Document:

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                                                                   Exhibit 10(R)

                              COAL SALES AGREEMENT

THIS AGREEMENT, effective the 1st day of January, 2002, by and between SIERRA
PACIFIC POWER COMPANY, a Nevada Corporation, ("BUYER") with its principal place
of business at 6100 Neil Road, Reno, Nevada and ARCH COAL SALES COMPANY, INC., a
Delaware corporation, individually and as Agent for Canyon Fuel Company, LLC and
the independent operating subsidiaries of Arch Coal, Inc., a Delaware
corporation (collectively as "SELLER") with its principal place of business at
CityPlace One, Suite 350, St. Louis, Missouri.

                                   WITNESSETH
                                   ----------

WHEREAS, BUYER is a Nevada Public Utility Corporation engaged in the generation,
transmission and distribution of electric power and owns and operates the North
Valmy Generation Station near Battle Mountain, Nevada ("Station"), with Idaho
Power Company ("IPC") owning fifty percent (50%) of the Station; and

WHEREAS, SELLER represents and warrants it is capable of supplying coal to BUYER
in accordance with the specifications and terms and conditions set forth herein
("Coal"); and

WHEREAS, the operation of the Station is subject to stringent air quality and
other regulations and BUYER and IPC desire to achieve operational efficiencies,
the Coal must meet the specifications set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
intending to be legally bound hereby, BUYER and SELLER agree as follows:

I.   TERM

Unless sooner terminated or canceled, the term of this Agreement ("Term") shall
be five (5) years commencing January 1, 2002 and ending December 31, 2006.

II.  SOURCE MINES

A.   The Coal supplied hereunder shall be produced from SELLER's Sufco, Skyline
     and Dugout Canyon ("Dugout") mines located in Emery and Sevier Counties,
     Utah (collectively the "Mines"). SELLER represents and warrants that it has
     dedicated the Mines to the performance of this Agreement subject to ARTICLE
     X. QUALITY SPECIFICATIONS, Section F below. SELLER shall have the right to
     direct which of the Mines will originate shipments in accordance with
     ARTICLE IV. ORDERING. SELLER shall use reasonable efforts to maximize
     shipments from Sufco, and in no event, shall shipments from Sufco be less
     than 350,000 tons during the period July 1, 2003 through December 31, 2003
     and 700,000 tons per year in 2004 through 2006. Additionally, shipments
     from Dugout shall be no more than 500,000 tons in any calendar year during
     the Term of this Agreement. Currently, no shipments are anticipated to come
     from Sufco during calendar year 2002.

B.   SELLER represents and warrants that the Mines contain a sufficient quantity
     of economically recoverable coal that meets the quality specifications and
     quantity requirements of this Agreement. SELLER further warrants that the
     title to all Coal delivered under this Agreement shall be good and that
     such Coal shall be delivered free from any claim, lien or other
     encumbrance. SELLER shall indemnify BUYER against any and all expenses,
     damages, and liabilities resulting from breach of this warranty.

C.   Subject to the prior written approval of BUYER, SELLER shall have the right
     to supply coal from sources other than the Mines ("Substitute Coal"),
     subject to all other terms and conditions of this

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     Agreement, provided that any Substitute Coal shall not result in a higher
     delivered price to BUYER calculated in dollars per million Btu F.O.B. the
     Station than the price in effect for Skyline under this Agreement at the
     time of shipment of the Substitute Coal, and provided further that
     Substitute Coal shipments shall not reduce coal deliveries from Sufco below
     the levels set forth in ARTICLE II. SOURCE MINES, Section A.

D.   BUYER shall have the right to divert shipments to the following generating
     stations:

          Pinon Pine, Sparks, Nevada
          Reid Gardner, Moapa, Nevada
          Jim Bridger, Point of Rocks, Wyoming
          Boardman, Castle, Oregon

III. QUANTITY

A.   The quantity of Coal to be delivered and purchased hereunder on an annual
     basis shall be the base tonnage specified in the table below ("Base Tons").
     At the BUYER'S sole option, the annual Base Tons may be decreased by the
     amount specified in the table below ("Reduced Tonnage Option"). The BUYER'S
     Reduced Tonnage Option shall only be valid with respect to the specified
     calendar year and the annual Reduced Tonnage Option volumes shall not carry
     over to the next calendar year.

                                   Base Tons     Reduced Tonnage
                                   ---------     ---------------
January 1 - December 31, 2002      1,030,000            0
January 1 - December 31, 2003      1,200,000            0
January 1 - December 31, 2004      1,600,000         75,000
January 1 - December 31, 2005      1,600,000         75,000
January 1 - December 31, 2006      1,600,000         75,000

B.   As BUYER intends to take delivery in unit trains, actual tonnage delivered
     during any calendar year may differ slightly from the Base Tons (less any
     Reduced Tonnage) in order to accommodate deliveries in unit train lots.
     Provided, however, that the amount of over-shipment or under-shipment in
     any calendar year shall be no more than 10,000 Tons of Coal. Differences
     resulting from truing up of actual deliveries (but not including variances
     in deliveries due to an event of force majeure) with Base Tons (less any
     Reduced Tonnage) during any calendar year will be carried over into the
     following contract year such that the Base Tons for the following year
     would be decreased or increased by an amount which takes these differences
     into account. Additionally, BUYER and SELLER agree that up to 50,000 tons
     of coal per year may be carried into the next calendar year, and shall be
     delivered by SELLER to BUYER during the first calendar quarter of such
     calendar year under a mutually agreeable shipment schedule and at the price
     in effect for the calendar year in which the Coal was originally scheduled
     for delivery. BUYER and SELLER agree that the Term of this Agreement may be
     extended for up to three months to allow for the delivery of such Coal.

C.   BUYER shall have the right to resell the Base Tons in any calendar year to
     a third party, provided however, that SELLER shall have the right, but not
     the obligation to purchase said amount of Coal from BUYER at the price
     BUYER could otherwise resell the Coal to the third party. In such cases,
     BUYER will notify SELLER of its intent to resell any coal sold hereunder,
     specifying the price, volume, and term, and unless otherwise agreed, SELLER
     shall then have three business days to exercise its right to repurchase
     said Coal. BUYER agrees to identify the amount of Coal intended for resale
     as part of the shipment scheduling requirements set forth in ARTICLE IV.
     ORDERING, Section B. Additionally, all terms and conditions contained in
     this Agreement between BUYER and SELLER shall apply to all Coal resold in
     accordance with this ARTICLE III. QUANTITY, Section C.

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IV.  ORDERING

A.   Shipments utilizing one unit train set will be scheduled on an approximate
     ratable basis. Further, the parties recognize that BUYER will schedule a
     second unit train set from time to time and that the operation of the
     second train set will cause total monthly shipments to be substantially in
     excess of the approximate ratable basis utilizing one trainset.

B.   BUYER shall notify SELLER on or before the fifteenth day of each month of
     the quantity of Coal to be shipped during the following month. (ie, BUYER
     will notify SELLER on or before January 15th of the amount of Coal to be
     shipped during February.) In addition, BUYER shall provide SELLER with its
     best estimate of the quantity of Coal to be shipped during the following
     eleven months. Within five days of receipt of BUYER's notice, SELLER shall
     respond in writing, or by facsimile or electronic mail, to BUYER confirming
     BUYER's schedule and specifying the source of each of the following month's
     shipments among Sufco, Skyline and Dugout. In addition, SELLER's response
     shall also include its best estimate of the sources of the projected
     quantities of Coal for the following eleven months.

     In the event SELLER is required to estimate future Coal deliveries beyond
     the twelve-month period, then the following percentage amounts shall be
     used as an estimate of Coal deliveries from SELLER'S Mines, and shall
     become effective in the first month following the twelve month forecast
     period described hereunder:

             Sufco     Skyline    Dugout
             -----     -------    ------
2003          29%        56%        15%
2004-2006     44%        46%        10%

V.   DELIVERY

SELLER shall at its own expense transport to and load the Coal into rail cars
F.O.B. at the following loading facilities ("Loading Facilities"):

          Sufco - Levan (Sharp), Utah
          Skyline - Skyline, Utah
          Dugout - Savage Coal Terminal, Wellington, Utah

VI.  SHIPMENTS

A.   SELLER shall load the Coal in quantities suitable for unit train loading,
     consisting of approximately 85 rail cars in accordance with the provisions
     of ARTICLE IX. SAMPLING AND ANALYSIS. SELLER shall load the Coal in
     compliance with the rules and regulations as published in the Union Pacific
     Railroad Company's Circular UP 6602, General Rules for Loading and Handling
     Coal Trains Originating in Colorado and Utah ("Circular UP 6602"), as
     amended from time to time, except that Free Time for loading trains at
     Sharp, Utah shall be four hours. SELLER shall be liable for all demurrage
     or related charges assessed due to SELLER's failure to comply with the
     requirements in Circular UP 6602. BUYER shall have the right to increase
     the number of rail cars in each unit train. However, in no event shall
     SELLER be required to load more than 11,000 tons in three hours or load
     unit trains greater than 105 railcars.

B.   SELLER shall have the obligation to conform to restrictions on maximum
     allowable weights as specified in Circular UP 6602, as amended from time to
     time. SELLER shall be responsible for performing and bearing all costs of
     removal of excess Coal and all related charges assessed by the railroad for
     overloading, including but not limited to set out and storage charges.

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C.   SELLER shall be liable for any incremental transportation charges assessed
     to BUYER as a result of SELLER's failure to load cars to a minimum car
     weight of 113 net tons for railcars in a trainload consisting of aluminum
     286,000 gross net weight in pounds railcars, and 98 net tons for railcars
     in a trainload consisting of steel/aluminum 263,000 gross net weight in
     pounds railcars. BUYER shall have the right to specify new and revised
     minimum railcar weights from time to time.

D.   Rail transportation shall be ordered by BUYER and shall be paid for by
     "BUYER except when shipments are rejected or acceptance of shipments is
     revoked by BUYER, which, in such event rail transportation costs will be
     borne by SELLER. SELLER shall make reasonable efforts to make the necessary
     arrangements with the railroad for the placement of railcars at the Loading
     Facility in accordance with the rail transportation arrangements made by
     BUYER.

E.   Upon arrival of each train at SELLER's Loading Facility and prior to
     commencing loading, SELLER shall make reasonable efforts to check each car
     for the presence of foreign material and check that each car door is closed
     and locked.

F.   Upon the loading of each train for shipment, SELLER shall promptly fax a
     shipping notice to: North Valmy Generation Station; Attention: North Valmy
     Plant Administration; (FAX #: 775-834-3164). The shipping notice shall
     include the shipment date, shipment number, car initials and numbers,
     tonnages and the trainload identification numbers.

VII. TITLE AND RISK OF LOSS

Title and risk of loss of the Coal shall pass from SELLER to BUYER as the Coal
is progressively loaded into railcars to be provided by BUYER.

VIII. WEIGHING

A.   For billing and all other purposes under this Agreement, the weight of the
     Coal delivered hereunder shall be determined by certified weighing systems
     at the Loading Facilities when the Coal is loaded. At its expense, SELLER
     shall directly (or, in the case of Savage Coal Terminal cause the Loading
     Facility Operator to) inspect, test and calibrate the weighing and
     measuring devices at least semiannually in accordance with accepted
     methods. SELLER shall provide copies of the scale certification reports to
     BUYER. SELLER shall notify BUYER at least seven days prior to such testing
     and BUYER shall have the right to have a representative present to observe
     such weighing inspections or tests.

B.   If SELLER's scales are determined to be in error in excess of two-tenths of
     one percent (.2%) as determined by such inspection and certification, an
     appropriate adjustment shall be made to the Coal's weight and related
     invoices and payments. Such adjustment shall be retroactive to the time of
     the error if such time can be factually ascertained. If the time of error
     cannot be ascertained, it will be deemed to be one-half the time between
     the last certification of such scales and the time the error in weighing
     was corrected.

