Document:

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Exhibit 10.16
Coal Purchase Contract

SELLER AND ADDRESS                           FUEL PURCHASE ORDER:  10-62660-P
Eastern Consolidated Energy, Inc.            DATED AS OF:  May 16, 2005
12508 W. Atlantic Boulevard
Coral Springs, FL 33071
Attn:  Robert W. Ramey
Phone:  727-937-0038/Fax:  727-937-1448

BUYER AND ADDRESS                            CONSIGNMENT
Ohio Valley Electric Corporation             Kyger Creek Plant
P.O. Box 468                                 Cheshire, OH
Piketon, OH  45661                           MP 259.6, Ohio River
Attn:  R. D. Cook

Commodity: Crushed, bituminous coal, containing no synthetic fuels,
substantially free from any extraneous material, with no intermediate sizes to
be added or removed and otherwise meeting the specifications of this Contract.

Term: July 1, 2005 through June 30, 2006.  Buyer shall have the option to
extend this Purchase Order for a period of up to twenty-four months (the
"Extended Term") by providing notice to Seller no later than April 1, 2006.
Such notice may be provided verbally or by E-mail, and shall be confirmed in
writing as soon as practicable.

Quantity: Deliveries shall be by barge in accordance with the following
schedule:
 July through December 2005     60,000 tons per month
 January through June 2006      50,000 tons per month

Deliveries during the Extended Term, if applicable, shall occur at the rate of
40,000 tons per month. Each barge shall constitute a "Shipment."

Price: Except as provided herein under Quality Adjustments, $57.67 per ton FOB
barge at the Delivery Point during the period July 1, 2005 through September
30, 2005 and $56.50 per ton FOB barge at the Delivery Point during the period
October 1, 2005 through December 31, 2005.

The FOB barge per ton price for deliveries during the period January 1, 2006
through June 30, 2006, shall be determined by November 1, 2005, based upon
market conditions.  Such price shall not be in excess of $54.00 per ton, nor
lower than $51.00 per ton.  In order to determine the price, Buyer and Seller
agree to the following:  On October 28, 2005, the parties shall obtain the
prior day's published NYMEX price for trades for the first half of 2006 and
the current traded value for sulfur dioxide allowances to determine the
equivalent price on a per million Btu basis.  Consideration shall be given to
Seller's higher Btu per pound (13,000 versus 12,000) and higher sulfur dioxide
(2.62 versus 1.67) than those values for the NYMEX product.  The price so
determined shall be the effective price for the period January 1, 2006 through
June 30, 2006.

During the Extended Term, if applicable, the price for deliveries shall be
$53.00 per ton FOB barge at the Delivery Point, except as provided herein
under Quality Adjustments.

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Quality: As-received basis in accordance with ASTM standards ("Standards") for
each Shipment, as follows:

                   Contracted          Monthly           Applicable Lot
Characteristic:     Standard:     Suspension Limit:     Suspension Limit:
---------------     ---------     -----------------     -----------------
July 1, 2005 through September 30, 2005

Btu/lb:              12,500          12,400 minimum        12,300 minimum
Sulfur (%):            1.20            1.20 maximum          1.20 maximum
SO2 (lbs. SO2/mmBtu):  1.92            1.92 maximum          1.92 maximum
Moisture (%):          7.00            8.50 maximum         10.00 maximum
Ash (%):              11.00           12.00 maximum         13.50 maximum
Volatile Matter (%):  30.0           Not Applicable         28.0 minimum
Hardgrove Grindability: 44           Not Applicable           43 minimum
Ash Fusion Temp.
H = 1/2W F Red. Atm. 2,500          Not Applicable         2,100 minimum

October 1, 2005 through December 31, 2005

Btu/lb:             12,500           12,400 minimum        12,300 minimum
Sulfur (%):           1.45             1.52 maximum          1.57 maximum
SO2 (lbs. SO2/mmBtu): 2.32             2.32 maximum          2.32 maximum
Moisture (%):         7.00             8.50 maximum         10.00 maximum
Ash (%):             11.00            12.00 maximum         13.50 maximum
Volatile Matter (%): 30.0            Not Applicable         28.0 minimum
Hardgrove Grindability: 44           Not Applicable         43 minimum
Ash Fusion Temp.
H = 1/2W F Red. Atm. 2,450          Not Applicable         2,100 minimum

January 1, 2006 through June 30, 2006, and the Extended Term, if applicable.
---------------     ---------     -----------------     -----------------
Btu/lb:              13,000          12,850 minimum        12,700 minimum
Sulfur (%):            1.70            1.78 maximum          1.82 maximum
SO2 (lbs. SO2/mmBtu):  2.62            2.70 maximum          2.80 maximum
Moisture (%):          7.00            8.50 maximum         10.00 maximum
Ash (%):               9.00           10.00 maximum         11.00 maximum
Volatile Matter (%):  30.0           Not Applicable         28.0 minimum
Hardgrove Grindability: 44           Not Applicable         43 minimum
Ash Fusion Temp.
H = 1/2W F Red. Atm. 2,350          Not Applicable         2,100 minimum

Sizing: Typical 2" x 0" with maximum 55% passing one-quarter inch square wire
cloth sieve to be determined on the basis of the primary cutter of the
mechanical sampling system.

Source: Warfield Mine, washed Alma seam of coal, located in Martin County,
Kentucky; Corbin Mining, Pondcreek seam of coal, located in Pike County,
Kentucky; and Pasture Fork Mine, Lower Peach Orchard and Broaz seams of coal
in Morgan County, Kentucky.

Delivery Point: FOB Buyer's barge at the Riverway South Dock, Mile Post 7.4 on
the Big Sandy River.

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Weighing: The weight of the coal delivered by barge shall be determined by
Buyer by the use of a belt scale system located at the plant of consignment.
The accuracy of the weighing party's belt scales shall be maintained to within
plus or minus one half of one percent (0.50%) accuracy.  The weighing party's
belt scales shall be tested and calibrated at least once each month in
accordance with the guidelines outlined by NIST or other procedures which
shall be mutually acceptable to Seller and Buyer. Weights taken in accordance
with this provision shall be deemed accepted as correct (absent manifest
error) and shall govern all invoicing and payments hereunder.  Unless
otherwise specified, the costs of weighing shall be for Buyer's account.

Sampling & Analysis: Sampling, via mechanical sampler for each Shipment, shall
be performed by Buyer at the plant of consignment.  Sampling and analysis
shall be performed in accordance with ASTM standards with the cost for such
sampling and analysis for Buyer's account.  Such analysis shall be final and
binding and, absent manifest error, govern for payment.  Seller shall have the
right to have a representative present at any and all times to observe the
sampling and collect a split of the sample when sampling is being performed
pursuant to these provisions.

Other Terms: Buyer shall retain an amount equal to $1.00 per ton ("Retained
Amount") for all tons delivered during the first nine months of this Purchase
Order.  The Retained Amount will be subtracted from each monthly payment made
by Buyer during the first nine months of the Term. The Retained Amount will be
returned to Seller with each monthly payment made by Buyer during of the last
three months of the Term.

