Document:

Fourth Amend. to the Amended and Restated Credit Agreement dated July 25, 2005

 EXHIBIT 10(a) 
  
 FOURTH AMENDMENT TO THE AMENDED AND RESTATED CREDIT AGREEMENT 
  
 FOURTH AMENDMENT, dated as of July 25, 2005 (this “Amendment”), to the Credit Agreement initially dated as of
March 25, 2003 (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”), among K2 Inc. and each of its Subsidiaries party hereto, each of the lending institutions from time to time party hereto (such lending
institutions, together with their respective successors and assigns, are referred to herein individually as a “Lender” and collectively as the “Lenders”), JPMorgan Chase Bank, N.A., as a contractual representative for the Lenders
(the “Administrative Agent”), Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as a contractual representative for the Lenders (the “Collateral Agent”), and acting through its London
branch as the “U.K. Security Trustee”. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement. 
  
 W I T N E S S E T H : 
  
 WHEREAS, the Obligated Parties have requested that the Lenders amend the
Credit Agreement in the manner provided for herein; and 
  
 WHEREAS, the Administrative Agent and the Lenders are willing to amend the Credit Agreement in the manner and on the conditions provided for herein. 
  
 NOW THEREFORE, in consideration of the premises and mutual covenants hereinafter set forth, the parties agree as follows: 
  
 1. Amendment to Section 6.14 of the Credit Agreement: Section 6.14 of
the Credit Agreement is hereby amended by adding the following subsection at the end thereof: 
  
 (m) unsecured notes in an aggregate principal amount of up to $100,000,000; provided that (i) the terms of such notes shall be subject to the approval of the Administrative Agent, such approval not to be
unreasonably delayed, withheld or conditioned, (ii) the net proceeds from the issuance thereof shall be applied to the extent thereof to repay any then outstanding Revolving Loans and (iii) such issuance shall occur within 365 days of July 25, 2005.

  
 2. Effectiveness. This Amendment shall become effective
on the date the Administrative Agent has received counterparts of this Amendment executed by the Obligated Parties, the Administrative Agent and the Required Lenders. 
  
 3. Payment of Fees and Expenses. The Borrowers agree to pay or reimburse the Administrative Agent for all of its
out-of-pocket costs and reasonable expenses incurred in connection with this Amendment and any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent. 

 4. Representations and Warranties. After giving effect to this Amendment, each Obligated Party
hereby confirms, reaffirms and restates the representations and warranties set forth in Section 5 of the Credit Agreement as if made on and as of the date hereof except for any representation or warranty made as of the earlier date, which
representation or warranty shall have been true and correct in all material respects as of such earlier date. 
  
 5. Severability; Headings. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction, shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction. The section and subsection headings used in this Amendment are for convenience of reference only and are not to affect the construction hereof or to be taken into consideration in the interpretation hereof. 
  
 6. Continuing Effect of Other Documents. This Amendment shall not
constitute an amendment or waiver of any other provision of the Credit Agreement not expressly referred to herein and shall not be construed as a waiver or consent to any further or future action on the part of the Obligated Parties that would
require a waiver or consent of the Lenders or the Administrative Agent. Except as expressly amended, modified and supplemented hereby, the provisions of the Credit Agreement are and shall remain in full force and effect. 
  
 7. Governing Law; Counterparts. 
  
 (a) This Amendment and the rights and obligations of the parties hereto shall
be governed by, and construed and interpreted in accordance with, the laws of the State of New York. 
  
 (b) This Amendment may be executed by one or more of the parties to this Agreement in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrowers and the Administrative Agent. This Amendment may be delivered by facsimile
transmission of the relevant signature pages hereof. 
  
 [SIGNATURE
PAGES FOLLOW] 
  

 2 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by
their proper and duly authorized officers as of the day and year first above written. 
  

			
	 OBLIGATED PARTIES:

	
	 K2 INC.

