STANDARD TERMS & CONDITIONS

SELLER:

BUYER:

Alliance Coal, LLC

Mount Storm Coal Supply, LLC

By:

/s/ George C. Tichnell

By:

/s/ Kirby B. Martin, Jr.

Name:

George C. Tichnell

Name:

Kirby B. Martin, Jr.

Title:

Pursuant to Delegation of

Title:

Senior Vice President, Sales & Marketing

Authority dated July 18, 2005

Date:

July 18, 2005

Date:

August 4, 2005

Phone:    (304) 414-0420

Fax:        (304) 414-0430

(1)

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

(2)

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

(3)

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

(4)

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

(5)

FORCE MAJEURE.

(a)

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

(b)

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

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

(c)

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

(6)

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

(7)

EQUAL OPPORTUNITY EMPLOYER. Buyer and Seller, and each of them, is an equal opportunity employer. Seller agrees not to