Exhibit 10.1

EXECUTION VERSION

SHARE AND MEMBERSHIP INTEREST
PURCHASE AGREEMENT
by and among
TRU ENERGY SERVICES, LLC,
as Buyer,
THE SELLERS PARTY HERETO,
and
THE TRUSTEES AND BENEFICIARIES PARTY HERETO,

Dated as of August 31, 2012

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TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
RECITALS
1

 
 
ARTICLE I DEFINITIONS
1

  Section 1.1
Terms Generally
1

  Section 1.2
Certain Terms
2

 
 
 
ARTICLE II SALES AND PURCHASE OF SHARES
14

  Section 2.1
Sale and Purchase
14

  Section 2.2
Purchase Price
14

  Section 2.3
Earn-out
15

  Section 2.4
Purchase Price Adjustment
19

  Section 2.5
Allocation of Purchase Price
21

  Section 2.6
Shareholder Acknowledgment
21

  Section 2.7
Refunds and Remittances
22

  Section 2.8
Buyer Acknowledgment
22

 
 
 
ARTICLE III CLOSING AND DELIVERIES
22

  Section 3.1
Closing
22

  Section 3.2
Deliveries by the Shareholders
23

  Section 3.3
Deliveries by Buyer
24

  Section 3.4
Intercompany Arrangements
25

 
 
 
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
25

  Section 4.1
Organization, Power and Authority
25

  Section 4.2
Validity of Agreements
26

  Section 4.3
No Conflicts
26

  Section 4.4
Consent
26

  Section 4.5
Financial Statements
26

  Section 4.6
No Material Adverse Changes
27

  Section 4.7
Contracts
28

  Section 4.8
Compliance with Laws; Permits
30

  Section 4.9
Intellectual Property
30

  Section 4.10
Litigation and Orders
30

  Section 4.11
Taxes
30

  Section 4.12
Mining and Environmental Matters
33

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  Section 4.13
Insurance
35

  Section 4.14
Real Property
36

  Section 4.15
Mineral Assets; Company Assets
38

  Section 4.16
Inventory
38

  Section 4.17
Undisclosed Liabilities
38

  Section 4.18
Customers
38

  Section 4.19
Related Party Transactions
39

  Section 4.20
Labor Matters
39

  Section 4.21
Employee Plans
40

  Section 4.22
Absence of Certain Commercial Practices
42

  Section 4.23
No Broker's, Finder's or Insider Fees
43

  Section 4.24
MSHA; OSHA
43

  Section 4.25
Accounts Receivable
44

  Section 4.26
Corporate Records
44

  Section 4.27
Bank Accounts
44

  Section 4.28
Quality
44

  Section 4.29
No Other Representations or Warranties
45

 
 
 
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER
45

  Section 5.1
Organization, Power and Authority
45

  Section 5.2
Validity of Agreements
45

  Section 5.3
No Conflict; Consents
45

  Section 5.4
Litigation
46

  Section 5.5
No Broker's or Finder's Fees
46

  Section 5.6
Availability of Funds
46

  Section 5.7
Investment Intention
46

 
 
 
ARTICLE VI COVENANTS
46

  Section 6.1
Interim Operations
46

  Section 6.2
Reasonable Access
47

  Section 6.3
Notification of Certain Matters
48

  Section 6.4
Reasonable Best Efforts
49

  Section 6.5
Further Assurances
49

  Section 6.6
No Shop
50

  Section 6.7
Competitive Activity; Nonsolicitation; Confidentiality
50

  Section 6.8
Taxes
52

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  Section 6.9
Release by the Shareholders; Release by the Companies
56

  Section 6.10
Correspondence
58

  Section 6.11
Use of Names
58

  Section 6.12
Indemnification and Insurance
58

  Section 6.13
Personal Guaranties
59

  Section 6.14
Reclamation Performance Bonds
59

 
 
 
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF BUYER AND THE SHAREHOLDERS
59

  Section 7.1
Conditions to Obligations of Each Party
59

  Section 7.2
Conditions to Obligations of Buyer
59

  Section 7.3
Conditions to Obligations of the Shareholders
60

  Section 7.4
Frustration of Closing Conditions
60

 
 
 
ARTICLE VIII EMPLOYEE MATTERS
61

  Section 8.1
Benefits and Compensation
61

  Section 8.2
Prior Service
61

  Section 8.3
Transferred Employees
61

  Section 8.4
No Employment Rights or Third Party Beneficiaries
61

 
 
 
ARTICLE IX INDEMNIFICATION AND SURVIVAL
61

  Section 9.1
General Indemnification Obligation
61

  Section 9.2
Indemnification Procedures
63

  Section 9.3
Limitations on Indemnification; Survival
65

  Section 9.4
Adjustments to Purchase Price
66

  Section 9.5
Indemnity Escrow
66

  Section 9.6
Contribution and Waiver
67

  Section 9.7
Effect of Investigation
67

  Section 9.8
Exclusive Remedy
67

 
 
 
ARTICLE X TERMINATION
67

  Section 10.1
Termination of Agreement
67

  Section 10.2
Effect of Termination
68

 
 
 
ARTICLE XI MISCELLANEOUS
68

  Section 11.1
Waivers and Amendments
68

  Section 11.2
Shareholders' Representative
68

  Section 11.3
Notices
69

  Section 11.4
Fees and Expenses
70

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  Section 11.5
Successors and Assigns
70

  Section 11.6
Third Party Beneficiaries
71

  Section 11.7
Consent to Jurisdiction
71

  Section 11.8
Governing Law
71

  Section 11.9
Waiver of Jury Trial
71

  Section 11.10
Severability
72

  Section 11.11
Specific Performance
72

  Section 11.12
Entire Agreement
72

  Section 11.13
Construction
72

  Section 11.14
Incorporation of Exhibits and Schedules
72

  Section 11.15
Headings
72

  Section 11.16
Counterparts
73

  Section 11.17
No Presumption Against Drafting Party
73

  Section 11.18
Announcements
73

INDEX OF EXHIBITS

Exhibit
 
A
Form of Escrow Agreement
B
Form of Lease Agreements
C
Form of Consulting Agreement
D
Company Release
E
NACoal Guarantee

INDEX OF SCHEDULES

Schedule
 
1.2(a)
Operating Leases
1.2(b)
LOI Payments
1.2(c)
Reclamation Performance Bonds
2.3(a)
Sample Earn-out Payment and Adjustment Calculation
2.4(a)
Closing Working Capital Calculation
2.4(a)(ii)
Calculation of Shot Rock Inventory Value
2.6
McWane and QCC Amounts
3.4
Intercompany Arrangements
4.1(c)
Capitalization; Managers, Directors and Officers
4.3
Notice to Alabama Surface Mining Commission
4.5(a)
Financial Statements
4.5(b)
Non-GAAP Financial Statements
4.6
Material Adverse Effects

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Schedule
 
4.7
Contracts
4.8(a)
Noncompliance with Laws
4.8(b)
Permits
4.9
Intellectual Property Rights
4.1
Litigation
4.11
Tax Exceptions
4.12
Mining and Environmental Exceptions
4.12(h)
Former Reed Locations
4.13(a)
Insurance
4.13(b)
Self-Insurance; Risk-Sharing Arrangements
4.13(c)
Reclamation Bonds
4.13(d)
Insurance Exceptions
4.14(a)
Owned Real Property
4.14(b)(i)
Leased Real Property
4.14(b)(ii)
Right of Access Real Property
4.14(b)(iii)
Former Mines
4.14(c)
Leased Real Property Exceptions
4.15(a)
Mines
4.17
Liabilities
4.18
Material Customers
4.19
Related Party Transactions
4.20(a)
Labor Matters
4.20(b)
Bonus Plans
4.20(d)
Employment Law
4.21(a)
Employee Plans
4.21(b)
Employment Plans – Compliance with Law
4.21(d)
Payments to Employees
4.21(l)
Other Employee Plans
4.21(q)
Independent Contractors
4.23
Broker’s, Finder’s and Insider Fees
4.24(a)
MSHA and OSHA Compliance
4.24(c)
MSHA and OSHA Assessments and Fines
4.24(d)
MSHA and OSHA Reports and Orders
4.25
Accounts Receivable
4.27
Bank Accounts
4.28
Quality
5.5
Broker’s, Finder’s and Insider Fees
6.1
Interim Operations Exceptions
6.7(b)
Certain Employees
6.8(g)
Allocation Schedule
6.13
Personal Guaranties
7.2(e)
Consents
8.1
Employee Benefit Matters

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SHARE AND MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS SHARE AND MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of this 31st day
of August, 2012, is by and among TRU Energy Services, LLC, a Nevada limited
liability company (“Buyer”), the shareholders and members of the Companies
listed on the signature pages hereof (collectively, the “Sellers”), and the
individual trustees and beneficiaries of the Trust, in such capacities (each, a
“Beneficiary”).
RECITALS
WHEREAS, Mr. Robert J. Reed (“Mr. Reed”) and the B&R Family Trust (the “Trust”)
collectively own all of the outstanding shares (the “Minerals Shares”) of Reed
Minerals, Inc., an Alabama corporation (“Reed Minerals”);
WHEREAS, Mr. Reed owns all of the outstanding shares (the “Hauling Shares”) of
Reed Hauling, Inc., an Alabama corporation (“Reed Hauling”);
WHEREAS, Mr. Reed and the Trust collectively own all of the outstanding shares
(the “C&H Shares”) of C&H Mining Company, Inc., an Alabama corporation (“C&H
Mining”);
WHEREAS, Mr. Reed owns all of the membership interest units (the “Management
Shares” and together with the Minerals Shares, the Hauling Shares and the C&H
Shares, the “Shares”) of Reed Management, L.L.C., an Alabama limited liability
company (“Reed Management” and together with Reed Minerals, Reed Hauling and C&H
Mining, each a “Company” and collectively the “Companies”);
WHEREAS, Robbin Reed Allen and James R. Reed (“BRJ” and together with Robin Reed
Allen, the “Beneficiaries”) are beneficiaries of the Trust and will indirectly
receive, pursuant to this Agreement and the Trust documents, the benefit of the
consideration contemplated by this Agreement to be paid to the Trust; and
WHEREAS, the Sellers desire to sell to Buyer and Buyer desires to purchase from
the Sellers all of the Shares, including the goodwill of the Companies, on the
terms and subject to the conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained and intending to be
legally bound, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1        Terms Generally. The words “hereby,” “herein,” “hereof,”
“hereunder” and words of similar import refer to this Agreement as a whole
(including any Schedules hereto) and not merely to the specific section,
paragraph or clause in which such word appears, unless the context shall
otherwise clearly require. All references herein to Articles, Sections, Exhibits
and

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Schedules shall be deemed references to Articles and Sections of, and Exhibits
and Schedules to, this Agreement unless the context shall otherwise clearly
require. The words “include,” “includes” and “including” shall be deemed to be
followed by the phrase “without limitation.” The definitions given for terms in
this Article I and elsewhere in this Agreement shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Except as otherwise expressly provided herein, all references to
“dollars” or “$” shall be deemed references to the lawful money of the United
States of America. Unless the context otherwise requires, any reference to any
federal, state, local or foreign statute or law will be deemed also to refer to
all rules and regulations promulgated thereunder. The word “extent” in the
phrase “to the extent” shall mean the degree to which a subject or other thing
extends, and such phrase shall not simply mean “if.”
Section 1.2        Certain Terms. Whenever used in this Agreement (including in
the Schedules), the following terms shall have the respective meanings given to
them below or in the Sections indicated below:
“Accounting Firm” has the meaning set forth in Section 2.3(c).
“Accounts Receivable” has the meaning set forth in Section 4.25.
“Action” means any action, claim, demand, litigation, cause of action, suit,
proceeding, citation, summons, subpoena, hearing, complaint or investigation of
any nature, civil, criminal, regulatory or otherwise, at law or in equity, by or
before any Governmental Authority.
“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; and
“control” (including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, by Contract or otherwise, including the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.
“Agreement” means this Share and Membership Interest Purchase Agreement
(including the Exhibits and Schedules hereto), as amended, modified or
supplemented from time to time.
“Allocation” has the meaning set forth in Section 2.5.
“Allocation Schedule” has the meaning set forth in Section 6.8(g).
“Ancillary Agreements” means the Escrow Agreement, the Consulting Agreement, the
Lease Amendments, the Company Releases and the NACoal Guarantee.
“Average Sale Price” means the average sale price of coal F.O.B. Mine, including
all settlement payments, premiums, discounts and penalties.
“Balance Sheet Date” has the meaning set forth in Section 4.5(a).

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“Basket” has the meaning set forth in Section 9.3(a).
“Beneficiary” has the meaning set forth in the recitals to this Agreement.
“Bona Fide Purchaser” means a non-related and unaffiliated third-party
independent purchaser who pays valuable consideration in good faith in an
arms’-length transaction. Bona Fide Purchaser specifically excludes any
Affiliate of Buyer. Bona Fide Purchaser specifically includes the Cooperative.
“BRJ” has the meaning set forth in the recitals to this Agreement.
“Business Confidential Information” has the meaning set forth in Section 6.7(c).
“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in Birmingham, Alabama are authorized or required by Law to
close.
“Buyer” has the meaning set forth in the preamble to this Agreement.
“Buyer Indemnified Party” has the meaning set forth in Section 9.1(a).
“Buyer Released Parties” has the meaning set forth in Section 6.9(a).
“Buyer Returns” has the meaning set forth in Section 6.8(b).
“Buyer’s Plans” has the meaning set forth in Section 8.2.
“C&H Mining” has the meaning set forth in the recitals to this Agreement.
“C&H Shares” has the meaning set forth in the recitals to this Agreement.
“Cap Amount” has the meaning set forth in Section 9.3(b).
“Certified Indebtedness” has the meaning set forth in Section 3.2(e).
“Claims Notice” has the meaning set forth in Section 9.2(b).
“Closing” has the meaning set forth in Section 3.1.
“Closing Date” has the meaning set forth in Section 3.1.
“Closing Working Capital” has the meaning set forth in Section 2.4(a).
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral Trust Agreements” means, collectively, the Collateral Trust
Agreement between C&H Mining and Bond Safeguard Insurance Company, and the
Collateral Trust Agreement between Reed Minerals and Bond Safeguard Insurance
Company, each dated October 26, 2011.
“Company” or “Companies” has the meaning set forth in the recitals to this
Agreement.

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“Company Employees” has the meaning set forth in Section 8.1.
“Company Indemnified Parties” has the meaning set forth in Section 6.12.
“Company Marks” has the meaning set forth in Section 6.11.
“Company Permits” has the meaning set forth in Section 4.8(b).
“Company Related Persons” has the meaning set forth in Section 6.9(f).
“Company Related Person Claims” has the meaning set forth in Section 6.9(f).
“Company Release” means the releases by each of Buyer and the Companies on
behalf of the Company Related Persons, each in substantially the form attached
hereto as Exhibit D.
“Compiled Financial Statements” has the meaning set forth in Section 4.5(a).
“Consent” means a consent, approval, authorization, waiver, notification,
permit, license, certificate, exemption, order, registration, declaration,
filing or notice of, with or to any Person.
“Consultant” means each of BRJ, Robbin Reed Allen, and Anthony Allen.
“Consulting Agreement” means the consulting agreement to be entered into at the
Closing between Reed Energy, LLC and Reed Management, Buyer or an Affiliate
thereof, in the form attached hereto as Exhibit C.
“Contract” means any note, deed, lease (whether real or personal property), loan
agreement, indenture, letter of credit (including any related letter of credit
application and reimbursement obligation), mortgage, security agreement,
license, franchise, power of attorney, open purchase order, guarantee,
acquisition or divestiture agreement, employment, consulting, severance, agency,
bonus, compensation or similar agreement, non-competition agreement, finder’s
contract, secrecy, confidentiality, non-disclosure or similar agreement, and any
other agreement, contract, and legally binding commitment, whether written or
oral.
“Controlled Group” means any trade or business (whether or not incorporated)
(i) under common control within the meaning of Section 4001(b)(1) of ERISA with
any Company or (ii) which together with any Company is treated as a single
employer under Section 414(t) of the Code.
“Cooperative” means the Alabama Coal Cooperative, an Alabama corporation.
“Cooperative Straddle Period” means all quarterly or annual periods that begin
on or before, and end after, the Closing Date.
“Current Businesses” has the meaning set forth in Section 6.7(a).
“Current Reserves” has the meaning set forth in Section 2.3(a)(i).

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“CPI-U Index” means the index entitled Consumer Price Index – All Urban
Consumers (CPI-U), Series ID CUUR00005A0, All Items (1982-1984 = 100), as
published from time to time by the United States Bureau of Labor Statistics.
“Dilworth Lease” has the meaning set forth in Section 9.1(a)(v).
“Direct Claim” has the meaning set forth in Section 9.2(a).
“Drilling Data” has the meaning set forth in Section 4.15(d).
“Earn-out Base” means $100.00 per Ton, F.O.B. mine, as adjusted pursuant to
Section 2.3(a)(ii).
“Earn-out Interest” has the meaning set forth in Section 9.5.
“Earn-out Payment Period” has the meaning set forth in Section 2.3(a).
“Employee Plans” has the meaning set forth in Section 4.21(a).
“Environment” or “Environmental” means soil, surface waters, groundwater, land,
stream sediments, surface or subsurface strata, ambient air, indoor air or
indoor air quality, including any material or substance used in the physical
structure of any building or improvement and any environmental medium.
“Environmental Claim” means any Action by any Person alleging Liability
(including Liability for investigatory costs, cleanup costs, governmental
response costs, natural resource damages, fines or penalties) for any
Environmental Losses.
“Environmental Condition” means any Release of any Hazardous Materials or any
violation of Environmental Law in connection with: (i) the Leased Real Property
and any Hazardous Materials migrating thereto or therefrom; (ii) any real
property formerly owned, leased or operated by any Company, its Affiliates or
any of their respective predecessors; or (iii) any other real property at which
any Hazardous Materials generated by the operations of any Company, its
Affiliates or any of their respective predecessors prior to the Closing have
been generated, treated, stored, recycled, disposed of or have otherwise come to
be located.
“Environmental Law” means all present Law relating to remediation, restoration
or protection of the Environment or human health (as relating to actual or
potential exposure to Hazardous Materials), including such Laws relating to
storage, treatment, management, generation, transportation, use or disposal of
Hazardous Materials.
“Environmental Losses” means Losses arising from a Release of Hazardous
Materials or noncompliance with or Liability under any Environmental Laws.
“Environmental or Mining Permit” means any permit, license, approval, consent or
other authorization by or from a Governmental Authority required for coal mining
or Reclamation or otherwise required under Environmental Law or Mining Law.

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Escrow Agent” has the meaning set forth in Section 9.5.
“Escrow Agreement” has the meaning set forth in Section 9.5.
“Escrow Amounts” means the General Escrow Amount and the Tax Escrow Amount.
“Financial Statements” has the meaning set forth in Section 4.5(a).
“First National Cash Account” means the account(s) in which the First National
Cash Amount is held.
“First National Cash Amount” means the amount in cash held by First National
Trust Company as collateral for surety bonds posted by Bond Safeguard Insurance
Company in connection with the Collateral Trust Agreements.
“Former Coal Mines” has the meaning set forth in Section 4.14(b)(iii).
“Fundamental Representations” means those representations and warranties
contained in Sections 4.1 (Organization, Power and Authority), 4.2 (Validity of
Agreements), 4.3 (No Conflicts), 4.11 (Taxes) and 4.23 (No Brokers).
“GAAP” means United States generally accepted accounting principles as applied
on a consistent basis.
“General Enforceability Exceptions” has the meaning set forth in Section 4.2.
“General Escrow Account” means an account, set up pursuant to the Escrow
Agreement, where the General Escrow Amount is held for disbursement by the
Escrow Agent.
“General Escrow Amount” has the meaning set forth in Section 9.5(a).
“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, or any government authority, agency, department,
board, commission or instrumentality of any such nation, government, state or
political subdivision thereof exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, or any
federal, state, local or foreign court of competent jurisdiction.
“Hauling Shares” has the meaning set forth in the recitals to this Agreement.
“Hazardous Materials” means any substance or preparation defined as a “hazardous
substance,” “toxic substance,” “hazardous waste” or any other term of similar
import under any Environmental Law or any other materials that are regulated or
give rise to Liability under Environmental Law, including petroleum (including
crude oil or any fraction thereof), asbestos and asbestos-containing materials,
radiation and radioactive materials, polychlorinated biphenyls, and acid mine
drainage.

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“Indebtedness” of any Person means, without duplication: (i) all obligations of
such Person (A) for the principal of, interest on, and premium and breakage
costs in respect of, money borrowed (whether or not borrowed from an Affiliate
of such Person), or (B) evidenced by notes, debentures, bonds (other than the
Reclamation Performance Bonds) or other similar instruments for the payment of
which such Person is responsible or liable; (ii) all obligations of such Person
issued or assumed as the deferred purchase price for property, all conditional
sale obligations of such Person and all obligations of such Person under any
title retention agreement, including all obligations of such Person for the
payment of money relating to leases that are required to be classified as
capitalized lease obligations in accordance with GAAP but specifically excluding
any obligation of such Person with respect to leases for equipment or other
property as identified on Schedule 1.2(a); (iii) all obligations of such Person
for the reimbursement of any obligor on any letter of credit (other than the
letter of credit in connection with the RGGS Lease Agreement), banker’s
acceptance or similar credit transaction; (iv) all obligations of such Person
under interest rate or currency swap transactions (valued at the termination
value thereof); (v) all obligations of the type referred to in clauses (i)
through (iv) of other Persons for the payment of which such Person is
responsible or liable, directly or indirectly, as obligor, guarantor, surety or
otherwise, including guarantees of such obligations; and (vi) all obligations of
the type referred to in clauses (i) through (iv) of other Persons secured by (or
for which the holder of such obligations has an existing right, contingent or
otherwise, to be secured by) any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person).
“Indemnified Party” has the meaning set forth in Section 9.2(a).
“Indemnifying Party” has the meaning set forth in Section 9.2(a).
“Independent Expert” has the meaning set forth in Section 2.3(a)(iii).
“Intellectual Property Rights” has the meaning set forth in Section 4.9.
“Interest” has the meaning set forth in Section 2.4(c).
“Interim Financial Statements” has the meaning set forth in Section 4.5(a).
“Inventory” means all raw materials, work-in-process, supplies, parts, spare
parts, replacement and component parts, and other inventories of any Company
(including in transit, on consignment or in the possession of any third party).
“IRS” means the Internal Revenue Service or any successor agency, together with
any division, office or representative thereof.
“Law” means any applicable law (including principles of the common law), act,
statute, code, ordinance, rule, regulation or other requirement of any
Governmental Authority.
“Lease” has the meaning set forth in Section 4.14(b)(i).
“Lease Agreements” means the lease agreements between the applicable Companies
and Reed Energy, LLC, in the forms attached hereto as Exhibit B-1 and Exhibit
B-2.