		
	By:	 	/S/    DUDLEY W.
MENDENHALL        
	 	 	 Dudley W. Mendenhall
 Senior Vice President and Chief Financial Officer

  

					
	 BRASS EAGLE, LLC
 EX OFFICIO LLC
 K2 EYEWEAR, LLC
 WGP, LLC

		
	By:	 	 K2 Inc., its sole Member

			
	 	 	 By:
	 	/S/    DUDLEY W.
MENDENHALL        
	 	 	 	 	 Dudley W. Mendenhall
 Senior Vice President and Chief Financial Officer

  

					
	 HILTON CORPORATE CASUALS, LLC
 SHAKESPEARE COMPANY, LLC
 SHAKESPEARE CONDUCTIVE FIBERS, LLC
 WORTH, LLC

		
	By:	 	 K2 Inc., its Manager

			
	 	 	 By:
	 	/S/    DUDLEY W.
MENDENHALL        
	 	 	 	 	 Dudley W. Mendenhall
 Senior Vice President and Chief Financial Officer

			
	 BRASS EAGLE CHALLENGE PARK, INC.
 EX OFFICIO INTERNET COMPANY, LLC
 J. DEBEER & SON, INC.
 JT PROTECTIVE GEAR LLC
 JT USA LLC
 K2 BIKE, INC.
 K-2 CORPORATION
 K2 CORPORATION OF CANADA
 K-2 INTERNATIONAL, INC.
 K2 LICENSED PRODUCTS, INC.
 K2 MERCHANDISING, INC.
 K2 SNOWSHOES, INC.
 MARMOT MOUNTAIN, LLC 
 MORROW SNOWBOARDS, INC.
 RAWLINGS CANADA INCORPORATED
 RAWLINGS SPORTING GOODS COMPANY
 RIDE, INC.
 RIDE SNOWBOARD COMPANY
 SHAKESPEARE COMPANY (UK) LIMITED
 SHAKESPEARE INDUSTRIES, INC.
 SHAKESPEARE INTERNATIONAL LIMITED
 SHAKESPEARE MONOFILAMENT UK LIMITED
 SITCA CORPORATION
 SMCA, INC.
 SPORTS RECREATION COMPANY LTD.
 STEARNS INC.
 WORTH ACCESSORIES, INC.
 WORTH BAT COMPANY, INC.

		
	By:	 	/S/    DIANA C.
CRAWFORD        
	 	 	 Diana C. Crawford
 Secretary

					
	 SATV, LLC
 SOSPENDERS LLC

		
	By:	 	 Stearns Inc., as sole Member

			
	 	 	 By:
	 	/S/    DIANA C.
CRAWFORD        
	 	 	 	 	 Diana C. Crawford
 Secretary

  

							
	 SHAKESPEARE ALL STAR ACQUISITION LLC

		
	By:	 	 Shakespeare Company, LLC, as sole Member

			
	 	 	 By:
	 	 K2 Inc., its Manager

				
	 	 	 	 	 By:
	 	/S/    DUDLEY W.
MENDENHALL        
	 	 	 	 	 	 	 Dudley W. Mendenhall
 Senior Vice President and Chief Financial Officer

  

			
	 EARTH PRODUCTS, INC.
 KATIN, INC.

		
	By:	 	/S/    DIANA C.
CRAWFORD        
	 	 	 Diana C. Crawford
 Corporate Secretary

  

			
	 MARKER USA, INC.
 MIKEN SPORTS, LLC
 VOLKL SPORT AMERICA CORP.

		
	By:	 	/S/    DUDLEY W.
MENDENHALL        
	 	 	 Dudley W. Mendenhall
 Senior Vice President – Finance

			
	 ADMINISTRATIVE AGENT:

	 JPMORGAN CHASE BANK, N.A.

		
	By:	 	/S/    KEVIN D.
PADGETT        
	 Name:
	 	Kevin D. Padgett
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: General Electric Capital Corporation
		
	By:	 	/S/    LAWRENCE E.
RIDGEWAY        
	 Name:
	 	Lawrence E. Ridgeway
	 	 	Duly Authorized Signatory

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Bank of America N.A.
		
	By:	 	/S/    MATTHEW
KOENIG        
	 Name:
	 	Matthew Koenig
	 Title:
	 	Senior Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Wells Fargo Bank N.A.
		
	By:	 	/S/    JUTTA S.
GRAHAM        
	 Name:
	 	Jutta S. Graham
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Wells Fargo Foothill, LLC
		
	By:	 	/S/    DENNIS
KING        
	 Name:
	 	Dennis King
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: LaSalle Bank National Association
		
	By:	 	/S/    NICHOLAS
DEVILDER        
	 Name:
	 	Nicholas Devilder
	 Title:
	 	Assistant Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: PNC Bank National Association
		
	By:	 	/S/    GREGORY J.
HALL        
	 Name:
	 	Gregory J. Hall
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: GMAC Commercial Finance, LLC
		
	By:	 	/S/    MIKE
WILLIAMS        
	 Name:
	 	Mike Williams
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Merrill Lynch Business Financial Services, Inc.
		