IX.  SAMPLING AND ANALYSIS

A.   SELLER warrants that Coal samples will be taken in accordance with ASTM
     standards at the Loading Facilities.

B.   For the purposes of determining conformance of each shipment of Coal to
     ARTICLE X. QUALITY SPECIFICATIONS, or any other provision of this
     Agreement, a representative sample of the Coal shall be collected, as set
     forth in Section C of this ARTICLE IX. SAMPLING AND ANALYSIS, below, in
     accordance with ASTM standard methods at the Loading Facility as Coal is
     loaded into

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     each unit train. BUYER may, at its own risk and expense, have a
     representative present to observe such sampling. The presence of BUYER's
     representative at the time SELLER samples the Coal does not relieve the
     SELLER of its obligations to sample and analyze the Coal in conformance
     with the terms and conditions of this ARTICLE IX. SAMPLING AND ANALYSIS.

C.   SELLER shall cause a representative sample to be taken in accordance with
     ASTM standards at the Loading Facility as Coal is loaded into each unit
     train. The sample shall be taken by an ASTM mechanical sampler. SELLER
     shall divide each sample into three parts in accordance with ASTM standards
     and shall place the parts in suitable airtight containers each of which
     shall be sealed, documented and controlled for security purposes.

     1.   (a)  SELLER shall analyze the first part ("Original Sample") on a
               preliminary basis for Total Moisture, Ash, BTU/lb., and Sulfur
               (Sulfur to be stated in pounds of sulfur dioxide per million Btu)
               ("Preliminary Analysis") in accordance with ASTM standards. If
               the Preliminary Analysis shows that the Coal fails to meet any
               one of the Rejection Coal Specifications as set forth in ARTICLE
               X. QUALITY SPECIFICATIONS, BUYER may, at its option, exercise any
               of its rights set forth in ARTICLE XI. COAL QUALITY
               PENALTY/REFUSABLE COAL. SELLER shall fax a copy the Preliminary
               Analysis to BUYER within twelve (12) hours of collecting the
               Original Sample. BUYER shall designate an agent to receive such
               results after normal business hours.

          (b)  In addition, SELLER shall analyze the Original Sample for Total
               Moisture, Ash, BTU/lb., Ash Fusion Temperature (H=W) and Sulfur
               (Sulfur to be stated in pounds of sulfur dioxide per million Btu)
               in accordance with ASTM Methods ("Final Analysis"). SELLER shall
               fax a copy of the Final Analysis to BUYER within 72 hours after
               collecting the Original Sample.

          (c)  BUYER may, at its sole option and expense, require that the Final
               Analysis include further testing in accordance with ASTM
               standards for any or all of those characteristics in ARTICLE X.
               QUALITY SPECIFICATIONS which were not described in ARTICLE IX.
               SAMPLING AND ANALYSIS, Section C.1(b). If this analysis shows
               that the Coal fails to meet any one of the suspension limits set
               forth in ARTICLE X. QUALITY SPECIFICATIONS, Section A, BUYER may,
               at its option, exercise any of its rights set forth in ARTICLE
               XII. NONCONFORMING COAL.

     2.   (a)  The second part of the representative sample ("Duplicate Sample")
               shall be held by SELLER for at least thirty (30) days. BUYER, at
               its sole expense, may have the Duplicate Sample analyzed in
               accordance with ASTM standards for any or all of the
               characteristics in ARTICLE X. QUALITY SPECIFICATIONS ("BUYER's
               Analysis"). Except as provided in ARTICLE IX. SAMPLING AND
               ANALYSIS, Section 2(c) , a copy of BUYER's Analysis shall be made
               available to SELLER within ten (10) days of receipt of the
               results of BUYER's Analysis.

          (b)  If the results of BUYER'S Analysis are within the ASTM allowable
               reproducibility limits from the result of SELLER's Final
               Analysis, then SELLER's Final Analysis shall control for purposes
               of determining compliance with ARTICLE X. QUALITY SPECIFICATIONS,
               or any other term of this Agreement.

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          (c)  If SELLER's Final Analysis and BUYER's Analysis results vary by
               more than the ASTM allowable reproducibility limits, then:

               (i)  A copy of BUYER's Analysis shall immediately be made
                    available to SELLER; and

               (ii) SELLER shall cause the Referee Sample (referred to in
                    Sub-section (3) of this ARTICLE, below) to immediately be
                    analyzed as provided in Sub-section (3), below, and the
                    results shall immediately be made available to both SELLER
                    and BUYER.

     3.   (a)  The third part of the representative sample ("Referee Sample")
               shall be held by SELLER for at least forty-five (45) days for
               analysis by an independent laboratory as set forth below.

          (b)  If SELLER's Final Analysis and BUYER's Analysis results vary by
               more than the ASTM allowable reproducibility limits, then the
               Referee Sample shall be analyzed in accordance with ASTM
               standards by a mutually acceptable independent laboratory. The
               results of the Referee Sample analysis shall be furnished to both
               SELLER and BUYER and shall control for purposes of determining
               compliance with ARTICLE X. QUALITY SPECIFICATIONS and any other
               term of this Agreement. The cost of the Referee Sample analysis
               shall be paid equally by BUYER and SELLER.

D.   SELLER shall, at its own cost, cause the mechanical sampler to be
     dynamically bias tested by an independent third party at least every 24
     months during the Term of this Agreement. SELLER shall provide copies of
     the sampler test reports to BUYER. BUYER shall have the right to have a
     representative present during the sampler tests.

X.   QUALITY SPECIFICATIONS

A.   All Coal to be delivered under this Agreement shall substantially conform
     to the following Typical Coal Specifications:

                          COAL SPECIFICATION
                          ------------------
                              as Received

                               Sufco
                               -----

                               Typical      Suspension   Rejection
                              --------      ----------   ---------
Size (ASTM #D4749)             2" x 0
Total Moisture %                 9.8           12.5        13.0
Ash %                            8.5           12.0        13.0
Heat Content (BTU/1b)          11,400         10,950     10,500
Ash Fusion (ST H=W)           2100(0)F
Sulfur (Lbs. S02/MMBtu)         0.80           1.0         1.10
Grindability (HGI)               45
Iron Oxide % (Fe203)            5.5
Sodium Oxide % (Na20)           3.8
Fines %*                         43

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                            Skyline
                            -------

                            Typical      Suspension   Rejection
                            -------      ----------   ---------
Size (ASTM #D4749)          2" x 0
Total Moisture %              8.5           12.0         13.0
Ash %                         9.0           12.0         13.0
Heat Content (BTU/lb)       11,710         11,255       10,800
Ash Fusion (ST H=W)        2150(0)F
Sulfur (Lbs. S02/NEvlBtu)    0.74            1.0         1.10
Grindability (HGI)             46
Iron Oxide % (Fe203)          6.0
Sodium Oxide % (NaZO)         1.2
Fines %*                       50

                            Dugout
                            ------

                            Typical      Suspension   Rejection
                            -------      ----------   ---------
Size (ASTM #D4749)          2" x 0
Total Moisture %               6.2          10.0         11.0
Ash %                         10.5          12.0         13.5
Heat Content (BTU/lb)       11,960         11,380      10,800
Ash Fusion (ST H=W)        2400(0)F
Sulfur (Lbs. S02/MMBtu       1.04           1.10        1.10
Grindability (HGI)             43
Iron Oxide % (Fe203)          3.5
Sodium Oxide % (NaiO)         0.8
Fines %*                       45

     *    Fines in weight % measured through a 1/4 inch square screen. Wire size
          for sieve as listed in ASTM Specification E-11.

B.   SELLER agrees to permit and/or make all necessary arrangements for access
     during normal business hours by BUYER, at BUYER's risk and expense to any
     properties, equipment or facilities related to SELLER'S performance under
     this Agreement.

C.   The Coal shall be mixed thoroughly so that the quality thereof after being
     loaded into the rail cars shall be consistent within each car of the unit
     train and that the Coal shall be prepared substantially free of impurities.

D.   BUYER, through its agents, representatives or employees, shall have the
     right to inspect the Coal at BUYER's risk and expense at any time prior to
     unloading at the Station and to inspect any properties, equipment or
     facilities during normal business hours related to SELLER's performance
     under this Agreement, including, but not limited to, SELLER's reserves,
     mining operations, hauling operations, storage operations or loading
     operations. BUYER's inspection pursuant to this ARTICLE X. QUALITY
     SPECIFICATIONS, Section D, does not relieve SELLER of its obligations to
     deliver Coal to BUYER in conformance with the quality specifications set
     forth in this ARTICLE X. QUALITY SPECIFICATIONS.

E.   BUYER shall be entitled to randomly sample the Coal using ASTM standards
     during any such inspection ("Inspection Sample") and analyze the Inspection
     Sample using ASTM standard methods.

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F.   Because BUYER has not utilized Coal from Dugout at the Station, BUYER
     requires that a test burn be conducted. The test burn will require up to
     50,000 tons of representative quality Coal from Dugout and would be
     conducted on a schedule mutually agreeable between BUYER and SELLER. If, as
     a result of the test bum, BUYER, in its sole reasonable judgment,
     determines that Coal from Dugout is not suitable for use at the Station,
     BUYER shall so notify SELLER in writing no later than thirty (30) days
     after completion of the test burn. SELLER agrees to terminate shipments
     from Dugout upon receipt of SELLER's notice. BUYER and SELLER agree to meet
     thereafter to discuss the reasons for the unsuitability and what, if
     anything, can be done to make Coal from Dugout suitable. BUYER and SELLER
     agree that SELLER intends to utilize Coal from Dugout to supply a portion
     of the annual volumes set forth in ARTICLE III. QUANTITY, Section A. If
     BUYER determines the Coal from Dugout is unsuitable, SELLER may elect to
     reduce the annual volumes set forth in ARTICLE III. QUANTITY, Section A, by
     15% for the remainder of 2002-2003 and by 10% for 2004-2006. SELLER shall
     notify BUYER in writing of its election to reduce volumes no later than
     seven days after receipt of BUYER's notice of Dugout's unsuitability for
     use at the Station.

G.   BUYER AGREES THAT SELLER MAKES NO EXPRESS WARRANTIES OTHER THAN THOSE SET
     FORTH IN THIS AGREEMENT. SELLER MAKES NO WARRANTY CONCERNING THE
     SUITABILITY OF COAL DELIVERED HEREUNDER FOR USE IN BUYER'S PLANT, OR OTHER
     ELECTRIC GENERATION STATIONS. ALL WARRANTIES OF MERCHANTABILITY OR OF
     FITNESS FOR A PARTICULAR PURPOSE OR ARISING FROM A COURSE OF DEALING OR
     USAGE OF TRADE ARE SPECIFICALLY EXCLUDED.

H.   If, at any time after the date deliveries commence under this Agreement,
     BUYER reasonably and in good faith determines a material inability to burn
     the Coal purchased under this Agreement, BUYER may, at its option and upon
     notice confirmed in writing and sent to SELLER by certified mail,
     facsimile, or other electronic methods, suspend future shipments except
     shipments already loaded into railcars from the Mine(s) which produce the
     unacceptable Coal. SELLER may, within thirty (30) days of receipt of
     BUYER's notice, provide BUYER with reasonable assurances that subsequent
     monthly deliveries of Coal shall improve the combustion characteristics of
     the Coal. If SELLER fails to provide such assurances within said thirty day
     period, or if SELLER provides assurance but is unable to cure BUYER's
     inability to burn the Coal, BUYER may terminate shipments from the affected
     Mine(s) by giving written notice of such termination within five (5) days
     from the end of such thirty day period. In the event BUYER exercises its
     right under this Section, and terminates deliveries from the affected
     Mine(s), then SELLER shall continue to supply Coal from the unaffected
     Mine(s) and the shortfall created by the unburnable Coal would be
     determined in accordance with the forecast schedule set forth in ARTICLE
     IV. ORDERING, Section B. Additionally, both parties shall be relieved from
     any further rights, duties, obligations or liabilities under this Agreement
     for that portion of deliveries that would have been delivered from the
     affected Mine(s), except for payment of any sums due and owing for
     deliveries made under this Agreement prior to the termination of deliveries
     from the affected Mine(s).

