AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.3

THIS AGREEMENT CONTAINS REPRESENTATIONS AND WARRANTIES THE PARTIES HERETO MADE TO AND SOLELY FOR THE BENEFIT OF EACH OTHER. THE ASSERTIONS EMBODIED IN THOSE REPRESENTATIONS AND WARRANTIES ARE QUALIFIED BY INFORMATION IN CONFIDENTIAL DISCLOSURE SCHEDULES THAT THE PARTIES HAVE EXCHANGED IN CONNECTION WITH SIGNING THE AGREEMENT. WHILE THE REGISTRANT BELIEVES THAT THE SECURITIES LAWS DO NOT REQUIRE THE INFORMATION CONTAINED IN THE DISCLOSURE SCHEDULES TO BE PUBLICLY DISCLOSED, THE DISCLOSURE SCHEDULES DO CONTAIN INFORMATION THAT MODIFIES, QUALIFIES AND CREATES EXCEPTIONS TO THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT. ACCORDINGLY, INVESTORS AND SECURITY HOLDERS SHOULD NOT RELY ON THE REPRESENTATIONS AND WARRANTIES AS CHARACTERIZATIONS OF THE ACTUAL STATE OF FACTS. MOREOVER, INFORMATION CONCERNING THE SUBJECT MATTER OF THE REPRESENTATIONS AND WARRANTIES MAY CHANGE AFTER THE DATE OF THE AGREEMENT, WHICH SUBSEQUENT INFORMATION MAY OR MAY NOT BE FULLY REFLECTED IN THE REGISTRANT’S PUBLIC DISCLOSURES.

THE ATTACHMENTS TO THIS EXHIBIT LISTED IN THE TABLE OF CONTENTS HEREOF ARE NOT FILED HEREWITH, AS PROVIDED IN ITEM 601(b)(2) OF REGULATION S-K PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE REGISTRANT AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY SUCH OMITTED ATTACHMENT TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.

Execution Version

AGREEMENT AND PLAN OF MERGER

among

ALPHA NATURAL RESOURCES, INC.,

ALPHA NATURAL RESOURCES, LLC,

PREMIUM ENERGY, LLC,

PREMIUM ENERGY, INC.

and

THE SHAREHOLDERS OF
PREMIUM ENERGY, INC.

Dated as of
September 23, 2005

Table of Contents

EXHIBITS, ANNEXES AND SCHEDULES

AGREEMENT AND PLAN OF MERGER

          THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made as of September 23, 2005, among Alpha Natural Resources, Inc., a Delaware corporation (“Alpha”), Alpha Natural Resources, LLC, a Delaware limited liability company (“Parent”), Premium Energy, LLC, a Delaware limited liability company (“Merger Sub”), Premium Energy, Inc., a West Virginia corporation (the “Company”) and the shareholders of Premium Energy, Inc. listed on the signature pages to this Agreement (the “Shareholders”). Collectively, Alpha, Parent, Merger Sub, the Company and Shareholders shall be referred to in this Agreement as the “Parties” and individually as a “Party.” Capitalized terms not otherwise defined in this Agreement have the meaning given such terms in Article I.

RECITALS

          WHEREAS, the Company engages in (i) the mining, processing, transportation and sale of coal produced by it in the State of West Virginia, (ii) the domestic trading of coal, including the purchase and resale of coal produced by others, and (iii) activities related to the foregoing (collectively, the “Business”);

          WHEREAS, by approval of their Boards of Directors, each of Alpha, Parent, Merger Sub and the Company have determined to engage in the transactions contemplated by this Agreement, pursuant to which, among other things, at the Effective Time: (i) the Company shall merge with and into Merger Sub; and (ii) the issued and outstanding shares of Common Stock, par value $10.00 per share, of the Company (“Company Shares”) (except for Company Shares owned by the Company) shall be converted into the right to receive cash and shares of Common Stock, $0.01 par value, of Alpha (“Alpha Shares”) as set forth in this Agreement;

          WHEREAS, the Boards of Directors of each of Alpha, Parent, Merger Sub, and the Company have approved the transactions contemplated by this Agreement;

          WHEREAS, as inducements to each of Alpha, Parent and Merger Sub to enter into this Agreement and incur the obligations set forth in this Agreement, each of Shareholders have approved this Agreement and the Merger, on the terms and subject to the conditions of this Agreement;

          WHEREAS, as inducements to the Company and Shareholders to enter into this Agreement and incur the obligations set forth in this Agreement, Parent, the holder of all of Merger Sub’s outstanding Equity Interest, has approved this Agreement and the Merger, on the terms and subject to the conditions of this Agreement;

          WHEREAS, the Parties intend that the Merger shall constitute a “reorganization” within the meaning of section 368(a) of the Code, and that this Agreement shall constitute a “plan of reorganization” for purposes of the Code; and

          WHEREAS, Alpha, Parent, Merger Sub, the Company and Shareholders desire to make certain representations, warranties, covenants and agreements in connection with the

transactions contemplated by this Agreement and also to prescribe certain conditions to the transactions contemplated by this Agreement;

           NOW, THEREFORE, the Parties agree as follows:

ARTICLE I
DEFINITIONS

          Unless otherwise expressly provided in this Agreement, the following terms, as used in this Agreement, have the following meanings:

          “AAA” has the meaning set forth in Section 13.18.

          “Active Operating Properties” means all property included in Permits currently issued to the Company prior to the Closing and property that is necessary or required to operate the Business in the manner currently conducted.

          “Actual Statement” has the meaning set forth in Section 2.4(b).

          “Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, Decrees, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses but shall not include punitive, exemplary or consequential damages (except to the extent any such damages are included in a Third Party Claim for which a Purchaser Indemnitee is entitled to indemnification under the Indemnification Agreement).

          “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person and, in the case of an individual, includes the individual’s immediate family, and the trustees of a trust the beneficiaries of which include any one or more of the foregoing.

          “Affiliated Group” means any affiliated group within the meaning of Code §1504.

          “Agreement” has the meaning set forth in the preamble.

          “Alpha” has the meaning set forth in the preamble.

          “Alpha Benefit Plan” has the meaning set forth in Section 11.4.

          “Alpha Closing Certificate” means the certificate of Alpha substantially in the form of Exhibit A attached to this Agreement.

          “Alpha Entities” has the meaning set forth in Section 7.5(a).

          “Alpha Indemnitees” means, collectively, Alpha and its Affiliates and the officers, directors, employees and agents of Alpha and its Affiliates.

          “Alpha Shares” has the meaning set forth in the Recitals.

          “Applicable Period” has the meaning set forth in Section 7.5(a).

          “Base Amount” has the meaning set forth in Section 2.2.

          “Base Working Capital” means $1,400,000.

          “Basis” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the foundation for any specified consequence.

          “Bonds” has the meaning set forth in Section 5.26.

          “Books and Records” means the original or true and complete copies of all of the books and records of the Company, including but not limited to, customer lists, employee records for those Employees employed by the Company immediately following the Closing Date, Contracts, purchase orders and invoices, sales orders and sales order log books, credit and collection records, plats, drawings and specifications, environmental and mining reports and studies, correspondence and miscellaneous records with respect to customers and supply sources, lessors and lessees, maps, core logs, engineering data, equipment maintenance records, Real Property records including deeds, leases, lessor and lessee correspondence files, abstracts, title reports and opinions, and title insurance policies, and all other general correspondence, records, books and files owned by the Company, but excluding any and all Tax Returns, Books and Records relating to the Retained Assets and the Retained Liabilities.

          “Business” has the meaning set forth in the Recitals.

          “Business Day” means any day other than a Saturday, a Sunday or a United States federal or New York State banking holiday.

          “Cash Consideration” has the meaning set forth in Section 2.2(b).