	By:	 	/S/    STEVE
RUBINSTEIN        
	 Name:
	 	Steve Rubinstein
	 Title:
	 	Assistant Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Union Bank of California, N.A.
		
	By:	 	/S/    NANCY
PERKINS        
	 Name:
	 	Nancy Perkins
	 Title:
	 	Vice President

			
	 	 	 K-2 SIGNATURE PAGE TO FOURTH
 AMENDMENT DATED AS OF JULY 25, 2005

  

			
	Name of Institution: Bank of The West.
		
	By:	 	/S/    TERRY A. SWITZ,
JR.        
	 Name:
	 	Terry A. Switz, Jr.
	 Title:
	 	Assistant Vice PresidentFeedstock Agreement

 Exhibit 10.1 
  
 Portions of this exhibit indicated by “******” have been omitted pursuant to a 
 request for confidential treatment under Rule 24b-2 of the Securities Exchange Act 
 of 1934, as amended, and the omitted material has been separately filed with the 
 Securities and Exchange Commission. 
  
 Feedstock
Agreement No. 2 
 Mount Storm Coal Supply, LLC 
  
 Purchase Order No. 58 
 Date: As of July 1, 2005 
  
 PLEASE RETURN ACKNOWLEDGEMENT 
 COPY PROMPTLY TO THE ISSUING OFFICE 

							
	 	 	 	 	OUR PURCHASE ORDER NUMBER MUST BE
SHOWN ON ALL INVOICES AND SHIPPING
PAPERS
				
	 	 	SELLER	 	 	  	BUYER
	 T
	 	Alliance Coal, LLC	 	F	  	Mount Storm Coal Supply, LLC
	 O
	 	1717 South Boulder Ave.	 	R	  	Invoice To:
	 	 	Tulsa, OK 74119	 	O	  	Mount Storm Coal Supply, LLC
	 	 	Attn: Brad Shellenberger	 	M	  	5160 Parkstone Drive, Suite 260
	 	 	Phone: (918) 295-7619	 	 	  	Chantilly, VA 20151-3813
	 	 	Fax: (918) 295-7360	 	 	  	Attn: Accounts Payable
	 	 	 	 	 	  	Phone: (703) 263-0200
	 	 	 	 	 	  	Fax: (703) 378-3047

  
 TERMS AND CONDITIONS

  

			
	Term:	  	July 1, 2005 through December 31, 2007
		
	Quantity:	  	Up to 225,000 tons per month as mutually agreed by the parties
		
	Base Price:	  	The base price per ton of coal sold and purchased pursuant to this Order will be determined by reference to the Agreement for the Supply of Coal, dated June 22, 2005 between Seller and VEPCO
(the “New Mt. Storm Agreement”) or, as appropriate, any other corresponding coal supply agreement with VEPCO (such other coal supply agreement and the New Mt. Storm Agreement being referred to hereinafter as the “Corresponding Coal
Supply Agreement”). Seller shall notify Buyer of the applicable price (the “Applicable Price”) on a frequency of no less than each calendar quarter, unless otherwise mutually agreed by the parties. The base price under this Order will
be ******.
		
	Approximate Rate/Shipment:	  	Delivery of tons as mutually agreed
		
	Point of Delivery:	  	VEPCO Mount Storm Power Station “P” conveyor discharge
		
	Transportation:	  	Provided by Seller
		
	Terms of Payment:	  	Coal receipts for each calendar week, Monday 12:00AM through Sunday 11:59PM, will be paid within 7 days after Buyer’s receipt of Seller’s invoice by facsimile. As security for the
Buyer’s payment obligations hereunder, Buyer, within 15 days following the date hereof, shall cause to be issued in favor of each of Seller and Mettiki Coal, LLC, Seller’s subsidiary, an irrevocable letter of credit in the form referred to
in the Security Terms and Conditions attached hereto.
		
	Date Deliveries Commence:	  	January 1, 2007

			
		
	Other Provisions:	  	 Weights by Mettiki Coal, LLC - Sellers Account
 Sampling by Mettiki Coal, LLC - Sellers Account
 Analysis - Seller to provide all analytical testing (Sellers Account), and VEPCO will provided
reporting and administrative services for Mount Storm Coal Supply, LLC.

  

			
	 QUALITY SPECIFICATIONS:
	  	 (monthly weighted average – As Received Basis)

	 Moisture – Max
	  	 ******%

	 Ash – Typical
	  	 ****** lbs. Ash/mmBtu

	 Sulfur – Max
	  	 ****** lbs. SO2/mmBtu

	 BTU/Lb – Min
	  	 ******

	 Volatile – Range
	  	 ******-******

	 Size
	  	 ******

	 3/8” x 0 – Min
	  	 ******%

  
 See attached terms and conditions for
quality adjustment parameters. 
  