I.   In the event that certain Coal quality parameters create combustion related
     problems at the Station, BUYER may, upon notice confirmed in writing and
     sent to SELLER by certified mail, facsimile, or other electronic method,
     suspend future shipments except shipments already loaded into railcars.
     SELLER shall, within thirty (30) days of receipt of BUYER's notice, provide
     BUYER with reasonable assurances that subsequent monthly deliveries of Coal
     shall improve the combustion characteristics of the Coal. If SELLER fails
     to provide such assurances within said thirty (30) day period, or if SELLER
     provides assurance but is unable to change the certain Coal quality
     parameters which created such combustion related problems, BUYER may
     terminate shipments from the affected Mine by giving written notice of such
     termination within five (5) days from the end of the thirty (30) day
     period. Additionally, SELLER shall continue to supply Coal from the
     unaffected Mines and the shortfall created by the non-conforming Coal would
     be determined in accordance with the forecast

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     schedule set forth in ARTICLE IV. ORDERING, Section B. A waiver of this
     right for any one period by BUYER shall not constitute a waiver for
     subsequent periods. If SELLER provides such assurances to BUYER, shipments
     hereunder shall resume and any tonnage deficiencies resulting from
     suspension may be made up subject to the mutual agreement of BUYER and
     SELLER. BUYER shall not unreasonably withhold its acceptance of SELLER'S
     assurances, or delay the resumption of shipments. The parties recognize
     that BUYER, in accordance with ARTICLE XI. COAL QUALITY PENALTY/REFUSABLE
     COAL, has the right to reject shipments that do not conform with the
     rejection limits set forth in ARTICLE X. QUALITY SPECIFICATIONS, Section
     A., for Total Moisture, Ash, Sulfur (Sulfur to be stated in pounds of
     sulfur dioxide per million Btu), and Btu/lb. This Section I. is intended to
     apply to all constituents and properties of the Coal shipped hereunder
     (except for Total Moisture, Ash, Btu/1b., and Sulfur, with Sulfur to be
     stated in pounds of sulfur dioxide per million Btu) that individually or in
     combination cause the Coal to be unburnable as defined herein.

XI.  COAL QUALITY PENALTY/REFUSABLE COAL

A.   If the quality of any trainload of Coal hereunder based upon the
     Preliminary Analysis authorized under ARTICLE IX. SAMPLING AND ANALYSIS
     exceeds the rejection limits set forth in ARTICLE X. QUALITY
     SPECIFICATIONS, Section A, by an amount that causes it to be unburnable in
     the sole discretion of the BUYER, BUYER may refuse to accept delivery of
     the trainload, all expenses to be paid by SELLER. BUYER may stop any train
     in route all expenses to be paid by the SELLER. BUYER shall-give SELLER
     such notice by telephone as soon as is reasonably possible and shall
     provide written notice no more than two business days after such selection
     is made by BUYER. BUYER must reject such Coal within twenty-four (24) hours
     of receipt of the Preliminary Analysis or such right to reject is waived.

     When a train is rejected, SELLER shall have twenty-four (24) hours from the
     time BUYER notifies SELLER of the rejection to make arrangements to dispose
     of the Coal. BUYER may, at its discretion, lease the train to SELLER at
     prevailing lease rates in order to transport rejected Coal to a new
     destination. The train will be returned to BUYER at any of SELLER's Loading
     Facilities within 6 days of the rejection notice. SELLER agrees not to hold
     BUYER responsible for missing any loading dates or volumes due to SELLER's
     use of train for transporting rejected Coal.

B.   If the quality of any trainload of Coal hereunder exceeds the reject limits
     set forth in ARTICLE X. QUALITY SPECIFICATIONS, Section A, and BUYER
     intends to utilize the Coal, that shipment shall be subject to a $1.00 per
     ton penalty that shall be credited to BUYER. This penalty shall be in
     addition to the price adjustments set forth in ARTICLE XV. HEAT CONTENT
     ADJUSTMENT, and ARTICLE XVI. S02 ADJUSTMENTS.

XII. NON-CONFORMING COAL

A.   Should the weighted monthly average of all shipments from each Mine based
     upon the Final Analysis or Referee Sample Analysis of all monthly
     shipments, fail to meet any one or more of the suspension limits (except
     BTU/1b) set forth in ARTICLE X. QUALITY SPECIFICATIONS, Section A., or
     should SELLER deliver three (3) trains in a six (6) month period that fail
     to meet the rejection limits set forth in ARTICLE X. QUALITY
     SPECIFICATIONS, Section A., BUYER may upon notice confirmed in writing and
     sent to SELLER by certified mail, facsimile, or other electronic method,
     suspend future shipments with the exception of any shipments already loaded
     into railcars. SELLER shall, within thirty (30) days of receipt of BUYER's
     notice, provide BUYER with reasonable assurances that subsequent monthly
     deliveries of Coal shall meet or exceed the suspension limits (except
     BTU/1b) set forth in ARTICLE X. QUALITY SPECIFICATIONS, Section A. If
     SELLER fails to provide such assurances within said thirty (30) day period,
     BUYER may terminate shipments

                                       9

<PAGE>

     from the affected Mine by giving written notice of such termination at the
     end of the thirty (30) day period. Additionally, SELLER shall continue to
     supply Coal from the unaffected Mines and the shortfall created by the
     non-conforming Coal would be determined in accordance with the forecast
     schedule set forth in ARTICLE IV. ORDERING, Section B. A waiver of this
     right for any one period by BUYER shall not constitute a waiver for
     subsequent periods. If SELLER provides such assurances to BUYER, shipments
     hereunder shall resume and any tonnage deficiencies resulting from
     suspension may be made up subject to the mutual agreement of BUYER and
     SELLER. BUYER shall not unreasonably withhold its acceptance of SELLER'S
     assurances, or delay the resumption of shipments.

B.   All costs,.expenses or damages incurred by BUYER in the course of SELLER
     assuring BUYER of SELLER's ability to conform to the quality
     specifications, after giving notice to SELLER of SELLER's failure to meet
     any one or more of such suspension limits, shall be paid to BUYER by
     SELLER. Nothing herein shall limit the remedies available to BUYER under
     the Uniform Commercial Code as enacted in the State of Nevada (UCC).

XIII. DEFAULT EVENTSIREMEDIES

A.   A default event shall mean any of the following:

     1.   SELLER fails to supply Coal subject to:

          (a)  The quality specifications set forth under the suspension and
               rejection limits of ARTICLE X. QUALITY SPECIFICATIONS, Section
               A., and

          (b)  The quantity specifications set forth under ARTICLE III.
               QUANTITY. Sections A. and B., unless otherwise excused under
               ARTICLE XVIII. FORCE MAJEURE.

     2.   SELLER fails to provide assurances as required in ARTICLE XII.
          NON-CONFORMING COAL, Section A.

     3.   SELLER, having given adequate assurances, fails to commence delivery
          of Coal conforming to the Typical Coal Specifications set forth in
          ARTICLE X. QUALITY SPECIFICATIONS, Section A., within thirty (30) days
          after the date of SELLER providing assurances to BUYER as required in
          ARTICLE XII. NON-CONFORMING COAL, Section A.

     4.   SELLER delivers within three (3) months after the date of SELLER'S
          resumption of shipments under ARTICLE XII. NON-CONFORMING COAL,
          Section A, three shipments of Coal which fail to meet any one or more
          of the reject limits set forth in ARTICLE X. QUALITY SPECIFICATIONS,
          Section A.

     5.   Either party commits a material breach of its obligations under this
          Agreement and the breaching party fails to cure such material breach
          within thirty (30) days after receipt of written notice from the
          non-breaching party describing the breach.

     6.   BUYER or SELLER fails to pay any payment required by the Agreement
          when due and such failure is not remedied within fourteen (14) days
          after written notice thereof, provided however, that the payment is
          not subject to ARTICLE XVII. PAYMENT.

     7.   BUYER or SELLER files a petition or otherwise commences, authorizes,
          or acquiesces in the commencement of a proceeding or cause of action
          under any bankruptcy or similar

                                       10

<PAGE>

          law for the protection of creditors; has such petition filed or a
          proceeding commenced against it, otherwise becomes bankrupt or
          insolvent (however evidenced); fails or is unable generally to pay its
          debts as they become due; or seeks or becomes subject to the
          appointment of an administrator, provisional liquidator, conservator,
          receiver, trustee, custodian or other similar official for all or
          substantially all of its assets.

B.   In the event either party is in default, the other party may, in addition
     to and not in limitation of other rights provided for in this Agreement, do
     one or more of the following:

     1.   Cancel this Agreement.

     2.   Exercise all remedies available to either BUYER or SELLER under the
          entire UCC or any provision thereof.

XIV. COAL PRICE

A.   The price per ton (2000 pounds) to be paid by BUYER to SELLER for the Coal
     delivered hereunder shall be fixed for each calendar year for the duration
     of the agreement at the prices indicated below F.O.B. rail cars at SELLER'S
     Loading Facility for each Mine. This price includes all taxes, costs of
     compliance with all laws and regulations, royalties and other fees
     applicable to the production and sale of Coal under this Agreement, except
     that State of Nevada Use Tax shall be to BUYER's account.

                                      Sufco     Skyline       Dugout
                                     ------     -------       ------
Effective January 1, 2002            $18.50      $19.00       $19.30
Effective January 1, 2003            $19.05      $19.57       $19.88
Effective January 1, 2004            $19.63      $20.15       $20.48
Effective January 1, 2005            $20.22      $20.76       $21.09
Effective January 1, 2006            $20.82      $21.38       $21.72

B.   SELLER represents that the cost of compliance with all governmental laws
     and regulations in effect as of November 15, 2001 is included in the
     initial Coal prices. Subsequent to such date new laws or regulations,
     changes in the interpretation or enforcement practices concerning existing
     laws as well as changes in presently existing federal, state, and local
     laws, rules and regulations that impose additional costs, or reduce such
     costs being imposed to mine, process, transport, or sell Coal and which
     were not being incurred as of November 15, 2001, (collectively "Change in
     Governmental Imposition") shall be passed through to BUYER or SELLER, as
     the case may be, pursuant to Sections C through H below. SELLER and BUYER
     agree that cost changes due to changes in percentage depletion allowance
     shall not qualify as a Change in Governmental Imposition.

C.   There are two categories of Change in Governmental Imposition:

     1.   Any Change in Governmental Imposition that is directly assessed
          against SELLER as a dollar per ton, a dollar per million Btu or as a
          percent of sales price shall be passed in its entirety to BUYER as an
          adjustment to the base prices, subject to the limitations in Section E
          below. Examples include, but are not limited to, regulations impacting
          Btu, carbon, mercury, sodium dioxide, Federal Black Lung, Federal
          Reclamation Fee, Severance Tax, and Federal Coal Royalty.

     2.   Any other Change in Governmental Imposition not described by ARTICLE
          XIV. COAL PRICE, Section C.(1) shall be calculated as follows:

                                       11

<PAGE>

          (a)  The total Change in Governmental Imposition shall be calculated
               for each Mine as each such change is incurred.

          (b)  The total amount calculated pursuant to Subsection (a) above
               shall be divided by the total number of tons produced by the
               respective Mine for the applicable time period involved to yield
               the dollar per ton impact.

          (c)  Every Change in Governmental Imposition pursuant to this
               Subsection (2) will first be rounded to the nearest thousandth of
               a cent and then reduced by $0.10 per ton. If the Change in
               Governmental Imposition is less than $0.10 per ton then there
               shall be no change to the Coal prices.

D.   The following procedure applies when SELLER claims that there has been a
     Change in Governmental Imposition that is eligible to impact Coal prices,
     but the cumulative Coal price increase for the life of this Agreement in
     the Governmental Imposition category is less than or equal to $2.00 per ton
     each in either Subsection C.(1) or Subsection C.(2).