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“Lease Amendments” means the following, each in a form acceptable to Buyer: (a)
Master Coal Mining Agreement Second Amendment, amending the McWane Agreement;
(b) Memorandum of Master Coal Mining Agreement covering the McWane Agreement;
(c) Second Amendment to Coal Mining Lease, dated September 12, 2008, between
Reed Minerals and McWane, Inc. in the Burton Bend mine; (d) Second Amendment to
Coal Mining Lease, dated November 21, 2007, between Reed Minerals and McWane,
Inc. in the Town Creek mine; (e) Third Amendment to Coal Mining Lease, dated
August 29, 2003, between C&H Mining and Palos, L.L.C. in the Lindbergh mine (the
“Lindbergh Lease”); (f) Memorandum of Coal Mining Lease covering the Lindbergh
Lease; (g) Third Amendment of Coal Mining Lease, dated July 15, 2002, between
Palos, L.L.C. and Best Coal, Inc. in the Fishtrap mine (the “Fishtrap Lease”);
(h) Acknowledgment of Transfer/Assignment of Mining Lease covering the Fishtrap
Lease; (i) Second Amendment to Mining Contract, dated November 3, 2010, between
C&H Mining and WB Mining, LLC in the Fishtrap mine (the “Mining Contract”); (j)
Memorandum of Coal Mining Lease covering the Fishtrap Lease and the Mining
Contract; (k) Consent of United States Steel Corporation delivered under the
U.S. Steel Lease Agreement; (l) Memorandum of Lease covering the U.S. Steel
Lease Agreement; (m) Consent of RGGS Land & Minerals Ltd., L.P. delivered under
the RGGS Lease Agreement; and (n) Memorandum of Lease covering the RGGS Lease
Agreement.
“Leased Real Property” has the meaning set forth in Section 4.14(b)(i).
“Letter of Intent” means the Letter of Intent between Buyer and the Companies,
dated May 2, 2012.
“Liability” or “Liabilities” means any and all liabilities and obligations of
every kind and description whatsoever, whether such liabilities or obligations
are known or unknown, disclosed or undisclosed, matured or unmatured, accrued,
absolute, contingent or otherwise.
“Lien” means any lien, charge, mortgage, pledge, deed of trust, security
interest, title defect, title retention agreement, occupancy agreement,
easement, encroachment or other encumbrance.
“Litigation Conditions” has the meaning set forth in Section 9.2(b).
“LOI Payments” means (i) any payments made by Buyer or its Affiliates pursuant
to Section 14 of the Letter of Intent, as set forth on Schedule 1.2(b), plus
(ii) $50,000.
“Loss” has the meaning set forth in Section 9.1(a).
“Management Shares ” has the meaning set forth in the recitals to this
Agreement.
“Marks” has the meaning set forth in Section 6.11.
“Material Adverse Effect” means a material adverse effect on the business,
results of operations, financial condition or assets of the Companies, taken as
a whole, or on the ability of any Seller to consummate the transactions
contemplated by this Agreement; provided, however, that Material Adverse Effect
shall not include (a) any event, occurrence, fact, condition, or change,
directly or indirectly, arising out of or attributable to any changes,
conditions or effects: (i) that generally affect the mining industry in which
any of the Companies operate (but only to the extent

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such conditions do not disproportionately affect the Companies); (ii) in the
United States economy in general or in the general economy in the geographic
area in which the Companies operate or developments or changes therein; (iii)
caused by acts of terrorism or war (whether or not declared) or other national
or international political or social conditions; (iv) caused by a change in Law;
(v) in financial, banking or securities markets; or (b) any adverse change in or
effect on the business of the Companies that is cured by Shareholders before the
earlier of (x) the Closing Date and (y) the date on which this Agreement is
terminated pursuant to Article X hereof.
“Material Customers” has the meaning set forth in Section 4.18.
“Maximum Shareholder Amount” means $6,000,000 less amounts released by the
Escrow Agent from the General Escrow Account pursuant to the terms of the Escrow
Agreement to or for the benefit of Buyer Indemnified Parties to satisfy
indemnification claims pursuant to Article IX; provided, that Losses relating to
Sections 9.1(a)(ii) through 9.1(a)(vii) and Losses due to the failure to be true
and correct of any of the Fundamental Representations do not count towards the
Maximum Shareholder Amount.
“McWane Agreement” means the Master Coal Mining Agreement between Empire Coke
Company and McWane Coal Sales, a division of McWane, Inc., and Reed Minerals,
dated November 21, 2007, as amended.
“McWane Escrow Amount” means the amount of money held in the “Reclamation Bond
Escrow Account” pursuant to the McWane Agreement.
“Mine” has the meaning set forth in Section 4.15(a).
“Minerals Shares” has the meaning set forth in the recitals to this Agreement.
“Mining” has the meaning set forth in the definition of “Mining Law.”
“Mining Law” means all present Laws relating to the exploration, extraction,
processing, storage and transportation of coal and non-coal minerals and to the
Reclamation of lands used for such activities (collectively referred to as
“Mining”).
“Monthly Earn-out Amount” has the meaning set forth in Section 2.3(a)(i).
“Most Recent Fiscal Year-end” means, (a) with respect to C&H Mining, September
30, 2011 and (b) with respect to each Company other than C&H Mining, December
31, 2011.
“Mr. Reed” has the meaning set forth in the recitals to this Agreement.
“MSHA” means the Federal Mine Safety and Health Act, as amended.
“NACoal” means The North American Coal Corporation, a Delaware corporation.
“NACoal Guarantee” means the guarantee agreement in substantially the form
attached hereto as Exhibit C.

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“Noncompete Period” means the period equal to five (5) years following the
Closing.
“Order” means any order, judgment, injunction, award, decree, ruling, charge or
writ of any Governmental Authority.
“Ordinary Course of Business” means the ordinary course of business consistent
with the applicable Company’s past custom and practice (including with respect
to quantity and frequency).
“Organizational Documents” means, as to any Person, its articles or certificate
of incorporation or certificate of formation and its bylaws or operating
agreement or limited liability company agreement or any equivalent documents
under the Law of such Person’s jurisdiction of incorporation or organization.
“OSHA” means the Occupational Safety and Health Act.
“Panel” has the meaning set forth in Section 2.3(a)(iii).
“Permit” means any license, permit, registration, permanent certificate of
occupancy, concession, grant, franchise, filing, Consent, qualification or
similar document or authority issued or granted by any Governmental Authority,
including Environmental or Mining Permits.
“Permitted Liens” means: (a) Liens for Taxes not yet due and payable or, if due
and payable, being diligently contested in good faith by appropriate legal
proceedings and for which appropriate reserves according to GAAP are reflected
on the balance sheets contained in the Financial Statements; (b) mechanic’s,
materialman’s, repairer’s and other similar Liens arising or incurred in the
Ordinary Course of Business that are not yet due and payable or, if due and
payable, are being contested in good faith by appropriate procedures; (c) Liens
arising under original purchase price conditional sales contracts and equipment
leases with third parties entered into in the Ordinary Course of Business; and
(d) in the case of Leased Real Property or subleased properties and assets,
easements, rights of way, zoning ordinances and other similar encumbrances
affecting Leased Real Property or subleased properties and assets which are not,
individually or in the aggregate, material to the business of the Companies and
Liens on the lessors’ or prior lessors’ interests.
“Person” means any individual, sole proprietorship, partnership, limited
partnership, corporation, limited liability company, unincorporated society,
association, trust, joint venture, cooperative association, Governmental
Authority or other legal entity.
“Personal Guaranties” has the meaning set forth in Section 6.13.
“Post-Closing Straddle Period” has the meaning set forth in Section 6.8(a).
“Pre-Closing Straddle Period” has the meaning set forth in Section 6.8(a).
“Pre-Closing Tax Period” means any Tax period ending on or before the Closing
Date.
“Privilege Period” has the meaning set forth in Section 6.8(a).
“Purchase Price” has the meaning set forth in Section 2.2(a).

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“QCC Agreement” has the meaning set forth in Section 2.6.
“Quarterly Earn-out Payment” has the meaning set forth in Section 2.3(a).
“Quarterly Earn-out Settlement Date” has the meaning set forth in Section
2.3(b).
“Quarterly Earn-out Statement” has the meaning set forth in Section 2.3(b).
“Reclamation” means reclamation, revegetation, recontouring, abatement, control
or prevention of adverse effects of Mining activities.
“Reclamation Performance Bonds” means all reclamation performance bonds as to
which any Company is a principal, each of which is listed on Schedule 1.2(c).
“Reed Hauling” has the meaning set forth in the recitals to this Agreement.
“Reed Management” has the meaning set forth in the recitals to this Agreement.
“Reed Minerals” has the meaning set forth in the recitals to this Agreement.
“Reed No. 5 Mine” means the area near Cordova, Alabama for which Reed Minerals
has a mine permit application pending and a surface lease agreement in effect
with Reed Energy, LLC, and which is also referred to as “Dovertown Mine.”
“Reed Ownership Period” means, with respect to (a) Reed Hauling, the period
beginning on November 22, 2005 and ending on the Closing Date, (b) Reed
Management, the period beginning on March 16, 2009 and ending on the Closing
Date, (c) C&H Mining, the period beginning on September 4, 2003 and ending on
the Closing Date and (d) Reed Minerals, the period beginning on October 1, 2002
and ending on the Closing Date.
“Reimbursable Fees” means $62,632, which are the actual costs incurred by the
Companies to drill the fourteen (14) drill holes, and to perform quality
analysis on the resulting drill cores, requested by Buyer or NACoal in
connection with the transactions contemplated by this Agreement.
“Related Persons” has the meaning set forth in Section 4.19.
“Release” means any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migrating, disposing or
dumping into the Environment (including the abandonment or discarding of
barrels, containers and other receptacles containing any Hazardous Materials),
and any condition that results in the exposure of a Person or property or other
medium to a Hazardous Material.
“Restricted Territory” means: the geographic area within the State of Alabama.
“Review Period” has the meaning set forth in Section 2.3(c).
“RGGS Lease Agreement” means the Coal Mining Lease between RGGS Land & Minerals
Ltd., L.P. and C&H Mining, dated May 3, 2012.

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“Right of Access Leases” has the meaning set forth in Section 4.12(b).
“Right of Access Real Property” has the meaning set forth in Section 4.12(b).
“Section 338(h)(10) Election” has the meaning set forth in Section 6.8(g).
“Seller Indemnified Party” has the meaning set forth in Section 9.1(b).
“Seller Related Person Claims” has the meaning set forth in Section 6.9(a).
“Seller Related Persons” has the meaning set forth in Section 6.9(a).
“Seller Released Parties” has the meaning set forth in Section 6.9(f).
“Seller Returns” has the meaning set forth in Section 6.8(c).
“Sellers” has the meaning set forth in the preamble to this Agreement.
“Selling Expenses” means all (a) unpaid costs, fees and expenses of outside
professionals incurred by any Company or which any Company has agreed to pay
relating to the process of selling the Companies, whether incurred in connection
with this Agreement, any Ancillary Agreement or otherwise, including all legal
fees, accounting, Tax, investment banking fees and expenses, but, for the
avoidance of doubt, excluding Buyer’s payment of any fee to Cornerstone
Minerals, LLC in connection with the consummation of the transactions
contemplated hereby and excluding the Reimbursable Fees, (b) bonuses payable to
employees, agents and consultants of and to any Company as a result of the
transactions contemplated by this Agreement and unpaid by such Company as of the
Closing Date (including the employer portion of any payroll, Social Security,
unemployment or similar Taxes), and (c) severance obligations owed by any
Company to employees, agents and consultants of and to the Companies triggered
prior to or as a result of the transactions contemplated by this Agreement
(including the employer portion of any payroll, Social Security, unemployment or
similar Taxes).
“Settlement Payment” means a payment from the Cooperative to any of the
Companies in the Ordinary Course of Business for any settlement amount
attributable to deliveries prior to the Closing Date, including, without
limitation, any quarterly settlement payment, sulfur adjustment payment or
patron dividend; provided, that such payment is not treated as an Account
Receivable for purposes of the Working Capital.
“Shareholders” means, collectively, the Sellers and the Beneficiaries.
“Shareholders’ Knowledge” means, with respect to periods during the Reed
Ownership Period, the actual knowledge after reasonable inquiry of the
Shareholders and Anthony Allen, where “reasonable inquiry” is defined as
reasonable discussions about the relevant subject matter with senior level
employees and officers of each of the Companies who have responsibility or
oversight for such subject matter, and, with respect to periods prior to the
Reed Ownership Period, the actual knowledge of the Shareholders and Anthony
Allen.
“Shareholders’ Pro Rata Share” has the meaning set forth in Section 2.7(c).

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“Shareholders’ Representative” means Robbin Reed Allen.
“Shares” has the meaning set forth in the recitals to this Agreement.
“SMCRA” has the meaning set forth in Section 4.12(m).
“Statement” has the meaning set forth in Section 2.4(a).
“Straddle Period” means all Tax periods that begin on or before, and end after,
the Closing Date.
“Subsidiary” of any Person means any other Person of which at least a majority
of the outstanding shares or other equity interests having ordinary voting power
for the election of directors or comparable managers of such other Person are at
the time owned, directly or indirectly, by such first Person, by one or more of
its Subsidiaries, or by such Person and one or more of its Subsidiaries.
“Target Working Capital” means $(600,000).
“Tax” means (a) any foreign, United States federal, state or local net income,
alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, including any
liability under any state abandonment or unclaimed property, escheat or similar
Law, together with any interest, penalty, addition to tax or additional amount
imposed by any Law or Taxing Authority, whether disputed or not, (b) any
liability for the payment of any amounts of any of the foregoing types as a
result of being a member of an affiliated, consolidated, combined or unitary
group, or being a party to any agreement or arrangement whereby liability for
payment of such amounts was determined or taken into account with reference to
the liability of any other Person, (c) any liability for the payment of any
amounts as a result of being a party to any tax sharing or allocation agreements
or arrangements (whether or not written) or with respect to the payment of any
amounts of any of the foregoing types as a result of any express or implied
obligation to indemnify any other Person, and (d) any liability for the payment
of any of the foregoing types as a successor, transferee or otherwise.
“Tax Escrow Account” means an account, set up pursuant to the Escrow Agreement,
where the Tax Escrow Amount is held for disbursement by the Escrow Agent.
“Tax Escrow Amount” has the meaning set forth in Section 9.5(a).
“Taxing Authority” means any Governmental Authority responsible for the
collection, administration or the imposition of any Tax.
“Tax Matter” has the meaning set forth in Section 6.8(f).
“Tax Return” means all Tax returns, statements, reports, elections, schedules,
claims for refund and forms (including estimated Tax or information returns and
reports), including any supplement or attachment thereto and any amendment
thereof.

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“Termination Date” has the meaning set forth in Section 10.1(b).
“Third Party Claim” has the meaning set forth in Section 9.2(b).
“Ton” means two thousand (2,000) pounds.
“Transfer Taxes” has the meaning set forth in Section 6.8(d).
“Trust” has the meaning set forth in the recitals to this Agreement.
“Unresolved Claims” has the meaning set forth in Section 9.5.
“U.S. Steel Lease Agreement” means the Surface Mining Coal Lease by and between
United States Steel Corporation and C&H Mining, dated May 10, 2012.
“Voluntary Benefits” means insured benefits for which each Company paid no
portion of the premium immediately prior to the Closing and for which each
Company only offered pre-tax payment of premiums.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988,
as amended.
“Working Capital” means the current assets of the Companies on a consolidated
basis, minus the current liabilities of the Companies on a consolidated basis,
in each case, as calculated in accordance with the requirements of
Section 2.4(a).
ARTICLE II
SALE AND PURCHASE OF SHARES
Section 2.1        Sale and Purchase. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, Buyer shall purchase
from each Seller, and each Seller shall sell, transfer, assign, convey and
deliver to Buyer, all of such Seller’s Shares, free and clear of any Liens or
similar restrictions or limitations, including any restriction on the right to
vote, sell or otherwise dispose of the Shares, other than restrictions under
applicable securities laws.
Section 2.2    Purchase Price.
(a)    Subject to adjustment as provided in Section 2.4, in consideration for
the transfer of the Shares, (i) Buyer shall pay or cause to be paid, at the
Closing, for the benefit of the Sellers (and, indirectly by virtue of payment to
the Trust, the Beneficiaries), an amount equal to $62,500,000 (the “Purchase
Price”), payable as provided in clauses (b) and (c) below, and (ii) Buyer shall
make the contingent earn-out payments, if any, contemplated by Section 2.3.
(b)    Buyer shall deposit at Closing (i) the General Escrow Amount into the
General Escrow Account pursuant to the terms of the Escrow Agreement, and (ii)
the Tax Escrow Amount into the Tax Escrow Account pursuant to the terms of the
Escrow Agreement.
(c)    Buyer shall pay the Purchase Price less the Escrow Amounts at the Closing
as follows:  

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(i)    Buyer shall pay or cause to be paid to the Persons entitled thereto all
of the Certified Indebtedness;
(ii)    the Selling Expenses shall be paid to the Persons entitled thereto, to
the extent previously unpaid; and
(iii)    a net amount equal to the Purchase Price plus an amount equal to the
McWane Escrow Amount plus an amount equal to the Reimbursable Fees, minus the
LOI Payments minus the aggregate of the amounts referred to in clauses (i) and
(ii) of this Section 2.2(c) and in Section 2.2(b) shall be paid by bank wire
transfer of immediately available funds to an account designated to Buyer in
writing by the Shareholders’ Representative (on behalf of the Sellers), such
designation to be made at least two (2) Business Days prior to the Closing Date.
In no event will Buyer, the Companies or any of their respective Affiliates have
any responsibility or liability for the allocation of any such payment among the
Sellers or the Beneficiaries by the Shareholders’ Representative or trustees of
the Trust, as applicable, or the distribution of any such payment by the
Shareholders’ Representative or the trustees of the Trust to the Sellers or the
Beneficiaries, as applicable.
Section 2.3    Earn-out.
(a)    As additional consideration for the Shares, on a quarterly basis
beginning with the third calendar quarter of 2012 (each calendar quarter, an
“Earn-out Payment Period”), Buyer (or, at the direction of Buyer, the Companies)
shall pay to the Shareholders’ Representative an amount (each, a “Quarterly
Earn-out Payment”), if any, equal to the sum of the Monthly Earn-out Amounts for
each of the three months during the applicable Earn-out Payment Period, at the
time specified in Section 2.3(b) and as adjusted in accordance with this Section
2.3(a). A sample calculation of the Quarterly Earn-out Payment is set forth on
Schedule 2.3(a), including a sample calculation of the adjustments contemplated
by Section 2.3(a)(ii) below. Any payments made pursuant to this Section 2.3
shall be treated as adjustments to the Purchase Price.
(i)    The “Monthly Earn-out Amount” shall be equal to (A) 20% of the amount, if
any, by which the Average Sale Price during the applicable calendar month
exceeds the Earn-out Base, multiplied by (B) the number of Tons of coal mined
after the Closing Date and sold during the applicable calendar month from the
reserves owned, leased or controlled by the Companies at the Closing, including
the reserves currently leased under the RGGS Lease Agreement and the U.S. Steel
Lease Agreement (collectively, the “Current Reserves”); provided, however, that
in no event will any Quarterly Earn-out Payment be due for any amount of such
coal sold after the Closing that exceeds 15,000,000 Tons of coal mined and sold
after the Closing, regardless of the sale price; provided further, however, that
any such coal mined and sold at a per Ton sale price less than the minimum per
Ton net proceeds received by C&H Mining or Reed Minerals from the Cooperative
during such month will be excluded from the calculation of the Monthly Earn-out
Amount and from the calculation of Average Sale Price. For the avoidance of
doubt, (i) no further Monthly Earn-out Amounts will be paid once 15,000,000 Tons
of coal have been mined and sold from the Current Reserves after the Closing,
regardless of sale price, and (ii) the Monthly Earn-Out Amounts shall be due
from Buyer and calculated as provided in this Section 2.3(a) with respect to

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coal mined and sold by any Person (whether a Company, Buyer, an Affiliate of
Buyer or any Company, an independent contractor, any third party assignee, any
other third party or any other Person) from the Current Reserves.
(ii)    Beginning effective January 1, 2013, the Earn-out Base shall be
increased or decreased, as appropriate, as of January 1 of each applicable
calendar year, in the same percentage by which (A) the first published value of
the CPI-U Index for October of the preceding calendar year is greater or less
than (B) the first published value of the CPI-U Index for May 2012 (which is
229.815, on the base of (1982-1984=100)). Such increased or decreased Earn-out
Base shall be effective as of the adjustment date and shall be included in the
next Quarterly Earn-out Statement following such adjustment date, and any
additional payment to be made by Buyer shall be made accordingly. An example
calculation of such adjustment is included on Schedule 2.3(a). If any adjustment
made pursuant to this Section 2.3(a)(ii) is based upon a first published CPI-U
Index figure that is subsequently revised, there shall be no further adjustment
of such amount on the basis of such revision. If the CPI-U Index or any
substitute index is changed in the future to use some base other than the base
of (1982-1984=100), then for the purposes hereof the CPI-U Index or any
substitute index, as the case may be, shall be adjusted so as to be in correct
relationship to the base of (1982-1984=100) or some other alternative base that
is mutually agreed by Buyer and the Shareholders’ Representative. If publication
of the CPI-U Index or any substitute index is no longer made by any federal
agency, the index to be used shall be that index mutually agreed by Buyer and
the Shareholders’ Representative. If at any time either Buyer or the
Shareholders’ Representative believes that the CPI-U Index does not accurately
reflect the true change in the price level of consumer goods and services in the
United States of America, then Buyer and the Shareholders’ Representative shall
attempt to agree mutually upon a new index. If Buyer and the Shareholders’
Representative do not agree to the continued use of the CPI-U Index or the use
of a new index which Buyer and the Shareholders’ Representative agree more
accurately reflects the changes in the price level of consumer goods and
services in the United States of America, that issue will be subject to
arbitration pursuant to clause (iii) below.
(iii)    Any dispute that arises between Buyer and the Shareholders’
Representative with respect to the continued use of the CPI-U Index or the use
of a new index shall be submitted to a panel of three Independent Experts for
determination as the exclusive means of resolving such dispute. “Independent
Expert” shall mean a regionally or nationally recognized economist who has not
been employed or engaged by Buyer, any Shareholder, any Company, or any of their
Affiliates, within the immediately preceding five (5) years. Either Buyer or
Shareholders’ Representative may give written notice to the other of a dispute
under this Section 2.3(a)(iii). Within thirty (30) days after receipt of such
written notice, Buyer shall select one Independent Expert and Shareholders’
Representative shall select another Independent Expert. Within fifteen (15) days
after selection of the first two Independent Experts, those two Independent
Experts shall select the third Independent Expert. Those three Independent
Experts shall constitute the “Panel”. The Buyer and Shareholders’ Representative
shall submit their positions and supporting information and documentation to the
Panel and shall each have an opportunity to discuss the same with the Panel. The
Panel shall conduct and conclude its review of the disputed matters within
thirty (30) days after selection of the Panel. The Panel shall have no authority
to modify any term or provision of this Agreement, award any damages or require
any payments of any nature, or make any determination hereunder other than with
respect to the continued use of the CPI-U or the selection and use of a

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new index hereunder. The determination by the Panel shall be final, conclusive
and binding on the Parties. The expenses of the Panel shall be shared equally by
Buyer and the Shareholders’ Representative on behalf of the Sellers.
(b)    Within 30 days after the end of each Earn-out Payment Period, Buyer shall
(i) pay to the Shareholders’ Representative the Quarterly Earn-out Payment, if
any, for the applicable Earn-out Payment Period by wire transfer of immediately
available funds to an account designated by the Shareholder’s Representative and
(ii) provide to the Shareholders’ Representative a statement in a form
substantially similar to that used to prepare the sample calculation in Schedule
2.3(a) setting forth the Monthly Earn-out Amount for each of the calendar months
in such Earn-out Payment Period (each, a “Quarterly Earn-out Statement”). Upon
the reasonable request of the Shareholders’ Representative, Buyer shall deliver
to the Shareholders’ Representative copies of the applicable records, work
papers and other information contemplated by Section 2.3(d). Upon receipt of the
Quarterly Earn-out Statement, the Shareholders’ Representative shall be entitled
to object to the calculation of the Quarterly Earn-out Payment in a manner
consistent with the procedures set forth in Section 2.3(c). The date on which
each Quarterly Earn-out Payment is finally determined pursuant to Section 2.3(c)
shall be referred to herein as a “Quarterly Earn-out Settlement Date.” On the
fifth Business Day following the Quarterly Earn-out Settlement Date, Buyer shall
pay to the Shareholders’ Representative by wire transfer of immediately
available funds to an account designated by the Shareholders’ Representative an
amount equal to the difference between the Quarterly Earn-out Payment paid to
the Shareholders’ Representative pursuant to Section 2.3(b)(i), if any, and the
Quarterly Earn-out Payment as finally determined in accordance with Section
2.3(c).
(c)    If the Shareholders’ Representative disagrees with any portions of the
proposed Quarterly Earn-out Statement, it shall notify Buyer of such
disagreement in writing, setting forth in reasonable detail the particulars of
such disagreement, within 30 days after the Shareholders’ Representative’s
receipt of the proposed Quarterly Earn-out Statement (in each case, the “Review
Period”). If the Shareholders’ Representative does not provide such a notice of
disagreement within the Review Period, the Quarterly Earn-out Statement and the
Quarterly Earn-out Payment shall be final, binding and conclusive for all
purposes hereunder. During the Review Period, the Shareholders’ Representative
(and his or her representatives) shall have the right to inspect the applicable
books and records of the Companies and Buyer during normal business hours at the
offices of Buyer or the Companies, as applicable, upon reasonable prior notice
and solely for the purposes of reasonably determining the Quarterly Earn-out
Payment; provided, that all materials reviewed by or on behalf of the
Shareholders’ Representative shall be deemed Confidential Information subject to
Section 6.7 and shall only be used to determine the Quarterly Earn-out Payment
(including raising, identifying and resolving any disputes relating thereto). In
the event the Shareholders’ Representative timely provides any such notice of
disagreement, Buyer and the Shareholders’ Representative shall negotiate in good
faith for a period of thirty (30) days (or such longer period as they may
mutually agree) to resolve any disagreements with respect to the calculations of
the Quarterly Earn-out Payment. If, at the end of such period, the parties are
unable to resolve such disagreements, then the parties shall jointly engage an
independent accounting firm (meaning a firm of certified public accountants that
has not provided services to any of the parties hereto or their Affiliates
during the immediately preceding five (5) years), which firm shall initially be
the firm of UHY LLP (the “Accounting Firm”), or another mutually acceptable,
independent accounting firm, to resolve any remaining disagreements. If at any
point following the Closing