 THIS ORDER FOR GOODS AND/OR SERVICES SPECIFIED
ABOVE IS SUBJECT TO THE TERMS AND CONDITIONS ATTACHED HERETO. I HEREBY ACCEPT THIS ORDER, AS COPIED HEREON, IN ACCORDANCE WITH THE TERMS AND CONDITIONS SPECIFIED HEREON AND EXPECT TO SHIP AS INDICATED BELOW: 
  

							
	 SELLER:
	 	 BUYER:

	 Alliance Coal, LLC
	 	 Mount Storm Coal Supply, LLC

				
	 By:
	 	 /s/ George C. Tichnell

	 	 By:
	 	 /s/ Kirby B. Martin, Jr.

	 Name:
	 	 George C. Tichnell
	 	 Name:
	 	 Kirby B. Martin, Jr.

	 Title:
	 	 Pursuant to Delegation of
	 	 Title:
	 	 Senior Vice President, Sales & Marketing

	 	 	 Authority dated July 18, 2005
	 	 Date:
	 	 July 18, 2005

	 Date:
	 	 August 4, 2005
	 	 	 	 Phone:    (304) 414-0420

	 	 	 	 	 	 	 Fax:        (304) 414-0430

  
 BY SHIPPING THE ABOVE GOODS OR BY
ACKNOWLEDGING RECEIPT OF THIS ORDER HEREAFTER CALLED “ORDER” YOU ACCEPT THE TERMS & CONDITIONS SET FORTH ON THE FACE AND AS ATTACHED HERETO, AND ANY DIFFERENT OR ADDITIONAL TERMS IN YOUR ACCEPTANCE OF THE OFFER ARE HEREBY OBJECTED TO
AND SHALL NOT BE BINDING UPON BUYER HEREAFTER. 

 STANDARD TERMS & CONDITIONS 
  

	 	(1)	ACCEPTANCE. This order (“Order”) constitutes a binding contract upon the terms and conditions herein contained when accepted by Seller, either by acknowledgment or
by commencement of shipments. If any of Seller’s prior proposals, quotations, or writing are in conflict with the terms of this Order, the terms hereof shall govern. Buyer recognizes that Seller may, for operating convenience, utilize its own
form of acknowledgement or confirmation of sale in accepting this Order, and in such case, any provisions, terms or conditions is such form of acceptance which modify, conflict with, contradict or add to any provision, term or condition of this
Order shall be deemed to be waived (unless expressly accepted in writing by Buyer), it being agreed that the provisions, terms and conditions of this Order constitute the entire contract between the parties. No alterations, modifications, or
deletions of any terms or provisions of this Order made by Seller will be binding upon Buyer, unless expressly accepted in writing by Buyer. 

  

	 	(2)	PRICE AND PAYMENT. Payment of the base price will be made in accordance with the terms set forth in the Order. 

  

	 	(3)	GENERAL INDEMNITY. Seller agrees to indemnify and save harmless Buyer, its officers, directors, employees and representatives from any responsibility and liability for any
and all claims, demands, losses, legal actions for personal injuries, and property damage (excluding inside and outside attorney’s fees) (i) due to any failure of Seller to comply with laws, regulations or ordinances, or (ii) due to the acts or
omissions of Seller in the performance of this Order. Buyer agrees to indemnify and save harmless Seller, its officers, directors, employees and representatives from any responsibility and liability for any and all claims, demands, losses, legal
actions for personal injuries, and property damage (excluding inside and out side attorney’s fees) (i) due to any failure of Buyer to comply with laws, regulations or ordinances, or (ii) due to the acts or omissions of Buyer in the performance
of this Order. Notwithstanding any other term or provision contained herein, the parties acknowledge and agree that, except for the “Base Price” set for herein, Seller will not have any greater reduced, additional or changed obligation or
liability than Seller has under the appropriate Corresponding Coal Supply Agreement. 

  

	 	(4)	CONFIDENTIAL DATA. Seller agrees to treat as strictly secret and confidential all specification, drawings, blueprints, nomenclature, samples and models and other information
supplied by Buyer and further agrees not to disclose any information relating to this Order to any person or entity other than the Buyer. The parties acknowledge and agree that nothing contained herein shall prohibit either party hereto or their
respective parent entities from making any public disclosures regarding this Order if such disclosure is required by applicable securities laws or any listing agreement with any national securities exchange or quotation system.

