Document:

<PAGE>
                                                                   Exhibit 10.20

                       LETTER OF CREDIT FACILITY AGREEMENT

         This Letter of Credit Facility Agreement is dated as of this 29th day
of June, 2001 by and between BANK OF OKLAHOMA, NATIONAL ASSOCIATION ("Lender"),
and ALLIANCE RESOURCE PARTNERS, L.P., a Delaware limited partnership
("Borrower").

                                    RECITALS

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

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

                                    AGREEMENT

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

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

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

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

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

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

                  1.5. "AROP" means Alliance Resource Operating Partners, L.P.,
         a Delaware limited partnership.
<PAGE>
                  1.6. "Borrower Authority Documents" means the following
         documents as to the Borrower: (i) Certificate of Good Standing, dated
         within five (5) Business Days of the Effective Date, issued by the
         State in which the Borrower was formed; and (ii) Certificate, dated the
         Effective Date, from the managing general partner of the Borrower,
         substantially in form and content as set forth on Schedule "1.6"
         hereto, to which shall be attached the Certificate of Limited
         Partnership of the Borrower, certified by the Secretary of State of the
         State of Delaware as of a date that is within five (5) Business Days of
         the Effective Date, and a copy of the fully executed limited
         partnership agreement of the Borrower, together with all amendments, if
         any.

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

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

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

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

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

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

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

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

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

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

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

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

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

                  1.20. "General Partner Authority Documents" means the
         following documents as to the General Partner: (i) Certificate of Good
         Standing, dated within five (5) Business Days of the Effective Date,
         issued by the State in which the Borrower was formed; and (ii)
         Certificate, dated the Effective Date, from the Secretary or Assistant
         Secretary of the General Partner, substantially in form and content as
         set forth on Schedule "1.20" hereto, to which shall be attached a
         complete copy of the Certificate of Formation of the General Partner,
         certified by the Secretary of State of the State of Delaware as of a
         date that is within five (5) Business Days of the Effective Date, and a
         copy of the Amended and Restated Operating Agreement of the General
         Partner, together with all amendments, if any.

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

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

                  1.23. "Guarantor Authority Documents" means the following
         documents as to the Guarantor: (i) Certificate of Good Standing, dated
         within five (5) Business Days of the

                                      -3-
<PAGE>
         Effective Date, issued by the state in which the Guarantor was formed;
         and (ii) Certificate, dated the Effective Date, from the Secretary or
         Assistant Secretary of the Guarantor, substantially in form and content
         as set forth on Schedule "1.23" hereto, to which shall be attached a
         complete copy of the Certificate of Formation of the Guarantor,
         certified by the Secretary of State of the State of Delaware as of a
         date that is within five (5) Business Days of the Effective Date, and a
         copy of the Operating Agreement of the Guarantor, together with all
         amendments, if any.

                  1.24. "Guaranty Agreement" means the Guaranty, dated on or
         prior to the Effective Date, executed by the Guarantor, substantially
         in form and content as set forth on Schedule "1.24" hereto, as the same
         may be amended, amended and restated, modified or supplemented from
         time to time in accordance with the terms thereof.

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

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

                  1.27. "Letter of Credit Application" means an application for
         a Letter of Credit Action as shall at any time be in use by the Lender.

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

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

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

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

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

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

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

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

                  1.35. "Note" means the original, executed $10,000,000
         Promissory Note, dated on or prior to the Effective Date, substantially
         in form and content set forth on Schedule "1.35" attached hereto, as
         the same may be amended, amended and restated, modified or supplemented
         from time to time in accordance with the terms thereof.

