STOCK PURCHASE AGREEMENT by and among JAMES RIVER COAL COMPANY, INC., TRIAD MINING, INC. and THE STOCKHOLDERS OF TRIAD MINING, INC. dated as of March 30, 2005

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Title: STOCK PURCHASE AGREEMENT by and among JAMES RIVER COAL COMPANY, INC., TRIAD MINING, INC. and THE STOCKHOLDERS OF TRIAD MINING, INC. dated as of March 30, 2005
Governing Law: Tennessee Date: 4/19/2005
Industry: Coal Law Firm: Kilpatrick Stockton;Bass Berry Sector: Energy

STOCK PURCHASE AGREEMENT

by and among

JAMES RIVER COAL COMPANY, INC.,

TRIAD MINING, INC.

and

THE STOCKHOLDERS OF TRIAD MINING, INC.

dated as of March 30, 2005

TABLE OF CONTENTS

1. DEFINITIONS*		1
2. SALE AND TRANSFER OF SHARES; CLOSING*		9
2.1	SHARES	9
2.2	PURCHASE PRICE	9
2.3	CLOSING	9
2.4	CLOSING OBLIGATIONS	9
2.5	NET WORKING CAPITAL ADJUSTMENT	10
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS*		11
3.1	ORGANIZATION AND GOOD STANDING	11
3.2	AUTHORITY; NO CONFLICT	11
3.3	CAPITALIZATION	12
3.4	FINANCIAL STATEMENTS	12
3.5	BOOKS AND RECORDS	13
3.6	TITLE TO PROPERTIES; ENCUMBRANCES; PERSONAL PROPERTY; REAL PROPERTY	13
3.7	CONDITION AND SUFFICIENCY OF ASSETS	15
3.8	ACCOUNTS RECEIVABLE	15
3.9	INVENTORY	16
3.10	NO UNDISCLOSED LIABILITIES	16
3.11	TAXES	16
3.12	BANK ACCOUNTS	18
3.13	EMPLOYEE BENEFITS	18
3.14	COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS	23
3.15	LEGAL PROCEEDINGS; ORDERS	25
3.16	ABSENCE OF CERTAIN CHANGES AND EVENTS	26
3.17	CONTRACTS; NO DEFAULTS	27
3.18	INSURANCE	29
3.19	ENVIRONMENTAL AND SMCRA MATTERS	30
3.20	EMPLOYEES	31
3.21	LABOR RELATIONS; COMPLIANCE	32
3.22	INTELLECTUAL PROPERTY	32
3.23	CERTAIN PAYMENTS	32
3.24	CUSTOMERS AND SUPPLIERS	33
3.25	SOLVENCY	33
3.26	OFFERS	33
3.27	DEBT; SECURITY INTERESTS	33
3.28	GRANTS AND ALLOWANCES	33
3.29	RELATIONSHIPS WITH RELATED PERSONS	34

3.30	BROKERS OR FINDERS	34
3.31	DISCLOSURE	34
3.32	INFORMATION IN REGISTRATION STATEMENT	34
3A. REPRESENTATIONS AND WARRANTIES OF EACH SELLER*		34
3A.1	STOCKHOLDERS TITLE	34
3A.2	AUTHORITY; NO CONFLICT	35
3A.3	INVESTMENT INTENT	35
3A.4	DISCLOSURE	35
4. REPRESENTATIONS AND WARRANTIES OF BUYER*		36
4.1	ORGANIZATION AND GOOD STANDING	36
4.2	AUTHORITY; NO CONFLICT	36
4.3	INVESTMENT INTENT	36
4.4	CERTAIN PROCEEDINGS	36
4.5	SEC REPORTS	37
4.6	BROKERS OR FINDERS	37
4.7	SHARES OF BUYERS STOCK	37
4.8	BUYER’S INVESTIGATION OF COMPANY	37
4.9	DISCLOSURE	37
4.10	SHAREHOLDER APPROVAL	37
4.11	NO MATERIAL ADVERSE CHANGE	38
5. COVENANTS OF SELLERS AND THE COMPANY*		38
5.1	ACCESS AND INVESTIGATION	38
5.2	OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES	38
5.3	NEGATIVE COVENANT	39
5.4	REQUIRED APPROVALS	39
5.5	NOTIFICATION	39
5.6	PAYMENT OF INDEBTEDNESS BY RELATED PERSONS	39
5.7	NO NEGOTIATION	39
5.8	BEST EFFORTS	39
5.9	RESIGNATIONS	40
5.10	COOPERATION IN FINANCING	40
5.11	NONCOMPETITION AND NONSOLICITATION	40
5.12	TAX MATTERS	41
5.13	PLANT REPAIRS	43
6. COVENANTS OF BUYER*		43
6.1	APPROVALS OF GOVERNMENTAL BODIES	43
6.2	EFFORTS	43
6.3	SELLER GUARANTEES; BONDS	43
6.4	ACCESS	45

6.5	NOTIFICATION	45
6.6	DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION	45
6.7	INSURANCE	45
6.8	TREATMENT OF TRIAD MINING INC. PROFIT SHARING PLAN	45
7. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE*		46
7.1	ACCURACY OF REPRESENTATIONS	46
7.2	SELLERS’ PERFORMANCE	46
7.3	CONSENTS	46
7.4	ADDITIONAL DOCUMENTS	46
7.5	NO PROCEEDINGS	47
7.6	NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS	47
7.7	NO PROHIBITION	47
7.8	FINANCING	47
8. CONDITIONS PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE*		48
8.1	ACCURACY OF REPRESENTATIONS	48
8.2	BUYER’S PERFORMANCE	48
8.3	[INTENTIONALLY OMITTED]	48
8.4	ADDITIONAL DOCUMENTS	48
8.5	NO INJUNCTION	48
9. TERMINATION*		49
9.1	TERMINATION EVENTS	49
9.2	EFFECT OF TERMINATION	49
10. INDEMNIFICATION; REMEDIES*		49
10.1	SURVIVAL	49
10.2	INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS	49
10.3	INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS— ENVIRONMENTAL MATTERS	50
10.4	INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER	51
10.5	TIME LIMITATIONS	51
10.6	LIMITATIONS ON AMOUNT—SELLERS	51
10.7	LIMITATIONS ON AMOUNT—BUYER	52
10.8	PROCEDURE FOR INDEMNIFICATION—THIRD PARTY CLAIMS	52
10.9	PROCEDURE FOR INDEMNIFICATION —OTHER CLAIMS	53
10.10	INSURANCE COVERAGE	53
10.11	RIGHT TO SET OFF	53
11. GENERAL PROVISIONS*		53
11.1	EXPENSES	53
11.2	PUBLIC ANNOUNCEMENTS	54
11.3	CONFIDENTIALITY	54

iii

11.4	NOTICES	54
11.5	JURISDICTION; SERVICE OF PROCESS	55
11.6	FURTHER ASSURANCES	55
11.7	WAIVER	55
11.8	ENTIRE AGREEMENT AND MODIFICATION	56
11.9	DISCLOSURE LETTER	56
11.10	ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS	56
11.11	SEVERABILITY	56
11.12	SECTION HEADINGS, CONSTRUCTION	56
11.13	TIME OF ESSENCE	56
11.14	GOVERNING LAW	56
11.15	SELLERS’ AGENT; POWER OF ATTORNEY	56
11.16	COUNTERPARTS	57

Exhibits

Exhibit 2.4(a)(ii)				Form of Sellers’ Releases
Exhibit 2.4(a)(iii)				Form of Consulting Agreements
Exhibit 2.4(a)(iv)				Form of Lease Agreement
Exhibit 2.4(b)(iii)				Form of Registration Rights Agreement
Exhibit 5.13				Form of Warranty Agreement
Exhibit 7.4(a)				Form of Sellers’ Counsel’s Opinion
Exhibit 8.4(a)				Form of Buyer’s Counsels’ Opinions
Sellers Disclosure Letter
Schedule 4.2				Buyer’s Consents
Schedule 5.11				Midwestern Coal Basin
Schedule 5.13				Plant Repairs

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of March 30, 2005, by and among James River Coal Company, a Virginia corporation (“Buyer”), Triad Mining, Inc., an Indiana corporation (the “Company”), and the stockholders of the Company set forth on the signature pages hereto (collectively, the “Sellers”).

RECITALS

Sellers desire to sell, and Buyer desires to purchase, all of the issued and outstanding shares (the “Shares”) of capital stock of the Company for the consideration and on the terms and conditions set forth in this Agreement.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

DEFINITIONS

For purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1:

“Accounts Receivable”—as defined in Section 3.8.

