Document:

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                                                                   Exhibit 10.18

            THIS AGREEMENT AND DEED OF LEASE, made as of the 1st day of January,
1965, by and between THE CRAB ORCHARD COAL AND LAND COMPANY, a corporation
organized and existing under the laws of the State of West Virginia, party of
the first part, hereinafter sometimes called "Lessor," and WINDING GULF COALS,
INC., a corporation likewise organized and existing under the laws of the State
of West Virginia, party of the second part, hereinafter sometimes called
"Lessee,"

                              W I T N E S S E T H :

            That for and in consideration of the sum of One Dollar ($1.00), cash
in hand paid to the Lessor by the Lessee, the receipt of which is hereby
acknowledged, and in further consideration of the rentals and royalties
hereinafter reserved by Lessor and to be paid by Lessee and of the faithful
performance by the Lessee of the terms, conditions, covenants and stipulations
hereinafter set forth to be performed and observed by Lessee, Lessor for the
term hereinafter set forth and upon the terms, conditions, covenants and
stipulations hereinafter contained does hereby DEMISE, LEASE and LET unto Lessee
for the purposes hereinafter set forth all of the coal in all of the seams
containing merchantable coal and particularly, but not by way of limitation, the
coal contained in what is known as the "Sewell," "Beckley" and "Pocahontas No.
3" veins or seams of coal in, on and under the tracts or parcels of land situate
in Raleigh County, West Virginia, and more particularly described as follows:

            All those certain tracts or parcels of land aggregating
approximately 8,400 acres of coal land and approximately 3,600 acres of surface,
as shown upon maps or prints attached hereto, as follows:

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            (1) A map or print marked, "Eastern Gas and Fuel Associates -
            Eccles, W. Va., No. 6 Sewell Seam - Scale l" = 1000' - P. - 6 - 32A"
            (Revised), the exterior boundary lines of which are outlined with
            green thereon; the "Brown Lines" pertaining to the Sewell Seam,
            hereinafter referred to, are shown in brown, and the "Corridor"
            pertaining to the Sewell Seam, hereinafter referred to, in solid
            yellow.

            (2) A map or print marked, "Eastern Gas and Fuel Associates -
            Eccles, W. Va., No. 5 Beckley Seam - Scale 1" = 1000' - P - 6 - 32B"
            (Revised), the exterior boundary lines of which are outlined with
            green thereon; the "Brown Lines" pertaining to the Beckley Seam,
            hereinafter referred to, are shown in brown, and the "Corridor"
            pertaining to the Beckley Seam, hereinafter referred to, in solid
            yellow.

            (3) The Pocahontas No. 3 seam and other seams may underlie the
            entire property. Therefore, the exterior boundary lines shown in
            green upon the map referred to in (2) above, marked P - 6 - 32B,
            adequately defines and describes said Pocahontas No. 3 seam and
            other seams herein demised.

            Lessor also leases and lets to Lessee all of the rights and
privileges now vested in Lessor for mining said coal and for occupying the
surface of the above mentioned Leased Premises for all purposes whatsoever in
connection with mining, transporting, shipping, removing and marketing the said
coal from said Leased Premises, and the coal from adjacent, coterminous and
neighboring lands which Lessee may now have or may hereafter acquire by purchase
or lease, together with the improvements, shafts and other property now or
hereafter located on the Leased Premises and all of the rights of Lessor to use
the stone, sand, gravel, water and other materials, except timber, therein and
thereon for its mining purposes; and, to the extent Lessor has the right so to
grant, the right to take and remove said coal without liability for damages to
the overlying surface, water or water courses therein or thereon or to anything
therein or thereon by reason of such mining operations.

            It is recognized between the parties hereto that certain rights of
way and easements for pipelines, telephone and telegraph lines, electric
transmission lines, railroads,

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roads and similar rights as well as conveyances of surface, tenements, oil and
gas rights, etc. have heretofore been granted to other parties and this
Agreement and Deed of Lease is made and entered into subject in all respects
thereto. In addition thereto, this Agreement and Deed of Lease is also made
subject to all out-conveyances, leases, grants and other instruments which may
affect said Leased Premises which are of record in said County Clerk's office or
of which Lessee has knowledge including, but not by way of limitation,
conveyances, contracts to convey and agreements for the sale of surface lots and
tenements.

            This Agreement and Deed of Lease is further made upon and subject to
the following terms, conditions, stipulations and agreements which the Lessee
covenants to and with Lessor faithfully to perform and observe:

            ARTICLE ONE: Lessee agrees to pay to the Lessor for the rights and
privileges herein demised the sum of Fifteen Cents (15(cent)) per net ton of
2,000 pounds for all coal mined from the Sewell and Beckley seams on said
premises; the further sum of Fifteen Cents (15(cent)) per net ton of 2,000
pounds for all coal mined from the Pocahontas No. 3 seam and other seams (except
the Sewell and Beckley seams) herein demised during the period from January 1,
1965 until December 31, 1974; the sum of Sixteen Cents (16(cent)) per net ton of
2,000 pounds of coal mined from said Pocahontas No. 3 and other seams (except
the Sewell and Beckley seams) during the period from January 1, 1975 until
December 31, 1984; and the sum of Seventeen Cents (17(cent)) per net ton of
2,000 pounds of coal mined from said Pocahontas No. 3 and other seams (except
the Sewell and Beckley seams) for the period from January 1, 1985 until the
termination of this lease and all extensions and renewals thereof. Said tonnage
royalty for coal actually mined shall be paid quarterly, that is to say: For the
quarter extending from January 1 to

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March 31st, on April 25th next following; for the quarter extending from April
1st to June 30th, on July 25th next following; for the quarter extending from
July 1st to September 30th, on October 25th next following; and for the quarter
extending from October 1st to December 31st, on January 25th next following.

            It is understood that either through the process now employed in the
cleaning of the coal mined from the Demised Premises or by other cleaning plant
or plants erected thereon, there has already accumulated and will be produced in
the future certain slate, refuse and like by-products of mining and that some
commercial salvage or use may be made or obtained from said accumulations,
present and future, and such products sold or otherwise disposed of.
Accordingly, it is agreed that the Lessee shall pay to Lessor at the rate of
Fifteen Cents (15(cent)) per net ton for all such products so sold.

            ARTICLE TWO: Lessee further covenants and agrees to pay to Lessor as
a minimum rental or royalty on account of coal mined hereunder the following
sums:

            (1) For the year extending from January l, 1965 to December 31,
1965, the sum of Seventy-Five Thousand Dollars ($75,000.00), which shall be paid
in full on the 2nd day of January, 1965. The Lessee shall be entitled to credit
against the amount so paid the tonnage royalty at the rate of Fifteen Cents
(15(cent)) per net ton upon coal mined from the Sewell and Beckley seams on the
demised premises only, during the year 1965, up to but not exceeding 500,000 net
tons mined in said year; provided, however, that no such credit shall be allowed
(a) for coal mined outside what is known as the "Brown Lines," the locations of
which are familiar to the parties hereto; (b) coal mined from the so-called
corridors in said Beckley and Sewell

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seams, with which the parties hereto are also familiar; or (c) any other credit
or recoupment therefrom.

            (2) For the year beginning January 1, 1966, and for each year
thereafter, the sum of Twenty-Five Thousand Dollars ($25,000.00) per year until
all of the merchantable and mineable coal shall have been mined and removed from
the Sewell and Beckley seams on said Demised Premises or until the total amount
paid shall equal or exceed the number of net tons of merchantable and mineable
coal in said seams multiplied by Fifteen Cents (15(cent)), as hereinafter
provided.

            (3) For the period from January 1, 1966 to December 31, 1970, the
sum of Twenty-Five Thousand Dollars ($25,000.00) per year for all coal mined or
to be mined from the Pocahontas No. 3 seam or any other seam or seams than the
Sewell and Beckley; for the period from January 1, 1971 to December 31, 1975,
the sum of Thirty Thousand Dollars ($30,000.00) per year; and for the period
from January 1, 1976, the sum of Thirty-Five Thousand Dollars ($35,000.00) per
year until all the merchantable and mineable coal in said Pocahontas No. 3 seam
and seams other than the Sewell and Beckley, have been mined and removed or paid
for as hereinafter provided.

            (4) When the said sum of Twenty-Five Thousand Dollars ($25,000.00)
minimum rental mentioned in subparagraph (2) above shall cease to be paid, as
hereinafter provided, as minimum rental or royalty for coal mined from the
Beckley and Sewell seams, then the respective amounts of minimum rental or
royalty above provided to be paid on account of the coal mined from the
Pocahontas No. 3 and other seams in subparagraph (3) above shall be increased by
the said sum of Twenty-Five Thousand Dollars ($25,000.00), that is to say, the
minimum on all coal hereby leased, let and demised shall not be less than the
sum of Fifty

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Thousand Dollars ($50,000.00) for the period from January 1, 1966 to December
31, 1970; the sum of Fifty-Five Thousand Dollars ($55,000.00) for the period
from January 1, 1971 to December 31, 1975; and the sum of Sixty Thousand Dollars
($60,000.00) for each and every year thereafter, subject to discontinuance and
recoupment as hereinafter provided.

            All said minimum rental or royalty shall be paid in quarterly
installments on the 25th day of the month following the end of each quarter or
three month's period in the same manner as hereinbefore provided for the payment
of tonnage royalty, whether or not the tonnage royalty on coal mined or dug
during the preceding three month's period equals said installment.

            In the event the tonnage royalty for any year during the term of
this lease is less than the minimum rental or royalty actually paid for such
year, Lessee shall have the right during any succeeding year or years of the
term hereof to mine and remove sufficient coal over and above the minimum rental
or royalty requirement for such succeeding year or years, without payment of
tonnage royalty, to make up the deficiency of said year but no excess of tonnage
royalty over and above the minimum rental or royalty from time to time paid
shall be credited upon or against any subsequent deficiency, however or whenever
occurring.

            Whenever in the opinion of the engineer of the Lessee and the
engineer of Lessor, or other proper officer of either of them, the quantity of
coal remaining to be recovered here-under in the Beckley and Sewell seams at the
applicable rate of tonnage royalty, would produce an amount of royalties equal
to the aggregate amount of such payments as may have been made by Lessee to make
up deficiencies in minimum rental or royalty for the respective years, and for
which Lessee has not reimbursed itself by mining free from royalty as
hereinbefore provided in this Article, then, in that case, Lessee shall not be
required to make any further payments of minimum rental or royalty in respect of
said Sewell and Beckley seams and shall have the

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privilege of mining free of tonnage royalty from said Sewell and Beckley seams,
a quantity of coal sufficient at the rate of tonnage royalty to reimburse itself
for said aggregate amount of said minimum rental or royalty deficiency payments.
After Lessee ceases to pay said amount of minimum rental in respect of said
Sewell and Beckley seams the same shall be used to increase the amounts of
minimum rental or royalty applicable to the Pocahontas No. 3 seam and other
seams, as hereinbefore provided.

            Whenever in the opinion of the engineer of Lessor and the engineer
of the Lessee, or other proper officer of either of them, the quantity of coal
remaining to be recovered hereunder in the pocahontas No. 3 seam and in seams
other than the Sewell and Beckley seams, shall be such as at the rate of tonnage
royalty hereinbefore provided in respect of said Pocahontas No. 3 seam and said
other seams, will produce an amount of royalties equal to the aggregate amount
of such payments as may have been made by Lessee to make up deficiencies in
minimum rental royalty for the respective years, and for which Lessee has not
reimbursed itself by mining free from royalty as hereinbefore provided in this
Article, then, and in that case, Lessee shall not be required to make any
further payments on account of minimum rental or royalty and shall have the
privilege of mining free of royalty a quantity of coal sufficient, at the rate
of tonnage royalties applicable at the time the deficiencies were incurred, as
hereinbefore provided in respect to the Pocahontas No. 3 and said other seams,
to reimburse itself for said aggregate amount of said minimum rental or royalty
deficiency payments.

            Lessee shall, on or before the 25th day of each April, July, October
and January furnish to Lessor a report showing the quantity of coal mined
hereunder during the three preceding calendar months, using the weights
furnished by the company over whose railway the coal is shipped for all coal so
mined and shipped by rail; provided, however, that if any coal

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mined hereunder is, before or upon loading the same into railroad cars, mixed or
commingled with other coal mined by Lessee from adjoining or adjacent premises,
then the quantity thereof shall be ascertained either (a) through railroad
weights [by prorating such railroad weights in proportion to the weights of the
mine cars loaded from the Leased Premises and from said other premises], or (b)
by mine weights which shall be, at all reasonable times, subject to check by
Lessor, or its authorized representative, or (c) by some other manner
satisfactory to such person as may, by written notice given by Lessor to Lessee,
be designated as the authorized representative of Lessor for the purposes of
this and certain other paragraphs hereof, such person being herein for
convenience referred to as the engineer of Lessor. A separate record shall be
kept of the coal mined from each of the seams on the Demised Premises.

            In the event the coal mined hereunder shall be mixed or mingled with
other coal, it is recognized between the parties hereto that the coal from the
Leased Premises and such other coal may be dissimilar in character and quality
and that when processed for market the impurities or refuse so removed from said
coal may vary; and, in such case, it is understood and agreed that an equitable
method of ascertaining the reduction in tonnage due to the removal of impurities
or refuse shall then be determined and agreed upon.

            ARTICLE THREE: Lessee shall keep and preserve, for a period of six
(6) years from and after the mining in fact, books of account of the mining,
using and shipping of coal mined hereunder, and records of all analyses made by
it of coal mined hereunder, and said books and records shall be open at all
reasonable times for inspection by Lessor, its agents or attorneys, or other
persons in its behalf, for the purpose of comparing and verifying the reports
rendered by

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Lessee under ARTICLE TWO hereof, or any other provision of this Agreement and
Deed of Lease.

            If Lessor shall not, within two (2) years next after receiving from
Lessee any quarterly statement of rent and royalty rendered under the terms of
ARTICLE ONE and ARTICLE TWO hereof, and the payment to be made in accordance
therewith, question the accuracy of such statement and payment, such statement
and payment shall be regarded as final and conclusive upon Lessor and Lessee and
the same may not thereafter be disputed or questioned by either Lessor or
Lessee.

            ARTICLE FOUR: If Lessee shall locate any additional mine openings,
shafts, buildings, railway sidings, highways or other improvements for use in
its operations on the Leased Premises, they shall be located in accordance with
plans approved by the engineer of Lessor, which approval shall not be
unreasonably withheld, it being understood and agreed that said additional
improvements, subject to certain exceptions hereinafter contained, shall be
located on the Leased Premises so that the same will become a part thereof if
this Agreement and Deed of Lease should become forfeited, cancelled or
terminated for any reason.

            ARTICLE FIVE: Any dumps for disposal of refuse or waste material of
whatever nature which are to be located on the Leased Premises shall be located
with the approval of the engineer of Lessor, and shall comply with any rules and
regulations that reasonably may be prescribed by said engineer in respect to the
disposal of such refuse and waste material.

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            ARTICLE SIX: Lessee covenants and agrees that it will conduct and
prosecute its mining operations on said property in an approved and skillful
manner so as to mine and produce from the Leased Premises all of the
merchantable and mineable coal that can be mined and produced at a profit by
approved and modern methods, machinery and appliances and that it will not mine
out such portions of the coal in the Leased Premises as will jeopardize or make
more difficult the mining and removal of the remaining portions thereof;
provided, however, that as to the mining in the Beckley and Sewell seams only,
the size, kind and type of mining equipment is to be exclusively determined by
Lessee.

            It is understood that some time may elapse before the Lessee in the
course of orderly mining shall desire to open and develop mining operations in
the Pocahontas No. 3 seam in said premises. It is, therefore, agreed that the
Lessee may defer the opening, development and mining of said Pocahontas No. 3
seam for such period as it may desire, not exceeding eighteen (18) years from
the date of this Agreement and Deed of Lease. When, however, operations are
started in said Pocahontas No. 3 seam, Lessee agrees to prosecute the same
diligently and to conduct its mining operations in an approved and skillful
manner as hereinabove provided.

            Whenever the Lessee shall pay the aggregate amounts of minimum
rental or royalties equal to the estimated amount of merchantable and mineable
coal in the Leased Premises at the applicable tonnage royalty rates aforesaid
and shall, therefore, have ceased to pay any further minimum rents or royalties
to Lessor, Lessee covenants and agrees to pay a rental for the use of Lessor's
property, the sum of Fifteen Thousand Dollars ($15,000.00) per year until this
lease shall have been terminated or surrendered.

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            ARTICLE SIX-A: The original term of this lease shall be for a period
of thirty-one (31) years, extending from January 1, 1965 to December 31, 1995.
It is agreed, however, that if the Lessee shall have kept and performed all of
the terms and conditions hereof it shall have the privilege and option of
renewing this Lease for an additional period of thirty (30) years from and after
January 1, 1996 and in like manner and under the same conditions, the Lessee
shall have the option and privilege of further renewing this Lease for a third
term of fourteen (14) years after the expiration of said second thirty (30) year
period; provided, however, that in each instance the Lessee shall give to the
Lessor at least one (1) year's written notice before expiration of the then
current term of its election to extend said lease for each additional period.

            ARTICLE SEVEN: Lessee shall not at any time, except with the written
consent of Lessor, drive any draft, tunnel, slope, shaft, room, entry or air
course within sixty (60) feet of any of the outside boundaries of the Leased
Premises, or lands now or hereafter acquired, except along the common boundary
line between the Leased Premises and other adjoining and coterminous coal
property now owned or hereafter acquired by Lessee by purchase, lease or
otherwise.

            Lessor does hereby waive the prohibition against mining coal within
five (5) feet of the boundary lines of the adjoining coal properties which
Lessee may now own or hereafter acquire by purchase, lease or otherwise.

            ARTICLE EIGHT: Lessee shall conduct its mining operations in the
Leased Premises in such manner as to absolve the Lessor from liability due to
air pollution, pollution or discoloration of streams fed by waters from the
Demised Premises, or because of interference

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with the beds of such streams or their natural flow and in accordance with the
laws and regulations of the State of West Virginia and of the United States of
America and as its operations are permitted under the mining rights, liberties
and privileges owned by Lessor and hereby leased and let. Lessee shall indemnify
and save harmless Lessor from all claims, demands, damages, suits, judgments,
awards, costs and expenses whatsoever suffered or incurred by Lessor (other than
any so suffered or incurred through any defects in Lessor's titles), and due to,
caused by, or arising in any manner out of, the possession, use and occupancy by
Lessee of the premises or property of Lessor.

            ARTICLE NINE: The Lessee shall work and mine the coal in accordance
with general and detailed plans of mining and description thereof, both
inclusive, which shall be pre-pared by the Lessee and submitted to the Engineer
of the Lessor who shall act upon the same with reasonable diligence. Said plan
shall not be put in operation unless and until the same has been approved in
writing by said Engineer, who shall not unreasonably refuse to approve it. No
change in, or modification of, or departure from any plan so approved, shall be
made in the development or operation of the mine except as requested by the
Lessee and approved in writing by said Engineer, or as requested by said
Engineer and approved in writing by the Lessee, any such request from either the
Lessee or said Engineer to be accompanied by plans illustrating such change,
modification or departure.

            ARTICLE TEN: Lessee shall employ an experienced and competent
Engineer whose duty it shall be to make surveys, determine elevations, prepare
the plans and maps provided for in ARTICLES FOUR, FIVE and NINE hereof, give
directions and courses for all

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entries, airways, rooms and other mine workings, and prepare and keep up, on a
scale of one hundred (100) feet to one (1) inch, a map of the vein or seam of
coal being mined by Lessee, which map shall be posted every three (3) months,
and shall show accurately and completely, on true meridian, the boundaries of
the Leased Premises, the height and thickness of said coal, the location of all
railway tracks, streams, roads, buildings and other improvements within the
boundaries of said lands, and all mine workings within the boundaries of said
lands, together with elevations on tide-water datum in the mine workings and on
the surface, and any additional information that can be practicably obtained,
and that may be necessary to the safe and proper conduct of the operations
hereunder, or that may reasonably be required by the Engineer of Lessor. Two (2)
copies of said map shall be sent to said Engineer, which map shall be
supplemented on or before the 25th day of January, April, July and October of
each year by Lessee furnishing to said Engineer the postings (two (2) copies),
mapped for the three (3) months ending on the last day of the calendar month
immediately preceding; and Lessor, its agents, engineers, or other persons in
its behalf, shall at all reasonable times have access to the maps, plans and
tracings of Lessee prepared in connection with operations of Lessee hereunder,
and may take therefrom copies of such portions as may be desired.

            The Engineer of Lessee shall furnish to the Engineer of Lessor on or
before the 25th day of January of each year an annual statement showing the
acreage of coal mined for the twelve (12) month's period ending on the last day
of the calendar month immediately preceding.

            If Lessee shall fail to furnish the said map or maps for thirty (30)
days after written demand therefor shall have been made by the Engineer of
Lessor, Lessor may at its option employ a competent Engineer to make surveys and
prepare such map or maps, and Lessee shall pay to Lessor the full amount of the
expense so incurred, such amount to be recovered, on

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default of prompt payment, in the manner provided for the collection of rents
and royalties hereinafter mentioned.

            ARTICLE ELEVEN: During the term of this Agreement and Deed of Lease,
and during any extension or extensions thereof, Lessee shall pay all taxes and
assessments (exclusive of Income or Excess Profits taxes of Lessor, or any taxes
payable by Lessor upon royalties under the provisions of any present or future
tax law of the State of West Virginia or of the United States of America) that
may be levied or assessed against Lessor or Lessee on account of ownership of
the Leased Premises, or the improvements thereon, or the coal mined therefrom,
or the severance, processing, transportation or sale of said coal, or the
products manufactured from said coal and if any such taxes and assessments are
paid by Lessor, Lessee shall repay to Lessor the amount thereof, such amount to
be recovered, in default of prompt payment, in the manner provided in ARTICLE
FOURTEEN hereof. Should Lessee consider excessive any taxes or assessments for
which it is liable under this Agreement and Deed of Lease, Lessor shall upon
request from Lessee, protest or appeal such excessive taxes or assessments at
the expense of Lessee.

            ARTICLE TWELVE: Lessor, its agents, engineers, or other persons in
its behalf, shall at all reasonable times have the right and privilege of
entering the works and mines of Lessee in, upon or beneath the surface of the
Leased Premises, in order to inspect, examine, survey or measure the same or any
part thereof and for such purposes to use freely the means of access to the said
works and mines without hindrance or molestation. It is understood and agreed
that said agents, engineers, or other persons in behalf of Lessor, when in and
on the

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Leased Premises for any purpose, shall not be regarded under the law, or
otherwise, as employees of Lessee.

            ARTICLE THIRTEEN: Lessee shall not mortgage or assign, convey,
lease, underlet, sublet, or set over any of its estate, interest, or rights
hereunder, or any part thereof, to any person or persons whomsoever, or any
corporation whatsoever, without the license and consent of Lessor in writing for
that purpose being first had and obtained, which consent shall not be
unreasonably withheld.

            Any transfer by operation or process of law, whether in a proceeding
at law, or in equity, or in bankruptcy, or insolvency shall be deemed an
assignment within the meaning of this provision and a violation of this
covenant. But this covenant shall not be deemed to apply to or prevent the
leasing by Lessee of any house or building of part thereof to others for
business or residential purposes in connection with said mining operations.

            If Lessee shall make an assignment for the benefit of its creditors,
or voluntarily go into bankruptcy, or file an application under Chapter X of the
Bankruptcy Act or an answer admitting the allegations of an application filed by
others thereunder, or shall voluntarily go into or suffer or permit a
receivership of its property, then Lessor may, at its option, forthwith forfeit
and declare null and void this Agreement and Deed of Lease.

            ARTICLE FOURTEEN: It is further agreed and understood that all
rentals and royalties herein provided to be paid by Lessee shall be deemed and
considered as rent reserved upon contract by Lessor, and all remedies now or
hereafter given by the laws of West Virginia to landlords for the collection of
rents shall exist in favor of Lessor for the collection of all such

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rentals and royalties to be paid under this Agreement and Deed of Lease, and a
lien is hereby expressly reserved, given, granted and imposed upon the leasehold
estate hereby created, to secure the payment of all said rents and royalties
when and as they occur until the same are paid; and it is further agreed and
understood that if any of the rents or royalties remain unpaid for thirty (30)
days after the same shall become due and payable as herein provided, Lessor
shall have the right to enforce the payment thereof by the remedies given to
landlords by law and by the remedies herein given.

            And Lessor shall have the further right, at its option, if said
rentals and royalties shall not be paid within said period of thirty (30) days
after the same become due and payable, respectively, upon at least thirty (30)
days' written notice to Lessee of such default, and, if such default be not
remedied by Lessee within thirty (30) days from receipt of such notice, then and
in such event, unless Lessee shall have within such thirty (30) days' period
resorted to arbitration, Lessor may declare this Agreement and Deed of Lease to
be thenceforth null and void, and this Agreement and Deed of Lease shall
thereupon, with all the rights and privileges of Lessee hereunder, cease and
determine, and thereupon Lessor shall have the right by its officers, or agents,
to enter upon the Leased Premises without further notice and take possession of
the same, and the right of possession of Lessor shall thereupon be complete to
every intent and purpose as if this Agreement and Deed of Lease had not been
made. But the exercise of this right to end and terminate this Agreement and
Deed of Lease shall not be held to release or impair any accrued obligation of
Lessee under this Agreement and Deed of Lease.

            The neglect of Lessor at any time to avail itself of rights or
remedies hereunder shall not be construed as a waiver of its rights and
privileges to avail itself of each and every of such rights and remedies
whenever and so often as any new ground therefor may arise.

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            The remedies given in this Article are merely cumulative and shall
not deprive Lessor of any of its legal or equitable remedies.

            ARTICLE FIFTEEN: All of the preceding terms, conditions, covenants,
stipulations and agreements to be performed and observed by Lessee, and the
covenants of Lessee to perform and observe the same, shall inure to the benefit
of Lessor, and Lessor may, by proper action at law or suit in equity, or other
proper proceedings specifically enforce any and all of said terms, conditions,
covenants, stipulations and agreements and the covenants of Lessee to perform
and observe the same. In case Lessee shall fail in the performance or observance
of any of the said terms, conditions, covenants, stipulations and agreements, or
shall use the Leased Premises contrary to the provisions and limitations hereof,
and any such failure shall continue for a period of thirty (30) days after
Lessor shall have given to Lessee written notice of such default, then Lessor
may, at its option, forfeit this Agreement and Deed of Lease under the terms of
this Article, then and in such event, unless Lessee shall have within such
thirty (30) days' period resorted to arbitration, the term and leasehold
interest hereby created and all of the rights and privileges of Lessee hereunder
shall forthwith cease and determine, and Lessor shall be entitled to re-enter
the Leased Premises and to exclude Lessee therefrom and to hold said lands as of
its former estate; and a waiver by Lessor of

            The neglect of Lessor at any time to avail itself of rights or
remedies hereunder shall not be construed as a waiver of its rights and
privileges to avail itself of each and every of such rights and remedies
whenever and so often as any new ground therefor may arise.

            The remedies given in this Article are mealy cumulative and shall
not deprive Lessor of any of its legal or equitable remedies.

                                      -17-
<PAGE>

            ARTICLE FIFTEEN: All of the preceding terms, conditions, covenants,
stipulations and agreements to be performed and observed by Lessee, and the
covenants of Lessee to perform and observe the same, shall inure to the benefit
of Lessor, and Lessor may, by proper action at law or suit in equity, or other
proper proceedings specifically enforce any and all of said terms, conditions,
covenants, stipulations and agreements and the covenants of Lessee to perform
and observe the same. In case Lessee shall fail in the performance or observance
of any of the said terms, conditions, covenants, stipulations and agreements, or
shall use the Leased Premises contrary to the provisions and limitations hereof,
and any such failure shall continue for a period of sixty.(60) days after Lessor
shall have given to Lessee written notice of such default, then Lessor may, at
its option, forfeit this Agreement and Deed of Lease under the terms of this
Article, then and in such event, unless Lessee shall have within such sixty (60)
days' period resorted to arbitration, the term and leasehold interest hereby
created and all of the rights and privileges of Lessee hereunder shall forthwith
cease and determine, and Lessor shall be entitled to re-enter the Leased
Premises and to exclude Lessee therefrom and to hold said lands as of its former
estate; and a waiver by Lessor of any particular cause of forfeiture shall not
prevent the forfeiture and cancellation of this Agreement and Deed of Lease for
any other cause of forfeiture or for the same cause occurring at any other time.
It is understood and agreed between the parties hereto that if it should be
impossible or impractical for Lessee to correct any such default by actual
compliance, then Lessee shall be entitled to pay to the Lessor money damages to
correct such default. If the parties cannot agree upon said money damages, then
the matter may be arbitrated under ARTICLE NINETEEN hereof.

            The remedies given in this Article are merely cumulative and shall
not deprive Lessor of any of its other legal or equitable remedies.

                                      -18-
<PAGE>

            ARTICLE SIXTEEN: During the term of this Agreement and Deed of
Lease, or any extension of term as hereinabove provided, Lessee agrees to keep
all fixed items now on said Leased Premises or hereafter placed by it on said
Leased Premises in good operating condition and repair and which said fixed
items shall include all shafts, tipples, buildings, structures, tracks, fans,
main pumps, pipelines, feeder and trolley lines and other fixed items which are
necessary to maintain and operate said mines.

            Upon the expiration or sooner termination of this Agreement and Deed
of Lease, Lessee will turn over and deliver or cause to be turned over and
delivered to Lessor all such fixed items or their equivalent in good operating
condition and repair, which said fixed items shall be and become the property of
the Lessor, free and clear of all claims of any person, firm or corporation.

            In the event all of the merchantable and mineable coal in the Leased
Premises shall have been mined and removed or upon the date of the termination
of this Agreement and Deed of Lease, or any extension thereof, then Lessee shall
be entitled to take and remove within six (6) months from the date thereof all
movable machinery, equipment and supplies used by it in connection with the
mining of coal from the Leased Premises.

            In the event all of the merchantable and mineable coal in the Leased
Premises shall not have been mined and removed at the termination of this
Agreement and Deed of Lease or any extension thereof, then Lessee shall be
entitled to take and remove within six (6) months from the date of such
termination all store merchandise, store supplies, store equipment, expendable
mine supplies, all loading equipment such as coal loading machines, rock loading
machines and continuous mining machines, all haulage equipment such as shuttle
cars, caterpillar equipment trucks, locomotives and mine cars, all drilling
equipment such as rock

                                      -19-
<PAGE>

drills, coal drills and impact wrenches, all conveyors, such as belt conveyors,
chain conveyors, elevators, shaker conveyors inside the mines, and mine car
hoists, except two main line motors, four gathering motors and eighty mine cars
(that is to say, one main line motor, two gathering motors and forty mine cars
for the mine in the Sewell seam of coal and one main line motor, two gathering
motors and forty mine cars for the mining of the Beckley seam of coal), all in
good operating condition. Each and every provision of this paragraph shall in
like manner apply to all such equipment, facilities and appliances used or
useful in the mining of the Pocahontas No. 3 seam.

            In the event this Agreement and Deed of Lease should become
terminated by default on the part of Lessee in the payment of rentals or
royalties or in the performance of the covenants and conditions herein required
to be kept and performed by Lessee, then, and in such event, all said mobile
movable machinery, equipment and supplies shall thereupon become the property of
Lessor in addition to the fixed items hereinabove mentioned.

            Notwithstanding anything to the contrary herein contained, Lessee
shall have the right to remove or dispose of any item of improvements, equipment
and appliances on said Leased Premises which may have become worn out,
destroyed, obsolete, or not useful in the operation of the mines operated by
Lessee on said Leased Premises, provided such property is replaced by other
property of equal value and usefulness (before said replaced property became
worn out, destroyed, obsolete or not useful) in the operations of said mines.
When in the course of mining it shall appear, in the opinion of the engineer of
the Lessor and the engineer of the Lessee, that the merchantable and mineable
coal in the Leased Premises is nearing exhaustion, the Lessee shall be required
to keep in repair and to replace only so much of the property aforesaid as may
be necessary or useful in the mining of such remaining coal.