                  1.36. "Opinion of Borrower's Counsel" shall mean an opinion
         from Borrower's counsel, dated the Effective Date and addressed to
         Lender, which opinion shall be in form and content reasonably
         satisfactory to Lender and shall include, but not be limited to, the
         following: (a) Borrower has the authority and capacity to enter into
         and perform under the Loan Documents; (b) this Agreement and all other
         Loan Documents executed by Borrower in connection herewith are valid
         and binding obligations against Borrower, fully enforceable in
         accordance with their respective terms under applicable laws; (c) there
         are, to Borrower's counsel's knowledge, no actions or proceedings
         pending or threatened in any court or governmental department or agency
         which would affect the validity of this Agreement or any other Loan
         Documents; (d) the delivery by Borrower of this Agreement and the other
         Loan Documents and compliance by Borrower with the terms of this
         Agreement and all other Loan Documents do not conflict with or violate
         the constituent documents of Borrower; and (e) Borrower is a duly
         formed and validly existing limited partnership under the laws of the
         State of Delaware.

                  1.37. "Opinion of Guarantor's Counsel" shall mean an opinion
         from Guarantor's counsel, dated the Effective Date and addressed to
         Lender, which opinion shall be in form and content reasonably
         satisfactory to Lender and shall include, but not be limited to, the
         following: (a) Guarantor is a limited liability company duly formed and
         validly existing under the laws of the State of Delaware, (b) Guarantor
         has the authority and capacity to enter into and perform under the
         Guaranty Agreement; and (c) the Guaranty Agreement constitutes a legal,
         valid and binding obligation against Guarantor, enforceable in
         accordance with its terms.

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

                  1.39. "Subsidiary" means, with respect to any Person, any
         corporation limited liability company, partnership, joint venture,
         association, trust or other entity of which (or in which) more than 50%
         of (a) the issued and outstanding Capital Stock having ordinary

                                      -5-
<PAGE>
         voting power to elect a majority of the board of directors of such
         corporation (irrespective of whether at the time Capital Stock of any
         other class or classes of such corporation shall or might have voting
         power upon the occurrence of any contingency), (b) the interests in the
         capital or profits of such partnership, limited liability, joint
         venture or association with ordinary voting power to elect a majority
         of the board of directors (or Person performing similar functions) of
         such partnership, limited liability company, joint venture or
         association, or (c) the beneficial interests in such trust or other
         entity with ordinary voting power to elect a majority of the board of
         trustees (or Persons performing similar functions) of such trust or
         other entity, is at the time directly or indirectly owned or controlled
         by such Person, by such Person and one or more of its Subsidiaries, or
         by one or more of such Person's Subsidiaries.

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

         2.       LETTERS OF CREDIT.

                  2.1. The Letter of Credit Commitment; Letter of Credit Fee.
         Subject to the terms and conditions hereof, at any time and from time
         to time from the Effective Date through the date that is three (3)
         Business Days prior to the Termination Date, the Lender shall take such
         Letter of Credit Actions as the Borrower may request; provided,
         however, that (i) the aggregate outstanding Letter of Credit Usage
         shall not exceed the Letter of Credit Commitment at any time, and (ii)
         each Letter of Credit Action shall be in a form reasonably acceptable
         to Lender and shall not violate any policies of Lender. Each Letter of
         Credit will be a nontransferable standby letter of credit to support
         payment and/or performance obligations of the Borrower or any of its
         Subsidiaries. No Letter of Credit shall expire more than 365 days after
         the date of issuance except that, at the request of Borrower, such
         Letter of Credit shall provide that it shall be automatically renewed
         for a one-year period unless the Lender, as issuer of such Letter of
         Credit, shall give at least 90 days advance notice to the beneficiary
         thereof that such Letter of Credit shall not be automatically renewed.
         If any Letter of Credit shall remain outstanding after the Termination
         Date or other date upon which Lender's Letter of Credit Commitment
         expires pursuant to the terms hereof, the Borrower shall, not later
         than sixty (60) days thereafter with respect to all such then
         outstanding Letters of Credit, (i) deposit cash or Cash Equivalents in
         an amount equal to one hundred and two percent (102%) of the Letter of
         Credit Usage as of the date such deposit shall be required in a
         collateral account with the Lender (which account shall, with respect
         to all cash collateral, bear interest for the account of the Borrower
         or be invested in Cash Equivalents at the direction, and for the
         account, of the Borrower), or (ii) cause the then outstanding Letters
         of Credit to be replaced and terminated. In the case of each Letter of
         Credit issued hereunder, a Letter of Credit Issuance Fee shall be
         payable to the Lender on the issuance date thereof and the Letter of
         Credit Fee with respect thereto shall be payable quarterly in advance.
         At least two (2) Business Days prior to the commencement of any
         quarterly period during which any Letter of Credit shall remain
         outstanding, the Lender shall deliver to the Borrower a statement
         showing the Letter of Credit Fee due for the next quarterly period, and
         the Borrower shall pay the Letter of Credit Fee then due not later than
         five (5) Business Days following receipt of such statement. In the
         event that any Letter of Credit shall have terminated prior to the end
         of any quarterly period as to which the Lender shall have received