          “CERCLA” has the meaning set forth in the definition of “Environmental Laws.”

          “CERCLIS” has the meaning set forth in Section 5.12(g).

          “Closing” has the meaning set forth in Section 2.1(b).

          “Closing Balance Sheet” means a consolidated balance sheet of the Company as of the close of business on the Closing Date immediately preceding the consummation of the

transactions contemplated by this Agreement (without giving effect to any purchase accounting adjustments arising from the such transactions), that is prepared in accordance with GAAP applied consistently with past practices and which shall be prepared and certified by the Chief Financial Officer of Parent.

          “Closing Date” has the meaning set forth in Section 2.1(b).

          “Closing Price” has the meaning set forth in Section 2.2(b).

          “Coal Act” means the Coal Industry Retiree Health Benefit Act of 1992 as amended (codified at Subtitle J of the Code).

          “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Commitment” means (a) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights or other contracts that could require a Person to issue any of its Equity Interests or to sell any Equity Interests it owns in another Person; (b) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Interest of a Person or owned by a Person; (c) statutory pre-emptive rights or pre-emptive rights granted under a Person’s Organizational Documents; and (d) stock appreciation rights, phantom stock, profit participation, guarantee of profit, guarantee against loss, or other similar rights with respect to a Person.

          “Company” has the meaning set forth in the preamble.

          “Company Shares” has the meaning set forth in the Recitals.

          “Confidential Information” means any information concerning the Business or the Company that is not already generally available to the public.

          “Contaminated” or “Contamination” means the presence of one or more Hazardous Substances in such quantity or concentration as to: (i) violate any Environmental Law; (ii) require disclosure to any Governmental Authority; (iii) require remediation or removal; (iv) interfere with or prevent the customary use of the Real Property owned by the Company; or (v) create any Liability to fund the clean up of the Real Property.

          “Contracts” shall mean all of the contracts, agreements or leases, written and oral, of the Company.

          “Decree” means any injunction, judgment, order, decree, charge or ruling of any applicable Governmental Authority.

          “Delaware Law” has the meaning set forth in Section 2.1(a).

          “Disclosure Schedule” has the meaning set forth in Article V.

          “Dispute” has the meaning set forth in Section 13.18.

          “Effective Date” has the meaning set forth in Section 2.1(c).

          “Employee” means any Person (i) employed by and rendering personal services for the Company, (ii) receiving short-term or long-term disability benefits from the Company under an Employee Benefit Plan, (iii) on vacation or an approved leave of absence from his employment with the Company or (iv) off work from the Company and receiving or eligible to receive benefits under a Workers’ Compensation Act The term “current and former Employees” means all Persons who fall within the term Employee at any time prior to the Closing Date.

          “Employee Benefit Plans” has the meaning set forth in Section 5.24(a).

          “Encumbrances” means any charge, claim, community or other marital property interest, right of way, easement, encroachment, servitude, right of first option, right of first refusal, restriction on use, mortgage, pledge, lien, encumbrance, charge, property right or interest, restriction on transfer, or other security interest or Equity Interest or defect in title, other than Permitted Encumbrances.

          “Entity” means a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.

          “Environment” means surface or ground water, water supply, soil or the ambient air.

          “Environmental Laws” means all Laws that relate to (a) the prevention, abatement or elimination of pollution, or the protection of the Environment, or of natural resources, including, without limitation, (i) Laws applicable to Mining Activities or related activities and (ii) all Reclamation Laws, (b) the generation, handling, treatment, storage, disposal or transportation of waste materials, (c) the regulation of or exposure to Hazardous Substances, including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§9601 et. Seq. (“CERCLA”), the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§6901 et. seq. (“RCRA”), the Clean Air Act, 42 U.S.C. §§7401 et. seq., the Clean Water Act, 33 U.S.C. §§1251 et. seq., the Toxic Substances Control Act, 15 U.S.C. §§2601 et. seq. and the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§11001 et. seq. and any other similar applicable Laws relating to the matters set forth in (a) – (c) above.

          “Environmental Matter” means any assertion of a violation, claim, Decree or directive by any Governmental Authority or any other Person for personal injury, damage to property or the

Environment, nuisance, Contamination or other adverse effects on the Environment, or for damages or restrictions resulting from or related to (i) the operation of the Business or the ownership, use or operation at or on any Real Property or other assets owned, operated or leased by the Company or their Affiliates or any predecessors; or (ii) the existence or the continuation of a Release of, or exposure to, or the transportation, storage or treatment of any Hazardous Substance into the Environment from or related to any Real Property or assets currently or formerly owned, operated or leased by the Company or their Affiliates or any predecessors or any activities on or operations thereof.

          “Environmental or Response Action” means all actions required: (i) to clean up, remove, treat or in any other way address any Hazardous Substance; (ii) to prevent the Release or threat of Release, or minimize the further Release of any Hazardous Substance so it does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor Environment; (iii) to perform pre-remedial studies and investigations or post-remedial monitoring and care; (iv) to bring facilities on any Real Property currently or formerly owned, operated or leased by the Company or their Affiliates or any predecessors and the facilities located and operations conducted thereon into compliance with all Environmental Laws and all permits and other authorizations, and the filing of all notifications and reports required under any Environmental Laws; or (v) for the purpose of environmental protection of any Real Property currently or formerly owned, operated or leased by Shareholders or their Affiliates or any predecessors; but such term shall not include actions in response to Mining Environmental Liabilities or actions required under Reclamation Laws.

          “EPA” has the meaning set forth in Section 5.12(d).

          “Equipment” means the tangible machinery, vehicles, equipment, office equipment, computer hardware, supplies, materials, furniture, fixtures, furnishings, trailers, tools, parts and other personal property of every kind owned or leased by the Company (wherever located and whether or not carried on the books of the Company) other than Retained Assets, together with any express or implied warranty by the manufacturers or sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto, having a replacement cost of $50,000 or more, all of which are listed on Section 1.1 of the Disclosure Schedule.

          “Equity Interest” means (a) with respect to a corporation, any and all shares of capital stock and any Commitments with respect thereto, (b) with respect to a limited liability company, trust or similar Person, any and all units, interests or other limited liability company interest, and any Commitments with respect thereto, and (c) any other direct equity ownership, participation in a Person and any Commitments with respect thereto.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “ERISA Affiliate” means each Entity which is treated as a single employer with the Company for purposes of Code §414.

          “Escrow Agent” means JP Morgan Chase Bank, N.A., as escrow agent pursuant to the Escrow Agreement.

          “Escrow Agreement” means that certain Escrow Agreement to be entered into at Closing attached as an exhibit to the Indemnification Agreement.

          “Escrow Amount” means that number of Alpha Shares equal to the quotient obtained by dividing (x) $50,000,000 by (y) the Closing Price for the 20 days preceding the Closing Date.

          “Estimated True Up” has the meaning set forth in Section 2.4(a).

          “Estimated Working Capital” has the meaning set forth in Section 2.4(a).

          “Final True Up” has the meaning set forth in Section 2.4(b).

          “Final Working Capital” has the meaning set forth in Section 2.4(b).

          “Financial Statements” has the meaning set forth in Section 5.8.

          “GAAP” means United States generally accepted accounting principles as in effect from time to time, consistently applied.

          “Governmental Authority” means any agency, authority, board, bureau, commission, court, tribunal, department, office or instrumentality of any nature whatsoever or any governmental unit, whether federal, state, county, district, city, other political subdivision, or taxing district, foreign or otherwise, and whether now or hereafter in existence, or any officer or official thereof acting in an official capacity.