                                      -20-
<PAGE>

            ARTICLE SEVENTEEN: Lessee shall, at its own expense, keep the
tipple, tipple facilities and all other insurable improvements insured, in a
reasonably adequate amount, against fire, with an extended coverage endorsement
thereon, in recognized insurance companies of financial integrity authorized to
do business in West Virginia. In the event the tipple or other improvements are
destroyed, or partially destroyed, by any of the hazards insured against, the
insurance proceeds, to the extent necessary, shall be used for repairing,
rebuilding, restoring or replacing the insured property, or so much thereof as
may be reasonably required to handle the then remaining unmined coal covered by
this Agreement and Deed of Lease, or, in lieu thereof, to substitute another
tipple, tipple facilities or other improvements for such purposes. It is
understood and agreed that the proceeds of the said insurance money obtained by
Lessee, as aforesaid, and not used by Lessee for repairing, rebuilding,
restoring or replacing the insured property, shall be paid to Lessor.

            ARTICLE EIGHTEEN: The giving of any notice to or the making of any
demand on Lessee under the provisions hereof, shall be sufficient, if in writing
addressed to Lessee, and sent by Registered or Certified Mail to Lessee at its
office at Tams, West Virginia, or such other address as may be hereafter
designated by Lessee for that purpose by letter of advice addressed to Lessor
and any such notice to Lessor shall be sufficient if in writing addressed to
Lessor and sent by Registered or Certified Mail to it at Kanawha Banking & Trust
Company Building, Charleston, West Virginia, or such other address as may be
hereafter designated by Lessor for that purpose, by letter of advice addressed
to Lessee. Unless otherwise herein specifically provided, ten (10) days shall be
considered reasonable notice.

                                      -21-
<PAGE>

            ARTICLE NINETEEN: In the event Lessee should be dissatisfied with
any of the rulings, decisions or determinations of the Engineer of Lessor
hereunder, or in the event any dispute or difference of any kind should arise
between Lessor and Lessee, which the parties are not able to adjust within ten
(10) days after the subject of such dissatisfaction, dispute or difference has
been brought to the attention of the other in writing, either of the parties
hereto may elect to submit such dissatisfaction, dispute or difference to a
Board of Arbitration, consisting of three (3) reputable disinterested persons
with practical experience in coal mining. One Arbitrator to be chosen by Lessor
and one by Lessee within ten (10) days after notice from either party to the
other, and an umpire to be selected promptly thereafter by the arbitrators so
chosen, and upon default by either party to so appoint an arbitrator within said
ten (10) days, any Judge of a Federal Court having jurisdiction of the County of
Raleigh, State of West Virginia, shall have power, upon application by the other
party, to appoint such arbitrator, and in the event of the failure of such
arbitrators when so appointed to select an umpire promptly, then any such Judge
shall have power, upon the application of either party, to appoint such umpire,
and such Board so constituted shall have full and complete authority to proceed
with the arbitration and fully and completely decide the disagreement or dispute
as if appointed by said parties. The decision of the Board of Arbitration shall
be set forth in writing and shall be such as to permit the subject of such
dissatisfaction, dispute or difference to be corrected by a reasonable
compliance of the same by the party in default; provided, however, if it should
be impossible or impractical to correct such default by actual compliance, then
money damages shall be determined and assessed in lieu thereof. The arbitrators
shall determine the costs of the arbitration, including reasonable compensation
to the arbitrators, and by whom such costs shall be paid. Such costs may be
assessed against either or both parties; provided, however, it is agreed that
each party

                                      -22-
<PAGE>

shall pay all costs which it may incur for counsel fees, witness fees, traveling
fees and similar costs. In the event either party hereto has resorted to
arbitration, as aforesaid, pending the decision of the Board of Arbitrators, the
remedies given Lessor for the forfeiture of this Agreement and Deed of Lease and
re-entry by reason of any alleged default on the part of Lessee, except the
payment of rent or royalty on the coal actually mined and removed from the
Leased Premises during the arbitration, shall be suspended but such remedies
shall again become and be immediately available to Lessor if Lessee shall not,
within thirty (30) days after the decision of the arbitrators, comply therewith.
The parties shall accept as final, conclusive and binding any award so made by
the arbitrators, unless either party shall, within thirty (30) days after the
award is made, institute an appropriate suit or action in a court of competent
jurisdiction to determine the matters covered by the award.

            ARTICLE TWENTY: Lessee covenants and agrees that at the final
termination of this Lease, or any renewal or extension thereof, it will convey
to the Lessor any interest it, the Lessee, may have acquired in and to any
surface lands lying within the exterior boundaries of the Leased Premises.

            ARTICLE TWENTY-ONE: Lessee covenants and agrees to pay unto Lessor,
in addition to the rentals and royalties hereinabove specified, a rental of Two
Cents (2(cent)) for each and every net ton of two thousand (2,000) pounds of
coal mined from adjacent, coterminous and neighboring lands and hauled and
transported through, on or over the Leased Premises, the same to be paid and
accounted for at the times set forth in ARTICLE ONE herein in respect of tonnage
royalty.

                                      -23-
<PAGE>

            ARTICLE TWENTY-TWO: Lessor reserves the right to operate, sell,
lease or otherwise use or dispose of any part or parts of the land, surface,
oil, gas or other minerals, or any interest therein except coal which the Lessee
has the right to mine as provided herein, without applying for or obtaining the
further consent of Lessee; provided, however, that any deed, lease or other
instrument evidencing such sale, lease or other disposition, shall in each
instance reserve therefrom such mining and transportation rights and privileges
as may be necessary or convenient for the full and complete exercise of Lessee's
rights to mine and remove said coal, including a waiver of subjacent and lateral
support of the surface. When such sale, lease or other disposition shall be made
by the Lessor, all obligations and liability of Lessee with respect to the area
or areas so sold, leased or disposed of from time to time shall terminate and
Lessee shall be relieved of the payment of property taxes upon all such areas.

            Lessor reserves the right to grant and convey such rights of way and
easements over and across said lands as it may desire to grant and convey for
roads, railways, pipelines, power lines, telephone and telegraph lines and like
facilities, except that Lessor shall not make any such grant or conveyance which
will damage Lessee or unreasonably interfere with Lessee's mining operations or
of its plant improvements and facilities.

            ARTICLE TWENTY-THREE: Except as otherwise expressly provided in this
Agreement and Deed of Lease, all of the covenants, promises, undertakings and
stipulations contained herein and all of the benefits derived therefrom, shall
inure to the benefit of and extend to and be binding upon Lessor and Lessee,
their respective successors and assigns.

                                      -24-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ J. A. Prince
                                         ---------------------------------
                                             President

ATTEST:

/s/  J. R. Clark, Jr.
--------------------------------
     Secretary

                                      WINDING GULF COALS, INC.

                                      By /s/ W. A. Haslam
                                         ---------------------------------
                                             President

ATTEST:

/s/  C. A. Ivery
-------------------------------
     Secretary

                                      -25-
<PAGE>

STATE OF WEST VIRGINIA,

COUNTY OF KANAWHA, TO-WIT:

            I, Glenda June Green, a Notary Public in and for said county, do
certify that J. A. Prince, who signed the writing hereto annexed, bearing date
January 1, 1965, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in my
said county, before me, acknowledged the said writing to be the act and deed of
said corporation.

      Given under my hand and notarial seal this 30th day of December, 1964.

      My commission expires January 23, 1969.

(NOTARIAL SEAL)                                 /s/ Glenda June Green
                                         -----------------------------------
                                                    Notary Public

STATE OF WEST VIRGINIA,

COUNTY OF KANAWHA, TO-WIT:

            I, Glenda June Green, a Notary Public in and for said county, do
certify that W. A. HASLAM, who signed the writing above, bearing date January 1,
1965, for WINDING GULF COALS, INC., has this day in my said county, before me,
acknowledged the said writing to be the act and deed of said corporation.

      Given under my hand and notarial seal this 30th day of December, 1964.

      My commission expires January 23, 1969.

(NOTARIAL SEAL)                                 /s/ Glenda June Green
                                         -----------------------------------
                                                    Notary Public

                                      -26-
<PAGE>

OFFICE OF THE CLERK OF THE COUNTY COMMISSION

OF RALEIGH COUNTY, WEST VIRGINIA                             Feb 14 1978 3:41 AM

      The forgoing Instrument of Writing, together with the certificate of
acknowledgement thereon, was this day presented in said office and admitted to
record.

      RETURN TO:

      /s/ Robert Sayre                                                     CLERK
  ----------------------------                            ----------------------

                                      -27-
<PAGE>

            THIS MODIFICATION AND AMENDMENT OF AGREEMENT AND DEED OF LEASE, made
as of this 28th day of December, 1970, by and between THE CRAB ORCHARD COAL AND
LAND COMPANY, a corporation organized and existing under the laws of The State
of West Virginia, party of the first part, hereinafter sometimes called
"Lessor," and WINDING GULF COALS, INC., a corporation likewise organized and
existing under the laws of the State of West Virginia, party of the second part,
hereinafter sometimes called "Lessee,"

            WHEREAS, Lessor and Lessee are parties to a certain Agreement and
Deed of Lease dated as of January 1, 1965 with respect to the mining and removal
of coal on the property of Lessor in Raleigh County, West Virginia; and

            WHEREAS, ARTICLE TWO of said agreement and deed of lease contains
certain covenants and agreements between the parties with respect to the
payments of minimum rentals and royalties thereunder; and

            WHEREAS, Lessor and Lessee mutually desire to modify and amend
subparagraphs (3) and (4) of said ARTICLE TWO,

            NOW, THEREFORE, THIS AGREEMENT WITNESSETH:

            That in consideration of the premises and for the sum of One Dollar
($1.00), cash in hand paid by each party to the other and other good and
valuable considerations, the receipt of all of which is hereby acknowledged by
both Lessor and Lessee, Lessor and Lessee mutually covenant and agree as
follows:

            1. Subparagraphs (3) and (4) of ARTICLE TWO of said agreement and
deed of lease between them dated January 1, 1965, shall be and said
subparagraphs are hereby modified and amended to read and provide as follows:

<PAGE>

            (3) For the period from January 1, 1966 to December 31, 1970, the
sum of Twenty-Five Thousand Dollars ($25,000.00) per year for all coal mined or
to be mined from the Pocahontas No. 3 seam or any other seam or seams than the
Sewell and Beckley; and for the period from January 1, 1971, the sum of
Thirty-Five Thousand Dollars ($35,000.00) per year until all the merchantable
and mineable coal in said Pocahontas No. 3 seam and seams other than the Sewell
and Beckley, have been mined and removed or paid for as hereinafter provided.

            (4) When the said sum of Twenty-Five Thousand Dollars ($25,000.00)
minimum rental mentioned in subparagraph (2) above shall cease to be paid, as
hereinafter provided, as minimum rental or royalty for coal mined from the
Beckley and Sewell seams, then the respective amounts of minimum rental or
royalty above provided to be paid on account of the coal mined from the
Pocahontas No. 3 and other seams in subparagraph (3) above shall be increased by
the said sum of Twenty-Five Thousand Dollars ($25,000.00), that is to say, the
minimum on all coal hereby leased, let and demised shall not be less than the
sum of Fifty Thousand Dollars ($50,000.00) for the period from January 1, 1965
to December 31, 1970; the sum of Sixty Thousand Dollars ($60,000.00) from
January 1, 1971, and the sum of Sixty Thousand Dollars ($60,000.00) for each and
every year thereafter, subject to discontinuance and recoupment as hereinafter
provided.

            2. Said subparagraphs (3) and (4) of said ARTICLE TWO, as so
modified and amended and as above set forth are hereby made a part of said
agreement and deed of lease dated January 1, 1965 in the place and stead of
subparagraphs (3) and (4) as the same now appear in said agreement and deed of
lease, in the same manner and to the same effect as of said amended paragraphs
had been originally included in said agreement and deed of lease.

            3. Except as herein modified and amended, said agreement and deed of
lease dated January 1, 1965 shall be and remain in full force and effect.

            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                       -2-
<PAGE>

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ J. Roy Harris
                                         ---------------------------------------
                                             President

ATTEST:

      /s/ J. M. Clark, Jr.
-----------------------------
       Secretary

(CORPORATE SEAL)

                                      WINDING GULF COALS, INC.

                                      By /s/ E. V. Bowman
                                         ---------------------------------------
                                             President

(CORPORATE SEAL)

ATTEST:

      /s/ L. K. McPherson
-------------------------------------
        Assistant Secretary

ATTEST:

----------------------------------
          Secretary

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to-wit:

            I, D. S. Keener, a Notary Public in and for said county, do certify
that J. Roy Harris, who signed the writing hereto annexed, bearing date December
28, 1970, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in my said
county, before me, acknowledged the said writing to be the act and deed of said
corporation.

            Given under my hand this 29th day of December, 1970.

            My commission expires 24th day of August, 1971.

                                      /s/ D. S. Keener
                                      ----------------------------------
                                      Notary Public

STATE OF WEST VIRGINIA

COUNTY OF RALEIGH, to-wit:

            I, __________________, a Notary Public in and for said county, do
certify that E. V. Bowman who signed the writing hereto annexed, bearing date
December 28, 1970, for WINDING GULF COALS, INC., has this day in my said county,
before me, acknowledged the said writing to be the act and deed of said
corporation.

                                       -3-
<PAGE>

            Given under my hand this 28th day of December, 1970.

            My commission expires March 6, 1972.

                                      ----------------------------------
                                      Notary Public

This instrument was prepared by Frederick L. Thomas, Jr., Attorney at Law,
Charleston, West Virginia.

                                      -4-
<PAGE>

            THIS SECOND MODIFICATION AND AMENDMENT OF AGREEMENT AND DEED OF
LEASE, made as of this 22nd day of August, 1974, by and between THE CRAB ORCHARD
COAL AND LAND COMPANY, a corporation organized and existing under the laws of
the State of West Virginia, party of the first part, hereinafter sometimes
called "Lessor," and WESTMORELAND COAL COMPANY, a corporation likewise organized
and existing under the laws of the State of West Virginia, party of the second
part, hereinafter sometimes called "Lessee,"

            WHEREAS, Lessor and Winding Gulf Coals, Inc. are parties to a
certain Agreement and Deed of Lease dated as of January l, 1965, with respect to
the mining and removal of coal on the property of Lessor in Raleigh County, West
Virginia; and

            WHEREAS, Westmoreland Coal Company, party of the first part herein,
is the successor to said Winding Gulf Coals, Inc. and is now the Lessee under
said Agreement and Deed of Lease; and

            WHEREAS, ARTICLE THREE and ARTICLE TEN of said Agreement and Deed of
Lease contains certain covenants and agreements between the parties with respect
to the preparation of reports and maps and examination thereof; and

            WHEREAS, Lessor and Lessee mutually desire to modify and amend said
ARTICLE THREE and ARTICLE TEN,

            NOW, THEREFORE, THIS AGREEMENT WITNESSETH:

            That in consideration of the premises and for the sum of One Dollar
($1.00), cash in hand paid by each party to the other and other good and
valuable considerations, the receipt of all of which is hereby acknowledged by
both Lessor and Lessee, Lessor and Lessee mutually covenant and agree as
follows:

            1. ARTICLE THREE of said Agreement and Deed of Lease dated January
1, 1965, shall be and it is hereby modified and amended to read and provide as
follows:

<PAGE>

            ARTICLE THREE: Lessee shall keep and preserve, for a period of six
(6) years from and after the mining in fact, books of account of the mining,
using and shipping of coal mined hereunder, and records of all analyses made by
it of coal mined here-under, and said books and records shall be open at all
reasonable times for inspection by Lessor, its agents or attorneys, or other
persons in its behalf, for the purpose of comparing and verifying the reports
rendered by Lessee under ARTICLE TWO hereof, or any other provision of this
Agreement and Deed of Lease.

            If Lessor shall not, within three (3) years next after receiving
from Lessee any quarterly statement of rent and royalty rendered under the terms
of ARTICLE ONE and ARTICLE TWO hereof, and the payment to be made in accordance
therewith, question the accuracy of such statement and payment, such statement
and payment shall be regarded as final and conclusive upon Lessor and Lessee and
the same may not thereafter be disputed or questioned by either Lessor or
Lessee.

            2. ARTICLE TEN of said Agreement and Deed of Lease dated January l,
1965, shall be and it is hereby modified and amended to read and provide as
follows:

            ARTICLE TEN: Lessee shall employ an experienced and competent
Engineer whose duty it shall be to make surveys, determine elevations, prepare
the plans and maps provided for in ARTICLES FOUR, FIVE and NINE hereof, give
directions and courses for all entries, airways, rooms and other mine workings,
and prepare and keep up, on a scale of one hundred (100) feet to one (1) inch, a
map of the vein or seam of coal being mined by Lessee, which map shall be posted
every six (6) months, and shall show accurately and completely, on true
meridian, the boundaries of the Leased Premises, the height and thickness of
said coal, the location of all railway tracks, streams, roads, buildings and
other improvements within the boundaries of said lands, and all mine workings
within the boundaries of said lands, together with elevations on tide-water
datum in the mine workings and on the surface, and any additional information
that can be practicably obtained, and that may be necessary to the safe and
proper conduct of the operations hereunder, or that may reasonably be required
by the Engineer of Lessor. Two (2) copies of said map shall be sent to said
Engineer, which map shall be

                                       -2-
<PAGE>

supplemented on or before the 25th day of January and July of each year by
Lessee furnishing to said Engineer the postings (two (2) copies), mapped for the
six (6) months ending on the last day of the calendar month immediately
preceding; and Lessor, its agents, engineers, or other persons in its behalf,
shall at all reasonable times have access to the maps, plans and tracings of
Lessee prepared in connection with operations of Lessee hereunder, and may take
therefrom copies of such portions as may be desired.

            The Engineer of Lessee shall furnish to the Engineer of Lessor on or
before the 25th day of January of each year an annual statement showing the
acreage of coal mined for the twelve (12) months' period ending on the last day
of the calendar month immediately preceding.

            If Lessee shall fail to furnish the said map or maps for thirty (30)
days after written demand therefor shall have been made by the Engineer of
Lessor, Lessor may at its option employ a competent Engineer to make surveys and
prepare such map or maps, and Lessee shall pay to Lessor the full amount of the
expense so incurred, such amount to be recovered, on default of prompt payment,
in the manner provided for the collection of rents and royalties hereinafter
mentioned.

            3. Said ARTICLE THREE and ARTICLE TEN, as so modified and amended
and as above set forth are hereby made a part of said Agreement and Deed of
Lease dated January 1, 1965, in the place and stead of said articles as they now
appear in said Agreement and Deed of Lease, in the same manner and to the same
effect as if said amended paragraphs had been originally included in said
Agreement and Deed of Lease.

            4. Except as herein modified and amended, said Agreement and Deed of
Lease dated January 1, 1965, shall be and remain in full force and effect.

                                      -3-
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be signed and their respective seals to be affixed hereto, by their
respective proper officers thereunto duly authorized, as of the day and year
first above written.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ J. Roy Harris
                                         ---------------------------------------
(CORPORATE SEAL)                             President

ATTEST:

/s/ J. M. Clark, Jr.
--------------------------------
    Secretary

                                      WESTMORELAND COAL COMPANY

                                      By /s/ Howard H. Frey
                                         ---------------------------------------
(CORPORATE SEAL)                             Exec. Vice President

ATTEST:

/s/ S. F. Miller
--------------------------------
    Secretary

                                      -4-
<PAGE>

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to-wit:

            I, Ruth A. Cadle, a notary public in and for said county, do certify
that J. Roy Harris, who signed the writing hereto annexed, bearing date the 22nd
day of August, 1974, for THE CRAB ORCHARD COAL AND LAND COMPANY, has this day in
my said county, before me, acknowledged the said writing to be the act and deed
of said corporation.

            Given under my hand this 29th day of August, 1974.

            My commission expires: April 27, 1982.

                                      /s/ Ruth A. Cadle
                                      -------------------------------------
                                      Notary Public

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

            I, Marguerite K. Smith, a notary public in and for said county, do
certify that Howard H. Frey, Executive Vice President, who signed the writing
hereto annexed, bearing date the 22nd day of August, 1974, for WESTMORELAND COAL
COMPANY, has this day in my said county, before me, acknowledged the said
writing to be the act and deed of said corporation.

            Given under my hand this 18th day of March, 1975.

            My commission expires: November 10, 1975

                                      /s/ Marguerite K. Smith
                                      -------------------------------------
                                      Notary Public

This instrument was prepared by Frederick L. Thomas, Jr., Attorney at Law,
Charleston, West Virginia.

                                      -5-
<PAGE>

      THIS AGREEMENT AND PARTIAL SURRENDER AND RELEASE, dated October 13, 1980,
by and between WESTMORELAND COAL COMPANY, a Delaware corporation, hereinafter
referred to as "Westmoreland"; and THE CRAB ORCHARD COAL AND LAND COMPANY, a
West Virginia corporation, hereinafter referred to as "Crab Orchard".

      WHEREAS, Crab Orchard has leased unto Westmoreland all of the coal in all
of the seams containing merchantable coal (specifically including, but not
limited to the Sewell, Beckley and Pocahontas #3 Seams) in, on and under various
tracts or parcels of land situate in Raleigh County, West Virginia, pursuant to
that certain document entitled "Agreement and Deed of Lease" dated January 1,
1965 by and between Crab Orchard and Winding Gulf Coals, Inc., which
Westmoreland acquired via merger in 1970.

      WHEREAS, Crab Orchard also leased to Westmoreland pursuant to that same
Agreement and Deed of Lease all of the rights and privileges for mining said
coal and for occupying the surface of the tracts or parcels leased and described
therein for all purposes whatsoever in connection with mining, transporting,
shipping, removing and marketing the coal from the Leased Premises.

      WHEREAS, Crab Orchard and Westmoreland have agreed that Westmoreland may
surrender to Crab Orchard all its rights and interests in and to all the coal in
the Sewell seam only in, on and under a small area of the Leased Premises and
Crab Orchard has agreed to accept such surrender.

      NOW, THEREFORE, in consideration of the premises and covenants herein
contained, Westmoreland and Crab Orchard agree and covenant as follows:

      1. Westmoreland surrenders and releases to Crab Orchard all of its right,
title and interest in and to all the coal in the Sewell Seam (and no other seam)
in, on and under that certain area of land containing 2.77 acres as shown
colored in red or pink on that certain map entitled "Application For Incidental
Surface Mine Permit Pavex, Inc. Town District-Raleigh County-West Virginia
Scale: 1" = 500' September 16, 1980 Contour Interval: 40'" prepared by Southern
Surveying & Engineering Co., Inc. of Beckley, West Virginia, which such map is
attached hereto and hereby made a part hereof and reference to which is made for
a further description of said surrendered area.

<PAGE>

      2. Westmoreland specifically reserves all its right, title and interest in
and to all the other coal (and all other rights and privileges leased to
Westmoreland in connection with such coal) in, on and under the remainder of the
Leased Premises as described and set forth in the aforementioned Agreement and
Deed of Lease (unless any other areas thereof have heretofore been released and
surrendered by Westmoreland to Crab Orchard).

      3. Crab Orchard hereby accepts the surrender of the coal described in the
first numbered paragraph hereof and hereby releases Westmoreland from any
further obligations, liabilities and/or responsibilities of whatever nature or
form concerning such coal whether such obligations, liabilities and/or
responsibilities arise under or as a result of the aforementioned Agreement and
Deed of Lease or otherwise. Crab Orchard does hereby also remise, release and
forever discharge Westmoreland, its agents, employees, successors and assigns of
and from all manner of actions and causes of action, suits, debts, dues,
accounts, bonds, covenants, contracts, agreements, judgments, claims and demands
whatsoever in law or equity relating in any way to the coal surrendered and
released to it by Westmoreland herein which against Westmoreland Crab Orchard
ever had, now has or shall have at any time in the future or which it or its
successors, assigns, insurers, subrogees, or anyone claiming through or on
behalf of it, hereafter can, shall or may have, for, or by reason of any cause,
matter or thing whatsoever, from the beginning of the world to the end of the
world.

      IN TESTIMONY WHEREOF, Westmoreland and Crab Orchard have caused this
Agreement and Partial Surrender and Release to be signed in their respective
corporate names by their respective officers thereunto duly authorized.

                                      WESTMORELAND COAL COMPANY

                                      By: /s/ Howard H. Frey
                                          --------------------------------------
                                          H. H. Frey, President

                                      CRAB ORCHARD COAL AND LAND COMPANY

                                      By: /s/ J. Roy Harris
                                          --------------------------------------
                                          Title:  President

                                      -2-
<PAGE>

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

      I, Helen M. O'Mara, a Notary Public in and for the County aforesaid, do
certify that H. H. Frey, whose name is signed to the above writing dated October
13, 1980, as President of Westmoreland Coal Company, has this day in my said
County, before me acknowledged the said writing to be the act and deed of said
corporation.

      GIVEN under my hand and official seal of office this 31st day of October,
1980.

      My Commission Expires: March 5, 1984

                                      /s/ Helen M. O'Mara
                                      ---------------------------------
                                      Notary Public

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to wit:

            I, Judith L. Oxley, a Notary Public in and for the County aforesaid,
do hereby certify that, John Roy Harris whose name is signed to the foregoing
writing dated October 13, 1980, as President of Crab Orchard Coal and Land
Company, has this day in my said County, before me acknowledged the said writing
to be act and deed of said corporation.

            GIVEN under my hand and official seal of office this 18th day of
      October, 1980.

            My Commission Expires: July 12, 1989

                                      /s/ Judith L. Oxley
                                      ---------------------------------
                                      Notary Public

                                      -3-

<PAGE>

      This is an AMENDMENT effective as of January 1, 1983, between THE CRAB
ORCHARD COAL AND LAND COMPANY, a West Virginia corporation ("Lessor"), and
WESTMORELAND COAL COMPANY, a Delaware corporation ("Lessee").

      The BACKGROUND of this Amendment is as follows:

      A. Lessor and Winding Gulf Coals, Inc., predecessor to Lessee, entered
into an Agreement and Deed of Lease made as of January 1, 1965 (the "Lease").
Article Six of the Lease allows Lessee to defer the opening, development and
mining of the Pocahontas No. 3 seam of coal on the leased premises for a period
not exceeding eighteen years from the date of the Lease. It also provides that
when operations are started in the seam, Lessee is to prosecute them diligently.

      B. Lessee in fact began work in preparation for mining in the Pocahontas
No. 3 seam, but was forced to suspend the work due to depressed market
conditions for the type of coal to be produced from the seam.

      C. Lessor and Lessee have agreed that Lessee should be permitted to defer
further development of the seam, and that certain other provisions of the Lease
should be amended.

      The TERMS of this Amendment are as follows:

      1.ARTICLE ONE of the Lease is amended by deleting the first sentence
thereof and substituting the following:

            "Until the termination of this lease and all extensions and renewals
            thereof, Lessee agrees to pay to the Lessor for the rights and
            privileges herein demised the sum of Fifteen Cents ($.15) per net
            ton of two thousand (2,000) pounds for all coal mined from the
            Sewell and Beckley seams on said premises. For all coal mined from
            the Pocahontas No. 3 seam and other seams and certain slate, refuse
            and like by-products of mining (except the Sewell and Beckley
            seams), Lessee agrees to pay Lessor a royalty on the coal mined from
            those seams during the

<PAGE>

            preceding calendar quarter, which shall be determined by multiplying
            the gross sales proceeds of such coal, without deductions, by 3.5%.
            Lessee's right of recoupment as provided in Article 4 of the Lease
            shall be calculated on the basis of the royalty rates applicable to
            the respective seams from which coal is mined and removed."

      2. ARTICLE TWO of the Lease is amended by deleting Section (3) thereof and
substituting the following:

            "For all coal mined or to be mined from the Pocahontas No. 3 seam or
            other seams (except the Sewell and Beckley seams), the sum of
            Seventy-Five Thousand Dollars ($75,000) per year until all the
            merchantable and mineable coal in said Pocahontas No. 3 seam and
            such other seams have been mined and removed or paid for as
            hereinafter provided."

      3. ARTICLE TWO of the Lease is further amended by deleting the language
following the phrase "that is to say" in the first paragraph of Section (4)
thereof and substituting the following:

            "the minimum on all coal hereby leased, let and demised shall not be
            less than the sum of One Hundred Thousand Dollars ($100,000) for
            each and every year after January 1, 1983, subject to adjustment,
            discontinuance and recoupment as hereinafter provided."

      4. ARTICLE TWO of the Lease is further amended by adding the following new
Section (4) at the end thereof:

            "(4) The minimum rentals or royalties payable under this ARTICLE TWO
            shall be adjusted annually beginning with the calendar year 1984 to
            reflect the average change in the Producer Price Index - All
            Commodities Table 6 for the preceding twelve-month period, using as
            a base the index for December 1982."

      5. ARTICLE SIX of the Lease is amended by deleting the phrase "for such
period as it may desire, not exceeding eighteen (18) years from the date of this
Agreement and Deed of Lease." from the second paragraph thereof and substituting
the phrase "until January 1, 1993."

      6. ARTICLE THIRTEEN of the Lease is amended by adding the following
language at the end of the first paragraph thereof:

                                      -2-
<PAGE>

            "Notwithstanding the foregoing, should Lessee assign all or any part
            of its estate, interests or rights hereunder on or before January 1,
            1993, the economic terms of this Lease shall not be subject to
            negotiation as a condition of Lessor's consent thereto, provided
            that Lessee remains responsible to Lessor for the assignee's
            performance of the terms of this Lease."

      7.ARTICLE TWENTY-ONE of the Lease is amended by deleting the Article in
its entirety and substituting the following:

            "ARTICLE TWENTY-ONE: Lessee covenants and agrees to pay unto Lessor
            a rental for each and every net ton of two thousand (2,000) pounds
            of coal mined from adjacent, coterminous and neighboring lands and
            hauled and transported through, on or over the Leased Premises, the
            same to be paid and accounted for at the times set forth in ARTICLE
            ONE herein in respect of tonnage royalty. The amount of such rental
            shall be determined by multiplying the gross sales proceeds for such
            coal, without deductions, by the applicable percentage from the
            following schedule:

<TABLE>
<S>                                                         <C>
January 1, 1983 through December 31, 1983                   .l%
January 1, 1984 through December 31, 1984                   .2%
January 1, 1985 through December 31, 1985                   .3%
After December 31, 1985                                     .35%"
</TABLE>

      8. Lessor agrees not to make any claim or demand whatsoever against Lessee
based upon any event of alleged noncompliance with the terms of the Lease
arising on or before the date of this Amendment, other than for rentals and
royalties earned prior to that date but not yet paid.

                                      -3-
<PAGE>

      9. Except as modified herein, the Lease shall remain in full force and
effect as previously amended.

      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1983.

ATTEST:                               THE CRAB ORCHARD COAL AND LAND COMPANY

/s/ Richard A. Gregg                  By /s/ J. Roy Harris
-------------------------------          ---------------------------------------
Secretary                                President

ATTEST:                               WESTMORELAND COAL COMPANY

/s/ William E. Bradshaw               By /s/ Howard H. Frey
-------------------------------          ---------------------------------------
Secretary                                Vice Chairman

                                      -4-
<PAGE>

STATE OF WEST VIRGINIA,

COUNTY OF KANAWHA, TO-WIT:

      I, Julia Ann Butler, a Notary Public in and for said county, do certify
that J. Roy Harris, and Richard A. Gregg who signed the writing hereto annexed,
dated January 1, 1983, for THE CRAB ORCHARD COAL AND LAND COMPANY, have this day
in my said county, before me, acknowledged the said writing to be the act and
deed of said corporation.

      Given under my hand and notarial seal this 25 day of January, 1983.

      My commission expires Feb. 18, 1987.