                                      -6-
<PAGE>
         such advance Letter of Credit Fee, the Lender shall refund to the
         Borrower the unearned portion of the Letter of Credit Fee in respect of
         the Letter of Credit that shall have early terminated.

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

                  2.3. Reimbursement of Payments Under Letters of Credit. The
         Borrower shall reimburse Lender for any payment that Lender makes under
         a Letter of Credit on or before the date of such payment except to the
         extent that such payment resulted from the Lender's gross negligence or
         willful misconduct.

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

         3. CONDITIONS PRECEDENT TO LENDER'S OBLIGATION TO ISSUE INITIAL LETTER
OF CREDIT. It is expressly agreed that Lender shall not be obligated to issue
the initial Letter of Credit hereunder until the date (which must be a Business
Day) on which all of the conditions set forth in Sections 3.1, 3.2 and 3.3
hereof shall have been satisfied, unless waived by Lender at its sole discretion
(such date the "Effective Date"); provided that such conditions shall be deemed
satisfied if the Lender shall have issued the initial Letter of Credit hereunder
except to the extent expressly reserved by the Lender in writing on or prior to
the Effective Date; provided, further, that if the Effective Date shall not have
occurred by July 31, 2001, the obligation of the Lender hereunder to issue any
Letter of Credit, and this Agreement, shall terminate. In the event Lender
elects to waive any requirements or conditions contemplated by this Section 3,
such waiver shall not preclude Lender from thereafter requiring full and
complete performance of all terms, conditions and requirements hereof with
regard to the issuance of any subsequent Letter of Credit.

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

                                      -7-
<PAGE>
                               3.1.1.       The Note;

                               3.1.2.       The Guaranty Agreement;

                               3.1.3.       Borrower Authority Documents;

                               3.1.4.       General Partner Authority Documents;

                               3.1.5.       Guarantor Authority Documents;

                               3.1.6.       Opinion of Borrower's Counsel; and

                               3.1.7.       Opinion of Guarantor's Counsel.

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

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

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

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

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

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

                                      -8-
<PAGE>
                  5.1. Financial Statements. All financial statements heretofore
         delivered to Lender relating to the Borrower and Guarantor are true and
         correct in all material respects, have been prepared in accordance with
         Borrower's and Guarantor's past practices consistently applied, and
         fairly present (subject to year-end audit adjustments) the financial
         conditions reflected therein without material changes since the
         respective dates thereof.

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

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

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

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

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

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

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

                  6.4. Representations and Warranties. Any representation,
         statement, certificate, schedule or report made or furnished to Lender
         by Borrower proves to be materially false or materially misleading at
         the time of the making thereof, or any warranty ceases to be complied
         with in any material respect, and Borrower fails to take or cause to be
         taken

                                      -9-
<PAGE>
         corrective measures satisfactory to Lender within fifteen (15) business
         days after receipt of written notice from Lender relating to the
         particular default.

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

                  6.6. Other Loans. Default by the Borrower of any other loan,
         extension or credit which it may now or hereafter have with Lender
         (other than any loan or extension of credit made by Lender under the
         Alliance Resource Master Credit Agreement) after taking into account
         any applicable cure period.

