Document:

<PAGE>

                                                                   Exhibit 10.24

                                    GUARANTY

         THIS GUARANTY is dated August 30, 2001 (the "Guaranty"), and made by
ALLIANCE RESOURCE GP, LLC, a Delaware limited liability company ("Guarantor"),
in favor of the FIFTH THIRD BANK, an Ohio banking corporation ("Lender").

         PRELIMINARY STATEMENT. Alliance Resource Partners, L.P., a Delaware
limited partnership (the "BORROWER"), is party to a Letter of Credit Facility
Agreement, dated as of August 30, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT";
the capitalized terms defined therein and not otherwise defined herein being
used herein as therein defined) with Lender. Guarantor shall receive, directly
or indirectly, a benefit from the issuance of the Letters of Credit under the
Credit Agreement and will derive substantial direct and indirect benefits from
the transactions contemplated by the Credit Agreement. It is a condition
precedent to issuing from time to time the Letters of Credit by the Lender under
the Credit Agreement that Guarantor shall have executed and delivered this
Guaranty.

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

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

                  (b) Guarantor and, by its acceptance of this Guaranty, Lender
hereby confirm that it is the intention of all such Persons that this Guaranty
and the Guaranteed Obligations of Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of or under any Debtor Relief
Laws (including the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent
Transfer Act) to the extent applicable to this Guaranty and the Guaranteed
Obligations of Guarantor hereunder. To effectuate the foregoing intention, the
Lender and the Guarantor hereby irrevocably agree that the Guaranteed
Obligations of Guarantor under this Guaranty at any time shall be limited to the
maximum amount as will result in the Guaranteed Obligations of such Guarantor
under this Guaranty not constituting a fraudulent transfer or conveyance.

         Section 2. Guaranty Absolute. To the extent permitted by law, Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Credit
<PAGE>
Agreement, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of Lender with
respect thereto. To the extent permitted by law, the obligations of Guarantor
under or in respect of this Guaranty are independent of the Guaranteed
Obligations, and a separate action or actions may be brought and prosecuted
against Guarantor to enforce this Guaranty, irrespective of whether any action
is brought against the Borrower or any other Person guarantying or pledging
assets as collateral security for the Guaranteed Obligations or whether the
Borrower or any such other Person is joined in any such action or actions. To
the extent permitted by law, the liability of Guarantor under this Guaranty
shall be irrevocable, absolute and unconditional irrespective of, and Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in
any way relating to, any or all of the following:

                  (a) any lack of validity or enforceability of the Credit
Agreement or any agreement or instrument relating thereto;

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

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

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

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

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

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

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

                                       -2-
<PAGE>
         Section 3. Waivers and Acknowledgments. (a) To the extent permitted by
law, Guarantor hereby unconditionally and irrevocably waives promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that Lender protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action against
Borrower or any other Person or any collateral.

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

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

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

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

         Section 4. Subrogation. Guarantor hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter
acquire against the Borrower that arise from the existence, payment, performance
or enforcement of Guarantor's obligations under or in respect of this Guaranty
or the Credit Agreement, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of Lender against the Borrower, or
any other insider guarantor whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, including, without limitation,
the right to take or receive from the Borrower, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Letter of Credit Commitment shall have expired or
been terminated. If any amount shall be paid to Guarantor in violation of the
immediately preceding sentence at any time prior to the later of (a) the payment
in full in cash of the Guaranteed Obligations and all other amounts payable
under this Guaranty, and (b) the Termination Date, such amount shall be received
and held in trust for the benefit of Lender, shall be segregated from other
property and funds of Guarantor and shall forthwith be paid or delivered to the
Lender in the same form as so received (with any necessary endorsement or
assignment) to be credited and applied to

                                       -3-
<PAGE>
the Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement, or to be held as collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) Guarantor shall
make payment to Lender of all or any part of the Guaranteed Obligations, (ii)
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been paid in full in cash, and (iii) the Termination Date
shall have occurred, the Lender will, at Guarantor's request and expense,
execute and deliver to Guarantor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to Guarantor of an interest in the Guaranteed Obligations resulting
from such payment made by such Guarantor pursuant to this Guaranty.