“Acquired Companies”—the Company and its Subsidiaries (including Triad Underground Mining, LLC, an Indiana limited liability company), collectively.

“Acquired Companies’ Surety Bonds”—as defined in Section 3.14(e).

“Adjusted Net Working Capital”—the Net Working Capital of the Acquired Companies as calculated from the Balance Sheet (i.e., $27,942,362), less $16,503,130.

“Agreement”—as defined in the first paragraph of this Agreement.

“Applicable Contract”—any Contract (a) under which any Acquired Company has any rights, (b) under which any Acquired Company has any obligation or liability, or (c) by which any Acquired Company or any of the assets owned or used by it is bound.

“Balance Sheet”—as defined in Section 3.4.

“Best Efforts”—the efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as possible.

“Breach”—a “Breach” of a representation, warranty, covenant, obligation, or other provision of this Agreement or any instrument delivered pursuant to this Agreement will be deemed to have occurred if there is or has been (a) any inaccuracy in or breach of, or any failure to perform or comply with, such representation, warranty, covenant, obligation, or other provision, or (b) any claim (by any Person) or other occurrence or circumstance that renders such representation or warranty inaccurate or violates such covenant, obligation, or other provision, and the term “Breach” means any such inaccuracy, breach, failure, claim, occurrence, or circumstance.

“Buyer”—as defined in the first paragraph of this Agreement.

“Buyer Financial Statements”—as defined in Section 4.5.

“Buyer Shares”—as defined in Section 2.2(b).

“Buyer’s Advisors”—as defined in Section 5.1.

“Calculation Date”—as defined in Section 2.5.

“Calculation Date Balance Sheet”—as defined in Section 2.5.

“Closing”—as defined in Section 2.3.

“Closing Date”—the date and time as of which the Closing actually takes place.

“Coal Act”—the Coal Industry Retiree Health Benefit Act of 1992 as it may be amended from time to time (codified at Subtitle J of the IRC).

“Company”—as defined in the first paragraph of this Agreement.

“Consent”—any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization).

“Construction Firm”—as defined in Section 5.13.

“Consulting Agreements”—as defined in Section 2.4(a)(iii).

“Contemplated Transactions”—all of the transactions contemplated by this Agreement, including:

(a)

the sale of the Shares held by each Seller to Buyer;

(b)

the execution, delivery, and performance of the Consulting Agreements, the Lease, the Sellers’ Releases and the Registration Rights Agreement;

(c)

the performance by Buyer and Sellers of their respective covenants and obligations under this Agreement; and

(d)

Buyer’s acquisition and ownership of the Shares and exercise of control over the Acquired Companies.

“Contract”—any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding.

“Covered Party”—as defined in Section 5.11(e).

“Damages”—as defined in Section 10.2.

“Debt”—shall, as applied to any Person, mean, without duplication:

(a)

all indebtedness for borrowed money, including, all principal, interest or other obligations evidenced by or under a note, bond, debenture, letter of credit, draft or similar instrument;

(b)

that portion of obligations with respect to capitalized or synthetic leases that is properly classified as a liability on a balance sheet in accordance with GAAP;

(c)

liabilities under or pursuant to interest rate cap contracts, swap contracts, foreign currency exchange contracts and other hedging or similar contracts (including breakage or associated fees);

(d)

all obligations to pay the deferred purchase price of property or services (including the earned portion of any so-called “earn-out” obligations);

(e)

all indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property;

(f)

all indebtedness and obligations of the types described in the foregoing clauses (a) through (e) to the extent secured by any Encumbrance on any property or asset owned or held by that Person, regardless of whether the indebtedness secured thereby shall have been incurred or assumed by that Person or is otherwise nonrecourse to the credit of that Person; and

(g)

all guarantees of any of the foregoing.

“Disclosure Letter”—the disclosure letter delivered by Sellers to Buyer concurrently with the execution and delivery of this Agreement.

“Employment Contracts”—any management, consulting, profit sharing, stock option, stock purchase, pension, retainer, welfare, stock appreciation or other equity-incentive, deferred compensation, retirement, change in control, severance and/or employment contract or commitment to enter into the same.

“Encumbrance”—any charge, claim, community property interest, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“Environment”—soil, land surface or subsurface strata, surface waters (including navigable waters, ocean waters, streams, ponds, drainage basins, and wetlands), ground waters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life, and any other environmental medium or natural resource.

“Environmental, Health, and Safety Liabilities”—any cost, damages, expense, liability, obligation, or other responsibility arising from or under Environmental Law or Occupational Safety and Health Law and consisting of or relating to:

(a)

any environmental, health, or safety matters or conditions (including on-site or off-site contamination, occupational safety and health, and regulation of chemical substances or products) other than routine compliance;

(b)

fines, penalties, judgments, awards, settlements, legal or administrative proceedings, damages, losses, claims, demands and response, investigative, remedial, or inspection costs and expenses arising under Environmental Law or Occupational Safety and Health Law;

(c)

financial responsibility under Environmental Law or Occupational Safety and Health Law for cleanup costs or corrective action, including any investigation, cleanup, removal, containment, or other remediation or response actions (“Cleanup”) required by applicable Environmental Law or Occupational Safety and Health Law (whether or not such Cleanup has been required or requested by any Governmental Body or any other Person) and for any natural resource damages; or

(d)

any other compliance, corrective, investigative, or remedial measures required under Environmental Law or Occupational Safety and Health Law, other than routine compliance;

provided, however, that reclamation activities required solely under SMCRA are excluded from the foregoing.

The terms “removal,” “remedial,” and “response action,” include the types of activities covered by the United States Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as amended (“CERCLA”).

“Environmental Law”— the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.; the Superfund Amendment and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Federal Solid Waste Act, 42 U.S.C. 1901 et seq.; the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et seq., the Safe Drinking Water Act, 42 U.S.C. 300f et seq.; the National Environmental Policy Act, 42 U.S.C. § 4321; the federal Endangered Species Act, 42 U.S.C. § 1531; SMCRA; any and all state and local Legal Requirement corresponding to any of the foregoing or generally addressing the same subject matter as any of the foregoing; any other Legal Requirement concerning hazardous or toxic materials or substances, pollution, petroleum or any derivatives thereof or synthetic substitutes therefor, asbestos or asbestos-containing materials, or environmental protection; and any other Legal Requirement that requires or relates to:

(a)

advising appropriate authorities, employees, and the public of intended or actual releases of Hazardous Materials, violations of discharge limits, or other prohibitions and of the commencements of activities, such as resource extraction or construction, that could have significant impact on the Environment;

(b)

preventing or reducing to acceptable levels the release of Hazardous Materials into the Environment;

(c)

reducing the quantities, preventing the release, or minimizing the hazardous characteristics of wastes that are generated;

(d)

protecting natural resources or species;

(e)

reducing to acceptable levels the risks inherent in the transportation of Hazardous Materials;

(f)

cleaning up Hazardous Materials that have been released, preventing the threat of release, or paying the costs of such clean up or prevention;

(g)

making responsible parties pay private parties, or groups of them, for damages done to human health from Hazardous Materials, for damages done to the Environment, or permitting self-appointed representatives of the public interest to recover for injuries done to natural resources; or

(h)

protecting human health from Hazardous Materials or protecting the Environment;

provided, however, that the term “Environmental Law” shall not include reclamation requirements under SMCRA.

“ERISA”—the Employee Retirement Income Security Act of 1974 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Exchange Act”—the Securities Exchange Act of 1934 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Facilities”—any real property, leaseholds, or other interests currently or formerly owned or operated by any Acquired Company and any buildings, plants, structures, or equipment (including motor vehicles, tank cars, and rolling stock) currently or formerly owned or operated by any Acquired Company.

“Filings”—as defined in Section 4.5.

“GAAP”—generally accepted United States accounting principles, applied on a basis consistent with the basis on which the Balance Sheet and the other financial statements referred to in Section 3.4 were prepared.

“Good and Marketable Title”—title which is free from Encumbrances except for Permitted Encumbrances.

“Governmental Authorization”—any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

“Governmental Body”—any:

(a)

nation, state, county, city, town, village, district, or other jurisdiction of any nature;

(b)

federal, state, local, municipal, foreign, or other government;

(c)

governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal);

(d)

multi-national organization or body; or

(e)

body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

“Hazardous Activity”—the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment, or use (including any withdrawal or other use of groundwater) of Hazardous Materials in, on, under, about, or from the Facilities or any part thereof into the Environment, and any other act, business, operation, or thing that increases the danger, or risk of danger, or poses an unreasonable risk of harm to persons or property on or off the Facilities, or that may affect the value of the Facilities or the Acquired Companies.