(NOTARIAL SEAL)                                /s/ Julia Ann Butler
                                        -------------------------------------
                                                   Notary Public

COMMONWEALTH OF PENNSYLVANIA,

COUNTY OF PHILADELPHIA, TO-WIT:

      I, Helen M. O'Mara, a Notary Public in and for said county, do certify
that Howard H. Frey, and William E. Bradshaw who signed the writing hereto
annexed, dated January 1, 1983, for WESTMORELAND COAL COMPANY, have this day in
my said county, before me, acknowledged the said writing to be the act and deed
of said corporation.

      Given under my hand and notarial seal this 18th day of January, 1983.

      My commission expires March 5, 1984.

(NOTARIAL SEAL)                                /s/ Helen M. O'Mara
                                        -------------------------------------
                                                   Notary Public

                                      -5-
<PAGE>

      This AMENDMENT, effective as of January 1, 1986, by and between THE CRAB
ORCHARD COAL AND LAND COMPANY, a West Virginia corporation ("Lessor"); and
WESTMORELAND COAL COMPANY, a Delaware corporation ("Lessee").

      WHEREAS, Lessor and Winding Gulf Coals, Inc., predecessor to Lessee,
entered into an Agreement and Deed of Lease made as of January 1, 1965 (the
"Lease"); and

      WHEREAS, the Lease has been modified and amended from time to time for
various purposes and was most recently so modified and amended by an Amendment
made effective as of January 1, 1983; and

      WHEREAS, Lessor and Lessee have further agreed to amend the Lease
concerning minimum rental or royalty payments due thereunder and for certain
other purposes.

      NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, Lessor and Lessee agree and covenant as follows:

      1. The minimum rental or royalty payments, payable quarterly, under
ARTICLE TWO of the Lease, as modified and amended, shall each be reduced by
twenty-five percent (25%) during the period beginning on January 1, 1986, and
ending on December 31, 1990 (that is to say that the minimum rental or royalty
attributable to the Sewell and Beckley seams and the

<PAGE>

minimum rental or royalty attributable to the Pocahontas No. 3 seam or any other
seam or seams than the Sewell and Beckley shall both be so reduced), SUBJECT to
the following:

            (a) In the event Lessee at any time commences mining operations
      under the Lease during the period beginning on January 1, 1986, and ending
      on December 31, 1990, there shall be no such twenty-five percent (25%)
      reduction in the minimum rentals or royalties payable to the Lessor from
      and after the time of the commencement of such mining operations (but such
      reduction shall be fully applicable up to and until the time of the
      commencement of such mining operations).

            (b) In the event Lessor, Lessee and Methane Drainage Ventures, a
      California general partnership (or some other related entity), enter into
      an agreement or agreements for the commercial development and production
      of methane gas ["Methane Drainage Agreement(s)"] from the premises covered
      by the Lease, then Lessee shall pay to Lessor during the period beginning
      on January 1, 1986, and ending on December 31, 1990, an amount of money
      from the rentals, royalties or other monies that Lessee receives pursuant
      to the Methane Drainage Agreement(s) up to, but not in any event to
      exceed, an amount equal to such twenty-five percent (25%) reduction in the
      minimum rentals or royalties payable to Lessor by Lessee under the Lease,
      as modified and amended, as provided for above during the period beginning
      on January 1, 1986, and ending on December 31, 1990.

                                      -2-
<PAGE>

      2. The minimum rentals or royalties payable under ARTICLE TWO of the
Lease, as modified and amended, shall be increased to one hundred and
twenty-five percent (125%) of the original minimum rentals or royalties payable
as of January 1, 1986, for the period beginning on January 1, 1991, and ending
on December 31, 1995, if and only if Lessee is actively engaged in mining
operations on and producing coal from the leased premises after January 1, 1991.
If Lessee is not actively engaged in mining operations on and producing coal
from the leased premises after January 1, 1991, then there shall be no such
increase in the original minimum rentals or royalties during the period
beginning January 1, 1991, and ending on December 31, 1995, and the minimum
rentals or royalties payable during such period shall be equal to the original
minimum rentals or royalties payable as of January 1, 1986 (subject to any
adjustments to reflect the average change in the Producer Price Index - All
Commodities Table 6 as provided for in the Amendment effective as of January 1,
1983).

      3. ARTICLE SIX of the Lease, as modified and amended, particularly by the
Amendment effective as of January 1, 1983, is further amended by deleting the
date "January 1, 1993" from the second sentence of the second paragraph thereof
and substituting the date "December 31, 1995" in its place.

      4. ARTICLE THIRTEEN of the Lease, as modified and amended, particularly by
the Amendment effective as of January 1, 1983, is further amended by deleting
the date "January 1, 1993," from the second or last sentence of the first
paragraph thereof (which such sentence was added to the Lease by the Amendment
effective as of January 1, 1983) and substituting the date "December 31, 1995,"
in its place.

                                      -3-
<PAGE>

      5. Except as amended and modified herein, the Lease shall remain in full
force and effect as previously amended and modified.

                                      -4-
<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1986.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By /s/ F. L. Thomas, Jr.
                                         -----------------------------------
                                         Its  President

      ATTEST:

      --------------------------
      Secretary

                                      WESTMORELAND COAL COMPANY

                                      By /s/ Pemberton Hutchinson
                                         -----------------------------------
                                         Its  President

      ATTEST:

      /s/ W. E. Bradshaw              Date: September 19, 1986
      --------------------------
      W.E. Bradshaw, Secretary

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to-wit:

      I, Linda J. Ross, a Notary Public in and for the County of Kanawha, in the
State of West Virginia, do hereby certify that F.L. Thomas, Jr., whose name is
signed to the foregoing instrument effective as of January 1, 1986, as President
of Crab Orchard Coal and Land Company, and John P. Harris whose name is likewise
signed thereto as Secretary of said Company have each acknowledged the same
before me in my County aforesaid.

      GIVEN under my hand and official seal of office this 10th day of
September, 1986.

      My Commission Expires: August 13, 1994

                                      /s/ Linda J. Ross
                                      ---------------------------------
                                      Notary Public

                                      -5-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF PHILADELPHIA

COUNTY OF PHILADELPHIA, to-wit:

      I, Lillian Zebuski, a Notary Public in and for the County of Philadelphia,
in the Commonwealth of Pennsylvania, do hereby certify that Pemberton
Hutchinson, whose name is signed to the foregoing instrument effective as of
January 1, 1986, as President of Westmoreland Coal Company, and W. E. Bradshaw
whose name is likewise signed thereto as Secretary of said Company have each
acknowledged the same before me in my County aforesaid.

      GIVEN under my hand and official seal of office this 19th day of
September, 1986.

      My Commission Expires: April 3, 1989

                                      /s/ Lillian Zebuski
                                      ---------------------------------
                                      Notary Public

                                      -6-
<PAGE>

                               AMENDMENT OF LEASE

      This AMENDMENT, dated and effective as of January 1, 1991, although
executed by the parties at a later date, by and between THE CRAB ORCHARD COAL
AND LAND COMPANY, a West Virginia corporation ("Lessor"); and WESTMORELAND COAL
COMPANY, a Delaware corporation ("Lessee").

      WHEREAS, Lessor and Winding Gulf Coals, Inc., predecessor to Lessee,
entered into an Agreement and Deed of Lease made as of January 1, 1965 (the
"Lease"); and

      WHEREAS, the Lease has been modified and amended from time to time for
various purposes including December 28, 1970, August 22, 1974, October 13, 1980,
and January 1, 1983, and was most recently so modified and amended by an
Amendment made effective as of January 1, 1986; and

      WHEREAS, Lessor and Lessee have further agreed to amend the Lease
concerning minimum rental or royalty payments due thereunder and for certain
other purposes.

      NOW, THEREFORE, in consideration of the premises and the covenants herein
contained, Lessor and Lessee agree and covenant as follows:

      1. The minimum rental or royalty payments, payable quarterly, under
ARTICLE TWO of the Lease, as modified and amended, as previously reduced by
twenty-five percent (25%) during the period beginning on January 1, 1986, and
ending on December 31, 1990 shall continue to be so reduced by twenty-five
percent (25%) during the period beginning January 1, 1991, and ending on
December 31, 2000, (that is to say that the minimum rental or royalty
attributable to the Sewell and Beckley seams and the minimum rental or royalty
attributable to the Pocahontas No. 3 seam or any other seam or seams than the
Sewell and Beckley shall both be so reduced), SUBJECT to the following:

            (a) In the event Lessee at any time commences mining operations
under the Lease during the period beginning on January 1, 1991, and ending on
December 31, 2000, minimum rentals or royalties payable to the Lessor from and
after the time of the commencement of such mining operations shall be increased
to one hundred twenty five percent (125%) of the minimum rentals or royalties
payable as of January 1, 1991, under the original lease terms (but such
reduction shall be fully applicable up to and until the time of the commencement
of such mining operations).

            (b) If Lessee is not actively engaged in mining operations on and
producing coal from the leased  premises after January 1, 2001, then there shall
be no such  increase in the original  minimum  rentals or  royalties  during the
period  beginning  January 1, 2001,  and ending on December  31,  2010,  and the
minimum  rentals or royalties  payable  during such period shall be equal to the
original minimum rentals or royalties  payable as of January 1, 1986 (subject to
any  adjustments to reflect the average change in the Producer Price Index - All
Commodities Table 6 as provided for in the Amendment  effective as of January 1,
1983).

<PAGE>

      2. ARTICLE SIX of the Lease, as modified and amended, particularly by the
Amendments effective as of January 1, 1983, and January 1, 1986, is further
amended by deleting the date "December 31, 1995" from the second sentence of the
second paragraph thereof and substituting the date "December 31, 2010" in its
place.

      3. ARTICLE SIX-A of the Lease is amended by deleting that article in its
entirety and substituting therefor the following:

            "ARTICLE SIX-A: The original term of this Lease shall be for a
            period of forty-six (46) years, extending from January 1, 1965, to
            December 31, 2010, or until all mineable and merchantable coal
            leased hereunder has been mined, whichever shall occur first. It is
            agreed, however, that if the Lessee shall have kept and performed
            all of the terms and conditions hereof it shall have the privilege
            and option of renewing this Lease for an additional period of
            fifteen (15) years from and after January 1, 2011, and in like
            manner and under the same conditions the Lessee shall have the
            option and privilege of further renewing this Lease for a third term
            of fifteen (15) years after the expiration of said first fifteen
            (15) year extension; provided, however, that in each instance the
            Lessee shall give to the Lessor at least one (1) year's written
            notice before expiration of the then current term of its election to
            extend this Lease for each additional period; and provided further
            that this Lease shall terminate if all mineable and merchantable
            coal leased thereunder has been mined during any such extension.

      4. ARTICLE THIRTEEN of the Lease, as modified and amended, particularly by
the Amendments effective as of January 1, 1983, and January 1, 1986, is further
amended by deleting the date "December 31, 1995" from the second or last
sentence of the first paragraph thereof (which such sentence was added to the
Lease by the Amendment effective as of January 1, 1983 and which date was
changed to January 1, 1995 by the Amendment effective as of January 1, 1986) and
substituting the date "December 31, 2010" in its place.

      5. Except as amended and modified herein, the Lease shall remain in full
force and effect as previously amended and modified.

<PAGE>

      IN WITNESS WHEREOF, the parties have executed this Amendment effective as
of January 1, 1991.

                                      THE CRAB ORCHARD COAL AND LAND COMPANY

                                      By  /s/ F. L. Thomas, Jr.
                                          -------------------------------------
                                      Its President

      ATTEST:

      /s/ J. R. Clark
      --------------------------

                                      WESTMORELAND COAL COMPANY

                                      By  /s/ Pemberton Hutchinson
                                          -------------------------------------
                                      Its President & Chief Executive Officer

      ATTEST:

      /s/ Philip O. Weinstock         Date: December 19, 1991
      --------------------------

<PAGE>

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, to wit:

            I, June Farnsworth, a Notary Public in and for the County of
Kanawha, in the State of West Virginia, do hereby certify that F. L. Thomas,
Jr., whose name is signed to the foregoing instrument effective as of January 1,
1991 as President of Crab Orchard Coal and Land Company, and J.P. Clark whose
name is likewise signed thereto as Secretary of said Company have each
acknowledged the same before me in my County aforesaid.

            GIVEN under my hand and official seal of office this 8th day of
      January, 1992.

            My Commission Expires: September 7, 1994

                                      /s/ June Farnsworth
                                      ------------------------------------
                                      Notary Public

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit

      I, Lillian Zebuski, a Notary Public in and for the County of Philadelphia,
in the Commonwealth of Pennsylvania, do hereby certify that Pemberton
Hutchinson, whose name is signed to the foregoing instrument effective as of
January 1, 1991, as President & Chief Executive Officer of Westmoreland Coal
Company, and Philip D. Weinstock whose name is likewise signed thereto as
Secretary of said Company have each acknowledged the same before me in my County
aforesaid.

      GIVEN under my hand and official seal of office this 19th day of December,
1991.

      My Commission Expires: May 10, 1993

                                      /s/ Lillian Zebuski
                                      ------------------------------------
                                      Notary Public

<PAGE>

      THIS AGREEMENT OF CONSENT is made and entered into effective as of the
27th day of October, 1994, by and among WESTMORELAND COAL COMPANY, a Delaware
corporation authorized to do business in the State of West Virginia, hereinafter
referred to as "Westmoreland", THE CRAB ORCHARD COAL AND LAND COMPANY, a West
Virginia corporation, hereinafter referred to as "Crab Orchard", and PINE VALLEY
COAL COMPANY, INC., a West Virginia corporation, hereinafter referred to as
"Pine Valley".

                                   WITNESSETH:

      WHEREAS, Westmoreland's predecessors in title and Crab Orchard have
previously entered into a Lease as of January 1, 1965, which Lease was amended
on December 28, 1970, August 22, 1974, October 13, 1980, January 1, 1983,
January 1, 1986 and January 1, 1991 (hereinafter referred to as "Coal Lease"),
and

      WHEREAS, Westmoreland wishes to assign its rights and obligations under
the Coal Lease and all amendments to Pine Valley, and Crab Orchard is willing to
consent thereto on the terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises,

      1. Crab Orchard hereby consents to the assignment by Westmoreland of all
      of Westmoreland's right, title, and interest in and to the Coal Lease and
      all amendments to Pine Valley on the condition that Pine Valley agrees
      upon such assignment to assume full responsibility for performance of all
      of the terms, conditions, and obligations, past, present, and future, of
      "Lessee" thereunder and to be liable for any nonperformance of the same,
      and further upon such assignment and assumption, Crab Orchard hereby
      releases Westmoreland from all liabilities, responsibilities and
      obligations under the Coal Lease.

      2. Crab Orchard and Westmoreland acknowledge that the Coal Lease is duly
      executed, validly existing, and enforceable in accordance with its terms,
      and Crab Orchard and Westmoreland have no knowledge of any default by any
      party to the Coal Lease or any event which with notice or the passage of
      time or both would constitute such a default thereunder.

      3. Crab Orchard agrees that Westmoreland has paid $1,692,448.14 in minimum
      royalties and that this amount is fully recoupable in accordance with the
      terms and conditions of the Lease.

      4. This consent of Crab Orchard shall not be construed as a waiver of the
      right of Crab Orchard to deny any future assignment of the Coal Lease.

      5. This Agreement shall be effective when executed by and delivered to all
      parties but may be executed in counterpart with the same effect as if
      executed by all parties on one agreement.

<PAGE>

      WITNESS the following signatures of duly authorized officers of these
parties, all as of the 27th day of October, 1994.

                                         THE CRAB ORCHARD COAL AND
                                         LAND COMPANY

                                         By: /s/ Donald C. Pauley
                                             -----------------------------------
                                             Its President

                                         PINE VALLEY COAL COMPANY, INC.

                                         By: /s/ Bruce Sparks
                                             -----------------------------------
                                             Name  Bruce Sparks
                                             Title President

                                         WESTMORELAND COAL COMPANY

                                         By: /s/ Ronald W. Stucki
                                             -----------------------------------
                                             Name  Ronald W. Stucki
                                             Title Sr. Vice President

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, TO-WIT:

      I, Carolyn A. Carpenter, a Notary Public of the said County of Kanawha, in
and for the State and County aforesaid, do certify that Donald C. Pauley,
President, of THE CRAB ORCHARD COAL AND LAND COMPANY, who signed the writing
above, bearing the 27th day of October, 1994, for The Crab Orchard Coal and Land
Company, has this day in my said County, before me, acknowledged said writing to
be the act and deed of said corporation.

      GIVEN under my hand and official seal, this 27th day of October.

                                         /s/ Carolyn A. Carpenter
                                         ---------------------------------------
                                         Notary Public

My Commission Expires:

      August 30, 1999

<PAGE>

STATE OF VIRGINIA

COUNTY OF WISE, TO-WIT:

      I, Doris F. Dillon, a Notary Public of the said County of Wise, in and for
the State and County aforesaid, do certify that Bruce Sparks, President of PINE
VALLEY COAL COMPANY, INC., who signed the writing above, bearing the 27th day of
October, 1994, for the said Pine Valley Coal Company, Inc., has this day in my
said County, before me, acknowledged said writing to be the act and deed of said
corporation.

      GIVEN under my hand and official seal, this 27th day of October, 1994.

                                         /s/ Doris F. Dillon
                                         ---------------------------------------
                                         Notary Public
My Commission Expires:

      11-30-96

STATE OF VIRGINIA

COUNTY OF WISE, TO WIT:

      I, Doris F. Dillon, a Notary Public of the said County of Wise, in and for
the State and County aforesaid, do certify that Ronald W. Stucki, Senior Vice
President of WESTMORELAND COAL COMPANY, who signed the writing above, bearing
the 27th day of October, 1994, for the said Westmoreland Coal Company, has this
day in my said County, before me, acknowledged said writing to be the act and
deed of said corporation.

      GIVEN under my hand and official seal, this 27th day of October, 1994.

                                         /s/ Doris F. Dillon
                                         ---------------------------------------
                                         Notary Public

My Commission Expires:

      11-30-96
<PAGE>

                                   ACCEPTANCE

      Pine Valley Coal Company, Inc. ("Pine Valley") hereby assumes all of the
covenants, obligations and liabilities, except as to any Retained Liabilities in
the Asset Purchase Agreement of even date hereof, and agrees perform all of the
covenants contained in the Lease dated January 1, 1965 and all amendments
thereto between The Crab Orchard Coal and Land Company and Westmoreland Coal
Company's predecessors in title ("Westmoreland") in accordance with the terms
and conditions of the Asset Purchase Agreement.

      This Acceptance shall be effective from and after October 31, 1994.

      IN TESTIMONY WHEREOF, Pine Valley Coal Company, Inc. has caused its name
to be signed hereto by its proper officer, thereunto duly authorized, on the 31
day of October, 1994.

                                        PINE VALLEY COAL COMPANY, INC.

                                        By  /s/ Bruce Sparks
                                            ------------------------------------
                                            Name  Bruce Sparks
                                            Title President

<PAGE>

                            INSTRUMENT OF ASSIGNMENT

      WHEREAS, pursuant to the Asset Purchase Agreement dated as of October 28,
1994, (the "Agreement") between Westmoreland Coal Company, a Delaware
corporation ("Seller") and Pine Valley Coal Company, Inc., a West Virginia
corporation ("Buyer"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller does hereby sell, assign,
transfer, convey and deliver unto Buyer, its successors and assigns, each and
all of the Assets (as such term is defined in the Agreement), intending hereby
to convey all of the right, title and interest of Seller therein; provided,
however, as to any lease, contract, agreement, or other authorization included
in the Assets which cannot be sold, transferred, assigned, conveyed or delivered
effectively without the consent of a third party, which consent has not been
obtained, this instrument shall be of no force or effect until such requisite
consent is obtained, whereupon this instrument shall become of full force and
effect with respect thereto.

      Seller hereby covenants and agrees to and with Buyer, its successors and
assigns, to do, execute, acknowledge and deliver to, or to cause to be done,
executed, acknowledged and delivered to, Buyer, its successors and assigns, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances that may be reasonably requested by Buyer for the better
selling, assigning, transferring, conveying, delivering, assuring and confirming
to Buyer, its successors or assigns, any or all of the Assets.

      This Instrument of Assignment shall be binding upon the successors and
assigns of Seller and shall inure to the benefit of the successors and assigns
of Buyer. Each capitalized term used herein but not defined herein is used as
defined in the Agreement.

      IN WITNESS WHEREOF, Seller has caused this Instrument of Assignment to be
duly executed and delivered this 31 day of October, 1994.

                                        WESTMORELAND COAL COMPANY

                                        By  /s/ Ronald W. Stucki
                                            ----------------------------------
                                            Name   Ronald W. Stucki
                                            Title  Sr. Vice President Operations

<PAGE>

                               AMENDMENT OF LEASE

            THIS AMENDMENT OF LEASE (this "Amendment") is made and entered into
this 31st day of October, 1994, by and between THE CRAB ORCHARD COAL AND LAND
COMPANY, a West Virginia corporation ("Lessor"), and PINE VALLEY COAL COMPANY,
INC., a West Virginia corporation ("Lessee").

                              W I T N E S S E T H :

            WHEREAS, by Agreement and Deed of Lease dated January 1, 1965 (the
"Lease"), Lessor leased, let and demised unto Winding Gulf Coals, Inc. ("Winding
Gulf") certain tracts or parcels of land situate in Raleigh County, West
Virginia, aggregating approximately 8,400 acres of coal land and approximately
3,600 acres of surface, for the purpose of mining, transporting, shipping,
removing and marketing all of the coal in, on or underlying such tracts or
parcels of land, including coal in the Beckley, Sewell and Pocahontas No. 3
seams;

            WHEREAS, the Lessor and Winding Gulf subsequently amended the Lease
as of December 28, 1970;

            WHEREAS, by merger dated on or about December 31, 1970, Westmoreland
Coal Company, a Delaware corporation ("Westmoreland") acquired all of Winding
Gulf's right, title and interest in and to the Lease; and

            WHEREAS, Lessor and Westmoreland subsequently modified the Lease by
various amendments dated as of August 22, 1974, October 13, 1980, January 1,
1983, January 1, 1986, and January 1, 1991; and

            WHEREAS, by Assignment of Lease of even date herewith, Westmoreland
assigned all of its right, title and interest in and to the Lease to Lessee; and

<PAGE>

            WHEREAS, Lessor and Lessee have agreed to amend the Lease as set
forth herein.

            NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, Lessor and Lessee agree as follows:

            1. Article One of the Lease, as amended, is hereby amended by
deleting the first two sentences of the first paragraph and substituting in
place thereof the following:

            Until termination of the Lease and all extensions and renewals
      thereof, Lessee agrees to pay to the Lessor a royalty on all coal mined
      from the leased premises during the preceding calendar quarter, which
      shall be determined by multiplying the gross sales proceeds, FOB mine, of
      such coal, without deductions, by 3.5%.

            2. Article Two of the Lease, as amended, is hereby amended by adding
the following paragraph to the end of such Article:

                  Notwithstanding anything in this Lease, as amended, to the
      contrary, all minimum rentals or royalties paid by Lessee to Lessor after
      the date of this Amendment shall be allocated for purposes of recoupment
      by Lessee to the Pocahontas No. 3 seam.

            3. Article Two of the Lease, as amended, is hereby amended by
inserting the following paragraph after the paragraph beginning "[a]ll said
minimum rental or royalty shall be paid . . . " and before the paragraph
beginning "[i]n the event the tonnage royalty for any year . . . ":

<PAGE>

                  Notwithstanding anything in this Lease, as amended, to the
      contrary, Lessor and Lessee hereby expressly agree that beginning on
      January 1, 1995, and until termination of the Lease, as amended, and all
      extensions and renewals thereof, Lessee shall be entitled to apply all
      tonnage royalties paid by it in any calendar quarter under Article One
      against any minimum rental or royalty due for such calendar quarter,
      regardless of the seam of coal. In the event the tonnage royalty paid by
      Lessee under Article One for any calendar quarter exceeds the minimum
      rental or royalty for such calendar quarter, Lessee may apply such excess
      tonnage royalty against any minimum rental or royalty due in any
      subsequent calendar quarter in that year.

            4. The paragraph in Article Two of the Lease, as amended, beginning
"[i]n the event the tonnage royalty for any year . . . " is hereby amended in
full as follows:

                  In the event the tonnage royalty paid under Article One for
      any year during the term of this Lease is less than the minimum rental or
      royalty paid under Article Two for such year (the "Deficiency"), Lessee
      shall have the right during any succeeding year or years of the term
      hereof to mine and remove sufficient coal over and above the minimum
      rental or royalty requirement for such succeeding year or years to fully
      recoup, at the rate of 75%, the Deficiency of said preceding year or
      years. In the event the minimum rentals or royalties paid hereunder with
      respect to a particular seam are fully recouped, Lessee shall be

<PAGE>

      entitled to fully recoup any minimum rental or royalty paid under the
      Lease on other seams at the rate of 25%.

            4. The Lease is hereby amended by adding a new Article Twenty-Four
thereto, which Article shall read in its entirety as follows:

                  ARTICLE TWENTY-FOUR: Lessee shall have the right to dispose of
      coal combustion by-products ("ash") from any source on any area on the
      Leased Premises that is currently permitted for refuse disposal. On or
      before the 25th day of the month following the end of each calendar
      quarter, Lessee shall pay Crab Orchard a sum equal to the total number of
      tons of ash disposed on the Leased Premises and any surface property owned
      by Lessee located within the external boundaries of the Leased Premises
      during the calendar quarter times the greater of: (i) three and a half
      cents ($0.035); or (ii) one-tenth of one percent (0.10%) of the average
      gross selling price per ton, FOB mine, for all "local coal" sold by Lessee
      during said calendar quarter. For purposes of this paragraph, the term
      "local coal" shall mean coal mined by Lessee within Raleigh County, West
      Virginia. In the event Lessee has not sold any local coal in the same
      calendar quarter in which it disposes of ash, the average gross selling
      price per ton, FOB mine, for the most recent calendar quarter in which
      Lessee sold local coal shall be used for purposes of (ii) above. Lessee
      shall be entitled to a credit against the sum to be paid to Lessor
      hereunder by reducing the total number of tons of ash disposed on the
      Leased Premises and any surface property owned by Lessee located within
      the external boundaries of the Leased premises by an amount equal to the
      average percentage of ash content of all coal mined and sold by Lessee

<PAGE>

      from the Leased Premises during the prior calendar quarter times the
      number of tons of such coal.

            5. Except as amended herein, the Lease shall remain in full force
and effect as previously amended.

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

                                         THE CRAB ORCHARD COAL AND LAND COMPANY

                                         By: /s/ Donald C. Pauley
                                             -----------------------------------
                                             Its President

                                         PINE VALLEY COAL COMPANY, INC.

                                         By: /s/ James A. Walls
                                             -----------------------------------
                                             Its Secretary

<PAGE>

STATE OF WEST VIRGINIA

COUNTY OF KANAWHA, TO-WIT:

            The foregoing instrument was acknowledged before me this 7th day of
November, 1994, by Donald C. Pauley, the President of CRAB ORCHARD COAL AND LAND
COMPANY, on behalf of said corporation, as its duly authorized agent.

            My commission expires        August 30, 1999.

                                         /s/ Carolyn A. Carpenter
                                         ---------------------------------------
                                         Notary Public

[NOTARIAL SEAL]

STATE OF WEST VIRGINIA

COUNTY OF _______________, TO-WIT:

            The foregoing instrument was acknowledged before me this ____ day of
October, 1994, by James A. Walls, the Secretary of PINE VALLEY COAL COMPANY,
INC., on behalf of said corporation, as its duly authorized agent.

            My commission expires        July 21, 2003

                                         /s/ Peggy A. Layman
                                         ---------------------------------------
                                         Notary Public

[NOTARIAL SEAL]<PAGE>
                                                                   Exhibit 10.19

                               INDENTURE OF LEASE.

                                ----------------

                             BEAVER COAL CORPORATION

                                       TO

                             THE NEW RIVER COMPANY.

                                ----------------

                             DATED JANUARY 2, 1936.

                                ----------------

            LEASE OF 4337.19 ACRES, MORE OR LESS, IN RALEIGH COUNTY,
                    WEST VIRGINIA, FOR A PERIOD NOT EXCEEDING
                         30 YEARS FROM JANUARY 1, 1936.