          “Hazardous Substances” means any substance, chemical, waste, solid, material, pollutant or contaminant that is defined or listed as hazardous or toxic under any applicable Environmental Laws. Without limiting the generality of the foregoing, Hazardous Substances shall include any radioactive material, including any naturally-occurring radioactive material, and any source, special or by-product material as defined in 42 U.S.C. 2011, et seq., as now in effect, any asbestos-containing materials in any form or condition, any polychlorinated biphenyls in any form or condition, radioactive waste, or oil or petroleum products or by products and constituents.

          “Health and Safety Requirements” means all applicable federal, state, local and foreign Laws concerning public health and safety and worker health and safety, other than Environmental Laws.

          “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended, and all rules and regulations thereunder.

          “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and regulations and rules promulgated pursuant to that act or any successor law.

          “Inactive Employee” means an Employee who is employed by the Business but is not actively working prior to the Closing because such Employee is disabled or on an approved leave of absence.

          “Inactive Permits” means the written permits, consents, licenses, orders, certificates, registrations, approvals and similar rights issued by a Governmental Authority and held by the Company that relate to idle, inactive or closed mining operations and which are listed in Section 1.2 of the Disclosure Schedule.

          “Indemnification Agreement” means that certain Indemnification Agreement dated the date of this Agreement among the Alpha, Parent, Merger Sub, Shareholders and others.

          “Initial Filing” has the meaning set forth in Section 7.6(a).

          “Insurance Policies” means those policies of insurance, including any arrangements for self-insurance, that the Company or Affiliates maintained with respect to the Business prior to and including the Closing Date.

          “Intellectual Property” means the trademarks, service marks, patents, copyrights (including any registrations, applications, licenses or rights relating to any of the foregoing) technology, logos, trade secrets, Confidential Information related to the Company, inventions, know-how, designs, technical data, drawings, customer and supplier lists, pricing and cost information, or computer programs and processes and all goodwill associated therewith and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions owned or licensed, leased or created by the Company.

          “Inventory” means all coal inventory of the Company located in the United States as of the Closing including, without limitation, all coal in transit to stockpiles or in transit to point of sale or in stockpiles, and all spare equipment parts, replacement and component parts, office, fuel and other supplies and similar items of the Company.

          “IRS” means the United States Internal Revenue Service.

          “Knowledge of Alpha” means the actual knowledge of the individuals listed in Section 1.3 of the Disclosure Schedule assuming due inquiry reasonable under the circumstances.

          “Knowledge of Shareholders” means the actual knowledge of the individuals listed in Section 1.4 of the Disclosure Schedule assuming due inquiry reasonable under the circumstances, which shall require inquiry of the operating management of the Company.

          “Law” means any constitution, statute, code, ordinance, rule or regulation of any applicable Governmental Authority.

          “Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.

          “Material Adverse Change” or “Material Adverse Effect” with respect to the Company means a change, event or occurrence that individually, or together with any other change, event or occurrence, has a material adverse impact on the financial position, business, results of operations or prospects of the Company, taken as a whole, and a “Material Adverse Change” shall be deemed to have occurred if any such material adverse impact exists on any date, without regard to the duration of such material adverse impact; provided, however, that the term “Material Adverse Change” shall not include actions or omissions of Shareholders or the Company taken with the prior written consent of Alpha.

          “Material Contracts” has the meaning set forth in Section 5.16(a).

          “MD&A Disclosure” means any “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure (required by Item 303 of Regulation S-K promulgated by the SEC (or any successor rule or regulation of the SEC)).

          “Merger” has the meaning set forth in Section 2.1(a).

          “Merger Consideration” has the meaning set forth in Section 2.2(b).

          “Merger Sub” has the meaning set forth in the preamble.

          “Mining Activities” means those activities of the Company that involve or are related to surface mining, underground mining, auger mining, processing, sale or transporting of coal and coal by-products and the providing of services related thereto. For the purpose of this definition, “Mining Activities” shall include, without limitation, any activities defined under the SMCRA, and Laws governing, controlling or applying to coal mining operations.

          “Mining Data has the meaning set forth in Section 5.5(g).

          “Mining Environmental Liabilities” shall mean Liabilities that relate to or arise from both of the following: (i) any of the Hazardous Substances set forth on Section 1.5 of the Disclosure and (ii) an Environmental Matter or Environmental and Response Action associated with Mining Activities to the extent that such Mining Activities conformed to industry standard practices.

          “Month End Balance Sheet” means a consolidated balance sheet of the Company for the most recent month then ended (or, if not yet available, a good faith estimate of the consolidated balance sheet of the Company for the most recent month then ended), that is prepared in accordance with GAAP applied consistently with past practices and which shall be prepared and certified by Sellers Representative.

          “Most Recent Financial Statements” has the meaning set forth in Section 5.8.

          “Most Recent Fiscal Month End” has the meaning set forth in Section 5.8.

          “Most Recent Fiscal Year End” means December 31, 2004.

          “Multiemployer Plan” has the meaning set forth in Section 5.24(a).

          “MSHA” has the meaning set forth in Section 5.12(d).

          “Neutral Auditor” has the meaning set forth in Section 2.4(b).

          “Ordinary Course of Business” means the ordinary course of business consistent with the Company’s past custom and practice (including with respect to quantity and frequency).

          “Organizational Documents” means the articles of incorporation, certificate of incorporation, charter, bylaws, articles or certificate of formation, regulations, operating agreement, certificate of limited partnership, partnership agreement, and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of a Person, including any amendments thereto.

          “OSM” has the meaning set forth in Section 5.12(d).

          “Parent” has the meaning set forth in the preamble.

          “Party” and “Parties” have the meaning set forth in the preamble.

          “PBGC” means the Pension Benefit Guaranty Corporation.

          “Pension Plans” has the meaning set forth in Section 5.24(a).

          “Permits” means all written permits, consents, licenses, orders, certificates, registrations, approvals and similar rights issued by a Governmental Authority and held by the Company related to the Business, other than Inactive Permits, and which are listed in Section 1.6 of the Disclosure Schedule.

          “Permitted Encumbrances” means any of the following: (i) any liens for Taxes and assessments of Governmental Authorities not yet delinquent or, if delinquent, that are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (ii) liens of mechanics, materialmen, carriers, warehousemen or processors of labor, materials or supplies incurred in the Ordinary Course of Business (a) which are not overdue for a period of more than 30 days or (b) which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (iii) encumbrances that would be apparent by a survey or in a physical inspection of the surface of the Real Property; (iv) all instruments of record in the offices of the Clerk of the Circuit Court for each county where the Real Property is located; and (v) easements and similar restrictions that do not materially interfere with the Business; (vi) zoning restrictions; (vii) rights of way, easements and other encumbrances granted by the owners of Real Property interests (who are not Shareholders or the Company) to which the Shareholders or the Company is not a party; and (viii) all Encumbrances disclosed on Section 1.7 of the Disclosure Schedule.

          “Person” means an individual or an Entity.

          “Post-Closing Period” means any taxable period beginning after the Closing Date.

          “Post-Closing Tax Return” has the meaning set forth in Section 10.1.

          “Pre-Closing Period” means any taxable period ending on or before the Closing Date.

          “Pre-Closing Tax Return” has the meaning set forth in Section 10.2.

          “Proceeding” means any action, litigation, suit, claim, dispute, demand, investigation, review, hearing, charge, complaint or other judicial or administrative proceeding, at law or in equity, before or by any Governmental Authority or arbitration or other dispute resolution proceeding.

          “Public Reports” has the meaning set forth in Section 4.8.

          “Qualified Plans” has the meaning set forth in Section 5.24(a).

          “RCRA” has the meaning set forth in the definition of “Environmental Laws.”

          “Real Property” means the real property rights and interests owned, leased or subleased by the Company and any improvements, fixtures, easements, rights of way, and other appurtenants thereto (such as appurtenant rights in and to public streets) and all rights of the Company to surface, timber, coal, oil, natural gas (including coalbed methane, gob gas and coal mine methane), and all other minerals (including coal on the ground, coal refuse, coal waste and coal in the gob).