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

                  6.8. Guarantor Liquidity. If at any time the sum of (x) the
         Guarantor's Cash Equivalents plus (y) the then current market value of
         the common units of the Borrower beneficially owned by the Guarantor,
         in each case after deducting therefrom the value of any encumbrances
         imposed on any thereof, shall be less than 125% of the Letter of Credit
         Commitment hereunder or $12,500,000, whichever is greater, unless the
         Borrower shall have reduced the Letter of Credit Commitment in
         accordance with Section 2.4 hereof, in which case the Borrower shall be
         in compliance with this covenant so long as the sum of the amounts
         computed pursuant to clauses (x) and (y) of this Section 6.8 shall not
         be less than 125% of the Letter of Credit Commitment then in effect
         hereunder.

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

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

                  6.11. Debt. Without duplication of the provisions contained in
         Section 6.6 hereof, an event of default occurs under any indenture,
         loan agreement, promissory note or other instrument of indebtedness, in
         each case in the principal amount of $10,000,000.00 or more,

                                      -10-
<PAGE>
         to which Borrower or Guarantor is a party and which is not cured within
         any applicable cure period permitted thereunder.

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

                  7.1. Acceleration of Note. Lender (i) may by notice to the
         Borrower, declare the commitments to issue Letters of Credit to be
         terminated, whereupon the same shall forthwith terminate, (ii) may (A)
         by notice to the Borrower, declare the Note, all interest thereon and
         all other amounts payable under this Agreement to be forthwith due and
         payable, whereupon the Note, all such interest and all such amounts
         shall become and be forthwith due and payable, without presentment,
         demand, protest or further notice of any kind, all of which are hereby
         expressly waived by the Borrower; provided, however, that in the event
         of an actual or deemed entry of an order for relief with respect to the
         Borrower under the Federal Bankruptcy Code, (x) the Letter of Credit
         Commitment shall automatically be terminated and (y) the Note, all such
         interest and all such other amounts shall automatically become and be
         due and payable, without presentment, demand, protest or any notice of
         any kind, all of which are hereby expressly waived by the Borrower, or
         (iii) may, by notice to Borrower, reduce the Letter of Credit
         Commitment.

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

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

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

                  7.5. Cumulative Remedies. The remedies herein provided shall
         be in addition to and not in substitution for the rights and remedies
         which would otherwise be vested in

                                      -11-
<PAGE>
         Lender in law or equity, all of which rights and remedies are
         specifically reserved by Lender. The remedies herein provided or
         otherwise available to Lender shall be cumulative and may be exercised
         concurrently. The failure to exercise any of the remedies herein
         provided shall not constitute a waiver thereof, nor shall use of any of
         the remedies hereby provided prevent the subsequent or concurrent
         resort to any other remedy or remedies which by this Agreement or by
         law or equity shall be vested in Lender.

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

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

                  To Borrower:

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

                  with a copy to:

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

                  and to:

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

                                      -12-
<PAGE>
                  To Lender:

                  BANK OF OKLAHOMA, NATIONAL ASSOCIATION
                  BOK Tower, 8 Southeast
                  1 Williams Center
                  Tulsa, Oklahoma  74172
                  Attn: Robert D. Mattax, Senior Vice President
                  Telefax: (918) 295-0400

                  with copy to:

                  Riggs, Abney, Neal, Turpen, Orbison & Lewis
                  502 West Sixth Street
                  Tulsa, Oklahoma  74119
                  Attn: Harley W. Thomas, Esq.
                  Telefax: (918) 584-1603

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

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

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

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

                  8.5. Binding Effect. This Agreement shall be binding upon and
         shall inure to the benefit of the parties hereto and their respective
         heirs, legal representatives, successors and

                                      -13-
<PAGE>
         permitted assigns; provided, however, that, without the consent of the
         Borrower, the Lender shall not transfer or assign any of its rights or
         obligations hereunder or all or any part of its Letter of Credit
         Commitment, the Note or any Advance except to another commercial bank
         organized under the laws of the United States having a combined capital
         and surplus and retained earnings of not less than $500,000,000.