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Date the Accounting Firm shall cease being independent from all the parties
hereto, the parties shall jointly engage a new independent accounting firm to
serve as the Accounting Firm. The fees and costs of the Accounting Firm shall be
paid 50% by Buyer and 50% by the Shareholders’ Representative on behalf of the
Sellers. The Accounting Firm shall calculate (based solely on written
submissions from Buyer and the Shareholders’ Representative) as promptly as
practicable, but in any event, within fifteen (15) days of the date on which
such dispute is referred to the Accounting Firm, the Quarterly Earn-out Payment;
provided, that, except as provided in Section 2.3(f), the amount determined by
the Accounting Firm shall be no lower than the lower of the submissions and no
higher than the higher of the submissions. The Accounting Firm’s calculation
shall be final, binding and conclusive for all purposes hereunder.
(d)    Each Quarterly Earn-out Statement shall, at the reasonable request of the
Shareholders’ Representative solely for the purpose of determining the Quarterly
Earn-out Payment (including raising, identifying and resolving any disputes
relating thereto), be accompanied by copies of invoices, purchase orders, sales
receipts, bills of lading, truck weight tickets, railroad weight tickets, barge
weight tickets, statements of transportation, washing and handling charges, and
other reasonable forms of verification as may reasonably be deemed necessary by
the Shareholders’ Representative showing the actual amount of the Current
Reserves mined, processed, stockpiled, loaded, shipped and sold by Buyer, the
Companies or their respective Affiliates, agents and assigns during the Earn-out
Payment Period and shall also include individual sales of coal, the customers to
which coal was sold, the sale price received for such coal, and the location, by
Quarter-Quarter Section, Township, and Range from which such coal was mined. All
such information shall be deemed Confidential Information subject to Section 6.7
and shall only be used to verify the Quarterly Earn-out Payment (including
raising, identifying and resolving any disputes relating thereto). The
Shareholders’ Representative shall bear all reasonable costs and expenses
incurred by or on behalf of the Companies in connection with such requests over
$100 per Earn-out Payment Period.
(e)    In no event will Buyer, the Companies or any of their respective
Affiliates have any responsibility or liability for the distribution of any such
Quarterly Earn-out Payments by the Shareholders’ Representative or the trustees
of the Trust to the Sellers or the Beneficiaries, as applicable.
(f)    For purposes of determining the sales price of coal mined and sold
pursuant to this Section 2.3 for the calculation of any and all Quarterly
Earn-out Payments, it is specifically understood and agreed by Buyer that all
calculations shall be made based on the sale of coal from the Current Reserves
to a Bona Fide Purchaser. If the Companies or their respective Affiliates,
employees, agents or assigns should sell coal from the Current Reserves to a
purchaser, or otherwise transfer, exchange, assign or convey coal to another
Person (whether an Affiliate or a third party), and the Shareholders’
Representative provides notice in writing to Buyer that, in the Shareholders’
Representative’s reasonable judgment, such purchaser or other transferee is not
a Bona Fide Purchaser or such transaction was consummated with the intention of
manipulating the sale price for the purpose of negatively impacting a Quarterly
Earn-out Payment, and thereafter Buyer does not or is not able to justify to the
Shareholders’ Representative’s reasonable satisfaction, within thirty (30) days
from the date of such notice, that such purchaser or transferee is a Bona Fide
Purchaser and such transaction was not intentionally consummated for the purpose
of negatively

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impacting a Quarterly Earn-out Payment, the amount of the Quarterly Earn-out
Payment with respect to such transaction shall be submitted to the Accounting
Firm for final determination pursuant to Section 2.3(c). If the Accounting Firm
determines that the purchaser or transferee was not a Bona Fide Purchaser or
that the transaction was consummated with the intention of manipulating the sale
price for the purpose of negatively impacting a Quarterly Earn-out Payment, then
the Accounting Firm shall substitute for the reported sale price of such sale
the prevailing market price of coal of similar quality and quantity recently
sold, F.O.B. Mine, by the Companies or, F.O.B. Mine, by other sellers to Bona
Fide Purchasers in arms’ length transactions as determined by the Accounting
Firm based on evidence gathered by it, including any evidence submitted by Buyer
and the Shareholders’ Representative. The Shareholders shall have no right to
control, and, except for a Quarterly Earn-out Payment adjustment claim pursuant
to this Section 2.3(f), they hereby waive any claim related to controlling, (i)
the sale price of coal set by Buyer or the Companies from and after the Closing
and (ii) the Companies’ mine planning and sequencing, and whether and at what
rate the Current Reserves are mined.
(g)    The sale price of coal sold by the Companies to brokers that are Bona
Fide Purchasers shall be the amount paid by the broker to the Companies for the
coal F.O.B. mine, rather than the sale price from the broker to the third party
purchaser of the coal.
(h)    Effective as of the Closing Date and thereafter until an aggregate of
15,000,000 Tons of coal have been mined and sold from the Current Reserves after
the Closing and all payment obligations of Buyer under this Section 2.3 shall
have been paid in full to the Shareholders’ Representative, Buyer, for itself,
its Affiliates and the Companies, agrees that (i) Buyer shall not sell, assign,
transfer, convey or otherwise voluntarily dispose of any of the Company Shares
without the Shareholders’ Representative’s consent, which shall not be withheld
unreasonably, (ii) none of Buyer, any Company or any of Buyer’s Affiliates
shall, or shall permit, any Company to sell, assign, transfer, convey or
otherwise dispose of the rights of any Company in and to any of the Leased Real
Property with respect to the Current Reserves prior to the release of the
Reclamation Bonds covering such Leased Real Property, and (iii) subject to any
deficiencies in the Companies’ rights to the Leased Real Property as of the
Closing Date, none of Buyer, any Company or any of Buyer’s Affiliates shall
intentionally, or shall intentionally permit, any Company to, terminate or allow
to terminate or expire any of the rights of the Companies in and to any of the
Leased Real Property, without (in the case of each of clauses (i), (ii) and
(iii) above) arrangements reasonably satisfactory to the Shareholders’
Representative for the continued compliance with the terms of this Section 2.3;
provided, that no consummation of any such action shall in any way relieve Buyer
of its obligations with respect to payment of the Monthly Earn-out Amounts with
respect to the Current Reserves, except to the extent that any of such payment
obligations have been satisfied by the applicable transferee.
Section 2.4    Purchase Price Adjustment.
(a)    Within sixty (60) days after the Closing Date, Buyer shall prepare and
deliver to the Shareholders’ Representative a statement (the “Statement”)
setting forth the actual Working Capital as of the close of business on the
Closing Date (the “Closing Working Capital”), calculated in the manner set forth
on Schedule 2.4(a). The Statement shall be prepared in accordance with GAAP and
consistent with the accounting principles, practices, methodologies and policies
used

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in the preparation of the Target Working Capital, except that Buyer is permitted
to conduct a physical inventory, at Buyer’s cost and expense, for purposes of
preparing the Statement. Schedule 2.4(a)(ii) sets forth the calculation for
determining the value of shot rock inventory. Buyer hereby agrees that the
Shareholders and their respective representatives shall be permitted to attend
and participate in the physical inventory conducted by Buyer under this Section
2.4, and Buyer hereby further agrees to provide written notice to the
Shareholders’ Representative of the date(s) on which the physical inventory
shall be conducted, which notice shall be delivered no later than ten (10)
Business Days prior to the start of the physical inventory.
(b)    Within thirty (30) days following receipt by the Shareholders’
Representative of the Statement, the Shareholders’ Representative shall deliver
written notice to Buyer of any dispute the Shareholders have regarding the
Statement and the accurate calculation of the Closing Working Capital on a basis
consistent with the requirements of Section 2.4(a) (such written notice shall
set forth a detailed description of any such dispute); provided, however, that
the Shareholders’ Representative (on behalf of the Shareholders) may not dispute
the accounting principles, practices, methodologies and policies used in
preparing the Statement if they are consistent with GAAP and consistent with the
accounting principles, practices, methodologies and policies used in the
preparation of the Target Working Capital. If the Shareholders’ Representative
does not so notify Buyer of a dispute with respect to the Statement within such
30-day period, such Statement will be final, conclusive and binding on the
parties. In the event of such notification of a dispute, the parties shall
negotiate in good faith to resolve such dispute. If Buyer and the Shareholders’
Representative, notwithstanding such good faith efforts, fail to resolve all or
any portion of such dispute within fifteen (15) days after the Shareholders’
Representative advises Buyer of the dispute, then Buyer and the Shareholders’
Representative jointly shall engage the Accounting Firm, acting as accountants
and not as arbitrators, to resolve the dispute, or any remaining portion
thereof, on a basis consistent with the requirements of Section 2.4(a). The
parties agree that they will request that the Accounting Firm render its
reasoned written decision within thirty (30) days after referral of the dispute
to the Accounting Firm for decision pursuant hereto. In resolving the dispute,
the Accounting Firm shall limit its review to the items that were properly
identified by the Shareholders’ Representative in the written notification of
the dispute (which decision, in the case of each disputed item, shall be within
the range of the respective amounts asserted by the Shareholders’ Representative
and Buyer to be the correct amount of such disputed item). All determinations so
made by the Accounting Firm shall be final, conclusive and binding on the
parties, absent manifest error. Judgment may be entered to enforce such
determination in any court of competent jurisdiction. Buyer and the
Shareholders’ Representative (on behalf of the Sellers) shall each bear its own
costs and expenses, including reasonable expenses of their respective
representatives and experts, that may be incurred by such Person in connection
with the preparation, review, dispute (if any) and final determination of the
Statement and Closing Working Capital; provided, that Buyer and the
Shareholders’ Representative (on behalf of the Sellers) shall share equally all
reasonable expenses and fees of the Accounting Firm in connection with the
review, dispute and final determination of the Statement and Closing Working
Capital.
(c)    Upon final determination of Closing Working Capital as provided in
Section 2.4(b) above, (i) if Closing Working Capital is greater than Target
Working Capital, then the Purchase Price shall be increased by the amount of the
excess of Closing Working Capital over Target Working Capital (together with
Interest), and Buyer shall pay or cause to be paid an amount in cash equal to

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such excess amount (together with Interest) to the Shareholders’ Representative
by bank wire transfer of immediately available funds to an account or accounts
designated in writing by the Shareholders’ Representative to Buyer, and (ii) if
Closing Working Capital is less than Target Working Capital, then the Purchase
Price shall be decreased by the excess of Target Working Capital over Closing
Working Capital, and the Shareholders’ Representative shall pay or cause to be
paid an amount in cash equal to such shortfall (together with Interest) to Buyer
by bank wire transfer of immediately available funds to an account or accounts
designated in writing by Buyer. Any such payment is to be made within five (5)
Business Days of the date on which the Closing Working Capital is finally
determined pursuant to Section 2.4(b). In no event will Buyer, the Companies or
any of their respective Affiliates have any responsibility or liability for the
allocation of any such payment among the Sellers by the Shareholders’
Representative or the distribution of any such payment by the Shareholders’
Representative to the Sellers. “Interest” will be payable at the “prime” rate,
as announced by The Wall Street Journal, Eastern Edition, from time to time to
be in effect, calculated based on a 365 day year and the actual number of days
elapsed. For the avoidance of doubt, Interest shall accrue (i) beginning on the
day following the Closing Date and ending on the date of the payment
contemplated by this Section 2.4(c) and (ii) at the “prime” rate in effect on
the Closing Date.
(d)    For purposes of complying with the terms set forth in this Section 2.4,
each party shall cooperate with and make available to the other party and their
respective representatives all information, records, data and working papers,
and shall permit access to its facilities and personnel, as may be reasonably
required in connection with the preparation and analysis of the Statement and
the resolution of any disputes thereunder.
Section 2.5    Allocation of Purchase Price. The Purchase Price (and all other
capitalized costs and any other items treated as additional Purchase Price for
U.S. federal income tax purposes) shall be allocated by Company based on their
respective fair market values and in accordance with Sections 338 and 1060 of
the Code and the regulations thereunder and as further provided under Section
6.8(g) and as adjusted, if necessary, consistent with any Purchase Price
adjustment (the “Allocation”); provided that such adjustment will not include
adjustments regarding allocations to “net mineral rights/reserves” or “net
property and equipment” without the Shareholders’ Representative’s consent.
Buyer and the Shareholders shall each prepare and file, and cause their
respective Affiliates to prepare and file, its Tax Returns filed with the IRS or
any other Governmental Authority, including Form 8594, on a basis consistent
with the Allocation. Neither Buyer nor the Shareholders shall take any position
(whether in audits, Tax Returns or otherwise) that is inconsistent with the
Allocation unless required to do so by applicable Law. In the event that the
Allocation is disputed by any Taxing Authority, the party receiving notice of
the dispute shall promptly notify the other party hereto, and both the
Shareholders and Buyer agree to use their reasonable best efforts to defend such
Allocation in any audit or similar proceeding.
Section 2.6    Shareholder Acknowledgment. The Shareholders acknowledge and
agree that (i) all funds held in the “Reclamation Bond Escrow Account” pursuant
to the McWane Agreement, and (ii) any amounts due from Quality Coal Company,
Inc. under the Assignment and Assumption Agreement Regarding Slate Creek, dated
September 22, 2010 (the “QCC Agreement”), are, in each case, assets of the
Companies and will remain assets of the Companies after the Closing. The amounts
referenced in clauses (i) and (ii) above are set forth on Schedule 2.6 as of the
date of this Agreement.

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Between the date of this Agreement and the Closing, no Company will remove any
funds held in the “Reclamation Bond Escrow Account” pursuant to the McWane
Agreement or paid to any Company pursuant to the QCC Agreement other than in the
Ordinary Course of Business. At the Closing, (i) the amount of funds held in the
“Reclamation Bond Escrow Account” pursuant to the McWane Agreement shall be at
least equal to the amount set forth on Schedule 2.6, and (ii) any amounts
received pursuant to the QCC Agreement after the Closing Date will remain with
the Companies.
Section 2.7    Refunds and Remittances.
(a)    Subject to the terms of this Agreement, if, after the Closing Date, any
party to this Agreement receives any payment relating to any property of any
other party, the receiving party will promptly forward such payment to the
appropriate party.
(b)    Subject to Section 6.14, as soon as reasonably possible following the
Closing, Buyer shall obtain, or shall cause one or more of the Companies to
obtain, a release of all funds held in the First National Cash Account and shall
cause all of such funds to be remitted promptly to the Shareholders’
Representative on behalf of the Sellers.
(c)    Upon receipt by Reed Minerals and C&H Mining of any Settlement Payments
from the Cooperative due to such Companies with respect to the calendar quarter
ending June 30, 2012, Buyer shall remit, or shall cause Reed Minerals or C&H
Mining to remit, an amount equal to such payments to the Shareholders’
Representative on behalf of the Sellers within five (5) Business Days after the
applicable Company’s receipt thereof. Upon receipt by Reed Minerals and C&H
Mining of any Settlement Payments from the Cooperative due to such Companies
with respect to any Cooperative Straddle Period, Buyer shall remit, or shall
cause Reed Minerals or C&H Mining to remit, an amount equal to the Shareholders’
Pro-Rata Share of such payments to the Shareholders’ Representative on behalf of
the Sellers within five (5) Business Days after the applicable Company’s receipt
thereof. For purposes of this Section 2.7(c), “Shareholders’ Pro Rata Share” is
equal to the quotient of (i) the number of Tons of coal delivered by the
Companies to the Cooperative during the period beginning on the first date of
the calendar quarter or year to which such payment applies through the Closing
Date and (ii) the number of Tons of coal delivered by the Companies to the
Cooperative during the calendar quarter or year to which such payment applies.
Section 2.8    Buyer Acknowledgment. Subject to Buyer’s indemnification rights
in Article IX (including, without limitation, its indemnification rights
pursuant to Section 9.1(a)(i) with respect to any misrepresentation or breach of
warranty by the Shareholders under this Agreement), Buyer acknowledges and
agrees that (i) all obligations with respect to equipment leases of any of the
Companies with third parties that are set forth on Schedule 4.7(a), (ii) all
obligations with respect to leases for the Leased Real Property and Right of
Access Real Property set forth on Schedules 4.14(b)(i) and (ii) and (iii) all
Reclamation obligations of the Companies with respect to areas identified or
referenced on Schedule 1.2(c) or covered by Permits referenced on Schedule
4.8(b) will remain obligations of the Companies after the Closing.
ARTICLE III
CLOSING AND DELIVERIES
Section 3.1    Closing. The closing of the transactions contemplated by this
Agreement

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(the “Closing”) shall take place at the offices of Bradley Arant Boult Cummings
LLP, One Federal Place, 1819 Fifth Avenue North, Birmingham, AL 35203, on August
31, 2012 (the “Closing Date”). The Closing shall be effective for accounting
purposes as of 11:59 p.m., local time, on the Closing Date.
Section 3.2    Deliveries by the Shareholders. At the Closing (or in the case of
clause (g) below, contemporaneously with the execution and delivery of this
Agreement), the Shareholders will deliver or cause to be delivered to Buyer the
following items:
(a)    any documents that are necessary to transfer to Buyer good and valid
title to the Shares, together with all current, original certificates
representing the Shares;
(b)    the record books, share ledgers and limited liability company ownership
ledgers of each Company;
(c)    copies of the Organizational Documents of each Company, certified by an
officer of the applicable Company;
(d)    a certificate of existence and certificate of good standing of each
Company issued by the Alabama Secretary of State and Alabama Department of
Revenue, respectively, issued as of a recent date;
(e)    a certificate of the Shareholders’ Representative, dated as of the
Closing Date and in form and substance reasonably acceptable to Buyer, setting
forth in sufficient detail the aggregate amount of (i) any and all Indebtedness
of the Companies outstanding as of the Closing (the “Certified Indebtedness”)
and (ii) any and all unpaid Selling Expenses;
(f)    payoff letters for the Certified Indebtedness, in form and substance
reasonably acceptable to Buyer, together with appropriate termination statements
under the Uniform Commercial Code and other instruments as may be reasonably
requested by Buyer to extinguish all Indebtedness of the Companies, and all
security interests related thereto, in form and substance reasonably acceptable
to Buyer;
(g)    copies of all authorizations required for the trustees of the Trust to
approve and enter into the transactions contemplated by this Agreement and the
Ancillary Agreements;
(h)    a duly executed counterpart by the Shareholders and the Shareholders’
Representative of the Escrow Agreement;
(i)    a duly executed counterpart by Reed Energy, LLC of the Consulting
Agreement;
(j)    duly executed counterparts by Reed Energy, LLC of each Lease Agreement;
(k)    duly executed counterparts by each of the parties to the Lease
Amendments;
(l)    a certificate signed by all the Shareholders to the effect that the
conditions set forth in Sections 7.2(b) and (c) have been satisfied;

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(m)    a properly completed non-foreign affidavit of each Seller dated as of the
Closing Date, sworn under penalty of perjury and in form and substance
reasonably satisfactory to Buyer to prevent Buyer from having to withhold any
amount of the Purchase Price under Section 1445 of the Code;
(n)    an Internal Revenue Service Form 8023 (Elections under Section 338 for
Corporations Making Qualified Stock Purchases) with respect to each of Reed
Minerals, Reed Hauling, Reed Management and C&H Mining, duly executed by each
Seller, and any other analogous or corresponding form required to be filed with
any state, local or foreign Governmental Authority to effect the Section
338(h)(10) Election;
(o)    a properly completed IRS Form W-9 of each of the Sellers;
(p)    written resignations of corporate directors and officers and, with
respect to Reed Management, the managing member (in their capacities as such) as
set forth on Schedule 4.1(c);
(q)    all of the Consents set forth on Schedule 7.2(e);
(r)    any forms required by the banks to change the ownership, control or
signature of the accounts set forth on Schedule 4.27 from any Company to Buyer;
(s)    a complete and correct list of all current employees of each Company who
are suspended, terminated, laid off, on a leave of absence or otherwise on
non-active status from January 1, 2012 through the Closing Date; and
(t)    such other documents and instruments as Buyer shall reasonably request to
consummate the transactions contemplated hereby.
Section 3.3    Deliveries by Buyer. At the Closing, Buyer will deliver or cause
to be delivered to the Shareholders’ Representative (or as otherwise directed
below) the following items:
(a)    a certificate of an officer of Buyer to the effect that the condition set
forth in Section 7.3(b) has been satisfied;
(b)    certificates of good standing of Buyer issued by the Nevada Secretary of
State and the Alabama Department of Revenue, and a certificate of existence of
Buyer issued by the Alabama Secretary of State, in each case issued as of a
recent date;
(c)    copies of the resolutions of the board of directors and sole shareholder
of Buyer approving the execution and delivery of this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby, certified by an officer of Buyer;
(d)    payment of the Purchase Price as provided in Section 2.2(c);
(e)    a duly executed counterpart by Buyer of each Ancillary Agreement to which
it is a party;

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(f)    Company Releases in the form of Exhibit D, duly executed by Buyer and
each of the Companies;
(g)    the NACoal Guarantee in the form of Exhibit E, duly executed by NACoal;
and
(h)    such other documents and instruments as the Shareholders’ Representative
shall reasonably request to consummate the transactions contemplated hereby.
Section 3.4    Intercompany Arrangements. The Shareholders and Buyer acknowledge
and agree that, immediately prior to the Closing, except as provided in this
Agreement or any Ancillary Agreement or in Schedule 3.4 hereto, (i) any Contract
between a Company, on the one hand, and such Company’s Shareholders or any of
their respective Affiliates (other than such Company), on the other hand, shall
be terminated and be of no further force or effect, and (ii) each Company shall
be released from any and all of their obligations (financial or otherwise) to
its Shareholders and their respective Affiliates.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

The Shareholders, jointly and severally, hereby represent and warrant to Buyer
as follows:
Section 4.1    Organization, Power and Authority.
(a)    Each Company is duly organized and validly existing under the Laws of the
State of Alabama. No Company is required to be authorized, qualified or licensed
to do business as a foreign corporation or limited liability company in any
jurisdiction other than the State of Alabama except where the failure to be
qualified would not reasonably be expected to have a Material Adverse Effect.
(b)    Each Company has the corporate or limited liability power and authority
to (i) own, operate and lease their respective properties and assets as and
where currently owned, operated and leased and (ii) carry on its respective
business as currently conducted.
(c)    The authorized shares or membership interests, as applicable, of each
Company are set forth on Schedule 4.1(c). The Shares set forth on Schedule
4.1(c) are issued and outstanding and all such Shares have been duly authorized
and validly issued and are fully paid and non-assessable and were issued in
compliance with all applicable Laws and any preemptive rights or rights of first
refusal of any Person. There are no outstanding options, warrants, rights,
calls, subscriptions, claims of any character, agreements, obligations,
convertible or exchangeable securities or other commitments, contingent or
otherwise, of any kind obligating any Company to issue, directly or indirectly,
any additional shares or membership interests, as applicable, in such Company.
There are no agreements, commitments or contracts currently in effect relating
to the issuance, sale, transfer or voting of any equity securities or other
securities of any Company. Schedule 4.1(c) sets forth a true and complete
statement of the capitalization of each Company, including a list of the number
of Shares owned by each Shareholder opposite such Shareholder’s name. No Person
other than each of the Shareholders has any interest in the equity of any
Company.