         Section 5. Representations and Warranties. Guarantor hereby represents
and warrants that Guarantor has, independently and without reliance upon Lender
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Guaranty, and Guarantor
has established adequate means of obtaining from the Borrower on a continuing
basis information pertaining to, and is now and on a continuing basis will be
completely familiar with, the business, condition (financial or otherwise),
operations, performance, properties and prospects of the Borrower. In addition,
the Guarantor further represents and warrants to the Lender as follows:

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

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

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

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

         Section 6. Covenants; Delivery of Financial Information. Guarantor
covenants and agrees that, so long as any part of the Guaranteed Obligations
shall remain unpaid or the Letter of Credit Commitment shall be in effect,
Guarantor will:

                                       -4-
<PAGE>
                  (a) perform and observe all of the terms, covenants and
         agreements set forth in the Credit Agreement on its part to be
         performed or observed or that the Borrower has agreed to cause
         Guarantor to perform or observe;

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

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

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

         The financial statements and compliance certificate required to be
delivered pursuant to clauses (b), (c) and (d) of this Section 6 shall be
accompanied by a certificate of the Chief Financial Officer or Treasurer of the
Guarantor to the effect that the information contained therein is true and
accurate as of the date of such certificate.

         Section 7. Amendments, Guaranty Supplements, Etc. (a) No amendment or
waiver of any provision of this Guaranty and no consent to any departure by
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

         Section 8. Notices, Etc. All notices, consents, waivers, and other
communications required or permitted to be given under this Guaranty must be in
writing and will be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier (with written
confirmation of receipt), provided that a copy is mailed by registered mail,
return receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each
case to the appropriate addresses and telecopier numbers set forth below (or to
such other addresses and telecopier numbers as a party may designate by notice
to the other parties):

                  To Guarantor:

                  Alliance Resource GP, LLC
                  1717 South Boulder Avenue
                  Tulsa, Oklahoma 74119

                                       -5-
<PAGE>
                  Attn: Cary Marshall, Director, Corporate Finance
                  Telefax: (918) 295-7357

                  with a copy to:

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

                  and to:

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

                  To Lender:

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

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

         Section 9. No Waiver; Remedies. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

         Section 10. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Default and (b) the delivery of the notice and expiration of
the Cure Period provided by Section 6 of the Credit Agreement, the Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Lender, to or for the credit or the account of Guarantor
against any and all of the Guaranteed Obligations of

                                       -6-
<PAGE>
Guarantor now or hereafter existing under the Credit Agreement, irrespective of
whether Lender shall have made any demand under this Guaranty or the Credit
Agreement and although such Guaranteed Obligations may be unmatured. Lender
agrees promptly to notify Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that Lender may have.

         Section 11. Survival. Without prejudice to the survival of any of the
other agreements of Guarantor under this Guaranty, the agreements and
obligations of Guarantor contained in Section 1(a) (with respect to enforcement
expenses) and the last sentence of Section 2 shall survive the payment in full
of the Guaranteed Obligations and all of the other amounts payable under this
Guaranty.

         Section 12. Continuing Guaranty; Assignments under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the latest of (i) the payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) the Termination Date, (b) be binding upon the Guarantor, its successors and
assigns and (c) inure to the benefit of and be enforceable by the Lender and its
successors, permitted transferees and permitted assigns. Without limiting the
generality of clause (c) of the immediately preceding sentence, the Lender may
assign or otherwise transfer all or any portion of its rights and obligations
under the Credit Agreement (including, without limitation, all or any portion of
its Letter of Credit Commitment and the Advances owing to it) to any other
Person to the extent permitted by and in accordance with Section 8.5 of the
Credit Agreement, and such other permitted transferee shall thereupon become
vested with all the benefits in respect thereof granted to Lender herein or
otherwise. Guarantor shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Lender.

         Section 13. Execution in Counterparts. This Guaranty and each
amendment, waiver and consent with respect hereto may be executed in any number
of counterparts and by difference parties thereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Guaranty by telecopier shall be
effective as delivery of an original executed counterpart of this Guaranty.

         Section 14. Governing Law. This Guaranty shall be deemed to be a
contract made under the laws of the State of Ohio, and shall be construed by and
governed in accordance with the laws of the State of Ohio, without giving effect
to principles of conflicts of laws.