  

	 	(5)	FORCE MAJEURE. 

  

	 	(a)	Seller shall not be liable for any delay, reduction, or suspension of shipments resulting from any event of force majeure, and Buyer shall not be liable for failure, refusal, or
inability to perform its obligations under this Agreement resulting from any event of force majeure, provided that Buyer or Seller, as the case may be, (1) promptly notifies the other party of such event and its cause and confirms such in writing
within 15 calendar days of its occurrence, (2) promptly supplies such information about the event and its cause that may be reasonably requested by the other party, and (3) exercises due diligence to remove the cause of the event or to lessen its
effect. Seller shall also notify its truck transportation subcontractor(s), if any, of any event of force majeure. Notwithstanding the foregoing, the settlement of labor disputes shall be entirely at the discretion of the affected party.

  

	 	(b)	Events of force majeure shall be events beyond the control and without the fault or negligence of the party claiming such event, including but not limited to floods, fire,
accidents, extreme geological conditions at Seller’s Mine, strikes or other labor disputes, frozen coal, major restrictions on use or breakdown of equipment 

	 	    	(including equipment utilized for unloading coal supplied pursuant to this Order at VEPCO’s Mount Storm Station (the “Station”), a reduction or interruption of
generation of electricity at the Station resulting from a total or partial forced outage of a coal-fired unit at the Station, governmental regulations or restrictions, unexpected loss of electric load, or any cause, whether of the same or a
different nature, existing or future, foreseen or unforeseen. 

  

	 	(c)	In no event shall this force majeure provision be construed to relieve either party of any obligations hereunder solely because of increased costs or other adverse economic
consequences that may be incurred through the performance of such obligations of the parties. 

  

	 	(6)	REMEDIES. Except for reasons of Force Majeure, if Buyer fails to take delivery of all or a portion of the quantity of coal as required under this Order, Buyer shall pay
Seller an amount for each ton of coal not received times the positive difference, if any, between: (i) the price Seller would have received for the coal under this Agreement, and (ii) the price at which Seller is, or would be, able to sell
comparable quantities of coal using reasonable efforts, provided such price is a commercially reasonable price, which may include additional charges such as handling, loading or additional transportation cost Seller must absorb as the result of
selling the coal to any other party Seller may choose. Except for reasons of Force Majeure, if Seller fails to make delivery of all or a portion of the quantity of coal as required under this Order, Seller shall pay Buyer an amount for each ton of
coal not received times the positive difference, if any, between: (i) the price at which Buyer is, or would be, able to purchase comparable quantities of coal using reasonable efforts, provided such price is a commercially reasonable price, and
which may include additional charges such as handling, unloading or transportation from any other party Buyer may choose, and (ii) the price Buyer would have paid for the coal under this Order. 

  

	 	(7)	EQUAL OPPORTUNITY EMPLOYER. Buyer and Seller, and each of them, is an equal opportunity employer. Seller agrees not to discriminate against employees or applicants for
employment because of race, color, religion, sex or national origin and also to abide by and comply with the provisions of Presidential Executive Order No. 11246, which is incorporated herein by reference to the same extent as though set forth
herein in full. 

  

	 	(8)	GOVERNING LAW. The contract resulting from the delivery and acceptance of this Order shall be interpreted under and shall be governed by the laws of the State of West
Virginia, excluding any conflicts of law, rule or principal that might refer the interpretation or enforcement of this Order to the laws of another jurisdiction. 

 ADDITIONAL TERMS & CONDITIONS 
  

	•	 	QUALITY VARIATION PRICE ADJUSTMENTS 

  

	 	•	 	BTU Quality Adjustment per ton = 

  

							
	[	 	( Actual as Received BTU/lb X (****** - $******)	 	]	 	- (****** - $******)
	 	****** BTU/lb	 	 

  

	 	•	 	Payment – All BTU quality adjustments per ton will be determined by Buyer for each calendar month’s receipts and a notice thereof shall be provided by Buyer to Seller
within 15 calendar days following the month in which the coal was received. Payments, if applicable by either party, will follow within 15 calendar days following the notice to Seller. 

  

	•	 	· ANALYSIS 

  
 Pursuant to the terms of any agreement entered into between Mount Storm Supply and VEPCO which is corresponding to this Order, VEPCO shall act as Mount
Storm Supply’s consultant in regards providing, reporting and administrative services relating to any coal purchased by Mount Storm Supply under this Order. As such, all reporting and administrative services provided to Mount Storm Supply by
VEPCO shall be in accordance with the terms and conditions of the appropriate Corresponding Coal Supply Agreement. Unless otherwise agreed to by Seller and Mount Storm Supply, Mount Storm Supply shall have no greater rights of suspension of
shipments than as defined in the appropriate Corresponding Coal Supply Agreement. 
  