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No Company has any Subsidiaries and no Company has any investments in equity
interests of any other Person. The Shareholders have good and marketable title
to the Shares, free and clear of all Liens or similar restrictions or
limitations, including any restriction on the right to vote, sell or otherwise
dispose of the Shares, other than restrictions under applicable securities laws.
Upon the consummation of the transactions contemplated by this Agreement, Buyer
will acquire good and valid title to the Shares, free and clear of all Liens or
similar restrictions or limitations, including any restriction on the right to
vote, sell or otherwise dispose of the Shares, other than restrictions under
applicable securities laws. Schedule 4.1(c) sets forth, by Company, a true and
complete list of the directors and officers of each Company that is a
corporation and, with respect to Reed Management, the managing member.
Section 4.2    Validity of Agreements. Assuming due authorization, execution and
delivery by the other parties hereto and thereto, this Agreement constitutes
and, when executed and delivered, each of the Ancillary Agreements to which the
Shareholders are to be parties, will constitute, the legal, valid and binding
obligation of the Shareholders, enforceable against such Shareholders in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and other similar Laws
relating to or affecting creditors’ rights generally and general equitable
principles, whether considered in a proceeding in equity or at law
(collectively, the “General Enforceability Exceptions”). Each of the
Shareholders has the requisite legal capacity and full corporate power and
authority, as applicable, to execute and deliver this Agreement and the
Ancillary Agreements to which it is or will be a party, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby to be consummated by it. The execution, delivery
and performance of this Agreement and the Ancillary Agreements, and the
consummation of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all necessary corporate (or equivalent) action of the
Shareholders.
Section 4.3    No Conflicts. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by the Shareholders, nor the performance
of the Shareholders’ obligations hereunder or thereunder, will (a) violate,
conflict with or result in a breach of any Laws or the Organizational Documents
of any of the Shareholders or any Company, (b) assuming that all Consents set
forth in Schedule 7.2(e) have been obtained and all filings and notifications
described therein and in Schedule 4.3 have been made, violate, conflict with or
result in a breach or termination of, or otherwise give any contracting party
additional rights or compensation under, or the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a default
under the terms of, any Contract to which any Company is a party or by which any
of the assets or property of any Company are bound, (c) result in the creation
or imposition of any Lien with respect to any of the assets or properties of any
Company, or (d) result in the creation or imposition of any Lien with respect to
the Shares, other than, in the case of clauses (b) and (c) above, any such items
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
Section 4.4    Consent. Except as set forth on Schedules 4.3 and  7.2(e), no
Consent is required in connection with the execution and delivery by any of the
Shareholders of this Agreement or the Ancillary Agreements or the consummation
by Sellers of the transactions contemplated hereby or thereby.
Section 4.5    Financial Statements.

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(a)    Schedule 4.5(a) sets forth complete copies of (i) the audited balance
sheets of Reed Minerals and C&H Mining, as of the Most Recent Fiscal Year-end,
and the related audited statements of income, cash flow and shareholders’ equity
together with the notes thereto, and any other financial information included
therewith (collectively, the “Audited Financial Statements”), (ii) the
unaudited, compiled balance sheet of Reed Hauling, as of the Most Recent Fiscal
Year-end, and the related statements of income, cash flow and shareholders’
equity together with any notes thereto and any other financial information
included therewith (collectively, the “Compiled Financial Statements”) and (iii)
the unaudited, compiled balance sheets of each Company as of May 31, 2012 (the
“Balance Sheet Date”), and the related unaudited statements of income and
shareholders’ equity for the five-month period and eight-month period, as
applicable, then ended (collectively, the “Interim Financial Statements” and
together with the Audited Financial Statements and Compiled Financial
Statements, the “Financial Statements”).
(b)    The Financial Statements are complete and correct in all material
respects and present fairly, in all material respects, the financial position,
results of operations and shareholders’ or members’ equity, as applicable, of
each Company at the dates and for the time periods indicated (provided, however,
that the Interim Financial Statements and the Compiled Financial Statements are
subject to normal year-end adjustments and lack footnotes and other presentation
items), subject to the matters set forth on Schedule 4.17, and, except as set
forth on Schedule 4.5(b), the Audited Financial Statements have been prepared in
accordance with GAAP, consistently applied throughout the period involved. The
Financial Statements were derived from the books and records of the Companies.
Section 4.6    No Material Adverse Changes. Except as set forth on Schedule 4.6,
since the Most Recent Fiscal Year-end, the business and operations of each
Company have been conducted in the Ordinary Course of Business and there has not
been any Material Adverse Effect. Without limiting the generality of the
foregoing, since the Balance Sheet Date, and except as set forth on
Schedule 4.6, no Company nor any of its Affiliates (to the extent relating to
such Company):
(a)    sold, assigned, transferred (including transfers to any employees,
equityholders, or Affiliates), leased or otherwise disposed of any material
amount of assets or properties except for sales of Inventory in the Ordinary
Course of Business;
(b)    received any notice of termination of any Contract or suffered any theft
or material loss (whether or not covered by insurance) with respect to any
material assets or properties;
(c)    cancelled or compromised any debt or claim of value in excess of $25,000,
or waived or released any right or claim of value in excess of $25,000;
(d)    mortgaged, pledged, factored, or subjected to any Lien, any assets or
properties;
(e)    made any individual expenditure (including capital expenditures) in
excess of $100,000;
(f)    suffered any material adverse change in its relations with its employees,
sales agents, independent contractors, customers or suppliers, or the
Cooperative or the members or

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customers of the Cooperative;
(g)    transferred, granted, waived or abandoned any rights under, or entered
into any settlement regarding the breach or infringement of, any Intellectual
Property Rights, or modified any existing rights with respect thereto outside of
the Ordinary Course of Business;
(h)    instituted, settled or agreed to settle any individual Action in excess
of $25,000;
(i)    failed to replenish or record inventories and supplies in a normal and
customary manner consistent with its prior practice;
(j)    entered into any transaction or Contract other than in the Ordinary
Course of Business, or incurred or committed to any severance pay obligations by
reason of this Agreement or the transactions contemplated hereby;
(k)    (i) entered into or amended any employment, retention, severance, change
in control or similar agreement or arrangement; (ii) granted any increase in the
compensation of any employee, agent, independent contractor or consultant (other
than normal compensation increases made in the Ordinary Course of Business) or
instituted or adopted any compensation or benefit program, plan or arrangement
for employees of any Company or amended any such program, plan or arrangement to
increase benefits thereunder in any material respect or (iii) paid or accrued
any bonus or deferred compensation for or in respect of, any current or former
employee of any Company;
(l)    declared or paid any dividends or other distributions (in each case,
other than cash dividends and distributions) with respect to any of its equity
interests or redeemed or purchased, directly or indirectly, any of its equity
interests or any options (in each case other than redemptions or purchases made
in cash);
(m)    issued or sold any capital stock or other equity interests (or securities
convertible into its equity interests) or split, combined or subdivided its
capital stock or other equity interests;
(n)    made any change in accounting or Tax principles, practices or policies
from those utilized in the preparation of the Financial Statements; or
(o)    committed to any of the foregoing.

Section 4.7    Contracts. (1) Schedule 4.7(a) sets forth all Contracts to which
any Company is a party, or by which any of the assets of any Company are bound,
that are currently in effect or which contain any ongoing obligation of any
Company, and that:
(i)    govern the borrowing of money or the guarantee or the repayment of
Indebtedness or granting of Liens on any property or asset of any Company
(including any such

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Contract under which any Company has incurred any Indebtedness);
(ii)    provide for the employment of any Person;
(iii)    contain covenants limiting the freedom of any Company to compete in any
line of business or with any Person or in any geographic area or market;
(iv)    are with any directors, managers, officers, employees, or equityholders
of any Company or its Affiliates;
(v)    provide for the purchase, maintenance or acquisition, or the sale or
furnishing, of materials, supplies, merchandise or equipment (including computer
hardware or software or other property or services) involving total payments in
excess of $100,000;
(vi)    grant to any Person a first-refusal, first-offer or similar preferential
right to purchase or acquire any right, asset or property of any Company;
(vii)    pertain to the purchase or lease of real property or equipment or other
personal property involving remaining total payments in excess of $100,000;
(viii)    provide for any offset, countertrade or barter arrangement;
(ix)    involve any distributor, sales representative, broker or advertising
arrangement;
(x)    involve a joint venture or joint development arrangement;
(xi)    are with any Governmental Authority;
(xii)    involve management services or consulting services;
(xiii)    involve the acquisition of any business enterprise whether via stock
or asset purchase or otherwise;
(xiv)    provide for indemnification of any Person; and
(xv)    are otherwise material Contracts or Contracts not made in the Ordinary
Course of Business.
(b)    To the Shareholders’ Knowledge, except as expressly noted on Schedule
4.7(b), each Contract listed on Schedule 4.7(a) is in full force and effect, and
is a valid and binding obligation of the applicable Company, enforceable in
accordance with its terms, subject to the General Enforceability Exceptions.
With respect to each Contract listed on Schedule 4.7(a): (a) no Company nor, to
the Shareholders’ Knowledge, any other party thereto is in material default
under or in material violation of any such Contract; (b) to the Shareholders’
Knowledge, no event has occurred which, with notice or lapse of time or both,
would constitute such a material default or material violation, and none of the
Companies or the Shareholders has received any written notice claiming that any
Company has committed any such material default or material violation or

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indicating the desire or intention of any party thereto to amend, modify,
rescind or terminate the same; and (c) no Company has released any material
right thereunder. Except as expressly noted in Schedule 4.7(b), the Shareholders
have delivered to Buyer true, correct and complete copies of all such Contracts,
together with all amendments, modifications or supplements thereto.
Section 4.8    Compliance with Laws; Permits.
(a)    Except as set forth on Schedule 4.8(a) and except for fully paid,
discharged and settled citations and notices of violation issued by MSHA, the
Alabama Surface Mining Commission or the Alabama Department of Environmental
Management, during the Reed Ownership Period and, to the Shareholders’
Knowledge, prior to the Reed Ownership Period, each Company has complied in all
material respects with all Laws applicable to its respective business,
properties, or operations as presently conducted. No Company has received any
notice of or been charged with the violation of any Laws during the Reed
Ownership Period or, to the Shareholders’ Knowledge, prior to the Reed Ownership
Period. To the Shareholders’ Knowledge, no Company is under investigation with
respect to the violation of any Laws.
(b)    Schedule 4.8(b) contains a list of all Permits which are required for the
operation of the business of each Company as presently conducted (“Company
Permits”). Each Company Permit is in full force and effect. Each Company has (or
has the contractual right to operate under as a contract miner, as reflected on
Schedule 4.8(b)) all Permits necessary or required for the conduct or operation
of its respective business as presently conducted, all of which have been duly
made or obtained and are in full force and effect. Except as set forth on
Schedule 4.8(b) and except for fully paid, discharged and settled citations and
notices of violation issued by MSHA, the Alabama Surface Mining Commission or
the Alabama Department of Environmental Management, no Company is in default or
violation, and, to the Shareholders’ Knowledge, no event has occurred which,
with notice or the lapse of time or both, would constitute a default or
violation, in any material respect under any Company Permit. There are no
Actions pending or, to the Shareholders’ Knowledge, threatened that may result
in the revocation, cancellation or suspension, or any adverse modification, of
any Company Permit.
Section 4.9    Intellectual Property. Schedule 4.9 sets forth all patents,
trade-marks, trade names, service marks and copyrights that are material to the
conduct of the business, as presently conducted, of the Companies (collectively,
the “Intellectual Property Rights”). The Companies own or have the right to use
such Intellectual Property Rights and, to the Shareholders’ Knowledge, such
Intellectual Property Rights do not infringe in any material way upon any third
parties’ intellectual property and proprietary rights. To the Shareholders’
Knowledge, no event has occurred that would render invalid or unenforceable any
such Intellectual Property Rights.
Section 4.10    Litigation and Orders. Schedule 4.10 sets forth a list, as of
the date of this Agreement, of each Action or Order pending or, to the
Shareholders’ Knowledge, threatened by or against any Company or Shareholder.
Except as set forth on Schedule 4.10, no Company has, since July 31, 2009,
commenced, settled or satisfied any litigation. All Actions listed on Schedule
4.10 as “settled” have been fully settled, paid and discharged by the Companies
and no further Losses of any Company exist with respect to such Actions.
Section 4.11    Taxes. Except as set forth on Schedule 4.11:

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(a)    All Tax Returns required to be filed with any Taxing Authority with
respect to any Pre-Closing Tax Period within the Reed Ownership Period or, to
the Shareholders’ Knowledge, prior to the Reed Ownership Period, by or on behalf
of each of the Companies, to the extent required to be filed on or before the
Closing Date, have been timely filed in accordance with all applicable Laws.
(b)    All Tax Returns with respect to Pre-Closing Tax Periods within the Reed
Ownership Period and, to the Shareholders’ Knowledge, prior to the Reed
Ownership Period, are true, correct and complete in all material respects. No
Company is currently a beneficiary of any extension of time within which to file
any Tax Return.
(c)    All Taxes owed by each Company (whether or not shown as due and payable
on any Tax Return) with respect to the Reed Ownership Period and, to the
Shareholders’ Knowledge, with respect to any period prior to the Reed Ownership
Period, have been timely paid to the appropriate Taxing Authority.
(d)    Each Company has withheld and timely remitted to the appropriate Taxing
Authority all Taxes required to have been withheld and remitted in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other Person, and all Forms W-2, 1099 or other documentation
required with respect thereto has been properly completed and timely filed.
(e)    No Tax Return of any Company with respect to any Pre-Closing Tax Period
within the Reed Ownership Period or, to the Shareholders’ Knowledge, prior to
the Reed Ownership Period, has ever been audited by any Taxing Authority and,
with respect to the Reed Ownership Period and, to the Shareholders’ Knowledge,
any period prior to the Reed Ownership Period, no change or adjustment has been
required by any Taxing Authority.
(f)    No Company has any Tax liabilities (whether due or to become due) with
respect to the income, property and operations of such Company except as
reflected in the Financial Statements.
(g)    During the Reed Ownership Period and, to the Shareholders’ Knowledge, any
period prior to the Reed Ownership Period, no Company has granted, or has had
granted on its behalf, any extension or waiver of the statute of limitations
period applicable to any Tax Return or within which any Tax may be assessed or
collected by any Taxing Authority, which period (after giving effect to such
extension or waiver) has not yet expired.
(h)    There is no audit, examination, investigation or other proceeding now
pending or, to the Shareholders’ Knowledge, threatened against or with respect
to any Company in respect of any Tax.
(i)    There are no Liens for Taxes upon the assets or properties of any
Company, except for Permitted Liens.
(j)    During the Reed Ownership Period and, to the Shareholders’ Knowledge, any
period prior to the Reed Ownership Period, no Company has been a member of an
affiliated,

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consolidated, combined or unitary group or participated in any other arrangement
whereby any income, revenues, receipts, gain or loss was determined or taken
into account for Tax purposes with reference to or in conjunction with any
income, revenues, receipts, gain, loss, asset or liability of any other Person
other than a group of which such Company was the parent. To the Shareholders’
Knowledge, no Company has any liability for the Taxes of any Person (other than
such Company) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferee or successor, by
contract, or otherwise.
(k)    To the Shareholders’ Knowledge, there is no jurisdiction (whether foreign
or domestic) in which any Company files, or is required to file, a Tax Return
relating to income, franchise, gross receipts, license, excise, net worth,
property, sales, use or any other Tax at any time for any taxable period not
closed by the applicable statute of limitations.
(l)    During the Reed Ownership Period and, to the Shareholders’ Knowledge, any
period prior to the Reed Ownership Period, no Company nor any of the
Shareholders has received written notice of any claim by a Governmental
Authority in a jurisdiction where any Company does not file Tax Returns that
such Company is or may be subject to taxation by that Governmental Authority.
(m)    No Company will be required to include any item of income in, or exclude
any item of deduction from, taxable income for any period or portion thereof
ending after the Closing Date (i) under Section 481 of the Code (or any similar
provision of state, local or foreign Law) as a result of change in method of
accounting for a Pre-Closing Tax Period, (ii) pursuant to the provisions of any
agreement entered into with any Taxing Authority or pursuant to a “closing
agreement” as defined in Section 7121 of the Code (or any similar provision of
state, local or foreign Law) executed on or prior to the Closing Date, (iii) as
a result of any intercompany transactions or any excess loss account described
in Section 1.1502-19 of the Treasury Regulations (or any similar provision of
state, local or foreign Law), (iv) as a result of the installment method of
accounting, the completed contract method of accounting or the cash method of
accounting with respect to a transaction that occurred prior to the Closing
Date, (v) as a result of any prepaid amount received on or prior to the Closing
Date or (vi) as a result of any election under Section 108(i) of the Code with
respect to the discharge of any indebtedness on or prior to the Closing Date.
(n)    No Company is a party to any Tax sharing, allocation or indemnity
agreement, arrangement or similar Contract. No power of attorney with respect to
any Tax matter is currently in force with respect to any Company that would, in
any manner, bind, obligate or restrict Buyer.
(o)    During the Reed Ownership Period and, to the Shareholders’ Knowledge,
prior to the Reed Ownership Period, no Company has distributed the stock of
another Person, or has not had its stock distributed by another Person, in a
transaction that was purported or intended to be governed in whole or in part by
Sections 355 or 361 of the Code.
(p)    During the Reed Ownership Period and, to the Shareholders’ Knowledge,
prior to the Reed Ownership Period, no Company has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 879(c)(1)(A)(ii) of the Code.

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(q)    During the Reed Ownership Period and, to the Shareholders’ Knowledge, any
period prior to the Reed Ownership Period, no Company has participated in any
“reportable transaction” as defined in Section 6707A of the Code or Treasury
Regulation Section 1.6011-4 (or any predecessor provision).
(r)    Each Company has disclosed on its federal income Tax Returns during the
Reed Ownership Period and, to the Shareholders’ Knowledge, any period prior to
the Reed Ownership Period all positions taken in such Tax Returns that could
give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code.
(s)    Reed Minerals has been a validly electing S corporation within the
meaning of Sections 1361 and 1362 of the Code at all times since January 1,
2008, Reed Hauling has been a validly electing S corporation within the meaning
of Sections 1361 and 1362 of the Code at all times since January 1, 2007, and
C&H Mining has been a validly electing S corporation within the meaning of
Sections 1361 and 1362 of the Code at all times since October 1, 2010. Reed
Minerals, Reed Hauling and C&H Mining have no qualified subchapter S
subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code.
(t)    None of Reed Minerals, Reed Hauling, Reed Management and C&H Mining will
be liable for any Tax under Sections 1374 or 1375 of the Code or any similar
provisions of state, local or foreign Law in connection with the transactions
contemplated by this Agreement.
(u)    Reed Management is, and since the date of its formation has been, taxed
as an entity disregarded for federal and applicable state and local income Tax
purposes. Neither Reed Management nor, to the Shareholders’ Knowledge, any
member of Reed Management has made any election, taken any action or filed or
furnished any Tax Return on a basis that is inconsistent with the foregoing.
(v)    None of the Companies’ assets are “tax exempt use property” within the
meaning of Section 168(h) and Section 470(c)(2) of the Code.
(w)    Each Company has made available to Buyer for inspection (i) complete and
correct copies of all Tax Returns filed by such Company relating to Taxes for
all taxable periods for which the applicable statute of limitations has not yet
expired and (ii) complete and correct copies of all private letter rulings,
revenue agent reports, information document requests, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements,
settlement agreements, pending ruling requests, and any similar documents,
submitted by, received by or agreed to by or on behalf of any Company relating
to Taxes for all taxable periods for which the statute of limitations has not
yet expired.
Section 4.12    Mining and Environmental Matters. Except as set forth on
Schedule 4.12:
(a)    and except for fully paid, discharged and settled citations and notices
of violation issued by MSHA, the Alabama Surface Mining Commission or the
Alabama Department of Environmental Management, each Company is and has been
during the Reed Ownership Period and, to the Shareholders’ Knowledge, prior to
the Reed Ownership Period, in material compliance with all applicable Mining Law
and applicable Environmental Law;

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(b)    each Company has obtained, and is in material compliance with, all
Environmental or Mining Permits required for the conduct of its business and
operations as currently conducted, and the ownership, occupation, operation and
use of its Leased Real Property and other property, all such Environmental or
Mining Permits are valid and in good standing and any applications for renewal
of such Permits have been submitted on a timely basis;
(c)    there are no pending nor, to the Shareholders’ Knowledge, threatened
Environmental Claims or other actions to deny, revoke or terminate any
Environmental or Mining Permits possessed or applied for by any Company, and, to
the Shareholders’ Knowledge, there has not been any such Environmental Claim
during the Reed Ownership Period and, to the Shareholders’ Knowledge, prior to
the Reed Ownership Period;
(d)    to the Shareholders’ Knowledge, there are no polychlorinated biphenyls or
any asbestos or asbestos containing materials located on, under or within the
Leased Real Property, and, to the Shareholders’ Knowledge, no Company sells or
has sold any product containing asbestos or that utilizes or incorporates
asbestos containing materials in any way;
(e)    no Company has received any pending Environmental Claim or notice of any
currently threatened Environmental Claim;
(f)    during the Reed Ownership Period and, to the Shareholders’ Knowledge,
prior to the Reed Ownership Period, no Company has agreed, and no Company is
currently subject, to any outstanding Order under any Environmental Law or
Mining Law;
(g)    to the Shareholders’ Knowledge, during the Reed Ownership Period and, to
the Shareholders’ Knowledge, prior to the Reed Ownership Period, there has been
no Release or threatened Release of any Hazardous Materials at any property
currently owned, leased, controlled or operated by any Company in a manner that
would reasonably be expected to result in material Liability under any
Environmental Law or Mining Law;
(h)    during the Reed Ownership Period and, to the Shareholders’ Knowledge,
prior to the Reed Ownership Period, no Company has owned, leased or conducted
operations at any location other than the Leased Real Property and those
locations referenced in Schedule 4.12(h);
(i)    no Leased Real Property is listed or, to the Shareholders’ Knowledge, is
proposed to be listed on the National Priorities List, the Comprehensive
Environmental Response, Compensation, and Liability Information System or the
National Corrective Action Priority System;
(j)    to the Shareholders’ Knowledge, no Person, including any employee, has
impaired health as the result of the operations of any Company or any Release
from or on any land, building or other improvement owned, leased, controlled or
used in the operation of any Company, other than with respect to impaired health
documented by workers’ compensation claims or occurring or resulting from the
Ordinary Course of Business;
(k)    to the Shareholders’ Knowledge, no underground storage tanks are or have
ever been located on the Leased Real Property;

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(l)    the Shareholders have caused the Companies to provide or make available
to Buyer copies of all documents, records and written information in the
Companies’ possession or control concerning Environmental Conditions or
potential liability under Environmental Laws or Mining Laws, including
previously conducted Environmental assessments, compliance audits, asbestos
surveys and documents regarding any Releases at, upon or from the Leased Real
Property, and Environmental and Mining agency reports and correspondence;
(m)    all Reclamation performed by or on behalf of any Company during the Reed
Ownership Period and, to the Shareholders’ Knowledge, prior to the Reed
Ownership Period, has been performed in all material respects in a manner and to
the standards that a prudent person with the requisite skill and experience
engaged in surface mining would perform such reclamation and meets in all
material respects the requirements of the applicable Mining Permit and any
associated mine reclamation plan approved by the Surface Mining Commission. The
liability amounts for mine closing and reclamation obligations recorded on the
Interim Financial Statements is, to the Shareholders’ Knowledge, equal to or in
excess of the amount of such obligations, determined on the basis of such
Company’s actual historic reclamation and closure costs and currently planned
mine life. All reclamation bonds affecting the Companies’ operations have been
approved as adequate by the required Governmental Authorities to complete
Reclamation in accordance with all applicable Permits and Laws;
(n)    to the Shareholders’ Knowledge, none of the Leased Real Property
constitutes tribal lands, land subject to treatment as a National Heritage Area,
burial lands or cemeteries, land where the Companies’ valid existing rights as
defined by the Surface Mining Control and Reclamation Act of 1977, as amended
(“SMCRA”), have been challenged, lands that have been challenged as or declared
unsuitable for mining under SMCRA or lands designated as critical habitat under
the Endangered Species Act; and
(o)    to the Shareholders’ Knowledge, none of the Leased Real Property has any
pre-historic or historic archeological sites that could reasonably be expected
to impede the use of the Leased Real Property in the manner in which the
Companies have historically used the Leased Real Property.
Section 4.13    Insurance.
(a)    Schedule 4.13(a) sets forth a complete and correct list of all currently
effective policies of fire, real and personal property (including building,
machinery, equipment, inventory and raw materials), workers’ compensation,
general liability (including products), pollution/environmental, automobile and
other insurance carried by each Company on the date of this Agreement. Such
policies are in full force and effect, and no Company is in default under any of
them.
(b)    Schedule 4.13(b) describes, with respect to each Company and any of its
respective assets and properties, any self-insurance arrangement, including any
reserves established thereunder.
(c)    Schedule 4.13(c) describes each applicable Mine, a list of the
reclamation, fidelity or surety bond, and the Permit(s) applicable to such Mine
for each location where any of