     1.   SELLER shall notify BUYER within sixty days of the effective date of
          any Change in Governmental Imposition. Such notification shall include
          SELLER's non-binding indication of whether the Change in Governmental
          Imposition is significant.

     2.   As soon as possible after such notification, SELLER shall provide
          BUYER with written cost per ton calculations and satisfactory evidence
          of the pertinent Change in Governmental Imposition. Such calculations,
          together with supporting documentation and workpapers will be
          sufficient to allow a knowledgeable person to determine the
          reasonableness and accuracy of SELLER's calculations.

     3.   BUYER shall have ninety (90) days to review the materials provided by
          SELLER pursuant to Subsection (2) above and provide SELLER with notice
          of acceptance or dispute of such Change in Governmental Imposition and
          resulting Coal price adjustments.

     4.   If BUYER accepts SELLER's calculation of the Change in Governmental
          Imposition, the Coal prices will be adjusted retroactively for a
          period beginning (i) on the effective date of such Change in
          Governmental Imposition if SELLER's notice of the same was within the
          sixty day deadline referenced in Subsection (1) above; or (ii) sixty
          days prior to the date of SELLER's initial notification if SELLER
          failed to comply with such deadline. BUYER or SELLER as the case may
          be shall make payment of a Change in Governmental Imposition that is
          retroactive within 20 days of SELLER's invoice or credit memorandum,
          and the per ton impact shall be reflected in the revised Coal prices
          for subsequent deliveries.

     5.   If BUYER or SELLER disputes such calculations, then BUYER and SELLER
          shall have up to sixty days from the notice of dispute to resolve the
          dispute. If the dispute cannot be resolved within the sixty day
          period, then the dispute shall be arbitrated as set forth in ARTICLE
          XXIII. DISPUTE RESOLUTION, as modified by this Subsection. The sole
          questions for the arbitrator to decide will be the correct amount of
          Change in Governmental Imposition and the corresponding change in Coal
          prices. If BUYER or SELLER elect to arbitrate a dispute arising from a
          Change in Governmental Impositions, then BUYER and SELLER agree to be
          bound by the arbitrators' ruling and apply it retroactively to the
          effective date of such Change in Governmental Imposition pursuant to
          Paragraph 4 of this Section (D) and this Agreement shall not be
          terminated as a result of the arbitrators' ruling.

                                       12

<PAGE>

E.   When the Changes in Governmental Impositions described by ARTICLE XIV. COAL
     PRICE, Section C.(I) reach a cumulative amount exceeding $2.00 per ton,
     then these additional procedures will apply following the ninety day review
     period referenced in Section (D)(3).

     1.   If BUYER accepts the validity of the charge, BUYER and SELLER agree to
          meet to discuss which, if either party, agrees to absorb the amount of
          the ARTICLE XIV. Section C.(1) cost that exceeds $2.00 per ton. Such
          meeting shall take place within 5 days of BUYER's notice of acceptance
          as provided for in this ARTICLE XIV. COAL PRICE, Section D.(3). If
          either party agrees to absorb such amount, then this Agreement shall
          remain in full force and effect. If neither party agrees to absorb
          such amount, then this Agreement shall terminate 90 days from the
          meeting date. During the final ninety day period, the Coal prices
          shall be adjusted to reflect fifty percent (50%) of the subject
          ARTICLE XIV. COAL PRICE, Section C.(1) charge and shall not be subject
          to any other adjustments for a Change in Governmental Imposition for
          as long as this Agreement remains in effect.

     2.   If BUYER disputes the validity of the charge, such dispute shall be
          resolved pursuant to ARTICLE XIV. COAL PRICE, Section D(5).

F.   When the Change in Governmental Impositions described in ARTICLE XIV. COAL
     PRICE, SECTION C.(2) reach a cumulative amount exceeding $2.00 per ton,
     then these additional procedures will apply following the ninety day review
     period referenced in Section (D)(3).

     1.   If the BUYER accepts the validity of the charge, BUYER and SELLER
          agree to meet to discuss which, if either party, agrees to absorb the
          amount of this ARTICLE XIV. COAL PRICE, Section C.(2) cost that
          exceeds $2.00 per ton. Such meeting shall take place within 5 days of
          BUYER's notice of acceptance as provided for in this ARTICLE XIV. COAL
          PRICE, Section D.(3). If either party agrees to absorb such amount,
          then this Agreement shall remain in full force and effect. If neither
          party agrees to absorb such amount, then this Agreement shall
          terminate ninety (90) ~ days from the meeting date. During the final
          ninety day period, the Coal prices shall be adjusted to reflect fifty
          percent (50%) of the subject ARTICLE XIV. COAL PRICE(C)(2) charge and
          shall not be subject to any other adjustments for a Change in
          Governmental Imposition for as long as this Agreement remains in
          effect.

     2.   If BUYER disputes the validity of the charge, such dispute shall be
          resolved pursuant to this ARTICLE XIV. COAL PRICE, Section D.(5).

G.   In the event that BUYER contends that SELLER has failed to claim and
     calculate an available Change in Governmental Imposition, the parties agree
     as follows:

     1.   BUYER will give SELLER notice within sixty (60) days of the effective
          date that it believes that a Change in Governmental Imposition has
          provided a cost saving opportunity that should be passed through
          retroactively as of the effective date of such Change in Governmental
          Imposition to BUYER by an adjustment to the Coal prices. If BUYER
          fails to notify SELLER of a Change in Governmental Imposition within
          the required sixty day period, then the effective date of the Change
          in Governmental Imposition would then become sixty days prior to the
          date of BUYER's initial notification, unless the discovery of a Change
          in Governmental Imposition occurs during annual audit by BUYER as set
          forth in ARTICLE XIX. AUDIT/INSPECTION when the effective date of any
          change in Coal prices shall be the effective date of the Change in
          Governmental Imposition.

                                       13

<PAGE>

     2.   SELLER will then calculate the available cost changes related to such
          Change in Governmental Imposition as soon as possible and calculate
          the related adjustment to the Coal prices. SELLER shall provide BUYER
          with its calculations and related documentation sufficient to allow a
          knowledgeable person to determine the reasonableness and accuracy of
          the possible cost change on a dollar per ton basis.

     3.   BUYER shall have ninety (90) days after receiving such documentation,
          to give SELLER notice of acceptance or dispute of such calculations.
          If BUYER disputes such calculations, then such dispute will be
          resolved pursuant to this ARTICLE XIV. COAL PRICE, Section D.(5).

H.   BUYER and SELLER mutually agree that time is of the essence as it relates
     to the obligations of the parties under this ARTICLE XIV. COAL PRICE.

XV.  HEAT CONTENT ADJUSTMENT

In the event the weighted average heat content of all Coal shipped in any
calendar month is less than the guaranteed Btu/lb as specified in this ARTICLE
XV. HEAT CONTENT ADJUSTMENT, then a Heat Content Penalty in an amount determined
by the following formula, shall apply. Heat content adjustments shall be
calculated separately for each Mine from which Coal was shipped hereunder

     Heat Content Penalty = Price Per Ton x Btu I- Btu2 x Tons Shipped
                                            -----------
                                              Btul

In the event the weighted average heat content of all Coal shipped in any
calendar month is greater than the guaranteed Btu/lb as specified in this
ARTICLE XV. HEAT CONTENT ADJUSTMENT, then a Heat Content Premium in an amount
determined by the following formula shall apply:

     Heat Content Premium=Price Per Ton x Btu2- Btu 1 x Tons Shipped
                                          -----------
                                             Btu l

     Where:

          "Price Per Ton" =          The price set forth in ARTICLE XIV. COAL
                                     PRICE for the Mine in dollars per ton;

          "Btu l" =                  The guaranteed heat content in
                                     Btu/lb (as received basis) as
                                     follows: Sufco - 11,400, Skyline -
                                     11,710, Dugout -- 11,960;

          "Btu2" =                   The weighted average as received
                                     heat content (as determined in
                                     accordance with ARTICLE IX. SAMPLING
                                     AND ANALYSIS) for all Coal shipped
                                     for the month from the Mine;

          "Tons Shipped" =           The total number of tons of Coal received
                                     for the contract month.

There shall be no Heat Content Premium or Penalty for the month if the weighted
average Btu content of all Coal shipped from the Mine in that month is greater
than or equal to [Btu1 - 50 Btu/lb.], but less than or equal to [Btu1 + 50
Btu/1b.].

BUYER shall send SELLER a written calculation of the Heat Content Penalty or
Premium by Mine within thirty (30) days after the end of each month. Payment or
credit shall be made within fifteen (15) days of receipt of the written
calculation.

                                       14

<PAGE>

XVI. S02 ADJUSTMENTS

If the weighted average pounds of S02 per million BTU (lbs S02/MMBTU) on an as
received basis of all shipments accepted by BUYER in a calendar month from a
Mine differs from the base lbs S02/MMBTU for that Mine, then a S02 adjustment in
an amount determined by the following formula shall apply

     Sulfur Adjustment = (Base S02 - Actual S02) X (BTU2) X (Value S02)
                         ----------------------------------------------
                                            1,000,000

     Where:

          "Base S02" =   The specification in lbs S02/MMBTU (as received basis)
                         for the Mine as follows: Sufco - 0.80, Skyline - 0.74,
                         Dugout -1.04;

          "Actual S02" = The weighted average lbs S02/MhlBTU (as received
                         basis) for that Mine (as determined in accordance with
                         ARTICLE IX. SAMPLING AND ANALYSIS) for all Coal shipped
                         for the month from the Mine;

          "Btu2" =       The weighted average as received heat content
                         (as determined in accordance with ARTICLE IX. SAMPLING
                         AND ANALYSIS) for all Coal shipped for the month from
                         the Mine;

          "Value S02" =  The average price of S02 allowances for the
                         month in dollars per ton of S02 determined by summing
                         the "Air Daily Market Price Indices" during the month
                         divided by the number of indices published in "Air
                         Daily" during the month.

     Lbs S02/MMBTU shall be calculated as follows:

          Lbs S02/MMBTU = % Sulfur x 20,000
                          -----------------
                               BTU/lb

BUYER shall send SELLER a written calculation of the S02 adjustment by Mine
within thirty (30) days after the end of each month. Payment shall be mailed by
SELLER within twenty (20) days of receipt of the written calculation. If an
additional payment is due SELLER, BUYER shall make payment within twenty (20)
days of SELLER's review of BUYER's written calculations.

XVII. PAYMENT

By the tenth day of the month, SELLER shall send BUYER an invoice for all Coal
received in the previous month. The invoice shall include train numbers, tonnage
per train, price per ton, Mine, and Loading Facility. Invoices should be sent
to:

          Fuels Accountant, General Accounting Department
          Sierra Pacific Power Company
          P.O. Box 98910
          Las Vegas, NV 89151

Payment for the Coal shall be made by BUYER within twenty (20) days of receipt
of the invoice.

                                       15

<PAGE>

XVIII. FORCE MAJEURE

A.   Definition of Force Majeure. The term "force majeure" as used in this
     Agreement shall mean any causes beyond the control and not caused by the
     fault or negligence of the affected party that the affected party is unable
     to overcome or mitigate, such as Acts of God, acts of the public enemy,
     insurrections, riots, strikes, or labor disputes, power, labor or material
     shortages, fires, explosions, floods, breakdowns of or damage to plants,
     mines, equipment or facilities, interruptions to or contingencies of
     transportation, embargoes, court or commission orders, inability to obtain
     necessary permits, licenses, and governmental approvals after applying for
     same with reasonable diligence, unforeseen mining conditions, unforeseen
     geologic faults, or other causes of a similar nature that wholly or
     partially prevent the mining, loading, and/or delivery of Coal by SELLER
     from the Mines, or the receiving, unloading or consuming of Coal by BUYER
     in the generation of electricity at any of units at the Station or other
     generating stations then receiving Coal under this Agreement, or the
     transmission of electricity; provided, however, that the excuse of force
     majeure shall not be available to SELLER if the delay or failure in its
     performance arises from a defect in the rights entitling SELLER to mine and
     remove Coal at the Mines. Failure to prevent or settle any strike or labor
     trouble shall be considered beyond the control of the party claiming such
     excuse for nonperformance. The party claiming force majeure shall give
     prompt notice by telephone as soon as possible after the occurrence of the
     event of force majeure and shall promptly give the other party written
     notice describing the nature of the occurrence and its probable duration.