          “Reclamation Laws” means all Laws, as now or hereafter in effect, relating to reclamation Mining Activities or reclamation Liabilities including, without limitation, SMCRA.

          “Related Persons” means related persons as that term is defined in §9701(c)(2) of the Coal Act, except that it shall not include successors in interest.

          “Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, dumping or disposing into the Environment of Hazardous Substances.

          “Representative” has the meaning set forth in Section 6.7.

          “Retained Assets” means (a) the assets of any Employee Benefit Plan, and (b) the assets, properties and rights listed in Section 1.8 of the Disclosure Schedule.

          “Retained Debt” means (a) all indebtedness for borrowed money of the Company, including, all principal, interest, prepayment penalties, early termination fees or other obligations evidenced by or under a note, bond, debenture, letter of credit, draft or similar instrument and

including any loans made to the Company by the holders of their Equity Interests, (b) all obligations to pay the deferred purchase price of property or services, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (d) all indebtedness associated with equipment financing arrangements, including, without limitation, any prepayment penalties, early termination fees or other similar obligations related to such indebtedness, and (e) all guarantees of any of the foregoing.

          “Retained Employees” has the meaning set forth in Section 11.2.

          “Retained Liabilities” means the following Liabilities of the Company:

               (i) all Liabilities (including any post-Closing premium assessments for pre-Closing periods) under applicable Workers’ Compensation Acts for or based upon the employment of (a) the current and former Employees who are not Retained Employees, and (b) the current or former Employees who are Retained Employees, but only with respect to claims where the date of injury or the last injurious increment of exposure needed to give rise to the claim occurred prior to and including the Closing Date, and excluding any post-Closing increases in premium rates arising from the Company’s pre-Closing experience;

               (ii) all Liabilities (including any post-Closing premium assessments for pre-Closing periods) arising under the federal black lung Laws for or based upon the employment of (a) the current and former Employees who are not Retained Employees, and (b) the current and former Employees who are Retained Employees, but only with respect to claims where the Employee was not exposed to the occupational hazard after the Closing for a period equal to or greater than the minimum period of exposure needed to impose liability on a new employer, and excluding any post-Closing increases in premium rates arising from the Company’s pre-Closing experience;

               (iii) all Liabilities arising under COBRA, HIPAA and other similar Laws, including all Liabilities of a fiduciary for breach of fiduciary duty or any other failure to act or comply in connection with the administration of an Employee Benefit Plan;

               (iv) all Liabilities arising under or based upon the Employee Benefit Plans, including all Liabilities arising from or related to contributions to, the termination of, withdrawal from, or cessation of the Company’s participation in, and benefits due under any Employee Benefit Plan, and all Liabilities of an ERISA Affiliate for contributions to and the termination of a pension plan or contributions to or a withdrawal from a multiemployer plan (as those terms are defined in §§3(2) and (37) of ERISA);

               (v) all Liabilities for salaries, wages, bonuses, overtime payments, vacation days, personal days and similar forms of leave or compensation for or based upon the employment of (i) the current and former Employees who are not Retained Employees, and (ii) the current and former Employees who are Retained Employees, but only to the extent they are accrued, due, or earned prior to and including the Closing Date;

               (vi) all Liabilities for claims of any current or former Employees pursuant

to the WARN Act arising out of acts or omissions of the Company prior to the Closing Date;

               (vii) all Liabilities arising out of compliance with Laws relating to equal employment opportunity, employment, leaves of absence, returns to work, and labor relations for or based upon the employment or termination of employment, or any other action taken or not taken with respect to (i) applicants for employment, (ii) the current and former Employees who are not Retained Employees, and (iii) the current and former Employees who are Retained Employees, but only with respect to periods prior to and including the Closing Date;

               (viii) all Liabilities of the Company for non-pension retiree benefits, including retiree medical benefits for current and former Employees (and their eligible dependents and beneficiaries);

               (ix) all Liabilities relating to assets held in trust under any Employee Benefit Plan;

               (x) [reserved];

               (xi) all Liabilities for the claims, legal actions, suits, litigation, arbitrations, grievances, disputes or investigations involving the Company or based on the action or inaction of the Company prior to and including the Closing Date, including, without limitation, (A) all such matters set forth in Section 5.20 of the Disclosure Schedule and (B) all Liabilities related to any continuing nuisance claims and their future effect;

               (xii) all Liabilities of the Company for unpaid Taxes with respect to any Tax year or portion thereof ending on or before the Closing Date or for any Tax year beginning before and ending after the Closing Date to the extent allocable to the portion of such period beginning before and ending on the Closing Date;

               (xiii) all Liabilities of the Company for the unpaid Taxes of any Person under Reg. §1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise;

               (xiv) all Liabilities for any Environmental Matter or Environmental or Response Action related to any asset that is not owned by the Company;

               (xv) [reserved];

               (xvi) all Liabilities related to Retained Assets and Retained Debt;

               (xvii) all Liabilities to third parties for personal injury or damage to property (other than Liabilities for Environmental Matters or Environmental or Response Actions) attributable to or arising out of the ownership or operation of the Business at or prior to the Closing but not those which are attributable to or arising out of the ownership or operation of the Business after the Closing;

               (xviii) all reclamation obligations arising out of Mining Activities occurring on or prior to the Closing Date as required by the contract mining agreements, as amended, between Mingo Logan Coal Company and its affiliates, on the one hand, and the Company, on the other hand; and

               (xix) all Liabilities, if any, of the Company and its Related Persons (collectively, the “Shareholder Group”) under the Coal Act, including Liabilities for beneficiaries eligible under the Coal Act who are assigned to a member of Shareholder Group or for whom a member of Shareholder Group is required to provide or pay for medical benefits, and for premiums or other contributions that are assessed against any member of Shareholder Group; provided , that the Liabilities retained pursuant to this subsection shall not be affected by Alpha, Parent, Merger Sub or any of their Affiliates being identified under the Coal Act as a successor, successor in interest or Related Person under the Coal Act to any member of Shareholder Group solely as a result of the Merger.

          “Securities Act” means the Securities Act of 1933, as amended.

          “SEC” means the Securities and Exchange Commission.

          “Sellers Representative” means David Lester.

          “Share Consideration” has the meaning set forth in Section 2.2(b).

          “Shareholder Group” has the meaning set forth in paragraph (xix) of the definition of “Retained Liabilities.”

          “Shareholder Indemnities” means, collectively, Shareholders and their respective Affiliates (which, after the Closing, shall exclude the Company), and the officers, directors, employees, agents and representatives of Shareholders and their respective Affiliates.

          “Shareholders” has the meaning set forth in the preamble.

          “Shareholders Closing Certificate” means the certificate of Shareholders substantially in the form of Exhibit C attached to this Agreement.

          “Shareholders Indemnitees” means, collectively, Shareholders and their Affiliates, and the officers, directors, employees, agents and representatives of Shareholders and their Affiliates.

          “Shareholders Subscription Agreement” means a Shareholders Subscription Agreement in the form of Exhibit H completed and signed by each Shareholder concurrent with the execution and delivery of this Agreement.

          “SMCRA” has the meaning set forth in Section 5.12(e).

          “Straddle Period” means a Tax period or year commencing before and ending after the Closing Date.

          “Straddle Return” means a Tax Return for a Straddle Period.

          “Subsidiary” means any Person with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the Equity Interests or has the power to vote or direct the voting of sufficient Equity Interests to elect a majority of the directors or a similar governing body; provided, however, that Buchanan Energy, LLC shall not be deemed a subsidiary of the Company.

          “Surviving Entity” has the meaning set forth in Section 2.1(a)

          “Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

          “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any required tax shelter disclosures and reporting, any schedule or attachment thereto, and any amendment thereof.