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the Companies has previously conducted mining operations which are now concluded
but for which there are still reclamation, fidelity or surety bonds outstanding.
(d)    Except as set forth on Schedule 4.13(d): (i) all policies of insurance to
which any Company is a party (A) are, to the Shareholders’ Knowledge, valid,
outstanding and enforceable and (B) are sufficient for compliance with all
applicable Laws and Contracts; (ii) no Company has received (A) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights or (B) any notice of cancellation or any other indication that any policy
of insurance is no longer in full force or effect or that the issuer of any such
policy of insurance is not willing or able to perform its obligations
thereunder; (iii) each Company has paid all premiums due and payable under each
policy of insurance to which it is a party; and (iv) to the Shareholders’
Knowledge, each Company has given notice to the insurer of all claims that may
be insured thereby.
Section 4.14    Real Property.
(a)    Except as set forth in Schedule 4.14(a), no Company owns in fee, or,
during the Reed Ownership Period, has owned in fee, any real property.
(b)    Except for the Leased Real Property and Right of Access Property, no
Company leases, subleases, licenses or has any interests in any real property,
and no other real property is controlled or used or held for use by the
Companies in connection with or is otherwise necessary to carry on the business
of the Companies as presently conducted, including real property leaseholds and
subleaseholds, purchase options, easements, licenses, rights to access and
rights of way. Schedule 4.14(b)(i) contains a complete and correct list of all
coal leases, coal subleases, licenses, easements and all other leases, subleases
or any other agreement (including all amendments, extensions, renewals,
guaranties and other agreement with respect thereto) with respect to real
property or minerals held by any Company as of the date hereof, other than the
Right of Access Leases (each, a “Lease” and the real property subject to such
Leases, the “Leased Real Property”). Schedule 4.14(b)(i) identifies the lessor
of each parcel of Leased Real Property according to the applicable Lease and
identifies the Mine at which such Leased Real Property is located and any
applicable Permit number. The Leased Real Property and the appurtenant easements
include all of the land, buildings, offices, structures, appurtenant easements
and other improvements used or held for use in connection with or otherwise
required to carry on the business of the Companies as presently conducted. No
Company is in breach or default of any royalty, rental or other payment
obligation under any of the Leases. Each Company is in material compliance with
and enjoying quiet possession under each of the Leases. No Company has received
any written notice and no Company is aware of any Action, demand or suit by a
lessor or sublessor of any of the Leases claiming a material breach or default
thereof or termination of any such Leases. Subject to the receipt of all
Consents, neither the execution and delivery of this Agreement by the
Shareholders nor the performance of their obligations hereunder constitutes or
will constitute a breach, default or event of default under any such Leases. The
Companies have delivered to Buyer a true and complete copy of each Lease.
Schedule 4.14(b)(ii) contains a complete and correct list of all Right of Access
Leases. “Right of Access Leases” means any and all coal leases, coal subleases,
licenses, easements and all other leases, subleases or any other agreement
(including all amendments, extensions, renewals, guaranties and other agreement
with respect thereto) with respect to real property or minerals held by any
Company during the Reed Ownership Period, the (A) terms of

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which have expired and which are no longer in force or effect or (B) the
expiration of the terms of which are contingent on the release of Reclamation
Performance Bonds, except that such Right of Access Leases and/or the applicable
Permit have remaining reclamation obligations and associated rights of access
(which rights of access and reclamation obligations survive the term of such
Right of Access Lease). “Right of Access Real Property” means the real property
subject to the Right of Access Leases. “Right of Access Leases” do not include
any of the Leases or any leases or similar documents that evidenced rights of
the Companies with respect to the Former Coal Mines (as defined in Section
4.14(b)(iii)). Schedule 4.14(b)(ii) identifies the lessor of each parcel of
Right of Access Real Property according to the applicable Right of Access Lease
and identifies the mine at which such Right of Access Real Property is located
and any applicable Permit number. Except as specifically set forth in Schedule
4.14(b)(ii), the Companies have delivered to Buyer a true and complete copy of
each Right of Access Lease. Schedule 4.14(b)(iii) contains a complete and
correct list of all coal mines operated by any Company during the Reed Ownership
Period other than coal mines that consist of Leased Real Property or Right of
Access Real Property (the “Former Coal Mines”), identifying any applicable
Permit numbers, which Former Coal Mines (and associated Permits) have no
remaining reclamation obligations.
(c)    Except as set forth on Schedule 4.14(c):
(ii)    to the Shareholders’ Knowledge, there are no Actions in eminent domain
or other similar Actions pending or threatened that would have an adverse effect
on the use or operation of the Leased Real Property;
(iii)    to the Shareholders’ Knowledge, the present use and operation of the
Leased Real Property does not violate any instrument of record or agreement
affecting the Leased Real Property;
(iv)    no Company has received any written notice of violation or claimed
violation of any applicable building, zoning, subdivision and other land use or
similar Laws in connection with the use or operation of the Leased Real
Property;
(v)    other than as reflected in the Leases with respect to the Leased Real
Property, there are no Contracts to which any Company or any of its Affiliates
is a party granting to any Person other than the Companies the right of use or
occupancy of any portion of the parcels of the Leased Real Property; and
(vi)    to the Shareholders’ Knowledge, other than as reflected in the Leases
with respect to the Leased Real Property, there are no Persons other than the
Companies in possession of, or with rights to mine coal from, the Leased Real
Property during the term of the applicable Lease with respect to such Leased
Real Property.
(d)    No Company has taken any action to disturb the Leased Real Property
related to the Reed No. 5 Mine permit.
(e)    For the avoidance of doubt, no representations or warranties are made in
this Agreement with respect to title to any of the Leased Real Property.

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Section 4.15    Mineral Assets; Company Assets.
(a)    Schedule 4.15(a) sets forth a list of all real property currently or
during the Reed Ownership Period operated for the purpose of extracting coal
(each, a “Mine”), which now is or during the Reed Ownership Period has been
owned, leased or operated by a Shareholder or Company and the status of each
such Mine.
(b)    The Mines have at all times during the Reed Ownership Period and, to the
Shareholders’ Knowledge, prior to the Reed Ownership Period, been operated in
compliance with applicable Law in all material respects, except as set forth on
Schedules 4.8(a), 4.12, 4.24(c) and 4.24(d).
(c)    To the Shareholders’ Knowledge, the Companies have valid and enforceable
leasehold interests in all of the Leased Real Property subject only to Permitted
Liens. The assets currently owned or leased by the Companies include all of the
facilities, machinery, equipment and other assets (whether tangible or
intangible) used in or necessary for the Companies to conduct the business of
the Companies as presently conducted.
(d)    All geological and reserve data, lithological data, test hole locations,
drill hole distribution maps, logs, isopach maps, coal trees and laboratory coal
data (the “Drilling Data”) provided by the Companies to Buyer that pertain to
the Burton Bend I, Burton Bend II, Burton Bend III, Fishtrap, No Business Creek,
Piney Woods, Town Creek and West Sipsey mine areas is accurate in all material
respects to the Shareholders’ Knowledge. The Companies do not possess and, to
the Shareholders’ Knowledge, have not possessed or reviewed data or information
that indicates that the Drilling Data is unreliable or inaccurate in any
material respect. For the avoidance of doubt, this Section 4.15(d) warrants the
accuracy in all material respects of the Drilling Data but is not a warranty of
the quantity or quality of the coal reserves with respect to the Leased Real
Property.
(e)    The Companies are the only entities through which the Companies’ business
is conducted, and the assets and properties currently owned, leased or licensed
by the Companies constitute all of the tangible properties necessary to conduct
the Companies’ business as it is currently conducted.
Section 4.16    Inventory. The Inventory is of a quality and quantity useable or
saleable in the Ordinary Course of Business, subject only to the reserve for
surplus or obsolete inventory set forth in the Financial Statements or the
Interim Financial Statements. All of the Inventories have been valued at the
lower of cost or market value on an average cost basis. Inventories now on hand
that were purchased after the date of the Financial Statements were purchased in
the Ordinary Course of Business at a cost not exceeding market prices prevailing
at the time of purchase.
Section 4.17    Undisclosed Liabilities. Except as adequately reflected or
reserved against in the Financial Statements, there exist no material
Liabilities of any Company that would be required to be reflected on a balance
sheet prepared in accordance with GAAP, except (a) Liabilities which have arisen
after the Most Recent Fiscal Year-end in the Ordinary Course of Business or
(b) as otherwise set forth on Schedule 4.17.
Section 4.18    Customers. Schedule 4.18 sets forth a correct and complete list
of the ten

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(10) largest customers (“Material Customers”) of the Companies (on a
consolidated basis) in terms of sales for the 12-month period ended December 31,
2011 and the first six (6) months of 2012, together with the dollar amount of
sales or services provided by the Companies during said period to each Material
Customer. Except as set forth on Schedule 4.18, (a) no Company has received any
notice that any of its Material Customers has ceased, or intends to cease after
the Closing Date, to use its goods or services or to otherwise terminate or
materially reduce its level of purchases to the Companies, and none of the
Material Customers has reduced materially its business with the Companies from
the levels achieved during the 12-month period ended December 31, 2011, (b) no
Company is involved in any claim, dispute or controversy with any Material
Customer and (c) no Company is involved in any claim, dispute or controversy
with any of its other customers.
Section 4.19    Related Party Transactions. Except as set forth on Schedule
4.19, no officer, director, limited liability company managing member,
stockholder, partner or member of any Company, any member of his or her
immediate family or any of their respective Affiliates, including the
Shareholders (“Related Persons”), (a) owes any amount to any Company nor does
any Company owe any amount to, nor has any Company committed to make any loan or
extend or guarantee credit to or for the benefit of, any Related Person, (b) is
involved in any business arrangement or other relationship with any Company
(whether written or oral), (c) owns any property or right, tangible or
intangible, that is used by any Company, (d) has any claim or cause of action
against any Company, nor is there any basis therefor, or (e) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person that is a competitor,
supplier, customer, landlord, tenant, creditor or debtor of any Company.
Section 4.20    Labor Matters.
(a)    (i) No Company is a party to or bound by any union contract, collective
bargaining agreement, employment contract, independent contractor agreement,
consulting agreement or other similar type of Contract except as set forth on
Schedule 4.20(a), (ii) during the Reed Ownership Period and, to the
Shareholders’ Knowledge, prior to the Reed Ownership Period, no Company has
agreed to recognize any union or other collective bargaining representative, no
union or group of employees has made a pending demand for recognition and there
are no representation proceedings or petitions seeking a representation
proceeding presently pending or, to the Shareholders’ Knowledge, threatened to
be brought or filed, with the National Labor Relations Board, and (iii) during
the Reed Ownership Period and, to the Shareholders’ Knowledge, prior to the Reed
Ownership Period, no union or collective bargaining representative has been
certified as representing any employees of any Company, and, to the
Shareholders’ Knowledge, no organizational attempt has been made or threatened
by or on behalf of any labor union or collective bargaining representative with
respect to any employees of any Company. During the Reed Ownership Period and,
to the Shareholders’ Knowledge, prior to the Reed Ownership Period, no Company
has experienced any labor strike, dispute, slowdown or stoppage, material
grievance, claim of unfair labor practice or any other material labor
difficulty. During the Reed Ownership Period and, to the Shareholders’
Knowledge, prior to the Reed Ownership Period, no Company has committed any
unfair labor practice.
(b)    Buyer has been provided with a complete and correct list, by Company, of

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all employees of each Company, together with a description of their respective
job titles and the rate of all regular compensation payable to each such Person
in any and all capacities, and any regular or special compensation that will be
payable to each such Person in any and all capacities as of the date of this
Agreement other than the then-current accrual of regular payroll compensation.
Schedule 4.20(b) sets forth a complete list of all bonus plans or practices of
each of the Companies. No Company employs any employee who cannot be dismissed
immediately without notice and, without further liability to such Company, other
than with respect to accrued compensation and benefits, subject to applicable
employment Laws. Except as set forth on Schedule 4.20(b) and except as expressly
contemplated by this Agreement, to the Shareholders’ Knowledge, no employee of
any Company intends to terminate his or her employment prior to or within two
(2) years of the Closing.
(c)    Shareholders have delivered to Buyer a complete and correct list of all
current and former employees of each Company who have been suspended,
terminated, laid off, granted any leave of absence or otherwise placed in any
non-active status from January 1, 2012 through the date of this Agreement. No
Company has taken action with respect to employees that could be construed as a
“plant closing,” “mass layoff” or “employment loss” within the meaning of the
WARN Act during the ninety-day period ending on the Closing Date.
(d)    Except as set forth on Schedule 4.20(d), each Company is, and has been
during the six (6) years prior to the date of this Agreement, in compliance in
all material respects with all applicable Laws relating to wages, benefits,
hours, overtime, terms and conditions of employment, discrimination, equal
opportunity, harassment, immigration, disability, workers’ compensation,
unemployment insurance, occupational health and safety and the reporting,
collection and payment of withholding and/or social contribution Taxes or
similar Taxes.
Section 4.21    Employee Plans.
(a)    Schedule 4.21(a) contains a true and complete list of (i) all “employee
benefit plans,” as defined in Section 3(3) of ERISA, (ii) all other severance
pay, salary continuation, bonus, incentive, stock option, retirement, pension,
welfare benefit, profit sharing or deferred compensation plans, contracts,
programs, funds, or arrangements of any kind and (iii) all other employee
benefit plans, contracts, programs, funds, or arrangements (whether written or
oral, qualified or nonqualified, funded or unfunded, foreign or domestic), and
any trust, escrow, or similar agreement related thereto, whether or not funded,
in respect of any present or former employees, directors, officers, managers,
equityholders, consultants, or independent contractors of each Company or with
respect to which any Company has made or is required to make payments,
transfers, or contributions, in each case that are currently effective or as to
which the Company currently has obligations (all of the above being hereinafter
collectively referred to as “Employee Plans”). No Employee Plan (1) is
maintained outside of the United States or (2) is intended to be qualified under
Section 401(a) of the Code or has received a determination letter from the IRS.
The Shareholders have caused the Companies to deliver to Buyer true, complete
and correct copies of (A) each Employee Plan (or, in the case of any unwritten
Employee Plans, descriptions thereof), (B) the most recent summary plan
description for each Employee Plan for which such a summary plan description is
required, and (C) each trust agreement, group annuity contract or other funding
and financing arrangement relating to any Employee Plan.

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(b)    Except as set forth on Schedule 4.21(b), each Employee Plan has been
maintained, operated, and administered in compliance in all material respects
with its terms and all applicable Laws except as would not have a Material
Adverse Effect. There have been no prohibited transactions or breaches of any of
the duties imposed on “fiduciaries” (within the meaning of Section 3(21) of
ERISA) by ERISA with respect to the Employee Plans that could result in any
Liability or excise tax under ERISA or the Code being imposed on any Company.
(c)    There is no Action or Order (except routine claims for benefits) against
or involving any Employee Plan. To the Shareholders’ Knowledge, there are no
threatened Actions against or involving any Employee Plan (except routine claims
for benefits).
(d)    Except as set forth on Schedule 4.21(d), the execution and performance of
this Agreement will not (i) constitute a stated triggering event under any
Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from any Company to any current or former officer,
employee, director or consultant (or dependents of such Persons), or (ii)
accelerate the time of payment or vesting, or increase the amount, of
compensation due to any current or former officer, employee, director or
consultant (or dependents of such Persons) of any Company.
(e)    No Company nor any member of the Controlled Group currently has, and at
no time in the past has had, an obligation to contribute to (i) a “defined
contribution plan” as defined in Section 3(34) of ERISA; (ii) a “defined benefit
plan” as defined in Section 3(35) of ERISA or a pension plan subject to the
funding standards of Section 302 of ERISA or Section 412 of the Code; (iii) a
“multiemployer plan” as defined in Section 3(37) of ERISA or Section 414(f) of
the Code; or (iv) a “multiple employer plan” within the meaning of
Section 210(a) of ERISA or Section 413(c) of the Code.
(f)    With respect to each group health plan benefiting any current or former
employee of the Companies or any member of the Controlled Group that is subject
to Section 4980B of the Code, each Company and each member of the Controlled
Group has complied with the continuation coverage requirements of Section 4980B
of the Code and Part 6 of Subtitle B of Title I of ERISA.
(g)    No Employee Plan is or at any time was funded through a “welfare benefit
fund” as defined in Section 419(e) of the Code, and no benefits under any
Employee Plan are or at any time have been provided through a voluntary
employees’ beneficiary association (within the meaning of subsection 501(c)(9)
of the Code) or a supplemental unemployment benefit plan (within the meaning of
Section 501(c)(17) of the Code).
(h)    All contributions, transfers and payments in respect of any Employee
Plan, other than transfers incident to an incentive stock option plan within the
meaning of Section 422 of the Code, have been or are fully deductible under the
Code.
(i)    All (i) insurance premiums required to be paid with respect to, (ii)
benefits, expenses, and other amounts due and payable under, and (iii)
contributions, transfers, or payments required to be made to, any Employee Plan
prior to the Closing Date will have been paid, made or

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accrued on or before the Closing Date.
(j)    With respect to any insurance policy providing funding for benefits under
any Employee Plan, there is no Liability of any Company in the nature of a
retroactive rate adjustment, loss sharing arrangement, or other actual or
contingent Liability, nor would there be any such Liability if such insurance
policy was terminated at or after the Closing.
(k)    No Employee Plan provides benefits, including death or medical benefits,
beyond termination of service or retirement other than (i) coverage mandated by
Law or (ii) accrued but unused vacation pay or (iii) coverage through the last
day of the calendar month in which termination of employment occurs.
(l)    Except as provided on Schedule 4.21(l), no Company has agreed or
committed to institute any plan, program, arrangement or agreement for the
benefit of employees or former employees of any Company other than the Employee
Plans, or to make any amendments to any of the Employee Plans.
(m)    Each Company has reserved all rights necessary to amend or terminate each
of the Employee Plans without the Consent of any other Person.
(n)    As of the Closing Date, no Employee Plan will provide benefits to any
individual who is not a current or former employee of a Company, or the
dependents or other beneficiaries of any such current or former employee.
(o)    No amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of any Company or any of its
affiliates who is a “disqualified individual” (as such term is defined in
Treasury Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Employee Plan currently
in effect would be characterized as an “excess parachute payment” (as such term
is defined in Section 280G(b)(1) of the Code).
(p)    No Employee Plan is a “nonqualified deferred compensation plan” (within
the meaning of Section 409A(d)(1) of the Code) that is subject to Section 409A
of the Code.
(q)    To the Shareholders’ Knowledge, with respect to independent contractors
who perform services for any of the Companies, all Persons so classified
satisfy, and have at all times satisfied, in all material respects the
requirements of applicable Law to be so classified, except as set forth on
Schedule 4.21(q).
(r)    To the extent a filing is required under applicable Law, each Company has
filed an annual report (Form 5500), with all applicable schedules, for each
Employee Plan for each applicable plan year since the inception of such Employee
Plan.
Section 4.22    Absence of Certain Commercial Practices.
(a)    None of the Companies or, to the Shareholders’ Knowledge, any other
Person

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acting on behalf of any Company has, directly or indirectly, (i) violated, or,
to the Shareholders’ Knowledge, is currently being investigated or has been
investigated for violating, the U.S. Foreign Corrupt Practices Act of 1977 or
any other similar Law applicable to the conduct of business with Governmental
Authorities or given or agreed to give any gift or similar benefit to any
employee of any Governmental Authority who is or may be in a position to help or
hinder the business of the Companies or assist the Companies in connection with
any actual or proposed transaction relating to the Companies, (ii) paid,
offered, promised, authorized or agreed to give any monies, gift or other thing
of value or benefit to (A) any official or employee of any Governmental
Authority (including an official or employee of any public international
organization or of any business or enterprise owned by a Governmental
Authority), (B) any political party, or employee or director thereof, or (C) any
candidate for a political position or any political subdivision for the purpose
of: (1) influencing any act or decision of such Person described in
clauses (A)-(C), including a decision to not comply with his/her official
duties; (2) inducing such Person described in clauses (A)-(C) to act or fail to
act in violation of his/her legal duties; or (3) causing such Person described
in clauses (A)-(C) to influence any act or decision of any Governmental
Authority in order to obtain or retain business, or direct business toward any
Person.
(b)    Each transaction during the prior three (3) years the value of which
equals or exceeds $25,000 in connection with the business of the Companies is
properly and accurately recorded on the books and records of the Companies.
Section 4.23    No Broker’s, Finder’s or Insider Fees. Except as set forth on
Schedule 4.23, no Person has acted, directly or indirectly, as a broker, finder
or financial advisor for the Shareholders or any Company, and no Person has, or
immediately following the consummation of the transactions contemplated hereby
will have, as a result of any act or omission of any Company or any Shareholder,
any right, interest or valid claim against Buyer for any commission, fee or
other compensation as a broker, finder or financial advisor in connection with
the execution of this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby, nor are there any fees or any payments or
promises of payment, however characterized, that have been paid or that are or
may become payable in connection with the transactions contemplated hereby or
thereby to the Shareholders, any Company or any director, officer, manager or
employee of any Company or any Affiliate of any of the foregoing.
Section 4.24    MSHA; OSHA.
(a)    The Companies have conducted their respective businesses and operations,
and their respective assets have been maintained, in material compliance with
MSHA, OSHA or similar Laws, as applicable, except as set forth on Schedule
4.24(a) and except for fully paid, discharged and settled citations and notices
of violation issued by MSHA, the Alabama Surface Mining Commission or the
Alabama Department of Environmental Management.
(b)    There are no investigations pending or, to the Shareholders’ Knowledge,
threatened by any Governmental Authority or other third Person that would result
in the imposition of any material Liability on any Company pursuant to MSHA,
OSHA or similar Laws.
(c)    Except as set forth on Schedule 4.24(c), no Company owes any assessments,
penalties, fines, liens, charges, surcharges, nor are there any other amounts
due or owing pursuant

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to MSHA, OSHA or similar Law, and there have been no imminent danger orders,
unwarrantable failure orders, failure to abate orders, or cessation orders,
notices of a pattern of violations, or material assessments, under MSHA, OSHA or
similar Law received by any of the Companies during the previous three (3)
years.
(d)    Schedule 4.24(d) sets forth all reports of MSHA, OSHA or similar Law
audits with respect to the business of any Company performed within the previous
three (3) years by any Person (including any Company or the Shareholders).
Schedule 4.24(d) sets forth all orders issued under MSHA, OSHA or similar Law,
together with any appeals thereof, with respect to the business of the Companies
within the previous three (3) years by any Person.
(e)    The Shareholders have caused the Companies to deliver or make available
to Buyer copies of all orders and reports under MSHA, OSHA or similar Law with
respect to the Companies for the past three years.
Section 4.25    Accounts Receivable. All accounts receivable, notes receivable,
unbilled revenues, reimbursable costs and expenses and other claims for amounts
due to any Company (including, for the avoidance of doubt, any accounts
receivable due from Quality Coal Company, Inc. under the Assignment and
Assumption Agreement Regarding Slate Creek, dated September 22, 2010)
(collectively, “Accounts Receivable”) that are reflected on the Financial
Statements, the Statement or on the accounting records of the Companies as of
the Closing Date represent or will represent valid obligations arising from
sales actually made or services actually performed by the Companies in the
Ordinary Course of Business. To the Shareholders’ Knowledge, there is no
contest, claim, defense or right of setoff with any account debtor of an Account
Receivable relating to the amount or validity of such Account Receivable.
Schedule 4.25 contains a complete and accurate list of all Accounts Receivable
as of July 31, 2012, which list sets forth the aging of each such Account
Receivable.
Section 4.26    Corporate Records.
(a)    Each Company has delivered to Buyer true, correct and complete copies of
the articles of incorporation (each certified by the Secretary of State or other
appropriate official of the applicable jurisdiction of organization) and by-laws
(each certified by the secretary, assistant secretary or other appropriate
officer of the applicable Company) or comparable organizational documents of
each Company in each case as amended and in effect on the date hereof, including
all amendments thereto.
(b)    The equity ownership information of each Company previously made
available to Buyer is true, correct and complete.
Section 4.27    Bank Accounts. Schedule 4.27 sets forth a true and complete list
of (a) the name and address of each bank with which any Company has an account
or safe deposit box, (b) the name of each Person authorized to draw thereon or
have access thereto and (c) the account number for each bank account of any
Company.
Section 4.28    Quality. Except as set forth on Schedule 4.28, during the past
three (3) years, (a) there have been no material disputes between any of the
Companies and a third party relating

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to the quality of the coal sold by any of the Companies to such third party, and
(b) there have been no discounts agreed to by any of the Companies with respect
to any future sales of coal by any of the Companies.
Section 4.29    No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV (including the
related Schedules) or as specifically set forth in the Ancillary Agreements,
none of the Shareholders or any other Person has made or makes any other express
or implied representation or warranty, either written or oral, on behalf of the
Shareholders or the Companies.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to the Shareholders that:
Section 5.1    Organization, Power and Authority. Buyer is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the State of Nevada and has full limited liability company power and authority
to own, operate and lease its properties and assets as and where currently
owned, operated and leased and to carry on its business as currently conducted.
Buyer is duly qualified to do business as a foreign corporation and is in good
standing in the State of Alabama and in each jurisdiction in which the nature of
its business or the location of its properties makes such qualification
necessary except where the failure to be qualified would not reasonably be
expected to materially and adversely affect the ability of Buyer to consummate
the transactions contemplated hereby.
Section 5.2    Validity of Agreements. Assuming due authorization, execution and
delivery by the other parties hereto and thereto, this Agreement constitutes
and, when executed and delivered, each of the Ancillary Agreements to which
Buyer is to be a party, will constitute, the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, subject to the
General Enforceability Exceptions. Buyer has full limited liability company or
corporate power and authority, as applicable, to execute and deliver this
Agreement and the Ancillary Agreements to which it is or will be a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby to be consummated by it. The
execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate action
of Buyer.
Section 5.3    No Conflict; Consent. Subject to the receipt of all Consents,
including those set forth on Schedule 7.2(e), neither the execution and delivery
of this Agreement or the Ancillary Agreements by Buyer, nor the performance of
Buyer’s obligations hereunder or thereunder, will (a) violate, conflict with or
result in a breach of any Laws or the Organizational Documents of Buyer or (b)
violate, conflict with or 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 Contract to which
Buyer is a party or by which it is bound or to which any of its assets are
subject. Except as set forth on Schedule 7.2(e), no Consent is required in
connection with the execution and delivery by Buyer of this Agreement or the
Ancillary Agreements or the consummation by Buyer of the transactions
contemplated hereby or thereby.