“Hazardous Materials”—any material, waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or pursuant to any Environmental Law, including any admixture or solution thereof, and specifically including petroleum

and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials; provided, however, that “Hazardous Materials” (i) does not include coal mined and managed in the Ordinary Course of Business, but (ii) does include coal dust, runoff and leachate from coal piles, and similar substances if they otherwise meet this definition of “Hazardous Materials.”

“HSR Act”—the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Indemnification Notification Date”—as defined in Section 10.5.

“Indemnified Persons” —as defined in Section 10.2.

“Intellectual Property Assets” —as defined in Section 3.22.

“Interim Balance Sheet”—as defined in Section 3.4.

“IRC”—the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.

“IRS”—the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury.

“Knowledge”—an individual will be deemed to have “Knowledge” of a particular fact or other matter if:

(a)

such individual is actually aware of such fact or other matter; or

(b)

a prudent individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter.

A Person (other than an individual) will be deemed to have “Knowledge” of a particular fact or other matter if any individual who is serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has, or at any time had, Knowledge of such fact or other matter. The Company will be deemed to have “Knowledge” of a particular fact or other matter if any of the following persons has, or at any time had, Knowledge of such fact or other matter: Joe Aull, Tim Aull, John Worth, Mike Howard, Jeff Sermersheim and Tommy Sutton.

“Lease”—as defined in Section 2.4(a)(iv).

“Leased Fixtures and Improvements”—as defined in Section 3.6(e)(2)(ii).

“Legal Requirement”—any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, regulation, statute, or treaty.

“Midwestern Coal Basin”—as defined in Section 5.11(b).

“Mining Activities”—those activities of the Acquired Companies related to the mining, processing, sale and trading of coal that involve surface mining, underground mining, auger mining, processing, sale or transporting of coal and coal by-products, including reclamation activities. For the purpose of this definition, “Mining Activities” shall include any activities regulated or required under SMCRA and Legal Requirements governing, controlling or applying to coal mining operations.

“Mining Applications”—as defined in Section 3.14(d)(ii).

“Mining Authorization”—the mining or exploration leases, licenses, Governmental Authorizations and other mining authorizations held by each of the Acquired Companies (including any authorization or permit relating to coal mining, preparation, load out or reclamation operations).

“Most Recent Balance Sheet”—as defined in Section 2.5.

“Net Working Capital”—the consolidated net working capital of the Acquired Companies, calculated as follows: (a) the sum of cash and cash equivalents, marketable securities, inventory (coal and stores), prepaid

expenses, current portion of advance royalties, accounts and other receivables (excluding receivables from Sellers to be paid prior to Closing) and after elimination of intercompany receivables, less (b) current liabilities after elimination of intercompany payables. With respect to any calculation of Net Working Capital, no change in accounting principles will be made from those utilized in preparing the Balance Sheet (as defined in Section 3.4) including, without limitation, with respect to the nature of accounts, types of reserves or accruals, and/or methodology and assumptions for determining the levels of reserves or accruals. For purposes of the preceding sentence, “changes in accounting principles” includes all changes in accounting principles, policies, practices, procedures or methodologies with respect to financial statements, their classification or their display, as well as all changes in practices, methods, conventions or assumptions utilized in making accounting estimates.

“Occupational Safety and Health Law”—any Legal Requirement designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any program, whether governmental or private (including those promulgated or sponsored by industry associations and insurance companies), designed to provide safe and healthful working conditions, including the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) and the Mine Safety and Health Act (30 U.S.C. § 801 et seq.) and comparable state statutes and regulations.

“Order”—any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

“Ordinary Course of Business”—an action taken by a Person will be deemed to have been taken in the “Ordinary Course of Business” only if:

(a)

such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person;

(b)

such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and

(c)

such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

“Organizational Documents”—(a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of organization and the operating agreement of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to any of the foregoing.

“Owned Fixtures and Improvements”—as defined in Section 3.6(e)(1)(i).

“Permitted Encumbrances”— any or all of the following:

(a)

Encumbrances arising by operation of law in the Ordinary Course of Business, such as mechanics’ liens, materialmen’s liens, carriers’ liens, warehousemen’s liens, and similar liens, none of which materially detract from the value or materially interfere with the present use of the asset to which such Encumbrance attaches;

(b)

pledges or deposits under worker’s compensation (or similar) laws, unemployment insurance or other types of insurance or compensation plans participation in which is mandatory in connection with the operation of the business of any of the Acquired Companies;

(c)

pledges or deposits which secure the performance of tenders, statutory obligations, bonds, bids, leases, Contracts and similar obligations;

(d)

with respect to any lease, Encumbrances arising pursuant to the terms of the applicable lease;

(e)

minor imperfections of title and Encumbrances, if any, which (i) do not materially detract from the value of the property subject thereto, impair the operations of the business of any of the Acquired Companies, or the use or license of certain of the assets of the Acquired Companies, and (ii) have arisen in the Ordinary Course of Business;

(f)

ad valorem taxes not yet due and payable; and

(g)

zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto or that do not have a material adverse effect on the ownership, operation or maintenance of such property or the conduct of Mining Activities thereon.

“Person”—any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Body.

“Proceeding”—any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

“Profit Sharing Plan”—as defined in Section 6.8.

“Proprietary Rights Agreement”—as defined in Section 3.20(b).

“Purchase Price”—as defined in Section 2.2.

“Registration Rights Agreement”—as defined in Section 2.4(b)(iii).

“Related Person”—with respect to a particular individual:

(a)

each other member of such individual’s Family;

(b)

any Person that is directly or indirectly controlled by such individual or one or more members of such individual’s Family;

(c)

any Person in which such individual or members of such individual’s Family hold (individually or in the aggregate) a Material Interest; and

(d)

any Person with respect to which such individual or one or more members of such individual’s Family serves as a director, officer, partner, executor, or trustee (or in a similar capacity).

With respect to a specified Person other than an individual:

(a)

any Person that directly or indirectly controls, is directly or indirectly controlled by, or is directly or indirectly under common control with such specified Person;

(b)

any Person that holds a Material Interest in such specified Person;

(c)

each Person that serves as a director, officer, partner, executor, or trustee of such specified Person (or in a similar capacity);

(d)

any Person in which such specified Person holds a Material Interest;

(e)

any Person with respect to which such specified Person serves as a general partner or a trustee (or in a similar capacity); and

(f)

any Related Person of any individual described in clause (b) or (c).

For purposes of this definition, (a) the “Family” of an individual includes (i) the individual, (ii) the individual’s spouse, and (iii) any other natural person who resides with such individual, and (b) “Material Interest” means direct or indirect beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting securities or other voting interests representing at least 10% of the outstanding voting power of a Person or equity securities or other equity interests representing at least 10% of the outstanding equity securities or equity interests in a Person.

“Release”—any spilling, leaking, emitting, discharging, depositing, escaping, leaching, dumping, or other releasing into the Environment, whether intentional or unintentional.

“Representative”—with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, or other representative of such Person, including legal counsel, accountants, and financial advisors.

“SEC”—as defined in Section 3.10.

“Securities Act”—the Securities Act of 1933 or any successor law, and regulations and rules issued pursuant to that Act or any successor law.

“Seller Bonds”—those deposits, trust funds, bid bonds, performance bonds and surety bonds (and all such similar undertakings) set forth in Part 6.3(b) of the Disclosure Letter.

“Seller Guarantees”—those guarantees, indemnities, letters of credit, letters of comfort and similar credit obligations set forth in Part 6.3(a) of the Disclosure Letter.

“Sellers”—as defined in the first paragraph of this Agreement.

“Sellers’ Releases”—as defined in Section 2.4(a)(ii).

“Shares”—as defined in the Recitals of this Agreement.

“SMCRA”—the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. § 1201 et seq.), as amended, and any state or local Legal Requirement governing, controlling or applying to coal mining operations.

“Straddle Period”—any tax period or year commencing before, and ending after, the Closing Date.

“Subsidiary”—with respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred) are held by the Owner or one or more of its Subsidiaries; when used without reference to a particular Person, “Subsidiary” means a Subsidiary of the Company.

“Tax”—any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the IRC), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, 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”—any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Legal Requirement relating to any Tax.