          “Terminated Employees” has the meaning set forth in Section 11.1.

          “Third Party Claim” means any Proceeding by or before any Governmental Authority or any arbitration or other alternative dispute resolution proceeding made or brought by any Person who is not a Party or an Affiliate of a Party.

          “Transfer Agent” has the meaning set forth in Section 2.3(b).

          “WARN Act” means the Worker Adjustment and Retraining Notification Act, as amended.

          “Weighted Average Daily Trading Price” has the meaning set forth in Section 2.2(b).

          “Welfare Plans” has the meaning set forth in Section 5.24(a).

          “West Virginia Law” has the meaning set forth in Section 2.1(a).

          “Working Capital” means the working capital of the Company an amount (which may be a positive or negative number) computed in accordance with Section 1.10 of the Disclosure Schedule.

          “Workers’ Compensation Acts” means Laws that provide for awards to employees and their dependents for employment-related accidents and diseases.

          “Year End Financial Statements” has the meaning set forth in Section 5.8.

ARTICLE II
THE MERGER

     2.1 The Merger .

          (a) At the Effective Time, the Company shall be merged (the “Merger”) with and into Merger Sub in accordance with the Business Corporation Act of the State of West Virginia (the “West Virginia Law”) and the Limited Liability Company Act of the State of Delaware (the “Delaware Law”), whereupon the separate existence of the Company shall cease, and Merger Sub shall be the surviving entity (the “Surviving Entity”).

          (b) The closing of the transactions contemplated by this Agreement (“Closing”) shall take place at the offices of Alpha in Abingdon, Virginia commencing at 9:00 a.m., local time on the tenth Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated by this Agreement (other than conditions with respect to actions each Party will take at the Closing itself), or such other date as the Parties may mutually determine. The date on which the Effective Time occurs is referred to in this Agreement as the “Closing Date.”

          (c) At the Closing, upon fulfillment or waiver of the conditions precedent to the Merger set forth in Article VIII, the Parties shall cause appropriate merger filings to be made with the Secretaries of State of the States of West Virginia and Delaware, in such forms as required by, and duly executed in accordance with, the relevant provisions of the West Virginia Law and the Delaware Law using the procedures permitted by Section 31D-11-1102 of the West Virginia Law and in Section 18-209 of the Delaware Law, respectively. The Merger shall become effective at such time as the both such filings are duly made or at such later time as the Company and Alpha agree to specify in such filings (the “Effective Time”).

          (d) From and after the Effective Time, the Surviving Entity shall possess all the rights, privileges, powers and franchises and be subject to all of the restrictions, disabilities and duties of the Company and Merger Sub, all as provided under Delaware Law and West Virginia Law.

          (e) The Surviving Entity may, at any time after the Effective Time, take any action (including the execution and delivery of any document) in the name and on behalf of either of the Company and Merger Sub in order to carry out and effectuate the transactions contemplated by this Agreement.

          (f) At the Effective Time, the governing instruments of the Surviving Entity shall be the limited liability company agreement of Merger Sub until thereafter amended in accordance

with applicable law.

          (g) From and after the Effective Time, the directors and officers of Merger Sub shall be the directors and officers of the Surviving Entity.

          (h) After the close of business on the Closing Date, no transfers of Company Shares outstanding prior to the Effective Time shall be made on the stock transfer books of the Surviving Corporation.

     2.2 Conversion of Shares . At the Effective Time:

          (a) each Company Share held by the Company as treasury stock shall be canceled and no payment shall be made with respect thereto;

          (b) (i) the Company Shares issued and outstanding immediately prior to the Effective Time shall (except as otherwise provided in Section 2.2(a)) be converted as a whole into the right to receive in exchange therefor (A) cash in an amount equal to $19,762,000, without interest (the “Cash Consideration”), subject to cash adjustment as provided in Section 2.4, and (B) the number of validly issued, fully paid and non-assessable Alpha Shares (the “Share Consideration” and collectively with the Cash Consideration, the “Merger Consideration”) determined below. If: (i) the Closing Price (as hereinafter defined in this Section 2.2(b)) is equal to or greater than $27.52 per Alpha Share but not greater than $33.64 per Alpha Share, then the Share Consideration shall equal the quotient obtained by dividing (x) $60,000,000 by (y) the Closing Price; (ii) the Closing Price is less than $27.52 per Alpha Share, the Company shall have the right to terminate this Agreement as provided in Section 12.1(d) (but if the Company does not so terminate, then the Share Consideration shall be 2,180,233Alpha Shares); and (iii) the Closing Price is greater than $33.64 per Alpha Share, Parent, Merger Sub and Alpha shall have the right to terminate this Agreement as provided in Section 12.1(e) (but if Parent, Merger Sub and Alpha do not so terminate, then the Share Consideration shall be 1,783,591 Alpha Shares). The Merger Consideration shall be allocated to Shareholders as specified on Section 2.2(b) of the Disclosure Schedule. No Company Share shall be deemed to be outstanding or to have any rights other than those set forth in this Section 2.2(b)(i) after the Effective Time. If, subsequent to the date of this Agreement but prior to the Effective Time, the Company changes the number of Company Shares, or Alpha changes the number of Alpha Shares, outstanding as a result of any stock split, stock dividend, recapitalization or similar transaction, the Share Consideration obtainable upon conversion of a Company Share as provided in this Section 2.2(b) shall be appropriately adjusted;

               (ii) for purposes of this Agreement, (A) “Closing Price” shall mean the Weighted Average Daily Trading Price of Alpha Shares on the New York Stock Exchange during the last 20 days on which Alpha Shares are traded prior to the Closing Date, and (B) “Weighted Average Daily Trading Price” for the20 days shall mean (i) the sum for all 20 days of (x) the average of the high and low sales prices for each of the 20 days times (y) the number of shares traded on each such day, all as is reported on the New York Stock Exchange Trading Report, divided by (z) the total number of shares traded during such 20 days, as is reported on the New York Stock Exchange Trading Report; and

               (iii) the membership interest of Merger Sub outstanding immediately prior to the Effective Time shall remain outstanding and be unaffected by the Merger as the membership interest of the Surviving Entity.

     2.3 Conduct of Closing .

          (a) At Closing, (i) Parent will deliver to Sellers Representative the various certificates, instruments, and documents referred to in Section 8.2, (ii) Sellers Representative will deliver to Parent the various certificates, instruments, and documents referred to in Section 8.1, (iii) Parent will cause to be delivered to Sellers Representative, on behalf of and for the benefit of Shareholders, the Merger Consideration specified in Section 2.2 as provided in Section 2.8(b) (exclusive of the Alpha Shares deposited with the Escrow Agent pursuant to the Escrow Agreement) with the Cash Consideration being delivered by wire transfer of immediately available funds in accordance with instructions provided by Seller Representative, (iv) each Seller will deliver to Escrow Agent five stock powers duly executed in blank (with any required signature guarantees) to facilitate any disbursements and distributions of the Escrow Amount required pursuant to the terms of the Escrow Agreement, (v) Parent, at the direction of Sellers Representative, which direction is hereby irrevocably given, will cause the Escrow Amount to be delivered to the Escrow Agent to hold pursuant to the Escrow Agreement, (vi) Sellers Representative will deliver to Parent a certified copy of the Organizational Documents of, and a certificate of good standing, with respect to the Company issued by the Secretary of State of West Virginia as of a date not more than five days prior to the Closing Date, (vii) Parent will cause to be delivered to Sellers Representative a certified copy of Alpha’s Organizational Documents and a certificate of good standing, existence or similar document with respect to Alpha, Parent and Merger Sub, in each case issued by the appropriate Governmental Authority of the jurisdiction of formation as of a date not more than five days prior to the Closing Date, (viii) Sellers Representative will deliver the written resignations of each officer and director of the Company such resignations to be effective as of the Effective Time, and (ix) each Shareholder will deliver such other certificates, instruments of conveyance and documents as may be reasonably requested by Alpha, Parent or Merger Sub prior to the Closing Date to consummate the transactions contemplated by this Agreement.