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Section 5.4    Litigation. As of the date of this Agreement, there is no Action
pending against or, to Buyer’s actual knowledge, threatened against or affecting
Buyer that challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement and the Ancillary Agreements.
Section 5.5    No Broker’s or Finder’s Fees. Except as set forth on Schedule
5.5, no Person has acted, directly or indirectly, as a broker, finder or
financial advisor for Buyer or any of its Affiliates, no Person has or,
immediately following the consummation of the transactions contemplated by this
Agreement, will have, as a result of any act or omission of Buyer or any of its
Affiliates, any right, interest or valid claim against the Shareholders for any
commission, fee or other compensation as a broker, finder or financial advisor
in connection with the execution of this Agreement or the Ancillary Agreements
or the transactions contemplated hereby or thereby.
Section 5.6    Availability of Funds. Buyer has, and at the Closing will have,
sufficient funds available to pay the Purchase Price and any expenses incurred
by Buyer in connection with the transactions contemplated by this Agreement.
Section 5.7    Investment Intention. Buyer is acquiring the Shares for its own
account, for investment purposes only and not with a view to the distribution of
such Shares. Buyer understands that the Shares have not been registered under
the Securities Act of 1933 and cannot be sold unless subsequently registered
under the Securities Act of 1933 or an exemption from such registration is
available.
ARTICLE VI
COVENANTS
Section 6.1    Interim Operations. From the date hereof until the Closing,
except as set forth in Schedule 6.1 or as expressly permitted or required by
this Agreement or as otherwise expressly consented to by Buyer in writing, and
to the extent not prohibited by applicable Law, the Shareholders shall cause the
Companies to:
(a)    conduct their respective businesses in the Ordinary Course of Business
and use commercially reasonable efforts to (i) maintain and keep their
properties and equipment in the same condition as they were on the date of this
Agreement, subject to wear and tear normal to the industries in which the
Companies operate, (ii) keep in full force and effect insurance presently
maintained (or insurance comparable in amounts and scope of coverage),
(iii) perform in all material respects all of their obligations under any
Contracts, (iv) maintain their books and records in accordance with past
practice, (v) comply in all material respects with all applicable Laws and
Permits, (vi) maintain and preserve their business organizations intact and use
commercially reasonable efforts to keep available to the Companies the services
of present employees, agents and independent contractors of the Companies (and
providing prompt notice to Buyer if any employee of a Company indicates he or
she intends to leave employment of the Company), and (vii) use commercially
reasonable efforts to preserve for the benefit of Buyer all goodwill of the
Companies and their relationships with the suppliers, customers and others
having business relations with them;
(b)    not change their Organizational Documents or merge or consolidate with or
into any other Person;

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(c)    subject to Section 6.1(a), not enter into any Contract described under
Section 4.7(a);
(d)    not perform, take any action or incur or, to the extent within the
reasonable control of the Companies, permit to exist any of the acts,
transactions, events or occurrences of the type described in Section 4.6 that
would have been inconsistent with the representations and warranties set forth
therein had the same occurred after June 30, 2012 and prior to the date hereof;
(e)    not accelerate the collection of Accounts Receivable or defer the payment
of accounts payable other than in the Ordinary Course of Business;
(f)    other than in connection with the reimbursement of expenses in the
Ordinary Course of Business, not incur any Indebtedness, accelerate the
repayment of any existing Indebtedness, or make any payment with respect to any
Indebtedness other than nondiscretionary payments that become due and payable in
the Ordinary Course of Business prior to the Closing Date;
(g)    not (i) make any change in the Tax reporting or accounting principles,
practices or policies, including with respect to (A) depreciation or
amortization policies or rates or (B) the payment of accounts payable or the
collection of accounts receivable; (ii) settle or compromise any Tax liability;
(iii) make, change or rescind any Tax election; (iv) surrender any right in
respect of Taxes; (v) consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes, or (vi) amend
any Tax Return;
(h)    not (i) increase the salary or other compensation of any employee of any
Company outside the Ordinary Course of Business, (ii) increase the coverage or
benefits available under any (or create any new) severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance, pension
or other employee benefit plan or similar arrangement made to, for, or with the
employees of any Company or otherwise modify or amend or terminate any Employee
Plan or (iii) enter into any deferred compensation, severance, special pay, or
similar agreement or arrangement, or any other employment or consulting
arrangement not terminable at will with no further Liability, with any employee;
(i)    not take any actions with respect to shot rock inventory other than in
the Ordinary Course of Business; and
(j)    not take any action that would disturb the Leased Real Property related
to the Reed No. 5 Mine permit.
Section 6.2    Reasonable Access.
(a)    Except as otherwise provided herein, from the date hereof until the
Closing Date, upon reasonable advance notice furnished by Buyer to Mr. Reed and
the Beneficiaries, which notice (notwithstanding Section 11.3) may be furnished
either orally or in writing, the Shareholders will cause each Company to permit
Buyer and Buyer’s attorneys, consultants, accountants and other representatives
to have reasonable access during regular business hours, accompanied by Persons

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designated by the Shareholders, to each Company’s personnel and all of the
Companies’ premises (whether leased or otherwise occupied), properties,
employees, books, records (including Tax records), accountants’ working papers
(whether of internal or outside accountants), Contracts and documents, and will
cause each Company to furnish Buyer with copies of such documents and with such
information with respect to the affairs of each Company as Buyer may from time
to time reasonably request, provided, however, that Buyer shall not, other than
as otherwise set forth in this Agreement, have the right to perform any
investigative procedures that involve physical disturbance or damage to the
Leased Real Property or Right of Access Real Property (including any
Environmental testing or sampling) or any of the other assets of the Companies
without the Shareholders’ Representative’s written consent, which consent may be
withheld by the Shareholders’ Representative in its sole and absolute
discretion; provided further, however, that Buyer shall not have the right to
access any documents or information related to the negotiation, execution and
implementation of the transactions contemplated by this Agreement or that may be
protected by the attorney-client privilege. Such access shall not interfere in
any material respect with the business of the Companies, and Buyer will not
disclose such information prior to the Closing except to the extent required by
applicable Law. Any such furnishing of such information to Buyer or any
investigation by Buyer shall not affect Buyer’s right to rely on any
representations and warranties made in this Agreement or in connection herewith
or pursuant hereto.
(b)    For a period of seven (7) years following the Closing Date, Buyer will
permit the Shareholders’ Representative or designees of the Shareholders’
Representative to have access upon reasonable notice during normal business
hours to the books and records of the Companies (or copies or extracts thereof)
with respect to periods or portions of periods ending on or before the Closing
Date, as the Shareholders’ Representative may reasonably request in order to
comply with applicable Tax Laws and to fulfill the Shareholders’ obligations
under this Agreement and the Ancillary Agreements, provided, however, that any
such access shall not unreasonably interfere with the conduct of the businesses
of the Buyer or any of Buyer’s Affiliates. The Shareholders’ Representative (on
behalf of the Shareholders) shall promptly reimburse Buyer for any and all out
of pocket costs and expenses (excluding attorneys’ fees and costs, reimbursement
for general overhead, salaries and employee benefits) incurred by Buyer, any
Affiliate of Buyer or any of their respective representatives in connection with
the foregoing. Any information, books and records or other documents accessed by
the Shareholders’ Representative or its designees pursuant to this Section
6.2(b) shall not be used for any purpose other than as expressly permitted by
this Section 6.2(b).
Section 6.3    Notification of Certain Matters. The Shareholders shall give
notice to Buyer and Buyer shall give notice to the Shareholders, as promptly as
reasonably practicable upon becoming aware of (a) any fact, change, condition,
circumstance, event, occurrence or non-occurrence that has caused or is
reasonably likely to cause any representation or warranty in this Agreement made
by it to be untrue or inaccurate in any respect at any time after the date
hereof and prior to the Closing, (b) any material failure on its part to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder or (c) the institution of or the threat of institution
of any Action against any of the Shareholders or any Company of any kind,
including those related to this Agreement or the transactions contemplated
hereby; provided that, except as set forth in the following sentence, the
delivery of any notice pursuant to Section 6.3(a) shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice, or
the

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representations or warranties of, or the conditions to the obligations of, the
parties hereto. Unless Buyer has the right to terminate this Agreement pursuant
to Section 10.1(d) below by reason of the development and exercises such right
within ten (10) Business Days immediately following the end of the cure period
referred to in Section 10.1(d) below (or, if sooner, before the Closing Date),
the written notification pursuant to this Section 6.3 will be deemed to have
amended the Schedules attached hereto, to have qualified the representations or
warranties contained in Section 4 above, and to have cured any misrepresentation
or breach of warranty that otherwise might have existed hereunder by reason of
the development.
Section 6.4    Reasonable Best Efforts.
(a)    Upon the terms and subject to the conditions set forth in this Agreement,
each of the Shareholders and Buyer agrees to use reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in a reasonably
expeditious manner, the transactions contemplated hereby and by the Ancillary
Agreements and to obtain satisfaction or waiver of the conditions precedent to
such transactions, including (i) the obtaining of all necessary actions or
nonactions and Consents from Governmental Authorities and the making of all
necessary registrations and filings as promptly as practicable and the taking of
all steps as may be necessary to obtain a Consent from, or to avoid an Action or
proceeding by, any Governmental Authority, (ii) the obtaining of all necessary
Consents from third parties (all at the Shareholders’ expense; provided, nothing
in this Section 6.4(a) shall require any Company or Shareholder to pay any form
of consideration for any such Consents), (iii) the defending of any Actions
challenging this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby, including seeking to have any
stay or temporary restraining order entered by any Governmental Authority
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement and the Ancillary Agreements.
(b)    To the extent not prohibited by Law, the Shareholders and Buyer shall use
reasonable best efforts to furnish to each other all information required for
any application or other filing to be made pursuant to any applicable Law in
connection with the transactions contemplated by this Agreement. Each party
shall give the other party reasonable prior notice of any communication with,
and any proposed understanding, undertaking or agreement with, any Governmental
Authority regarding any such filings or any such transaction. No party shall
independently participate in any meeting, or engage in any substantive
conversation, with any Governmental Authority in respect of any such filings,
investigation or other inquiry without giving the other party prior notice of
such meeting.
Section 6.5    Further Assurances. Following the Closing Date, the Shareholders
and Buyer shall, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably be requested by Buyer or the
Shareholders, to confirm and assure the rights and obligations provided for in
this Agreement and the Ancillary Agreements and render effective the
consummation of the transactions contemplated hereby and thereby, or otherwise
to carry out the intent and purposes of this Agreement.

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Section 6.6    No Shop. The Shareholders shall not, and shall not authorize or
permit any officer, director, manager or employee of any Company, or any
investment banker, attorney, accountant or other agent or representative
retained by the Shareholders, any Company or any of their respective Affiliates
to, directly or indirectly, (i) solicit, initiate or encourage any “other bid,”
(ii) consider, accept or enter into any agreement with respect to any other bid
or (iii) participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any other bid. The Shareholders’
Representative shall promptly advise Buyer orally and in writing of any other
bid or any inquiry with respect to or which could lead to any other bid and the
identity of the Person making any such other bid or inquiry and the material
terms thereof. As used in this Section 6.5, “other bid” shall mean any proposal
relating to the acquisition of any or all of the equity interests of any
Company, or for a merger, sale of securities, sale, lease or license of
substantial assets or similar transaction involving any Company, or for a
cost-plus or hybrid cost-plus coal mining service agreement or coal sales
agreement for the benefit of any potential customers, other than (A) the
transactions contemplated by this Agreement and the Ancillary Agreements and
(B) the sale of Inventory in the Ordinary Course of Business.
Section 6.7    Competitive Activity; Nonsolicitation; Confidentiality.
(a)    Non-Competition. Each Shareholder agrees that during the Noncompete
Period, he, she or it shall not, directly or indirectly, (i) enter into, engage
in, consult, manage or otherwise participate in the operation of any business
which competes with the businesses of the Companies as conducted during any
portion of the Reed Ownership Period through the Closing Date (the “Current
Businesses”) within the Restricted Territory; (ii) solicit, divert, entice or
otherwise take away any customers, prospective customers, business, cooperative
associations, patronage or orders of the Companies with respect to the Current
Businesses, or attempt to do so; (iii) solicit orders for, broker, or sell, any
coal or other products or services offered or sold by the Companies in
connection with the Current Businesses in competition with, or for any business
that competes with, the Current Businesses within the Restricted Territory; or
(iv) promote or assist, financially, by providing introductions or making
marketing efforts for, or otherwise, any Person engaged in any business which
competes with the Current Businesses within the Restricted Territory. Nothing
contained in this Section 6.7 shall prohibit (A) any Shareholder from acquiring
or holding at any one time a passive investment of less than two percent of the
outstanding shares of capital stock of any publicly traded corporation that may
compete with the Companies within the Restricted Territory, (B) the continuation
of the surface and current mineral leasing businesses of Reed Energy, LLC
(including with respect to the Lease Agreements and any other agreement between
Reed Energy, LLC and Buyer, NACoal or their respective Affiliates, successors or
assigns) and the fuel and lube sales and distribution business of Henry Oil Co.,
Inc., and the ownership, operation and disposition thereof by one or more of the
Shareholders, in each case only to the extent that the business of such
companies does not compete with the Current Businesses, including by not
leasing, optioning, purchasing or otherwise controlling surface or mineral
interests in lands on or under which the Companies intend to conduct
mining-related activities within five (5) years in Walker County, Alabama,
Jefferson County, Alabama or Tuscaloosa County, Alabama, (C) subject to the
immediately preceding clause (B), the employment of the Beneficiaries by Reed
Energy, LLC or Henry Oil Co., Inc., (D) the execution, delivery and performance
of the Consulting Agreement, (E) any Beneficiary from being a consultant to
Nelson Brothers solely with respect to blasting litigation

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expertise, or (F) any Shareholder from entering into, engaging in, consulting,
managing or otherwise participating in the operation of any business that serves
solely as an equipment vendor, including to companies in the coal mining
industry. Notwithstanding Section 6.7(a)(B), if the Shareholders desire to
lease, option, purchase or control any such surface or mineral interests in such
lands, the Shareholders’ Representative may request in writing to Buyer such
desire and, in the event that Buyer does not intend to conduct mining-related
activities on or under such lands within five (5) years of Shareholders’ written
request, Buyer shall not prevent Shareholders from leasing, optioning,
purchasing or controlling such lands.
(b)    Non-Solicitation. During the Noncompete Period, each Shareholder agrees
that he, she or it shall not, directly or indirectly, at any time solicit or
induce or attempt to solicit or induce any employee(s), sales representative(s),
agent(s), vendor(s) or consultant(s) of the Companies to terminate their
employment, representation or other association with the Companies, except that
the Shareholders, or any of them, may solicit and employ any of the employees
listed on Schedule 6.7(b).
(c)    Non-Disclosure. From and after the Closing, no Shareholder shall disclose
to any Person or use, and the Shareholders shall use their reasonable best
efforts to prevent their respective Affiliates and representatives from
disclosing to any Person or using, any Business Confidential Information except
as required by law or legal process, as reasonably necessary to assert or
protect his, her, its or their rights under or with respect to this Agreement or
any of the Ancillary Agreements or as reasonably necessary to contest or defend
against any claims or other Actions against any of them. “Business Confidential
Information” means any proprietary, non-public information of the Companies that
has commercial value or other utility and is related to the Companies, or the
unauthorized disclosure of which could be detrimental to the value of the
Companies, subject to the following exceptions: (i) information generally
available to the public prior to the Closing (subject to the Shareholders’
compliance with their covenants set forth in Section 6.1); (ii) information that
is or becomes generally available to the public through no action by any
Company, any Shareholder, or any of their respective employees or
representatives; or (iii) information that is later lawfully acquired by any
Shareholder or any of their respective representatives from sources other than
those related to their prior ownership of the Companies (provided that such
source is not under an obligation to keep such information confidential);
provided, however, that the Shareholders may disclose Business Confidential
Information to their respective representatives in connection with the
transactions contemplated by this Agreement and the Ancillary Agreements so long
as such representatives are informed by the Shareholders of the nature of the
Business Confidential Information and are directed by the Shareholders to hold
the Business Confidential Information in confidence, and the Shareholders shall
be responsible for any breach of the confidentiality provisions of this
Section 6.7 by such representatives. If, after the Closing, any Shareholder or
any of such Shareholder’s representatives or Affiliates is legally required to
disclose any Business Confidential Information, such Shareholder shall
(A) promptly notify Buyer to permit Buyer, at Buyer’s sole cost and expense, to
seek a protective order or take other appropriate action and (B) cooperate as
reasonably requested by Buyer in Buyer’s efforts to obtain a protective order or
other reasonable assurance that confidential treatment will be accorded such
Business Confidential Information, but only at Buyer’s sole cost and expense.
If, after the Closing, and in the absence of a protective order, any Shareholder
or any of such Shareholder’s representatives is compelled as a matter of Law to
disclose Business Confidential Information to a

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third party, such Shareholder may disclose (and such Shareholder shall cause any
such representative(s) to disclose) to the third party compelling disclosure
only the part of such Business Confidential Information as is required by Law to
be disclosed; provided, however, that prior to any such disclosure, any such
Shareholder will, and will cause any such representative(s), as applicable, to
use good faith efforts to advise and consult with Buyer and its counsel as to
such disclosure and the nature and wording of such disclosure, to the extent
legally permitted.
(d)    Acknowledgment and Relief. The Shareholders acknowledge that (i) their
respective obligations under this Section 6.7 are reasonable in the context of
the Purchase Price and earn-out payments under this Agreement, the nature of
Buyer and the Companies and the competitive injuries likely to be sustained by
Buyer and the Companies if such Persons were to violate such obligations, (ii)
the covenants in this Section 6.7 are adequately supported by consideration from
Buyer for the benefit of such Persons, and (iii) the foregoing makes it
necessary for the protection of Buyer and the Companies that such Persons uphold
their respective obligations under this Section 6.7 for the reasonable time
period contained herein. Accordingly, each Shareholder acknowledges and agrees
that the remedy at law available to the Buyer for breach of any of such Person’s
obligations under this Section 6.7 would be inadequate; therefore, in addition
to any other rights or remedies that the Buyer may have at law or in equity, (i)
Buyer may withhold as liquidated damages up to $3,000,000 of Quarterly Earn-out
Payments to the Sellers if the Shareholders breach Section 6.7(a) by providing
written notice to the Sellers, provided that the Shareholders do not cure the
applicable breach within fifteen (15) Business Days from receipt of such notice
or Buyer determines that such breach is not capable of cure, but is no longer
ongoing and has not damaged any Company business, and (ii) temporary and
permanent injunctive relief may be granted in any proceeding which may be
brought to enforce any provision contained in this Section 6.7, without the
necessity of proof of actual damage. If it shall be judicially determined that
any Shareholder has violated this Section 6.7, then the period applicable to
each obligation that such Person has been determined to have violated will
automatically be extended by a period of time equal in length to the period
during which such violation(s) occurred.
(e)    Other Agreements. The obligations and restrictions set forth in this
Section 6.7 are in addition to the provisions of any employment, consulting or
other agreement between the Buyer and/or the Companies and the Shareholders that
may be entered into from time to time and addresses the same or similar subject
matter covered by this Section 6.7. In the event that any restriction set forth
in this Section 6.7 is deemed to exceed any limitation on time, geographic scope
or other limitation permitted under applicable Law, then such restriction shall
be deemed to be reformed such that the maximum time, geographic scope or other
limitation permitted under applicable Law shall be deemed to apply.
Section 6.8    Taxes.
(a)    For purposes of this Agreement, the portion of Tax with respect to the
income, property or operations of each Company that is attributable to any
Straddle Period will be apportioned between the period of the Straddle Period
that extends before the Closing Date through the Closing Date (the “Pre-Closing
Straddle Period”) and the period of the Straddle Period that extends from the
day after the Closing Date to the end of the Straddle Period (the “Post-Closing
Straddle Period”) in accordance with this Section 6.8(a). The portion of such
Tax attributable to the Pre-Closing

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Straddle Period will (i) in the case of any Taxes other than sales or use taxes,
value-added taxes, employment taxes, withholding taxes, and any Tax based on or
measured by income, receipts or profits earned during a Straddle Period, be
deemed to be the amount of such Tax for the entire taxable period multiplied by
a fraction, the numerator of which is the number of days in the Pre-Closing
Straddle Period and denominator of which is the number of days in the Straddle
Period, and (ii) in the case of any sales or use taxes, value-added taxes,
employment taxes, withholding taxes, and any Tax based on or measured by income,
receipts or profits earned during a Straddle Period, be deemed equal to the
amount that would be payable if the Straddle Period ended on and included the
Closing Date. The portion of Tax attributable to a Post-Closing Straddle Period
shall be calculated in a corresponding manner. To the extent that any Tax for a
Straddle Period is based on the greater of a Tax on net income, on the one hand,
and a Tax measured by net worth or some other basis not otherwise measured by
income, on the other hand, the portion of such Tax related to the Pre-Closing
Straddle Period and the Post-Closing Straddle Period will be determined based on
the foregoing and based on the manner in which the actual Tax liability for the
entire Straddle Period is determined. In the case of a Tax that is (x) paid for
the privilege of doing business during a period (a “Privilege Period”) and (y)
computed based on business activity occurring during an accounting period ending
prior to the privilege period, any reference to a “Tax period,” a “tax period”
or a “taxable period” shall mean such accounting period and not the privilege
period. Proration of property taxes will be made on the basis of the most recent
officially certified tax valuation and tax assessment rate for the corresponding
assets. If the valuation or rate pertain to a tax period other than that in
which the Closing occurs, such proration will be recalculated at such time as
actual tax bills for such period are available, and the parties will cooperate
with each other in all respects in connection with such recalculation and pay
any sums due in consequence thereof to the party entitled to recover the same
within sixty (60) days after notice of the issuance of such actual tax bills.
(b)    Buyer will timely prepare and file (or cause to be timely prepared and
filed) with the appropriate Taxing Authorities all Tax Returns of any Company
for any Straddle Period (other than any Tax Returns for any Pre-Closing Straddle
Period for which the parties have joint responsibility under this Section or for
which the Shareholders have filing responsibility under Section 6.8(c)) (the
“Buyer Returns”). Buyer will make available to the Shareholders’ Representative
any Buyer Returns with respect to any Straddle Period for review and comment at
least 20 days prior to the respective due dates of such Buyer Returns, and the
Shareholders Representative will provide Buyer with the Shareholders’ comments
no later than 15 days before the respective due dates of such Buyer Returns;
provided, however, that in the event such Buyer Returns are due within 30 days
of the Closing Date, Buyer will provide such Buyer Returns to the Shareholders
Representative at least ten days prior to the respective due date, and the
Shareholders Representative will provide Buyer with the Shareholders’ comments
no later than seven days before the respective due date of such Buyer Returns.
Buyer and the Shareholders will jointly prepare and file (or cause to be timely
prepared) with the Taxing Authorities all Tax Returns of any Company containing
any Pre-Closing Straddle Period. Not later than five Business Days prior to the
actual date of filing of any Tax Return that is required to be filed with
respect to a Straddle Period, the Shareholders will pay (or cause to be paid) to
Buyer cash in an amount equal to the Taxes allocable to the Pre-Closing Straddle
Period (as determined pursuant to Section 6.8(a)) shown on such Tax Return.