“Threat of Release”—a substantial likelihood of a Release that may require action in order to prevent or mitigate damage to the Environment that may result from such Release.

“Threatened”—a claim, Proceeding, dispute, action, or other matter will be deemed to have been “Threatened” if any demand or statement has been made (orally or in writing) or any notice has been given (orally or in writing), or if any other event has occurred or any other circumstances exist, that would lead a prudent Person to conclude that such a claim, Proceeding, dispute, action, or other matter is likely to be asserted, commenced, taken, or otherwise pursued in the future.

“Warranty Agreement”—as defined in Section 5.13.

“Workers’ Compensation Law”—Legal Requirements that provide for awards to employees and their dependents for employment-related accidents and occupational diseases, including, but not limited to, the Federal Black Lung Benefits Act, as amended, 29 U.S.C. Section 801 et seq.

SALE AND TRANSFER OF SHARES; CLOSING

2.1

SHARES

Subject to the terms and conditions of this Agreement, at the Closing, Sellers will sell and transfer the Shares to Buyer, and Buyer will purchase the Shares from Sellers.

2.2

PURCHASE PRICE

The aggregate purchase price (the “Purchase Price”) to be paid by Buyer for the Shares will be Seventy Five Million Dollars ($75,000,000), payable in cash and shares of Buyer’s Common Stock, subject to adjustment as set forth in Section 2.5 below, to be paid as follows:

(a)

Sixty Four Million Dollars ($64,000,000) of the Purchase Price shall be paid in cash; and

(b)

Sellers shall be issued, in the aggregate, shares of Buyer’s Common Stock having a market value equal to Eleven Million Dollars ($11,000,000) (the “Buyer Shares”) based upon the average closing price of Buyer’s Common Stock as set forth on The Nasdaq Stock Market for the fifteen (15) consecutive trading days ending two (2) trading days prior to the Closing Date.

The allocation of cash and stock comprising the Purchase Price among the Sellers shall be as set forth by Sellers at any time prior to Closing in Part 2.2 of the Disclosure Letter.

2.3

CLOSING

The purchase and sale (the “Closing”) provided for in this Agreement will take place at the offices of Buyer’s counsel, Bass, Berry & Sims PLC, at 315 Deaderick Street, Suite 2700, Nashville, Tennessee, at 10:00 a.m. (local time) on the second business day following the satisfaction or waiver of all conditions to the obligations of the parties to consummate the transactions contemplated hereby as set forth Sections 7 and 8 (other than conditions relating to the signing and delivery of documents that will take place at the Closing itself), or on such other date or at such other time and place as the parties may agree. Subject to the provisions of Section 9, failure to consummate the purchase and sale provided for in this Agreement on the date and time and at the place determined pursuant to this Section 2.3 will not result in the termination of this Agreement and will not relieve any party of any obligation under this Agreement.

2.4

CLOSING OBLIGATIONS

At the Closing:

(a)

Sellers will deliver to Buyer:

(i)

certificates representing the Shares, duly endorsed (or accompanied by duly executed stock powers);

(ii)

releases in the form of Exhibit 2.4(a)(ii) executed by Sellers, and in the case of trusts, the underlying beneficiaries (collectively, “Sellers’ Releases”);

(iii)

consulting agreements in substantially the form of Exhibit 2.4(a)(iii), executed by Joseph A. Aull and Timothy R. Aull, respectively (collectively, the “Consulting Agreements”);

(iv)

a real property lease agreement in substantially the form of Exhibit 2.4(a)(iv) executed by Joseph A. Aull and Timothy R. Aull (the “Lease”);

(v)

a certificate executed by Sellers representing and warranting to Buyer that each of Sellers’ representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date (giving full effect to any supplements to the Disclosure Letter that were delivered by Sellers to Buyer prior to the Closing Date in accordance with Section 5.5); and

(vi)

the other documents required to be delivered pursuant to Section 7.4; and

(b)

Buyer will deliver to Sellers:

(i)

the cash consideration payable pursuant to Section 2.2 by wire transfer to such accounts, and in the percentages, as set forth in Part 2.2 of the Disclosure Letter;

(ii)

the Buyer Shares;

(iii)

a registration rights agreement in the form of Exhibit 2.4(b)(iii), executed by Buyer (the “Registration Rights Agreement”);

(iv)

a certificate executed by Buyer to the effect that, except as otherwise stated in such certificate, each of Buyer’s representations and warranties in this Agreement was accurate in all respects as of the date of this Agreement and is accurate in all respects as of the Closing Date as if made on the Closing Date; and

(v)

the other documents required to be delivered pursuant to Section 8.4.

2.5

NET WORKING CAPITAL ADJUSTMENT

(a)

Not later than five (5) business days prior to the Closing Date, Sellers will deliver to Buyer the most recently prepared month-end consolidated balance sheet of the Acquired Companies setting forth the Net Working Capital of the Acquired Companies (the “Most Recent Balance Sheet”). If the Net Working Capital shown on the Most Recent Balance Sheet exceeds the Adjusted Net Working Capital, the cash portion of the Purchase Price payable to Sellers shall be increased by such amount. If the Net Working Capital shown on the Most Recent Balance Sheet is less than the Adjusted Net Working Capital, the cash portion of the Purchase Price payable at Closing shall be decreased by such amount.

(b)

Within forty-five (45) days after the Closing Date, Buyer will prepare (to the extent not already prepared), or review and make any adjustments it deems necessary and appropriate, and deliver to Sellers a consolidated balance sheet setting forth the Net Working Capital of the Acquired Companies as of the Calculation Date (the “Calculation Date Balance Sheet”). “Calculation Date” shall mean either: (i) the last day of the month prior to month in which the Closing Date occurs, in the event the Closing Date occurs on one of the first fifteen days of a month; or (ii) the last day of the month in which the Closing Date occurs, in the event the Closing Date occurs on a day after the fifteenth day of such month. If Sellers have any objections to the Calculation Date Balance Sheet, they shall notify Buyer in writing within twenty (20) days of receipt of the Calculation Date Balance Sheet and deliver a detailed written statement describing their objections. Buyer and Sellers shall use their reasonable efforts to resolve any such objections themselves. If Buyer and Sellers cannot resolve any such objections within thirty (30) days after Buyer receives Sellers’ statement of objections, such dispute shall be referred to the Nashville office of Ernst & Young, LLP, each party hereby represents that such firm through its Nashville office has not provided material services for the benefit of such party or its Related Persons within the preceding three years, for conclusive and binding resolution. The Buyer and the Sellers shall direct such firm to render a determination within thirty (30) days after its retention and the Buyer, the Sellers and their respective agents shall cooperate with the such firm during its engagement. Such firm may consider only those items and amounts in the Calculation Date Balance Sheet and related computation and the written objection from Sellers that the Buyer and the Sellers are unable to resolve. In resolving any disputed item, such firm may not ultimately assign a value to any item greater than the greatest value for such item claimed by a party or less than the smallest value

for such item claimed by either party. The determination of such firm shall be conclusive and binding upon the Buyer and the Sellers, with no right of appeal. The Buyer and the Sellers shall bear the costs and expenses of such firm based on the percentage that the portion of the contested amount not awarded to each party bears to the amount actually contested by such party. If there is a dispute as to the Net Working Capital adjustment required hereunder, the Buyer and the Sellers shall promptly pay to the other, as appropriate, such amounts as are not in dispute pending final determination of such dispute.

(c)

If the Net Working Capital shown on the Calculation Date Balance Sheet (as prepared by Buyer) exceeds the Net Working Capital shown on the Most Recent Balance Sheet as prepared by Sellers, Buyer will pay Sellers in cash within five (5) business days an amount equal to the amount by which Net Working Capital shown on the Calculation Date Balance Sheet exceeds the Net Working Capital shown on the Most Recent Balance Sheet. If the Net Working Capital shown on the Calculation Date Balance Sheet is less than the Net Working Capital shown on the Most Recent Balance Sheet, Sellers will pay Buyer in cash within five (5) business days an amount equal to the amount of such deficit.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLERS

The Company and Sellers, jointly and severally, make the following representations and warranties to Buyer.

3.1

ORGANIZATION AND GOOD STANDING

(a)

Part 3.1 of the Disclosure Letter contains a complete and accurate list for each Acquired Company of its name, its jurisdiction of incorporation or formation, other jurisdictions in which it is authorized to do business, and its capitalization (including the identity of each stockholder or member (as applicable) and the number of shares or membership percentage (as applicable) held by each). Each Acquired Company is a corporation or limited liability company (as applicable) duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or formation, with full corporate or limited liability company power and authority (as applicable) to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under Applicable Contracts. Each Acquired Company is duly qualified to do business as a foreign corporation or limited liability company (as applicable) and is in good standing under the laws of each state or other jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

(b)

Sellers have delivered to Buyer copies of the Organizational Documents of each Acquired Company, as currently in effect.