<PAGE>

      THIS INDENTURE OF LEASE, Made this Second day of January, A. D. One
Thousand Nine Hundred and Thirty-six (1936), between the BEAVER COAL
CORPORATION, a corporation incorporated, organized and existing under and by
virtue of the laws of the State of Delaware, and duly authorized according to
the laws of the State of West Virginia to hold property and to do business in
that State, party of the first part, hereinafter called the Lessor; and THE NEW
RIVER COMPANY, a corporation incorporated, organized and existing under and by
virtue of the laws of the State of West Virginia, party of the second part,
hereinafter called the Lessee:

                                   WITNESSETH:

      THAT in consideration of the terms, conditions and stipulations as
hereinafter set forth to be performed and observed by the Lessee, the Lessor
does hereby demise, let, and lease to the Lessee, for the purpose of mining coal
and making of coke and other products of coal, for and until such time as all
the merchantable coal shall have been mined and removed, but not for any period
exceeding thirty years from the first day of January, 1936, the tracts or
parcels of land containing in the aggregate, by estimation, a gross area of Four
Thousand Three Hundred Thirty-seven and Nineteen one-hundredths (4337.19) acres,
more or less, (in three separate parcels, designated herein and on the map
attached hereto and made part hereof as Tract No. 1, Tract No. 2 and Tract No.
3), owned by the Lessor, subject to the exceptions and reservations hereinafter
set forth, situated, lying and being in the County of Raleigh and State of West
Virginia, and bounded and described as follows:

      TRACT NO. 1: -- A tract or parcel of land containing by estimation Four
Thousand Ninety-five and Thirty-four one-hundredths (4095.34) acres, more or
less, and bounded and described as follows:

            BEGINNING at a white oak, the common corner of Tract 52 (Marshall
      Bailey), of Tract 98 (Dyar, Addison & Co.), of land of The New River
      Company (R. Tench), and of land of the Cranberry Fuel Company (Tract 98a),
      as the said Tract 52, Tract 98, land of The New River Company, land of the
      Cranberry Fuel Company, and all numbered and named Tracts hereinafter
      mentioned and described (except those Tracts acquired by the Beaver Coal
      Company and/or its successor the Beaver Coal Corporation since January 19,
      1904,) are numbered, named and shown on a general map entitled "Map of
      Tracts of Land in Raleigh County, West Virginia, conveyed to the Beaver
      Coal Company by deeds dated January 19, 1904, from Piney Coal Company et
      al.," attached to and forming part of a certain deed dated January 19,
      1904, from the White Stick Coal Company to the Beaver Coal Company,
      recorded in the Office of the Clerk of the County Court of Raleigh County,
      West Virginia, in Deed Book No. 29, page 1 etc.; said general map being on
      page 55 of said Deed Book No. 29: -- thence by land of the Cranberry Fuel
      Company (Tract 98a) S 61 degrees 48' E 1050.00 feet to a set stone; thence
      by land of the Cranberry Fuel Company (Tract 98a), and land of M. C. Bibb
      (Tracts 7a and 59a), S 0 degrees 56' E 5360.75 feet to a hub between a
      chestnut and chestnut oak stump, the common corner of Tract 59 (W. P.
      Willis), of land of M. C. Bibb (Tract 59a), and of land formerly owned by
      J. H. McGinnis; thence by land formerly owned by J. H. McGinnis N
      65 degrees 49' W 775.07 feet to a hub and hickory, the common corner of
      Tract 59 (W. P. Willis), of Tract 97 (Robert T. Thurman), and of land
      formerly owned by J. H. McGinnis; thence S

<PAGE>

      52 degrees 28' W 2665.58 feet to a chestnut snag, the common corner of
      Tract 97 (Robert T. Thurman), of Tract 65 (W. C. Thurman), and of land
      formerly owned by J. H. McGinnis; thence S 46 degrees 52' E 1003.00 feet
      to a chestnut oak stump, the common corner of Tract 65 (W. C. Thurman), of
      Tract 123 (S. J. Snuffer), and of land formerly owned by J. H. McGinnis;
      thence N 79 degrees 27' E 1747.04 feet to a stone at Logan Turnpike, the
      common corner of Tract 123 (S. J. Snuffer), of land formerly owned by J.
      H. McGinnis and of land of J. A. Ewart's Heirs; thence by land of J. A.
      Ewart's Heirs S 42 degrees 25' E 415.20 feet to a chestnut on the
      northeast side of Logan Turnpike, the common corner of Tract 123 (S. J.
      Snuffer), of land of J. A. Ewart's Heirs and of Tract 99 (David Robertson)
      (the said chestnut marking also a corner of a tract of 8312.10 acres
      leased by the said Beaver Coal Company to the Raleigh Coal and Coke
      Company by lease dated the 16th day of October, 1899); thence following
      the boundary line of the said tract of 8312.10 acres, by Tract 99 (David
      Robertson), S 70 degrees 08' W 759.64 feet to an iron rail on the south
      side of Maple Meadow Road (a double chestnut oak called for); thence S 12
      degrees 11' W. 2068.72 feet to an iron rail, the common corner of Tract
      126 (W. R. Graham), of Tract 99 (David Robertson), and of land formerly
      owned by W. R. Graham; thence leaving the boundary line of the said tract
      of 8312.10 acres, by land formerly owned by W. R. Graham, S 52 degrees 22'
      W 692.95 feet to an iron rail (a double maple called for); thence S 0
      degrees 47' W 1100.87 feet to a point in the center line of the Chesapeake
      and Ohio Railway, the common corner of Tract 126 (W. R. Graham), of Tract
      126a (W. R. Graham), of land formerly owned by W. R. Graham and of land of
      the Mabscott Coal & Coke Company (J. W. McCreery); thence by land of the
      Mabscott Coal & Coke Company (J. W. McCreery) S 79 degrees 22' W 1570.00
      feet to a white oak, the common corner of Tract 126a (W. R. Graham), of
      Tract 20 (John A. Covey), and of land of the Mabscott Coal & Coke Company
      (J. W. Bower and J. W. McCreery); thence S 16 degrees 15' W 2136.61 feet
      to a large chestnut on south side of road, the common corner of Tract 20
      (John A. Covey), of Tract 82 (D. S. Cline), and of land of the Mabscott
      Coal & Coke Company (J. W. Bower); thence S 43 degrees 36' E 844.04 feet
      to a stake between a white oak and a chestnut, the common corner of Tract
      82 (D. S. Cline), of land of the Mabscott Coal & Coke Company (J. W.
      Bower), and of land of J. A. Ewart's Heirs; thence by land of J. A.
      Ewart's Heirs S 56 degrees 07' W 1258.64 feet to a stake in a chestnut
      stump, the common corner of Tract 82 (D. S. Cline), of land of J. A.
      Ewart's Heirs, and of land of J. Hutchinson; thence by land of J.
      Hutchinson and of Ward Cook's Heirs N 36 degrees 04' W 1281.63 feet to a
      large chestnut, a common corner of Tract 82 (D. S. Cline) and of land of
      Ward Cook's Heirs; thence by land of Ward Cook's Heirs N 32 degrees 54' E
      159.26 feet to a white oak in a hollow; thence N 33 degrees 21' W 657.22
      feet to a hub between a large chestnut and a hickory, the common corner of
      Tract 82 (D. S. Cline), of Tract 101 (Archie Stover), and of land of Ward
      Cook's Heirs; thence by land of Ward Cook's Heirs and J. Hutchinson S 55
      degrees 21' W 1531.41 feet to a red oak, the common corner of Tract 101
      (Archie Stover), of Tract 3, (Archie Stover), and of land of J.
      Hutchinson; thence S 55 degrees 06' W 370.70 feet to a white oak and a
      chestnut stump, the common corner of Tract 3 (Archie Stover), of Tract 106
      (J. Beckley), and of land of J. Hutchinson; thence S 6 degrees 58" W
      426.74 feet to a white pine, the common corner of Tract 106 (J. Beckley),
      of Tract 25 (Daniel Fitzpatrick), and of land of J. Hutchinson; thence 54
      degrees 21' E 1802.77 feet to a hub between two gums, the common corner of
      Tract 25 (Daniel Fitzpatrick), and of lands of J. Hutchinson and of J. A.
      Ewart's Heirs; thence by land of J. A. Ewart's Heirs S 37 degrees 14' E
      167.78 feet to a white oak, the common corner of

                                       2
<PAGE>

      Tract 25 (Daniel Fitzpatrick), of Tract 17 (A.E. Huddleston), and of land
      of J. A. Ewart's Heirs; thence S 79 degrees 45' E 706.79 feet to a gum;
      thence S 38 degrees 59' E 1220.44 feet to a hub between two white oaks
      near a stump, the common corner of Tract 17 (A.E. Huddleston), of Tract
      186 (Tolbert Smokeless Coal Company), and of land of J. A. Ewart's Heirs;
      thence by land of J. A. Ewart's Heirs S 42 degrees 02' E 886.90 feet to a
      stake; thence N 54 degrees 36' E 566.66 feet to a sourwood, the common
      corner of Tract 186 (Tolbert Smokeless Coal Company), of Tract 92 (B. F.
      Ruff), and of land of J. A. Ewart's Heirs, said point being also a corner
      of the said tract of 8312.10 acres; thence following the boundary line of
      the said tract of 8312.10 acres, by Tract 92 (B. F. Ruff), S 46 degrees
      50' E 553.51 feet to a white oak; thence S 33 degrees 30' E 263.90 feet to
      a sourwood, the common corner of Tract 92 (B. F. Ruff), of Tract 186
      (Tolbert Smokeless Coal Company), and of land of Fitzpatrick Heirs (J. D.
      Bower); thence leaving the boundary line of the said tract of 8312.10
      acres and Tract 92 (B. F. Ruff), by land of Fitzpatrick Heirs (J. D.
      Bower), S 66 degrees 00' W 1442.00 feet to a chestnut, maple and two
      sourwoods, a common corner of Tract 186 (Tolbert Smokeless Coal Company),
      and of land of Fitzpatrick Heirs (J. D. Bower), and being a point in the
      boundary line of Tract 17 (A. E. Huddleston); thence by land of
      Fitzpatrick Heirs (J. D. Bower) S 10 degrees 44' E 776.55 feet to a double
      white oak; thence S 53 degrees 58' W 1039.78 feet to a stake between two
      white oaks; thence S 33 degrees 48' W 396.37 feet to a spruce pine stump,
      the common corner of land of Fitzpatrick Heirs (J. D. Bower), of Tract 108
      (Simeon Mankin), and of Tract 17 (A. E. Huddleston); thence passing
      through Tract 17 (A. E. Huddleston), N 85 degrees 57 degrees" W 1969.03
      feet to a white oak, a common corner of Tract 17 (A.E. Huddleston), and of
      land of the Crab Orchard Fuel Company (Joshua Griffith); thence by land of
      the Crab Orchard Fuel Company (Joshua Griffith) N 16 degrees 31' E 795.35
      feet to a white oak; thence N 24 degrees 32' W 926.24 feet to a stone, the
      common corner of Tract 17 (A.E. Huddleston), of Tract 53 (Mary M. Cole),
      and of land of the Crab Orchard Fuel Company (Joshua Griffith); thence S
      55 degrees 30' W 977.48 feet to a stake, the common corner of Tract 53
      (Mary M. Cole), and of land of the Crab Orchard Fuel Company (Joshua
      Griffith and Beaver Coal Company's Tract 53); thence by land of the Crab
      Orchard Fuel Company (Beaver Coal Company's Tract 53) N 35 degrees 08' W
      1401.50 feet to a stake; thence S 55 degrees 30' W 495.00 feet to a stake
      (white oak gone), the common corner of Tract 145 (John Snuffer), of Tract
      53 (Mary M. Cole), of land of the Crab Orchard Fuel Company (Beaver Coal
      Company's Tract 53), and of land of The Crab Orchard Coal & Land Company
      (J. P. Sutphin and John Snuffer); thence following the division line
      between the properties of The Crab Orchard Coal & Land Company and the
      Beaver Coal Corporation, passing through lands of John Snuffer and J. O.
      Snuffer, N 22 degrees 53' W 2618.98 feet to a white pine and maple sprout,
      the common corner of Tract 147 (J. W. Snuffer, S. H. Snuffer and F. H.
      Good), of Tract 79 (J. W. Tolbert), of Tract 146 (J. O. Snuffer), and of
      lands of J. O. Snuffer and F. H. Good; thence passing through lands of F.
      H. Good, S. H. Snuffer and J. Jones (Tract 75), and by land of The Crab
      Orchard Coal & Land Company (Lewis Williams), N 22 degrees 49' W 6962.80
      feet to a double maple, the common corner of Tract 111 (G. W. Hutchinson),
      of Tract 69 (Anderson Godby), of Tract 16 (Lewis Williams), and of land of
      The Crab Orchard Coal & Land Company (I. & J. Howery); thence by land of
      the Crab Orchard Coal & Land Company (I. and J. Howery) N 31 degrees 36' W
      1142.85 feet to a stone and gum, the common corner of Tract 111 (G. W.
      Hutchinson), of Tract 189a (Owen Davis's Heirs), and of land of The Crab
      Orchard Coal & Land Company (I. and J. Howery);

                                       3
<PAGE>

      thence N 31 degrees 27' W 602.61 feet to an iron rail in the southern
      mineral right of way boundary line of the Piney Creek Branch of the
      Chesapeake and Ohio Railway Company, said iron rail being 25 feet,
      measured at right angles, from the center line of said railway as now
      located; thence leaving the land of The Crab Orchard Coal & Land Company
      (I. and J. Howery), and following the southern mineral right of way
      boundary line, parallel to and 25 feet distant from the said center line
      as now located, the five following courses and distances: (1) N 40 degrees
      52' E 1407.28 feet to an iron rail at a P. C.; (2) curving to the south
      with a radius of 1297.53 feet, through an arc of 352.45 feet, (the chord
      of the arc bearing N 48 degrees 39' E, and being 351.45 feet in length,)
      to an iron rail at a P. T.; (3) N 56 degrees 26' E 496.47 feet to an iron
      rail at a P. C.; (4) curving to the south with a radius of 1297.53 feet,
      through an arc of 161.50 feet, (the chord of the arc bearing N 60 degrees
      00' E, and being 161.45 feet in length,) to an iron rail at a P. T.; (5) N
      63 degrees 34' E 1531.45 feet to a P. O. T.; thence leaving the said
      southern mineral right of way boundary line, and crossing the mineral
      right of way of said railway, N 26 degrees 26' W 50.00 feet to an iron
      rail in the northern mineral right of way boundary line of said railway,
      said iron rail being 25 feet, measured at right angles, from said center
      line as now located; thence leaving the said mineral right of way, by land
      of Prince E. Lilly (Perry Davis's Heirs), N 44 degrees 23' E 346.25 feet
      to an iron rail between two large white oaks, the common corner of Tract
      189d (Perry Davis's Heirs), of tract 191a (I. C. Prince), of land of
      Prince E. Lilly (Perry Davis's Heirs), and of a tract of 231.6 acres in
      which the coal and other minerals were conveyed by William Prince and wife
      to The Crab Orchard Coal & Land Company, by deed dated October 25th, 1901,
      and recorded in the Office of the Clerk of the County Court of Raleigh
      County, West Virginia, in Deed Book "W", at page 143, said point being
      also a corner of Tract No. 2 hereinafter described; thence following the
      boundary line of the said tract of 231.6 acres, N 58 degrees 28' E 584.08
      feet to an iron rail in a wild cherry stump on the south bank of Big White
      Stick Creek, a common corner of Tract 189 (Andrew Davis), of Tract 189e
      (Andrew Davis), and of Tract 190 (Andrew Davis), being also a common
      corner of the said tract of 231.6 acres and of said Tract No. 2
      hereinafter described; thence continuing with the boundary line of the
      said tract of 231.6 acres, by said Tract No. 2, down said Big White Stick
      Creek, following the general direction thereof, N 79 degrees 08' E 158.00
      feet to an iron rail on the north bank of said creek; thence S 50 degrees
      48' E 180.00 feet to an iron rail on the north bank of said creek; thence
      S 40 degrees 22' E, at 269.96 feet leaving the boundary line of said Tract
      No. 2, running 440.00 feet to an iron rail on the south bank of said
      creek, a corner of Tract No. 3 hereinafter described, and a common corner
      of Tract 189 (Andrew Davis), of Tract 189f (Andrew Davis) and of Tract
      190a (Andrew Davis); thence by said Tract No. 3, S 55 degrees 22' E 480.20
      feet to a stake, a common corner of Tract 189 (Andrew Davis), of Tract
      189f (Andrew Davis) and of Tract 190a (Andrew Davis), and a point in the
      boundary line of Tract 89 (James H. Cook); thence leaving said Tract No.
      3, and continuing with the said tract of 231.6 acres, N 11 degrees 58' E
      591.65 feet to a white oak stump, the common corner of Tract 89a (Henry
      Prince), of Tract 90b (Henry Prince) and of Tract 192 (Henry Prince), and
      being also a corner of said Tract No. 2; thence N 10 degrees 23' E 1028.43
      feet to a white oak on the road; thence leaving the boundary line of the
      said tract of 231.6 acres, by land of The Crab Orchard Coal & Land Company
      (J. W. Gunther), S 79 degrees 39' E 925.37 feet to a hub in a fence
      corner; thence N 78 degrees 16' E 230.24 feet to a stone; thence S 87
      degrees 18' E 719.17 feet to a stone, the common corner of Tract 91
      (Harvey Cook), of Tract 90 (T. E. Combs), and of

                                       4
<PAGE>

      said land of The Crab Orchard Coal & Land Company (J. W. Gunther); thence
      N 4 degrees 25' E 477.32 feet to a dogwood and maple; thence N 7 degrees
      20' W 2074.44 feet to a white oak, the common corner of Tract 91 (Harvey
      Cook), of Tract 203 (Daniel Phipps), and of land of The Crab Orchard Coal
      & Land Company (J. W. Gunther); thence continuing by land of The Crab
      Orchard Coal and Land Company, S 79 degrees 57' W 1191.72 feet to a point;
      thence N 10 degrees 48' E 500.00 feet to a chestnut stump; thence N 88
      degrees 26' W 1820.51 feet to an iron rail; thence N 34 degrees 04' E
      1856.52 feet to a stake, the common corner of Tract 48 (G. W. Humphries),
      of Tract 203 (Daniel Phipps), and of land of The Crab Orchard Coal & Land
      Company; thence N 34 degrees 04' E 163.12 feet to a white oak stump by the
      road, the common corner of Tract 48 (G. W. Humphries), of Tract 204 (Joe
      L. Smith), and of the said land of The Crab Orchard Coal & Land Company;
      thence N 34 degrees 45' W 3211.38 feet to a chestnut and hickory by an old
      road; thence N 66 degrees 34' E 720.42 feet to a gum and chestnut oak
      below the road, the common corner of Tract 26 (Andrew Williams), of Tract
      204 (Joe L. Smith), and of land of The Crab Orchard Coal & Land Company
      (W. Prince); thence by land of The Crab Orchard Coal & Land Company (W.
      Prince) N 59 degrees 13' E 2023.44 feet to a stake, a corner on line of
      Tract 26 (Andrew Williams), and the common corner of Tract 205 (The Crab
      Orchard Coal & Land Company), and of land of The Crab Orchard Coal & Land
      Company (W. Prince); thence by land of The Crab Orchard Coal & Land
      Company (W. Prince), N 8 degrees 36' 46" W 1147.68 feet to a stake, the
      common corner of Tract 32 (Granger), of Tract 205 (The Crab Orchard Coal &
      Land Company), and of land of The Crab Orchard Coal & Land Company (W.
      Prince and Tract 32); thence by land of The Crab Orchard Coal & Land
      Company (Tract 32) N 8 degrees 36' 46" W 1976.79 feet to a stake, the
      common corner of Tract 32 (Granger), of land of The Crab Orchard Coal &
      Land Company (Tract 32), and of land of The New River Company (Andrew
      Biggs); thence by land of The New River Company (Andrew Biggs), S 65
      degrees 21' E 2190.15 feet to an iron rail, the common corner of Tract 32
      (Granger) and of land of J. M. Bailey's Heirs; thence by land of J. M.
      Bailey's Heirs S 8 degrees 49' E 1331.18 feet to an iron rail, the common
      corner of Tract 117 (Otis A. Tench), of Tract 32 (Granger), and of land of
      J. M. Bailey's Heirs; thence N 42 degrees 05' E 106.86 feet to an iron
      rail; thence S 75 degrees 25' E 380.80 feet to a stone, the common corner
      of Tract 117 (Otis A. Tench), and of lands of J. M. Bailey's Heirs and The
      New River Company; thence by land of The New River Company S 16 degrees
      55' W 465.16 feet to a maple; thence S 85 degrees 17' E 330.00 feet to a
      poplar; thence N 67 degrees 18' E 307.68 feet to a chestnut; thence S 30
      degrees 06' E 1322.07 feet to two white oaks, the common corner of Tract
      133 (M. C. Bibb), of Tract 117 (Otis A. Tench), and of lands of The New
      River Company and the Cranberry Fuel Company; thence by land of the
      Cranberry Fuel Company S 26 degrees 11' W 1442.45 feet to a point, the
      common corner of Tract 50 (William H. Smith), of Tract 133 (M. C. Bibb),
      and of land of the Cranberry Fuel Company; thence S 35 degrees 37' E
      234.91 feet to a point, the common corner of Tract 72 (John Bailey), of
      Tract 50 (William H. Smith), and of land of the Cranberry Fuel Company;
      thence S 53 degrees 05' E 1857.33 feet to a black pine and chestnut;
      thence S 47 degrees 06' W 82.80 feet to a maple stump; thence S 18 degrees
      11' E 114.03 feet to a point; thence S 10 degrees 15' E 841.94 feet to a
      white oak; thence S 24 degrees 40' E 295.76 feet to a dogwood and white
      oak; thence S 71 degrees 26' E 862.63 feet to a point, the common corner
      of Tract 52 (Marshall Bailey), of Tract 72 (John Bailey), and of land of
      the Cranberry Fuel Company; thence N 24 degrees 46' E 380.78 feet to a
      stone; thence N 34 degrees 37' E 1044.18 feet to a white oak, the common
      corner of Tract 52 (Marshall Bailey), and of lands of the Cranberry

                                       5
<PAGE>

      Fuel Company and The New River Company (R. Tench); thence by land of The
      New River Company (R. Tench) S 61 degrees 48' E 870.03 feet to the point
      of beginning; CONTAINING by estimation 4095.34 acres, more or less.

      EXCEPTING AND RESERVING, NEVERTHELESS, from and out of the tract or parcel
      of land above described and designated as Tract No. 1, and from and out of
      the operation of this indenture of lease,

      FIRST. -- The School Lot excepted and reserved, as Exception "First," from
the supplemental indenture of lease from the said Beaver Coal Company to the
Beckley Coal & Coke Company, dated January 2, 1924, and recorded in the Office
of the Clerk of the County Court of Raleigh County, West Virginia, in Lease
Record No. 3, page 387, which is more particularly bounded and described as
follows:

            BEGINNING at a point in the division line between Tract 117 (Otis A.
      Tench) and Tract 26 (Andrew Williams), said point being N 0 degrees 30' E
      from the large white oak marking the common corner of Tract 117 (Otis A.
      Tench), of Tract 151 (Dennis Poff) and of Tract 26 (Andrew Williams), and
      distant therefrom 99 feet; thence by Tract 26 (Andrew Williams) N 5
      degrees 00' W 264.00 feet to a white oak, a common corner of Tract 26
      (Andrew Williams) and of Tract 32 (Granger); thence by Tract 32 (Granger)
      N 89 degrees 30' E 264.00 feet to a black oak, a common corner of Tract 32
      (Granger) and of Tract 117 (Otis A. Tench); thence by Tract 117 (Otis A.
      Tench) S 42 degrees 00' W 358.9 feet to the point of beginning; CONTAINING
      0.76 of an acre, more or less.

      SECOND. -- The Alfred Beckley Tract excepted and reserved as Exception
"Second," from the said supplemental indenture of lease dated January 2, 1924,
which is more particularly bounded and described as follows:

            BEGINNING at a point in the center of the bridge over Big White
      Stick Creek on Maple Meadow Road, the common corner of Tract 124 (E. E.
      White), of Tract 130 (E. E. White), of Tract 13 (C. C. Snuffer), and of
      Tract 131 (E. E. White); thence by Tract 131 (E. E. White) and Tract 119
      (Gordon Lester), in the center of and following the various courses and
      meanderings of Big White Stick Creek and a small branch thereof, to a
      black pine stump, the common corner of Tract 119 (Gordon Lester), of Tract
      63 (W. N. Davis), and of Tract 124 (E. E. White); thence by Tract 124 (E.
      E. White) S 39 degrees 08' E 621.00 feet to the point of beginning;
      CONTAINING 0.75 of an acre, more or less.

      THIRD. -- The surface of that certain lot, piece or parcel of land
situated in the said County of Raleigh and State of West Virginia, containing by
estimation one-half (1/2) of an acre, more or less, which was excepted and
reserved, as Exception "Third," from the said supplemental indenture of lease
dated January 2, 1924, and which is more particularly bounded and described as
follows:

            BEGINNING at a small white oak about eight (8) inches in diameter on
      the East side of the County Road leading from the turnpike at Mt. Tabor to
      the Surveyor Road at Cleveland School House; thence with said roadside S
      15 degrees 00' W 264.00 feet to a stone; thence S 75 degrees 00' E 82.50
      feet to a stone; thence N 15 degrees 00' E 264.00 feet to a stone;

                                       6
<PAGE>

      thence 75 degrees 00' W 82.50 feet to the point of beginning; CONTAINING
      by estimation one-half (1/2) of an acre, more or less.

      BEING the same lot, piece or parcel of surface land which was conveyed by
the White Stick Coal Company, predecessor in title of the Lessor herein, to
Oliver Godbey, James P. Clay and Milton Curtis, Trustees of the Church of Christ
of Roxie, Raleigh County, West Virginia, by deed dated September 1, 1900, and
recorded in the Office of the Clerk of the County Court of Raleigh County, West
Virginia, in Deed Book "S," page 500.

      FOURTH. -- Those two certain strips, pieces or parcels of railroad right
of way situated in the said County of Raleigh and State of West Virginia,
containing by estimation One and Sixty-nine one-hundredths (1.69) acres, more or
less, and three (3) acres, more or less, respectively, hereinafter designated as
Parcel I and Parcel II, which were excepted and reserved, as Exception "Fourth,"
from the said supplemental indenture of lease dated January 2, 1924, and which
are more particularly bounded and described as follows:

            PARCEL I. -- A strip sixty-six (66) feet wide, lying thirty-three
      (33) feet on each side of the center line of the extension of the Piney
      Creek Branch of the Chesapeake and Ohio Railway, said center line entering
      the land of the White Stick Coal Company (now of the Beaver Coal
      Corporation) at Station 188+62, a point on the dividing line between the
      lands of the Raleigh Coal and Coke Company and of the said White Stick
      Coal Company (now of the said Beaver Coal Corporation); thence by a
      tangent N 56 degrees 07' W 448.00 feet to Station 193+10; thence by a 4
      degrees curve to the right 580.00 feet to Station 198+90; thence by a
      tangent N 32 degrees 55' W 90.00 feet to Station 199+80, a point on the
      County Road; CONTAINING by estimation One and Sixty-nine one-hundredths
      (1.69) acres, more or less.

            PARCEL II. -- A strip sixty-six (66) feet wide, lying thirty-three
      (33) feet on each side of the center line of the extension of the said
      Piney Creek Branch of the said Chesapeake and Ohio Railway, said center
      line entering the land of the said White Stick Coal Company (now of the
      said Beaver Coal Corporation) at Station 205+98, at a point in the
      dividing line between the lands of Gordon Lester and of the said White
      Stick Coal Company (now of the said Beaver Coal Corporation); thence by a
      tangent N 32 degrees 55' W 352.00 feet to Station 209+50; thence by a 5
      degrees curve to the left 700.00 feet to Station 216+50; thence by a
      tangent N 67 degrees 55' W 770.00 feet to Station 224+20; thence by a 3
      degrees curve to the right 150.00 feet to Station 225+70, a point on the
      County Road; CONTAINING by estimation three (3) acres, more or less.

      TOGETHER WITH so much land on each side of the center line aforesaid in
addition to the two strips of land containing respectively, by estimation, One
and Sixty-nine one-hundredths (1.69) acres, more or less, and three (3) acres,
more or less, hereinbefore described, as may be necessary at cuts and
embankments for the construction and operation of the extension of the said
Piney Creek Branch of the said Chesapeake and Ohio Railway, with single or
double track or sidings, said tracks to be located on the land above described.

      BEING Parcels I and II of the eight (8) strips, pieces or parcels of
railroad right of way, which were conveyed by the said White Stick Coal Company,
predecessor in title of the Lessor

                                       7
<PAGE>

herein, to the Chesapeake and Ohio Railway Company, by deed dated March 30,
1903, and recorded in the Office of the Clerk of the County Court of said
Raleigh County, in Deed Book "Z," page 342.

      FIFTH. -- That certain strip, piece or parcel of railroad right of way
situated on Big White Stick Creek, in the said County of Raleigh and State of
West Virginia, containing by estimation Four and Four one-hundredths (4.04)
acres, more or less, which was excepted and reserved, as Exception "Fifth," from
the said supplemental indenture of lease dated January 2, 1924, and which is
more particularly bounded and described as follows:

            A strip sixty-six (66) feet wide, lying thirty-three (33) feet on
      each side of the center line of the extension of the Piney Creek Branch of
      the Chesapeake and Ohio Railway, said center line entering the lands of
      the Raleigh Coal and Coke Company at Station 161+95, a point in the
      division line between lands of J. W. Bowers and T. K. Scott and lands of
      the Raleigh Coal and Coke Company; thence by an 8 degrees curve to the
      right, 160.00 feet to Station 163+55; thence by a 2 degrees curve to the
      right, 740.00 feet to Station 170+95; thence by a tangent N 16 degrees 25'
      W 335.00 feet to Station 174+30; thence by a 4 degrees curve to the left,
      980.00 feet to Station 184+10; thence by a tangent N 56 degrees 07' W
      452.00 feet to Station 188+62, a point on the division line between the
      lands of the Raleigh Coal and Coke Company and of the White Stick Coal
      Company; CONTAINING four and four one-hundredths (4.04) acres, more or
      less.

      TOGETHER WITH such land on each side of the center line aforesaid, in
addition to the Four and Four one-hundredths (4.04) acres, more or less, above
described, as may be necessary at cuts and embankments for the construction and
operation of the extension of the said Chesapeake and Ohio Piney Creek Branch,
with single or double track and sidings, the said tracks to be located on the
land above described.

      BEING Parcel 2 of the two (2) parcels of railroad right of way which were
conveyed by the said Raleigh Coal and Coke Company, predecessor in title of the
Lessor herein, to the said Chesapeake and Ohio Railway Company, by deed dated
September 1, 1903, and recorded in the Office of the Clerk of the County Court
of said Raleigh County, in Deed Book No. 27, page 453, and being the same strip,
piece or parcel of railroad right of way which was excepted and reserved from
the deeds from W. R. Graham to the said Beaver Coal Company, predecessor in
title of the Lessor herein, dated respectively December 1, 1903, and January 22,
1904, and recorded in the Office of the Clerk of the County Court of said
Raleigh County, in Deed Book No. 28, page 79, and Deed Book No. 28, page 207,
respectively.

      SIXTH. -- That certain tract or parcel of surface land, situated in the
said County of Raleigh and State of West Virginia, containing by estimation
Seventy-four and Sixty-eight one-hundredths (74.68) acres, more or less, and
more particularly bounded and described as follows:

            BEGINNING at a stake, the common corner of Tract 7 (Jackson Smith),
      of Tract 59 (W. P. Willis) and of land of M. C. Bibb (Tract 7a and Tract
      59a), as the said Tract 7, Tract 59, land of M. C. Bibb, and all numbered
      and named Tracts hereinafter mentioned and described (except those Tracts
      acquired by the Beaver Coal Company and/or its successor the Beaver Coal
      Corporation since January 19, 1904,) are numbered, named

                                       8
<PAGE>

      and shown on a general map entitled "Map of Tracts of Land in Raleigh
      County, West Virginia, conveyed to the Beaver Coal Company by deeds dated
      January 19, 1904, from Piney Coal Company et al.", attached to and forming
      part of a certain deed dated January 19, 1904, from Piney Coal Company et
      al.," attached to an forming part of a certain deed dated January 19,
      1904, from the White Stick Coal Company to the Beaver Coal Company,
      recorded in the Office of the Clerk of the County Court of Raleigh County,
      West Virginia, in Deed Book No. 29, page 1 etc.; said general map being on
      page 55 of said Deed Book No. 29: -- the said beginning point being also a
      point in the boundary line of Tract No. 1 hereinbefore described and
      hereby leased; thence by Tract 59 (W. P. Willis) S 68 degrees 46' W 440.84
      feet to a point in the middle of the Logan Turnpike, a common corner of
      Tract 7 (Jackson Smith) and of Tract 59 (W. P. Willis); thence following
      the middle of the said Logan Turnpike, by Tract 59 (W. P. Willis), Tract
      115 (L. A. Willis), Tract 114 (A. S. Evans) and Tract 114a (J. Evans), the
      eighteen following courses and distances, to wit: (1) N 31 degrees 46' W
      164.99 feet; (2) N 51 degrees 54' W 104.82 feet; (3) N 77 degrees 12' W
      153.44 feet; (4) N 86 degrees 48' W 118.67 feet; (5) S 86 degrees 10' W
      388.08 feet; (6) S 84 degrees 16' W 132.72 feet; (7) S 80 degrees 33' W
      329.29 feet; (8) S 81 degrees 45' W 143.68 feet; (9) N 89 degrees 45' W
      81.11 feet; (10) N 74 degrees 30' W 100.14 feet; (11) N 62 degrees 56' W
      231.37 feet; (12) N 62 degrees 25' W 259.97 feet; (13) N 60 degrees 18' W
      137.83 feet; (14) N 67 degrees 40' W 126.64 feet; (15) N 76 degrees 21' W
      711.87 feet; (16) N 68 degrees 57' W 127.87 feet; (17) N 54 degrees 11' W
      159.04 feet; and (18) N 48 degrees 24' W 463.78 feet; thence leaving the
      middle of said Logan Turnpike, by Tract 114a (J. Evans) and Tract 91
      (Harvey Cook), N 32 degrees 43' W 92.89 feet to a stake on the east side
      of said Logan Turnpike, the common corner of Tract 76 (Marshall Bailey),
      of Tract 91 (Harvey Cook), and of Tract 98 (Dyar, Addison & Co.); thence
      following the boundary line between Tract 76 (Marshall Bailey) and Tract
      98 (Dyar, Addison & Co.), N 57 degrees 41' E 809.33 feet to a stake;
      thence leaving the boundary line between Tract 76 (Marshall Bailey) and
      Tract 98 (Dyar, Addison & Co.), and passing through Tract 98 (Dyar,
      Addison & Co.), S 66 degrees 53' E 2020.93 feet to a stake in or near the
      boundary line between Tract 98 (Dyar, Addison & Co.) and Tract 7 (Jackson
      Smith); thence passing through Tract 7 (Jackson Smith) N 73 degrees 43' E
      1523.58 feet to a stake in the boundary line between Tract 7 (Jackson
      Smith) and land of M. C. Bibb (Tract 7a), which is also the boundary line
      of said Tract No. 1 hereinbefore described; thence following the boundary
      line between Tract 7 (Jackson Smith) and land of M. C. Bibb (Tract 7a),
      which is also the boundary line of said Tract No. 1, S 0 degrees 56' E
      1098.85 feet to the point of beginning; CONTAINING by estimation 74.68
      acres, more or less, and being composed of parts of Beaver Coal
      Corporation's Tracts 7 (Jackson Smith) and 98 (Dyar, Addison & Co.).