B.   Suspension of Obligations. Neither party shall be under any obligation nor
     subject to any liability (except payment of invoices for Coal already
     delivered) for failure to perform any of its obligations under this
     Agreement as the result of a force majeure event, and the obligations of
     the party claiming force majeure shall be suspended to the extent made
     necessary by such force majeure and during its continuance. Should the
     situation of a total force majeure at one or more Mine(s) exceed twelve
     months, the party not claiming force majeure shall have the option to
     terminate the Mine source(s) under this Agreement upon sixty days written
     notice.

C.   Full or Partial Force Majeure Tonnage Allocation. During the period that an
     event of force majeure causes a complete reduction in the total quantity of
     Coal SELLER can deliver from one or more Mines, deliveries shall cease from
     the affected Mine(s) and shall continue from the unaffected Mine(s) in
     accordance with the schedule set forth in ARTICLE IV. ORDERING, Section B.,
     from the unaffected Mine(s). During the period that an event of force
     majeure causes a partial reduction in the total quantity of Coal SELLER can
     deliver from the affected Mine(s), SELLER first shall continue to deliver
     Coal from the unaffected Mine(s) in accordance with the schedule set forth
     in ARTICLE IV. ORDERING, Section B., and then curtail any spot deliveries
     from the affected Mine(s) that SELLER is not committed to sell. If
     necessary, SELLER shall apportion the Coal that it is able to deliver from
     the affected Mine(s) pro rata among the BUYER and all other customers
     supplied Coal from the affected Mine(s) under existing agreements. During
     the period that an event of force majeure causes a partial reduction in the
     total quantity of Coal that BUYER can consume at the Station , BUYER shall
     apportion its Coal requirements pro rata among SELLER and any other parties
     with whom BUYER has contracted to supply Coal to the Station. The party not
     invoking force majeure shall have the right to require the make-up of
     deliveries suspended during the force majeure, subject to a mutually
     acceptable scheduling of such make-up deliveries. The price for make-up of
     such force majeure tonnage shall be as follows:

     .    If the force majeure was declared by the SELLER, then the price shall
          be the price in effect at the time the force majeure was declared by
          the SELLER.

     .    If the force majeure was declared by the BUYER, then the price shall
          be the price in effect at the time the Coal deliveries are made up.

                                       16

<PAGE>

XIX. AUDIT/ INSPECTION

BUYER, and its authorized agents which have signed appropriate confidentiality
agreements with SELLER, at BUYER's risk and expense, shall have the right to
make inspections of the properties and related operations of SELLER insofar as
may be reasonably required to verify SELLER'S representations and claims
relating to the performance of its obligations hereunder. In addition, BUYER or
SELLER, upon request, shall furnish the other party and its agents with all
information which may be reasonably required to verify quality specifications
and to calculate any prices hereunder including verification of any and all
passthrough costs. BUYER, upon request to SELLER, at BUYER's risk and expense,
shall have the right to verify by audit all information regarding quantity
requirements, quality specifications and prices charged hereunder. SELLER shall
maintain all such records for a period of twenty-four (24) months from the
creation of the records.

XX.  NOTICES

Unless otherwise provided in this Agreement, all notices under this Agreement
shall be in writing and shall be sufficient in all respects if delivered in
person or sent by overnight mail service to:

          BUYER:

          Fuels Department
          Sierra Pacific Power Company
          P.O. Box 98910
          Las Vegas, NV 89151

          SELLER:

          J. Thomas Dilley
          Vice President Administration
          Arch Coal Sales Company, Inc.
          CityPlace One, Suite 350
          St. Louis, MO 63141

XXI. FREEZE CONDITIONING & DUST SUPPRESSION

SELLER shall allow BUYER or its representatives to use BUYER's own equipment or
SELLER's equipment to apply freeze conditioning or dust suppressant agents to
the Coal supplied herein. The cost of the chemicals used in any such treatment
shall be borne by BUYER. At BUYER's option, SELLER shall apply a freeze
conditioning or dust suppression agent(s) at a rate (pints per ton) to be
specified by the BUYER as the Coal purchased and sold hereunder is loaded into
railcars. Such agents shall be approved by BUYER. As full compensation for
applying the agents, BUYER shall pay the direct cost of purchasing the agent
applied to the Coal purchased and sold hereunder. SELLER shall submit invoices
for the agents monthly, which shall be accompanied by documentation satisfactory
to BUYER. For billing purposes, SELLER agrees to deduct the weight of any freeze
and/or dust conditioning agent from the total weight of each Coal railcar if
these chemicals are added prior to weighing the loaded railcar. Specific
procedures for determining and administering these weight adjustments will be
coordinated among BUYER's Joint Facility Accounting Department, the freeze
and/or dust conditioning agent supplier, and SELLER. BUYER will pay invoices
within twenty (20) days of receipt of invoices.

                                       17

<PAGE>

XXII. CAPTIONS AND SEVERABILITY

All ARTICLE captions are inserted for convenience and shall not affect the
interpretation of this Agreement. Any provision of the Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.

XXIII. DISPUTE RESOLUTION

A.   The parties will attempt in good faith to resolve any controversy or
     disagreement arising out of or relating to this Agreement, including the
     breach or termination thereof, (hereinafter collectively referred to as
     "Dispute") promptly by negotiation between senior executives of the parties
     who have authority to settle the controversy.

B.   The disputing party shall give the other party written notice of the
     Dispute. Within ten (10) days after receipt of said notice, the receiving
     party shall submit to the other a written response. The notice and response
     shall include (a) a statement of the respective position of each party and
     a summary of the evidence and arguments supporting its position, and (b)
     the name and title of the executive who will represent the party. The
     executives shall meet at a mutually acceptable time and place within twenty
     (20) days of the disputing party's notice and thereafter as often as they
     reasonably deem necessary to exchange relevant information and to attempt
     to resolve the Dispute.

C.   If the parties are unable to resolve the Dispute through negotiation, then
     the Dispute shall be subject to arbitration as hereafter set forth. This
     Agreement, so to arbitrate, and any other agreement or consent to arbitrate
     entered into in accordance herewith, will be specifically enforceable under
     the prevailing law of any court located in Nevada having jurisdiction.

D.   Notice of the demand for arbitration must be filed in writing with the
     other party to the Agreement. The demand must be made within a reasonable
     time, not to exceed sixty (60) days, after the Dispute has arisen.

E.   Unless the parties otherwise agree in writing, all arbitrations shall be
     heard by a panel of three (3) arbitrators experienced in the coal or
     electric generating utilities industries. Each party shall have the right
     to appoint, at its sole discretion, one arbitrator. The two party-appointed
     arbitrators shall select a third arbitrator, who shall act as the
     Chairperson of the Panel. In the event the party appointed arbitrators are
     unable or unwilling to agree upon a third arbitrator, the Chief Judge of
     the Federal District Court of the State of Nevada shall select the third
     arbitrator.

F.   Once the full Panel has been appointed, the parties shall be entitled to
     review and copy records within the control or custody of the other party
     which would be discoverable under the Federal Rules of Civil Procedure.
     Depositions shall only be allowed at the discretion of two members of the
     Panel.

G.   The award rendered by a majority of the arbitrators will be final and
     binding upon the parties. Judgment may be entered upon the arbitration
     award in any court having jurisdiction thereof, and will not be subject to
     modification or appeal except to the extent permitted by Sections 10 and 1
     I of the Federal Arbitration Act (9 U.S.C. ss.ss.10,11).

H.   Pending resolution of any dispute or disagreement between the parties under
     this Agreement, both parties shall diligently proceed with their
     performance under this Agreement in accordance with BUYER's interpretation
     thereof, and neither BUYER's or SELLER's legal rights shall be prejudiced
     because they continue to perform. BUYER shall continue to pay the price for
     Coal calculated pursuant to ARTICLE XIV. COAL PRICE, as that provision and
     the calculation of the price, or any damages, costs, expenses, etc., are
     determined by BUYER.

                                       18

<PAGE>

I.   Interest on any amounts not paid in full, withheld by BUYER or to be paid
     by either party for any reason shall be calculated by reference to the
     prime interest rate as listed in the Wall Street Journal, Money Rate
     section, as of the date such amount was due or incurred.

XXIV. INDEPENDENT CONTRACTOR

This is an agreement for the purchase and sale of Coal in which the parties
recognize and agree that SELLER is not an agent or employee of BUYER but is an
independent contractor.

XXV. 1NDEMVIFICATION

SELLER indemnifies and holds BUYER harmless from and against all claims and
liabilities (including, without limitation, attorneys' fees and expenses), from
whatever source, related to or deriving from SELLER's mining, processing,
trucking, and loading activities, or its sale and delivery of Coal to BUYER.

BUYER indemnifies and holds SELLER harmless from and against all claims and
liabilities (including, without limitation, attorney's fees and expenses), from
whatever source, related to or deriving from BUYER's rail transportation, except
as otherwise provided for in this Agreement, and utilization of the Coal sold
hereunder.

XXVI. WAIVER/FAILURE TO INSIST ON STRICT COMPLIANCE

The failure of either party at any time or from time to time to insist upon
strict compliance with any provision of this Agreement, or to exercise any right
hereunder shall not be construed as a waiver of any provision or right.

XXVII. ENTIRE AGREEMENT

This Agreement contains the entire agreement between the parties and there are
no representations, understandings or agreements, oral or written which are not
included herein. This Agreement cannot be modified except in writing by duly
authorized representatives of the parties.

XXVIII. ASSIGNMENTS

The Agreement may not be assigned wholly or in part by either party without the
written consent of the other party, which consent shall not be unreasonably
withheld; provided however, that either party, without the written consent of
the other, may assign this Agreement to a successor in interest of any party by
way of a merger or consolidation, or to a company controlled by, or under common
control with SELLER or, in the case of BUYER, the sale of all or a substantial
portion of its coal-fired generation assets. Any party making an assignment
under this ARTICLE XXVIII. ASSIGNMENTS, shall give notice thereof to the other
party within a reasonable time prior to the effective date of the assignment.
The assignee shall become liable for all terms and conditions as if such party
was signatory to the Agreement. Notwithstanding the foregoing, any party may,
without the need for consent from the other party (and without relieving itself
from liability hereunder), transfer, sell, pledge, encumber or assign this
Agreement or the accounts, revenues or proceeds hereof or thereof in connection
with any bank financing or security arrangements, provided, however, that no
such assignment shall in any way relieve the assignor from liability for full
performance under this Agreement. Any such assignee shall assume and agree to be
bound by the terms and conditions of this Agreement.

                                       19

<PAGE>

XXIX. NON-DISCLOSURE

The Agreement, the terms and conditions (including but not limited to pricing)
set forth in this Agreement and the information exchanged during the negotiation
of this Agreement are considered by both BUYER and SELLER to be confidential and
proprietary. Neither BUYER nor SELLER shall disclose any of the terms and
conditions hereof or any such information to any third party without the prior
written consent of the other, except when such disclosure is required (a) by
statute; (b) in connection with a judicial or administrative proceeding; or (c)
by order of a government agency having jurisdiction over BUYER or SELLER or the
subject matter of this Agreement, in which the party intending to make such
disclosure shall notify the other in writing in advance and shall cooperate to
the extent practicable to minimize the disclosure of any such information. BUYER
may disclose the terms and conditions of this Agreement (including pricing) to
IPC. For the purposes of this ARTICLE XXIX. NON-DISCLOSURE, the term "third
party" shall not include a parent, subsidiary or affiliate of either party
hereto.