3.2

AUTHORITY; NO CONFLICT

(a)

This Agreement has been duly authorized by all necessary corporate action on the part of the Company and constitutes the legal, valid, and binding obligation of the Company and the Sellers, enforceable against the Company and the Sellers in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other laws affecting creditor’s rights generally, and by general equitable principles. Upon the execution and delivery by Sellers of the Sellers’ Releases, the Sellers’ Releases will constitute the legal, valid, and binding obligations of Sellers, enforceable against Sellers in accordance with their respective terms. The Company and the Sellers have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement to perform their obligations under this Agreement. The Sellers have the absolute and unrestricted right, power, authority, and capacity to execute and deliver the Sellers’ Releases and to perform their obligations under the Sellers’ Releases.

(b)

Except as set forth in Part 3.2 of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):

(i)

contravene, conflict with, or result in a violation of (A) any provision of the Organizational Documents of the Acquired Companies, or (B) any resolution adopted by the board of directors, stockholders or members (as applicable) of any Acquired Company;

(ii)

contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which any Acquired Company or any of the Sellers, or any of the assets owned or used by any Acquired Company, may be subject;

(iii)

contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by any Acquired Company or that otherwise relates to the business of, or any of the assets owned or used by, any Acquired Company;

(iv)

contravene, conflict with, or result in a violation or breach of any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Applicable Contract; or

(v)

result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by any Acquired Company.

Except as set forth in Part 3.2 of the Disclosure Letter, no Seller or Acquired Company is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions.

3.3

CAPITALIZATION

The authorized equity securities of the Company consist of 1,000 shares of common stock, no par value per share, of which 411.31 shares are issued and outstanding and constitute the Shares. Sellers are and will be on the Closing Date the record owners and holders of the Shares and Part 3.3 of the Disclosure Letter shall set forth the record and beneficial owners of all issued and outstanding Shares. With the exception of the Shares (which are owned by Sellers), all of the outstanding equity securities and other securities of each Acquired Company are owned of record and beneficially by one or more of the Acquired Companies, free and clear of all Encumbrances. No legend or other reference to any purported Encumbrance (other than legends related to restrictions on transfer imposed by applicable securities laws) appears upon any certificate representing equity securities of any Acquired Company. All of the outstanding equity securities of each Acquired Company have been duly authorized and validly issued and are fully paid and nonassessable. There are no Contracts (including, without limitation, stockholders’ agreements) relating to the issuance, sale, or transfer of any equity securities or other securities of any Acquired Company. None of the outstanding equity securities or other securities of any Acquired Company was issued in violation of the Securities Act, any other Legal Requirement or any preemptive or similar right. There are no outstanding warrants, options, agreements, convertible or exchangeable securities or other commitments pursuant to which any of the Acquired Companies is or may become obligated to issue or sell any shares of capital stock or other securities, and there are no equity securities of any Acquired Company reserved for issuance for any purpose. No Acquired Company owns, or has any Contract to acquire, any equity securities or other securities of any Person (other than Acquired Companies) or any direct or indirect equity or ownership interest in any other business.

3.4

FINANCIAL STATEMENTS

Sellers have delivered to Buyer: (a) consolidated balance sheets of the Acquired Companies as at December 31 in each of the years 2002 and 2003, and the related consolidated statements of income, changes in stockholders’ equity, and cash flow for each of the fiscal years then ended (including the notes thereto), together

with the reports thereon of York, Neel & Co.—Madisonville, LLP, independent certified public accountants, (b) a consolidated balance sheet of the Acquired Companies as at December 31, 2004 (the “Balance Sheet”), and the related consolidated statements of income, changes in stockholders’ equity, and cash flow for the fiscal year then ended (including the notes thereto), together with the report thereon of York, Neel & Co.—Madisonville, LLP, independent certified public accountants, and (c) an unaudited consolidated balance sheet of the Acquired Companies as at February 28, 2005 (the “Interim Balance Sheet”) and the related unaudited consolidated statements of income, and cash flow for the two months then ended, including in each case the notes thereto. Such financial statements and notes have been prepared in accordance with GAAP and fairly present the financial condition and the results of operations, changes in stockholders’ equity, and cash flow of the Acquired Companies as at the respective dates of and for the periods referred to in such financial statements, subject, in the case of interim financial statements, to normal recurring year-end adjustments (the effect of which will not, individually or in the aggregate, be materially adverse) and the absence of notes (that, if presented, would not differ materially from those included in the consolidated audited financial statements for the year ended December 31, 2004); the financial statements referred to in this Section 3.4 reflect the consistent application of such accounting principles throughout the periods involved. No financial statements of any Person other than the Acquired Companies are required by GAAP to be included in the consolidated financial statements of the Company.

3.5

BOOKS AND RECORDS

The books of account, minute books, stock record books, and other records of the Acquired Companies, all of which have been made available to Buyer, are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls. The minute books of the Acquired Companies contain accurate and complete records of all meetings held of, and corporate action taken by, the stockholders or members (as applicable), the Boards of Directors, and committees of the Boards of Directors of the Acquired Companies, and no formal meeting of any such stockholders, members, Board of Directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Acquired Companies.

3.6

TITLE TO PROPERTIES; ENCUMBRANCES; PERSONAL PROPERTY; REAL PROPERTY

(a)

The Acquired Companies own (with Good and Marketable Title in the case of real property, subject only to the matters permitted by the following sentence) all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) reflected in the Balance Sheet and the Interim Balance Sheet (except for assets held under capitalized leases disclosed or not required to be disclosed in Part 3.6(d) of the Disclosure Letter and personal property sold since the date of the Balance Sheet and the Interim Balance Sheet, as the case may be, in the Ordinary Course of Business), and all of the properties and assets purchased or otherwise acquired by the Acquired Companies since the date of the Balance Sheet (except for personal property acquired and sold since the date of the Balance Sheet in the Ordinary Course of Business and consistent with past practice). Except as set forth in Part 3.6(a) of the Disclosure Letter, all material properties and assets reflected in the Balance Sheet and the Interim Balance Sheet are free and clear of all Encumbrances except for Permitted Encumbrances. All buildings, plants, and structures owned by the Acquired Companies lie wholly within the boundaries of the real property owned by the Acquired Companies and do not encroach upon the property of, or otherwise conflict with the property rights of, any other Person. To the Knowledge of the Sellers and the Company, there are no claims of adverse ownership to any of the properties occupied or used by any of the Acquired Companies.

(b)

Part 3.6(b) of the Disclosure Letter sets forth a true and complete list of all the material machinery, equipment, vehicles and other tangible personal property now owned or leased by each Acquired Company and indicates which of the Acquired Companies owns or leases such asset. As to each asset shown in Part 3.6(b) of the Disclosure Letter, each Acquired Company has Good and Marketable Title to, or holds by a valid and enforceable lease or license with respect to, such asset. Except as set forth

in Part 3.6(b) of the Disclosure Letter, no rights of the Acquired Companies under such leases or licenses have been assigned or otherwise transferred as security for any obligation of the Acquired Companies.

(c)

The title or leasehold interests to the assets set forth in Part 3.6(b) of the Disclosure Letter includes all material tangible assets used by the Acquired Companies to conduct the business of the Acquired Companies as currently conducted.

(d)

Part 3.6(d) of the Disclosure Letter is a true and complete list of all capital leases of the Acquired Companies, indicating which of the Acquired Companies is a party to such captial leases and the payoff amount under each such capital lease that, if paid to the lessor thereunder, would fully satisfy the Acquired Companies’ remaining obligations under such capital lease as a primary obligor.

(e)

Part 3.6(e) of the Disclosure Letter lists all parcels (or portions thereof) of real property owned or leased by the Acquired Companies (including all other interests in land owned, leased, licensed to, or otherwise held by, the Acquired Companies). The Acquired Companies own, lease, license or otherwise hold all rights necessary to conduct Mining Activities on such parcels of real property, and any other activities permitted on such parcels of real property will not interfere with such Mining Activities.