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(c)    The Shareholders will timely prepare and file (or cause to be timely
prepared and filed) with the appropriate Taxing Authorities all Tax Returns with
respect to the Companies for all Pre-Closing Tax Periods including any Tax
Return based upon or measured by income of any Company that extends before the
Closing Date and ends on or before the Closing Date (the “Seller Returns”), and
will pay (or cause to be paid) all Taxes with respect to the Seller Returns
(whether imposed on the Companies or the (direct or indirect) equityholders of
any Company or its Affiliates). Any payment the Shareholders are obligated to
make pursuant to Section 6.8(c) with respect to Taxes of the Companies pursuant
to Section 1374 of the Code shall be paid first, to the extent there are
sufficient funds in the Tax Escrow Account, by release of funds to the Buyer
from the Tax Escrow Account by the Escrow Agent pursuant to and upon compliance
with the procedures set forth in the Escrow Agreement. The Shareholders
Representative will make available to Buyer any Seller Returns for review and
comment at least twenty (20) days prior to the respective due dates of such
Seller Returns, and Buyer will provide the Shareholders Representative with
Buyer’s comments no later than ten (10) days before the respective due dates of
such Seller Returns. Buyer shall appoint BRJ as Assistant Treasurer after the
Closing Date for the sole purpose of signing all Seller Returns. BRJ shall duly
execute all such Seller Returns at least two days before the due date for any
such Seller Return. BRJ’s sole responsibility will be the signing of any such
Seller Returns and after all Seller Returns have been filed, Buyer shall remove
BRJ as Assistant Treasurer.
(d)    All transfer, documentary, sales, use, stamp, registration, value-added
and other such Taxes and fees (including any penalties and interest) imposed on
Buyer or any Company in connection with this Agreement (“Transfer Taxes”) will
be borne and paid one-half by the Shareholders and one-half by Buyer when due
and the party required by applicable law shall, at their own expense, cause to
be filed all necessary Tax Returns and other documentation with respect to all
such Transfer Taxes. Each party shall use reasonable best efforts to obtain any
available exemptions from such Transfer Taxes and to cooperate with the other
party in providing any information or documentation that may be necessary to
obtain such exemptions. Each party shall use its commercially reasonable efforts
to obtain any available exemptions from Transfer Taxes.
(e)    In connection with the preparation of Tax Returns, audit examinations,
and any administrative or judicial proceedings relating to the Tax liabilities
imposed on or with respect to any Company, Buyer and such Company, on the one
hand, and the Shareholders, on the other hand, shall cooperate fully with each
other, including, without limitation, the furnishing or making available during
normal business hours of records, personnel (as reasonably required), books of
account, powers of attorney or other materials necessary or helpful for the
preparation of such Tax Returns, the conduct of audit examinations or the
defense of claims by Taxing Authorities as to the imposition of Taxes.
(f)    This Section 6.8(f) and not Section 9.2 shall control any inquiry,
assessment, proceeding or other similar event relating to Taxes of any Company.
The Shareholders’ Representative shall have the right to represent the interests
of any Company before the relevant Taxing Authority with respect to any inquiry,
assessment, proceeding or other similar event with respect to any Company (a
“Tax Matter”) relating solely to any Pre-Closing Tax Period and shall have the
right to control the defense, compromise or other resolution of any such Tax
Matter, including responding to inquiries, preparing Tax Returns and contesting,
defending against and resolving any assessment for additional Taxes or notice of
Tax deficiency or other adjustment of

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Taxes of, or relating to, such Tax Matter; provided, however, (i) Buyer has the
right (but not the duty) to participate in the defense of such Tax Matter and to
employ counsel, at its own expense, separate from counsel employed by Sellers,
and (ii) the Shareholders’ Representative shall not enter into any settlement of
or otherwise compromise any such Tax Matter without the prior written consent of
Buyer, which consent shall not be unreasonably conditioned, withheld or delayed.
Buyer shall have the right to represent the interests of any Company before the
relevant Taxing Authority with respect to any Tax Matter that relates solely to
any Post-Closing Tax Period or Straddle Period and has the right to control the
defense, compromise or other resolution of any such Tax Matter, including
responding to inquiries, filing Tax Returns and contesting, defending against
and resolving any assessment for additional Taxes or notice of Tax deficiency or
other adjustment of Taxes of, or relating to, such Tax Matter; provided,
however, (i) the Shareholders’ Representative shall have the right (but not the
duty) to participate in the defense of such Tax Matter and to employ counsel, at
its own expense, separate from counsel employed by Buyer, and (ii) Buyer shall
not enter into any settlement of or otherwise compromise any such Tax Matter
that affects the liability of the Shareholders, whether pursuant to Section 9.1
or otherwise, without the prior written consent of the Shareholders’
Representative, which consent shall not be unreasonably conditioned, withheld or
delayed.
Buyer shall have the right to represent the interests of any Company before the
relevant Taxing Authority with respect to any Tax Matter that relates to both a
Pre-Closing Tax Period and a Post-Closing Tax Period or Straddle Period (joint
audit) and has the right to control the defense, compromise or other resolution
of any such Tax Matter, including responding to inquiries, filing Tax Returns
and contesting, defending against and resolving any assessment for additional
Taxes or notice of Tax deficiency or other adjustment of Taxes of, or relating
to, such Tax Matter; provided, however, (i) the Shareholders’ Representative
shall have the right to participate in the defense of such Tax Matter to the
extent permitted by applicable law and to employ counsel, at its own expense,
separate from counsel employed by Buyer, (ii) Buyer shall not enter into any
settlement of or otherwise compromise any such Tax Matter that affects the
liability of the Shareholders, whether pursuant to Section 9.1 or otherwise,
without the prior written consent of the Shareholders’ Representative, which
consent shall not be unreasonably conditioned, withheld or delayed, and (iii)
with respect to and solely to the extent of a Tax Matter that relates to a
Pre-Closing Tax Period, Buyer will represent the Company’s interests and
Shareholders’ interests with respect to such Tax Matter in a manner consistent,
in all material respects, with the reasonable requests and instructions of the
Shareholders’ Representative or its counsel that are communicated in writing to
Buyer or Buyer’s counsel, or communicated orally to Buyer’s chief financial
officer, to the chief financial officer of Buyer’s parent company, to any
officer of Buyer, a Company or any Affiliate thereof who is in charge of the
representation of a Company in such Tax Matter, to any representative designated
by any of the foregoing, or to Buyer’s counsel, including, without limitation,
with respect to positions taken, information presented, defenses offered and
other communications to or with the applicable Tax Authority or its
representatives. In the event that Buyer or its representatives fail to
materially comply with the immediately preceding sentence, including, without
limitation clause (iii) thereof, Buyer shall pay the amount of any increased Tax
liability of Sellers or the Company arising from the resolution of such Tax
Matter (including, without limitation, as it relates to the Pre-Closing Tax
Period), including penalties and interest paid by the Sellers or the Company,
and Buyer shall not

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have a right to recover the amount of such increased Tax liability from
Shareholders or the Shareholders’ Representative, and shall not have a right to
indemnification by Shareholders under Section 9.1(a) with respect to the amount
of such increased Tax liability.
(g)    The Shareholders and Buyer shall join in making an election under Section
338(h)(10) of the Code (and any corresponding election under state, local, and
foreign Tax Law) with respect to the purchase and sale of the Minerals Shares,
the Hauling Shares and the C&H Shares hereunder (collectively, the “Section
338(h)(10) Elections”). In furtherance of the preceding sentence, the
Shareholders and Buyer shall jointly prepare the election forms and after the
applicable parties have signed the forms as are required by applicable Law to
effect the Section 338(h)(10) Elections jointly file them. The Shareholders
shall include any income, gain, loss, deduction, or other Tax item resulting
from the Section 338(h)(10) Elections on their Tax Returns to the extent
required by applicable Law, and shall take no position inconsistent with
treating the purchase by Buyer of the Minerals Shares, the Hauling Shares and
the C&H Shares as a transaction to which Section 338(h)(10) applies. The
consideration paid for the Minerals Shares, the Hauling Shares and the C&H
Shares hereunder and the liabilities (to the extent included in amount realized
for federal income Tax purposes) of Reed Minerals, Reed Hauling and C&H Mining
shall be allocated among the Minerals Shares, the Hauling Shares and the C&H
Shares and then the assets of Reed Minerals, Reed Hauling and C&H Mining in
accordance with their fair market values set forth on Schedule 6.8(g) (the
“Allocation Schedule”) and Section 338 of the Code and, as adjusted, if
necessary, consistent with any Purchase Price adjustment; provided that such
adjustment will not include adjustments regarding allocations to “net mineral
rights/reserves” or “net property and equipment” without the Shareholders’
Representative’s consent. Buyer, the Shareholders and each of their Affiliates
shall file all Tax Returns in a manner consistent with such Allocation Schedule,
and none of the parties will voluntarily take any position inconsistent with the
Allocation Schedule in any inquiry, assessment, audit, action, proceeding or
other similar event relating to Taxes.
(h)    All Tax sharing or allocation agreements, arrangements or similar
Contracts with respect to or involving any Company will be terminated as of the
Closing Date and, after the Closing Date, no Company will be bound thereby or
have any liability thereunder.
Section 6.9    Release by the Shareholders; Release by the Companies.
(a)    Effective as of the Closing, each of the Shareholders, on behalf of
themselves and their respective Affiliates, heirs, successors and assigns
(collectively, the “Seller Related Persons”), hereby absolutely, unconditionally
and irrevocably releases and discharges, fully, finally and forever, each
Company, Buyer, and Buyer’s respective Affiliates, agents, representatives,
directors, officers and employees (together, the “Buyer Released Parties”) from
any and all claims, demands, rights, causes of action, proceedings, orders,
remedies, obligations, damages and liabilities of whatsoever kind or character
arising as a result of any event or condition, or action or inaction of the
Buyer Released Parties, from the beginning of time until the Closing, whether
known or unknown, absolute or contingent, both at Law and in equity, which such
Seller Related Person ever had, now has, or ever may have, against any Buyer
Released Party, including in any Seller Related Person’s capacity as a direct or
indirect equityholder of any Company prior to the Closing and pursuant to any
Contract between any Seller Related Person and a Buyer Released Party (as to
each Seller Related Person, such Seller Related Person’s “Seller Related Person
Claims”); provided,

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however, that Seller Related Person Claims shall not include (i) any claims
pursuant to this Agreement or any Ancillary Agreement or other agreement
executed at or after the Closing with a Buyer Released Party, (ii) any claims in
the Shareholder’s capacity as an employee for vested rights under an employee
benefit plan that cannot be waived pursuant to any applicable Law, or (iii) any
claims in the Shareholder’s capacity as an officer, director, manager, agent or
employee of any of the Companies in connection with rights to indemnification
under the Organizational Documents of the Companies, or any of them, or
insurance coverage under any directors’ and officers’ liability insurance
policies, as contemplated by Section 6.12 below (subject to Sections 9.3(d) and
9.6).
(b)    No Shareholder has filed, and will not file or permit to be filed, any
Action against any Buyer Released Party with any Governmental Authority or
otherwise, based on events occurring on or prior to the Closing Date in relation
to any matter released or purported to be released hereunder. No Shareholder has
assigned, and will not assign, any Seller Related Person Claim and has not
authorized, and will not authorize, any other Person to assert any Seller
Related Person Claim on its or their behalf.
(c)    Each of the Shareholders expressly acknowledges that the release provided
under this Section 6.9 is intended to include in its effect all claims within
the scope of this release that the Shareholders do not know or suspect to exist
in their favor at the time of execution hereof, and that this release
contemplates the extinguishment of any such claim or claims.
(d)    Each of the Shareholders is aware that statutes exist that render null
and void or otherwise affect or may affect releases and discharges of any
claims, rights, demands, Liabilities, Actions and causes of action that are
unknown to the releasing or discharging party at the time of execution of the
release and discharge. Each of the Shareholders, for itself and the other Seller
Related Persons, hereby expressly waives, surrenders and agrees to forego any
and all protections, rights or benefits to which the Shareholders otherwise
would be entitled by virtue of the existence of any such statute or the common
law of any state, province or jurisdiction with the same or similar effect.
Further, it is understood and agreed that the facts in respect of which the
release provided under this Section 6.9 is given may turn out to be other than
or different from the facts in that respect now known or believed by the
Shareholders to be true; and with such understanding and agreement, each of the
Shareholders expressly accepts and assumes the risk of facts being other than or
different from the assumptions and perceptions as of any date prior to and
including the Closing Date, and agrees that this release shall be in all
respects effective and shall not be subject to termination or rescission by
reason of any such difference in facts.
(e)    The release provided under this Section 6.9 shall extend to and be
binding upon each of the Shareholders, and each such Person’s legal successors
and assigns, and all other Seller Related Persons, and shall inure to the
benefit of all of the Buyer Released Parties.
(f)    Effective as of the Closing, Buyer and each of the Companies, on behalf
of themselves and their respective Affiliates, successors and assigns
(collectively, the “Company Related Persons”), shall absolutely, unconditionally
and irrevocably release and discharge, fully, finally and forever, each of the
Shareholders and Anthony Allen (together, the “Seller Released Parties”) from
any and all claims, demands, rights, causes of action, proceedings, orders,
remedies, obligations, damages and liabilities of whatsoever kind or character
arising as a result of any event

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or condition, or action or inaction of the Seller Released Parties, from the
beginning of time until the Closing, whether known or unknown, absolute or
contingent, both at Law and in equity, which such Company Related Person ever
had, now has, or ever may have, against any Seller Released Party (as to each
Company Related Person, such Company Related Person’s “Company Related Person
Claims”) pursuant to a Company Release in the form of Exhibit D attached hereto
which shall be executed and delivered by and on behalf of each Company as a
condition to the Shareholders’ obligations to consummate the transactions
hereunder at Closing; provided, however, that Company Related Person Claims
shall not include (i) any claims pursuant to this Agreement or any Ancillary
Agreement or other agreement executed at or after the Closing with a Seller
Released Party, or (ii) any claims resulting from a Seller Released Party’s
knowing and intentional fraud or conviction of an intentional criminal act.
Section 6.10    Correspondence. The Shareholders shall promptly forward to Buyer
any mail (including electronic mail) that such Person receives after the Closing
Date that is intended for any Company or the owner of any Company. The Buyer
shall, and shall cause the Companies to, promptly forward to the Shareholders’
Representative any mail (including electronic mail) that Buyer or any of the
Companies receives after the Closing Date that is intended for any Shareholders
other than in the capacity of an officer, director, manager or current owner of
any Company or in relation to the Cooperative or other Company business.
Section 6.11    Use of Names. The Shareholders hereby agree that upon the
Closing, Buyer and the Companies shall have the sole right to the use of (a) the
names of the Companies and (b) any service marks, trademarks, trade names, d/b/a
names, fictitious names, identifying symbols, logos, emblems, signs or insignia
(collectively, “Marks”) used or owned exclusively by any or all of the
Companies, including any name, mark, trademark, and service mark listed on
Schedule 4.9 (collectively, the “Company Marks”); provided, however, that
nothing in this Section 6.11 shall prohibit the Shareholders or any of their
post-Closing Affiliates from using the name “Reed,” “Reed Energy,” “Reed Energy,
LLC” or any Marks related thereto or containing or comprising such name or Marks
in business other than the Current Businesses. Following the Closing, the
Shareholders shall not, and shall not permit their respective Affiliates to, use
any of the Company Marks. Following the Closing, Buyer shall not, and shall not
permit its Affiliates to, use any name or Marks containing “Reed”, “Reed Energy”
or “Reed Energy, LLC” other than the Company Marks; provided, however, that
Buyer shall have a reasonable transitional period after the Closing to remove
signs at the Leased Real Property that utilize the “Reed Energy” name and to
change any Company email addresses that utilize the “Reed Energy” name. In
furtherance thereof, as promptly as practicable but in no event later than 90
days following the Closing Date, the Shareholders shall remove, strike over or
otherwise obliterate all Company Marks from all vehicles, business cards,
schedules, stationery, packaging materials, displays, signs, promotional
materials, manuals and forms held by, or under the control of, the Shareholders
and their post-closing Affiliates.
Section 6.12    Indemnification and Insurance. Buyer agrees that all rights to
indemnification or exculpation now existing in favor of the employees, agents,
directors, managers or officers of the Companies (the “Company Indemnified
Parties”) as provided in the Organizational Documents of the Companies as of
December 31, 2011 shall continue in full force and effect in respect of events
occurring prior to the date hereof following the Closing Date, subject to
Sections 9.3(d) and 9.6 below. Buyer agrees to cause the Companies to perform
all officer and director

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indemnification obligations to be performed by the Companies under the
Organizational Documents to the extent permitted by Alabama law.
Section 6.13    Personal Guaranties. Buyer shall provide the Shareholders with
reasonable assistance to procure the release on or prior to the Closing Date of
each of the personal guaranties and indemnities identified on Schedule 6.13 and,
if any such release is not procured on or prior to the Closing Date, then Buyer
shall continue to provide the Shareholders with reasonable assistance to procure
such release after the Closing Date. Each of Buyer and the Shareholders shall
provide reasonable assistance and cooperation to procure the release of any
other personal guaranty or indemnity made by any Shareholder prior to the
Closing Date to the extent such guaranty or indemnity is a guaranty or indemnity
of a Company obligation for any item of Certified Indebtedness or any Contract
listed on Schedule 4.7(a), excluding any guaranties with respect to
environmental or undisclosed Reclamation liabilities (such personal guaranties
and indemnities, together with the personal guaranties and indemnities set forth
on Schedule 6.13, the “Personal Guaranties”). Each of Buyer and the Shareholders
shall provide prompt notice to the other upon becoming aware of any such
Personal Guaranty not identified on Schedule 6.13. For the avoidance of doubt,
Buyer acknowledges that any efforts by the Shareholders to provide the
assistance contemplated by this Section 6.13 or other reasonable efforts by or
on behalf of the Shareholders to obtain a release of a personal guaranty or
indemnity with respect to any Company obligation will not in and of itself be
deemed a violation of Sections 6.1 or 6.7 of this Agreement.
Section 6.14    Reclamation Performance Bonds. Buyer will use reasonable best
efforts and the Shareholders will reasonably cooperate with Buyer so that each
of the Reclamation Performance Bonds existing at the Closing as to which any
Company is a principal shall be replaced with a reclamation performance bond
satisfactory to the Alabama Surface Mining Commission as to which Buyer or an
Affiliate of Buyer is the principal, and so that the surety for such then
existing bond shall release all collateral (which shall be remitted to the
Sellers immediately upon release) and to terminate any related Personal
Guaranties. If any reclamation performance bonds are not replaced by December
31, 2012, then Buyer shall reimburse the Shareholders’ Representative for the
First National Cash Amount and terminate any and all related Personal Guaranties
existing as of December 31, 2012 (but in no event shall such reimbursement be in
an amount less than the balance of the First National Cash Amount as of the
Closing Date). In the event that the First National Cash Amount is reduced
following the Closing for any reason (whether due to a claim with respect to the
Reclamation Performance Bonds or otherwise), the Buyer shall reimburse the
Shareholders’ Representative for the full amount of such reduction to the extent
not already paid or reimbursed by one or more of the Companies.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF BUYER AND THE SHAREHOLDERS
Section 7.1    Conditions to Obligations of Each Party. The respective
obligations of the Shareholders and Buyer to consummate the transactions
contemplated by this Agreement are subject to there being no Law or Order
enacted, entered, enforced or issued preventing the consummation of the
transactions contemplated hereby.
Section 7.2    Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated by this Agreement to be performed at
the Closing are subject to the satisfaction or fulfillment of the following
conditions precedent, any of which may be waived in

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whole or in part in writing by Buyer:
(a)    the Shareholders shall have delivered, or caused to be delivered, all of
the items required by Section 3.2;
(b)    all representations and warranties of the Shareholders set forth in this
Agreement or in any document delivered pursuant hereto (i) shall be true and
correct in all respects (in the case of any representation and warranty
containing any materiality qualification) or in all material respects (in the
case of any representation or warranty without any materiality qualification)
when made and (ii) shall be repeated and shall be true and correct in all
respects (in the case of any representation and warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) on and as of
the Closing Date. The Shareholders shall have performed or complied in all
material respects with all covenants and agreements contemplated by this
Agreement to be performed by the Shareholders at or prior to the Closing Date;
(c)    there shall not have occurred any Material Adverse Effect;
(d)    effective upon Closing, there shall be no Seller Related Persons who are
employed by any Company;
(e)    Buyer shall have received written Consents from all third parties set
forth on Schedule 7.2(e) to effect the transactions contemplated by this
Agreement and the Ancillary Agreements; and
(f)    Buyer shall be satisfied that no material Company Permit will be impaired
or in any way adversely affected by the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
Section 7.3    Conditions to Obligations of the Shareholders. The obligations of
the Shareholders to consummate the transactions contemplated by this Agreement
to be performed at the Closing are subject to the satisfaction or fulfillment of
the following conditions precedent, any of which may be waived in whole or in
part in writing by the Shareholders’ Representative (on behalf of all
Shareholders):
(a)    Buyer shall have delivered all of the items required by Section 3.3; and
(b)    all representations and warranties of Buyer set forth in this Agreement
or in any document delivered pursuant hereto (i) shall be true and correct in
all respects (in the case of any representation and warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) when made and
(ii) shall be repeated and shall be true and correct in all respects (in the
case of any representation and warranty containing any materiality
qualification) or in all material respects (in the case of any representation or
warranty without any materiality qualification) on and as of the Closing Date.
Section 7.4    Frustration of Closing Conditions. Neither Buyer nor the
Shareholders may rely on the failure of any condition set forth in Section 7.1,
Section 7.2, or Section 7.3, as the case may be,

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to be satisfied if such failure results in whole or in part from such party’s
failure to comply with its obligations to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements as required by the
provisions of this Agreement.
ARTICLE VIII
EMPLOYEE MATTERS
Section 8.1    Benefits and Compensation. For the period beginning on the
Closing Date through December 31, 2012, Buyer shall provide to the employees of
each Company (other than Mr. Reed, the Consultants and any employees who are
Seller Related Persons) (the “Company Employees”) compensation and benefits that
are substantially comparable in the aggregate to the compensation and benefits
provided to such Company Employees immediately prior to the Closing, except for
the items set forth on Schedule 8.1. Notwithstanding the foregoing or any other
provision to the contrary, in no event will Buyer be required to provide Company
Employees with any defined benefit pension plan, defined contribution retirement
plan, retiree medical benefits or any other retiree welfare benefits and any
such benefits provided to Company Employees prior to the Closing will not be
taken into account when determining whether Buyer has satisfied its obligation
set forth in the preceding sentence.
Section 8.2    Prior Service. Subject to the consent of its insurance carriers,
if applicable, Buyer shall recognize each Company Employee’s service with the
applicable Company as of the Closing as service with Buyer for purposes of
Buyer’s employee welfare benefit plans (including vacation, disability and
severance) to the extent such Company Employees participate therein on and after
the Closing (the “Buyer’s Plans”).
Section 8.3    Transferred Employees. Except as otherwise provided elsewhere in
this Article VIII, the terms of employment with Buyer or its Affiliates for the
Company Employees shall be upon such terms and conditions as Buyer, in its sole
discretion, shall determine. Nothing herein expressed or implied by this
Agreement shall confer upon any employee, or legal representative thereof, any
rights or remedies, including any right to employment, or for any specified
period, of any nature or kind whatsoever, under or by reason of this Agreement.
Section 8.4    No Employment Rights or Third Party Beneficiaries. No provision
of this Article VIII shall (a) create any third party beneficiary or other
rights in any employee or former employee (including any beneficiary or
dependent thereof) of any Company or any other Person other than the parties
hereto and their respective successors and permitted assigns, (b) constitute or
create an employment agreement or (c) constitute or be deemed to constitute an
amendment to any Employee Plan or any employee benefit plan sponsored or
maintained by Buyer or its Affiliates.
ARTICLE IX
INDEMNIFICATION AND SURVIVAL
Section 9.1    General Indemnification Obligation.
(a)    The Shareholders hereby agree, jointly and severally, to indemnify,
defend and hold harmless Buyer, its Affiliates (including the Companies), and
their respective directors, officers, managers, employees, Affiliates,
shareholders, agents, advisers, representatives, successors and assigns (each,
a “Buyer Indemnified Party”) from and against, and pay and reimburse the Buyer
Indemnified Parties for, any and all losses, liabilities, claims, obligations,
deficiencies, demands,