Should Buyer elect the Extended Term, such Retained Amount shall continue to
be retained by Buyer for the first half of the Extended Term.  The Retained
Amount will be returned to Seller with each monthly payment made by Buyer
during second half of the Extended Term.

The Retained Amount shall accrue interest at the Federal Funds effective rate.
Interest will be paid during the last month of the Term or during the last
month of the Extended Term, should the contract be extended.

If Seller does not meet its delivery obligations under this Contract, in
addition to any other remedies to which Buyer may be entitled pursuant to this
Contract, at law or in equity, Buyer shall be entitled to setoff monies in the
account up to the damages amount as reasonably demonstrated by Buyer.

Buyer may terminate this Contract or terminate deliveries from the Source if
Buyer in its reasonable judgment determines through operating experience that
the coal therefrom causes unsatisfactory performance at the Plant of
consignment, even if such coal meets the requirements and specifications of
this Contract.  In such event, Buyer shall provide Seller with written notice
thereof, specifying the basis of such unsatisfactory performance.  Buyer shall
use its best efforts in cooperation with Seller to assess whether a feasible
remedy is possible.

Per the attached OVEC Fuel Purchase Order Terms and Conditions, which are
incorporated herein by specific reference.

Accepted:
Seller:                                     Buyer:
                                            David L. Hart
                                            Vice President
                                            OHIO VALLEY ELECTRIC CORPORATION
Date:  ________________                     Date:  May 17, 2005

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OVEC FUEL PURCHASE ORDER
TERMS AND CONDITIONS

 1)TERMS OF PAYMENT
Buyer shall make advance payment of $48.00 per ton for coal unloaded during
the first through the fifteenth calendar day of each month.  Such payment
shall be paid by the 25th day of such month.

Buyer shall submit to Seller the weighted average analytical and pricing data
for all coal unloaded from the first through the last calendar day of each
month within five (5) working days after the end of each month.  Thereafter,
Seller shall mail to Buyer, within two (2) working days of receipt of such
information, an invoice, in triplicate, covering such month's deliveries.

Final payment of the balance due to Seller, including the price for the second
half of such month's deliveries and the applicable price adjustment for
quality variation for such month's deliveries shall be paid by the 20th day of
the following month, provided Seller's invoice and Allowances (if applicable)
are submitted within the time period prescribed in the preceding paragraph.

2)ACCEPTANCE/AGREEMENT
Failure of Buyer or Seller, as the case may be, to execute and return the
attached Purchase Order (together with these Terms and Conditions the
"Contract") or to notify OVEC-IKEC of its disagreement with any of the terms
thereof within three Business Days of receiving this Contract constitutes the
other party's agreement to the terms set forth in this Contract.  OVEC-IKEC
hereby objects to any additions to or modifications of this Contract.

3)SCHEDULING, DELIVERY & TITLE AND RISK OF LOSS
Unless otherwise provided in the Purchase Order, Buyer shall advise Seller of
its desired loading dates and delivery schedule.  The parties will work
together in good faith to agree on a reasonable and mutually acceptable
delivery schedule within the Term and within each month during the Term.
Unless otherwise specified in the Purchase Order, Buyer shall designate to
Seller the scheduling, routing and method of Shipments of coal purchased under
this Contract.  Seller shall cause coal sold hereunder to be properly loaded
into the transport vehicle (i.e. railcars, barges, trucks, etc.) for delivery
to Buyer, provided that Buyer has provided Seller with applicable loading
instructions (including minimum and maximum weights) no less than 24 hours
prior to the arrival of Buyer's transport vehicle.  The delivery schedule
specified in the Purchase Order or as designated by Buyer in absence of such
in the Purchase Order is binding on both Buyer and Seller and may only be
changed by mutual written agreement.

Seller represents and warrants that it has title to all coal sold hereunder
and the same is shipped free and clear of all liens, encumbrances, and claims
of all third parties.  Title to and risk of loss of coal conforming to this
Contract shall pass to Buyer as follows:
a)For barge deliveries, as the loaded barges are pulled from the Delivery
Point.
b)For rail deliveries, as the loaded unit train or single car shipment is
pulled from the Delivery Point.
c)For truck deliveries, upon the coal being delivered and dumped at the plant
or other consigned destination.
d)For all Non Conforming Shipments (as hereinafter defined) title to and risk
of loss of coal shall revert back to Seller immediately upon any rejection or
nonacceptance by Buyer as provided elsewhere in this Contract.

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Seller and Buyer shall each indemnify, defend, and save harmless the other
party, and its Affiliates and their respective officers, directors, agents,
and employees from and against any liabilities, losses, claim, damages,
penalties, causes of action, or suits arising out of or in connection with its
failure to comply with its obligations under this Contract.

Seller shall indemnify, save harmless, and defend Buyer and its Affiliates and
their officers, directors, agents, and employees (all referred to in this
sentence as "Buyer") from and against any liabilities, expenses, losses,
claims, damages, penalties, causes of action, or suits, and all other
obligations whatsoever, including without limitation, all judgments rendered
against and all fines and penalties imposed upon Buyer (whether severally, or
in combination with others) and any reasonable attorneys' fees and any other
costs of litigation (all of which are hereinafter referred to as
"Liabilities") arising out of injuries or death to any person(s), or damage to
any property, caused by or related to, in whole or in part the railcars (or
barges, if applicable) furnished hereunder (as applicable), between the time
that such railcars (or barges, if applicable) are delivered to Seller or
Seller's agent and the time that custody thereof is properly returned to Buyer
(or to Buyer's agent carrier, if applicable), or if deliveries are by truck,
arising out of injuries or death to any person(s), or damage to any property,
caused by or related to, in whole or in part, to trucking of coal, whether
such coal is trucked by Seller or Seller's trucking contractor(s).  Any injury
or death to person(s) or damage to property as hereinbefore described shall be
reported to Buyer by Seller immediately upon the occurrence thereof, and
confirmed in writing as soon as possible.

FOR TRUCK DELIVERIES   Seller, at its expense, shall have coverage of the
insurance specified below, which shall be placed with insurance carrier(s)
acceptable to Buyer, and shall maintain this insurance at all times during
performance of this Contract:
(i)  Coverage for the legal liability of Seller under the workers'
compensation and occupational disease law of the state(s) in which the work is
(are) performed.  Seller shall be contributor to the state workers'
compensation fund(s) and shall furnish a certificate to that effect.  If
Seller is a legally permitted and qualified self-insurer, it may furnish proof
that it is such a self-insurer in lieu of submitting proof of insurance;
(ii)  Employer's liability insurance in an amount not less than $2,000,000.00
for each accident;
(iii) Commercial general liability insurance with limits of not less than
$2,000,000.00 for each occurrence and aggregate;
(iv)  Commercial automobile liability insurance with a limit for bodily injury
and property damage of not less than $2,000,000.00 each accident;
(v)  Seller shall obtain waivers of subrogation on all their insurance,
whether required by this Contract or in excess of the Contract requirements.
Such waivers shall be for the benefit of Buyer.

4)WEIGHING
All Deliveries:  For all non-PRB transactions, Buyer shall determine the
weight of the coal delivered hereunder at its expense using its rail, truck,
or belt scales, as applicable. For all PRB transactions, Seller shall
determine the weight of the coal delivered hereunder at its expense using its
rail scales or batch weighing system, as applicable.  The party responsible
for weighing is hereafter referred to as the weighing party and the other as
the non-weighing party.