                                       -7-
<PAGE>
         IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly
executed and delivered by or on its behalf as of the date first above written.

                                    ALLIANCE RESOURCE GP, LLC

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

                                       -8-<PAGE>

                                                                   Exhibit 10.25

                       LETTER OF CREDIT FACILITY AGREEMENT

         This Letter of Credit Facility Agreement is dated as of this 2nd day of
October, 2001 by and between BANK OF THE LAKES, NATIONAL ASSOCIATION ("Lender"),
and ALLIANCE RESOURCE PARTNERS, L.P., a Delaware limited partnership
("Borrower").

                                    RECITALS

         A. Borrower has requested a $5,000,000 line of credit ("Loan") from
Lender for the issuance from time to time of Letters of Credit (defined below).

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

                                    AGREEMENT

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

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

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

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

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

                  1.4. "Alliance Resource Master Credit Agreement" means the
         Credit Agreement, dated as of August 16, 1999, among AROP, as borrower
         and assignee of Alliance Resource GP, LLC, the banks, financial
         institutions and other institutional lenders from time to time parties
         thereto, the Swing Line Bank (as defined therein), The Chase Manhattan
         Bank ("Chase"), as paying agent, Deutsche Bank AG, New York Branch, as
         documentation agent, and Citicorp USA, Inc. and Chase as
         co-administrative agents, as the same may be amended, amended and
         restated, modified or supplemented from time to time in accordance with
         the terms thereof.

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

                                      -1-
<PAGE>
                  1.6. "Borrower Authority Documents" means the following
         documents as to the Borrower: (i) Certificate of Good Standing, dated
         within five (5) Business Days of the Effective Date, issued by the
         State in which the Borrower was formed; (ii) Certificate of Good
         Standing, dated within five (5) Business Days of the Effective Date,
         issued by the State in which the General Partner was formed; and (iii)
         Certificate, dated the Effective Date, from the managing general
         partner of the Borrower, substantially in form and content as set forth
         on Schedule "1.6" hereto, to which shall be attached (A) the
         Certificate of Limited Partnership of the Borrower and the Certificate
         of Formation of the General Partner, in each case certified by the
         Secretary of State of the State of Delaware as of a date that is within
         five (5) Business Days of the Effective Date, and (B) a copy of the
         fully executed limited partnership agreement of the Borrower and the
         Limited Liability Company Operating Agreement of the General Partner,
         in each case together with all amendments thereto, if any.

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

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

                  1.9. "Cash Equivalents" means any of the following: (a)
         marketable securities of any issuer (including, without limitation, any
         corporation or governmental authority) and, if applicable, of any
         duration; (b) cash; and (c) any other item determined by Borrower's
         auditors to constitute cash or cash equivalents.

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

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

                                      -2-
<PAGE>
         adjustments resulting from any change in accounting principles in
         accordance with GAAP, and (z) any extraordinary or unusual items.

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

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

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

                  1.15. "Default" shall mean the occurrence of any of the events
         described in Section 6 below.

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

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

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

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

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

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

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

                                      -3-
<PAGE>
                  1.23. "Guaranty Agreement" means the Guaranty, dated on or
         prior to the Effective Date, executed by the Guarantor, substantially
         in form and content as set forth on Schedule "1.23" hereto, as the same
         may be amended, amended and restated, modified or supplemented from
         time to time in accordance with the terms thereof.

                  1.24. "Hereto," "herein," "hereby," "hereunder," "hereof," and
         similar expressions refer to this Agreement and not to any particular
         article, section, subsection, clause, subdivision, or other portion
         hereof and include any and every amending agreement and agreement
         supplemental or ancillary hereto.

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

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

                  1.27. "Letter of Credit Application" means an application for
         a Letter of Credit Action substantially in the form of Schedule "1.27"
         hereto.

                  1.28. "Letter of Credit Commitment" means the commitment of
         the Lender to issue Letters of Credit in an amount up to $5,000,000, as
         the same may be reduced in accordance with Sections 2.4 and 7.1(iii)
         hereof.

                  1.29. "Letter of Credit Fee" means, with respect to any Letter
         of Credit, a fee of .95% per annum (calculated on the basis of a
         360-day year and the actual number of days elapsed) on the daily
         average of the maximum amount available to be drawn from time to time
         under such Letter of Credit issued or renewed after the date hereof,
         payable quarterly in advance.