(1)

Sellers have heretofore made available to Buyer copies of the deeds and other instruments (as recorded) by which the Acquired Companies acquired such real property that is owned by any of the Acquired Companies and copies of all title insurance policies, opinions, abstracts, and surveys in the possession of Sellers or the Acquired Companies and relating to such owned real property. With respect to each such parcel of real property owned by any of the Acquired Companies, except as otherwise specified in Part 3.6(e) of the Disclosure Letter:

(i) the identified owner has Good and Marketable Title to such parcel of real property and all fixtures and improvements on such real property, including all preparation plants or other coal processing facilities, loadout and other transportation facilities (the “Owned Fixtures and Improvements”);

(ii) there are no pending or, to the Knowledge of the Company or Sellers, threatened condemnation Proceedings, eminent domain or requisition Proceedings; and

(iii) there are no other matters that materially adversely affect the title of any Acquired Company to such real property or the Owned Fixtures and Improvements.

(2)

Set forth opposite each parcel or portion of real property or other interest in land identified in Part 3.6(e) of the Disclosure Letter is a list of all leases, subleases, licenses and Contracts applicable to such parcel or portion of real property or other interest in land (including, without limitation, all leases, subcontracts, licenses or Contracts pursuant to which any of the Acquired Companies are, or may become, responsible for the payment of annual minimum, production or overriding royalties or other consideration). Sellers have heretofore made available to Buyer true and complete copies of all such leases, subleases, licenses and Contracts (as amended to the date of this Agreement and the date of Closing). With respect to each such lease, sublease, license and Contract and except as otherwise specified in Part 3.6(e) of the Disclosure Letter:

(i) such lease, sublease, license or Contract is in full force and effect in all material respects and enforceable in accordance with its terms;

(ii) to the extent provided in the respective leases or subleases, the Acquired Companies have a valid leasehold interest in all leased or subleased real property and all fixtures and improvements on such property, including all preparation plants or other coal processing facilities, loadout and other transportation facilities (the “Leased Fixtures and Improvements”), in each case, free and clear of any Encumbrances other than Permitted Encumbrances;

(iii) (A) none of the Acquired Companies is in default under any such lease, sublease, license or Contract and no event has occurred which, with the passage of time or expiration of any grace period would constitute a default of any Acquired Company’s obligations under such lease,

sublease, license or Contract, (B) to the Knowledge of the Company and the Sellers, no other party to any such lease, sublease, license or Contract is in default thereunder and (C) none of the Acquired Companies has received a written or other notice of default with respect to such lease, sublease, license or Contract;

(iv) there are no unwritten or oral modifications to such leases, subleases, licenses or Contracts or any course of dealing or business operations that are modifications to such leases, subleases, licenses or Contracts;

(v) no such lease, sublease, license or Contract has been mortgaged, deeded in trust or subjected to an Encumbrance by any Acquired Company; and

(vi) there are no other matters that materially adversely affect the rights of any Acquired Company to such real property or other interest in land or the Leased Fixtures and Improvements.

(f)

The Acquired Companies hold or control adequate ingress and egress to the real property identified in Part 3.6(e) of the Disclosure Letter and any facilities located on such real property and all material rights, easements and rights-of-way necessary for the continued operation in their present manner of any facilities located on such real property.

(g)

Except as set forth in Part 3.6(g) of the Disclosure Letter, none of the Acquired Companies nor any Seller has received any written or other notice of claims that any Acquired Company 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 and, to Sellers’ and the Company’s Knowledge, no facts exist upon which such a claim could be based. Sellers have made available to Buyer the most recent complete and correct version of each of the following items to the extent such items are (a) in the possession of the Acquired Companies, (b) relate to or affect the real property identified in Part 3.6(e) of the Disclosure Letter, including the coal reserves, coal ownership, mining conditions, mines, and mining plans of the Acquired Companies and (c) material to the conduct of the business of any Acquired Company: geological data, reserve data, existing mine maps, surveys, 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 all other books and records, information, maps, reports and data.

3.7

CONDITION AND SUFFICIENCY OF ASSETS

Except as set forth in Part 3.7 of the Disclosure Letter, the buildings, plants, structures, equipment and machinery of the Acquired Companies are structurally sound, are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such buildings, plants, structures, equipment or machinery is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The building, plants, structures, equipment and machinery of the Acquired Companies are sufficient for the continued conduct of the Acquired Companies’ businesses after the Closing in substantially the same manner as conducted prior to the Closing.

3.8

ACCOUNTS RECEIVABLE

All accounts receivable of the Acquired Companies that are reflected on the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Acquired Companies as of the Closing Date (collectively, the “Accounts Receivable”) represent or will represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date current and collectible net of the respective reserves shown on the Balance Sheet or the Interim Balance Sheet or on the accounting records of the Acquired Companies as of the Closing Date (which reserves are adequate and calculated consistent with past practice and, in the case of the reserve as of the Closing Date, will not represent a greater percentage of the Accounts Receivable as of the Closing Date than the reserve reflected in the Interim Balance Sheet represented of the Accounts Receivable reflected therein

and will not represent a material adverse change in the composition of such Accounts Receivable in terms of aging). Subject to such reserves, each of the Accounts Receivable either has been or will be collected in full, without any set-off, within ninety days after the day on which it first becomes due and payable. Except as set forth in Part 3.8 of the Disclosure Letter, there is no contest, claim, or right of set-off, other than returns in the Ordinary Course of Business, under any Contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable. Part 3.8 of the Disclosure Letter contains a complete and accurate list of all Accounts Receivable as of the date of the Interim Balance Sheet, which list sets forth the aging of such Accounts Receivable.

3.9

INVENTORY

The coal inventory of the Acquired Companies reflected in the Balance Sheet, the Interim Balance Sheet or on the accounting records of the Acquired Companies as of the Closing Date, is (and shall be) estimated using consistently applied methodology and that portion of the coal inventory that is processed consists (and shall consist) of a quality suitable for delivery under the Acquired Companies’ coal supply agreements routinely sourced from the facility at which such inventory is located. That portion of the coal inventory that is classified as raw coal inventory (including “moved to plant” inventory, “in-pit” inventory, and base coal inventory) are estimated using consistently applied methodology for such category, adjusted periodically in the Ordinary Course of Business to reflect updated plant efficiency data. The value of the coal inventory is calculated in accordance with GAAP.

All stores inventory of the Acquired Companies reflected in the Balance Sheet, the Interim Balance Sheet or on the accounting records of the Acquired Companies as of the Closing Date consists (and shall consist) of a quality and quantity usable and salable in the Ordinary Course of Business. The value of all items of obsolete inventory and of inventory of below standard quality has been written off or written down to realizable market value, and the value at which such inventory is carried reflects the Acquired Companies’ normal inventory valuation policy of stating its inventory at the lower of cost or market value, in each case in accordance with GAAP.

3.10

NO UNDISCLOSED LIABILITIES

Except as set forth in Part 3.10 of the Disclosure Letter, the Acquired Companies have no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the Balance Sheet or the Interim Balance Sheet and current liabilities incurred in the Ordinary Course of Business since the respective dates thereof. Part 3.10 of the Disclosure Letter lists, and the Sellers have delivered to Buyer copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K of the Securities and Exchange Commission (the “SEC”)) effected by any of the Acquired Companies since December 31, 2001.

3.11

TAXES

(a)

The Acquired Companies have filed or caused to be filed on a timely basis all material Tax Returns that are or were required to be filed by or with respect to any of them, either separately or as a member of a group of corporations, pursuant to applicable Legal Requirements. Sellers have delivered to Buyer copies of, and Part 3.11 of the Disclosure Letter contains a complete and accurate list of, all such Tax Returns filed since January 1, 2001. Except as listed in Part 3.11 of the Disclosure Letter, none of the Acquired Companies is the beneficiary of any extension of time within which to file any Tax Return. The Acquired Companies have paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns (whether or not shown on any Tax Return) or otherwise, or pursuant to any assessment received by Sellers or any Acquired Company, except such Taxes, if any, as are listed in Part 3.11 of the Disclosure Letter and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Balance Sheet and the Interim Balance Sheet.

(b)

To the knowledge of any Seller or director or officer, no claim has ever been made by an authority in a jurisdiction where any of the Acquired Companies does not file Tax Returns that it is or may be

subject to taxation by that jurisdiction. There are no Encumbrances for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Acquired Companies.