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(A)  The accuracy of the weighing party's rail scale(s), truck scale(s), or
batch weighing system, as applicable, shall be maintained to within plus or
minus two tenths of one percent (0.20%).  The weighing party's rail scale(s),
truck scale(s), or batch weighing system, as applicable, shall be calibrated
at least once every six months in accordance with the guidelines established
by NIST.  The calibration shall be performed by a qualified third party (e.g.,
the rail carrier), using such equipment as deemed appropriate by such third
party.  At the non-weighing party's request, which may be made from time to
time, the weighing party shall inform the non-weighing party of the results of
such testing and calibration.  It shall be the responsibility of the weighing
party to arrange and schedule scale calibrations when required.

(B)  The accuracy of the weighing party's belt scales shall be maintained to
within plus or minus one half of one percent (0.50%) accuracy.  The weighing
party's belt scales shall be tested and calibrated at least once each month in
accordance with the guidelines outlined by NIST or other procedures which
shall be mutually acceptable to Seller and Buyer.  At the non-weighing party's
request, which may be made from time to time, the weighing party shall inform
the non-weighing party of the results of such testing and calibration.  It
shall be the responsibility of the weighing party to arrange and schedule
scale calibrations when required.

(C)  If the weighing party's scales are discovered to be outside of acceptable
tolerance ranges (plus or minus 0.20% for rail scale(s), truck scales, or
batch weighing system, and plus or minus 0.50% for conveyor belt scales), then
an appropriate adjustment will be made to the tonnage and invoiced
retroactively to the date of the most recent calibration or 30 calendar days
prior to the calibration which was found in error, whichever is later.

Barge Draft Surveys:  If there is no certified belt scale system at the
Delivery Point, and if the parties specifically agree that weights shall be
determined hereunder by draft survey taken at the Delivery Point, then all
such draft surveys shall be conducted by an independent surveyor (certified
commercial marine surveyor for vessels) experienced in the conduct of draft
surveys selected by mutual agreement of the parties.  In cases where (i) there
is no certified belt scale system at the Delivery Point or in absence of a
certified belt scale system and a draft survey is not taken at the Delivery
Point or (ii) the Delivery Point is the ultimate destination, weights shall be
determined at the destination by Buyer.

Weights determined in accordance with this Section 3 shall be deemed accepted
as correct (absent manifest error) and shall govern all invoicing and payments
hereunder.  Unless otherwise specified, the costs of weighing shall be for the
account of the weighing party.

Irrespective of which party's weights govern for payment hereunder, Seller
shall properly weigh each shipment hereunder and report such weights to Buyer
within 24 hours after the coal has been loaded for shipment.  Seller's weights
shall be reported to the recipients designated by and in the manner specified
by Buyer.

5) SAMPLING AND ANALYSIS
Buyer shall perform all sampling and analysis of coal for non-PRB transactions
unless otherwise agreed by the parties.  Seller shall perform all sampling and
analysis of coal for PRB transactions.  The party responsible for sampling and
analysis of coal is hereafter referred to as the sampling party and the other
as the non-sampling party.

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(A)  Notwithstanding the foregoing, Seller shall sample the coal or shall
provide for the coal to be sampled as it is loaded, analyze the sample(s) so
obtained, and notify Buyer and the consigned destination of the short
proximate (calorific value per pound, percent moisture, percent ash, percent
sulfur, and with respect to PRB coal, percent sodium oxide) average analytical
results of each Shipment.  Seller's notification shall include its weight
determination and the identifying number(s) of each Shipment, and shall be
provided within 24 hours after the coal is loaded for shipment, or within 36
hours should the Shipment be loaded on a Saturday.  Seller's analysis shall be
reported to the recipients designated by and in the manner specified by Buyer.
Seller shall immediately notify Buyer if either its sampling system or its
independent commercial laboratory becomes unavailable or unable, for any
reason, to provide the short proximate analysis.  Upon such occurrence(s),
Buyer and Seller shall establish procedures for sampling and/or analyzing the
coal shipped hereunder during such time that Seller's sampling system and/or
its independent commercial laboratory are unable to provide the short
proximately analysis for such coal.  Such short proximate analysis shall not
be used for payment purposes hereunder.

(B)  All sampling and analysis performed hereunder shall be performed by the
sampling party at its expense and shall comply with the governing ASTM
procedures and specifications in effect at the time of such sampling and
analysis.  Coal hereunder shall be sampled during the loading/unloading
process by the sampling party, prior to its commingling with other coals.  The
coal samples shall then be prepared and analyzed in Buyer's laboratory, or, if
Seller is the sampling party, by an independent commercial laboratory.  The
non-sampling party may observe the unloading, sampling, sample preparation and
analysis hereunder.  Each coal sample collected by the sampling party shall be
properly divided into at least two subsamples.  One subsample shall be
analyzed by the applicable laboratory for the governing contractual analysis.
The remaining sample is to be sealed in an airtight container and sent to the
non-sampling party at the non-sampling party's request provided such request
is made in writing within 30 days after the date of such sampling.  In the
event that the non-sampling party does not so request, the sampling party
shall retain the sample for no less than 30 days.

(C)  If Seller's analysis is used for payment purposes hereunder, all sampling
shall be performed using a mechanical sample system that has been certified
within the previous 24 calendar months by an independent commercial laboratory
mutually acceptable to the parties to be free of bias and that is properly
operated and maintained.  In case of disagreement as to the results of the
analysis reported by the Seller, Buyer may request analysis of Buyer's sample
by an independent referee laboratory mutually selected by the parties and the
final governing analysis shall be the referee analysis.  The cost of analyzing
Buyer's sample shall be borne by Buyer.

Seller's analysis shall be reported to the recipients designated by and in the
manner specified by Buyer.  For purposes of determining moisture hereunder,
the two-stage procedure as defined in ASTM D3302 shall be used.

Coal received, unloaded, and taken into account that is not sampled or is
sampled but not analyzed shall be taken into account as follows:  If during
any Monthly period at least fifty percent (by weight) of coal delivered at a
respective consigned destination during such period has been sampled and
analyzed, then the weighted average analytical results of such samples shall
be applicable to all coal delivered to such consigned destination during such
Monthly period.  If more than 50% (by weight) of coal delivered at a consigned
destination during any such Monthly period has not been sampled and analyzed,
then the weighted average analytical results of the portion of sampled and

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analyzed coal shall apply to such portion, and the weighted average analytical
result of the last preceding Month in which at least 50% (by weight) of the
coal delivered to such consigned destination was sampled and analyzed shall be
applicable to such portion of the coal delivered which was not sampled and/or
was not analyzed for such Monthly period.

