the transaction
         contemplated hereby and the performance of this Agreement by Borrower
         will not result in any breach of, or constitute a default under, any
         indenture, mortgage, lease, loan or credit agreement or any other
         material instrument or agreement to which Borrower is a party or by
         which Borrower may be bound or affected.

                  5.4. No Default. No Default presently exists under this
         Agreement and no event has occurred and is continuing which, with
         notice or the passage of time, or both, would constitute a Default
         under this Agreement.

         6. DEFAULT. The occurrence of any of the following shall constitute a
default hereunder:

                  6.1. Draws Not Reimbursed. Nonpayment of any amount required
         to be reimbursed to Lender by Borrower pursuant to and in accordance
         with Section 2.3 hereof after the same becomes due or payable for more
         than ten (10) days following notice thereof from Lender.

                  6.2. Other Nonpayment. Nonpayment when due of any other amount
         payable to Lender under the terms of this Agreement and Borrower shall
         have failed to cure such default within thirty (30) days following
         notice thereof from Lender.

                                       -9-
<PAGE>
                  6.3. Breach of Covenants. Nonsatisfaction by Borrower in the
         performance or observance of any covenant contained in this Agreement
         (other than as provided by Sections 6.1 and 6.2 hereof), following the
         Cure Period.

                  6.4. Representations and Warranties. Any representation,
         statement, certificate, schedule or report made or furnished to Lender
         by Borrower hereunder or pursuant hereto proves to be materially false
         or materially misleading at the time of the making thereof, or any
         warranty hereunder ceases to be complied with in any material respect,
         and Borrower fails to take or cause to be taken corrective measures
         satisfactory to Lender within fifteen (15) Business Days after receipt
         of written notice from Lender relating to the particular default.

                  6.5. Insolvency. Borrower or Guarantor shall: (i) apply for or
         consent to the appointment of a receiver, trustee or a liquidator of
         Borrower or Guarantor or its or their properties; (ii) admit in writing
         the inability to pay its or their debts as they mature; (iii) make a
         general assignment for the benefit of creditors; (iv) commence any
         proceeding relating to the bankruptcy, reorganization, liquidation,
         receivership, conservatorship, insolvency, readjustment of debt,
         dissolution or liquidation of Borrower or Guarantor or, if action shall
         be taken against Borrower or Guarantor for the purpose of effecting any
         proceeding described in this clause (iv), such proceeding is not
         dismissed or stayed within sixty (60) calendar days of such proceeding
         filing date, or (v) becomes insolvent.

                  6.6. Other Loans. Default by the Borrower of any other loan,
         extension or credit which it may now or hereafter have with Lender
         after taking into account any applicable cure period.

                  6.7. Leverage Ratio. If the Leverage Ratio during any given
         rolling twelve month period equals or exceeds 4 to 1.

                  6.8. Guarantor Liquidity. If at any time the then current
         market value of the Guarantor's Cash Equivalents shall be less than
         125% of the Letter of Credit Commitment in effect from time to time
         hereunder (including as such Letter of Credit Commitment shall be
         reduced, if at all, from time to time in accordance with Section 2.4
         hereof).

         7. REMEDIES. Upon the occurrence and continuance of a Default, Lender
may, following a written notice and cure period of sixty (60) days for
non-monetary defaults ("Cure Period"), at its option exercise any one (1) or
more of the following remedies unless following the expiration of the Cure
Period the Default shall have been cured:

                  7.1. Acceleration. Lender (i) may by notice to the Borrower,
         declare the commitments to issue Letters of Credit to be terminated,
         whereupon the same shall forthwith terminate, (ii) may (A) by notice to
         the Borrower, declare the maximum

                                      -10-
<PAGE>
         amount available to be drawn under all Letters of Credit then
         outstanding, together with all other amounts payable under this
         Agreement, to be forthwith due and payable, whereupon such maximum
         amount and all such other amounts shall become and be forthwith due and
         payable, without presentment, demand, protest or further notice of any
         kind, all of which are hereby expressly waived by the Borrower;
         provided, however, that in the event of an actual or deemed entry of an
         order for relief with respect to the Borrower under the Federal
         Bankruptcy Code, (x) the Letter of Credit Commitment shall
         automatically be terminated and (y) such maximum amount and all such
         other amounts shall automatically become and be due and payable,
         without presentment, demand, protest or any notice of any kind, all of
         which are hereby expressly waived by the Borrower, or (iii) may, by
         notice to Borrower, reduce the Letter of Credit Commitment.

                  7.2. Deposits; Setoff. Set off, regardless of the adequacy of
         any other collateral, any deposits or other sums due from Lender to
         Borrower against any and all liabilities, direct or indirect, absolute
         or contingent, due or to become due, now existing or hereafter arising,
         of Borrower to Lender under this Agreement. Such sums shall at all
         times constitute collateral security for all indebtedness and
         obligations of Borrower to Lender under this Agreement. The rights
         granted by this Section 7.2 shall be in addition to the rights of
         Lender under any statutory and case authority of the State of Ohio.