(c)

Except as listed in Part 3.11 of the Disclosure Letter, no foreign, federal, state or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to any of the Acquired Companies. Except as listed in Part 3.11 of the Disclosure Letter, none of the Acquired Companies has received from any foreign, federal, state or local taxing authority (including jurisdictions where the Acquired Companies have not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed by any taxing authority against any of the Acquired Companies. Part 3.11 of the Disclosure Letter contains a complete and accurate list of those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit, including a reasonably detailed description of the nature and outcome of each audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or, as described in Part 3.11 of the Disclosure Letter, are being contested in good faith by appropriate proceedings. Part 3.11 of the Disclosure Letter describes all adjustments to the United States federal income Tax Returns filed by any Acquired Company or any group of corporations including any Acquired Company for all taxable years since January 1, 2001, and the resulting deficiencies proposed by the IRS. Except as described in Part 3.11 of the Disclosure Letter, no Seller or Acquired Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other Person) of any statute of limitations relating to the payment of Taxes of any Acquired Company or for which any Acquired Company may be liable.

(d)

The charges, accruals, and reserves with respect to Taxes on the respective books of each Acquired Company are adequate (determined in accordance with GAAP) and are at least equal to that Acquired Company’s liability for Taxes. To the knowledge of any Seller or director or officer, there exists no proposed tax assessment against any Acquired Company. All Taxes that any Acquired Company is or was required by Legal Requirements to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Body or other Person.

(e)

All Tax Returns filed by any Acquired Company are true, correct, and complete in all material respects. There is no tax sharing agreement that will require any payment by any Acquired Company after the date of this Agreement.

(f)

At all times since July 1, 1995, the Company (and any predecessor of the Company) has been a validly electing S corporation within the meaning of Sections 1361 and 1362 of the IRC at all times during its existence and the Company will be an S corporation up to and including the day before the Closing Date.

(g)

None of the Acquired Companies is a “qualified subchapter S subsidiary” within the meaning of Section 1361(b)(3)(B) of the IRC.

(h)

None of the Acquired Companies has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the IRC during the applicable period specified in Section 897(c)(1)(A)(ii).

(i)

None of the Acquired Companies (or any entity purchased by, merged with or into, acquired pursuant to a share exchange or other reorganization with either of the Acquired Companies) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company).

(j)

None of the Acquired Companies (or any entity purchased by, merged with or into, acquired pursuant to a share exchange or other reorganization with either of the Acquired Companies) will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in the method of accounting for a taxable period ending on or prior to the Closing Date; (B) “closing agreement”

as described in Section 7121 of the IRC (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) installment sale or open transaction disposition made on or prior to the Closing Date; or (D) prepaid amount received on or prior to the Closing Date.

(k)

None of the Acquired Companies is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Section 280G of the IRC (or any corresponding provision of state, local or foreign Tax law).

(l)

Each Acquired Company has collected all material sales and use Taxes required to be collected, and has remitted or will remit on a timely basis, such amounts to the appropriate taxing authorities, or have been furnished properly completed exemption certificates. Each Acquired Company (i) has in its (or its affiliates’) possession all material records and supporting documents required by all applicable sales and use Tax statutes and regulations regarding the collection and payment of sales and use Taxes required to be collected and paid over by such Acquired Company and regarding all exempt transactions by such Acquired Company for all periods open under the applicable statute of limitations, and (ii) has maintained all such records and supporting documents in material compliance with all sales and use Tax statutes and regulations applicable thereto.

3.12

BANK ACCOUNTS

Part 3.12 of the Disclosure Letter sets forth the names and locations of all banks, trust companies, savings and loan associations and other financial institutions at which any Acquired Company maintains a safe deposit box, lock box or checking, savings, custodial or other account of any nature, the type and number of each such account and the signatories therefore, a description of any compensating balance arrangements, and the names of all persons authorized to draw thereon, make withdrawals therefrom or have access thereto.

3.13

EMPLOYEE BENEFITS

(a)

As used in this Section 3.13, the following terms have the meanings set forth below.

“Company Other Benefit Obligation” means an Other Benefit Obligation owed, adopted, or followed by an Acquired Company or an ERISA Affiliate of an Acquired Company.

“Company Plan” means all Plans of which an Acquired Company or an ERISA Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an Acquired Company or an ERISA Affiliate of an Acquired Company otherwise contributes or has contributed, or in which an Acquired Company or an ERISA Affiliate of an Acquired Company otherwise participates or has participated. All references to Plans are to Company Plans unless the context requires otherwise.

“Company VEBA” means a VEBA whose members include employees of any Acquired Company or any ERISA Affiliate of an Acquired Company.

“ERISA Affiliate” means, with respect to an Acquired Company, any other person that, together with the Company, would be treated as a single employer under IRC Section 414.

“Multi-Employer Plan” has the meaning given in ERISA Section 3(37)(A).

“Other Benefit Obligations” means all obligations, arrangements, or customary practices, whether or not legally enforceable, to provide benefits, other than salary, as compensation for services rendered, to present or former directors, employees, or agents, other than obligations, arrangements, and practices that are Plans. Other Benefit Obligations include consulting agreements under which the compensation paid does not depend upon the amount of service rendered, sabbatical policies, severance payment policies, and fringe benefits within the meaning of IRC Section 132.

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Pension Plan” has the meaning given in ERISA Section 3(2)(A).

“Plan” has the meaning given in ERISA Section 3(3).

“Plan Sponsor” has the meaning given in ERISA Section 3(16)(B).

“Qualified Plan” means any Plan that meets or purports to meet the requirements of IRC Section 401(a).

“Title IV Plans” means all Pension Plans that are subject to Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than Multi-Employer Plans.

“VEBA” means a voluntary employees’ beneficiary association under IRC Section 501(c)(9).

“Welfare Plan” has the meaning given in ERISA Section 3(1).

(b) (i)

Part 3.13(i) of the Disclosure Letter contains a complete and accurate list of all Company Plans, Company Other Benefit Obligations, and Company VEBAs, and identifies as such all Company Plans that are (A) defined benefit Pension Plans, (B) Qualified Plans, (C) Title IV Plans, or (D) Multi-Employer Plans.

(ii)

Part 3.13(ii) of the Disclosure Letter contains a complete and accurate list of (A) all ERISA Affiliates of each Acquired Company, and (B) all Plans of which any such ERISA Affiliate is or was a Plan Sponsor, in which any such ERISA Affiliate participates or has participated, or to which any such ERISA Affiliate contributes or has contributed.

(iii)

Part 3.13(iii) of the Disclosure Letter sets forth, for each Multi-Employer Plan, as of its last valuation date, the amount of potential withdrawal liability of the Acquired Companies and the Acquired Companies’ other ERISA Affiliates, calculated according to information made available pursuant to ERISA Section 4221(e).

(iv)

Part 3.13(iv) of the Disclosure Letter sets forth a calculation of the liability of the Acquired Companies for post-retirement benefits other than pensions, made in accordance with Financial Accounting Statement 106 of the Financial Accounting Standards Board, regardless of whether any Acquired Company is required by this Statement to disclose such information.

(v)

Part 3.13(v) of the Disclosure Letter sets forth the financial cost of all obligations owed under any Company Plan or Company Other Benefit Obligation that is not subject to the disclosure and reporting requirements of ERISA.

(vi)

Part 3.13(vi) of the Disclosure Letter sets forth any obligation and potential liability of the Acquired Companies and the Acquired Companies’ other ERISA Affiliates under the Coal Act.

(c)

Sellers have delivered to Buyer:

(i)

all documents that set forth the current terms of each Company Plan, Company Other Benefit Obligation, or Company VEBA and of any related trust, including (A) the most recent plan descriptions and summary plan descriptions of Company Plans for which Sellers or the Acquired Companies are required to prepare, file, and distribute plan descriptions and summary plan descriptions, and (B) the most recent summaries and descriptions furnished to participants and beneficiaries regarding Company Plans, Company Other Benefit Obligations, and Company VEBAs for which a plan description or summary plan description is not required;

(ii)

all current personnel, payroll, and employment manuals and policies;

(iii)

all collective bargaining agreements pursuant to which contributions have been made or obligations incurred (including both pension and welfare benefits) by the Acquired Companies and the ERISA Affiliates of the Acquired Companies, and all collective bargaining agreements pursuant to which contributions are being made or obligations are owed by such entities;

(iv)

a written description of any Company Plan or Company Other Benefit Obligation that is not otherwise in writing;

(v)

all registration statements filed with respect to any Company Plan;

(vi)

all insurance policies currently in effect purchased by or to provide benefits under any Company Plan;

(vii)

all contracts with third party administrators, actuaries, investment managers, consultants, and other independent contractors that relate to any Company Plan, Company Other Benefit Obligation, or Company VEBA;