6)QUALITY ADJUSTMENTS
If coal delivered under this Contract varies from the Quality specifications
in the Purchase Order (the "Specifications"), but Buyer does not exercise its
rejection rights under Section 6(A) below, quality adjustments shall be
calculated pursuant to the formulas set forth in this Section 5.  Within ten
days after the end of each Month during the Term, the quality adjustments, if
any, shall be netted against each other and the net quality adjustment, as
appropriate, for all Shipments of coal during such Month shall be determined
by Buyer, and Buyer shall pay Seller the net positive adjustment, if any, or
Seller shall credit Buyer the net negative adjustment, if any, on the next
invoice (or pay such amount to Buyer in the event no further invoices are due)
in accordance with the billing and payment terms of Section 7.

(A)  If the weighted average calorific value of the coal unloaded and taken
into account hereunder in a Month is not equal to the Contracted Month
Weighted Average Btu/lb., then there shall be an amount added to the Contract
Price (if the calculated number is positive) or subtracted from the Contract
Price (if such number is negative), as determined by the following formula, to
arrive at the adjusted price for such coal:

Amount Per Ton of Increase or = (Actual Btu   Contracted Btu)x Contract Price
Decrease for Calorific Value             Divided by Contracted Btu

provided, however, no premium will be paid for Calorific Value which exceeds
the Contracted Monthly Weighted Average Btu/lb. by 300 Btu per pound.

(B)  If the weighted average SO2 content of the coal unloaded and taken into
account hereunder in a Month is tested to have an SO2 content greater than the
SO2 Contracted Monthly Weighted Average Specification, the Contract Price for
such coal will be reduced by an amount per ton determined in accordance with
the following formula:

  ((SO2 Contracted   Actual lbs. SO2/mmbtu) * Actual Btu/lb. * E)
                        Divided by 1,000,000

E = the SO2 Monthly Price (or if not published, the average of the SO2 Daily
Prices for the applicable calendar month of delivery) of allowances expressed
in dollars per ton of SO2 in the table entitled "AIR Daily Emission Allowance
Indices" published in AIR Daily, or its successor publication, for such
calendar month of delivery as first published following such month.

Additionally, an amount of three dollars ($3.00) per ton shall be deducted
from the Contract Price for each Shipment of coal having an SO2 value greater
than the Shipment Suspension Limit.

(C)  For each Shipment of coal tested to have an ash content greater than the
Contracted Monthly Weighted Average Specification, the Contract Price for coal
in such Shipment will be decreased by $0.15 for each 0.5% ash increment, or
portion thereof, by which the Shipment's ash content is tested to be above the
Contracted Monthly Weighted Average Specification.  (For example, if the
Contracted Monthly Weighted Average is 13.00% and a Shipment has a percent ash
value of 13.70, then the Contract Price decrease shall be $0.30 per ton.)

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7)REJECTION AND SUSPENSION RIGHTS
(A)  If any Shipment of coal fails to conform to any requirement specified in
the Purchase Order (a "Non-Conforming Shipment"), Buyer shall have the option,
exercisable by notice to Seller of either (i) rejecting such Non-Conforming
Shipment at the Delivery Point or en route, but prior to unloading from
Transporter's equipment or (ii) accepting any Non-Conforming Shipment with a
Contract Price adjustment agreed to between Seller and Buyer.  Should Buyer
exercise such right of rejection, it shall notify Seller by E-mail or verbally
upon discovery of the nonconformance, any verbal notification to be promptly
confirmed in writing.  If Buyer fails to exercise its rejection rights
hereunder as to a Non-Conforming Shipment, Buyer shall be deemed to have
waived such rights with respect to that Non-Conforming Shipment only.  If
Buyer rejects the Non-Conforming Shipment, Seller shall be responsible for
promptly transporting the rejected coal to an alternative destination
determined by Seller and, if applicable, promptly unloading such coal, and
shall reimburse Buyer for all reasonable costs and expenses associated with
the transportation, storage, handling and removal of the Non-Conforming
Shipment.  Seller shall, at Buyer's request, replace the rejected coal as soon
as possible, provided that Buyer gives written notice to Seller of Buyer's
desire for replacement coal within 30 days after rejection of the
Non-Conforming Shipment.

(B)  If there are three Non-Conforming Shipments, whether rejected or not,
under this Contract in any three-month period or if two out of four
consecutive Shipments under this Contract are Non-Conforming Shipments, then
Buyer may upon notice to Seller suspend the receipt of future Shipments
(except Shipments already loaded or in transit to Buyer) under this Contract.
A waiver by Buyer of the suspension right for any one period shall not
constitute a waiver for subsequent periods.  If Seller, within ten days of its
receipt of such notice, provides reasonable assurances in writing to Buyer
that future Shipments under this Contract will conform to the Specifications
and Buyer has accepted such assurances (such acceptance not to be unreasonably
withheld, Shipments shall resume and any tonnage deficiencies shall be made up
within the Term at Buyer's option.  If (i) Seller fails to provide such
acceptable assurances within such ten day period, or (ii) after such
assurances are provided and for a period of three months thereafter, any
Shipment of coal fails to meet any of Buyer's rejection rights under this
Section for the Rejection Limit parameter for which there was a prior
suspension under this Contract, then such event shall constitute an Event of
Default as provided in Section 12 hereof.

(C)  If any of the Monthly weighted average coal qualities fail to conform to
the Monthly Suspension specifications, then Buyer may suspend the receipt of
future Shipments (except Shipments already loaded or in transit to Buyer)
under this Contract.  A waiver by Buyer of the suspension right for any one
period shall not constitute a waiver for subsequent periods.  If Seller,
within ten days of its receipt of such notice, provides reasonable assurances
in writing to Buyer that future Shipments under this Contract will conform to
the Specifications and Buyer has accepted such assurances (such acceptance not
to be unreasonably withheld, Shipments shall resume and any tonnage
deficiencies shall be made up within the Term at Buyer's option.  If (i)
Seller fails to provide such acceptable assurances within such ten day period,
or (ii) after such assurances are provided and for a period of six months
thereafter, any Shipment of coal fails to meet any of the Suspension limits
under this Section for any of the Monthly Suspension limits for which there
was a prior suspension under this Contract, then such event shall constitute
an Event of Default as provided in Section 12 hereof.

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(D)  Buyer may terminate this Contract or terminate deliveries from the Source
if Buyer in its reasonable judgment determines through operating experience
that the coal therefrom causes unsatisfactory performance at the Plant of
consignment, even if such coal meets the requirements and specifications of
this Contract.  In such event, Buyer shall provide Seller with written notice
thereof, specifying the basis of such unsatisfactory performance.

8)ASSIGNMENT/DELEGATION
This Contract shall inure to the benefit of and be binding upon the parties
and their respective successors and permitted assigns. However, no party shall
assign this Contract or any of its rights or obligations hereunder without the
prior written consent of the other party. Notwithstanding the foregoing, any
party may, without the need for consent from the other party (and without
relieving itself from liability hereunder), (a) transfer, sell, pledge,
encumber or assign this Contract or the accounts, revenues or proceeds hereof
or thereof in connection with any financing or other financial arrangements or
(b) transfer or assign this Contract to an Affiliate of such party; provided,
however, that no such assignment shall in any way relieve the assignor from
liability for full performance under this Contract. Any such assignee shall
assume and agree to be bound by the terms and conditions of this Contract.