          (b) At Closing, (A) Alpha will cause Equiserve Trust Company, N.A. (the “Transfer Agent”) to issue stock certificates representing the Alpha Shares referred to Section 2.2(b) (issued in the names of the respective Shareholders), (B) each Shareholder shall surrender to Alpha the certificate(s) which represented his or her Company Shares (or an affidavit of lost certificate in a form satisfactory to Alpha) duly endorsed or accompanied by stock powers duly executed in blank and (C) the Transfer Agent will furnish each Shareholder with a certificate representing the number of Alpha Shares to which such Shareholder is entitled (exclusive of the Alpha Shares deposited with the Escrow Agent pursuant to the Escrow Agreement).

          (c) Parent shall pay all charges and expenses of the Transfer Agent.

     2.4 Working Capital True Up .

          (a) At least two Business Days prior to the Closing, Sellers Representative shall deliver to Alpha the Month End Balance Sheet. If the Working Capital of the Company as calculated

based on the Month End Balance Sheet and in accordance with Section 1.10 of the Disclosure Schedule (the “Estimated Working Capital”) is greater than or less than the Base Working Capital, then the Cash Consideration shall be increased or decreased, as appropriate, at Closing by a cash payment by wire transfer of immediately available funds from Sellers Representative, on behalf and for the benefit of Shareholders, to Parent or Parent to Sellers Representative, on behalf and for the benefit of Shareholders, on a dollar-for-dollar basis by the amount of such excess or deficit (such adjustment, the “Estimated True Up”).

          (b) As soon as practicable, but in any event no later than 60 days following the Closing Date, Parent shall prepare and deliver to Sellers Representative (i) the Closing Balance Sheet, upon which a payment (the “Final True Up”) will be based and (ii) a written statement (the “Actual Statement”), prepared by the Chief Financial Officer of Parent, certifying the amount of the Final True Up (which may be a positive or negative number) and setting forth the calculation of such amount. The Final True Up shall be an amount equal to (A) the actual amount of Working Capital of the Company on the Closing Date as determined based on the Closing Balance Sheet (the “Final Working Capital”), less (B) the Estimated Working Capital. If, within 10 Business Days following delivery of the Closing Balance Sheet and the Actual Statement to Sellers Representative, Sellers Representative shall not have given Parent notice of Sellers Representative’s objection to the computation of the Final True Up (which notice shall contain a statement of the basis of such objection), then the amount of Final True Up at the Closing Date will be final and binding upon the Parties, absent manifest error. If Sellers Representative gives notice to Parent of Sellers Representative’s objection, and Parent and Sellers Representative are unable to resolve the issues in dispute within 30 days after delivery of such notice of objection, such issues will be submitted for resolution to Grant Thornton LLP, independent certified public accountants, or such other nationally recognized firm of independent certified public accountants mutually selected by the Parties (the “Neutral Auditor”). The Neutral Auditor shall be engaged within 15 days after the expiration of the 30 day period set forth in the preceding sentence. The Neutral Auditor shall make such review and examination of the relevant facts and documents as the Neutral Auditor deems appropriate, and shall permit each of Parent and Sellers Representative to make a written presentation of their respective positions; provided, however, that the Neutral Auditor shall require all facts, documents and written presentations from Parent and Sellers Representative to be completely submitted within 30 days after the Neutral Auditor has been engaged. Within 30 days after submission of such facts, documents and written presentations, the Neutral Auditor shall resolve all disputed items in writing and shall prepare and deliver its decision, which shall be final and binding upon the Parties without further recourse or collateral attack and, as to each disputed matter, shall accept (x) either Parent’s or Sellers Representative’s position on each disputed matter set forth in Shareholder Representative’s notice of objection provided pursuant to the fourth sentence of this Section 2.4(b) or (y) the stipulated position of Parent and Sellers Representative with respect to any matter which prior to such stipulation was disputed. All costs of the dispute resolution process contemplated by this Section 2.4(b) (including, without limitation, the Neutral Auditor’s fees, but exclusive of attorneys’ fees) shall be borne by the Party who is the least successful in such process, which shall be determined by comparing (x) the position asserted by each Party on all disputed matters taken together to (y) the final decision of the Neutral Auditor on all disputed matters taken together. For purposes of the preceding sentence: the “disputed matters” shall be all matters raised in Sellers Representative’s notice of objection provided pursuant to the fourth sentence of this Section 2.4(b) and the “position asserted” by Sellers Representative shall be determined by reference to the notice of objection; and the “position

asserted” by Parent shall be determined by reference to Parent’s written presentation submitted pursuant to the sixth sentence of this Section 2.4(b). The Neutral Auditor shall not preside over any hearing of the Parties nor permit the Parties to make any oral arguments to the Neutral Auditor.

          (c) Within five Business Days of the completion of the computations required by Section 2.4(b), if the Final True Up is a positive number, it shall be paid by Parent to Sellers Representative, on behalf and for the benefit of Shareholders. If the Final True Up is a negative number, it shall be paid by Sellers Representative, on behalf and for the benefit of Shareholders to Parent. Any such payments shall be made by wire transfer of immediately available funds.

          (d) The right to receive the positive Final True Up (or the obligation to pay the negative Estimated True Up and Final True Up) shall be allocated to each Shareholder in the manner determined by Sellers Representative. Parent and its Affiliates may conclusively and absolutely rely, without inquiry, upon Sellers Representative’s decisions regarding the proper allocation of such amounts to each Shareholder and each Shareholder agrees such decisions made by Sellers Representative shall be final and binding upon it. Each Shareholder agrees that Alpha and Parent shall have no Liability with respect to the payment of any positive Final True Up other than to pay any such amounts when due to Sellers Representative as determined in accordance with this Section 2.4.

          (e) Except as set forth in this Section 2.4, Parent and Shareholders shall bear their own expenses incurred in connection with the preparation and review of the Closing Balance Sheet and the Actual Statement.

     2.5 Retained Assets and Retained Liabilities .

          (a) Neither the Surviving Entity, Alpha, Parent nor any of their respective Affiliates shall acquire any of the Retained Assets nor be responsible for any of the Retained Liabilities.

          (b) Upon and after the Closing, the Retained Liabilities shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Shareholders. On or prior to the Closing Date, Shareholders shall cause the Retained Assets and Retained Liabilities to be assigned to or assumed by Shareholders in a manner satisfactory to Parent (or, in the case of the Retained Debt, Shareholders shall cause the Retained Debt to be assigned or otherwise transferred to a Shareholder or a third party designated by Shareholders (other than the Company) or fully pay and satisfy such Retained Debt). To the extent that any of the Retained Assets and Retained Liabilities cannot be assigned to or assumed by Shareholders prior to the Closing Date (including without limitation where such an assumption would constitute a breach or default under any agreement, encumbrance or commitment, would violate any Law or Decree), then the Surviving Entity, without having to incur or suffer any Adverse Consequences, and Shareholders will execute and deliver any other documents, certificates, agreements and other writings, and take such other actions, in each case, as may be reasonably necessary or desirable in order to provide to or impose upon Shareholders the benefits and unconditional obligation associated with any such Retained Assets and Retained Liabilities.