XXX. CHOICE OF LAW - JURISDICTION

This Agreement and any matter arising out of or related thereto shall be
governed, construed, enforced and performed in accordance with the laws of the
State of Nevada. Venue for any cause of action arising under this Agreement
shall be brought in Clark County, Nevada.

XXXI. LIMITATION OF LIABILITY

In no event shall either party have any liability to the other party for any
special, incidental or consequential damages, including lost profits, for any
reason arising out of, or in connection with this Agreement.

IN WITNESS WHEREOF, the undersigned hereby causes this Agreement to be duly
executed this 28th day of February, 2002.

BUYER:  SIERRA PACIFIC POWER COMPANY

By:
         --------------------------------------------

Title:
         --------------------------------------------

SELLER:  ARCH COAL SALES COMPANY

By:
         --------------------------------------------

Title:
         --------------------------------------------

                                       20<PAGE>

                                                                   Exhibit 10.15

STATE OF GEORGIA

COUNTY OF GORDON

                                COMMERCIAL LEASE

     THIS LEASE, made this 16/th/ day of NOVEMBER, 2001, by and between OSTOW
HOLDINGS, L.L.C. c/o Mr. Stanley J. Ostow, 55 Lookout Circle, Larchmont, N.Y.
10538 (hereinafter referred to as "Landlord"); and ALADDIN MANUFACTURING
CORPORATION (hereinafter referred to as "Tenant").

                                  WITNESSETH:

                                    Premises

1.   That Landlord, for and in consideration of the rents, covenants, agreements
, and stipulations hereinafter mentioned, reserved, and contained, to be paid,
kept and performed by Tenant, has leased and rented, and by these presents does
lease and rent, unto Tenant, and Tenant hereby leases and takes upon the terms
and conditions which hereinafter appear, the following described property
(hereinafter called "the premises") to wit:

            ONE HUNDRED FORTY THOUSAND SQUARE FEET OF WAREHOUSE SPACE
            REPRESENTING A PORTION OF THE PREMISES AT 501 OAK STREET,
             CALHOUN GEORGIA AS DESIGNATED AND AGREED UPON BETWEEN
          LANDLORD AND TENANT AND SHOWN ON EXHIBIT B ATTACHED HERETO.

<PAGE>

                                     [PLAN]

<PAGE>

                                  TERM

2.   Tenant shall have and hold the premises for a term beginning on the 1/st/
day of January, 2002 ending on the 31st day of December, 2003 at midnight unless
sooner terminated or extended as hereinafter specifically provided in this
Lease.

                                     RENTAL

3.   Tenant shall pay Landlord, by payments to F B & F HOLDING CO., L.L.C. P.O.
Box 2409, Calhoun, Georgia, 30703 (hereinafter called "Manager") or at such
other address of which Tenant shall from time to time otherwise be notified,
promptly on the first day of each month in advance, during all terms of this
Lease a monthly rental of $17,600. All amounts payable under this lease by
Tenant to Landlord, if not paid when due, will bear interest from the due date
until paid at the highest rate permitted by law.

                                    UTILITY

4.   Tenant shall pay all water, sewer, sewer service charges, gas, electricity,
fuel, light, heat and power bills for permises or used by Tenant in connection
therewith, during all terms of this Lease. If Tenant does not pay such bills or
charges Landlord may pay the same, and such payments shall be added to the
following month's rental of premises. Notwithstanding any payments of such bills
and charges by the Landlord, Tenant's failure to pay such bills and charges when
and as due shall constitute a default under this Lease and will give the
Landlord, interalia, the right to cancel this Lease as provided hereinafter in
Paragraph Sixteen (16).

                              USE OF THE PREMISES

5.   The premises shall be used specifically for warehousing only and no other
purposes whatsoever. The premises shall not be used for any illegal purposes;
nor in any manner to create any nuisance or trespass; nor in any manner to
vitiate the insurance or increase the rate of insurance on premises.

<PAGE>

                          ABANDONMENT OF THE PREMISES

6.   Tenant may abandon or vacate the premises during any term of this Lease but
shall maintain premises only for the aforesaid purpose herein leased until the
expiration of the final term hereof.

                              REPAIRS BY LANDLORD

7.   Landlord shall keep in good repair the roof, foundations and exterior walls
of the premises, and sewer pipes outside the exterior walls of the building in
which the premises is located, except repairs rendered necessary by the
negligence, wilful act or omission of Tenant, Tenant's agents, employees and
invitees. Landlord hereby gives Tenant exclusive control of the premises, and
Landlord shall be under no obligation to inspect the premises. Tenant shall
promptly report in writing to Landlord any defective condition known to Tenant
which Landlord is required to repair, and failure to so report such defects
shall make Tenant responsible to Landlord for any liability incurred by Landlord
by reason of such defects.

                               REPAIRS BY TENANT

8.   Tenant accepts the premises in its present condition and as suited for the
uses intended by Tenant. Tenant shall, throughout all terms of this Lease, at
Tenant's expense, maintain the premises in good order and repair, except those
repairs expressly required in Paragraph 7 hereof to be made by Landlord. Tenant
further agrees to care for and clean the ground surrounding the building,
including the removal of snow, mowing of grass, cleaning of the paved areas, and
general landscaping. Tenant shall return the premises to Landlord at the
expiration, or prior to termination, of the term of this Lease in as good
condition and repair as when first received, natural wear and tear expected.

<PAGE>

                     DESTRUCTION OF OR DAMAGE TO PREMISES

10.  (a) If the premises or any part thereof shall be damaged by fire or other
casualty, Tenant shall give immediate notice thereof to Landlord and Manager,
and this Lease shall continue in full force and effect except as hereinafter set
forth.

     (b) If the premises are partially damaged or rendered partially unusable by
fire or other casualty, not caused by Tenant, the damages thereto shall be
repaired by and at the expense of the Landlord and the rent, until such repair
shall be substantially completed, shall be apportioned from the day following
the casualty according to the part of the premises which is usable.

     (c) If the premises are totally damaged or rendered wholly unusable by fire
or other casualty, not caused by Tenant, then the rent shall be proportionately
paid up to the time of

<PAGE>

the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Landlord, subject to Landlord's right to
elect not to restore the same as hereinafter provided.

     (d)  If the premises are rendered wholly unusable or (whether or not the
premises are damaged in whole or in part) if the building shall be so damaged
that Landlord shall decide to demolish it or to rebuild it; then, in any of such
events, Landlord may elect to terminate this lease by written notice to Tenant,
given within 90 days after such fire or casualty, specifying a date for the
expiration of the lease, which date shall not be more than 60 days after the
giving of such notice, and upon the date specified in such notice the term of
this lease shall expire as fully and completely as of such date were the date
set forth above for the termination of this lease and Tenant shall forthwith
quit, surrender and vacate the premises without prejudice, however, to
Landlord's rights and remedies against Tenant under the lease provisions in
effect prior to such termination, and any rent owing shall be paid up to such
date and any payments of rent made by Tenant which were on account of any period
subsequent to such date shall be returned to Tenant unless such damages were
caused by Tenant, in which event Tenant shall not be entitled to the return of
any rent. Unless Landlord shall serve a termination notice as provided for
herein, Landlord shall make the repairs and restorations under the conditions of
(b) and (c) hereof, with all reasonable expedition, subject to delays due to
adjustment of insurance claims, labor troubles and causes beyond Landlord's
control. After any such casualty, Tenant shall cooperate with Landlord's
restoration by removing from the premises as promptly as reasonably possible,
all of the Tenant's salvageable inventory and movable equipment, furniture and
other property. Tenant's liability for rent shall resume five (5) days after
written notice from Landlord that

<PAGE>

the premises are substantially ready for Tenant's occupancy.

     (e)  Nothing contained hereinabove shall relieve Tenant from liability that
may exist as a result of damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its favor before
making any claim against the other party for recovery for loss or damage
resulting from fire or other casualty, and to the extent that such insurance is
in force and collectible and to the extent permitted by law, Landlord and Tenant
each hereby releases and waives all right of recovery against the other or any
one claiming through or under each of them by way of subrogation or otherwise.
The foregoing release and waiver shall be in force only if both releasors'
insurance policies contain a clause providing that such a release or waiver
shall not invalidate the insurance. If, and to the extent, that such waiver can
be obtained only by the payment of additional premium, then the party
benefitting from the waiver shall pay such premium within ten days after written
demand or shall be deemed to have agreed that the party obtaining insurance
coverage shall be free of any further obligation under the provisions hereof
with respect to waiver of subrogation. Tenant acknowledges that Landlord will
not carry insurance on Tenant's furniture, furnishings, equipment, fixtures,
inventory, improvements or appurtenances removable by Tenant and agrees that
Landlord will not be obligated to repair any damage thereto or replace the same,

                                   INDEMNITY

11.  Tenant agrees to and hereby does, indemnify and save Landlord harmless
against all claims for damages to persons or property by reason of Tenant's use
or occupancy of the premises, and all expenses incurred by the Landlord because
thereof, including attorney's fees and court costs.

<PAGE>

                              REQUIREMENTS OF LAW

12.   Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders, and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the State Fire Marshall of Georgia or
any similar body which shall impose any violation, or order or duty upon
Landlord or Tenant with respect to the premises, whether or not arising out of
Tenant's use or manner of use thereof, (including Tenant's permitted use) or,
with respect to the building if arising out of Tenant's use or manner of use of
the premises or the building (including the use permitted under the lease).
Nothing herein shall require Tenant to make structural repairs or alterations
unless Tenant has, by its manner of use of the premises or method of operation
therein, violated any such laws, ordinances, orders, rules, regulations or
requirements with respect thereto. Tenant may after securing Landlord to
Landlord's satisfaction against all damages, interest, penalties and expenses,
including but not limited to reasonable attorney's fees, by cash deposit or by
surety bond in an amount and in a company satisfactory to Landlord, contest and
appeal any such laws, ordinances, orders, rules, regulations or requirements
provided same is done with all reasonable promptness and provided such appeal
shall not subject Landlord to prosecution for a criminal offense or constitute a
default under any lease or mortgage under which Landlord may be obligated, or
cause the premises or any part thereof to be condemned or vacated. Tenant shall
not do or permit any act or thing to be done in or to the premises which is
contrary to law, or which will invalidate or be

<PAGE>

in conflict with the public liability, fire or other policies of insurance at
any time carried by or for the benefit of Landlord with respect to the premises
or the building of which the premises form a part, or which shall or might
subject Landlord to any liability or responsibility to any persons or for
property damage. Tenant shall not keep anything in the premises except as now or
hereafter permitted by the State Fire Marshall of Georgia or other authority
having jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect prior to the commencement of
Tenant's occupancy. Tenant shall pay all costs, expenses, fines, penalties, or
damages which may be imposed upon Landlord by reason of Tenant's failure to
comply with the provisions of this article and if by reason of such failure the
fire insurance rate shall at the beginning of this lease or any time thereafter,
be higher than it otherwise would be, then Tenant shall reimburse Landlord, as
additional rent hereunder, for that portion of all fire insurance premiums
thereafter paid by Landlord which shall have been charged because of such
failure of Tenant. Tenant shall not place a load upon any floor of the premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Landlord reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment.

Such installations shall be placed and maintained by Tenant at Tenant's expense
in settings sufficient, in Landlord's judgement, to absorb and prevent
vibration, noise and annoyance.

<PAGE>

                                  CONDEMNATION

13.  If the whole of the premises, or such portion thereof as will make premises
unusable for the purposes herein leased, be condemned by any legally constituted
authority for any public use or purposes, then in either of said events this
Lease shall cease from the time when possession thereof is taken by public
authorities, and rental shall be accounted for as between Landlord and Tenant as
of that date. Such termination, however, shall be without prejudice to the
rights of either Landlord or Tenant to recover compensation and damage caused by
condemnation from the condemnor. It is further understood and agreed that Tenant
shall not have any rights in any award made by any condemnation authority
notwithstanding the termination of this Lease as herein provided.