If OVEC-IKEC or one of its Affiliates is the Buyer under this Contract, it
shall have the right to assign this Contract, in whole or in part, to a
producer of synthetic fuel (as defined in Section 29 of the Internal Revenue
Code of 1986, as amended, hereafter referred to as "Synthetic Fuel").  Should
such assignment occur, Seller also agrees upon the request of OVEC-IKEC or its
Affiliate to enter into a new agreement with such Synthetic Fuel producer on
substantially the same terms and conditions as provided in this Contract with
respect to all or part of the coal to be purchased hereunder.  In such event,
OVEC-IKEC or its Affiliate shall be excused from its obligations under this
Contract to purchase coal hereunder to the extent of the quantities provided
for in such new agreement.

Written consent to one or more assignments shall not be construed as waiving
the necessity of obtaining written consent to other and/or additional
assignments.

9)FORCE MAJEURE
To the extent either party is prevented by Force Majeure from carrying out, in
whole or part, its obligations under this Contract and such party (the
"Claiming Party") gives notice and details, orally and confirmed promptly in
writing, of the Force Majeure to the other party as soon as practicable (but
in no event later than 30 days after the occurrence thereof), then the
Claiming Party shall be excused from the performance of its obligations.  The
Claiming Party shall remedy the Force Majeure with all reasonable dispatch.
The nonClaiming Party shall not be required to perform or resume performance
of its obligations to the Claiming Party corresponding to the obligations of
the Claiming Party that are excused by Force Majeure.  Failure to give such
notice and furnish such information within the time specified shall be deemed
a waiver of all rights under this Article for such period of time during which
notice was not given.  Buyer and Seller shall exercise reasonable efforts to
mitigate or eliminate the conditions which have caused the Force Majeure
condition, provided, however, nothing herein contained shall be construed as
requiring Seller or Buyer to accede to any demands of labor, or labor unions,
or suppliers, or other parties which Seller or Buyer considers unacceptable.
The Claiming Party claiming Force Majeure shall furnish the non-Claiming Party
a monthly statement by the 15th day of the calendar month setting forth the
amount of tonnage not shipped or to be reduced because of Force Majeure causes
asserted during the second preceding calendar month.

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Except as set forth in this paragraph, no suspension or reduction by reasons
of Force Majeure shall invalidate the remainder of this Contract but, on the
removal of the cause, shipments shall resume at the specified rate.  If an
event of Force Majeure persists for (i) a continuous period of 60 days or (ii)
an aggregate of 75 days in any twelve month period or during the Term of this
Contract (if the Term is less than twelve months), then, at any time
thereafter during the Force Majeure period, the non-Claiming Party shall have
the option, upon three days' prior written notice, to terminate this Contract
and the obligations of the parties thereunder.

In the event of a Force Majeure, delivery of the affected quantity of coal
shall not be made up except at Buyer's sole discretion.

If Seller claims Force Majeure under this Contract and has obligations to
provide coal of a similar type and quality as the coal under other coal sales
agreements, or if Buyer claims Force Majeure and has obligations to purchase
coal of a similar type and quality as the coal under other coal sales
agreements, then any reductions in Seller's deliveries or Buyer's purchases
(as applicable) shall be allocated by the party claiming Force Majeure on a
pro rata basis among this Contract and such other coal purchase or sales
agreements involving coal of a similar type and quality as the coal, to the
extent contractually permitted by such agreements.  Without limiting the
generality of this Article, in the event of a Force Majeure event which causes
a partial or total curtailment of electrical generation from or electrical
generating capacity at the consigned destination or partial or total
curtailment of transmission or distribution of electricity therefrom, Buyer
shall at its option, be relieved under this Article from its obligation to
accept up to the pro rata (based on such partial curtailment) quantity or
entire (based on such total curtailment) quantity of Seller's coal scheduled
for delivery for the period during which such event or occurrence exists or
existed.

10)WAIVER
The failure of Buyer or Seller to insist in any one or more instances upon
strict performance of any of the provisions of this Contract or to take
advantage of any of its rights hereunder shall not be construed as a future
waiver of any such provisions or the relinquishment of any such rights, but
the same shall continue and remain in full force and effect for the term of
this Contract.

11)FINANCIAL RESPONSIBILITY
Either party shall have the right, but not the obligation, to request from the
other party or its guarantor, as applicable, audited annual financial
statements and quarterly unaudited financial statements.  Should the
performance, creditworthiness or financial responsibility of either party
become unsatisfactory to the other party, in its reasonable judgment, at any
time during which this Contract is in effect, satisfactory Performance
Assurance may be required before further deliveries/receipts are made under
this Contract.

12) EVENT OF DEFAULT AND DAMAGES
If an Event of Default (as hereafter defined) occurs with respect to a party
or its guarantor (the "Defaulting Party") at any time during the term of this
Contract, the other party (the "Non-Defaulting Party") may, in its sole
discretion, do any or all of the following: (i) establish a date (which date
shall be no earlier than the date that such notice is given to the Defaulting
Party and no later than 20 days from notice) ("Early Termination Date") on
which this Contract shall terminate, (ii) withhold any payments due in respect
of this Contract, (iii) suspend performance under this Contract and/or  (iv)

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exercise such other remedies as may be provided in this Contract.  An event of
default with respect to any party ("Event of Default") shall mean any of the
following: (i) the failure of either party or its guarantor to make when due,
any payment required hereunder if such failure is not remedied within two
Business Days after notice of such failure is given to the Defaulting Party by
the Non-Defaulting Party; (ii) the failure of either party or its guarantor to
comply with any or all of its other respective obligations in good faith as
herein set forth and such noncompliance is not cured within five Business Days
after notice thereof to defaulting party; or (iii) failure to provide adequate
Performance Assurance or other assurances satisfactory to the Non-Defaulting
Party of its ability to perform its further obligations under this Contract
within 48 hours, but at least within one Business Day of a reasonable written
request by the Non-Defaulting Party; (iv) either party (a) filing a petition
in bankruptcy, (b) having such a petition filed against it, (c) becoming
otherwise insolvent or unable to pay its debts as they become due; (v) the
failure of a party's guarantor, if any, to perform any covenant set forth in
its guaranty, or such guaranty shall expire or be terminated or shall cease to
guarantee the obligations of such party hereunder, or such guarantor shall
become subject to any of the events specified in (iv) (a), (b) or (c); or (vi)
an event described in the last sentence of Section 6(B) shall have occurred.
If this Contract terminates on an Early Termination Date, the Non-Defaulting
Party shall calculate, in a good faith commercially reasonable manner, the
Settlement Amount as of the Early Termination Date as soon as is reasonably
practicable and shall promptly notify the Defaulting Party of the amount
thereof.

"Settlement Amount" shall mean the present value of the single net aggregate
amount for the remaining term of the Contract, including any exercised option
period, of any Losses, Costs and Gains, expressed in United States dollars,
which the Non-Defaulting Party incurs as a result of the early termination of
this Contract in accordance with this Section 12, including, but not limited
to, Losses or Gains based upon the then current replacement value of this
Contract, the amounts of any unpaid invoices, and the amount for coal
delivered but not yet billed.  In calculating the Settlement Amount, the
Non-Defaulting Party shall set off all amounts that are due to the Defaulting
Party against such Settlement Amount so that the Settlement Amount shall be
netted to a single liquidated amount.  Any collateral being held by the
Non-Defaulting Party shall be setoff against the amount owed to the
Non-Defaulting Party.  If the Defaulting Party is holding collateral posted by
the Non-Defaulting Party, then the Non-Defaulting Party will have the right to
set off that amount against any payment to be made to the Defaulting Party.