                  7.3. Selective Enforcement. In the event Lender shall elect to
         selectively and successively enforce its rights, such action shall not
         be deemed a waiver or discharge of any other lien, encumbrance or
         security instrument securing payment of the amounts owing hereunder
         until such time as Lender shall have been paid in full all sums
         outstanding hereunder.

                  7.4. Waiver of Default. Lender may, at its option, by an
         instrument in writing signed by Lender, waive any Default which shall
         have occurred and any consequences of such Default and, in such event,
         Borrower and Lender shall be restored to their former respective rights
         and obligations hereunder. Any Default so waived shall, for purposes of
         this Agreement, be deemed to have been cured and not to be continuing;
         but no such waiver shall extend to any subsequent or other Default or
         impair any consequence of such subsequent or other Default or any of
         Lender's rights relating thereto.

                  7.5. Cumulative Remedies. The remedies herein provided shall
         be in addition to and not in substitution for the rights and remedies
         which would otherwise be vested in Lender in law or equity, all of
         which rights and remedies are specifically reserved by Lender. The
         remedies herein provided or otherwise available to Lender shall be
         cumulative and may be exercised concurrently. The failure to exercise
         any of the remedies herein provided shall not constitute a waiver
         thereof, nor shall use of any of the remedies hereby provided prevent
         the subsequent or concurrent resort to any other remedy or remedies
         which by this Agreement or by law or equity shall be vested in Lender.

                                      -11-
<PAGE>
         8. GENERAL CONDITIONS. The following conditions shall be applicable
throughout the term of this Agreement:

                  8.1. Notices. All notices, consents, waivers, and other
         communications required or permitted to be given under this Agreement
         must be in writing and will be deemed to have been duly given when (a)
         delivered by hand (with written confirmation of receipt), (b) sent by
         telecopier (with written confirmation of receipt), provided that a copy
         is mailed by registered mail, return receipt requested, or (c) when
         received by the addressee, if sent by a nationally recognized overnight
         delivery service (receipt requested), in each case to the appropriate
         addresses and telecopier numbers set forth below (or to such other
         addresses and telecopier numbers as a party may designate by notice to
         the other parties):

                  To Borrower:

                  Alliance Resource Partners, L.P.
                  c/o Alliance Resource Management GP, LLC
                  1717 South Boulder Avenue, Suite 600
                  Tulsa, Oklahoma 74119
                  Attn: Cary Marshall, Director, Corporate Finance
                  Telefax: (918) 295-7357

                  with a copy to:

                  Alliance Resource Partners, L.P.
                  c/o Alliance Resource Management GP, LLC
                  1717 South Boulder Avenue
                  Tulsa, Oklahoma 74119
                  Attn:  Thomas L. Pearson, Senior Vice President - Law and
                         Administration, General Counsel and Secretary
                  Telefax: (918) 295-7361

                  and to:

                  Katten Muchin Zavis
                  1025 Thomas Jefferson Street, NW
                  East Lobby, Suite 700
                  Washington, DC 20007
                  Attn:  Steven C. Schnitzer, Esq.
                  Telefax: (202) 298-7570

                                      -12-
<PAGE>
                  To Lender:

                  Fifth Third Bank
                  38 Fountain Square Plaza
                  Cincinnati, Ohio   45263
                  Attn: Marie B. Magnin
                  Telefax: (513) 744-6757

         or at such other address of which it shall have notified the party
         giving such notice in writing. Notices to in-house counsel or outside
         counsel of a party hereto shall not constitute sufficient notice to
         such party.

                  8.2. Amendment; Waiver. This Agreement may not be amended,
         modified, waived, discharged or terminated in any way, except by an
         instrument in writing executed by the part against who enforcement of
         such amendment, modification, waiver, discharge or termination shall be
         sought. In the event of a waiver of Default by Lender, such specific
         Default shall be deemed to have been cured and not continuing, but no
         such waiver shall extend to any subsequent or other Default or impair
         any consequence of such subsequent or other Default.

                  8.3. Governing Law. This Agreement shall be deemed to be a
         contract made under the laws of the State of Ohio, and shall be
         construed by and governed in accordance with the laws (including the
         Uniform Commercial Code) of the State of Ohio, without giving effect to
         principles of conflicts of laws. This Agreement shall be supplemented
         by the Uniform Customs and Practices for Documentary Credits, 1993
         Revision, International Chamber of Commerce Publication No. 500 (the
         "UCP") to the extent the provisions of the UCP are not inconsistent
         with the terms hereof or the laws of the State of Ohio. Any Letter of
         Credit issued pursuant hereto shall be governed by the laws of such
         jurisdiction and the UCP to the extent provided therein.

                  8.4. Entire Agreement. This Agreement, any Letter of Credit
         Application executed in connection herewith, and the other instruments,
         statements or documents described herein constitute the entire
         agreement between Borrower and Lender with respect to the subject
         matter hereof, with any and all prior agreements and understandings
         being merged herein.