      BEING the same tract or parcel of surface land conveyed by the said Beaver
Coal Company, predecessor in title of the Lessor herein, to the South Beckley
Land Company, by deed dated June 4, 1925, and recorded in the Office of the
Clerk of the County Court of said Raleigh County, in Deed Book No. 89, page 485.

      SEVENTH. -- That certain lot, piece or parcel of surface land situated in
the said County of Raleigh and State of West Virginia, containing by estimation
One (1) acre, more or less, which was excepted and reserved, as Exception
"Seventh," from the said supplemental indenture of lease dated January 2, 1924,
and which is more particularly bounded and described as follows:

                                       9
<PAGE>

            BEGINNING at a stake which bears S 63 degrees 22' W 995.14 feet from
      a double maple, a common corner of land of Thomas H. Wickham (J. W. Bower)
      and of Tract 126 (G. W. Carper), as the said land of Thomas H. Wickham and
      Tract 126 are numbered, named and shown on a general map entitled "Map of
      Tracts of Land in Raleigh County, West Virginia, conveyed to the Beaver
      Coal Company by deeds dated January 19, 1904, from Piney Coal Company et
      al.," attached to and forming part of a certain deed dated January 19,
      1904, from the White Stick Coal Company to the Beaver Coal Company,
      recorded in the Office of the Clerk of the County Court of Raleigh County,
      West Virginia, in Deed Book No. 29, page 1 etc.; said general map being on
      page 55 of said Deed Book No. 29: -- thence N 85 degrees 00' W 263.93 feet
      to a stake; thence S 5 degrees 00' W 165.04 feet to a stake; thence S 85
      degrees 00' E 263.93 feet to a stake; thence N 5 degrees 00' E 165.04 feet
      to the point of beginning; CONTAINING by estimation one (1.00) acre, more
      or less, and being a portion of Tract 126 (G. W. Carper).

      BEING the same lot, piece or parcel of surface land which was conveyed and
released by the said Beaver Coal Company to the Board of Education of the
District of Town in the County of Raleigh, West Virginia, by the following
deeds:

      (1) Deed, dated October 24, 1916, and recorded in the Office of the Clerk
of the County Court of said Raleigh County, in Deed Book No. 69, page 214; and

      (2) Quitclaim deed, dated March 12, 1918, and recorded in the Office of
the Clerk of the County Court of said Raleigh County, in Deed Book No. 63, page
443.

      EIGHTH. -- Those three (3) certain strips, pieces or parcels of railroad
right of way, situated in the said County of Raleigh and State of West Virginia,
which were excepted and reserved, as Exception "Eighth," from said supplemental
indenture of lease dated January 2, 1924, and which are more particularly
bounded and described as follows:

            (1) MAIN SIDING. -- A strip twenty-five feet in width, centering on
      the following line: Beginning at Station 880+75 of the center line of the
      Main Track of the Piney Creek Branch of the Chesapeake and Ohio Railway,
      being the eastern switch point of the Main Siding to Beckley Mine; thence
      with the center line of said Main Siding, in a northwesterly direction,
      passing under the coal tipple at Beckley Mine, 3534.00 feet to Station
      914+62.5 of the center line of said Piney Creek Branch and the Western
      switch point of said Main Siding to Beckley Mine.

            (2) SIDING NO. 1. -- A Strip twenty-five feet in width, centering on
      the following line: Beginning at a point on the center line of the Main
      Siding to Beckley Mine, 230 feet east of the center line of the Coal
      Tipple at Beckley Mine and the eastern switch point of Siding No. 1;
      thence with the center line of Siding No. 1, in a northwesterly direction,
      494.00 feet to the western switch point of said Siding No. 1, being a
      point on the Main Siding to Beckley Mine, approximately 250 feet west of
      the center line of the Coal Tipple at Beckley Mine.

            (3) SIDING NO. 2. -- A strip twenty-five feet in width, centering on
      the following line: Beginning at a point on the center line of the Main
      Track of the Piney Creek Branch of the Chesapeake and Ohio Railway, 285
      feet west of Mile Post 17 of said Branch, being the point of switch of
      Siding No. 2; thence with the center line of said Siding No. 2, in a
      southeasterly direction, 328.00 feet to the end of track.

                                       10
<PAGE>

      ALSO all ballast, ties, rails and fastenings and appurtenances, together
with such additional rights of way, if any, for slopes of cuts and fills,
drainage ditches, etc., as may be necessary for the operation and maintenance of
the above-described tracks.

      BEING the same three (3) strips, pieces or parcels of railroad right of
way which were conveyed and released by the said Beaver Coal Company and the
said Beckley Coal & Coke Company to the said Chesapeake and Ohio Railway
Company, by deed dated October 1, 1917, and recorded in the Office of the Clerk
of the County Court of said Raleigh County, in Deed Book No. 62, page 200.

      NINTH. -- That certain lot, piece or parcel of surface land situated in
the said County of Raleigh and State of West Virginia, containing by estimation
One and Two tenths (1.2) acres, more or less, which was excepted and reserved,
as Exception "Ninth," from the said supplemental indenture of lease dated
January 2, 1924, and which is more particularly bounded and described as
follows:

            BEGINNING at a small white oak stump, which is S 18 degrees 07' W
      1065.77 feet from a chestnut oak and chestnut stump, a common corner of
      Tract 16 (Lewis Williams), of Tract 67 (Oliver Godby) and of Tract 69
      (Anderson Godby), as the said Tract 16, Tract 67 and Tract 69 are
      numbered, named and shown on a general map entitled "Map of Tracts of Land
      in Raleigh County, West Virginia, conveyed to the Beaver Coal Company by
      deeds dated January 19, 1904, from Piney Coal Company et al.," attached to
      and forming part of a certain deed dated January 19, 1904, from the White
      Stick Coal Company to the Beaver Coal Company, recorded in the Office of
      the Clerk of the County Court of Raleigh County, West Virginia, in Deed
      Book No. 29, page 1 etc.; said general map being on page 55 of said Deed
      Book No. 29: -- the said beginning point marking the northwest corner of a
      one-half (1/2) acre lot conveyed by the White Stick Coal Company to the
      Trustees of the Church of Christ by deed dated the 1st day of September,
      1900 (Exception "Third" above described); thence N 15 degrees 00' E 50.00
      feet to a stake; thence S 75 degrees 00' E 200.00 feet to a stake; thence
      S 15 degrees 00' W 390.00 feet to a stake; thence N 63 degrees 42' W
      203.97 feet to a stake; thence N 15 degrees 00' E 36.00 feet to a stone,
      the southwest corner of the said one-half (1/2) acre lot S 75 degrees 00'
      E 82.50 feet to a stone; thence N 15 degrees 00' E 264.00 feet to a stone;
      thence N 75 degrees 00' W 82.50 feet to the point of beginning; CONTAINING
      by estimation 1.2 acres, more or less, and being a portion of Tract 16
      (Lewis Williams).

      BEING the same lot, piece or parcel of surface land which was conveyed and
released by the said Beaver Coal Company and the said Beckley Coal & Coke
Company to the said Oliver Godby, James P. Clay and Milton Curtis, Trustees of
the Church of Christ of Roxie, Raleigh County, West Virginia, by deed dated
March 1, 1919, and recorded in the Office of the Clerk of the County Court of
said Raleigh County, in Deed Book No. 68, page 252.

      TENTH. -- That certain lot, piece or parcel of surface land situated in
the District of Town, in the said County of Raleigh and State of West Virginia,
containing by estimation Eight tenths (0.8) of an acre, more or less, which was
excepted and reserved, as Exception "Tenth," from the

                                       11
<PAGE>

said supplemental indenture of lease dated January 2, 1924, and which is more
particularly bounded and described as follows:

            BEGINNING at a double maple, a common corner of Tract 126 (W. R.
      Graham) and land formerly owned by Thomas H. Wickham, as the said Tract
      126 and land formerly owned by Thomas H. Wickham are numbered, named and
      shown on a general map entitled "Map of Tracts of Land in Raleigh County,
      West Virginia, conveyed to the Beaver Coal Company by deeds dated January
      19, 1904, from Piney Coal Company et al," attached to and forming part of
      a certain deed dated January 19, 1904, from the White Stick Coal Company
      to the Beaver Coal Company, recorded in the Office of the Clerk of the
      County Court of Raleigh County, West Virginia, in Deed Book No. 29, page 1
      etc.; said general map being on page 55 of said Deed Book No. 29: --
      thence passing into Tract 126 (W. R. Graham), S 49 degrees 31' W 84.12
      feet to a stake; thence N 34 degrees 55' W 206.80 feet to a stake; thence
      N 60 degrees 35' E 195.28 feet to a stake; thence S 27 degrees 50' E
      177.07 feet to a stake in the division line between Tract 126 (W. R.
      Graham) and said land formerly owned by Thomas H. Wickham; thence
      following said division line S 52 degrees 22' W 88.90 feet to the point of
      beginning; CONTAINING by estimation 0.8 of an acre, more or less, and
      being a part of Tract 126 (W. R. Graham).

      BEING the same lot, piece or parcel of surface land which was conveyed and
released by the said Beaver Coal Company and the said Beckley Coal & Coke
Company to Eugene Mankin, Andrew Bailey and N. S. Allen, Trustees of the
Methodist Episcopal Church of Mabscott, Raleigh County, West Virginia, by deed
dated June 1, 1920, and recorded in the Office of the Clerk of the County Court
of said Raleigh County, in Deed Book No. 73, page 170.

      ELEVENTH. -- The surface only of that certain tract or parcel of land
situated in the said County of Raleigh and State of West Virginia, containing by
estimation Forty-two and Fifty-five one-hundredths (42.55) acres, more or less,
which was excepted and reserved, as Exception "Eleventh," from the said
supplemental indenture of lease dated January 2, 1924, and which is more
particularly bounded and described as follows:

            BEGINNING at a stone, a common corner of Tract 17 (A. E.
      Huddleston), of Tract 53 (Mary M. Cole), and of land of the Crab Orchard
      Fuel Company (Joshua Griffith), as the said Tract 17, Tract 53, land of
      the Crab Orchard Fuel Company, and all numbered and named Tracts
      hereinafter mentioned and described (except those Tracts acquired by the
      Beaver Coal Company and/or its successor the Beaver Coal Corporation since
      January 19, 1904,) are numbered, named and shown on a general map entitled
      "Map of Tracts of Land in Raleigh County, West Virginia, conveyed to the
      Beaver Coal Company by deeds dated January 19, 1904, from Piney Coal
      Company et al.," attached to and forming part of a certain deed dated
      January 19, 1904, from the White Stick Coal Company to the Beaver Coal
      Company, recorded in the Office of the Clerk of the County Court of
      Raleigh County, West Virginia, in Deed Book No. 29, page 1 etc.; said
      general map being on page 55 of said Deed Book No. 29: -- the said
      beginning corner being also a common corner of Tract No. 1 hereinbefore
      described and hereby leased, and of the tract of 174.47 acres of the
      Sewell seam of coal hereinafter described and designated as Exception
      "Thirteenth;" -- thence following the boundary line of the said tract of
      174.47 acres, passing through said Tract No. 1 and Tract 17 (A. E.
      Huddleston), N 55 degrees 30' E

                                       12
<PAGE>

      20.00 feet to a stake on the outcrop of the Sewell seam of coal; thence
      leaving the boundary line of the said tract of 174.47 acres and continuing
      through said Tract No. 1 and Tract 17 (A. E. Huddleston), N 55 degrees 30'
      E 620.89 feet to a stake; thence S 34 degrees 44' E 1067.44 feet to a
      stake; thence S 24 degrees 47' E 1179.59 feet to a hickory; thence S 20
      degrees 15' W 129.06 feet to a stake in the boundary line of said Tract
      No. 1; thence following the boundary line of said Tract No. 1, N 85
      degrees 57' W 1431.24 feet to a white oak, a common corner of Tract 17 (A.
      E. Huddleston) and of land of the Crab Orchard Fuel Company (Joshua
      Griffith); thence continuing with the boundary line of said Tract No. 1,
      by land of the Crab Orchard Fuel Company (Joshua Griffith), N 16 degrees
      31' E 795.35 feet to a white oak; thence N 24 degrees 32' W 926.24 feet to
      the point of beginning; CONTAINING by estimation 42.55 acres, more or
      less, and being part of Beaver Coal Corporation's Tract 17.

      BEING the same tract or parcel of surface land which was conveyed and
released by the said Beaver Coal Company and the said Beckley Coal & Coke
Company to the said Lillybrook Land Company, by deed of conveyance and exchange
dated January 2, 1924, and recorded in the Office of the Clerk of the County
Court of said Raleigh County, in Deed Book No. 87, page 380, as Parcel No. 2 of
the lands conveyed to the said Lillybrook Land Company by the said deed.

      TWELFTH. -- That certain tract or parcel of mineral right of way of the
Chesapeake and Ohio Railway Company, situated in the said County of Raleigh and
State of West Virginia, containing by estimation One and Forty-nine
one-hundredths (1.49) acres, more or less, which was excepted and reserved, as
Exception "Twelfth," from the said supplemental indenture of lease dated January
2, 1924, and which is more particularly bounded and described as follows:

            BEGINNING at an iron rail in the southern mineral right of way
      boundary line of the Piney Creek Branch of the Chesapeake and Ohio Railway
      Company, said point being 25 feet, measured at right angles, from the
      center line of said railway as now located, said point being also a corner
      of Tract No. 1 hereinbefore described and hereby leased; thence following
      the boundary line of said Tract No. 1, crossing the said mineral right of
      way, N 26 degrees 26' W 50.00 feet to an iron rail in the northern mineral
      right of way boundary line of said railway, said point being 25 feet,
      measured at right angles, from the said center line as now located; thence
      leaving the boundary line of and passing through said Tract No. 1,
      following the said northern mineral right of way boundary line, parallel
      to and 25 feet, distant from the said center line as now located, N 63
      degrees 34' E 124.00 feet, more or less, to a P. C.; thence curving to the
      south with a radius of 1935.08 feet, through an arc of 1151.18 feet, more
      or less, (the chord of the arc bearing N 80 degrees 51' E, and being
      1136.29 feet, more or less, in length,) to a point in the boundary line of
      said Tract No. 1; thence leaving the said northern mineral right of way
      boundary line and following the boundary line of said Tract No. 1,
      crossing the said mineral right of way, S 40 degrees 22 E 75.00 feet, more
      or less, to a point in the said southern right of way boundary line, said
      point being 25 feet, measured radially, from the said center line as now
      located; thence leaving the said boundary line of and passing through said
      Tract No. 1, following the said southern mineral right of way boundary
      line, parallel to and 25 feet distant from the said center line, curving
      to the south with a radius of 1885.08 feet, through an arc of 1180.74
      feet, more or less, (the chord of the arc bearing S 81 degrees 40' W, and
      being 1160.39 feet, more or less, in length,) to a P. T.; thence S 63
      degrees 34' W 124.00 feet, more or less, to the point of beginning;
      CONTAINING by estimation 1.49 acres, more or less.

                                       13
<PAGE>

      BEING part of those two certain tracts or parcels of mineral right of way
which were conveyed to the said Chesapeake and Ohio Railway Company by the
following two deeds, to wit: (1) From Andrew Davis and wife to the said
Chesapeake and Ohio Railway Company, dated the 5th day of August, 1903, and
recorded as aforesaid in Deed Book No. 27, page 151; and (2) from Perry Davis
and wife to the said Chesapeake and Ohio Railway Company, dated the 25th day of
August, 1903, and recorded as aforesaid in Deed Book No. 27, page 194.

      THIRTEENTH. -- The Sewell vein or seam of coal in that certain tract or
parcel of land situated in the said County of Raleigh and State of West
Virginia, containing by estimation One Hundred Seventy-four and Forty-seven
one-hundredths (174.47) acres, more or less, and more particularly bounded and
described as follows:

            BEGINNING at a stone, a common corner of Tract 17 (A. E.
      Huddleston), of Tract 53 (Mary M. Cole), and of land of the Crab Orchard
      Fuel Company (Joshua Griffith), as the said Tract 17, Tract 53, land of
      the Crab Orchard Fuel Company, and all numbered and named Tracts
      hereinafter mentioned and described (except those Tracts acquired by the
      Beaver Coal Company and/or its successor the Beaver Coal Corporation since
      January 19, 1904,) are numbered, named and shown on a general map entitled
      "Map of Tracts of Land in Raleigh County, West Virginia, conveyed to the
      Beaver Coal Company by deeds dated January 19, 1904, from Piney Coal
      Company et al.," attached to and forming part of a certain deed dated
      January 19, 1904, from the White Stick Coal Company to the Beaver Coal
      Company, recorded in the Office of the Clerk of the County Court of
      Raleigh County, West Virginia, in Deed Book No. 29, page 1 etc.; said
      general map being on page 55 of said Deed Book No. 29: -- the said
      beginning corner being also a common corner of Tract No. 1 hereinbefore
      described and hereby leased, and of Exception "Eleventh" hereinbefore
      described; thence following the boundary line of said Tract No. 1, by land
      of the Crab Orchard Fuel Company (Joshua Griffith), S 55 degrees 30' W
      977.48 feet to a stake, the southeast corner of a tract of 22.04 acres in
      which the coal and other minerals were conveyed by the Beaver Coal Company
      and the Beckley Coal & Coke Company to the Tolbert Smokeless Coal Company,
      by deed of conveyance and exchange dated April 22, 1920; thence continuing
      with the boundary line of said Tract No. 1, by the said tract of 22.04
      acres, N 35 degrees 08' W 1401.50 feet to a stake; thence S 55 degrees 30'
      W 495.00 feet to a stake (white oak called for but gone), a common corner
      of Tract 53 (Mary M. Cole), of Tract 145 (John Snuffer), of land of The
      Crab Orchard Coal & Land Company (John Snuffer and J. P. Sutphin), and of
      the said tract of 22.04 acres; thence by land of The Crab Orchard Coal &
      Land Company (John Snuffer and J. O. Snuffer) N 22 degrees 53' W 2618.98
      feet to a white pine and maple sprout, the common corner of Tract 147 (J.
      W. Snuffer, S. H. Snuffer and F. H. Good), of Tract 79 (J. W. Tolbert), of
      Tract 146 (J. O. Snuffer), and of land of The Crab Orchard Coal & Land
      Company (J. O. Snuffer and F. H. Good); thence by land of The Crab Orchard
      Coal & Land Company (F. H. Good and S. H. Snuffer), N 22 degrees 49' W
      1640.00 feet to a set stone; thence leaving the said land of The Crab
      Orchard Coal & Land Company (F. H. Good and S. H. Snuffer), and the
      boundary line of said Tract No. 1, and passing into said Tract No. 1 and
      Tract 147 (J. W. Snuffer, S. H. Snuffer and F. H. Good), N 50 degrees 49'
      E 750.00 feet to a stake; thence passing out of Tract 147 (J. W. Snuffer,
      S. H. Snuffer and F. H. Good), through Tract 106 (John Beckley) and Tract
      25 (Daniel Fitzpatrick), and into Tract 79 (J. W. Tolbert), S 39 degrees
      08' E 3527.69 feet to a stake on the outcrop of the Sewell seam of coal;
      thence following

                                       14
<PAGE>

      the outcrop of the said Sewell seam of coal, passing through Tract 79 (J.
      W. Tolbert), S 35 degrees 51' E 137.12 feet to a point; thence S 82
      degrees 51' E 386.42 feet to a point; thence S 49 degrees 47' E 144.05
      feet to a point; thence passing out of Tract 79 (J. W. Tolbert) and into
      Tract 53 (Mary M. Cole), S 67 degrees 38' E 189.24 feet to a point; thence
      passing out of Tract 53 (Mary M. Cole) and into Tract 17 (A. E.
      Huddleston), S 20 degrees 54' E 470.99 feet to a point; thence S 4 degrees
      30' E 280.86 feet to a point; thence S 27 degrees 46' W 107.36 feet to a
      point; thence S 72 degrees 04' W 178.68 feet to a point; thence passing
      out of Tract 17 (A. E. Huddleston) and into Tract 53 (Mary M. Cole), N 67
      degrees 45' W 237.70 feet to a point; thence N 52 degrees 52' W 294.77
      feet to a point; thence S 25 degrees 48' E 597.57 feet to a point; thence
      S 1 degrees 27' W 198.66 feet to a point; thence S 45 degrees 32' W 77.07
      feet to a point; thence S 74 degrees 40' W 181.46 feet to a point; thence
      S 80 degrees 41' E 123.63 feet to a point; thence N 75 degrees 01' E
      189.44 feet to a point; thence passing out of Tract 53 (Mary M. Cole) and
      into Tract 17 (A. E. Huddleston), S 81 degrees 29' E 229.53 feet to a
      point; thence S 50 degrees 12' E 101.52 feet to a point; thence S 7
      degrees 00' W 129.64 feet to a stake, a corner of said Exception
      "Eleventh;" thence leaving the outcrop of the said Sewell seam of coal and
      following the boundary line of said Exception "Eleventh," S 55 degrees 30'
      W 20.00 feet to the point of beginning; CONTAINING by estimation 174.47
      acres, more or less, and being composed of parts of Beaver Coal
      Corporation's Tracts 17, 25, 53, 79, 106, 145, 146 and 147.

      BEING the same tract or parcel of land in which the Sewell vein or seam of
coal only, with certain rights and privileges, was conveyed and released by the
said Beaver Coal Company and the said Beckley Coal & Coke Company to the said
Lillybrook Land Company, by the above-recited deed of conveyance and exchange
dated January 2, 1924, and recorded in the Office of the Clerk of the County
Court of said Raleigh County, in Deed Book No. 87, page 380, as Parcel No. 1 of
the lands conveyed to the said Lillybrook Land Company by the said deed; and in
which the said Sewell vein or seam of coal was excepted and reserved, as
Exception "Thirteenth," from Tract No. 1 of the lands described in the
above-recited supplemental indenture of lease from the said Beaver Coal Company
to the said Beckley Coal & Coke Company, dated January 2, 1924, and recorded in
the Office of the Clerk of the County Court of Raleigh County, West Virginia, in
Lease Record No. 3, page 387.

      AND EXCEPTING AND RESERVING, MOREOVER, the rights and privileges granted
to the said Lillybrook Land Company in respect of the said Sewell vein or seam
of coal in the tract or parcel of land last above described, by the said deed of
conveyance and exchange dated January 2, 1924, to which deed and the record
thereof reference is hereby made for a full and specific statement of the said
rights and privileges hereby excepted and reserved.

      The exceptions and reservations above described and numbered respectively
Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh and
Twelfth, however, are subject to the continued ownership and enjoyment by the
Lessee, its successors and assigns, of its leasehold estate in so much of the
coal underlying the said lots, pieces or parcels of surface land, and the said
strips, pieces or parcels of right of way, so excepted and reserved, as, and in
the rights and privileges appurtenant thereto which were excepted and reserved
in and by the said deeds or other instruments of title by which the said lots,
pieces or parcels of surface land and the said strips, pieces or parcels of
railroad right of way were conveyed to the respective grantees

                                       15
<PAGE>

mentioned above; which said leasehold estate in the said coal and in the said
rights and privileges is hereby expressly confirmed and assured unto the Lessee.

      AND EXCEPTING AND RESERVING ALSO, from and out of the tract or parcel of
land above described and designated as Tract No. 1, and from and out of the
operation of this indenture of lease, the rights granted by the said Beaver Coal
Company to the grantees therein named by the following instruments, to wit:

      (1) Contract, between the said Beaver Coal Company and the Chesapeake &
Potomac Telephone Company of West Virginia, dated February 26, 1914, and
recorded in the Office of the Clerk of the County Court of Raleigh County, West
Virginia, in Deed Book No. 52, page 231, granting the right to construct,
operate and maintain telephone and telegraph lines over the lands of the said
Beaver Coal Company.

      (2) Contract, between the said Beckley Coal & Coke Company, the Beckley
Electric Light & Power Company and the said Beaver Coal Company, dated May 14,
1924, and recorded in the Office of the Clerk of the County Court of Raleigh
County, West Virginia, in Deed Book No. 86, page 81, granting the right to use
water from the mine of the said Beckley Coal & Coke Company.

      (3) Deed, from the said Beaver Coal Company to the Appalachian Electric
Power Company, dated May 3, 1927, and recorded in the Office of the Clerk of the
County Court of Raleigh County, West Virginia, in Deed Book No. 96, page 4,
conveying easements of right of way over various parcels of the lands of the
said Beaver Coal Company.

      (4) Deed, from the said Beaver Coal Company to the Amere Gas Utilities
Company, dated November 13, 1931, and recorded in the Office of the Clerk of the
County Court of Raleigh County, West Virginia, in Deed Book No. 113, page 51,
conveying easements of right of way over lands of the said Beaver Coal Company,
-- Parcel No. 3 of the said easements lying entirely within Tract No. 1 above
described.

      This indenture of lease is also made subject to the rights of William
Griffith (otherwise known as William E. Griffiths), under that certain sublease
from the said Beckley Coal & Coke Company (the said Beaver Coal Company joining)
to the said William Griffith (otherwise known as William E. Griffiths), dated
June 10, 1927, but not recorded, subletting a parcel of 39.86 acres of the
Sewell Seam of coal, being part of Tract No. 1 above described.

      TRACT NO. 2: -- The surface only of that certain tract or parcel of land
situated in the said County of Raleigh and State of West Virginia, on the waters
of Big White Stick Creek, containing by estimation Two Hundred Forty and
Eighty-eight one-hundredths (240.88) acres, more or less, and more particularly
bounded and described as follows:

            BEGINNING at an iron rail between two white oaks, the common corner
      of Tract 191a (I. C. Prince), of Tract 189d (Perry Davis's Heirs), and of
      land of Prince E. Lilly (Perry Davis's Heirs), as the said Tract 191a,
      Tract 189d, land of Prince E. Lilly, and all numbered and named Tracts
      hereinafter mentioned and described (except those Tracts acquired by the
      Beaver Coal Company and/or its successor the Beaver Coal Corporation since
      January 19, 1904,) are numbered, named and shown on a general map entitled
      "Map of Tracts of Land in Raleigh County, West Virginia, conveyed to the
      Beaver Coal

                                       16
<PAGE>

      Company by deeds dated January 19, 1904, from Piney Coal Company et al.,"
      attached to and forming part of a certain deed dated January 19, 1904,
      from the White Stick Coal Company to the Beaver Coal Company, recorded in
      the Office of the Clerk of the County Court of Raleigh County, West
      Virginia, in Deed Book No. 29, page 1 etc.; said general map being on page
      55 of said Deed Book No. 29: -- the said beginning point being also a
      common corner of the said tract of 231.6 acres in which the coal and other
      minerals were conveyed by the said William Prince and wife to the said The
      Crab Orchard Coal & Land Company, by the said deed dated the 25th day of
      October, 1901, and recorded in the Office of the Clerk of the County Court
      of Raleigh County, West Virginia, in Deed Book "W," at page 143, and of
      Tract No. 1 hereinbefore described; thence following the boundary line of
      the said tract of 231.6 acres, by land of Prince E. Lilly (Perry Davis's
      Heirs), N 79 degrees 31' W 1205.49 feet to a service tree; thence N 87
      degrees 17' W 822.08 feet to a white oak (dead), the common corner of
      Tract 19la (I.C. Prince), of land of Prince E. Lilly (Perry Davis's
      Heirs), and of land of Prince E. Lilly (Ida M. Davis's Heirs); thence by
      land of Prince E. Lilly (Ida M. Davis's Heirs) N 28 degrees 31' E 97.68
      feet to a white oak stump and black oak, the common corner of Tract 191
      (I. C. Prince), of Tract 191a (I. C. Prince), and of land of Prince E.
      Lilly (Ida M. Davis's Heirs), said point being also a common corner of the
      said tract of 231.6 acres and of a tract of 122.5 acres in which the coal
      and other minerals were conveyed by I. C. Prince to the said The Crab
      Orchard Coal & Land Company, by deed dated the 20th day of June, 1901, and
      recorded in the Office of the Clerk of the County Court of Raleigh County,
      West Virginia, in Deed Book "U," at page 254; thence leaving the boundary
      line of the said tract of 231.6 acres and following the boundary line of
      the said tract of 122.5 acres, by land of Prince E. Lilly (Ida M. Davis's
      Heirs) and land of The Crab Orchard Coal & Land Company (I. C. Prince), N
      34 degrees 11' W 1934.03 feet to a chestnut stump and gum; thence leaving
      the boundary line of and passing through the said tract of 122.5 acres, N
      64 degrees 23' E 1031.08 feet to a set stone; thence N 71 degrees 47' E
      1114.17 feet to a set stone in the boundary line between the said tract of
      122.5 acres and a tract of 126.6 acres of surface which was conveyed by
      the said I. C. Prince to the said The Crab Orchard Coal & Land Company, by
      the said deed dated the 20th day of November, 1902, and recorded in the
      Office of the Clerk of the County Court of Raleigh County, West Virginia,
      in Deed Book "Y," at page 366; thence following the boundary line between
      the said tract of 122.5 acres and the said tract of 126.6 acres, S 43
      degrees 20' E 638.52 feet to a stake on the west bank of Big White Stick
      Creek, the common corner of the said tract of 122.5 acres, of the said
      tract of 126.6 acres, of the said tract of 231.6 acres, of said Tract 191
      (I. C. Prince), and of said Tract 191a (I. C. Prince); thence leaving the
      boundary line of the said tract of 122.5 acres and continuing with the
      boundary line of the said tract of 126.6 acres, passing through the said
      tract of 231.6 acres, S 43 degrees 27' E 505.55 feet to a stake on the
      east bank of Big White Stick Creek, a common corner of the said tract of
      126.6 acres, of Tract 191a (I. C. Prince), and of Tract 191b (I. C.
      Prince); thence leaving the boundary line of and passing through the said
      tract of 126.6 acres, S 89 degrees 10' E 359.51 feet to a stake, a common
      corner of the said tract of 126.6 acres, of Tract 191b (I. C. Prince), and
      of Tract 192 (Henry Prince); thence following the boundary line of the
      said tract of 126.6 acres, N 60 degrees 52' E 787.41 feet to a stake;
      thence N 19 degrees 40' W 655.19 feet to two white oaks; thence N 20
      degrees 05' E 1058.62 feet to a dogwood snag, a common corner of the said
      tract of 126.6 acres and of Tract 192 (Henry Prince), and a point in the
      boundary line between said Tract No. 1 and the said

                                       17
<PAGE>

      tract of 231.6 acres; thence leaving the boundary line of the said tract
      of 126.6 acres, and following the boundary line between the said tract of
      231.6 acres and said Tract No. 1, S 88 degrees 26' E 464.94 feet to a
      stake near a large chestnut; thence leaving the boundary line between the
      said tract of 231.6 acres and said Tract No. 1, and passing through the
      said tract of 231.6 acres, by land of Henry Prince, S 15 degrees 15' E
      757.44 feet to a stake in a field; thence N 89 degrees 45' E 299.43 feet
      to a stake on the edge of the County road, a point in the boundary line of
      the said tract of 231.6 acres; thence leaving the said land of Henry
      Prince, and following the said County road, passing through the said tract
      of 231.6 acres, S 0 degrees 05' E 533.92 feet to a stake on the edge of
      the said County road, a corner of a school house lot, and a point in the
      boundary line of the said tract of 231.6 acres; thence leaving the said
      County road and following the boundary line of the said school house lot,
      passing through the said tract of 231.6 acres, N 81 degrees 57' W 124.10
      feet to a stake; thence S 9 degrees 52' W 230.18 feet to a stake; thence S
      78 degrees 05' E 114.86 feet to a stake on the edge of the said County
      road, a point in the boundary line of the said tract of 231.6 acres;
      thence leaving the said school house lot and following the boundary line
      of the said tract of 231.6 acres, and the said County road, S 27 degrees
      23' W 732.35 feet to a stake; thence S 7 degrees 57' E 233.73 feet to a
      stake; thence S 45 degrees 05' E 258.26 feet to a stake; thence leaving
      the boundary line of and passing through the said tract of 231.6 acres, S
      27 degrees 53' E 145.25 feet to a point in the boundary line between the
      said tract of 231.6 acres and said Tract No. 1 hereinbefore described, a
      common corner of Tract 192 (Henry Prince) and of Tract 90b (Henry Prince);
      thence following the boundary line between the said tract of 231.6 acres
      and said Tract No. 1, by Tract 90b (Henry Prince), S 10 degrees 23' W
      1019.04 feet to a stake, the common corner of Tract 192 (Henry Prince), of
      Tract 89a (Henry Prince) and of Tract 90b (Henry Prince); thence by Tract
      89a (Henry Prince) S 11 degrees 58' W 318.31 feet to a point; thence
      leaving the boundary line between the said tract of 231.6 acres and said
      Tract No. 1, and said Tract 89a (Henry Prince), and passing through the
      said tract of 231.6 acres, N 67 degrees 07' W 10.20 feet to a fence post
      on the edge of the said County road and in the northern surface right of
      way boundary line of the Piney Creek branch of the Chesapeake and Ohio
      Railway Company, a common corner of Tract 192 (Henry Prince) and of Tract
      194 (Carper Foundry-Machine Company); thence following the said northern
      surface right of way boundary line, parallel to and 50 feet distant from
      the center line of said railway as now located, curving to the south with
      a radius of 2796.07 feet, through an arc of 420.33 feet, (the chord of the
      arc bearing N 74 degrees 51' W, and being 420.06 feet in length,) to a
      point, a common corner of Tract 194 (Carper Foundry-Machine Company) and
      of Tract 193 (Eliza Ellen Windsor); thence curving to the south with a
      radius of 2796.07 feet, through an arc of 33.17 feet, (the chord of the
      arc bearing N 78 degrees 04' W, and being 33.16 feet in length,) to a
      point; thence curving to the south with a radius of 1960.08 feet, through
      an arc of 27.28 feet, (the chord of the arc bearing N 80 degrees 11' W,
      and being 27.22 feet in length,) to a point, a common corner of Tract 193
      (Eliza Ellen Windsor) and of Tract 190 (Andrew Davis); thence curving to
      the south with a radius of 1960.08 feet, through an arc of 89.43 feet,
      (the chord of the arc bearing N 82 degrees 01' W, and being 89.29 feet in
      length,) to a point on the south side of Big White Stick Creek, a point in
      the boundary line between the said tract of 231.6 acres and said Tract No.
      1, and a common corner of Tract 190 (Andrew Davis) and of Tract 189e
      (Andrew Davis); thence leaving the northern surface right of way boundary
      line of said railway, and following the boundary line between the said
      tract of 231.6 acres and said Tract

                                       18
<PAGE>

      No. 1, up Big White Stick Creek, following the general direction thereof,
      N 40 degrees 22' W 269.96 feet to an iron rail on the north bank of said
      creek; thence N 50 degrees 48' W 180.00 feet to an iron rail on the north
      bank of said creek; thence S 79 degrees 08' W 158.00 feet to an iron rail
      in a wild cherry stump on the south bank of said creek; thence leaving
      said creek, S 58 degrees 28' W 372.60 feet to a stake on the edge of the
      said County road; thence leaving the boundary line between the said tract
      of 231.6 acres and said Tract No. 1, and passing into the said tract of
      231.6 acres, N 41 degrees 04' W 50.80 feet to a stake, a common corner of
      Tract 190 (Andrew Davis) and of Tract 191a (I. C. Prince); thence S 44
      degrees 23' W 209.59 feet to the point of beginning; CONTAINING by
      estimation 240.88 acres, more or less.