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

                  8.7. Costs. Borrower shall pay all reasonable costs, expenses,
         fees (e.g., reasonable attorney fees) incurred by Lender in connection
         with this transaction, including, without limitation, the reasonable
         fees of Riggs, Abney, Neal, Turpen, Orbison & Lewis, and
         recording/filing fees, taxes and related expenses.

         9. AFFIRMATIVE COVENANTS. So long as the Note shall remain unpaid or
Lender shall have any commitment to issue any Letter of Credit under this
Agreement, Borrower will comply with the following:

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

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

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

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

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

                  9.6. General Information. Such other information respecting
         the condition or operations, financial or otherwise, of Borrower as
         Lender may from time to time reasonably

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

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

                                 "Borrower"

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

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

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

                                 "Lender"

                                 BANK OF OKLAHOMA, NATIONAL ASSOCIATION

                                 By         /s/ Robert D. Mattax
                                    --------------------------------------------
                                    Name:   Robert D. Mattax
                                    Title:  Senior Vice President

                                      -16-
<PAGE>
                                 Schedule "1.6"

                         (Borrower Authority Documents)

[No separate Secretary's Certificate; See Schedule 1.20, the Secretary's
Certificate attached to which is incorporated herein by reference.]
<PAGE>
                                 Schedule "1.20"

                      (General Partner Authority Documents)
<PAGE>
                                 Schedule "1.23"

                         (Guarantor Authority Documents)
<PAGE>
                                 Schedule "1.24"

                              (Guaranty Agreement)
<PAGE>
                                 Schedule "1.35"

                                     (Note)<PAGE>
                                                                   Exhibit 10.21

                                 PROMISSORY NOTE

$10,000,000.00                                                    July 31, 2001,
                                                                 Tulsa, Oklahoma

         FOR VALUE RECEIVED, the undersigned, ALLIANCE RESOURCE PARTNERS, L.P.
("Maker"), promises to pay to the order of BANK OF OKLAHOMA, N.A.("Lender"), at
its offices in Tulsa, Oklahoma, on demand, the principal sum of TEN MILLION AND
NO/100 DOLLARS ($10,000,000.00) or, if less, the aggregate sum of all Advances
made by Lender under the Letters of Credit issued for the account of Maker
pursuant to the Letter of Credit Facility Agreement between Maker and Lender,
dated as of June 29, 2001 (as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof, the "Credit Agreement")
to the extent Lender shall have not been reimbursed for such Advances as
required by Section 2.3 of the Credit Agreement, together with interest thereon
per annum at the Prime Rate as provided herein. Capitalized terms used herein
without definition shall have the meanings ascribed to them in the Credit
Agreement.

         If any payment shall be due on a Saturday or Sunday or upon any other
day on which state or national banks in the State of Oklahoma are closed for
business by virtue of a legal holiday for such banks, such payment shall be due
and payable on the next succeeding banking day and interest shall accrue to such
day. Interest on any Advance not so reimbursed shall accrue from the date
outstanding hereunder to (but not including) the date paid and shall be computed
on the actual number of days elapsed (365 or 366) based upon a 360-day year.

         "Prime Rate" shall mean a fluctuating interest rate per annum as in
effect from time to time, which interest rate per annum shall at all times be
equal to the rate of interest announced publicly from time to time (whether or
not charged in each instance) by Chase Manhattan Bank, N.A., at New York, NY
("Rate Bank"), as its base rate or general reference rate. Each change in the
Prime Rate (or any component thereof) shall become effective hereunder without
notice to Maker (which notice is hereby expressly waived by Maker), on the
effective date of each such change. Should the Rate Bank abolish or abandon the
practice of announcing or publishing a Prime Rate, then the Prime Rate used
during the remaining term of this Note shall be that interest rate or other
general reference rate then in effect at the Rate Bank which, from time to time,
in the reasonable judgment of Lender, most effectively approximates the initial
definition of the "Prime Rate." Maker acknowledges that Lender may, from time to
time, extend credit to other borrowers at rates of interest varying from, and
having no relationship to, the Prime Rate. The rate of interest payable upon the
indebtedness evidenced by this Note shall not, however, at any time exceed the
maximum rate of interest permitted under the laws of the State of Oklahoma for
loans of the type and character evidenced by this Note.