The Non-Defaulting Party shall provide the Defaulting Party with an
explanation of how it calculated the Settlement Amount, as well as supporting
calculations and documentation reasonably requested by the Defaulting Party.
The Non-Defaulting Party shall use good faith commercially reasonable efforts
to mitigate any Costs or Losses it is entitled to hereunder.  The Defaulting
Party shall have the right to audit (through a third party independent auditor
mutually agreed to by the parties) the calculation of all of the
Non-Defaulting Party's Gains, Losses and Costs.

If the present value of the Non-Defaulting Party's aggregate Losses and Costs
(net of any amounts due to the Defaulting Party) exceed the present value of
its aggregate Gains, all as finally determined in accordance with the
preceding provisions of this section, the Defaulting Party shall, within five
Business Days of such final determination, pay the Settlement Amount to the
Non-Defaulting Party, including interest thereon at the Interest Rate from the
Early Termination Date until paid in full.  If the Defaulting Party disputes
the Non-Defaulting Party's calculation of the Settlement Amount, the

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Defaulting Party will provide its calculations to the Non-Defaulting Party
within two Business Days of receipt of calculation from the Non-Defaulting
Party.  The Defaulting Party shall nevertheless pay to the Non-Defaulting
Party the undisputed portion of the Settlement Amount and provide Performance
Assurance for the remaining amount.

Notwithstanding any provision to the contrary contained in this Contract, the
Non-Defaulting Party shall not be required to pay the Defaulting Party any
amount under this Section 12, until the Non-Defaulting Party receives
confirmation satisfactory to it, in its reasonable discretion (which may
include an opinion of its counsel), that all other obligations of any kind
whatsoever of the Defaulting Party to make any payments to the Non-Defaulting
Party under this Contract (or otherwise) have been fully and finally
performed.

13)QUANTITY SHORTFALL DAMAGES
(A)  Unless excused by Force Majeure, by written agreement of Buyer and
Seller, or Seller's failure to perform, if Buyer fails to accept all or any
part of the quantity of coal to be delivered under this Contract, Buyer shall
pay Seller for each ton of such deficiency an amount equal to the positive
difference, if any, obtained by subtracting the Sales Price from the Contract
Price plus (i) any additional transportation costs incurred by Seller due to
such failure and (ii) reasonable legal costs incurred by Seller in enforcement
and protection of its rights under this Contract.  "Sales Price" means the
price, determined by Seller in a commercially reasonable manner, at which
Seller resells (if at all) the coal, or, absent such a sale, the market price
for such quantity of coal FOB Delivery Point.

(B)  Unless excused by Force Majeure, by written agreement of Buyer and
Seller, or Buyer's failure to perform, if Seller fails to deliver all or any
part of the quantity of coal to be delivered under this Contract, Seller shall
pay Buyer for each ton of such deficiency an amount equal to the positive
difference, if any, obtained by subtracting the Contract Price from the
Replacement Price plus (i) any additional transportation costs incurred by
Buyer due to such failure, and (ii) reasonable legal costs incurred by Buyer
in enforcement and protection of its rights under this Contract.  "Replacement
Price" means the price, determined by Buyer in a commercially reasonable
manner, at which Buyer purchases (if at all) substitute coal for the
deficiency or, absent such a purchase, the market price for such quantity of
coal at the consigned destination.

(C)  Each party hereby stipulates that the payment obligations set forth in
(A) and (B) above are reasonable in light of the anticipated harm and each
party hereby waives the right to contest such payments as an unreasonable
penalty or otherwise.

(D)  Payment of amounts, if any, determined under this Section 13 shall be
made in accordance with Section 7; provided, that payment of any such amounts
shall be made on the 20th calendar day of the month following such failure to
deliver or accept coal, as applicable.  All such determinations shall be made
in a commercially reasonable manner.  The Non-Defaulting Party shall not be
required to enter into any actual replacement transaction in order to
determine the Replacement Price or Sales Price, as appropriate, provided,
however, that the Non-Defaulting Party shall take all reasonable steps to
mitigate its damages.

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14) GRANT OF SECURITY INTEREST
To secure its obligations under this Contract and to the extent either or both
parties deliver Performance Assurance hereunder, each party (a "Pledgor")
hereby grants to the other party (the "Secured Party") a present and
continuing first priority secured interest in, and lien on (and right of
recoupment and setoff against), and assignment of, all cash collateral and
cash equivalent collateral and any and all proceeds resulting therefrom or the
liquidation thereof, whether now or hereafter held by, on behalf of, or for
the benefit of, such Secured Party, and each party agrees to take such action
as the other party reasonably requires in order to perfect the Secured Party's
first-priority security interest in, and lien on (and right of recoupment
and/or setoff against), such collateral and any and all proceeds resulting
therefrom or from the liquidation thereof.

15)HOLDING AND USE OF PERFORMANCE ASSURANCE
Each party will be entitled to hold Performance Assurance so long as the
credit rating of the senior unsecured debt obligation of the entity or its
guarantor is rated at least BBB- by S&P's and Baa3 by Moody's and further
provided that an Event of Default has not occurred and is continuing with
respect to the party.  If an Event of Default has occurred and is continuing
with respect to a party or its guarantor (if any), then, if it holds
Performance Assurance, it shall be required to immediately place all such
Performance Assurance in an escrow account with an independent third party
financial institution mutually acceptable to the parties.

16)FORWARD CONTRACT
Buyer and Seller each acknowledge that it is a "forward contract merchant" and
that this Contract constitutes a "forward contract" within the meaning of the
United States Bankruptcy Code.

17)NETTING AND SETOFF
If Buyer and Seller are required to pay any amount on the same day or in the
same month, then such amounts with respect to each party may be aggregated and
the parties may discharge their obligations to pay through netting, in which
case the party, if any, owing the greater aggregate amount shall pay to the
party owed the difference between the amounts owed.  Each party reserves to
itself all rights, setoffs, counterclaims, combination of accounts, liens and
other remedies and defenses which such party has or may be entitled to
(whether by operation of law or otherwise).  The obligations to make payments
under this Contract and/or any other contract between the parties hereto may
be offset against each other, set off or recouped therefrom.

18)CONFIDENTIALITY
The parties and their respective affiliates shall keep confidential any and
all matters relating to this Contract, except those readily obtainable from
public information, requested by a regulatory commission, or otherwise
required by law to be disclosed.

19)ENTIRE AGREEMENT; MODIFICATION
This Contract, together with any attachments or exhibits specifically
referenced herein, constitutes the entire contract between the Seller and the
Buyer with respect to the subject matter hereof, supersedes all prior oral or
written representations and contracts, and may be modified only by a written
amendment signed by Buyer and Seller.

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20)COMPLIANCE WITH LAW
Seller and Buyer shall make good faith efforts to comply with the provisions
of all applicable federal, state, and other governmental laws and any
applicable order and/or regulations, or any amendments or supplements thereto,
which have been, or may at any time be, issued by a governmental agency.