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

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

                  1.32. "Leverage Ratio" means, as of any date of determination,
         the ratio of Consolidated Funded Debt to Consolidated EBITDA of the
         Borrower and its Consolidated

                                      -4-
<PAGE>
         Subsidiaries, calculated for the four (4) consecutive fiscal quarters
         ending on the last day of the fiscal quarter most recently completed.

                  1.33. "Loan Documents" means this Agreement and the Note.

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

                  1.35. "Note" means the original, executed $5,000,000
         Promissory Note, dated on or prior to the Effective Date, substantially
         in form and content set forth on Schedule "1.35" attached hereto, as
         the same may be amended, amended and restated, modified or supplemented
         from time to time in accordance with the terms thereof.

                  1.36. "Opinion of Borrower's and Guarantor's Counsel" shall
         mean an opinion from Borrower's and Guarantor's counsel, dated the
         Effective Date and addressed to Lender, substantially in the form of
         Schedule "1.36" hereto.

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

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

                  1.39. "Termination Date" shall mean the one-year anniversary
         of the Effective Date.

         2.       LETTERS OF CREDIT.

                  2.1. The Letter of Credit Commitment; Letter of Credit Fee.
         Subject to the terms and conditions hereof, at any time and from time
         to time from the Effective Date through the date that is three (3)
         Business Days prior to the Termination Date, the Lender shall take such
         Letter of Credit Actions as the Borrower may request; provided,
         however, that (i) the aggregate outstanding Letter of Credit Usage
         shall not exceed the Letter of Credit

                                      -5-
<PAGE>
         Commitment at any time, and (ii) each Letter of Credit Action shall be
         in a form reasonably acceptable to Lender and shall not violate any
         policies of Lender. Each Letter of Credit will be a nontransferable
         standby letter of credit to support payment and/or performance
         obligations of the Borrower or any of its Subsidiaries. No Letter of
         Credit shall expire more than 365 days after the date of issuance
         except that, at the request of Borrower, such Letter of Credit shall
         provide that it shall be automatically renewed for a one-year period
         unless the Lender, as issuer of such Letter of Credit, shall give at
         least 90 days advance notice to the beneficiary thereof that such
         Letter of Credit shall not be automatically renewed. If any Letter of
         Credit shall remain outstanding after the Termination Date or other
         date upon which Lender's Letter of Credit Commitment expires pursuant
         to the terms hereof, the Borrower shall, not later than sixty (60) days
         thereafter with respect to all such then outstanding Letters of Credit,
         (i) deposit Cash Equivalents in an amount equal to one hundred and two
         percent (102%) of the Letter of Credit Usage as of the date such
         deposit shall be required in a collateral account with the Lender
         (which account shall, with respect to all cash collateral, bear
         interest for the account of the Borrower or be invested in Cash
         Equivalents (other than cash) at the direction, and for the account, of
         the Borrower), or (ii) cause the then outstanding Letters of Credit to
         be replaced and terminated. In the case of each Letter of Credit issued
         hereunder, a Letter of Credit Issuance Fee shall be payable to the
         Lender on the issuance date thereof and the Letter of Credit Fee with
         respect thereto shall be payable quarterly in advance. At least two (2)
         Business Days prior to the commencement of any quarterly period during
         which any Letter of Credit shall remain outstanding, the Lender shall
         deliver to the Borrower a statement showing the Letter of Credit Fee
         due for the next quarterly period, and the Borrower shall pay the
         Letter of Credit Fee then due not later than five (5) Business Days
         following receipt of such statement (unless such statement shall be
         delivered more than five (5) Business Days prior to the commencement of
         any quarterly period, in which case the Borrower shall not be required
         to pay the Letter of Credit fee then due prior to the first Business
         Day of the quarterly period as to which such fee shall relate). In the
         event that any Letter of Credit shall have terminated prior to the end
         of any quarterly period as to which the Lender shall have received such
         advance Letter of Credit Fee, the Lender shall refund to the Borrower
         the unearned portion of the Letter of Credit Fee in respect of the
         Letter of Credit that shall have early terminated.