         All payments under this Note shall be made in legal tender of the
United States of America or in other immediately available funds at Lender's
office described above, and no credit shall be given for any payment received by
check, draft or other instrument or item until such time as the holder hereof
shall have received credit therefor from the holder's collecting agent or, in
the event no collecting agent is used, from the bank or other financial
institution upon which said check, draft or other instrument or item is drawn.

                                      -1-
<PAGE>
         From time to time the maturity date of this Note may be extended or
this Note may be renewed, in whole or in part, or a new note of different form
may be substituted for this Note and/or the rate of interest may be changed, or
changes to this Note may be made in consideration of any Letter of Credit
Action, and the holder of this Note, from time to time, may waive or surrender,
either in whole or in part, any rights, guarantees, security interests or liens
given for the benefit of the holder of this Note in connection herewith; but no
such occurrences shall in any manner affect, limit, modify or otherwise impair
any rights, guarantees or security of the holder of this Note not specifically
waived, released or surrendered in writing, nor shall any maker, guarantor,
endorser or any person who is or might be liable hereon, either primarily or
contingently, be released from such liability by reason of the occurrence of any
such event. The holder hereof, from time to time, shall have the unlimited right
to release any person who might be liable hereon; and such release shall not
affect or discharge the liability of any other person who is or might be liable
hereon.

         If any payment required by this Note to be made is not made when due,
or if any Default occurs under the Credit Agreement or if any "event of default"
occurs under the provisions of any mortgage, security agreement, assignment,
pledge or other document or agreement which provides security for the
indebtedness evidenced by this Note, the holder hereof may, at its option,
without notice or demand, declare this Note in default and all indebtedness due
and owing hereunder immediately due and payable. Interest from the date of
default on such principal balance and on any past due interest hereunder shall
accrue at the rate of two percent (2%) per annum above the nondefault interest
rate accruing hereunder. The Maker hereby waives protest, presentment, demand,
and notice of protest and nonpayment in case this Note or any payment due
hereunder is not paid when due; and the Maker agrees to any renewal, extension,
acceleration, postponement of the time of payment, substitution, exchange or
release of collateral and to the release of any party or person primarily or
contingently liable without prejudice to the holder hereof and without notice to
the Maker or any endorser, guarantor or surety. Maker and any guarantor,
endorser, surety or any other person who is or may become liable hereon will, on
demand, pay all costs of collection, including reasonable attorney fees of the
holder hereof in attempting to enforce payment of this Note and reasonable
attorney fees for defending the validity of any document securing this Note as a
valid first and prior lien.

         Upon the occurrence of any Default, Lender shall have the right,
immediately and without further action by it, to set off against this Note all
money owed by Lender in any capacity to the Maker or any guarantor, endorser or
other person who is or might be liable for payment hereof, whether or not due,
and also to set off against all other liabilities of Maker to Lender all money
owed by Lender in any capacity to Maker; and Lender shall be deemed to have
exercised such right of setoff and to have made a charge against such money
immediately upon the occurrence of such Default even though such charge is made
or entered into the books of Lender subsequently thereto.

         This Note is the promissory note issued pursuant to the Credit
Agreement and is given for an actual loan of money for business purposes and not
for personal, agricultural or residential purposes, and is executed and
delivered in the State of Oklahoma and shall be governed by and

                                      -2-
<PAGE>
construed in accordance with the laws of the State of Oklahoma, without giving
effect to principles of conflicts of laws.

                              ALLIANCE RESOURCE PARTNERS, L.P.

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

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

                                      -3-

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