	•	 	· SUSPENSION OF SHIPMENTS 

  
 Shipments of coal under this Order may be suspended if coal received hereunder fails to comply with the following specifications based on the As-Received
analyses: 
  

									
	 	  	Three
Consecutive
Months (1)

	  	 Monthly (2)

	  	2 Analyses Per
30 Consecutive
Day Period (3)

	  	 Each
 Analysis (4)

	 Vol. Matter %
	  	—  	  	******-******	  	—  	  	—  
					
	 Moisture %
	  	—  	  	****** (max.)	  	—  	  	—  
					
	 Ash%
 (lbs. /mmBtu)
	  	****** (max.)	  	 	  	****** (max.)	  	—  
					
	 Sulfur
 (lbs.SO2/mmBtu)
	  	—  	  	******-******	  	—  	  	—  
					
	 Grind (HGI)
	  	****** (min.)	  	—  	  	—  	  	—  
					
	 Ash Fusion °F
 (Hemis.)
	  	—  	  	—  	  	—  	  	****** (min.)
					
	 Heating Value
 (Btu/lb.)
	  	****** (min.)	  	****** (min.)	  	****** (min.)	  	—  
					
	 Size
	  	—  	  	—  	  	—  	  	******%
fines (max.)
(no debris,
etc.)

 NOTES 
  

	(1)	The weighted average (weighted by the tons delivered for each month) of the monthly prorated analyses of coal shipped during any three consecutive Calendar Months shall not deviate
from any of the limits in this column. 

	(2)	The monthly prorated analysis of coal shipped during any Calendar Month shall not deviate from any of the limits in this column. 

	(3)	No two Proximate Analyses of coal shipped during any 30 consecutive day period shall deviate from any of the limits in this column. 

	(4)	No one Proximate Analysis or size analysis of coal shipped during any time period shall deviate from any of the limits in this column. 

 If Seller ships coal that fails to comply with one or more of the specifications set forth above, Buyer may provide Seller notice of such noncompliance
and request that Seller provide Buyer assurances that future shipments will comply with such specifications. 
  

	•	 	THIRD PARTY SERVICES 

  
 Buyer and its affiliate, PC West Virginia Synthetic Fuel #2, LLC (“Pace”), have entered into various transactions with VEPCO whereby Pace shall
produce synthetic fuel that qualifies for Section 29 tax credits that is derived from coal (“Synfuel”) at Pace’s synthetic fuel facility (the “Synfuel Facility”), which Synfuel Facility shall be operated and maintained by
PACE adjacent to or near VEPCO’s Mount Storm Station (“Station”) 
  
 When made available by Seller, Buyer shall utilize coal for use as feedstock for the Synfuel Facility under this Order ******. Buyer shall provide to Seller a daily tabulation of the total volume of synfuel produced
by the Synfuel Facility, and the coal tonnage supplied by Seller that day which was were utilized for the production of Synfuel. 
  
 Seller has constructed a truck unloading facility adjacent to Vepco’s Station (“Facility”). If Seller, in its sole discretion, determines
it can provide Buyer with use of the Facility to receive coal(s) from sources other than from Seller’s Mine (“Third Party Sources”), and such use will not impact Seller’s utilization of the Facility or Buyer’s and
Seller’s obligations under this Order, Buyer and Seller shall then mutually agree to acceptable procedures for the throughput of third party coal through the Facility. Unless otherwise agreed by the parties in writing, any coal delivered to the
Facility from Third Party Sources will be ratably delivered during Seller’s normal scheduled operating hours of the Facility. If requested by Buyer, Seller shall exert reasonable efforts to extend the normal scheduled operating hours of the
Facility to accommodate the delivery of coal from Third Party Sources. Seller shall have the right to suspend or reject deliveries of coal from Third Party Sources if they are not in compliance with the legal load limits as then currently enforced
in the State of West Virginia including any permitted variances and tolerances, and/or if the equipment is not compatible with design and safe operation of the Facility as existing or modified to accommodate the deliver of such coal from Third Party
Sources. Buyer will cause VEPCO to provide to Seller a daily tabulation of the certified weights for each truck load of coal delivered to the Facility from Third Party Sources. 
  