                           ASSIGNMENT AND SUBLETTING

14.  Tenant shall not, without the prior written consent of the Landlord
endorsed hereon, assign or encumber this Lease or any interest hereunder, or
sublet premises or any part thereof, or permit the use of premises by any other
party other than Tenant, Unless such assignment is to a division or subsidiary
of Tenant. Landlord's consent to any assignment, encumbrance or sublease shall
not constitute consent to any further assignments, encumbrances or subleases,
which shall be made likewise only on the prior written consent of Landlord.
Assignee of Tenant, at option of Landlord, shall become directly liable to
Landlord for all obligations of Tenant hereunder, but no sublease or assignment
by Tenant shall relieve Tenant of any liability hereunder.

<PAGE>

              TENANT ALTERATIONS, REMOVAL OF FIXTURES AND PROPERTY

15. Tenant shall make no changes in or to the premises of any nature without the
Landlord's prior written consent. Subject to the prior written consent of the
Landlord, and to the provisions of this article, Tenant at Tenant's expense, may
make alterations, installations, additions or improvements which are
nonstructural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the premises by using contractors or
mechanics first approved by Landlord. Tenant shall, before making any
alterations or additions, installations, or improvements, at its expense, obtain
all permits, approvals and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Landlord and Tenant agrees to carry and will cause the Tenant's
contractors and subcontractors to carry such workman's compensation, general
liability, personal and property damage insurance as Landlord may require. If
any mechanic's or materialman's lien is filed against the premises for work
claimed to have been done for, or material furnished to Tenant, whether or not
done pursuant to this article, the same shall be discharged by Tenant within
thirty (30) days thereafter, at Tenant's expense, by filing the bond required by
law. All fixtures and all paneling, partitions, railings and like installations,
installed in the premises at any time, either by Tenant or Landlord in Tenant's
behalf, shall, upon installation, become the property of Landlord and shall
remain upon and be surrendered with the premises unless Landlord, by notice to
the Tenant no later than twenty (20) days prior to the date fixed as the
termination of this Lease, elects to relinquish

<PAGE>

the Landlord's rights thereto and to have them removed by Tenant, in which event
the same shall be removed from the premises by Tenant, under Landlord's
supervision, prior to the expiration of the Lease, at Tenant's expense. Nothing
in this article shall be construed to give Landlord title to or prevent Tenant's
removal of trade fixtures, moveable office furniture and equipment, but upon
removal of any such from the premises or upon removal of other installations as
may be required by the Landlord, Tenant shall immediately and at its expense,
repair and restore the premises to the condition existing prior to the
installation and repair any damage to the premises due to such removal. All
property permitted or required to be removed by Tenant at the end of the term
remaining in the premises after Tenant's removal shall be deemed abandoned and
may, at the election of Landlord, either be retained as Landlord's property or
may be removed from the premises by Landlord at Tenant's expense.

                       CANCELLATION OF LEASE BY LANDLORD

16.  It is mutually agreed that, in the event Tenant shall default in the
payment of rent herein reserved, when due; or if Tenant shall be in default in
performing any of the terms or provisions of this Lease other than the
provisions requiring the payment of rent, and fails to cure such default within
thirty (30) days after the date of written notice of default from Landlord; or
if Tenant is adjudicated bankrupt; or if a permanent receiver is appointed for
Tenant's property and such receiver is not removed within sixty (60) days after
written notice from Landlord to Tenant to obtain such removal; or if, whether
voluntary or involuntary, Tenant takes advantage of any debtor relief
proceedings under any present or future law, whereby the rent or any part
thereof, or is proposed to be reduced or payment thereof deferred; or if Tenant
makes an assignment for the benefit of creditors; or if Tenant's effects

<PAGE>

shall be levied upon or attached under process against Tenant, not satisfied or
dissolved within thirty (30) days after written notice from Landlord to Tenant
to obtain satisfaction thereof; then, and in any of said events, Landlord at its
option may terminate this Lease by written notice to Tenant; whereupon this
Lease shall end. Any notice provided in this Paragraph 16 may be given by
Landlord, Landlord's attorney, Manager or Manager's attorney. Upon such
termination by Landlord, Tenant will at once surrender possession of premises to
Landlord and remove therefrom all of Tenant's effects in which Landlord claims
no interest under Paragraph 15 of this Lease; and Landlord shall have the right
forthwith to re-enter premises and repossess itself thereof, and remove all
persons and effects therefrom, using such force as may be necessary without
being guilty of trespass, forcible entry or detainer or other tort.

                             RELETTING BY LANDLORD

17.  In the case of any default, re-entry, expiration and/or disposes by summary
proceedings or otherwise, (a) the rent shall become due thereupon and be paid up
to time of such re-entry, disposes, and/or expiration, (b) Landlord may re-let
the premises or any part or parts thereof, either in the name of the Landlord or
otherwise, for a term or terms, which may at Landlord's option be less than or
exceed the period which would otherwise have constituted the balance of the term
of this lease and may grant concessions or free rent or charge a higher rental
than that in this lease, and/or (c) Tenant or the legal representative of Tenant
shall also pay Landlord as liquidated damages for failure of Tenant to observe
and perform Tenant's covenants herein contained, any deficiency between the rent
hereby reserved and/or covenanted to be paid and the net amount, if any, of the
rents collected on

<PAGE>

account of the lease or leases of the premises for each month of the period
which would otherwise have constituted the balance of the term of this Lease.
The failure of the Landlord to relet the premises or any part or parts thereof
shall not release or affect Tenant's liability for damages. In computing such
liquidated damages there shall be added to the said deficiency such expenses as
Landlord may incur in connection with reletting, such as legal expenses,
attorney's fees, brokerage, advertising and for keeping the premises in good
order or for preparing the same for re-letting. Any such liquidated damages
shall be paid in monthly installments by Tenant on the rent day specified in
this lease and any suit brought to collect the amount of deficiency for any
month shall not prejudice in any way the rights of Landlord to collect the
deficiency for any subsequent month by a similar proceeding. Landlord may, in
putting the demised premises in good order or preparing the same for re-rental,
at Landlord's option, make such alterations, repairs, replacements, and/or
decorations in the premises as Landlord, in Landlord's sole judgement, considers
advisable and necessary for the purpose of re-letting the premises, such repair
or alterations will not exceed condition of premises as originally leased by
Tenant and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from any
liability hereunder as aforesaid. Landlord shall in no event be liable in any
way whatsoever for failure to re-let the premises, or in the event that the
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Landlord
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Landlord shall have the right of injunction and
the right to invoke any remedy allowed at law or in equity as if re-entry,
summary proceedings and other remedies were not herein provided for. Mention in
this lease of any particular

<PAGE>

remedy shall not preclude Landlord from any other remedy in law or equity.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
the premises by reason of the violation by Tenant of any of the covenants and
conditions of this lease or otherwise.

                                 EXTERIOR SIGNS

18.  Tenant shall place no signs upon the outside walls or roof of the premises
except with prior written consent of Landlord. Any and all signs placed on the
premises by Tenant shall be maintained in compliance with all governmental
ordinances, rules, and regulations governing such signs, and Tenant shall be
responsible to Landlord for any damage caused by installation, use or
maintenance of said signs or violation of ordinance, rule or regulation with
regard thereto. Upon any removal of said signs Tenant shall simultaneously
repair all damage incident to such removal.

                    INTERRUPTION OF SERVICES OR OF OCCUPANCY

19.  Interruption or curtailment of any service to the premises, such as (but
not limited to) utilities, if caused by strikes, mechanical difficulties or
other causes beyond the Landlord's control will not entitle Tenant to any claim
against Landlord or any abatement in rent, nor will it constitute constructive
or partial eviction, unless Landlord fails to take measures that are reasonable
in the circumstances to restore the service without undue delay.

                             CONSTRUCTIVE EVICTION

20.  Tenant will not be entitled to claim a constructive eviction from the
premises unless Tenant will have first notified Landlord and Manager in writing
of the condition giving rise to the claim and, if the complaints meet the
appropriate legal standard for constructive

<PAGE>

eviction, unless Landlord fails to remedy the condition within a reasonable time
after receipt of the notice.

                                     ENTRY

21.  Landlord may card the premises "For Rent" one hundred eighty (180) days
before the termination of this Lease. At any time during the term hereof,
Landlord and Manager shall have the right to enter the premises at reasonable
hours to exhibit the same to prospective purchasers or tenants and to make
repairs, replacements and improvements required by Landlord under the terms
hereof or as Landlord may deem necessary and reasonably desirable or to make
repairs to Landlord's adjoining property, if any. Landlord may, during the
progress of any work in the premises take all necessary materials and equipment
into the premises without the same constituting an eviction nor shall the tenant
be entitled to an abatement of rent while such work is in progress nor to any
damages by reason of loss or interruption of business or otherwise.

                         EFFECT OF TERMINATION OF LEASE

22.  No termination of this Lease prior to the normal ending thereof, by lapse
of time or otherwise, shall affect Landlord's right to collect rent for the
period prior to termination thereof.

                         SUBORDINATION QUIET ENJOYMENT

23.  This lease is subject and subordinate to all ground or underlying leases
and to all mortgages which may or hereafter affect such leases of the real
property of which the premises are a part and to all renewals, modifications,
consolidations, replacements and extensions of any such underlying leases and
mortgages. This clause shall be self-operative

<PAGE>

and no further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease of the real property
of which the premises are a part. In confirmation of such subordination, Tenant
shall execute promptly any certificate that Owner may request.

     Landlord covenants and agrees with Tenant that upon Tenant paying said
rent, and performing all the covenants and conditions aforesaid, on Tenant's
part to be observed and performed, Tenant shall and may peaceably and quietly
have, hold, and enjoy the premises hereby demised, for the term aforesaid,
subject, however, to the terms of this lease and of any ground lease, underlying
leases, and mortgages hereinbefore mentioned.

                               NO ESTATE IN LAND

24.  This Lease shall create the relationship of Landlord and Tenant between the
parties hereto no estate shall pass out of Landlord. Tenant has only a usufruct,
not subject to levy and sale, and not assignable by Tenant except by Landlord's
consent. Neither Landlord nor Tenant shall cause this Lease to be recorded
without prior written consent of the other party to such recording.

                                  HOLDING OVER

25.  If Tenant remains in possession of premises after expiration of the term
hereof, with Landlord's acquiescence and without any express agreement of
parties, Tenant shall be a tenant at will at two (2) times the gross rental rate
in effect at end of Lease; and there shall be no renewal of this Lease by
operation of law.

                                   HOMESTEAD

26.  Tenant waives all homestead rights and exemptions which Tenant may have
under any law as against any obligation owing under this Lease. Tenant hereby
assigns to Landlord

<PAGE>

Tenant's homestead and exemption.

                               SERVICE OF NOTICE

27.   Tenant hereby appoints as Tenant's agent to receive service of all
dispossessory or other legal proceedings and notices thereunder, and all notices
required under this Lease, the person in charge of the premises or occupying
the premises at the time of delivery or service of such notice; and if no person
is in charge of or occupying the premises at such time, then such service or
notice may be made by attaching the same on the main entrance to the premises.
A copy of all notices under this Lease shall also be sent to Tenant's last known
address, if different from the premises. All notices given hereunder by Tenant
to Landlord shall be sent to Landlord's address set forth hereinafter in this
Lease with additional notice given Manager at Manager's address set out
hereinafter, unless Landlord has otherwise notified Tenant of another address
for Landlord.

                              ESTOPPEL CERTIFICATE

28.   Tenant, at any time, and from time to time, upon at least ten (10) days
prior notice by Landlord, shall execute, acknowledge and deliver to Landlord,
and/or any other person, firm or corporation specified by Landlord, a statement
certifying that this Lease is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), stating the dates to which the rent and
additional rent have been paid, and stating whether or not there exists any
default by the Landlord under this Lease, and, if so, specifying each such
default.