     2.6 Attempted Assignment . If the act of vesting in the Surviving Entity as a result of the Merger of any of the rights, privileges, powers and franchises or the restrictions, disabilities and duties of the Company would (i) constitute a breach or default under any Contract, (ii) violate any Law or (iii) adversely affect the rights, or increase the obligations of Surviving Entity, so that the Surviving Entity would not, in fact, be vested with receive all such rights, privileges, powers and franchises or the restrictions, disabilities and duties of the Company as they exist prior to such attempted assignment or assumption, then the Surviving Entity, without having to incur or suffer any Adverse Consequences, and Company and Shareholders shall enter into such arrangements as may be reasonably acceptable to the Surviving Entity to provide the Surviving Entity with the benefits of the rights or restrictions, as the case may be, and any transfer or assignment to the Surviving Entity which shall require such consent or authorization of a third party that is not obtained shall be made subject to such consent or authorization being obtained.

     2.7 Intercompany Transactions . Immediately before the Closing, all outstanding receivables, payables and other indebtedness among the Company, on the one hand, and Shareholders or their Affiliates, on the other hand, shall be satisfied and discharged, without any Adverse Consequences to the Surviving Entity, Alpha, Parent or their Affiliates. Except as set forth in Section 2.7 of the Disclosure Schedule, all intercompany transactions or arrangements between Shareholders or any of their Affiliates, on the one hand, and the Company, on the other hand, shall be terminated as of the Closing, in such manner as Shareholders shall specify, without imposing Adverse Consequences upon the Surviving Entity, Alpha, Parent or their Affiliates, and none of the Parties shall have any further Liability in respect of any such transaction or arrangement.

     2.8 Further Assurances . If at any time after the Effective Time, the Surviving Entity shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Entity its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either of the Company or Merger Sub, or (b) otherwise to carry out the purposes of this Agreement, the Surviving Entity and its proper officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of either of the Company or Merger Sub, all such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of either the Company or Merger Sub, all such other acts and things as may be necessary, desirable or proper to vest, perfect or confirm the Surviving Entity’s right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Company or Merger Sub, and otherwise to carry out the purposes of this Agreement.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS REGARDING THE
TRANSACTION

     Each Shareholder represents and warrants to Alpha, Parent and Merger Sub that the statements contained in this Article III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article III) with respect to itself,

except as set forth in Annex I to this Agreement.

     3.1 Authorization of Transaction . Such Shareholder has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement. This Agreement has been duly executed by such Shareholder and constitutes the valid and legally binding obligation of such Shareholder enforceable against it in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting creditor’s rights generally and general principals of equity. Such Shareholder need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement. The unanimous written consent of Shareholders approving this Agreement, which is evidenced by the Shareholders’ execution and delivery of this Agreement, is the only vote of the Company’s shareholders required by West Virginia Law for the adoption and approval of this Agreement, the Merger and the transactions contemplated by this Agreement.

     3.2 Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any Law, Decree, or other restriction of any Governmental Authority to which such Shareholder is subject, (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which such Shareholder is a party or by which it is bound or to which any of its assets are subject or (c) result in the imposition or creation of an Encumbrance upon or with respect to the Surviving Entity.

     3.3 Brokers’ Fees . Such Shareholder has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Alpha, Parent or the Surviving Entity could become liable or obligated.

     3.4 Ownership . The Company Shares owned beneficially or of record by such Shareholder are held free and clear of any Encumbrances or Taxes and there are no Commitments with respect to such Company Shares. Such Shareholder is not a party to any voting trust, proxy, or other agreement or understanding with respect to voting any equity interests of the Company.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALPHA, PARENT AND MERGER SUB
REGARDING THE TRANSACTION

     Alpha, Parent and Merger Sub represent and warrant to the Company and Shareholders that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article IV), except as set forth in Annex II to this Agreement.

     4.1 Organization of Alpha . Alpha is a corporation, Parent is a limited liability company and Merger Sub is a limited liability company each duly organized, validly existing, and in good

standing under the Laws of the State of Delaware.

     4.2 Authorization of Transaction . Alpha, Parent and Merger Sub each has the requisite power and authority to execute and deliver this Agreement and to perform its obligations under this Agreement. This Agreement has been duly executed by Alpha, Parent and Merger Sub and constitutes the valid and legally binding obligation of Alpha, Parent and Merger Sub, enforceable against each in accordance with its terms and conditions, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar Laws affecting creditor’s rights generally and general principals of equity. Other than with respect to the Permits, Alpha, Parent and Merger Sub need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement. The written consent of Parent approving this Agreement is the only vote of the Merger Subs’ members required by Delaware Law for the adoption and approval of this Agreement, the Merger and the transactions contemplated by this Agreement.

     4.3 Capitalization . As of the date of this Agreement, the authorized capital stock of Alpha consists of (i) 100 million Alpha Shares, of which 62,224,580 shares are outstanding, and (ii) 10 million shares of preferred stock, $.01 par value, none of which is outstanding. As of the date of this Agreement, there are issued and outstanding options to acquire 1,269,194 Alpha Shares (the “Options”). Except as disclosed in the Public Reports, as of the date of this Agreement, there are no Commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any Equity Interests (other than such Options), and there are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company. All Equity Interests issued by Alpha have been issued in compliance with the Securities Act and applicable state securities Laws. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the Equity Interests of Alpha. All of the Alpha Shares to be issued to Shareholders have been and are duly authorized and, upon consummation of the transactions contemplated hereby, will be validly issued, fully paid, and nonassessable. The Alpha Shares to be issued to Shareholders, at the time of issuance, will be free and clear of any restrictions on transfer (other than restrictions on transfer imposed under the Securities Act), taxes, Security Interests, options, warrants, purchase rights, contracts, commitments, equities, claims, preemptive rights and demands. There are no stockholder agreements, voting trusts or other agreements or understandings to which Alpha is a party or by which it is bound relating to the voting of any of Alpha Shares. The entire equity capitalization of Merger Sub consists of its membership interests, all of which are duly authorized, validly issued and are owned of record and beneficially only by Parent.

     4.4 Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any Law, Decree, or other restriction of any Government Authority to which Alpha or Parent is subject or any provision of its Organizational Documents or (b) other than as set forth in Section 4.2 of Annex II, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Alpha or Parent is a party or by which it is bound or to which any of its assets is subject.

     4.5 Brokers’ Fees . Alpha, Parent and Merger Sub have no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which any Shareholder could become liable or obligated.

     4.6. [Reserved]

     4.7 Operations of Merger Sub . Merger Sub is a wholly owned Subsidiary of Parent, was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.

     4.8 Filings with the SEC . Alpha has made all filings with the SEC that it has been required to make since December 6, 2004, under the Securities Act and the Securities Exchange Act (collectively with any voluntary filings, the “Public Reports”) in a timely manner. Each of the Public Reports has complied with the Securities Act and the Securities Exchange Act in all material respects. None of the Public Reports, as of their (i) respective dates with respect to filings under the Exchange Act, (ii) effective dates with respect to registration statements and post-effective amendments thereto filed under the Securities Act, and (iii) respective dates as to any definitive prospectus or prospectus supplement filed pursuant to Rule 424(b) promulgated under the Securities Act, as the case may be, contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Public Reports (together with true and correct copies of all exhibits and schedules thereto as amended to date) are available on EDGAR in the form filed by Alpha, and Alpha has not omitted to file any Public Report on EDGAR.

     4.9 Financial Statements . Each of the combined or consolidated financial statements of Alpha and its consolidated Subsidiaries (including the notes thereto) contained in the Public Reports: has been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby ( provided, however, that the unaudited condensed consolidated balance sheets and statements of operations, cash flows changes in stockholders’ equity, and cash flow as of and for any interim period reported upon for Alpha and its consolidated Subsidiaries are subject to normal year-end adjustments and lack footnotes and other presentation items as permitted in accordance with GAAP as to interim statements); present fairly the financial condition of Alpha and its consolidated Subsidiaries as of such dates and the results of operations of Alpha and its consolidated Subsidiaries for such periods; and are consistent with the books and records of Alpha and its consolidated Subsidiaries. Alpha and its consolidated Subsidiaries have maintained systems of internal accounting controls sufficient to provide reasonable assurances that (A) all transactions are executed in accordance with management’s general or specific authorization, (B) all transactions are recorded as necessary to permit the preparation of annual and interim financial statements in conformity with GAAP and to maintain proper accountability for items, and (C) access to their property and assets is permitted only in accordance with management’s general or specific authorization.