21)GOVERNING LAW; WAIVER OF JURY TRIAL; UCC; VENUE, GOVERNMENT CONTRACTOR
COMPLIANCE
This Contract shall be construed, enforced, and performed in accordance with
the laws of the State of New York, including New York General Obligation Law
Sections 5-1401 and 5-1402.  Each party waives its respective right to any
jury trial with respect to any litigation arising under or in connection with
this Contract.  Except as otherwise provided for herein, the provisions of the
Uniform Commercial Code ("UCC") of the State of New York shall govern this
Contract and coal provided hereunder shall be deemed to be "goods" for
purposes of the UCC.  Each party hereby submits to the exclusive jurisdiction
of state or federal courts located in Franklin County, Ohio and all appellate
courts therefrom and waives any objection which it may have at any time to the
laying of venue of any proceedings brought in such court, waives any claim
that such proceedings have been brought in an inconvenient forum, and further
waives the right to object, with respect to such proceedings, that such court
does not have jurisdiction over such party.

Unless exempted, Seller shall comply with the equal employment opportunity
clause in Section 202 of Executive Order 11246 and all applicable rules,
regulations, and relevant orders pertaining to Executive Order 11246, Section
503 of the Rehabilitation Act of 1973, and Section 4212 of the Vietnam Era
Readjustment Assistance Act of 1974, as amended.

22)NOTICES
Notices provided for or required under this Contract may be exercised
verbally, but shall be confirmed in writing as soon as practicable.  The
parties shall be legally bound from the date the notification is exercised.
Notices provided for or required in writing herein shall be delivered by hand
or electronic means or transmitted by facsimile or sent by certified mail,
postage prepaid, return receipt requested, or by overnight mail or courier.

Notices hand delivered or delivered by electronic means, shall be deemed
delivered by the close of the Business Day on which it was hand delivered or
delivered by electronic means (unless hand delivered or transmitted by
electronic means after the close of the Business Day in which case it shall be
deemed received by the close of the next Business Day).  Notices provided by
facsimile shall be deemed to have been received upon the sending party's
receipt of its facsimile machine's confirmation of a successful transmission.
If the day on which such facsimile is received is not a Business Day or is
after five p.m.  Eastern Prevailing Time on a Business Day, then such
facsimile shall be deemed to have been received on the following Business Day.
Notices provided by certified mail, postage prepaid, return receipt requested,
or by overnight mail or courier, shall be deemed delivered upon mailing.

23)RIGHT OF AUDIT
Buyer and its designated representatives and/or agents including but not
limited to its auditors, engineers, and geologists, shall at Buyer's
discretion, have access to the mine(s) producing coal under this Contract, to
all support facilities, and to all records pertaining to the coal reserves
covered by this Contract; to the production and cost of production records of
coal produced at the production sources providing coal under this Contract;
and to all records pertaining to the cost of transporting coal (where
applicable), to the extent necessarily required for purposes of administering
this Contract; and to all records pertaining to this Contract.

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24)DEFINITIONS
The following definitions and any terms defined internally in this Contract
shall apply to this Contract and all notices and communications made pursuant
to this Contract.

"OVEC-IKEC" means Ohio Valley Electric Corporation or Indiana-Kentucky
Electric Corporation, as applicable.
"Affiliate" means with respect to any entity, any other entity that directly
or indirectly, through one or more intermediaries, controls or is controlled
by, or is under common control with, such entity.  For this purpose, "control"
means the direct or indirect ownership of 50% or more of the outstanding
capital stock or other equity interests having ordinary voting power.
"ASTM" means the American Society for Testing and Materials.
"Business Day" means any day on which Federal Reserve member banks in New York
City, New York are open for business, and a Business Day shall open at 8:00
a.m. and close at 5:00 p.m. Eastern Prevailing Time.
"Contract Price" means the price in United States dollars per ton (unless
otherwise specified in the Purchase Order) to be paid by Buyer to Seller for
purchase of coal and any other proper charges pursuant to this Contract.
"Costs" means any brokerage fees, commissions and other transactional costs
and expenses reasonably incurred either by the Non-Defaulting Party as a
result of terminating any hedges or other risk management contracts and/or
entering into new arrangements in order to replace the Contract Quantity not
delivered by Seller or not accepted by Buyer, as the case may be, and legal
costs incurred by the Non-Defaulting Party.
"Eastern Prevailing Time" means Eastern Standard Time or Eastern Daylight
Savings Time in effect in New York City, New York, as the case may be on the
relevant date.
"Force Majeure" means an event or circumstance which prevents one party (the
"Claiming Party") from performing its obligations under this Contract, which
is not within the reasonable control of, or the result of the negligence of,
the Claiming Party, and which by the exercise of due diligence, the Claiming
Party is unable to overcome or avoid or cause to be avoided or is unable in
good faith to obtain a substitute acceptable to Buyer therefor.  Force Majeure
includes, but is not limited to, an event or occurrence beyond the control of
Buyer, such as without limitation, acts of God, war, insurrection, riots,
nuclear disaster, strikes, labor disputes, threats of violence, labor and
material shortages, fires, explosions, floods, river freeze-ups, breakdowns or
damage to mines, plants, equipment, or facilities (including a forced outage
or an extension of a scheduled outage of equipment or facilities to make
repairs to avoid breakdowns thereof or damage thereto), interruptions to or
slowdowns in transportation, railcar shortages, barge shortages, embargoes,
orders, or acts of civil or military authority, laws, regulations, or
administrative rulings, or total or partial interruptions of Buyer's
operations which are due to any enforcement action or other administrative or
judicial action arising from an environmental law or regulation.  Force
Majeure shall not be based on:  (1) Buyer's inability economically to use or
resell the coal purchased hereunder; (2) adverse geological or mining
conditions; (3) the Seller's ability to sell the coal at a price greater than
the Contract Price; or (4) Seller's inability to economically produce or
obtain the coal.
"Gains" means, with respect to a party, an amount equal to the present value
of the economic benefit, if any, (exclusive of Costs) to it resulting from the
termination of its obligations with respect to this Contract, determined in a
commercially reasonable manner.
"Letters of Credit" means one or more irrevocable, transferable, standby
letter of credit, issued by a major United States commercial bank or the
United States branch office of a foreign bank, reasonably acceptable to the
beneficiary with, in either case, a senior unsecured credit rating of at least

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(a) "A-" by Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P"), and "A3" by Moody's Investors Service, Inc.
("Moody's"), if such entity is rated by both S&P and Moody's or (b) "A-" by
S&P or "A3" by Moody's, if such entity is rated by either S&P or Moody's, but
not both.
"Losses" means, with respect to a party, an amount equal to the present value
of the economic loss, if any, (exclusive of Costs) to it resulting from the
termination of its obligations with respect to this Contract, determined in a
commercially reasonable manner.
"NIST" means the National Institute of Standards and Technology Handbook #44.
"PRB" means the Powder River Basin located in the States of Montana and
Wyoming.
"Performance Assurance" means collateral in the form of either cash or Letters
of Credit or such other security of the type and amount requested by the party
demanding Performance Assurance.
"Shipment" means, as applicable, one unit trainload or at Buyer's election a
composite of two or more unit trainloads, the aggregate of single railcars
loaded on any one day (only where single car rates apply), one barge or at
Buyer's election a composite of two or more barges, one vessel load, or the
aggregate of the truckloads that are loaded on any one day in accordance with
the applicable transportation specifications.
"Transporter" means the entity or entities transporting the coal on behalf of
Seller to and at the Delivery Point or on behalf of Buyer or Buyer's designee
from the Delivery Point.RESTRICTED STOCK AGREEMENT

FORM OF

RESTRICTED STOCK AGREEMENT

For Non-employee Directors

THIS AGREEMENT is made as of June 1, 2005 between <Director> ("Recipient") and NATCO Group Inc. (the "Company").  