(viii)

all reports submitted within the four years preceding the date of this Agreement by third party administrators, actuaries, investment managers, consultants, or other independent contractors with respect to any Company Plan, Company Other Benefit Obligation, or Company VEBA;

(ix)

all notifications provided during the three year period preceding the date of this Agreement to employees of their rights under ERISA Section 601 et seq. and IRC Section 4980B;

(x)

the Form 5500 filed in each of the most recent three plan years with respect to each Company Plan, including all schedules thereto and the opinions of independent accountants;

(xi)

all notices relating to any Company Plan that were given by any Acquired Company or any ERISA Affiliate of an Acquired Company or any Company Plan to the IRS, the PBGC, or any participant or beneficiary, pursuant to statute, within the four years preceding the date of this Agreement, including notices that are expressly mentioned elsewhere in this Section 3.13;

(xii)

all notices that were given by the IRS, the PBGC, or the Department of Labor to any Acquired Company, any ERISA Affiliate of an Acquired Company, or any Company Plan within the four years preceding the date of this Agreement;

(xiii)

with respect to Qualified Plans and VEBAs, the most recent determination letter for each Plan of the Acquired Companies that is a Qualified Plan or IRS opinion letter in the case of any Qualified Plan that is a prototype plan; and

(xiv)

with respect to Title IV Plans, the Form PBGC-1 filed for each of the three most recent plan years.

(d)

Except as set forth in Part 3.13(vi) of the Disclosure Letter:

(i)

The Acquired Companies have performed all of their respective obligations under all Company Plans, Company Other Benefit Obligations, and Company VEBAs. The Acquired Companies have made appropriate entries in their financial records and statements for all obligations and liabilities under such Plans, VEBAs, and Obligations that have accrued but are not due.

(ii)

No statement, either written or oral, has been made by any Acquired Company to any Person with regard to any Plan or Other Benefit Obligation that was not in accordance with the Plan or Other Benefit Obligation and that could have an adverse economic consequence to any Acquired Company or to Buyer.

(iii)

The Acquired Companies, with respect to all Company Plans, Company Other Benefits Obligations, and Company VEBAs, are, and each Company Plan, Company Other Benefit Obligation, and Company VEBA is, in full compliance with ERISA, the IRC, and other applicable Laws including the provisions of such Laws expressly mentioned in this Section 3.13, and with any applicable collective bargaining agreement.

(A)

No transaction prohibited by ERISA Section 406 and no “prohibited transaction” under IRC Section 4975(c) have occurred with respect to any Company Plan.

(B)

No Seller or Acquired Company has any liability to the IRS with respect to any Plan, including any liability imposed by Chapter 43 of the IRC.

(C)

No Seller or Acquired Company has any liability to the PBGC with respect to any Plan or has any liability under ERISA Section 502 or Section 4071.

(D)

All filings required by ERISA and the IRC as to each Plan have been timely filed, and all notices and disclosures to participants required by either ERISA or the IRC have been timely provided.

(E)

All contributions and payments made or accrued with respect to all Company Plans, Company Other Benefit Obligations, and Company VEBAs are deductible under IRC Section 162 or Section 404. No amount, or any asset of any Company Plan or Company VEBA, is subject to tax as unrelated business taxable income.

(iv)

Each Company Plan can be terminated within thirty days, without payment of any additional contribution or amount and without the vesting or acceleration of any benefits promised by such Plan.

(v)

Since December 31, 2004, there has been no establishment or amendment of any Company Plan, Company VEBA, or Company Other Benefit Obligation.

(vi)

No event has occurred or circumstance exists that could result in a material increase in premium costs of Company Plans and Company Other Benefit Obligations that are insured, or a material increase in benefit costs of such Plans and Obligations that are self-insured.

(vii)

Other than claims for benefits submitted by participants or beneficiaries, no claim against, or legal proceeding involving, any Company Plan, Company Other Benefit Obligation, or Company VEBA is pending or, to Sellers’ Knowledge, is threatened.

(viii)

No Company Plan is a stock bonus, pension, or profit-sharing plan within the meaning of IRC Section 401(a).

(ix)

Each Qualified Plan of each Acquired Company is qualified in form and operation under IRC Section 401(a); each trust for each such Plan is exempt from federal income tax under IRC Section 501(a). Each Company VEBA is exempt from federal income tax. No event has occurred or circumstance exists that will or could give rise to disqualification or loss of tax-exempt status of any such Plan or trust.

(x)

Each Acquired Company and each ERISA Affiliate of an Acquired Company has met the minimum funding standard, and has made all contributions required, under ERISA Section 302 and IRC Section 402.

(xi)

No Company Plan is subject to Title IV of ERISA.

(xii)

The Acquired Companies have paid all amounts due to the PBGC pursuant to ERISA Section 4007.

(xiii)

No Acquired Company or any ERISA Affiliate of an Acquired Company has ceased operations at any facility or has withdrawn from any Title IV Plan in a manner that would subject to any entity or Sellers to liability under ERISA Section 4062(e), Section 4063, or Section 4064.

(xiv)

No Acquired Company or any ERISA Affiliate of an Acquired Company has filed a notice of intent to terminate any Title IV Plan or has adopted any amendment to treat a Title IV Plan as terminated. The PBGC has not instituted proceedings to treat any Company Plan as terminated. No event has occurred or circumstance exists that may constitute grounds under ERISA Section 4042 for the termination of, or the appointment of a trustee to administer, any Company Plan.

(xv)

No amendment has been made, or is reasonably expected to be made, to any Plan that has required or could require the provision of security under ERISA Section 307 or IRC Section 401(a)(29).

(xvi)

No accumulated funding deficiency, whether or not waived, exists with respect to any Company Plan; no event has occurred or circumstance exists that may result in an accumulated funding deficiency as of the last day of the current plan year of any such Plan.

(xvii)

The actuarial report, if any, that is required to be prepared pursuant to applicable provisions of ERISA for any Pension Plan of each Acquired Company and each ERISA Affiliate of each Acquired Company fairly presents the financial condition and the results of operations of each such Plan in accordance with GAAP.

(xviii)

Since the last valuation date for each Pension Plan of each Acquired Company and each ERISA Affiliate of an Acquired Company, no event has occurred or circumstance exists that would increase the amount of benefits under any such Plan or that would cause the excess of Plan assets over benefit liabilities (as defined in ERISA Section 4001) to decrease, or the amount by which benefit liabilities exceed assets to increase.

(xix)

No reportable event (as defined in ERISA Section 4043 and in regulations issued thereunder) has occurred.

(xx)

No Seller or Acquired Company has Knowledge of any facts or circumstances that may give rise to any liability of any Seller, any Acquired Company, or Buyer to the PBGC under Title IV of ERISA.

(xxi)

No Acquired Company or any ERISA Affiliate of an Acquired Company has ever established, maintained, or contributed to or otherwise participated in, or had an obligation to maintain, contribute to, or otherwise participate in, any Multi-Employer Plan.

(xxii)

No Acquired Company or any ERISA Affiliate of an Acquired Company has withdrawn from any Multi-Employer Plan with respect to which there is any outstanding liability as of the date of this Agreement. No event has occurred or circumstance exists that would constitute a withdrawal from any Multi-Employer Plan, nor, to the Knowledge of any Acquired Company or any of the Sellers, has any event occurred that could otherwise result in any liability of either any Acquired Company or Buyer to a Multi-Employer Plan.

(xxiii)

No Acquired Company or any ERISA Affiliate of an Acquired Company has received notice from any Multi-Employer Plan that it is in reorganization or is insolvent, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, or that such Plan intends to terminate or has terminated.

(xxiv)

No Multi-Employer Plan to which any Acquired Company or any ERISA Affiliate of an Acquired Company contributes or has contributed is, to the Knowledge of any Acquired Company or any Seller, a party to any pending merger or asset or liability transfer or is subject to any proceeding brought by the PBGC.

(xxv)

Neither the Acquired Companies nor the Acquired Companies’ other ERISA Affiliates have any obligation or liability under the Coal Act.

(xxvi)

Except to the extent required under ERISA Section 601 et seq. and IRC Section 4980B, no Acquired Company provides health or welfare benefits for any retired or former employee or is obligated to provide health or welfare benefits to any active employee following such employee’s retirement or other termination of service.

(xxvii)

Each Acquired Company has the right to modify and terminate benefits (other than pensions) to retirees who receive benefits by reason of having been employed by such Acquired Company and may exercise such rights both with respect to its employees who have not yet retired and with respect to those of its employees who have already retired.

(xxviii)

Sellers and all Acquired Companies have co

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