	•	 	TERMINATION 

  
 Either party shall have the right to terminate this Agreement on seven (7) days prior written notice to each other in the event the tax credits under
Section 29 of the Internal Revenue Code arising from the production and sale of synthetic fuel derived from the coal are no longer available or are materially reduced. Seller shall not be subjected to any price adjustments for prior or future coal
receipts if Section 29 tax credits are altered and affect past or future sales of synthetic fuel which were derived from the Seller’s coal receipts. 
  

	•	 	WARRANTY 

  
 SELLER MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE COAL SUPPLIED HEREUNDER, OR AS TO
THE RESULT FROM USE THEREOF. 

 SECURITY TERMS AND CONDITIONS 
  

	1.	Buyer shall cause a letter of credit in the form attached as Exhibit 1 to that certain Feedstock Agreement No. 1, dated as of July 1, 2005, between Buyer and Mettiki Coal, LLC, a
subsidiary of Seller (“Mettiki Coal”), a copy of which is attached hereto, to be issued and maintained in effect to support Buyer’s obligations to make payments due for coal delivered under Feedstock Agreement No. 1, dated as of July
1, 2005, between Buyer and Mettiki Coal, Feedstock Agreement No. 2, dated as of July 1, 2005, or any other definitive Coal Supply Agreement that Buyer, Seller and/or Mettiki Coal, may enter into and that refers to or incorporates these terms and
conditions or substantially similar provisions (collectively, the “Definitive Coal Supply Agreements”). 

  

	2.	Seller may draw on the letter of credit for payment of amounts that remain unpaid by Buyer for two (2) business days after Seller has notified Buyer in writing via facsimile that
amounts are past due. The amount drawn by Seller may not exceed the amount that is past due. 

  

	3.	Buyer shall cause the stated amount of the letter of credit to be reinstated following a drawing by Seller. 

  

	4.	Seller shall return the letter of credit to the issuing bank within five (5) days after the termination or expiration of the Feedstock Agreement No. 2 and payment by Buyer of all
outstanding amounts due under Feedstock Agreement No. 1, Feedstock Agreement No. 2, and all other Definitive Coal Supply Agreements. 

 Exhibit 1 
  
 [Wachovia letterhead] 
  

			
	To:	 	Mettiki Coal, LLC
	 	 	1717 South Boulder Ave.
	 	 	Tulsa, OK 74119
		
	 	 	Alliance Coal
	 	 	1717 South Boulder Ave.
	 	 	Tulsa, OK 74119

  
 Dear Sirs: 
  

	1.	We hereby establish in favor of each of Mettiki Coal, LLC (“Mettiki Coal”) and Alliance Coal, LLC (“Alliance Coal”), as beneficiaries, this Irrevocable Standby
Letter of Credit No.              (the “Letter of Credit”) for the account of Mt. Storm Coal Supply, LLC (the “Account Party”) in the amount of ****** U.S.
Dollars (US$******) (the “Stated Amount”) effective immediately and expiring at our close of business on April 30, 2008 (or if such date is not a Business Day, as defined below, on the next succeeding Business Day thereafter) (as extended
from time to time pursuant to the terms hereof, the “Expiration Date”), or such other date of termination provided by the terms hereof. 

  

	2.	This Letter of Credit is issued at the request of the Account Party pursuant to (a) that certain Feedstock Agreement No. 1, dated as of July 1, 2005 (as amended from time to time)
between the Account Party and Mettiki Coal, and (b) that certain Feedstock Agreement No. 2, dated as of July 1, 2005 (as amended from time to time), between the Account Party and Alliance Coal, and we hereby irrevocably authorize Alliance Coal to
draw on us, in accordance with the terms and conditions hereof, all or a portion of the Stated Amount. 

  

	3.	A drawing hereunder may be made by Alliance Coal on any Business Day prior to the Expiration Date by delivering to us at our address at 1300 I Street, N.W. 12th Floor, Washington, D.C. 20005 (i) a certificate in the form
of Annex 1 hereto, duly completed and signed by a person purporting to be an authorized officer of Alliance Coal and (ii) Alliance Coal’s draft in the form of Annex 2, duly completed and endorsed on the reverse thereof, referring thereon to
Wachovia Bank, National Association Irrevocable Standby Letter of Credit No.            .” Partial and multiple drawings are permitted hereunder.

  

	4.	We hereby agree that drafts drawn under and in compliance with the terms and conditions of this Letter of Credit shall be duly honored on due presentation at our office set forth
above. Within three (3) Business Days after receipt of the draft and the drawing certificate from Alliance Coal, we will disburse the funds by wire transfer of immediately available funds in accordance with Alliance Coal’s payment instructions
set forth therein. 