                  2.2. Requesting Letter of Credit Actions. The Borrower may
         irrevocably request a Letter of Credit Action by delivering a Letter of
         Credit Application therefor to Lender, not later than 2:00 p.m. (Tulsa
         time) on the date which is two (2) Business Days prior to the date of
         the requested action therefor. Unless Lender determines that such
         Letter of Credit action is contrary to any requirement of law or
         policies of Lender or does not otherwise conform to the requirements of
         this Agreement, Lender shall effect such Letter of Credit Action.
         Notwithstanding anything to the contrary contained in any Letter of
         Credit Application, this Agreement shall control in the event that any
         term or provision of this Agreement shall conflict with any term or
         provision contained in any Letter of Credit Application.

                  2.3. Reimbursement of Payments Under Letters of Credit. The
         Borrower shall reimburse Lender for any payment that Lender makes under
         a Letter of Credit on or, at the request of the Lender, not more than
         three (3) Business Days before the date of such payment

                                      -6-
<PAGE>
         except to the extent that such payment resulted from the Lender's gross
         negligence or willful misconduct.

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

         3. CONDITIONS PRECEDENT TO LENDER'S OBLIGATION TO ISSUE INITIAL LETTER
OF CREDIT. It is expressly agreed that Lender shall not be obligated to issue
the initial Letter of Credit hereunder until the date (which must be a Business
Day) on which all of the conditions set forth in Sections 3.1, 3.2 and 3.3
hereof shall have been satisfied, unless waived by Lender at its sole discretion
(such date the "Effective Date"); provided that such conditions shall be deemed
satisfied if the Lender shall have issued the initial Letter of Credit hereunder
except to the extent expressly reserved by the Lender in writing on or prior to
the Effective Date; provided, further, that if the Effective Date shall not have
occurred by October 15, 2001, the obligation of the Lender hereunder to issue
any Letter of Credit, and this Agreement, shall terminate. In the event Lender
elects to waive any requirements or conditions contemplated by this Section 3,
such waiver shall not preclude Lender from thereafter requiring full and
complete performance of all terms, conditions and requirements hereof with
regard to the issuance of any subsequent Letter of Credit.

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

                           3.1.1. The Note;

                           3.1.2. The Guaranty Agreement;

                           3.1.3. Borrower Authority Documents;

                           3.1.4. Guarantor Authority Documents; and

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

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

                                      -7-
<PAGE>
                  3.3. No Default. No Default exists under this Agreement or any
         other Loan Documents.

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

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

                  4.2. No Default. No Default exists under this Agreement or any
         other Loan Documents.

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

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

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

                  5.3. Other Agreements. The consummation of the transaction
         hereby contemplated and the performance of this Agreement and the other
         Loan Documents by Borrower will not result in any breach of, or
         constitute a default under, any indenture,

                                      -8-
<PAGE>
         mortgage, lease, loan or credit agreement or any other material
         instrument or agreement to which Borrower is a party or by which
         Borrower may be bound or affected.

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

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

                  6.1. Nonpayment of Draws or Note. Nonpayment when due of any
         unpaid principal of or accrued interest under the Note.

                  6.2. Other Nonpayment. Nonpayment when due of any amount
         payable to Lender under the terms of this Agreement and, except in the
         case of any payment required to be made pursuant to Section 2.3 hereof,
         Borrower shall have failed to cure such default within ten (10) days
         following notice thereof from Lender, it being understood that a
         failure to pay under Section 2.3 hereof automatically constitutes a
         default.

                  6.3. Breach of Covenants. Nonsatisfaction by Borrower in the
         performance or observation of any covenant contained in this Agreement,
         or any other Loan Documents (other than as provided by Sections 6.1 and
         6.2 hereof), following the Cure Period.

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

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

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

                                      -9-
<PAGE>
                  6.7. Leverage Ratio. If the Leverage Ratio during any given
         rolling twelve month period equals or exceeds 4 to 1.