      EXCEPTING AND RESERVING, NEVERTHELESS, from and out of the tract or parcel
of surface land last above described, and designated as Tract No. 2, and from
and out of the operation of this indenture of lease,

      FOURTEENTH. -- That certain lot, piece or parcel of surface land situated
in the said County of Raleigh and State of West Virginia, containing by
estimation One (1.00) acre, more or less, and more particularly bounded and
described as follows:

            BEGINNING at a stake on the west edge of the County road leading
      from Mount Tabor to Cabell, a common corner of Tract 192 (Henry Prince)
      and of land of Henry Prince, as the said Tract 192, land of Henry Prince,
      and all numbered and named Tracts hereinafter mentioned and described
      (except those Tracts acquired by the Beaver Coal Company and/or its
      successor the Beaver Coal Corporation since January 19, 1904,) are
      numbered, named and shown on a general map entitled "Map of Tracts of Land
      in Raleigh County, West Virginia, conveyed to the Beaver Coal Company by
      deeds dated January 19, 1904, from Piney Coal Company et al.," attached to
      and forming part of a certain deed dated January 19, 1904, from the White
      Stick Coal Company to the Beaver Coal Company, recorded in the Office of
      the Clerk of the County Court of Raleigh County, West Virginia, in Deed
      Book No. 29, page 1 etc.; said general map being on page 55 of said Deed
      Book No. 29: -- the said beginning corner being also a corner of Tract No.
      2 hereinbefore described and hereby leased; thence following the boundary
      line of Tract 192 (Henry Prince), which is also the boundary line of said
      Tract No. 2, along the western edge of the said County road, S 0 degrees
      05' E 145.48 feet to a stake; thence leaving the common boundary line of
      Tract 192 (Henry Prince) and said Tract No. 2, and the western edge of the
      said County road, and passing through Tract 192 (Henry Prince) and said
      Tract No. 2, S 89 degrees 45' W 299.43 feet to a stake; thence N 0 degrees
      05' W 145.48 feet to a stake in a field, a common corner of Tract 192
      (Henry Prince) and of land of Henry Prince, and being also a corner of
      said Tract No. 2; thence following the boundary line between Tract 192
      (Henry Prince) and the said land of Henry Prince, which is also the
      boundary line of said Tract No. 2, N 89 degrees 45' E 299.43 feet to the
      point of beginning; CONTAINING by estimation 1.00 acre, more or less, and
      being part of Beaver Coal Corporation's Tract 192 (Henry Prince).

      BEING the same lot, piece or parcel of surface land which was conveyed and
released by the said Beaver Coal Company and the said Beckley Coal & Coke
Company to Clarkson Phipps, Harvey Cook and Chester Stanley, Trustees for Mount
Tabor Baptist Church, by deed dated

                                       19
<PAGE>

April 17, 1929, and recorded in the Office of the Clerk of the County Court of
said Raleigh County, in Deed Book No. 104, page 296.

      FIFTEENTH. -- That certain lot, piece or parcel of surface land situated
in the said County of Raleigh and State of West Virginia, containing by
estimation Twenty-six one-hundredths (0.26) of an acre, more or less, and more
particularly bounded and described as follows:

            BEGINNING at a stake, a common corner of Tract 192 (Henry Prince)
      and of the present school lot at Mt. Tabor, as the said Tract 192, the
      present school lot at Mt. Tabor, and all numbered and named Tracts
      hereinafter mentioned and described (except those Tracts acquired by the
      Beaver Coal Company and/or its successor the Beaver Coal Corporation since
      January 19, 1904,) are numbered, named and shown on a general map entitled
      "Map of Tracts of Land in Raleigh County, West Virginia, conveyed to the
      Beaver Coal Company by deeds dated January 19, 1904, from Piney Coal
      Company et al.," attached to and forming part of a certain deed dated
      January 19, 1904, from the White Stick Coal Company to the Beaver Coal
      Company, recorded in the Office of the Clerk of the County Court of
      Raleigh County, West Virginia, in Deed Book No. 29, page 1 etc.; said
      general map being on page 55 of said Deed Book No. 29: -- the said
      beginning point being also a corner of Tract No. 2 hereinbefore described
      and hereby leased; thence passing through said Tract 192 (Henry Prince)
      and said Tract No. 2, N 78 degrees 05' W 50.00 feet to a point; thence N 9
      degrees 52' E 226.81 feet to a point; thence S 81 degrees 57' E 50.00 feet
      to a stake, a common corner of Tract 192 (Henry Prince) and of the said
      present school lot at Mt. Tabor, and being also a corner of said Tract No.
      2; thence following the boundary line between Tract 192 (Henry Prince) and
      the said present school lot at Mt. Tabor, which is also the boundary line
      of said Tract No. 2, S 9 degrees 52' W 230.18 feet to the point of
      beginning; CONTAINING by estimation 0.26 of an acre, more or less, and
      being part of Beaver Coal Corporation's Tract 192 (Henry Prince).

      BEING the same lot, piece or parcel of surface land which was conveyed and
released by the said Beaver Coal Corporation, Lessor herein, and the said
Beckley Coal & Coke Company, to the Board of Education of the County of Raleigh,
West Virginia, by deed dated October 20, 1933, and recorded in the Office of the
Clerk of the County Court of said Raleigh County, in Deed Book No. 125, page 1.

      TRACT NO. 3: -- The surface only of that certain tract or parcel of land
situated in the said County of Raleigh and State of West Virginia, on the waters
of Big White Stick Creek, containing by estimation Ninety-seven one-hundredths
(0.97) of an acre, more or less, and more particularly bounded and described as
follows:

            BEGINNING at a stake in the boundary line of Tract 89 (James H.
      Cook), a common corner of Tract 189 (Andrew Davis), of Tract 189f (Andrew
      Davis) and of Tract 190a (Andrew Davis), as the said Tract 89, Tract 189,
      Tract 189f, Tract 190a, and all numbered and named Tracts hereinafter
      mentioned and described (except those Tracts acquired by the Beaver Coal
      Company and/or its successor the Beaver Coal Corporation since January 19,
      1904,) are numbered, named and shown on a general map entitled "Map of
      Tracts of Land in Raleigh County, West Virginia, conveyed to the Beaver
      Coal Company by deeds dated January 19, 1904, from Piney Coal Company et
      al.," attached

                                       20
<PAGE>

      to and forming part of a certain deed dated January 19, 1904, from the
      White Stick Coal Company to the Beaver Coal Company, recorded in the
      Office of the Clerk of the County Court of Raleigh County, West Virginia,
      in Deed Book No. 29, page 1 etc.; said general map being on page 55 of
      said Deed Book No. 29: -- the said beginning point being also a common
      corner of the said tract of 231.6 acres in which the coal and other
      minerals were conveyed by the said William Prince and wife to the said The
      Crab Orchard Coal & Land Company, by the said deed dated October 25th,
      1901, and recorded as aforesaid in Deed Book "W," at page 143, and of said
      Tract No. 1 above described; thence following the boundary line between
      the said tract of 231.6 acres and said Tract No. 1, N 55 degrees 22' W
      480.20 feet to a stake on the south bank of Big White Stick Creek; thence
      N 40 degrees 22" W 19.92 feet to a point in the southern surface right of
      way boundary line of the said Piney Creek Branch of the Chesapeake and
      Ohio Railway Company, said point being 50 feet, measured radially, from
      the center line of said railway as now located; thence leaving the
      boundary line between the said tract of 231.6 acres and said Tract No. 1,
      and passing into the said tract of 231.6 acres, following the said
      southern surface right of way boundary line, parallel to and 50 feet
      distant from the said center line as now located, curving to the south
      with a radius of 2696.07 feet, through an arc of 445.49 feet, (the chord
      of the arc bearing S 74 degrees 58' E, and being 444.96 feet in length,)
      to a stake; thence leaving the said southern surface right of way boundary
      line, S 7 degrees 10' W 174.00 feet to the point of beginning; CONTAINING
      by estimation 0.97 of an acre, more or less.

      (Most of the lands included in the boundaries of the tracts or parcels of
land above described and designated as Tract No. 1, Tract No. 2 and Tract No. 3
were formerly held by the Beckley Coal & Coke Company as Lessee of the said
Beaver Coal Corporation, Lessor herein, under a certain contract of lease
between the Beaver Coal Company, predecessor in title of the Lessor herein, and
one R. M. Oberteuffer, dated February 25, 1904, and recorded in the Office of
the Clerk of the County Court of Raleigh County, West Virginia, in Deed Book No.
35, page 137, and assigned by the said R. M. Oberteuffer to the said Beckley
Coal & Coke Company, by deed of assignment also dated February 25, 1904, and
recorded in the Office of the Clerk of the County Court of said Raleigh County,
in Deed Book No. 35, page 150, and certain other leases and other instruments
supplemental thereto; and the said Beaver Coal Corporation had covenanted and
agreed to lease to the said Beckley Coal & Coke Company the remainder of the
said lands; and, by deed of assignment dated January 2, 1936, and intended
forthwith to be recorded in the Office of the Clerk of the County Court of said
Raleigh County, the said Beckley Coal & Coke Company, with the consent of the
said Beaver Coal Corporation, expressed by joining in the said deed of
assignment, granted, bargained, sold, conveyed, confirmed, assigned, transferred
and set over unto the said The New River Company, Lessee herein, all the
leasehold estates, titles, interests, property, rights, privileges, claims and
demands, contractual and otherwise, of the said Beckley Coal & Coke Company, in
and to the said lands, together with all buildings, structures, improvements,
developments, fixtures, machinery, equipment, apparatus, appliances and
supplies, and all other appurtenances, thereon or therein, and any and all other
property of the said Beckley Coal & Coke Company, of any and every kind, nature,
or character whatsoever; and by deed of release bearing even date herewith, the
said The New River Company, Lessee herein, has released and surrendered to the
said Beaver Coal Corporation, Lessor herein, all its said leasehold estates,
titles, interests, property, rights, privileges, claims and demands, in
consideration of the execution and delivery of this indenture of lease by the
said Beaver Coal Corporation, as Lessor, to the said The New River Company, as
Lessee.)

                                       21
<PAGE>

      FOR the purpose of more accurately defining the location and boundaries of
the tracts or parcels of land and surface land above described and designated as
Tract No. 1, Tract No. 2 and Tract No. 3, and hereby leased, and of the tracts
or parcels of land and interests in land excepted and reserved therefrom, the
Lessor has attached to this lease a special map of the said tracts or parcels of
land, with the said exceptions noted thereon, entitled "Map of a Tract of
4095.34 Acres, and of Two Tracts or Parcels of Surface Land, Containing
Respectively 240.88 Acres and 0.97 of an Acre, Leased by the Beaver Coal
Corporation to The New River Company, with Certain Exceptions and Reservations,
by Lease Dated the Second Day of January, 1936," which is made part hereof, and
is to be taken and read as part of each of the descriptions hereinbefore set
forth.

      AND the Lessor does hereby grant and give to the Lessee the sole and
exclusive privilege of mining coal and making coke and other products of coal on
the above-described premises during the continuance of this lease, and the
privilege of using so much of the surface of the land and of the stone, sand,
and water thereon as may be necessary for its mining and building purposes, and
making coke and other products of coal on said premises, but for no other
purpose;

      IT BEING UNDERSTOOD AND AGREED, HOWEVER, (1) That the Lessor shall and
will not make any lease or use of the surface except for farming purposes,
churches, schools, and such buildings as its interest may call for or suggest
(the sale of merchandise being excepted), the cutting, manufacturing, and
shipping of timber, and the proper handling of such other material and products
as may be found or produced thereon; and (2) that the Lessor, its successors or
assigns, shall not, in the use of the surface of the lands hereby leased or in
the exercise of the rights hereby reserved with regard thereto, sell or
knowingly permit the sale or introduction of any intoxicating liquors thereon:
PROVIDED, ALWAYS, That the Lessee shall at all times have the right to take for
its use so much of any part of the surface now owned by the Lessor as may be
needed for the proper conduct of its mining and coke operations, and so much of
the timber as may be required for such purposes; it being understood and agreed
that the Lessor, its agents or assigns, shall at all times during the operation
of this lease have the right to cut and remove any and all timber the right to
cut and use which is not hereby specifically granted to the Lessee.

      BUT IT IS EXPRESSLY UNDERSTOOD AND AGREED, That the rights and privileges
herein granted are and shall be construed as limited to such rights and
privileges only as the Lessor, as owner or grantor, possesses and has the lawful
right to grant, and that where the Lessor owns the mineral right or the coal
only, this lease shall not be construed as conveying or attempting to convey to
the Lessee any rights and privileges in the surface, or timber rights, or any
rights other than such as are granted to the Lessor in and by the deeds under
which it claims the mineral right or the coal.

      THIS INDENTURE OF LEASE, HOWEVER, is subject to the following terms and
conditions:

      FIRST. -- WHEREAS, there is already a mining plant or operation on the
tract or parcel of land first above described and designated as Tract No. 1, and
hereby leased; and there are certain other mining plants or operations in active
operation on adjacent lands, formerly held under lease and operated by the
Cranberry Fuel Company and the Mabscott Coal & Coke Company respectively, whose
leasehold and other rights have been assigned to the Lessee herein; and in and
by Article Fourteenth of this indenture of lease, the Lessor herein has granted
to the Lessee

                                       22
<PAGE>

herein its license and consent that the Lessee herein may mine and remove coal
from the lands hereby leased by and through the said other mining plants or
operations, and ship the said coal and the coke manufactured therefrom from the
said other mining plants or operations, and conduct its mining operations on and
in the lands hereby leased and the said adjacent leaseholds formerly of the said
Cranberry Fuel Company and the said Mabscott Coal & Coke Company as one
operation:

      NOW, THEREFORE, IT IS COVENANTED AND AGREED by and between the Lessor and
the Lessee herein, as follows, to wit:

      (1) That the Lessee shall not be required to erect another mining plant or
operation on the lands hereby leased, but that the said lands may be mined and
operated from the mining plant or operation now on the said lands, and from the
said mining plants or operations on the said adjacent lands.

      (2) That nothing contained in this Article shall or shall be construed to
prevent the Lessee from erecting other mining plants or operations upon the
lands hereby leased, or from occupying the surface of the said lands with such
buildings or other structures as may be necessary or proper in the operation of
the mining plant or operation now on the said lands, or of such other mining
plants or operations as the Lessee may hereafter erect thereon.

      SECOND. -- That at all times during the continuance of this lease the
mining operations on or in the leased premises, whether carried on from the
mining plants or operations thereon, or from the mining plants or operations on
the former leaseholds of the said Cranberry Fuel Company and/or the said
Mabscott Coal & Coke Company, assigned to the Lessee as aforesaid, shall be
energetically opened, developed and kept up, in order that, so long as fair
prices are obtainable, the capacity of said operations for shipment shall be
sufficient to meet the demands of the market to the fullest extent therefrom,
and to use the cars, facilities, and transportation which are offered or
provided by any railroad or railway company for such shipments therefrom, to the
extent that the same can reasonably be done from the property hereby leased.

      THIRD. -- The Lessee shall pay to the Lessor, its successors and assigns,
during the continuance of this lease, as rent, the following royalties; Ten
cents for each and every ton of Two thousand (2000) pounds of coal mined, dug,
or carried away from the lands hereinabove described, or used on the said lands
for any other purpose than operating necessary mining and coking machinery; and
Fifteen cents per ton for each and every ton of Two thousand (2000) pounds of
coke made from coal from the said lands.

      The above rents to be paid and accounted for quarterly on the twentieth
days of January, April, July, and October of each year for the three months
immediately preceding the said months, respectively, each three months by
themselves.

      The Lessee covenants and agrees to furnish to the Lessor, its agents or
attorneys, at or before the payment of the said rents, the certificate of the
weighmaster or the proper officer of the railroad or railway company over whose
railroad the same is shipped, of the quantity of coal and coke taken from the
said premises and passed over the said railroad during the preceding quarter;
and if any coal or coke shall be taken away from or used upon the said premises
and not weighed upon the scales of any railroad or railway company, the quantity
shall be ascertained in a manner satisfactory to the Lessor and an account shall
be rendered of the same. The Lessee

                                       23
<PAGE>

covenants and agrees to conform to any and all other reasonable requirements of
the Lessor to insure the accurate ascertainment of the weight of all coal taken
from the premises, it being understood that no royalty shall be charged on coal
used in running machinery connected with the mining of coal and manufacture of
coke on the premises.

      The Lessee agrees and binds itself to pay to the Lessor, for each year
during the continuance of this lease, an amount equal to the royalties which
would accrue on one hundred and twenty-five thousand tons of coal annually as a
minimum rental for amount of royalties under this lease, whether the quantity of
coal mined and coke manufactured shall produce that amount of rental or not. But
the Lessee, however, shall have the privilege of mining the next succeeding year
free from royalty a sufficient amount of coal above the rental of the year to
reimburse itself for the deficiency in the preceding year, but no payments in
excess of the minimum of any one year shall be accredited against a deficiency
in any subsequent year.

      IT IS DISTINCTLY UNDERSTOOD AND AGREED, HOWEVER, that should the failure
of the Lessee to ship the required amount of coal or coke to realize the minimum
rental or amount of royalties have been caused by the act, failure, or inability
of the Chesapeake and Ohio Railway Company or any other railroad or railway
company reasonably to furnish cars, facilities, or transportation, whether
arising from the obligation of the said railroad or railway companies to other
shippers or from strikes or from any other cause, or shall have been caused by
illegal discrimination on the part of any of the said railroad or railway
companies, or shall have been caused by a strike among the employees of the
Lessee, or from any other cause not within the control of the Lessee, the Lessee
shall be released from a proportionate part of such minimum rental or amount of
royalties, but the burden of proof thereof shall be on the Lessee. The said
equitable proportion, if it cannot be agreed upon, to be determined by
arbitration in the manner provided in Article Twenty-third hereof.

      IT IS FURTHER UNDERSTOOD AND AGREED, That the tonnage royalties on coal
mined from the lands above described and hereby leased, and shipped from the
tipples at the plants on the former leaseholds of the said Cranberry Fuel
Company and the said Mabscott Coal & Coke Company, and the coke made from coal
so mined, and shipped from the said tipples, shall be treated as if mined by and
through, manufactured at and shipped from the plant or plants on the lands
hereby leased, in determining whether in any year there has been a deficiency in
the minimum annual rental payable by the Lessee under this Article.

      FOURTH. -- And it is further agreed that the Lessee shall keep books of
account for the mining and shipping of coal and for the making and shipping of
coke and other products of coal, from each tipple from which the said coal or
coke, or other product of coal, may be shipped; and said books shall be open for
the inspection of the Lessor, its agents or attorneys, for the purpose of
comparing and verifying the accounts rendered; and that the Lessee shall furnish
to the Lessor daily separate written reports of (1) the coal mined from Tract
No. 1 of the lands hereby leased, and from all other lands, respectively, and
loaded into railroad cars at the tipple of the Lessee, and at each of the
tipples on the former leaseholds of the said Cranberry Fuel Company and the said
Mabscott Coal & Coke Company, respectively, and (2) the number of railroad cars
so loaded at each of said plants, their initials, numbers and capacities; each
such report to be on forms approved by the superintendent or managing officer of
the Lessor.

                                       24
<PAGE>

      The Lessee shall also furnish to the Lessor on each day when shipments of
coke or other products of coal are made from each said plant, a separate report
giving similar information as to such shipments, on forms similarly approved.

      If the Lessee shall erect another mining plant or operation upon the lands
hereby leased, the Lessee shall, as soon as the same is in active operation,
furnish the Lessor a daily written report of all shipments of coal mined from
Tract No. 1 of the lands hereby leased, and of all shipments of coke and other
products of coal manufactured from coal so mined, loaded into railroad cars at
the tipple at the said plant, giving the car numbers and their capacities.

      FIFTH. -- The Lessee hereby covenants that it will mine the coal from the
No. 3 and No. 5 veins or seams of coal (now commonly known and designated as the
Sewell and Beckley veins or seams of coal), and shall also mine the coal from
any and all other veins or seams of coal found on the premises, the mining of
the coal from each of said veins or seams to be carried on in such a way as to
recover the greatest possible amount of coal from each and all of said veins or
seams of coal and in such manner that the mining on any one of the said veins or
seams shall not injure or destroy any other vein or seam of coal, or prevent the
convenient and proper mining thereof. All the agreements, terms, conditions and
stipulations, rents and royalties contained and retained herein shall refer to
all of the said veins or seams of coal and the coal taken therefrom and the coke
manufactured from said coal, but the Lessee shall not be obligated to mine any
vein or seam of coal which is not commercially valuable. If the Lessee shall
fail to mine any coal for the reason that it is not commercially valuable, the
Lessor or other lessees shall have the right to mine the same without
interference or hindrance on the part of the said Lessee, but in such a manner
as not to interfere with the operations of the said Lessee hereunder.

      The Lessee also hereby covenants that it will work and mine the coal in
the most effectual, workmanlike and proper manner, according to the most
approved and suitable methods of modern mining, complying in every respect with
the laws now existing or hereafter passed by the State of West Virginia, or of
the United States, regulating the proper working of mines, by driving tunnels,
drifts, gangways, and other necessary and appropriate openings to and in the
aforesaid veins or seams of coal on the said land, with openings for airways or
ventilating passages for keeping the mines in good working order, the said
airways to be of sufficient size to contain an area of at least ten feet in
width by the mining thickness of vein the whole distance, and the said gangways,
drifts, and tunnels to be made on a suitable grade, without any unnecessary loss
of level, for the proper drainage of the water and for hauling the coal by
railroad out of the said mines. The said drifts and gangways shall be not less
than four feet in height in the clear above the top of the railroads in the said
mines, and not less than ten feet wide between the timbers at the bottom (which
timbers are to be set with a proper slope), and with a sufficient gutter on the
lower or dip side to convey away the water and keep the railroads dry: PROVIDED,
That the size of the said vein be such as will in any way reasonably admit a
gangway of the above-named size.

      SIXTH. -- The Lessee further covenants that it will drive the regular size
of gangways and airways through such portions of said veins or seams of coal as
may prove faulty or may not yield merchantable coal, or with the approval in
writing of the superintendent or managing officer of the Lessor around the same,
and will leave no more available coal in mining openings or workings than may be
necessary and proper for their full security, but will leave pillars and

                                       25
<PAGE>

supports of coal along the sides of the gangways and elsewhere as the
superintendent or managing officer of the Lessor shall consider necessary for
such security.

      SEVENTH. -- If the Lessee, on abandoning any room, working, or other
opening, shall leave any available coal standing which, in the opinion of the
superintendent or managing officer of the Lessor, is not necessary to be left
for the proper security of the works, the said officer shall give the Lessee
notice thereof, with directions to remove the same; and if the Lessee shall
refuse to mine and take away the said coal according to the directions of the
said officer, for the space of one week after such notice, then the Lessee shall
forthwith submit the question whether the coal left is or is not necessary, as
aforesaid, to arbitration as in Article Twenty-third hereof provided, and the
arbitrators shall determine and report whether any, and if any, how much,
available and merchantable coal has been left standing, which ought to have been
mined and taken away; and unless the Lessee shall immediately mine the said
coal, it shall pay to the Lessor within two weeks after such report a sum equal
to the royalty for every ton of Two thousand (2000) pounds of available and
merchantable coal left standing, which, according to the report of the said
arbitrators, or a majority of them, ought to have been mined and taken away.

      EIGHTH. -- The Lessee further covenants that the Lessor, its
superintendent or managing officer, agents, engineers, or other persons on their
behalf, with their assistants, shall have the right to enter at all times the
said mines and all other works, whether below or on the surface of the ground,
in order to inspect, examine, survey, or measure the same or any part thereof,
or for any other lawful purpose, and for these purposes to use freely the means
of access to the said mines and works without hindrance or molestation.

      NINTH. -- It is further agreed that the Lessee shall at all times employ a
competent mining engineer, whose duty it shall be to keep up mine surveys and
give directions and courses of entries, rooms, and air-courses, and plat the
same on a scale of one hundred feet to an inch, and send a map to the
superintendent or managing officer of the Lessor on or before the twentieth days
of January and July of all mine work done during the six preceding calendar
months, in the area tributary to each of the plants of the Lessee from which
coal mined from the lands hereby leased is shipped. If practicable, two or more
such areas may be shown on one map. And the superintendent or managing officer
of the Lessor shall have the privilege of keeping the said map or maps long
enough to make the necessary copies, and shall at all times have access to the
maps, plans, tracings, &c., of the Lessee, and may take therefrom copies of such
portions as he may desire.

      In case the Less shall drill boreholes on or in the lands hereby leased,
or any lands adjacent thereto, for the purpose of testing any vein or seam of
coal in the lands hereby leased, or for the purpose of ascertaining whether
there are in the lands hereby leased any other veins or seams of coal of minable
thickness and merchantable value other than the said No. 3 and No. 5 veins or
seams of coal, or for any other purpose, the Lessee shall furnish to the Lessor
the logs of all such boreholes, as the drilling proceeds, and shall permit the
superintendent, engineer, or other authorized representative of the Lessor to
inspect the cores of all such boreholes, as the work proceeds, before they are
broken up, and to take notes of the information contained therein. And to effect
the purposes of this paragraph, the Lessee shall give the Lessor ten days'
written notice of its intention to drill any such borehole, and of the location
thereof, and of the time when drilling will begin, and shall also give the
Lessor daily written notice of the progress of the

                                       26
<PAGE>

drilling, and shall preserve the cores until the superintendent or managing
officer of the Lessor, or its agents, or employees, shall have had a reasonable
time to inspect them, and take notes thereof.

      TENTH. -- The Lessee agrees to pay all taxes that may be assessed against
the premises hereby leased and the improvements thereon, or upon the coal mined
or coke manufactured during the continuance of this lease, and also all other
assessments by court or operation of law whatsoever, when and as the same shall
become due.

      ELEVENTH. -- In any question of damage to the surface of the lands hereby
leased, where the mineral right only is owned by the Lessor, the Lessee assumes
all responsibility without claim upon the Lessor except to its assistance and
support in the proper defense of all mining rights and privileges covered by its
titles, the Lessee bearing all costs and expenses, legal or otherwise, connected
therewith.

      TWELFTH. -- It is further agreed that all rents and royalties herein
agreed to be paid shall be deemed and treated as rents reserved upon contract by
the Lessor, who reserves to itself all rights and remedies of landlords under
all present and future laws of the State of Virginia for the collection of the
same; and if any of the rents and royalties shall remain unpaid for fifteen days
after the same become due and payable, as before provided, the Lessor shall have
the right to enforce the payment of the same by the remedies given by law to
landlords against delinquent tenants for non-payment of rent; and it is further
agreed that not only the personal property shall be subject to distress as
contemplated and directed by law, but also the Lessor may enter upon the
leasehold and sell the same or any part thereof, together with the improvements
thereon, for the default in the payment of the rents and royalties as aforesaid.

      At any sale of this lease or leasehold, or any part thereof, under this
clause, the Lessor shall have the right to become the purchaser thereof, free
from any and all claims of the Lessee.

      The Lessor shall also have the right of re-entry by reason of any rent or
royalty being in arrear, or by reason of any breach of any covenant herein, in
the same manner and with the same effect as is now or hereafter may be provided
under the laws of West Virginia.

      THIRTEENTH. -- The Lessee further covenants and agrees that it will not
mortgage, nor will it assign, convey, lease, underlet, sublet, or set over any
of its estate, interest, or term, in whole or in part, in the premises hereby
leased or their appurtenances, or any part thereof, to any person or persons
whomsoever, or corporation whatsoever, for any time whatsoever, without the
license or consent of the Lessor, its successors and assigns, in writing; and
any transfer by operation or process of law shall be deemed an assignment by the
Lessee within the meaning of this provision and a violation of this covenant.

      The Lessor, however, shall have the right at its option to accept or
approve any assignment, conveyance, lease, or subletting in violation of this
covenant, but should the Lessor, upon receiving notice of any such breach or
violation of this covenant, not approve the same, the Lessor may, by notice in
writing, declare a forfeiture of this lease, and thereupon may exercise its
right of re-entry and repossession of its estate.