     4.10 Subsequent Events . Except issuances pursuant to stock incentive plans, as disclosed in the Public Reports, or as contemplated by this Agreement, since August 15, 2005: (a) there has not been any (i) material adverse change in the financial condition of Alpha and its consolidated

Subsidiaries taken as a whole; (ii) amendment to the articles of incorporation of Alpha; (iii) payment of dividends or changes in the capital structure of Alpha; or (iv) other transactions material to Alpha and its consolidated Subsidiaries taken as a whole; and (b) Alpha has conducted its, and has caused its consolidated Subsidiaries to conduct their, business and affairs only in the Ordinary Course of Business.

     4.11 Securities Act . Assuming the accuracy of the information provided to Alpha by, and the representations and warranties made to Alpha by, Shareholders in the Shareholders Subscription Agreement, the offer and sale by Alpha of the Alpha Shares pursuant to this Agreement will be exempt from registration under the Securities Act and applicable state securities laws, or, if not exempt under applicable state securities laws, Alpha will take such steps as are required to register such shares in compliance with applicable state securities laws.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company represents and warrants to Alpha, Parent and Merger Sub that the statements contained in this Article V are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Article V), except as set forth in the disclosure schedule delivered by Shareholders to Alpha on the date of this Agreement (the “Disclosure Schedule”):

     5.1 Organization, Qualification, and Power . The Company is a corporation that is duly organized, validly existing, and in good standing under the Laws of the jurisdiction of its incorporation. The Company is duly authorized to conduct business and is in good standing under the Laws of each jurisdiction where such qualification is required. The Company has full corporate power and authority and all material licenses, permits, and authorizations necessary to carry on the Business in which it is engaged and in which it presently proposes to engage and to own and use the properties owned and used by it. Section 5.1 of the Disclosure Schedule lists the directors and officers of each of the Company. Shareholders have delivered to Parent correct and complete copies of the Organizational Documents of each of the Company (as amended to date). The minute books (containing the records of meetings of the stockholders, members, partners, or other governing bodies, and any committees of such governing bodies), the ownership certificates and record books of each of the Company are correct and complete in all material respects. The Company is not in default under or in violation of any provision of its Organizational Documents.

     5.2 Capitalization . Section 5.2 of the Disclosure Schedule sets forth a complete and correct listing of the record and beneficial ownership of the Equity Interests issued by each of the Company and the entire Equity Interests the Company is authorized to issue. All of the issued and outstanding Equity Interests of the Company have been duly authorized, are validly issued, fully paid, and non-assessable, and are held of record by the respective Shareholders as set forth in Section 5.2 of the Disclosure Schedule. There are no Commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any Equity Interests. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to

the Company. All Equity Interests issued by Company have been issued substantially in compliance with the Securities Act and applicable state securities Laws. Other than as set forth in Organizational Documents previously provided to Parent, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the Equity Interests of the Company.

     5.3 Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any Law, Decree, or other restriction of any Governmental Authority to which the Company is subject, or any provision of the Organizational Documents of the Company, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which any of them is bound or to which any of their assets is subject (or result in the imposition of any Encumbrance upon any of its assets). The Company is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order for the Parties to consummate the transactions contemplated by this Agreement.

     5.4 Brokers’ Fees . Neither the Company nor any Shareholder has any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

     5.5 Real Property .

          (a) Section 5.5(a) of the Disclosure Schedule lists all tracts, parcels, lots and real property interests in which the Company has (i) an ownership interest and/or (ii) a leasehold interest, including a description of all Real Property leases. The Real Property listed in Section 5.5(a) of the Disclosure Schedule includes all real property necessary or required to operate the Business in the manner currently conducted.

          (b) The Company has (i) marketable title to all Real Property listed as owned by it on Section 5.5(a) and (ii) a valid leasehold interest in all Real Property listed as leased by it on Section 5.5(a) of the Disclosure Schedule, in each case, free and clear of any Encumbrances, except for Permitted Encumbrances.

          (c) The Company is not in default under any lease or other agreement relating to the Real Property, and the Company has not received any written notice alleging that the Company is in default under any lease.

          (d) Each of the leases listed on Section 5.5(a) of the Disclosure Schedule is, and, subject to obtaining any requisite third party consents, all of which are specified in Section 5.5(d) of the Disclosure Schedule, will be on and immediately following the Closing, valid and enforceable against the lessor or other parties thereto in accordance with its terms. There are no unwritten or oral modifications to such leases or any course of dealing or business operations that can be construed as a modification to such leases other than those described in Section 5.5(d) of the Disclosure Schedule. To the Knowledge of Shareholders, the lessors under each of the leases have good and marketable title to leased Real Property.

          (e) The Company has not received (and the Company has no Basis to believe that it will receive) any notice of claims that its has mined any coal that it did not have the right to mine or mined any coal in such reckless and imprudent fashion as to give rise to any claims for loss, waste or trespass.

          (f) No condemnation or eminent domain Proceeding against any part of the Real Property is pending or, to the Knowledge of Shareholders, threatened.

          (g) Shareholders have made available to Alpha all Books and Records, including but limited to the geological data, reserve data, material existing mine maps, surveys, title insurance policies, title insurance, abstracts and other evidence of title core hole logs and associated data, coal measurements, coal samples, lithologic data, coal reserve calculations or reports, washability analyses or reports, mine plans, mining permit applications and supporting data, engineering studies and information, maps, reports and data in the possession of the Company and relating to or affecting the Real Property, including the coal reserves, coal ownership, coal leases to Company, coal leases from the Company to third parties, mining conditions, mines, and mining plans of the Company (collectively, “Mining Data”). Notwithstanding anything in this Agreement to the contrary, Parent accepts the coal reserves in or under the Real Property, as is, where is, together with the mining data, free of any warranty (express or implied) with regard to the mineability, washability, recoverability, volume, or quantity or quality of any coal reserve. To the Knowledge of Shareholders, the coal reserves mined by the Company (whether such reserves are owned or leased by the Company) are not subject to any mining rights of any other Person with respect to such coal reserves, except for surface use and other appurtenant rights for the mining of the coal seams that are not owned or leased by the Company.

     5.6 Other Assets .

          (a) The assets of the Company constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated.

          (b) The Company (A) has good and marketable title to all of its assets (other than Real Property, which is addressed in Section 5.5), free and clear of any Encumbrance, except for Permitted Encumbrances, or (B) leases, if applicable, such assets under valid and enforceable leases. No rights of the Company under such leases have been assigned or otherwise transferred as security for any obligation of the Company or any of its Affiliates.

          (c) Each material tangible asset used in the Business or owned or leased by the Company (including all Equipment) is in good repair and operating condition, ordinary wear and tear excepted, and has been maintained in accordance with normal industry practice and is suitable for the purposes for which the Company is presently using such Equipment, normal wear and tear excepted. No item of Equipment is in need of repair or replacement other than as part of routine maintenance in the Ordinary Course of Business. All of the Equipment is in the possession of the Company.

          (d) All Books and Records (including income and non-income Tax Returns and relating workpapers) have been adequately maintained for all periods ending after December 31,

1998 (or for periods that the statute of limitations remains open).

     5.7 Subsidiaries . The Company does not own any Equity Interests in another Person or controls directly or indirectly any Person.

     5.8 Financial Statements . Attached to this Agreement as Exhibit E are the following fi