                  6.8. Guarantor Liquidity. If at any time the sum of (x) the
         then current market value of the Guarantor's Cash Equivalents plus (y)
         the then current market value of the common units of the Borrower
         beneficially owned by the Guarantor, in each case after deducting
         therefrom the value of any encumbrances imposed on any thereof, shall
         be less than 125% of the Letter of Credit Commitment then in effect
         hereunder or $6,250,000, whichever is greater, unless the Borrower
         shall have reduced the Letter of Credit Commitment in accordance with
         Section 2.4 hereof, in which case the Borrower shall be in compliance
         with this covenant so long as the sum of the amounts computed pursuant
         to clauses (x) and (y) of this Section 6.8 shall not be less than 125%
         of the Letter of Credit Commitment then in effect hereunder.

                  6.9. Guarantor Net Asset Position. If the Guarantor's total
         assets less its total liabilities (excluding the liability account
         entitled "Investments in Alliance Resource Partners, LP"), as
         determined in a manner consistent with the balance sheet of the
         Guarantor prepared as of April 2, 2001 and delivered to the Lender
         prior to the date hereof, shall be less than $30,000,000.

                  6.10. Alliance Resource Master Credit Agreement. An "Event of
         Default" occurs under the Alliance Resource Master Credit agreement
         which is not cured within any applicable cure period permitted
         thereunder.

                  6.11. Debt. An event of default occurs under (a) (i) the
         letter of credit facility agreement entered into by the Borrower with
         Bank of Oklahoma, dated as of June 29, 2001, as the same may be
         amended, modified or supplemented from time to time in accordance with
         the terms thereof, or (ii) the letter of credit facility agreement
         entered into by the Borrower with Fifth Third Bank, dated as of August
         30, 2001, as the same may be amended, modified or supplemented from
         time to time in accordance with the terms thereof, or (b) any other
         indenture, loan agreement, promissory note or other instrument of
         indebtedness, in the principal amount of $10,000,000.00 or more, to
         which Borrower or Guarantor is a party and which, in the case of clause
         (a) or (b), is not cured within any applicable cure period permitted
         thereunder.

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

                  7.1. Acceleration of Note. Lender (i) may by notice to the
         Borrower, declare the commitments to issue Letters of Credit to be
         terminated, whereupon the same shall forthwith terminate, (ii) may by
         notice to the Borrower, declare the maximum amount available to be
         drawn under all Letters of Credit then outstanding, together with all
         amounts owing under

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

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

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

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

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

         8. GENERAL CONDITIONS. The following conditions shall be applicable
throughout the term of this Agreement.

                                      -11-
<PAGE>
                  8.1. Notices. All notices, consents, waivers, and other
         communications required or permitted to be given under this Agreement
         must be in writing and will be deemed to have been duly given when (a)
         delivered by hand (with written confirmation of receipt), (b) sent by
         telecopier (with written confirmation of receipt), provided that a copy
         is mailed by registered mail, return receipt requested, or (c) when
         received by the addressee, if sent by a nationally recognized overnight
         delivery service (receipt requested), in each case to the appropriate
         addresses and telecopier numbers set forth below (or to such other
         addresses and telecopier numbers as a party may designate by notice to
         the other parties):

                  To Borrower:

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

                  with a copy to:

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

                  and to:

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

                                      -12-
<PAGE>
                  To Lender:

                  BANK OF THE LAKES, NATIONAL ASSOCIATION
                  12401 East 86th Street North
                  Owasso, Oklahoma 74055
                  Attn:    Scott Yandell, President & Chief Executive Officer
                  Telefax: (918) 274-0347

                  with copy to:

                  Stuart, Biolchini, Turner & Givray
                  3300 First Place Tower
                  15 East 5th Street
                  Tulsa, Oklahoma 74103
                  Attn:    Albert J. Givray, Esq.
                  Telefax: (918) 582-3033

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

                  8.2. Amendment: Waiver. This Agreement may not be amended,
         modified, waived, discharged or terminated in any way, except by an
         instrument in writing executed by both parties hereto; provided,
         however, Lender may, in a writing that shall be required to be executed
         only by Lender: (i) extend the time for performance of any of the
         obligations of Borrower; (ii) waive any Default by Borrower; and (iii)
         waive the satisfaction of any condition that is precedent to the
         performance of Lender's obligations under this Agreement. In the event
         of a waiver of Default by Lender, such specific Default shall be deemed
         to have been cured and not continuing, but no such waiver shall extend
         to any subsequent or other Default or impair any consequence of such
         subsequent or other Default.