      FOURTEENTH. -- WHEREAS, Notwithstanding Articles Thirteenth and Fifteenth
of the above-recited contract of lease dated February 25, 1904, the said Beckley
Coal & Coke Company and

                                       27
<PAGE>

the Lessee herein, with the consent of the said Beaver Coal Company and the
Lessor herein, have permitted the Cranberry Fuel Company and the Mabscott Coal &
Coke Company, both corporations incorporated, organized and existing under and
by virtue of the laws of the State of West Virginia, and operators of coal mines
in lands held by them under lease, adjacent to the lands above described and
hereby leased, to mine and remove coal from those portions of the lands above
described and hereby leased to which the lands so leased to and operated by the
said Cranberry Fuel Company and the said Mabscott Coal & Coke Company are
adjacent, from their plants or operations on said adjacent lands, -- the plants
of the said Cranberry Fuel Company being located at Sprague, West Virginia,
Skelton, West Virginia, and Cranberry, West Virginia, and the plant of the said
Mabscott Coal & Coke Company being located at Mabscott, West Virginia, -- and to
ship the coal so mined and the coke made therefrom from the tipples at the said
plants; paying to the said Beaver Coal Company and to the Lessor herein the same
tonnage royalties on the said coal and coke as were payable by the said Beckley
Coal & Coke Company under the terms of the leases hereinbefore recited:

      AND WHEREAS, The leaseholds and the leasehold rights of the said Cranberry
Fuel Company and the said Mabscott Coal & Coke Company have been assigned to the
Lessee herein; and in and by the above-recited deed of assignment between the
said Beckley Coal & Coke Company, the said The New River Company and the Lessor
herein, dated January 2, 1936, the Lessor herein granted its license and consent
in writing to the said The New River Company, as assignee of the said Cranberry
Fuel Company and of the said Mabscott Coal & Coke Company, to continue to mine,
as aforesaid, the coal in the lands above described and hereby leased, and to
ship the said coal and the coke made therefrom, as aforesaid, from the tipples
at said plants on adjacent lands, with certain rights and privileges, and under
and subject to certain conditions set forth at large in the said deed of
assignment; and the Lessee herein desires to continue mining coal in the lands
hereby leased from the said mining plants or operations on the said adjacent
lands, and has requested the Lessor herein to grant its license and consent in
writing to the continuance of the said mining, and the Lessor is willing to
grant the said request:

      NOW, THEREFORE, The Lessor herein, in accordance with and as required by
the preceding Article Thirteenth of this indenture of lease, does hereby grant
to the Lessee its license and consent in writing, that the Lessee, as assignee
of the said Cranberry Fuel Company and the said Mabscott Coal & Coke Company,
may continue to extend the mine workings tributary to the aforesaid plants at
Sprague, Skelton, Cranberry and Mabscott, into the lands above described and
hereby leased, and may ship the coal mined from the said workings, and coke
manufactured from the coal so mined, from the tipples at the said plants, and
also may use the entries, haulways, airways, drainage ways and other mine
workings in the lands hereby leased for the transportation of coal mined from
the said adjacent lands, and of mine supplies, material, equipment and
employees, to and from the tipples at the plants located as aforesaid at
Sprague, Skelton, Cranberry and Mabscott, and for the purpose of ventilating and
draining the mine workings in the said adjacent lands, without the payment of
any tolls or other charges therefor; and, subject to the provisions of this
lease, may conduct its mining operations in the lands hereby leased, and in the
former leaseholds of the Cranberry Fuel Company and the Mabscott Coal & Coke
Company, as one operation; but only and solely upon the following conditions, a
breach of any of which shall render the license and consent hereby granted null
and void, and shall reinstate the said Article Thirteenth of this indenture of
lease in full force and effect in all respects, and make the said operations of
the Lessee, as assignee of the said Cranberry Fuel Company and the said

                                       28
<PAGE>

Mabscott Coal & Coke Company, in the lands hereby leased, subject to the
prohibitions of the said Article; which said conditions are as follows:

      (1) That the operations of the Lessee, as assignee of the said Cranberry
Fuel Company and the said Mabscott Coal & Coke Company, in the lands above
described and hereby leased, shall be subject to the supervision and control of
the superintendent or managing officer of the Lessor, as fully and to the same
extent as the operations of the Lessee under this lease.

      (2) That in the conduct of its operations in the lands above described and
hereby leased, the Lessee, as assignee of the said Cranberry Fuel Company and
the said Mabscott Coal & Coke Company, shall comply with and be subject to all
the provisions of this lease, as fully and to the same extent as in its
operations under this lease.

      (3) That the Lessee shall pay to the Lessor, on all coal mined from the
lands hereby leased, but shipped from the tipples of the Lessee at Sprague,
Skelton, Cranberry and Mabscott, the tonnage royalties provided in and by
Article Third of this indenture of lease.

      (4) That the license and consent hereby granted shall not and shall not be
construed as a waiver of any of the terms and provisions of Articles Thirteenth
and Seventeenth of this lease, otherwise or further than is expressly set forth
in this Article; but that in all respects, other than as to the operations of
the Lessee as assignee of the said Cranberry Fuel Company and the said Mabscott
Coal & Coke Company, said Articles Thirteenth and Seventeenth of this lease
shall be and remain in full force and effect, as if the said license and consent
had not been granted.

      FIFTEENTH. -- The Lessee may, subject to the provisions of the Statutes of
West Virginia, and to the supervision and control of the State Department of
Mines and of the superintendent or managing officer of the Lessor, to the extent
hereinbefore provided, (1) mine and remove the coal from those portions of the
lands above described and hereby leased which are adjacent to the former
leaseholds of the said Cranberry Fuel Company and the said Mabscott Coal & Coke
Company, assigned to the Lessee as aforesaid, up to the common boundary lines
between said Lands and the said former leaseholds of the said Cranberry Fuel
Company and the said Mabscott Coal & Coke Company, and (2) mine and remove all
of the coal from the said former leaseholds of the said Cranberry Fuel Company
and the said Mabscott Coal & Coke Company, up to the said common boundary lines.

      SIXTEENTH. -- At the termination of this lease otherwise than by
forfeiture, all the improvements belonging to the Lessee upon the surface of the
premises hereby leased shall be valued by two disinterested persons, one to be
chosen by each of the parties hereto, and in case of disagreement, these two to
choose a third, and the three thus chosen shall value the said improvements; and
the Lessor shall have the privilege of purchasing said improvements at such
valuation within thirty days after notice of such valuation. If the Lessor shall
not within said thirty days accept said improvements at such valuation, the
Lessee shall have the privilege of removing the same from the leased premises
within ninety days from the expiration of said thirty days.

                                       29
<PAGE>

      SEVENTEENTH. -- No coal other than that mined from the property hereby
leased (except as is provided in Article Fourteenth hereof) shall be moved over
or through, or shipped therefrom without the Lessor's written consent.

      EIGHTEENTH. -- The Lessee shall not sell or knowingly permit the sale or
introduction of any intoxicating liquors upon the lands hereby leased.

      NINETEENTH. -- This lease is to be subject at all times to such rights of
way, and modifications thereof, as may be necessary in the construction of
railroads or tramways which may be needed in the development of other coal and
timber lands belonging to the Lessor.

      TWENTIETH. -- It is hereby expressly agreed that all of the preceding
covenants and agreements and stipulations to be kept and performed by the Lessee
shall inure to the benefit of the Lessor, its successors and assigns, and that
the Lessor, its successors and assigns, may by proper action, either at law or
in equity, enforce any and all of said covenants and agreements on the part of
the Lessee, and recover damages for the breach thereof, with or without
determining this indenture or the lease hereby made.

      TWENTY-FIRST. -- The Lessee shall have the right at the expiration of the
said thirty years to renew this lease with the terms, stipulations, and
conditions as above, provided the Lessee shall have complied with or performed
all of the conditions, covenants, agreements, and stipulations to be by it
complied with or performed.

      TWENTY-SECOND. -- The Lessee further covenants and agrees that in case of
failure on its part to comply with the provisions of Article Seventh hereof, any
coal lost thereby shall be paid for in the same manner as though actually mined.

      TWENTY-THIRD. -- Should any question arise between the parties hereto as
to the performance by the Lessee of the First, Second, Third, Fifth, Sixth,
Seventh, Ninth, Fourteenth, Nineteenth and Twenty-second Articles hereof, or of
any of them, or of any covenant contained in said Articles, or any of them,
every such question shall be determined by arbitration in the manner provided
for in this Article; and the Lessee hereby covenants with the Lessor to comply
with and carry out promptly the decision or award of any and every arbitration
appointed under the said or any other Articles of this lease. Questions in
dispute to be determined by arbitration hereunder shall be submitted to two
arbitrators, one of whom shall be appointed by each of the parties hereto
respectively, and in case the two thus chosen cannot agree, they shall appoint a
third; and in case either of the parties hereto shall neglect to nominate an
arbitrator for the space of ten days after receiving notice from the other party
to nominate an arbitrator, then the other party shall nominate two, and the two
thus appointed shall appoint a third, and the decisions and awards of such
arbitrators, or any two of them, shall be final and conclusive and binding upon
the parties hereto. And the said arbitrators, or any two of them, may, in their
decision or award, as part thereof, decide by whom the costs of such arbitration
shall be borne and paid, and the amounts of such costs.

      TWENTY-FOURTH. -- Nothing herein contained shall be or deemed to be, on
the part of the Lessor, a covenant for title, express or implied, except to this
extent only, that the Lessor will warrant specially the property hereby leased
for the term hereby created. BUT IT IS UNDERSTOOD

                                       30
<PAGE>

AND AGREED that the Lessor shall and will assist and support in the defense of
the title to the property hereby demised and (subject to the provisions of
Article Eleventh hereof) in the defense of the mining rights and privileges of
the Lessee hereunder.

      IN WITNESS WHEREOF, The parties hereto have hereunto caused this indenture
of lease, in two uniform originals, to be signed in their respective corporate
names by their respective Presidents or Vice-Presidents, and the respective
corporate seals of said corporations, attested by the signatures of their
respective Secretaries or Assistant Secretaries, to be hereto affixed, the day
and year first above written; but with delivery thereof made, and this
instrument going into effect on the 30th day of June, 1936, immediately after
the delivery made on said date prior to the delivery of this instrument of an
assignment to said The New River Company by Beckley Coal & Coke Company in
dissolution liquidation of a prior lease of the premises held by said Beckley
Coal & Coke Company and concurrently with the delivery of a release by The New
River Company of its rights as such assignee under said prior lease.

                                                 Beaver Coal Corporation,
[Beaver Coal Corporation                         By
     Corporate Seal                                 E. T. STOTESBURY
          1931                                                 President.
       Delaware]
                            Attest:
                                   C. T. BACH
                                                    Secretary.

                                                 THE NEW RIVER COMPANY,
[The New River Company                           By
         1906]                                      ROBERT H. GROSS.
                                                               Vice President.
                            Attest:
                                   WILLIAM S. ROONEY
                                                Assistant Secretary.

      In the original lease here follows a map entitled:

      "Map of a Tract of 4095.34 Acres, and of Two Tracts or Parcels of Surface
Land, Containing Respectively 240.88 Acres and 0.97 of an Acre, Leased by the
Beaver Coal Corporation to The New River Company, with Certain Exceptions and
Reservations, by Lease Dated the Second day of January, 1936."

                                       31
<PAGE>

STATE OF PENNSYLVANIA,  ) TO WIT:
COUNTY OF PHILADELPHIA, )

      I, Read Rocap, a Notary Public of said County of Philadelphia, in and for
the State and County aforesaid, do certify that E. T. Stotesbury, President of
the Beaver Coal Corporation, who signed the writing above, bearing date the
Second day of January, 1936, for said Beaver Coal Corporation, has this day in
my said County, before me, acknowledged the said writing to be the act and deed
of said corporation.

      Given under my hand and official seal, this Ninth day of June, 1936.

 [Read Rocap                                   READ ROCAP
Notary Public,                                                    Notary Public.
 Philada. Pa.]                            My commission expires March 18, 1937.

                                       32
<PAGE>

STATE OF MASSACHUSETTS, ) TO WIT:
COUNTY OF SUFFOLK,      )

      I, Addison C. Burnham, a Notary Public of said County of Suffolk, in and
for the State and County aforesaid, do certify that Robert H. Gross, Vice
President of The New River Company, who signed the writing above, bearing date
the Second day of January, 1936, for said The New River Company, has this day in
my said County, before me, acknowledged the said writing to be the act and deed
of said corporation.

      Given under my hand and official seal, this 30th day of June, 1936.

[Addison C. Burnham                         ADDISON C. BURNHAM
   Commonwealth                                                   Notary Public.
     U. S. A.                               My commission expires July 29, 1938.
   Massachusetts
  Notary Public]

            OFFICE OF THE CLERK OF THE COUNTY COURT OF RALEIGH COUNTY, WEST
      VIRGINIA, JULY 30, 1936.

      The foregoing instrument of writing, together with the certificates of
acknowledgment thereon, was this day presented in said office and admitted to
record.

                                                           HARRY ANDERSON,
                                                                          Clerk.

      Recorded in Lease Record No. 8, page 163.

                                       33
<PAGE>

                               AMENDMENT OF LEASES

      THIS IS AN AMENDMENT OF LEASES, dated and effective as of August 1, 1975,
although executed by the parties at a later date, by and between BEAVER COAL
COMPANY, LIMITED, a limited partnership, hereinafter sometimes called the
"Lessor", and WESTMORELAND COAL COMPANY, a Delaware corporation, hereinafter
sometimes called the "Lessee".

                                   BACKGROUND

      A. By Indenture of Lease dated June 25, 1908, which is of record in the
Office of the Clerk of the County Commission of Raleigh County, West Virginia,
in Deed Book No. 41, at page 263, Beaver Coal Company, a corporation, demised,
leased and let to New River Coal and Coke Company, a corporation, for coal
mining purposes a certain parcel of land as therein described, which Indenture
of Lease has since been renewed, supplemented and modified and, as so renewed,
supplemented and modified, is hereinafter referred to as "Tams Lease".

      B. By Indenture of Lease dated August 14, 1908, which is of record in said
Clerk's Office in Deed Book No. 41, at page 84, said Beaver Coal Company
demised, leased and let to MacAlpin Coal Company, a corporation, for coal mining
purposes a certain parcel of land as therein described, which Indenture of Lease
has since been renewed, supplemented and modified and, as so renewed,
supplemented and modified, is hereinafter referred to as "MacAlpin Lease".

      C. By Indenture of Lease dated January 2, 1936, which is of record in said
Clerk's Office in Lease Book No. 8 at page 163, Beaver Coal Corporation, a
corporation, demised leased and let to The New River Company, a corporation, for
the purpose of mining coal and making of coke and other products of coal certain
lands as therein described, which said Indenture of Lease has since been
renewed, supplemented and modified and, as so renewed, supplemented and
modified, is hereinafter referred to as "New River-Beaver Lease."

      D. Lessor herein is the successor in title to Beaver Coal Company and to
Beaver Coal Corporation.

      E. Lessee herein is the successor in title, as to the leases, to New River
Coal and Coke Company, to MacAlpin Coal Company and to The New River Company,
all by virtue of various conveyances, transfers, assignments and mergers.

      F. Beaver Coal Company, Limited is now the Lessor and Westmoreland Coal
Company is now the Lessee in the Tams Lease, MacAlpin Lease and New River-Beaver
Lease, hereinafter collectively referred to as the "Three Leases", and the
parties hereto desire further to supplement the terms and provisions of each of
the Three Leases in the manner and form as hereinafter set forth so as to modify
certain terms thereof.

                                   AGREEMENTS

      Intending to be legally bound and in consideration of the several
covenants, promises and agreements of the parties herein contained, the parties
hereto agree that the Tams Lease, the MacAlpin Lease and the New River-Beaver
Lease, as the same now are, are each further

<PAGE>

amended and supplemented effective August 1, 1975 in accordance with the
following agreements of the parties hereto:

      1. SEAMS OF COAL SUBJECT TO LEASE. Each of the Three Leases is hereby
amended to provide that all rights granted Lessee to mine coal, bone, middlings,
gas and any other products with respect to which Lessee has rights under each
such lease or any of them ("gas" being defined in paragraph 2 below and all such
products being hereinafter called "Leased Minerals"), including without
limitation the right to mine by strip mining and auger mining methods, and all
undertakings of Lessee so to do, shall be applicable to all seams of coal in the
Leased Premises lying above and including the No. 3 vein or seam of coal,
sometimes known and designated as the Pocahontas No. 3 vein or seam, as well as
each seam or vein of coal beneath said No. 3 vein or seam which may be close
enough to such No. 3 vein or seam so that the said vein or seam beneath such No.
3 vein or seam can or should, in accordance with approved and suitable methods
of modern mining, be mined with such No. 3 vein or seam as a single "full seam"
operation. The term "Leased Premises" wherever it appears herein shall be
construed to mean, with respect to each of the Three Leases, the premises leased
by each such lease. Lessee shall have no further rights in or obligations with
respect to Leased Minerals in seams or veins other than those seams or veins set
forth in this paragraph. Lessee's obligations shall extend only to "mineable and
merchantable coal" as defined in paragraph 5 below, and shall be subject to the
limitations set forth in the Three Leases. Lessor, as the owner of the Leased
Premises, retains all rights not granted to Lessee in the Three Leases as hereby
amended, including (i) the right to explore for and mine (directly or through
other lessees or assignees) coal in veins or seams lying below the No. 3 vein or
seam except as above described and (ii) following notice from Lessee to Lessor
pursuant to paragraph 5 below of the exhaustion of coal under any of the Three
Leases and the consequent release of Lessee from further obligations to mine
coal thereunder, the right to explore for and mine such coal as may in fact
remain. Subject to and in accordance with the provisions of paragraph 12 hereof,
Lessor shall be entitled to request and obtain such rights with respect to the
surface and other portions of the Leased Premises as it may need in order to
explore for and mine and ship such coal, provided that such rights do not
unreasonably interfere with Lessee's existing or contemplated mining operations
or, after the exhaustion of the coal, Lessee's remaining rights to occupy and
use the Leased Premises.

      2. GAS RIGHTS GRANTED. Each of the Three Leases is hereby amended and
supplemented to provide that Lessor grants to Lessee the right to take from the
Leased Premises and produce gas found in any of the seams of coal mined or to be
mined by Lessee in the Leased Premises, and to store such gas upon or under the
Leased Premises and remove such gas from the Leased Premises; together with such
rights of way and servitudes on, over and through the Leased Premises as may be
incident and appropriate to the production and marketing of such gas by methods
acceptable in the industry; except, however, that this further lease for gas
purposes is made under and subject to any rights which Lessor or its
predecessors in title may have granted to third parties by written instrument
prior to the effective date of this Amendment of Leases. Nothing herein
contained shall grant to Lessee any right to take from the Leased Premises or
produce gas except that which is found in seams of coal mined under any of the
Three Leases.

<PAGE>

      3. ROYALTY. Lessee's sole obligation to pay rent or royalties under each
of the Three Leases shall be and hereby is limited to the obligations set forth
below in paragraph 9 and to the following:

         (a) On or before the twenty-fifth (25th) day of each calendar month,
Lessee shall pay to Lessor a production royalty in an amount equal to three and
one-quarter percent (3 1/4%) of the Selling Price, as hereinafter defined, of
all Leased Minerals (including gas) mined at any time from the Leased Premises
and sold during the immediately preceding calendar month; provided, however,
that the royalty shall be four percent (4%) of the Selling Price of all
metallurgical and steam coal mined by strip-mining or auger-mining methods from
(i) the Beckley seam of coal and (ii) the Welch or Raleigh seam of coal which is
located between the Sewell seam and the Beckley seam, under the Tams and
MacAlpin Leases (but this higher royalty shall apply only to those coals in
those seams under those leases and not other Leased Minerals mined in any
fashion under any of the Three Leases). Sales by Lessee, of the type currently
being made by Lessee, of refuse materials not sold or used for fuel, such as red
dog, shall not be deemed sales of Leased Minerals under this paragraph. The term
"Selling Price", whenever it appears herein, shall mean the aggregate gross
price paid by each purchaser to Lessee (without deduction for commissions or
costs of sale), provided that if the terms of any sales contract or arrangement
between Lessee and any purchaser require the payment by such purchaser to Lessee
(as a part of the purchase price) of amounts equal to any one or more of the
charges set forth below, there shall be deducted (for the purpose of determining
the Selling Price on which the percentage royalty is computed) from the gross
price paid by such purchaser the sum of the following amounts: (i) the West
Virginia retail sales tax; (ii) the amount of any federal, state or local tax,
charge or fee on any Leased Minerals, or their mining, severance, production or
sale, less the amount of such tax, charge or fee, if any, in effect on November
l, 1975, (iii) the amount of any payments to any union or employee welfare,
retirement or similar fund, less the amount of such payments, if any, which
would have been payable (whether or not actually paid) had the requirements in
effect for such products mined and sold November 1, 1975 been applicable and
(iv) the amount of any payments required by law, collective bargaining agreement
or labor contract to be paid into any fund now or hereafter established for the
health of employees, or their safety or compensation for injury, damage or the
like, less the amount of such payments, if any, required under the laws,
collective bargaining agreements and labor contracts in force on November 1,
1975. Nothing in the foregoing provisions shall be construed to relieve Lessee
of its obligation under the law or under any of the Three Leases to pay any
taxes.

         (b) At the date of execution of this Amendment of Leases the aggregate
number of acres in the Tams Lease is 2809.26, in the MacAlpin Lease 2492.23
acres and in the New River-Beaver Lease 4096.31 acres. [It is understood that an
acre of surface and all subsurface below it is a single acre, regardless of the
number of seams or amount of coal therein.] Lessee shall pay to Lessor, as a
minimum rental for each year under each of the Three Leases, an amount equal to
Twenty-five Dollars ($25) times the aggregate number of acres held under such
lease on the last day of such year. A "year" for the purposes of this paragraph
3 shall commence on August 1. However, such minimum rental shall be payable
under each of the Three Leases only in the amount, if any, by which it exceeds
the sum of (i) all production royalties paid or payable under subparagraph (a)
above for that year with respect to that lease, and (ii) all production
royalties paid or payable under subparagraph (a) above for that year with

<PAGE>

respect to the other two of the Three Leases in excess of the minimum rentals
required for that year under such other two leases and (iii) after Lessee has
given the notice called for in the third sentence of paragraph 5 below with
respect to that lease, all wheelage royalties paid or payable under paragraph 9
for that year with respect both to that lease, and, if that lease is the Tams or
MacAlpin Lease, to the other as well. Payment of any amount payable under this
subparagraph (b) shall be made on or before the twenty-fifth (25th) day of
August following the year ending on the prior July 31.

            Lessee shall be entitled to credit all such minimum rentals paid
under any of the Three Leases for all prior years beginning on or after August
1, 1975, and not previously so credited, against production royalties payable
under subparagraph 3(a) under either that lease or any of the other two of the
Three Leases, provided that such credit taken in any one month shall not exceed
50% of the production royalties payable with respect to that month under
subparagraph 3(a).

            Should any failure of Lessee to ship the required amount of Leased
Minerals to realize the minimum rental have been caused by the act, failure, or
inability of the Chesapeake and Ohio Railway Company or any other railroad or
railway company reasonably to furnish cars, facilities, or transportation,
whether arising from the obligation of the said railroad or railway companies to
other shippers or from strikes or from any other cause, or shall such failure
have been caused by illegal discrimination on the part of any of the said
railroad or railway companies, or shall such failure have been caused by a
strike among the employees of Lessee, or from any other cause not within the
control of Lessee, Lessee shall be released from a proportionate part (to the
area affected and to the time involved) of such minimum rental, but the burden
of proof thereof shall be on Lessee. If such proportionate part cannot be agreed
upon, it shall be determined by arbitration in the manner provided in paragraph
13 below.

      4. ROYALTY ADJUSTMENT. Promptly following execution of this Amendment of
Leases, Lessee shall pay to Lessor an amount equal to the difference between
royalties theretofore paid and royalties payable under paragraph 3 above, for
Leased Minerals shipped from the Leased Premises under each of the Three Leases
between August 1, 1975 and the date of execution of this Amendment of Leases.
Lessor and Lessee agree that the total of such differences for all Three Leases
with respect to Leased Minerals shipped during the period from August 1, 1975 to
and including October 31, 1975 is Two Hundred Fifty Thousand Dollars ($250,000).

      5. TERM. The term of each of the Three Leases is hereby amended to
terminate on any July 31 after all mineable and merchantable coal shall have
been mined and removed from the Leased Premises as Lessee may by at least three
months' prior written notice designate to Lessor, provided, that each of the
Three Leases shall terminate no later than August 1, 1995. "Mineable and
merchantable coal" as used in this Amendment of Leases means coal which can be
mined and marketed at a reasonable profit to Lessee at the time such coal is
reached in the course of Lessee's mining operation by the use of practical and
efficient machinery, facilities, methods and management. Lessee shall notify
Lessor in writing whenever in its judgment all mineable and merchantable coal
has been exhausted with respect to any of the Three Leases. Unless within ninety
(90) days thereafter Lessor objects in writing and requests arbitration of the
issue of exhaustion under paragraph 13 below, Lessee shall be released and
forever discharged

<PAGE>

from all obligations to mine coal under that lease. However, notwithstanding
such notice and release, Lessee's rights to lease, occupy and use the premises
and all of its obligations (other than its obligation to mine coal) as Lessee
thereunder shall continue until the termination of that lease under this
paragraph and paragraph 6 below.

      6. RENEWAL. Lessee shall have the right to renew each of the Three Leases
for a further period to terminate at such time after all mineable and
merchantable coal shall have been mined from the Leased Premises (whether that
occurs before or after August 1, 1995) as Lessee may designate by written notice
at any time during the renewal term, provided that the renewal term shall
terminate no later than thirty (30) years from August 1, 1995. The renewal of
each of the Three Leases shall be upon the terms and conditions of such lease,
as hereby amended, modified and supplemented, in effect on that date, except
that during such renewal term the royalty called for by subparagraph 3(a) above
and by paragraph 9 below shall be a percentage of the Selling Price equal to the
higher of either (i) three and one-quarter percent (3 1/4%) in the case of
subparagraph 3(a), and one-quarter of one percent (1/4%) in the case of
paragraph 9, or (ii) the percentage equal to the average production royalty rate
for similar Leased Minerals in the case of subparagraph 3(a) above, and the
average wheelage royalty rate for similar Leased Minerals in the case of
paragraph 9 below, being negotiated and agreed to between lessors and lessees
similarly situated in the area of the Leased Premises at or about August 1,
1995. If on August 1, 1995 Lessor and Lessee have not agreed upon such average
royalty rates or any of them, such average royalty rate or rates as have not
been agreed upon shall be determined by arbitration in accordance with paragraph
13 below.

      Lessee may exercise the right of renewal herein granted by written notice
delivered to Lessor not later than August 1, 1994, stating Lessee's intention to
renew and specifying which one or more of the Three Leases it elects to renew.
The right of renewal contained in this paragraph shall constitute Lessee's sole
right of renewal under each of the Three Leases. Lessee shall not have the
foregoing right to renew as to any of the Three Leases (i) which has terminated
prior to August 1, 1995 under paragraph 5 above, or (ii) under which on that
date Lessee is in default and has had the opportunity to cure such default under
paragraph 8 below and has failed to do so (unless the issue of such default is
in arbitration or other litigation, in which event this clause (ii) shall not
apply).

      7. PAST DUE ROYALTIES. Any rental or royalty due and owing under one or
more of the Three Leases and payable by reason of facts expressly disclosed by
Lessee to Lessor or otherwise known to Lessor shall be payable to Lessor only
upon the condition that Lessor shall have made specific written demand therefor
within two years following the day on which the facts giving rise to a claim for
any such rental or royalty are disclosed or made known to Lessor. Upon the
expiration of such period Lessor shall be estopped from invoking any remedy with
respect thereto under any of the Three Leases or as may otherwise be provided by
law or custom for the collection of monies owed unless the written demand called
for under this paragraph shall theretofore have been made upon Lessee.

      8. LESSEE'S OPPORTUNITY TO CURE DEFAULT. Each of the Three Leases is
hereby amended and supplemented to provide that unless a longer period is
provided by another provision thereof Lessor may invoke any remedy available to
it thereunder on account of default by Lessee only if, prior thereto, (a) ten
days have passed since receipt by Lessee of Lessor's

<PAGE>

written notice specifying such default and demanding its cure and (b) Lessee has
not cured, or undertaken initial steps to cure within a reasonable time, such
default. Lessee shall not be deemed to be in default by reason of non-compliance
with any law, regulation, rule or standard promulgated for the protection of the
environment, reclamation of lands or mine health or safety during any time such
law, rule, regulation or standard is the subject of good faith challenge by
Lessee or by another or if Lessee has undertaken reasonable steps to comply with
such law, rule, regulation or standard within a reasonable time.

      9. WHEELAGE. Each of the Three Leases is hereby amended to provide that
Lessor grants unto Lessee the right to transport over, under, across and through
the premises leased under any of the Three Leases (i) any Leased Minerals mined
from the premises leased under any other of the Three Leases, and (ii) any coal,
bone, middlings, gas and other products similar to the Leased Minerals and mined
from lands other than the Leased Premises (herein called "Outside Minerals"),
and the further right to process and market any such other Leased Minerals and
Outside Minerals upon and from any of the Leased Premises, provided however that
on the twenty-fifth (25th) day of each month Lessee shall pay to Lessor a
royalty for any such Outside Minerals equal to one-quarter of one percent (1/4%)
of the Selling Price, as defined in subparagraph 3(a) above, of such Outside
Minerals.

      Lessor hereby consents to the commingling of Leased Minerals mined from
the Leased Premises with Outside Minerals and to the tippling and shipping of
same on and from the Leased Premises; Lessee hereby covenants and agrees to and
with Lessor that it will conform to any and all reasonable requirements of
Lessor to insure the accurate ascertainment of a quantity of (a) Leased Minerals
and (b) Outside Minerals.

      10. ASSIGNMENT BY LESSEE. Each of the Three Leases may be assigned by
Lessee to any entity with which Lessee merges or is consolidated or, so long as
Lessee remains liable for performance by lessee thereunder, to any entity
controlled by or controlling Lessee. Otherwise, Lessee may not assign any of the
Three Leases except to an entity controlling, controlled by, or under common
control with Lessee, the responsibility of which shall be established to
Lessor's satisfaction, which satisfaction shall not be unreasonably denied. Any
question as to the reasonableness of Lessor's denial of its satisfaction as to
the responsibility of an assignee or proposed assignee under this paragraph
shall be determined in accordance with paragraph 13 below.

      11. RELEASE OF TIMBER RIGHTS. Lessee hereby releases any right, heretofore
granted Lessee under any of the Three Leases, to cut and take for Lessee's use
any timber from the Leased Premises, provided, however, that this paragraph
shall not be construed to restrict or in any way limit Lessee's right to remove
any timber or other vegetation which may interfere with Lessee's mining
operations. Any question as to the right of Lessee to remove timber or other
vegetation under any one or more of the Three Leases shall be determined in
accordance with paragraph 13 below.

      12. RELEASE OF SURFACE. Upon Lessor's request, Lessee shall release all of
its rights and interests under any one or more of the Three Leases to any
portion of surface lands in the Leased Premises, provided that such surface
lands are not, in Lessee's reasonable opinion, necessary to Lessee's existing or
contemplated mining operations. Any question as to the

<PAGE>

reasonableness of Lessee's failure or refusal to release its rights or interests
to surface lands under this paragraph shall be determined by arbitration in
accordance with paragraph 13 below. The release by Lessee of its rights and
interests to surface lands pursuant to this paragraph shall reduce the acreage
subject to minimum annual rental under subparagraph 3(b) above by twenty-five
dollars ($25) for each acre of surface lands so released if Lessee thereafter
has no further rights to any Leased Minerals beneath such surface. Lessee shall
have the right to include in its release of surface a release of all rights to
Leased Minerals thereunder, thereby qualifying such release for the foregoing
reduction of minimum annual rental. Lessee shall receive no other consideration
for any such release.