                  8.5. Binding Effect. This Agreement shall be binding upon and
         shall inure to the benefit of the parties hereto and their respective
         heirs, legal representatives, successors and permitted assigns;
         provided, however, that, without the consent of the Borrower, the
         Lender shall not transfer or assign any of its rights or obligations
         hereunder or all or any part of its Letter of Credit Commitment or any
         Advance except to another

                                      -13-
<PAGE>
         commercial bank organized under the laws of the United States having a
         combined capital and surplus and retained earnings of not less than
         $500,000,000.

                  8.6. Severability. Should any clause or provision of this
         Agreement or any instrument, document or agreement provided by Borrower
         to Lender hereunder be invalid or void for any reason, such invalid or
         void clause shall not adversely affect the remainder of this Agreement
         or any such instrument, document or agreement, and such remainder shall
         remain in full force and effect.

                  8.7. Costs. Borrower shall pay all reasonable costs and
         expenses (including reasonable legal fees of its outside attorneys)
         incurred by Lender in connection with the negotiation and documentation
         of the transactions contemplated hereby and the performance and
         enforcement of the terms hereof.

         9. AFFIRMATIVE COVENANTS. So long as Lender shall have any commitment
to issue any Letter of Credit under this Agreement or any Letter of Credit which
has not been fully cash collateralized remains outstanding, Borrower will comply
with the following:

                  9.1. Maintenance of Existence. Preserve and maintain its
         limited partnership existence and good standing under the laws of the
         State of Delaware and remain in good standing as a foreign limited
         partnership in the State of Oklahoma.

                  9.2. Maintenance of Records. Keep adequate records and books
         of account.

                  9.3. Compliance with Laws. Comply in all material respects
         with all laws, rules, regulations and orders applicable to Borrower,
         such compliance to include, without limitation, paying before the same
         become delinquent all taxes, assessments, and governmental charges
         imposed upon it or upon its property, subject to the right to contest
         if adequate reserves are established.

                  9.4. Notice of Litigation. Promptly after the commencement and
         notice thereof, Borrower shall deliver to Lender notice of all actions,
         suits and proceedings before any court or governmental department,
         commission, board, bureau, agency or instrumentality, domestic or
         foreign, affecting Borrower which, if determined adversely to Borrower,
         could have a material adverse effect on the financial condition,
         properties or operations of Borrower and its Subsidiaries, taken as a
         whole.

                  9.5. Notice of Defaults. As soon as possible and in any event
         within five (5) days after becoming aware of the occurrence of each
         Default, a written notice setting forth the details of such Default and
         the action which is proposed to be taken by Borrower with respect
         thereto.

                                      -14-
<PAGE>
                  9.6. General Information. Such other information respecting
         the condition or operations, financial or otherwise, of Borrower as
         Lender may from time to time reasonably request; provided, however,
         that so long as the Lender shall be receiving copies of all proxy
         statements, financial statements and reports that the Borrower sends to
         its unitholders, partners or members, and copies of all regular,
         periodic and special reports, and all registration statements, that the
         Borrower files with the Securities and Exchange Commission of the
         United States or any governmental authority that may be substituted
         therefor, or with any national securities exchange, in each case
         promptly after the sending or filing thereof, the Borrower shall have
         no obligation to deliver any other financial statements to the Lender
         hereunder. In addition, the Borrower shall deliver to the Lender, as
         soon as available but within 60 days following the end of each of the
         initial three quarters of the Borrower's fiscal year and within 120
         days following the end of the Borrower's fiscal year, a statement
         demonstrating and computing compliance by the Borrower with the
         covenant required to be maintained by the Borrower pursuant to Section
         6.7 (Leverage Ratio) hereof for the period then ended, together with a
         certificate of the Chief Financial Officer or Treasurer of the General
         Partner to the effect that the information contained therein is true
         and accurate as of the date of such certificate.

                                      -15-
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Loan Agreement as of the day and year first above written.

                                   "Borrower"

                                   ALLIANCE RESOURCE PARTNERS, L.P.,
                                   a limited partnership

                                   By:  ALLIANCE RESOURCE MANAGEMENT GP,
                                        LLC, the managing general partner

                                        By        /s/ Michael L. Greenwood
                                          ______________________________________
                                           Name:  Michael L. Greenwood,
                                           Title: Senior Vice President - Chief
                                                  Financial Officer and
                                                  Treasurer

                                    "Lender"

                                    FIFTH THIRD BANK

                                    By       /s/ Kevin C.M. Jones
                                      __________________________________________
                                       Name:     Kevin C.M. Jones
                                       Title:    Vice President

                                      -16-
<PAGE>
                                 Schedule "1.5"

                         (Borrower Authority Documents)
<PAGE>
                                 Schedule "1.21"

                         (Guarantor Authority Documents)
<PAGE>
                                 Schedule "1.22"

                              (Guaranty Agreement)
<PAGE>
                                 Schedule "1.31"

                 (Opinion of Borrower's and Guarantor's Counsel)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]