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

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

                                      -13-
<PAGE>
                  8.5. Binding Effect. This Agreement shall be binding upon and
         shall inure to the benefit of the parties hereto and their respective
         heirs, legal representatives, successors and permitted assigns;
         provided, however, that, without the consent of the Borrower, the
         Lender shall not transfer or assign any of its rights or obligations
         hereunder or all or any part of its Letter of Credit Commitment, the
         Note or any Advance except to another commercial bank organized under
         the laws of the United States having a combined capital and surplus and
         retained earnings of not less than $500,000,000, except that Lender may
         sell not more than four (4) participations to one or more Lender-chosen
         banks or other entities in all or a portion of Lender's rights and
         obligations under the Loan Documents with the understanding that (a)
         each such participation shall be in an amount of not less than
         $400,000, (b) any such sale or participation shall not affect the
         rights and duties of Lender hereunder to the Borrower and the Borrower
         shall deal exclusively with the Lender with respect to the Loan
         Documents and the performance of the Lender's obligations and the
         exercise of the Lender's rights hereunder, and (c) no such participant
         under any participation shall have the right to approve any amendment
         or waiver of any provision of any Loan Document, or any consent to or
         departure by the Lender from any provision of any Loan Document, except
         to the extent that such amendment, waiver or consent would have the
         effect of reducing the principal of or interest on the Note or any fees
         payable by Borrower hereunder.

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

                  8.7. Costs. Borrower shall pay all reasonable costs, expenses,
         fees (e.g., reasonable attorney fees) incurred by Lender in connection
         with this transaction, including, without limitation, the reasonable
         fees of Stuart, Biolchini, Turner & Givray, and recording/filing fees,
         taxes and related expenses, as well as other customary charges or
         expenses incurred by Lender in connection with payment under or
         performance of a Letter of Credit.

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

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

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

                  9.3. Compliance with Laws. Comply in all material respects
         with all laws, rules, regulations and orders applicable to Borrower,
         such compliance to include, without

                                      -14-
<PAGE>
         limitation, paying before the same become delinquent all taxes,
         assessments, and governmental charges imposed upon it or upon its
         property, subject to the right to contest if adequate reserves are
         established.

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

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

                  9.6. General Information. Such other information respecting
         the condition or operations, financial or otherwise, of Borrower as
         Lender may from time to time reasonably request; provided, however,
         that so long as the Lender shall be receiving copies of all proxy
         statements, financial statements and reports that the Borrower sends to
         its unitholders, partners or members, and copies of all regular,
         periodic and special reports, and all registration statements, that the
         Borrower files with the Securities and Exchange Commission of the
         United States or any governmental authority that may be substituted
         therefor, or with any national securities exchange, in each case
         promptly after the sending or filing thereof, the Borrower shall have
         no obligation to deliver any other financial statements to the Lender
         hereunder. In addition, the Borrower shall deliver to the Lender, as
         soon as available but within 60 days following the end of each of the
         initial three quarters of the Borrower's fiscal year and within 150
         days following the end of the Borrower's fiscal year, a statement
         demonstrating and computing compliance by the Borrower with the
         covenant required to be maintained by the Borrower pursuant to Section
         6.7 (Leverage Ratio) hereof for the period then ended, together with a
         certificate of the Chief Financial Officer or Treasurer of the General
         Partner to the effect that the information contained therein is true
         and accurate as of the date of such certificate.

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

                               "Borrower"

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

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

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

                               "Lender"

                               BANK OF THE LAKES, NATIONAL ASSOCIATION

                               By:  /s/ Scott Yandell
                                 ___________________________
                                 Name:  Scott Yandell
                                 Title:

                                      -16-
<PAGE>
                                 Schedule "1.6"

                         (Borrower Authority Documents)

                                      -17-
<PAGE>
                                 Schedule "1.22"

                         (Guarantor Authority Documents)

                                      -18-
<PAGE>
                                 Schedule "1.23"

                              (Guaranty Agreement)

                                      -19-
<PAGE>
                                 Schedule "1.27"

                     (Form of Letter of Credit Application)

                                      -20-
<PAGE>
                                 Schedule "1.35"

                                     (Note)

                                      -21-
<PAGE>
                                 Schedule "1.36"

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

                                      -22-

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