      13. ARBITRATION. Should any dispute arise between the parties hereto under
paragraphs 1, 3, 5, 6, 10, 11 and 12 above, or of any of them, or of any
covenant contained in said paragraphs, or any of them, every such dispute shall
be determined by arbitration in the manner provided for in this paragraph 13 and
Lessee and Lessor hereby covenant with each other to comply with and carry out
promptly the decision or award of any and every arbitration rendered under this
paragraph. Either party may demand arbitration with respect to any such dispute
at any time. The party making such demand shall in writing specify the issues to
be submitted to arbitration and at the same time choose and nominate some
disinterested competent person to act as an arbitrator; thereupon, within ten
(10) days after receipt of such written notice, the other party shall in writing
choose and nominate a disinterested and competent arbitrator and the two
arbitrators so chosen shall forthwith select a third arbitrator, giving written
notice to both parties of the choice so made and fixing a place and time for
meeting not later than thirty (30) days thereafter, at which both parties may
appear and be heard touching such controversy. In case the notified party shall
neglect or refuse to choose and nominate an arbitrator within the time herein
specified, or in case the two chosen by either method herein provided shall fail
to agree upon a third arbitrator, then such arbitrator shall in each case, upon
application of either party, be named by the person (or any one of the persons)
who may then be holding the office of Senior Judge of the United States District
Court in and for the district in which the Leased Premises are located, or the
person holding the office which corresponds to such office as now extant if it
shall then have been abolished. The decision of said arbitrators shall be made
in writing within thirty (30) days after the completion of hearings thereon, and
when signed by a majority of them shall be final and conclusive upon both
parties, as to the facts found therein, and the award so made shall be forthwith
complied with. The expense of any such arbitration, including reasonable
compensation for the arbitrators, shall be paid by the party against which the
award therein shall be made, or as otherwise determined by the arbitrators.
Compliance with this agreement to arbitrate shall be a condition precedent to
any right of action hereunder, and this agreement to arbitrate shall be
specifically enforceable under the prevailing arbitration law and judgment may
be entered upon the award rendered by the arbitrators in accordance with
applicable law in any court having jurisdiction thereof.

      14. ADDITIONAL REPORTS FROM LESSEE. In addition to the reports and
information which the Lessee is required to furnish to Lessor under each of the
Three Leases, with respect to the Leased Minerals mined, shipped or sold from
the Leased Premises or Other Minerals transported over, under, through or across
the same, Lessee shall be obligated to report to Lessor all information, facts
and figures necessary for the determination of the "Selling Price" of such
Leased Minerals and Outside Minerals and of the royalty due under subparagraph
3(a) hereof or the wheelage payments due under paragraph 9. Lessee shall use its
best efforts to

<PAGE>

cause any carrier transporting Leased Minerals and Outside Minerals from the
Leased Premises to send reports directly to Lessor with respect to the
quantities shipped and transported.

      15. RELEASE. Lessor hereby releases and forever discharges Lessee, its
successors and assigns, from all claims (a) which Lessor has at any time
heretofore asserted or in any manner brought to Lessee's attention (including,
without limitation, all claims asserted by Lessor in the pending lawsuit between
it and Lessee), and (b) which Lessor has not asserted but which are or would be
based upon facts of which Lessor or any of its agents, representatives or
attorneys now has or heretofore has had knowledge, and (c) which Lessor ever
had, now has, or which it or its successors or assigns hereafter may have for
any reason or cause arising prior to the date of this Amendment of Leases,
excepting as to this clause (c) any claim based substantially on facts which
Westmoreland Coal Company or any subsidiary of it (but not their predecessors)
is determined to have intentionally and with fraudulent intent concealed from or
misrepresented to Lessor.

      For the purpose of this paragraph "all claims" shall include all manner of
actions and causes of action, suits, disputes, judgments, claims and demands
whatsoever in law or equity, especially those arising out of the Three Leases or
any of them, and all other transactions between the parties hereto relating to
the mining or sale of any Leased Minerals and Outside Minerals.

      16. HEADINGS. The headings preceding the text of the paragraphs hereof are
inserted solely for convenience of reference and shall not constitute a part of
this Amendment of Leases nor shall they affect its meaning, construction or
effect.

      17. CONFIRMATION OF THE THREE LEASES. Each of the Three Leases, as
heretofore amended, renewed and supplemented, is hereby ratified and confirmed
and shall remain in full force and effect except as specifically herein amended
or supplemented. In case any provision contained in this Amendment of Leases
shall conflict with any other provision of one or more of the Three Leases, as
between the two the provisions contained in this Amendment of Leases shall
prevail.

      IN WITNESS WHEREOF, the Lessor has caused this Amendment of Leases to be
signed in its name by its General Partner, Beaver Management Corporation, in its
corporate name, by its President, or presiding officer, and the corporate seal
of said General Partner, attested by the signature of the Secretary, to be
hereto affixed, and the Lessee has caused its name to be signed by its President
and its corporate seal, attested by the Secretary, to be hereto affixed in
several counterparts, each of which shall be deemed an original, on this 10th
day of February, 1976.

                                             BEAVER COAL COMPANY, LIMITED

                                             By its General Partner
                                             BEAVER MANAGEMENT CORPORATION

                                             By /s/ Orville H. Bullitt
                                                --------------------------------
                                                President

<PAGE>

(CORPORATE SEAL)

Attest:

/s/
--------------------------------
Secretary

                                             WESTMORELAND COAL COMPANY

                                             By: /s/ E.B. Leisenring, Jr.
                                                 -------------------------------
                                                 President

(CORPORATE SEAL)

Attest:

/s/
--------------------------------
Secretary

STATE OF PENNSYLVANIA               :
COUNTY OF PHILADELPHIA              :  SS

      I, Harry J. Byerly, Jr., a Notary Public in and for the County of
Philadelphia and the Commonwealth of Pennsylvania, do certify that ORVILLE H.
BULLITT, President of Beaver Management Corporation, General Partner of Beaver
Coal Company, Limited, who signed the writing above, bearing date as of the
first day of August, 1975, for the said BEAVER MANAGEMENT CORPORATION, General
Partner of BEAVER COAL COMPANY, LIMITED, has this day, in my said County, before
me, acknowledged the said writing to be the act and deed of said corporation.

      Given under my hand and official seal, this 10 day of February, 1976.

                                             /s/ Harry J. Byerly, Jr.
                                                --------------------------------
                                                        NOTARY PUBLIC

<PAGE>

STATE OF PENNSYLVANIA               :
COUNTY OF PHILADELPHIA              :  SS

      I, Marguerite K. Smith, a Notary Public in and for the County of
Philadelphia and the Commonwealth of Pennsylvania, do certify that E. B.
LEISENRING, JR., who as President signed the foregoing writing bearing date as
of the first day of August, 1975, for WESTMORELAND COAL COMPANY, a corporation,
has this day, in my said County, before me, acknowledged the said writing to be
the act and deed of said corporation.

      Given under my hand and official notarial seal, this 4th day of February,
1976.

                                        /s/ Marguerite K. Smith.
                                            -------------------------------
                                                   NOTARY PUBLIC

                                        My Commission Expires November 10, 1979

                          THIS INSTRUMENT PREPARED BY:

      Minturn T. Wright, III                 John Ames Ballard
      Dechert Price & Rhoads                 Drinker Biddle & Reath
      3400 Centre Square West     and        1100 Philadelphia National
      1500 Market Street                     Bank Building
      Philadelphia, Pa. 19102                Broad & Chestnut Streets
                                             Philadelphia, Pa. 19107

OFFICE OF THE CLERK OF THE COUNTY COMMISSION
OF RALEIGH COUNTY, WEST VIRGINIA Feb. 19, 1978

      The foregoing Instrument of Writing, together with the certificate of
acknowledgment thereon, was this day presented in said office and admitted to
record.

Ret. To: John L. McClaugherty                /s/ Elinor Hurt
Jackson Kelly                                -----------------------------------
<PAGE>

                               AMENDMENT OF LEASE

      THIS IS AN AMENDMENT OF LEASE, dated and effective as of August 1, 1986,
although executed by the parties at a later date, by and between BEAVER COAL
COMPANY, LIMITED, a limited partnership, hereinafter referred to as "Beaver",
and WESTMORELAND COAL COMPANY, a Delaware corporation, hereinafter referred to
as "Westmoreland".

      WHEREAS, by several Indentures of Lease, as amended, supplemented and
renewed from time to time, including without limitation, an Amendment of Leases
dated and effective as of August l, 1975, Beaver (or its predecessors in title)
has leased to Westmoreland (or its predecessors in title) certain coal, surface
lands and mining rights in various lands located in Raleigh County, West
Virginia; and

      WHEREAS, by a Termination Agreement dated as of the 30th day of November,
1982, Westmoreland released and surrendered to Beaver all its rights, title and
interest in and to certain documents specified therein pertaining to certain of
such coal, surface lands and mining rights and Beaver accepted such release and
surrender; and

      WHEREAS, Westmoreland specifically excepted and reserved from such release
and surrender all its rights, title and interest in, to and under that certain
Indenture of Lease dated January 2, 1936 (covering the mining of coal seams in
4337.19 acres), as amended and supplemented, including but not limited to
amendments and supplements effected by five (5) documents listed in such
Termination Agreement; and

      WHEREAS, the referenced Indenture of Lease dated January 2, 1936, as
amended and supplemented, is sometimes known as the "New River-Beaver Lease";
and

<PAGE>

      WHEREAS, Beaver and Westmoreland have agreed to amend or supplement
certain terms and provisions (including but not limited to minimum rental
obligations) of the New River-Beaver Lease.

      NOW, THEREFORE, Westmoreland and Beaver, intending to be legally bound, do
hereby agree as follows:

      1. Notwithstanding anything to the contrary either in the Amendment of
Leases dated and effective as of August 1, 1975, or in any other document
effecting the New River-Beaver Lease (whether or not listed in the August 1,
1975 Amendment of Leases), the minimum rental due under the New River-Beaver
Lease shall be calculated as follows:

            -     An amount equal to Twenty-Two Dollars and Fifty Cents ($22.50)
                  times the aggregate number of acres held by Westmoreland under
                  the New River-Beaver Lease on July 31, 1986, for the lease
                  year beginning August 1, 1986;

            -     An amount equal to Twenty Dollars ($20.00) times the aggregate
                  number of acres held by Westmoreland under the New
                  River-Beaver Lease on July 31, 1987, for the lease year
                  beginning August 1, 1987;

            -     An amount equal to Seventeen Dollars and Fifty Cents ($17.50)
                  times the aggregate number of acres held by Westmoreland under
                  the New River-Beaver Lease on July 31, 1988, for the lease
                  year beginning August 1, 1988;

<PAGE>

            -     An amount equal to Fifteen Dollars ($15.00) times the
                  aggregate number of acres held by Westmoreland under the New
                  River-Beaver Lease on July 31, 1989, for the lease year
                  beginning August 1, 1989; and

            -     An amount equal to Twelve Dollars and Fifty Cents ($12.50)
                  times the aggregate number of acres held by Westmoreland under
                  the New River-Beaver Lease on July 31, 1990, for the lease
                  year beginning August l, 1990.

      On or before August 1, 1991, the parties agree to negotiate in good faith
to determine the minimum rental to be applicable for the lease year beginning
August 1, 1991, and all subsequent years during the remaining term of the New
River-Beaver Lease. In the event the parties fail to negotiate the minimum
rental to be applicable for the lease year beginning August l, 1991, and for all
subsequent years during the remaining term of the New River-Beaver Lease, it is
agreed that the minimum rental provided for in the Amendment of Leases dated
August l, 1975, shall be the applicable minimum rental for the lease year
beginning August l, 1991, and for all subsequent years during the remaining term
of the New River-Beaver Lease.

      In the event Westmoreland resumes coal production from the New
River-Beaver Lease, then the applicable specified production royalty and/or
wheelage royalty due Beaver from Westmoreland shall be increased by one-fourth
(1/4) of one percent (1%) until all reduction in the minimum rental (as provided
for in Paragraph 1 above) have been fully recouped or "made up" by Beaver at
which time the increase in the production royalty and/or wheelage royalty
provided for in this Paragraph 2 shall immediately cease.

<PAGE>

      2. All the economic terms of the New River-Beaver Lease, as amended and
supplemented (and particularly as amended and supplemented by this Amendment of
Lease) shall not be subject to negotiation or renegotiation as a condition to
Beaver's consent to an assignment of all or any part of Westmoreland's estate,
rights, title or interest in, to or under the New River-Beaver Lease, as amended
and supplemented.

      Except as specifically amended or supplemented herein, the New
River-Beaver Lease, as amended and supplemented, shall remain in full force and
effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment of
Lease effective as of August 1, 1986.

                                             BEAVER COAL COMPANY, LIMITED
                                             By its General Partner

                                             BEAVER MANAGEMENT CORPORATION

                                             By /s/ Paul M. Ingersoll
                                                --------------------------------
                                                President

ATTEST:

/s/ A.J. Drexel Paul, Jr.
--------------------------------
Secretary

                                             WESTMORELAND COAL COMPANY

                                             By /s/ Pemberton Hutchinson
                                                --------------------------------
                                                Pemberton Hutchinson, President

ATTEST:

/s/ W.E. Bradshaw
--------------------------------
    W. E. Bradshaw, Secretary

<PAGE>

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

      The foregoing instrument was acknowledged before me this 10th day of
November, 1986 by Paul M. Ingersoll and A.J. Drexel Paul, Jr., President and
Secretary, respectively, of BEAVER MANAGEMENT CORPORATION, the General Partner
of BEAVER COAL COMPANY, LIMITED, a Limited Partnership, on behalf of the Limited
Partnership.

      My Commission Expires:      May 9, 1990

                                             /s/ Joseph G. Kern
                                             -----------------------------------
                                             Notary Public

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

      The foregoing instrument was acknowledged before me this 17th day of July,
1987, by Pemberton Hutchinson, President and W. E. Bradshaw, Secretary of
WESTMORELAND COAL COMPANY, a corporation, on behalf of the corporation.

      My Commission Expires:    April 3, 1989

                                             /s/ Lillian Zebuski
                                             -----------------------------------
                                             Notary Public

<PAGE>

                               AMENDMENT OF LEASE

      THIS IS AN AMENDMENT OF LEASE, dated and effective as of August 1, 1991,
although executed by the parties at a later date, by and between BEAVER COAL
COMPANY, LIMITED, a limited partnership, hereinafter referred to as "Beaver",
and WESTMORELAND COAL COMPANY, a Delaware corporation, hereinafter referred to
as "Westmoreland".

      WHEREAS, by several Indentures of Lease, as amended, supplemented and
renewed from time to time, including without limitation, an Amendment of Leases
dated and effective as of August 1, 1975, and an Amendment of Lease dated and
effective as of August 1, 1986, Beaver (or its predecessors in title) has leased
to Westmoreland (or its predecessors in title) certain coal, surface lands and
mining rights in various lands located in Raleigh County, West Virginia; and

      WHEREAS, the referenced Indenture of Lease dated January 2, 1936, as
amended and supplemented, is sometimes known as the "New River-Beaver Lease";
and

      WHEREAS, Beaver and Westmoreland have agreed to amend or supplement
certain terms and provisions (including but not limited to minimum rental
obligations) of the New River-Beaver Lease.

      NOW THEREFORE, Westmoreland and Beaver, intending to be legally bound, do
hereby agree as follows:

      1. Notwithstanding anything to the contrary either in the Amendment of
Leases dated and effective as of August 1, 1975, or the Amendment of Lease dated
and effective as of August 1, 1986, or in any other document affecting the New
River-Beaver Lease (whether or not listed in the August 1, 1975, Amendment of
Leases or the Amendment of Lease dated and effective as of August 1, 1986), the
minimum rental due under the New River-Beaver Lease shall be calculated as
follows:

            -     an amount equal to Twelve Dollars and Fifty Cents ($12.50)
                  times the aggregate number of acres held by Westmoreland under
                  the New River-Beaver Lease on July 31, 1991, for the lease
                  year beginning August 1, 1991, and continuing through the
                  lease year beginning August 1, 2000.

      2. On or before August 1, 2001, the parties agree to negotiate in good
faith to determine the minimum rental to be applicable for the lease year
beginning August 1, 2001, and all subsequent years during the remaining term of
the New River-Beaver Lease. In the event the parties fail to negotiate the
minimum rental to be applicable for the lease year beginning August 1, 2001, and
for all subsequent years during the remaining term of the New River-Beaver
Lease, it is agreed that the minimum rental provided for in the Amendment of
Leases dated August 1, 1975, shall be the applicable minimum rental for the
lease year beginning August 1, 2001, and for all subsequent years during the
remaining term of the New River-Beaver Lease.

      3. In the event Westmoreland resumes coal production from the New
River-Beaver Lease, then the applicable specified production royalty and/or
wheelage royalty due Beaver from Westmoreland shall be increased by one-fourth
(1/4) of one percent (1%) until all reduction in

<PAGE>

the minimum rental (as provided for in Paragraph 1 above, below that provided
under the terms of the New River-Beaver Lease prior to August 1, 1986) have been
fully recouped or "made up" by Beaver at which time the increase in the
production royalty and/or wheelage royalty provided for in this Paragraph 3
shall immediately cease.

      4. Paragraph 5 of the Amendment of Leases dated August 1, 1975 is amended
by deleting the words "August 1, 1995" at the end of the first sentence thereof
and substituting therefor the words "July 31, 2015."

      5. Paragraph 6 of the Amendment of Leases dated August 1, 1975 is amended
by deleting the words "August 1, 1995" as they appear in two places in the first
sentence of the first subparagraph thereof, at the end of the second sentence of
the first subparagraph thereof, at the beginning of the last sentence of the
first subparagraph thereof, and in the last sentence of the second subparagraph
thereof and substituting in each place therefor the words "July 31, 2015". Said
paragraph 6 is further amended by deleting the words "thirty (30)" in the first
sentence of the first subparagraph thereof and substituting therefor the words
"fifteen (15)" and by deleting the words "August 1, 1994" in the first sentence
of the second subparagraph thereof and substituting the words "August 1, 2014".

      6. All the economic terms of the New River-Beaver Lease, as amended and
supplemented (and particularly as amended and supplemented by this Amendment of
Lease) shall not be subject to negotiation or renegotiation as a condition to
Beaver's consent to an assignment of all or any part of Westmoreland's estate,
rights, title or interest in, to or under the New River-Beaver Lease, as amended
and supplemented.

      Except as specifically amended or supplemented herein, the New
River-Beaver Lease, as amended and supplemented, shall remain in full force and
effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment of
Lease effective as of August 1, 1991.

                                             BEAVER COAL COMPANY, LIMITED
                                             By its General Partner

                                             BEAVER MANAGEMENT CORPORATION

                                             By /s/ Paul M. Ingersoll, President
                                                --------------------------------

ATTEST:

/s/ A.J. Drexel Paul, Jr.
---------------------------------
Secretary

<PAGE>

                                             WESTMORELAND COAL COMPANY

                                             By /s/ Pemberton Hutchinson
                                                --------------------------------

ATTEST:

/s/ Philip D. Weinstock
--------------------------------

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

      The foregoing instrument was acknowledged before me this 13th day of
January, 1992, by Paul M. Ingersoll and A.J. Drexel Paul, Jr., President and
Secretary, respectively, of BEAVER MANAGEMENT CORPORATION, the General Partner
of BEAVER COAL COMPANY, LIMITED, a Limited Partnership, on behalf of the Limited
Partnership.

      My Commission Expires:     May 31, 1994

                                             /s/ Joseph G. Kern
                                             -----------------------------------
                                             Notary Public/Joseph G. Kern

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, to-wit:

      The foregoing instrument was acknowledged before me this 6th day of
January, 1991, by Pemberton Hutchinson, President and Philip D. Weinstock,
__________ Secretary of WESTMORELAND COAL COMPANY, a corporation, on behalf of
the corporation.

      My Commission Expires:    May 10, 1993

                                             /s/ Lillian Zebuski
                                             -----------------------------------
                                             Notary Public

<PAGE>

                                   ACCEPTANCE

      Pine Valley Coal Company, Inc. ("Pine Valley") hereby assumes all of the
covenants, obligations and liabilities, except as to any Retained Liabilities in
the Asset Purchase Agreement of even date hereof, and agrees to perform all of
the covenants contained in the Lease dated January 2, 1936 between Beaver Coal
Company, Limited and Westmoreland Coal Company's predecessors in title
("Westmoreland") together with all amendments thereto in accordance with the
terms and conditions of the Asset Purchase Agreement.

      This Acceptance shall be effective from and after October 31, 1994.

      IN TESTIMONY WHEREOF, Pine Valley Coal Company, Inc. has caused its name
to be signed hereto by its proper officer, thereunto duly authorized, on the
31st day of October, 1994.

                                             PINE VALLEY COAL COMPANY, INC.

                                             By  /s/ Bruce Sparks
                                                 -------------------------------
                                                 Name  Bruce Sparks
                                                 Title President

<PAGE>

      THIS AGREEMENT OF CONSENT is made and entered into effective as of the
28th day of October, 1994, by and among WESTMORELAND COAL COMPANY, a Delaware
corporation authorized to do business in the State of West Virginia, hereinafter
referred to as "Westmoreland", BEAVER COAL COMPANY, LIMITED, a limited
partnership formed and existing under and by virtue of the Uniform Limited
Partnership Act (as adopted by the Commonwealth of Pennsylvania), hereinafter
referred to as "Beaver", and PINE VALLEY COAL COMPANY, INC., a West Virginia
corporation, hereinafter referred to as "Pine Valley".

                                   WITNESSETH:

      WHEREAS, Westmoreland's predecessors in title and Beaver have previously
entered into a Lease as of January 2, 1936, which Lease has from time to time
been amended (hereinafter referred to as "Coal Lease"), and

      WHEREAS, Westmoreland wishes to assign its rights and obligations under
the Coal Lease to Pine Valley, and Beaver is willing to consent thereto on the
terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises,

      1. Beaver hereby consents to the assignment by Westmoreland of all of
      Westmoreland's right, title, and interest in and to the Coal Lease to Pine
      Valley on the condition that Pine Valley agrees upon such assignment to
      assume full responsibility for performance of all of the terms,
      conditions, and obligations, past, present, and future, of "Lessee"
      thereunder and to be liable for any nonperformance of the same, and
      further upon such assignment and assumption, Beaver hereby releases
      Westmoreland from all liabilities, responsibilities and obligations under
      the Coal Lease.

      2. Beaver and Westmoreland acknowledge that the Coal Lease is duly
      executed, validly existing, and enforceable in accordance with its terms,
      and Beaver and Westmoreland have no knowledge of any default by any party
      to the Coal Lease or any event which with notice or the passage of time or
      both would constitute such a default thereunder.

      3. This consent of Beaver shall not be construed as a waiver of the right
      of Beaver to deny any future assignment of the Coal Lease.

<PAGE>

      4. This Agreement shall be effective when executed by and delivered to all
      parties but may be executed in counterpart with the same effect as if
      executed by all parties on one agreement.

      WITNESS the following signatures of duly authorized officers of these
parties, all as of the 28th day of OCTOBER, 1994.

                                             BEAVER COAL COMPANY, LIMITED
                                             BY ITS GENERAL PARTNER
                                             BEAVER MANAGEMENT CORPORATION

                                             By: /s/ Paul M. Ingersoll
                                                 -------------------------------
                                                 Its President

                                             PINE VALLEY COAL COMPANY, INC.

                                             By: /s/ Bruce Sparks
                                                 -------------------------------
                                                 Name: BRUCE SPARKS
                                                 Title PRESIDENT

                                             WESTMORELAND COAL COMPANY

                                             By: /s/ Ronald W. Stucki
                                                 -------------------------------
                                                 Name  RONALD W. STUCKI
                                                 Title SR.  VICE PRESIDENT

COMMONWEALTH OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, TO-WIT:

      I, Joseph G. Kern, a Notary Public of the said County of Philadelphia, in
and for the State and County aforesaid, do certify that Paul M. Ingersoll,
President of BEAVER MANAGEMENT CORPORATION, a corporation, General Partner of
Beaver Coal Company, Limited, who signed the writing above, bearing the 28th day
of October, 1994, for the said Beaver Management Corporation, General Partner of
Beaver Coal Company, Limited, has this day in my said County, before me,
acknowledged said writing to be the act and deed of said corporation.

      GIVEN under my hand and official seal, this 28th day of October, 1994.

                                             /s/ Joseph G. Kern
                                             -----------------------------------
                                             Notary Public

<PAGE>

My Commission Expires:

May 9, 1998

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, TO-WIT:

      I, Celestine S. Wanamaker, a Notary Public of the said County of
Philadelphia, in and for the State and County aforesaid, do certify that Bruce
Sparks, President of PINE VALLEY COAL COMPANY, INC., who signed the writing
above, bearing the 28th day of October, 1994, for the said Pine Valley Coal
Company, Inc., has this day in my said County, before me, acknowledged said
writing to be the act and deed of said corporation.

      GIVEN under my hand and official seal, this 28th day of October, 1994.

                                             /s/ Celestine S. Wanamaker
                                             -----------------------------------
                                             Notary Public

My Commission Expires:

June 20, 1994

STATE OF PENNSYLVANIA

COUNTY OF PHILADELPHIA, TO-WIT:

      I, Celestine S. Wanamaker, a Notary Public of the said County of
Philadelphia, in and for the State and County aforesaid, do certify that Ronald
W. Stucki, Sr. Vice President of WESTMORELAND COAL COMPANY, who signed the
writing above, bearing the 28th day of October, 1994, for the said Westmoreland
Coal Company, has this day in my said County, before me, acknowledged said
writing to be the act and deed of said corporation.

      GIVEN under my hand and official seal, this 28th day of October, 1994.

                                             /s/ Celestine S. Wanamaker
                                             -----------------------------------
                                             Notary Public

My Commission Expires:

June 20, 1996

<PAGE>

                            INSTRUMENT OF ASSIGNMENT

      WHEREAS, pursuant to the Asset Purchase Agreement dated as of October 28,
1994, (the "Agreement") between Westmoreland Coal Company, a Delaware
corporation ("Seller") and Pine Valley Coal Company, Inc., a West Virginia
corporation ("Buyer"), for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller does hereby sell, assign,
transfer, convey and deliver unto Buyer, its successors and assigns, each and
all of the Assets (as such term is defined in the Agreement), intending hereby
to convey all of the right, title and interest of Seller therein; provided,
however, as to any lease, contract, agreement, or other authorization included
in the Assets which cannot be sold, transferred, assigned, conveyed or delivered
effectively without the consent of a third party, which consent has not been
obtained, this instrument shall be of no force or effect until such requisite
consent is obtained, whereupon this instrument shall become of full force and
effect with respect thereto.

      Seller hereby covenants and agrees to and with Buyer, its successors and
assigns, to do, execute, acknowledge and deliver to, or to cause to be done,
executed, acknowledged and delivered to, Buyer, its successors and assigns, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances that may be reasonably requested by Buyer for the better
selling, assigning, transferring, conveying, delivering, assuring and confirming
to Buyer, its successors or assigns, any or all of the Assets.

      This Instrument of Assignment shall be binding upon the successors and
assigns of Seller and shall inure to the benefit of the successors and assigns
of Buyer. Each capitalized term used herein but not defined herein is used as
defined in the Agreement.

      IN WITNESS WHEREOF, Seller has caused this Instrument of Assignment to be
duly executed and delivered this 31st day of October, 1994.

                                         WESTMORELAND COAL COMPANY

                                         By /s/ Ronald W. Stucki
                                            ------------------------------------
                                            Name  Ronald W. Stucki
                                            Title Sr. Vice President Operations

<PAGE>

                           OPTION TO LEASE COAL LANDS

      THIS OPTION TO LEASE COAL LANDS (this "Option"), made as of the 1st day of
April, 1995, by and between BEAVER COAL COMPANY, LIMITED, a Pennsylvania limited
partnership, hereinafter referred to as "Beaver", and PINE VALLEY COAL COMPANY,
INC., a West Virginia corporation, hereinafter referred to as "Pine Valley".

      WHEREAS, by an Indenture of Lease, dated January 2, 1936, as amended,
supplemented and renewed from time to time, including without limitation, an
Amendment of Lease dated and effective as of August 1, 1975, and an Amendment of
Lease dated and effective as of August 1, 1986, and an Amendment of Lease dated
and effective as of August 1, 1991 (the "Lease"), Beaver (or its predecessors in
title) leased to Westmoreland Coal Company (or its predecessors in title)
certain coal, surface lands and mining rights in various lands located in
Raleigh County, West Virginia (the "Leased Property"); and

      WHEREAS, by Instrument of Assignment, dated October 28, 1994, Westmoreland
Coal Company assigned all of its right, title and interest in and to the Leased
Property unto Pine Valley; and

      WHEREAS, Beaver is the owner of additional tracts or parcels of coal
property and mining rights in Raleigh County, West Virginia that are not part of
the Leased Property; and

      WHEREAS, Beaver and Pine Valley desire to enter into an agreement under
which Pine Valley will acquire an option to lease all seams of coal below the
Beckley seam, which can be mined by the deep mining method from said additional
tracts or parcels of coal property and mining rights.

      NOW, THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00) cash
in hand paid, the receipt and sufficiency of which is hereby acknowledged by
Beaver, and in further consideration of Pine Valley's agreement to furnish
Beaver with the data described in paragraph 5 hereof, Beaver does hereby grant,
convey and deliver unto Pine Valley the sole and exclusive right, privilege and
option to lease (the "Option") certain tracts or parcels of coal property and
related mining rights which now owns in Raleigh County, West Virginia (the
"Option Property") as shown on the Option Property Map is attached hereto and
made a part hereof as "Exhibit A".

      1. TERM. The Option shall become effective upon the date hereof and expire
twelve (12) months thereafter (the "Option Period").

<PAGE>

      2. EXERCISE OF OPTION. The Option may be exercised by Pine Valley on or
before the expiration of the Option Period by mailing written notice to Beaver
identifying those tracts or parcels which Pine Valley wishes to lease. Notice
shall be addressed to Beaver at:

                           __________________
                           __________________
                           __________________
                           __________________

Notice shall be sufficient if delivered in person or by certified/registered
mail. The signed, registered receipt shall be conclusive evidence of such
delivery.

      Upon the exercise of the Option by Pine Valley, Pine Valley shall
thereafter hold the relevant portion of the Option Property for the period and
upon the terms and conditions of the Lease without the need of any further
instrument or document being executed by the parties hereto. The Advance Minimum
Royalty due under the Lease shall then be increased by an amount equal to the
additional acre multiplied by the per acre rate due Beaver under the Lease.

      3. RIGHTS OF PINE VALLEY UNDER OPTION. During the Option Period, Pine
Valley shall have the right, at its costs, to examine, explore, prospect, drill,
test and evaluate, as it deems appropriate, the Option Property. Pine Valley and
its agents and representatives shall have access to all books, records, maps,
drill records and other information and data in the possession of Beaver
relating to the Option Property.

      4. RECORDS. Upon the request of Beaver, Pine Valley will furnish Beaver
with a copy of all engineering reports, geologists reports and all other
exploratory information regarding the Option Property obtained by it during the
Option Period.

      5. INDEMNIFICATION. Pine Valley shall indemnify and hold harmless, Beaver
of and from any liability, loss or claim for damages or injuries resulting from
or occasioned by the operations of Pine Valley on the Option Property during the
Option Period.

      IN WITNESS WHEREOF, the parties have caused this Option to be executed as
of the day and year first above written.

                                                BEAVER COAL COMPANY, LIMITED
                                                BY ITS GENERAL PARTNER
                                                BEAVER MANAGEMENT CORPORATION

                                                By:  /s/ Paul M. Ingersoll
                                                     ---------------------------
                                                Its: President

<PAGE>

                                                PINE VALLEY COAL COMPANY, INC.

                                                By:  /s/ Richard B. Bolen
                                                     ---------------------------
                                                Its: President

COMMONWEALTH OF PENNSYLVANIA,
COUNTY OF PHILADELPHIA, to-wit:

      The foregoing instrument was acknowledged before me this 10th day of
April, 1995, by Paul M. Ingersoll, the President, of BEAVER MANAGEMENT
CORPORATION, a corporation, General Partner of Beaver Coal Company, Limited, as
its duly authorized agent.

      My commission expires:

                                                 /s/ Joseph G. Kern
                                                 -------------------------------

STATE OF WEST VIRGINIA,
COUNTY OF MONONGALIA, to-wit:

      The foregoing instrument was acknowledged before me this 6th day of April,
1995, by Richard B. Bolen, the President, of PINE VALLEY COAL COMPANY, INC., a
corporation, as its duly authorized agent.

      My commission expires:                     August 5, 1997

                                                 Vaughn R. Miller
                                                 -------------------------------

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