1.As of June 1, 2005, the Company grants to Recipient 5,000 shares (the "Shares") of Common Stock, $0.01 par value, of the Company in accordance with and subject to the terms of the NATCO Group Inc. 2004 Stock Incentive Plan (the "2004 Stock Plan") and this Agreement.  It is understood that the consideration for the issuance of the Shares shall be Recipient's agreement to render future services as a Director of the Company, which services have a value not less than the par value of the Shares.  Recipient acknowledges receipt of a copy of the 2004 Stock Plan and agrees that this award of Shares shall be subject to all the terms and provisions of the 2004 Stock Plan.  In the event of any conflict between the terms of this Agreement and the 2004 Stock Plan, the terms of the 2004 Stock Plan shall govern.  Capitalized terms used but not defined in this Agreement have the respective meanings attributed to such terms under the 2004 Stock Plan.

2.Promptly after the execution of this Agreement by Recipient, the Company shall cause Mellon Investor Services, LLC, the transfer agent for the Common Stock (together with its successors and assigns, the "Transfer Agent"), to issue a stock certificate showing ownership for the Shares in the name of Recipient subject to the terms and conditions of this Agreement and the 2004 Stock Plan. The Shares shall be issued from Common Stock reserved for issuance pursuant to the 2004 Stock Plan as grants under such plan ("Plan Shares").  The certificate or certificates evidencing the Shares subject hereto shall be delivered to and deposited with the Secretary of the Company as Escrow Agent in this transaction. Such certificates are to be held by the Escrow Agent until termination of the Restricted Period, at which time they shall be released by said Escrow Agent to Recipient.  All certificates representing any Shares subject to the provisions of this Agreement shall have endorsed thereon the following legend:

"The shares represented by this certificate are subject to an agreement between the Company and the registered holder, a copy of which is on file at the principal office of the Company."

3.During the Restricted Period (as defined below) for the Shares, Recipient shall not sell, assign, exchange, transfer, pledge, hypothecate or otherwise dispose of, transfer or encumber any of such Shares.  This prohibition against transfer and the obligation to forfeit and surrender Shares to the Company as provided herein are referred to as the "Forfeiture Restrictions."  A breach of the terms of this Agreement shall cause a forfeiture of the Shares.  During the Restricted Period, Recipient shall have all the rights of a shareholder with respect to the Shares except for the right to transfer the Shares.  Accordingly, Recipient shall have the right to vote the Shares and to receive any cash dividends paid to or made with respect to the Shares.

4.Recipient represents that the Shares are being acquired for investment and that Recipient has no present intention to transfer, sell or otherwise dispose of the Shares, except in compliance with applicable securities laws, and the parties agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of this Agreement and the Plan.  Recipient agrees that (a) the Company may refuse to register the transfer of the Restricted Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or any applicable securities law and (b) the Company may give related instructions to the Transfer Agent to stop registration of the transfer of the Restricted Shares. 

5.The Forfeiture Restrictions shall lapse as to all of the Shares on the first anniversary date of this Agreement, provided that Recipient has continuously served as a Director of the Company from the date of this Agreement until such date, and subject to the possibility of earlier lapse pursuant to Section VIII of the 2004 Stock Plan.  Notwithstanding the foregoing, the Forfeiture Restrictions shall lapse as to all of the Shares on Recipient's termination from the Board due to his death, disability (as determined by the Committee) or retirement from the Board on or after the attainment of the age of 68, or upon the occurrence of a Corporate Change.  A certificate for all Shares granted pursuant to this Agreement will be issued to Recipient following such date of release, or, at Recipient's election, may be transferred in book entry form to Recipient's brokerage account (subject to any adjustment to withhold Shares to pay taxes as provided below).  Any period during which Shares are subject to restriction under this Agreement is referred to as the "Restricted Period".  In the event of termination of Recipient's service as a director of the Company for any reason during the Restricted Period, except as otherwise provided above, all Shares with respect to which the Forfeiture Restrictions that have not lapsed in accordance with the preceding provisions of this paragraph, for no consideration, shall be immediately forfeited to the Company.  

6.If Recipient makes an election pursuant to Section 83(b) of the Internal Revenue Code, Recipient shall promptly (but in no event after 30 days from the date of grant) file a copy of such election with the Company, and cash payment for taxes shall be made at the time of such election.  

7.Recipient must make arrangements satisfactory to the Company to satisfy any applicable federal, state or local withholding tax liability arising from the grant or vesting of the Shares. Recipient may elect to satisfy any such tax withholding obligation in cash or by authorizing the Company to withhold from the Shares issued to Recipient as a result of the lapse of the restrictions on Shares, the number of whole shares of Common Stock required to satisfy such tax obligation, the number to be determined by the Fair Market Value of the Shares on the date of the lapse of the restrictions on Shares.  If Recipient elects to withhold shares of Common Stock to satisfy any such tax obligation, Recipient shall pay in cash any obligation that remains after the application of whole shares that is less than the value of a whole share.  If Recipient fails to satisfy his or her withholding obligation in a time and manner satisfactory to the Company, the Company shall have the right to withhold the required amounts payable to Recipient.

8.Recipient understands that the Company will, and Recipient hereby authorizes the Company to, issue such instructions to the Transfer Agent as the Company may deem necessary or proper to comply with the intent and purposes of this Agreement.  This instruction serves as a stock power by Recipient to the Company with respect to the Shares during the Restricted Period, which stock power shall expire at the end of the Restricted Period.

9.This Agreement shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the Company and the successors, assigns, heirs and personal representatives of Recipient.

10.No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering any of the powers, rights or authority vested in the Committee pursuant to the terms of the 2004 Stock Plan, including, without limitation, the Committee's rights to make certain determinations and elections with respect to the Restricted Shares.

11.This Agreement shall not be deemed to (a) confer upon Recipient any right with respect to continuation of membership on the Board or (b) affect the terms and conditions of any other agreement between the Company and Recipient except as expressly provided herein.

12.This Agreement shall be governed by the laws of the State of Delaware applicable to agreements made and to be performed entirely within such State.  This Agreement may not be altered, modified, changed or discharged, except by a writing signed by or on behalf of both the Company and Recipient.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first written above.

 

	

NATCO Group Inc.

 
	

Recipient

	

By:________________________________   

John U. Clarke

Chairman and Chief Executive Officer
	

________________________________   

<Director>

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