                         TENANT'S OBLIGATION TO INSURE

29.   During the term of this lease, Tenant, at its sole cost and expense, and
for the mutual benefit of Landlord and Tenant, shall carry and maintain the
following types of insurance in

<PAGE>

the amounts specified:

(b)  Comprehensive public liability insurance, including property damage,
insuring Landlord and Tenant against liability for injury to persons or property
occurring in or about the premises or arising out of the ownership, maintenance,
use or occupancy thereof. The liability under such insurance shall not be less
than $1,000,000.00 for any one person injured or killed and not less than
$5,000,000.00 for any one accident and not less than $1,000,000.00 for personal
property damage per accident.

                      BUILDING ALTERATIONS AND MANAGEMENT

30.  Landlord shall have the right at any time without the same constituting an
eviction and without incurring liability to Tenant therefor to change the
arrangement and/or location of public entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets or other public part of the building and
to change the name, number or designation by which

<PAGE>

the building may be known. There shall be no allowance to Tenant for diminution
in rental value and no liability on the part of Landlord by reason of
inconvenience, annoyance or injury to business arising from Landlord or other
Tenants making any repairs in the building or any such alterations, additions
and improvements. Furthermore, Tenant shall not have any claim against Landlord
by reason of Landlord's imposition of such controls of the manner of access to
the building by Tenant's social or business visitors as the Landlord may deem
necessary for the security of the building and its occupants. If such repair or
change diminishes Tenant's use of Building, Tenant shall have the right to
terminate Lease.

                           FAILURE TO GIVE POSSESSION

31.  If Landlord is unable to give possession of the premises on the date of
commencement of the term hereof, because of the holdingover or retention of
possession of any tenant, undertenant, or occupants or for any other reason,
Landlord shall not be liable for failure to give possession on said date and the
validity of the lease shall not be impaired under such circumstances, nor shall
the same be construed in any wise to extend the term of this Lease, but the rent
payable hereunder shall be abated (provided Tenant is not responsible for
Landlord's inability to obtain possession) until after Landlord shall have given
Tenant written notice that the premises are substantially ready for Tenant's
occupancy. If permission is given to Tenant to enter into the possession of the
premises prior to the date specified as the commencement of the term of this
Lease, Tenant covenants and agrees that such occupancy shall be deemed to be
under the terms, covenants, conditions and provisions of this Lease.

                                    SECURITY

32   Tenant has deposited with Landlord the sum of N/A as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this Lease.

<PAGE>

It is agreed that in the event Tenant defaults in respect of any of the terms,
provisions and conditions of this Lease, including, but not limited to, the
payment of rent and additional rent. Landlord may use, apply or retain the whole
or any part of the security so deposited to the extent required for the payment
of any rent and additional rent or any other sum as to which Tenant is in
default or for any sum which Landlord may expend or may be required to expend
by required to expend by reason of Tenant's default in respect of any of the
terms, covenants and conditions of this Lease, including, but not limited to,
any damages or deficiency in the re-letting of the premises, whether such
damages or deficiency accrued before or after summary proceedings or other
re-entry by Landlord. In the event that shall fully and faithfully comply with
all of the terms, provisions, covenants and conditions of this Lease, the
security shall be returned to tenant after the date fixed as the end of the
Lease and after delivery of entire possession of the premises to Landlord. In
the event of a sale of the land and building or leasing of the building of which
the premises form a part, Landlord shall thereupon be released by Tenant from
all liability for the return of such security; and Tenant agrees to look to the
new owner solely for the return of said security, and it is agreed that the
provisions hereof shall apply to every transfer or assignment made of the
security to a new Landlord. Tenant further covenants that it will not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.

                               FEES AND EXPENSES

33. If Tenant shall default in the observance or performance of any term or
covenant on

<PAGE>

Tenant's part to be observed or performed under or by virtue of any of the terms
or provisions in any article of this Lease, then, unless otherwise provided
elsewhere in this Lease, Landlord may immediately or at any time thereafter and
without notice perform the obligation of Tenant thereunder. If Landlord, in
connection with the foregoing or in connection with any default by Tenant in the
covenant to pay rent hereunder, makes any expenditure or incurs any obligation
for the payment of money, including, but not limited to attorneys' fees and
disbursements, in instituting, prosecuting or defending any action or
proceeding, then Tenant will reimburse Landlord for such sums (including
attorneys' fees and disbursements) so paid or obligations incurred with
interests and costs. The foregoing expenses incurred by reason of Tenant's
default shall be deemed to be additional rent hereunder and shall be paid by
Tenant to Owner within five (5) days of rendition of any bill or statement to
Tenant therefor. If Tenant's lease term shall have expired at the time of making
of such expenditures or incurring such obligations, such sums shall be
recoverable by Owner as damages.

                          TENANT NOT TO INCREASE RISK

34.  Tenant shall not do or permit to be done any act or thing in or upon the
premises which will invalidate or be in conflict with the certificate of
occupancy or the terms of the Georgia State standard form of fire, boiler,
sprinkler, water damage, or other insurance policies covering the building and
the fixtures and property therein; and Tenant shall, at its own expense, comply
with all rules, orders, regulations or requirements of the Georgia Board of Fire
Underwriters or any other similar body having jurisdiction, and shall not
knowingly do or permit anything to be done in or upon the premises or bring or
keep anything therein or use the premises in a manner which increases the rate
of fire insurance

<PAGE>

upon the building or on any property or equipment located therein over the rate
in effect at the commencement of the term of this Lease.

        If, by reason of any failure of Tenant to comply with the provisions of
this Lease, the rate of fire, boiler, sprinkler, water damage, or other
insurance (with extended coverage) on the building or on the property shall be
higher than it otherwise would be, Tenant shall reimburse Landlord and the other
tenants in the building for that part of the fire, boiler, sprinkler, water
damage, or other insurance premiums thereafter paid by Landlord which shall have
been charged because such failure by Tenant and Tenant shall make the
reimbursement on the first day of the month following such payment by Landlord.
In any action or proceeding wherein Landlord and Tenant are parties, a schedule
or "make-up" of rate for the building or the premises issued by the Georgia Fire
Insurance Exchange or other body making fire insurance rates for said premises,
shall be conclusive evidence of the facts therein stated and of the several
items and charges in the fire insurance rate then applicable to said building or
the premises.

                          NO REPRESENTATIONS BY OWNER

3.5     Neither Landlord nor Landlord's agents have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected or the premises, the rents, leases, expenses of operation or
any other matter or things affecting or related to the premises except as herein
expressly set forth and no rights, easements or licenses are acquired by Tenant
by implication or otherwise except as expressly set forth in the provisions of
this Lease. Tenant has inspected the building and the premises and is thoroughly
acquainted with their condition and agrees to take the same "as is" and
acknowledges that the taking of possession of the premises by Tenant shall be
conclusive

<PAGE>

evidence that the said premises and the building of which the same form a part
were in good and satisfactory condition at the time such possession was so
taken, except as to latent defects. All understanding and agreements heretofore
made between the parties thereto are merged in this contract, which alone fully
and completely expresses the agreement between Landlord and Tenant and any
executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part, unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.

                                   NO WAIVER

36.  The failure of Landlord to seek redress for violation of, or to insist upon
the strict performance of any covenant or condition of this Lease shall not
prevent a subsequent act which would have originally constituted a violation
from having all the force and effect of an original violation. The receipt by
Landlord of rent with knowledge of the breach of any covenant of this Lease
shall not be deemed a waiver of such breach and no provision of this Lease shall
be deemed to have been waived by Landlord unless such waiver be in writing
signed by Landlord. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly rental stipulated herein shall be deemed to be other
than on account of the earliest stipulated rent, nor shall any endorsement or
statement of any check or any letter accompanying and check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy provided in this Lease. No act or thing done by
Landlord or Landlord's agents during the term hereby demised shall be deemed an
acceptance of a surrender of said premises, and no agreement to accept such
surrender shall

<PAGE>

be valid unless in writing signed by Landlord. No employee of Landlord or
Landlord's agents shall have any power to accept the keys of said premises prior
to the termination of the Lease and delivery of keys to any such agent or
employee shall not operate as a termination of this Lease or a surrender of the
premises.

                            WAIVER OF TRIAL BY JURY

37.  It is mutually agreed by and between Landlord and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counter-claim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any matters
whatsoever arising out of or in any way connected with this lease, the
relationship of Landlord and Tenant, Tenant's use of or occupancy of said
premises any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Landlord commences any summary proceedings for
possession of the premises, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding.

                             SUCCESSORS AND ASSIGNS

38.  The covenants, conditions and agreements contained in this Lease shall bind
and inure to the benefit of Landlord and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns.

                                 MISCELLANEOUS

39.  All rights, powers and privileges conferred hereunder upon parties hereto
shall be cumulative but not restrictive to those given by law. No failure of
Landlord to exercise any power given Landlord hereunder, or to insist upon
strict compliance by Tenant with its

<PAGE>

obligation hereunder, and no custom or practice of compliance by Tenant with its
obligation hereunder, and no custom or practice of the parties at variance with
the terms hereof shall constitute a waiver of Landlord's right to demand exact
compliance with the terms hereof. "Landlord" as used in this Lease shall include
Landlord, his or its heirs, executors, administrators, legal representatives,
assigns and successors in title to the premises. "Tenant" shall include Tenant,
his or its heirs, executors, administrators, legal representatives, successors,
and, if this Lease shall be validly assigned or sublet, shall also include
Tenant's assignees or sublessees, as to the premises covered by such assignment
or sublease. "Landlord" and "Tenant" shall include male and female, singular and
plural, corporation, partnership or individual, as may fit the particular
parties. Time is of the essence of this Lease.

40.     Tenant shall at all times maintain the interior of the premises at such
temperature to safeguard all exposed water pipes, sprinkler pipes, sewage pipes
or other water containing machinery, equipment or fixtures within the premises
from freezing or cracking due to an interior temperature at or below 32 degrees
F. Any such failure to maintain the interior temperature at or above 32 degrees
F shall constitute a default under this Lease and will give the Landlord the
right to cancel this Lease as provided in Paragraph Sixteen (16). Any damage to
any water pipe or fixture caused by Tenant's failure to maintain the interior of
the premises at or above 32 degrees F. shall be repaired immediately at Tenant's
expense as provided in Paragraph Eight (8).

<PAGE>

                                ENTIRE AGREEMENT

42.  This Lease contains the entire agreement of the parties hereto and no
representations, inducements, promises, or agreement, oral or otherwise, between
the parties, not embodied herein, shall be of any force or effect.

     IN WITNESS WHEREOF, the parties herein have hereunto set their hands and
seals or caused this instrument to be executed through authorized officials in
their name, in triplicate, the day and year first above written.

Signed, sealed and delivered
in the presence of:                     LANDLORD: Ostow Holdings, L.L.C.

/s/ Margaret Ryan                       by: /s/ [ILLEGIBLE]   (SEAL)
-----------------------------------         ------------------
UNOFFICIAL WITNESS

NOTARY PUBLIC                           ADDRESS: [ILLEGIBLE]
NEW YORK STATE AT LARGE                         -----------------------------
MY COMMISSION EXPIRES
July 17, 2003                                    [ILLEGIBLE]
-------------                           -------------------------------------
                           [STAMP]

Signed, sealed and delivered
        in the presence of:             TENANT: ALADDIN
                                                MANUFACTURING
                                                CORPORATION

/s/ [ILLEGIBLE]                         by: /s/ [ILLEGIBLE]   (SEAL)
-----------------------------------         ------------------
UNOFFICIAL WITNESS

/s/ Penny Dixon                         ADDRESS: [ILLEGIBLE]
-----------------------------------              ----------------------------
NOTARY PUBLIC
GA. STATE AT LARGE
MY COMMISSION EXPIRES:                  7-18-02
                                        -------------------------------------

[SEAL]

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