  

	5.	If a demand for payment made by Alliance Coal hereunder does not, in any instance, conform to the terms and conditions in this Letter of Credit, we shall give Alliance Coal prompt
notice that the demand for payment was not effected in accordance with the terms and conditions in this Letter of Credit, stating the reasons therefore and that we will upon Alliance Coal’s instructions hold any documents at Alliance
Coal’s disposal or return the same to Alliance Coal. Upon being notified that the demand for payment was not effected in conformity with this Letter of Credit, Alliance Coal may attempt to correct any such non-conforming demand for payment to
the extent that Alliance Coal is otherwise entitled, under the terms of this Letter of Credit (without regard to the provisions of this sentence), to make a demand for payment. 

	6.	Upon the payment hereunder to Alliance Coal of the amount demanded hereunder, we shall be fully discharged of our obligations under this Letter of Credit to the extent of the amount
specified in such draft presented hereunder. By paying to Alliance Coal the amount demanded in accordance herewith, we make no representations as to the correctness of the amount demanded. 

  

	7.	This Letter of Credit shall automatically terminate and be delivered to us for cancellation upon the earlier of (i) the date we have honored Alliance Coal’s draft or drafts
presented hereunder in an aggregate amount equal to the initial Stated Amount, and (ii) the Expiration Date. 

  

	8.	As used herein, “Business Day” shall mean any day other than a Saturday, Sunday or a day on which banks located in North Carolina are authorized or required to close.

  

	9.	Except as otherwise expressly stated herein, this Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (the “Uniform Customs”). As for matters not governed by the Uniform Customs, this letter of credit shall be governed and construed in accordance with the laws of North Carolina, without regard to principles of
conflicts of law. 

  

	10.	This Letter of Credit sets forth in full our undertaking, and such undertaking shall not in any way be modified, amended or amplified by reference to any document, instrument or
agreement referred to herein, and any such reference shall not be deemed to incorporate herein by reference any documents, instrument or agreement. 

  

			
	 Very truly yours,

	
	 WACHOVIA BANK,

	 NATIONAL ASSOCIATION

		
	 By:
	 	  

	 Name:
	 	 
	 Title:
	 	 

 Annex 1 to Letter of Credit 
  
 [Letterhead of Alliance Coal, LLC] 
  

DRAWING UNDER IRREVOCABLE STANDBY 
 LETTER OF
CREDIT NO.                  
  
 Date:             , 
  

	TO:	Wachovia Bank, National Association 

 [Address] 

 
 Dear Sirs: 
  
 Reference is made to the above-captioned Letter of Credit issued by you in favor of Alliance Coal, LLC (“Alliance Coal”) and
Mettiki Coal, LLC, a subsidiary of Alliance Coal (“Mettiki Coal”), as beneficiaries, for the account of Mt. Storm Coal Supply, LLC (the “Account Party”). Such Letter of Credit is issued as security for the payment obligations of
the Account Party under (a) that certain Feedstock Agreement No. 1, dated as of July 1, 2005 (as amended from time to time), between the Account Party and Mettiki Coal, (b) that certain Feedstock Agreement No. 2, dated as of July 1, 2005 (as amended
from time to time), between the Account Party and Alliance Coal and (c) any other Coal Supply Agreement that the Account Party, Mettiki Coal and/or Alliance Coal may enter into that refers to or incorporates the terms and conditions of Feedstock
Agreement No. 1 or Feedstock Agreement No. 2 or substantially similar provisions. 
  
 Alliance Coal certifies as follows: 
  
 Alliance Coal is making a
drawing under the Letter of Credit in the amount of $            . Alliance Coal or Mettiki Coal has notified the Account Party in writing that the amount claimed is past due, and
the Account Party has not paid the claimed amount within two (2) Business Days after its receipt of such written notice via facsimile. 
  

			
	 Very truly yours,

	
	 Alliance Coal, LLC

		
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

 Annex 2 to Letter of Credit 
  
 [Letterhead of Alliance Coal, LLC] 
  

DRAFT 
  
 On [DATE] 
  
 PAY TO: Alliance Coal, LLC

  
 U.S.$                 
  
 [INSERT WIRE INSTRUCTIONS] 
  
 FOR VALUE RECEIVED AND DRAWN UNDER WACHOVIA BANK, NATIONAL ASSOCIATION IRREVOCABLE STANDBY LETTER OF CREDIT
NO.                . 
  

			
	 Alliance Coal, LLC

		
	 By:
	 	  

	 Name:
	 	  

	 Title:

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