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judgments, damages, interest, fines, penalties, claims, suits, actions, causes
of action, assessments, awards, costs and expenses (including costs of
investigation and defense and attorneys’ and other professionals’ fees), whether
or not involving a Third Party Claim, in each case net of any insurance proceeds
received from third party insurers and, except for claims for consequential
damages for a breach of Section 6.7, in each case excluding any type of
punitive, consequential, incidental, indirect, special or exemplary damages or
diminution in value (except to the extent such damages are awarded to a third
party in connection with a Third Party Claim) (individually, a “Loss” and,
collectively, “Losses”):
(i)    based upon, attributable to or resulting from the failure of any of the
representations or warranties made by the Shareholders in this Agreement
(including any Schedule or Exhibit attached hereto) or under any Ancillary
Agreement to be true and correct in all respects at and as of the date hereof
and at and as of the Closing Date;
(ii)    based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of the Shareholders under this Agreement
(including any Schedule or Exhibit attached hereto) or under any Ancillary
Agreement;
(iii)    based upon, attributable to or resulting from any failure to timely or
duly form Reed Management;
(iv)    based upon, attributable to or resulting from the ownership prior to the
Closing by any Company of the real property identified on Schedule 4.14(a) or
that is required to be identified on Schedule 4.14(a);
(v)    based upon, attributable to or resulting from the Dilworth Facility
Lease, dated January 22, 2008, by and between Reed Minerals, McWane Coal Sales
and Empire Coke Company, as amended (the “Dilworth Lease”), or any operations
conducted by a Company on the Premises (as defined in the Dilworth Lease) prior
to the termination of the Dilworth Lease;
(vi)    (A) all Taxes (or the nonpayment thereof) of any Company for any
Pre-Closing Tax Period and any Pre-Closing Straddle Period; (B) all Taxes of any
member of an affiliated, combined or unitary group of which any Company is or
was a member on or prior to the Closing Date, including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local or foreign
Law; and (C) any and all Taxes of any Person (other than any Company) imposed on
any Company as a transferee or successor, by contract or pursuant to any Law,
which Taxes relate to an event or transaction occurring on or prior to the
Closing Date; and
(vii)    (A) all Taxes of any Company resulting from the Section 338(h)(10)
Elections, including, without limitation, any Taxes pursuant to Section 1374 of
the Code or any analogous or similar provision of state, local or foreign Law,
and (B) any invalidity of the Section 338(h)(10) Elections due to a breach of
the representation in Section 4.11(s).
(b)    Buyer hereby agrees to indemnify, defend and hold harmless the
Shareholders and their respective Affiliates, agents, advisers, representatives,
heirs, successors and assigns (each, a “Seller Indemnified Party”) from and
against, and pay and reimburse the applicable Seller Indemnified Parties for,
the amount of any Losses:

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(i)    based upon, attributable to or resulting from the failure of  any
representation or warranty made by Buyer in this Agreement (including any
Schedule or Exhibit attached hereto) or under any Ancillary Agreement to be true
and correct in all respects at the date hereof and as of the Closing Date;
(ii)    based upon, attributable to or resulting from the breach of any covenant
or other agreement on the part of Buyer under this Agreement or any Ancillary
Agreement;
(iii)    all Taxes (or the non-payment thereof) of any Company for any
Post-Closing Straddle Period and any Tax period after the Closing Date; and
(iv)    based upon, attributable to or resulting from any action of the
Companies, Buyer, NACoal or their respective Affiliates or successors and
assigns following the Closing Date with respect to any Personal Guaranties (as
defined in Section 6.13).
(c)    The right to indemnification or any other remedy based on
representations, warranties, covenants and agreements in this Agreement
(including any Schedule or Exhibit attached hereto) or under any Ancillary
Agreement shall not be affected by any investigation conducted at any time, or
any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of, or compliance with, any
such representation, warranty, covenant or agreement.
Section 9.2    Indemnification Procedures.
(a)    A claim for indemnification for any matter not involving a Third Party
Claim (a “Direct Claim”) may be asserted by a party seeking indemnification (the
“Indemnified Party”) by reasonably prompt written notice to the party from whom
indemnification is sought (the “Indemnifying Party”), but in any event not later
than sixty (60) days after the Indemnified Party becomes aware of such claim;
provided, however, that failure to so notify the Indemnifying Party shall not
preclude the Indemnified Party from any indemnification which it may claim in
accordance with this Article IX. Such notice by the Indemnified Party shall
describe the Direct Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated amount, to
the extent practicable, of the Loss that has been or may be sustained by the
Indemnified Party. The Indemnifying Party shall have sixty (60) days after its
receipt of such notice to respond to such Direct Claim unless the Indemnifying
Party’s notice advises that a more prompt response is reasonably necessary under
applicable Law. If the Indemnifying Party does not so respond within such sixty
(60) day period, the Indemnifying Party shall be deemed to have rejected such
claim, in which case the Indemnified Party shall be free to pursue such remedies
as may be available to the Indemnified Party on the terms and subject to the
provisions of this Agreement.
(b)    In the event that any Action shall be instituted or that any claim or
demand shall be asserted by any third party in respect of which indemnification
may be sought under Section 9.1 hereof (regardless of the limitations set forth
in Section 9.3) (a “Third Party Claim”), the Indemnified Party shall give (or,
in the case of a Shareholder, shall cause the Shareholders’ Representative to
give) notice thereof (a “Claims Notice”) to the other party. A Claims Notice
shall describe the Third Party Claim in reasonable detail, and shall indicate
the amount (estimated, if necessary and to the extent feasible) of the Loss that
has been or may be suffered by the Indemnified

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Party. No delay in or failure to give a Claims Notice by the Indemnified Party
to the Indemnifying Party pursuant to this Section 9.2(b) shall adversely affect
any of the other rights or remedies which the Indemnified Party has under this
Agreement, or alter or relieve the Indemnifying Party of its obligation to
indemnify the Indemnified Party to the extent that such delay or failure has not
materially prejudiced the Indemnifying Party. The Indemnifying Party shall have
the right, exercisable by written notice to the Indemnified Party within thirty
days of receipt of a Claims Notice from the Indemnified Party of the
commencement or assertion of any Third Party Claim in respect of which indemnity
may be sought hereunder, to assume and conduct the defense of such Third Party
Claim in accordance with the limits set forth in this Agreement with counsel
selected by the Indemnifying Party and reasonably acceptable to the Indemnified
Party; provided, however, that (i) the Indemnifying Party has sufficient
financial resources, in the reasonable judgment of the Indemnified Party, to
satisfy the amount of any adverse monetary judgment that is reasonably likely to
result; (ii) the Third Party Claim solely seeks (and continues to solely seek)
monetary damages; and (iii) the Indemnifying Party expressly agrees in writing
that as between the Indemnifying Party and the Indemnified Party, the
Indemnifying Party shall be solely obligated to satisfy and discharge the Third
Party Claim in accordance with the terms set forth in this Agreement (the
conditions set forth in the foregoing clauses (i) through (iii), collectively,
the “Litigation Conditions”). If the Indemnifying Party does not assume the
defense of a Third Party Claim in accordance with this Section 9.2(b), the
Indemnified Party may continue to defend the Third Party Claim at the expense of
the Indemnifying Party. If the Indemnifying Party has assumed the defense of a
Third Party Claim as provided in this Section 9.2(b), the Indemnifying Party
will not be liable for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that if (A) any of the Litigation Conditions cease to be met or (B) the
Indemnifying Party fails to take reasonable steps necessary to defend diligently
such Third Party Claim, the Indemnified Party may assume its own defense, and
the Indemnifying Party shall be liable for all reasonable costs or expenses paid
or incurred in connection therewith. The Indemnifying Party or the Indemnified
Party, as the case may be, shall have the right to participate in (but not
control), at its own expense, the defense of any Third Party Claim which the
other is defending as provided in this Agreement. The Indemnifying Party, if it
shall have assumed the defense of any Third Party Claim as provided in this
Agreement, shall not, without the prior written consent of the Indemnified
Party, consent to a settlement of, or the entry of any judgment arising from,
any such Third Party Claim which (x) does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of
a complete release from all Liability and Losses in respect of such Third Party
Claim, (y) grants any injunctive or equitable relief, or (z) may adversely
affect the business of the Indemnified Party. The Indemnified Party shall have
the right to settle any Third Party Claim, the defense of which has not been
assumed by the Indemnifying Parties after having been given notice and
opportunity to defend in accordance with this Section 9.2(b). If the
Indemnifying Party makes any payment on any Third Party Claim, the Indemnifying
Party shall be subrogated, to the extent of such payment, to all rights and
remedies of the Indemnified Party to any insurance benefits or other claims of
the Indemnified Party with respect to such Third Party Claim.
(c)    After any final decision, judgment or award shall have been rendered by a
Governmental Authority of competent jurisdiction and the expiration of the time
in which to appeal therefrom, or a settlement shall have been consummated, or
the Indemnified Party and the

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Indemnifying Party shall have arrived at a mutually binding agreement, in each
case with respect to a Third Party Claim hereunder, the Indemnified Party shall
forward to the Indemnifying Party notice of any sums due and owing by the
Indemnifying Party pursuant to this Agreement with respect to such matter, and
the Indemnifying Party shall pay all of such remaining sums so due and owing to
the Indemnified Party by bank wire transfer or transfers of immediately
available funds (i) in the case of a Buyer Indemnified Party, from the
Shareholders to an account designated by the applicable Buyer Indemnified Party
to the Shareholders’ Representative within five (5) days after the final
determination or settlement thereof, and (ii) in the case of a Seller
Indemnified Party, from Buyer to an account designated by the Shareholders’
Representative to Buyer within five (5) days after the final determination or
settlement thereof.
Section 9.3    Limitations on Indemnification; Survival.
(a)    An Indemnifying Party shall not have any liability for indemnification
pursuant to Sections 9.1(a)(i) or 9.1(b)(i) unless the aggregate amount of
Losses incurred by the Indemnified Parties and indemnifiable thereunder exceeds
$312,500 (the “Basket”), in which case the Indemnifying Party shall be required
to pay only the amount of all such Losses in excess of the Basket.
(b)    Subject to Section 9.5, the Shareholders shall not be required to
indemnify any Persons under Section 9.1(a)(i) for an aggregate amount of Losses
exceeding $12,000,000 (the “Cap Amount”); provided that neither the Basket nor
the Cap Amount shall apply with respect to Losses related to the failure to be
true and correct of any of the Fundamental Representations or with respect to
any Losses related to the knowing and intentional fraud of the Shareholders. For
the avoidance of doubt, Losses relating to Sections 9.1(a)(ii) through
9.1(a)(vii) and Losses with respect to the failure to be true and correct of any
of the Fundamental Representations do not count towards the Cap Amount. The
Shareholders shall not be required to indemnify any Persons under this Agreement
for an aggregate amount of any Losses exceeding the Purchase Price.
(c)    In the event of any failure of any representations or warranties to be
true and correct, then for purposes of calculating Losses hereunder, any
materiality or Material Adverse Effect qualifications in such representations
and warranties shall be disregarded.
(d)    The Shareholders shall have no right of contribution or other recourse
against any Company or its respective directors, officers, employees,
Affiliates, agents, attorneys, representatives, assigns or successors for any
Third Party Claims for which Buyer Indemnified Parties are entitled to
indemnification pursuant to Section 9.1(a).
(e)    All of the representations and warranties of the Shareholders and Buyer
contained in this Agreement or the Ancillary Agreements, will survive the
Closing hereunder and continue in full force and effect for a period of eighteen
(18) months thereafter, except that (i) the Fundamental Representations and the
representations and warranties contained in Sections 5.1, 5.2, 5.3, 5.5 and 5.7
will not expire, (ii) the representations and warranties contained in Section
4.21 will survive for 90 days after the expiration of the applicable statute of
limitations, and (iii) the representations and warranties in Section 4.12 will
continue for a period of four (4) years after Closing; provided, however, that
any obligations under Sections 9.1(a)(i) and 9.1(b)(i) with respect

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to any Losses as to which the Person to be indemnified shall have given written
notice on a reasonable basis and in good faith (stating in reasonably specific
detail the basis of the claim for indemnification) to the Indemnifying Party in
accordance with Section 9.2(b) prior to the expiration of the applicable
survival period shall not thereafter be barred by the expiration of the
applicable survival period and such claims shall survive until finally resolved.
Section 9.4    Adjustments to Purchase Price. Any payments made pursuant to
Sections 2.3, 2.4 and 9.1 shall be treated as adjustments to the Purchase Price.
Section 9.5    Escrow.
(a)    Escrow Funds. On the Closing Date, Buyer shall, on behalf of the
Shareholders, pay to Regions Bank, as agent to Buyer and the Shareholders (the
“Escrow Agent”), in immediately available funds, (a) to a separate account
designated by the Escrow Agent, an amount equal to $3,125,000 (the “General
Escrow Amount”), and (b) to a separate account designated by the Escrow Agent,
an amount equal to $4,100,000 (the “Tax Escrow Amount”), each in accordance with
the terms of this Agreement and the Escrow Agreement, which will be
substantially in the form attached as Exhibit A and will be executed at the
Closing, by and among Buyer, the Shareholders, the Shareholders’ Representative
and the Escrow Agent (the “Escrow Agreement”).
(b)    General Escrow. Subject to Section 6.8(c), any payment the Shareholders
are obligated to make to any Buyer Indemnified Party pursuant to this Article IX
shall be paid first, to the extent there are sufficient funds in the General
Escrow Account, by release of funds to the Buyer Indemnified Parties from the
General Escrow Account by the Escrow Agent pursuant to and upon compliance with
the procedures set forth in the Escrow Agreement and shall accordingly reduce
the General Escrow Amount. If the General Escrow Amount is insufficient to cover
any remaining sums due then (i) first, the Shareholders shall, jointly and
severally, be required to pay all of such additional sums up to the Maximum
Shareholder Amount, if applicable, by wire transfer of immediately available
funds, and (ii) then, to the extent the Maximum Shareholder Amount has been
paid, Buyer will withhold Quarterly Earn-out Payments for the remainder of such
amounts due until the aggregate amounts paid from the General Escrow Amount and
paid or withheld pursuant to clauses (i) and (ii) equal the Cap Amount; provided
that if it is determined that Buyer is not owed the amount withheld, Buyer will
pay to the Shareholders’ Representative the amount owed plus Earn-out Interest
from the applicable date of withholding. Notwithstanding the foregoing, with
respect to claims under this Article IX relating to breaches of Fundamental
Representations or claims other than pursuant to Section 9.1(a)(i), the
Shareholders shall, jointly and severally, be required to pay all of such sums
in excess of the General Escrow Amount and Buyer will not be limited to
withholding the amount of the Quarterly Earn-out Payments. “Earn-out Interest”
shall equal Interest plus 3%. On the 12-month anniversary of the Closing Date,
the Escrow Agent shall release the General Escrow Amount (to the extent not
utilized to pay Buyer for any indemnification claim) to the Shareholders’
Representative, except that the Escrow Agent shall retain an amount (up to the
total amount then held by the Escrow Agent) equal to the amount of claims for
indemnification under this Article IX prior to the 12-month anniversary of the
Closing Date but not yet resolved (the “Unresolved Claims”). The General Escrow
Amount retained for Unresolved Claims shall be released by the Escrow Agent (to
the extent not utilized to pay Buyer for any such claims resolved in favor of
Buyer) upon their resolution in accordance with this Article IX and the terms of
the

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Escrow Agreement.
Section 9.6    Contribution and Waiver. From and after the Closing, no
Shareholder shall seek indemnification or contribution from the Companies
(including by reason of the fact that he or it was a director, manager, officer,
employee or agent of any such entity or was serving at the request of any such
entity as a partner, trustee, director, manager, officer, employee or agent of
another entity) for any breaches or in respect of any other payments required to
be made by any Shareholder pursuant to this Agreement or the Ancillary
Agreements.
Section 9.7    Effect of Investigation. The representations, warranties and
covenants of the Indemnifying Party, and the Indemnified Party’s right to
indemnification with respect thereto, shall not be affected or deemed waived by
reason of any investigation made by or on behalf of the Indemnified Party or by
reason of the fact that the Indemnifying Party knew or should have known that
any such representation or warranty is, was or might be inaccurate.
Section 9.8    Exclusive Remedy. Buyer and the Shareholders acknowledge and
agree that, except as otherwise provided in Section 6.7, Section 11.11 and
Article X of this Agreement, the indemnification provisions in this Article IX
shall be the exclusive remedy of Buyer and Shareholders with respect to claims
against each other relating to the Companies and the transactions contemplated
by this Agreement.
ARTICLE X
TERMINATION
Section 10.1    Termination of Agreement. This Agreement may be terminated:
(a)    by mutual written consent of Buyer and the Shareholders’ Representative
at any time prior to the Closing;
(b)    by Buyer or the Shareholders’ Representative, if the Closing has not
occurred on or before August 31, 2012 (the “Termination Date”), unless the
failure of such consummation shall be due to the failure of the party wishing to
terminate (which, in the case of a proposed termination by the Shareholders’
Representative, shall mean the Shareholders) to comply in all material respects
with the agreements and covenants contained herein;
(c)    by the Shareholders’ Representative if there shall have been a
misrepresentation or breach of any representation, warranty, covenant or
agreement on the part of Buyer contained in this Agreement such that the
condition set forth in Section 7.3(b) would not be satisfied, and which shall
not have been cured prior to the earlier of (i) ten (10) Business Days following
notice of such misrepresentation or breach and (ii) the Termination Date;
(d)    by Buyer if there shall have been a misrepresentation or breach of any
representation, warranty, covenant or agreement on the part of the Shareholders
contained in this Agreement such that the condition set forth in Section 7.2(b)
would not be satisfied, and which shall not have been cured prior to the earlier
of (i) ten (10) Business Days following notice of such misrepresentation or
breach and (ii) the Termination Date; or
(e)    by either the Shareholders’ Representative or Buyer, by written notice to
the

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other, in the event that any Governmental Authority will have issued a final,
non-appealable Order, or adopted any applicable Law, in each case, permanently
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements.
The party desiring to terminate this Agreement pursuant to this Article X shall
give written notice of such termination to the other party.
Section 10.2    Effect of Termination. If any party terminates this Agreement in
accordance with Section 10.1, all obligations of the parties under this
Agreement will terminate and none of the parties will have any Liability to the
other parties hereto other than under this Section 10.2 and Article XI, which
provisions will survive termination and remain in full force and effect without
any limitation whatsoever; provided, however, that nothing in this Section 10.2
shall relieve any party from Liability for any willful and material breach
hereof; provided further, however, that in the event the transactions
contemplated by this Agreement are not consummated for any reason other than a
termination pursuant to Section 10.1(d), Buyer shall promptly (no later than ten
days following the Termination Date) reimburse the Companies for the
Reimbursable Fees and an additional amount up to $500,000 in the aggregate for
reasonable and documented third-party expenses incurred by the Companies or the
Shareholders solely in connection with responding to due diligence requests of
Buyer or its Affiliates and the Companies’ reasonable outside legal fees
incurred in connection with the preparation and negotiation of the transactions
contemplated hereby. All such third party expenses shall be documented by an
invoice provided to Buyer by each such third party, which invoice shall be
provided to Buyer as a condition to such payment.
ARTICLE XI
MISCELLANEOUS
Section 11.1    Waivers and Amendments. No amendment, modification or discharge
of this Agreement (including any Schedule or Exhibit), and no waiver hereunder,
shall be valid or binding unless set forth in writing and duly executed by the
party against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any party hereto of a breach or of a default under
any provisions of this Agreement, nor the failure by any party on one or more
occasions to enforce any of the provisions of this Agreement or to exercise any
right or privilege hereunder, shall be construed as a waiver of any other breach
or default of a similar nature, or as a waiver of any of such provisions, rights
or privileges hereunder.
Section 11.2    Shareholders’ Representative.
(a)    By virtue of the adoption of this Agreement by the Shareholders, and
without further action of any Shareholder, each Shareholder shall be deemed to
have acknowledged and agreed that the Shareholders’ Representative shall have
full power and authority to take all actions under this Agreement and the Escrow
Agreement that are to be taken by the Shareholders’ Representative, including
retaining counsel, accountants and other agents, representatives and experts,
incurring fees and expenses, asserting or pursuing any claim against Buyer,
defending any claims by Buyer or any Third Party Claim, consenting to,
compromising or settling any such claims,

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conducting negotiations with Buyer and its representatives regarding such
claims, it being understood that the Shareholders’ Representative shall not have
any obligation to take any such actions, and shall not have any liability for
any failure to take any such actions. All decisions and actions by the
Shareholders’ Representative (to the extent authorized by this Agreement) shall
be binding upon all the Shareholders, and no Shareholder shall have the right to
object, dissent, protest or otherwise contest the same; provided, however, that
the Shareholders’ Representative shall not take any such action where (i) any
single Shareholder would be held solely liable for any actual losses,
out-of-pocket costs or expenses, liabilities or other damages (without such
Shareholder’s prior written consent) or (ii) such action materially and
adversely affects the substantive rights or obligations of one Shareholder, or
group of Shareholders, without a similar proportionate effect upon the
substantive rights or obligations of all the Shareholders, unless each such
disproportionately affected Shareholder consents in writing thereto.
(b)    By virtue of the adoption of this Agreement by the Shareholders, and
without further action of any Shareholder, each Shareholder agrees that Buyer
shall be entitled to rely on any action taken or omission to act by the
Shareholders’ Representative, on behalf of such Shareholder, pursuant to Section
11.2(a), and that such action or omission shall be binding on each Shareholder
as fully as if such Shareholder had taken such action or omission.
(c)    All of the indemnities, immunities and powers granted to the
Shareholders’ Representative under this Agreement shall survive the Closing
Date.
(d)    A majority of Mr. Reed and the Beneficiaries shall have the right at any
time to remove the then-acting Shareholders’ Representative and to appoint a
successor Shareholders’ Representative; provided, however, that neither such
removal of the then acting Shareholders’ Representative nor such appointment of
a successor Shareholders’ Representative shall be effective until the delivery
to the Escrow Agent and Buyer of executed counterparts of a writing signed by
each such Shareholder or Beneficiary with respect to such removal and
appointment, together with an acknowledgement signed by the successor
Shareholders’ Representative appointed in such writing that he, she or it
accepts the responsibility of successor Shareholders’ Representative and agrees
to perform and be bound by all of the provisions of this Agreement and the
Escrow Agreement. Each successor Shareholders’ Representative shall have all of
the power, authority, rights and privileges conferred by this Agreement upon the
original Shareholders’ Representative, and the term “Shareholders’
Representative” shall be deemed to include any interim or successor
Shareholders’ Representative.
Section 11.3    Notices. All notices, requests, consents, demands and other
communications required or permitted to be given under this Agreement will be in
writing and will be deemed to have been duly given if delivered personally, sent
by recognized overnight delivery service, sent by registered or certified mail,
return receipt requested, postage prepaid, or sent by facsimile, as follows:
if to Buyer:
TRU Energy Services, LLC
5340 Legacy Drive, Building 1, Suite 300

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Plano, Texas 75024
Attention: Robert L. Benson, President
Facsimile No.:    (972) 387-1031

with a copy to:

The North American Coal Corporation
5340 Legacy Drive, Building 1, Suite 300
Plano, Texas 75024
Attention: John Neumann, Vice President, General Counsel & Secretary
Facsimile No.: (972) 387-1031

if to the Shareholders’ Representative, on behalf of the Shareholders:
Robbin Reed Allen
31 Dawn Lane
Jasper, Alabama 35503
Facsimile No.: (205) 384-3296

with a copy to:
Bradley Arant Boult Cummings LLP
One Federal Place
1819 Fifth Avenue North
Birmingham, Alabama 35203
Attention: Tracy Thompson, Esq.
Facsimile No.: (205) 488-6374

or, in each case, at such other address or facsimile number as may be specified
in writing to the other party hereto.
All such notices, requests, consents, demands and other communications shall be
deemed to have been received (i) if by personal delivery, on the day when
delivered, (ii) if by overnight delivery, on the next delivery day, (iii) if by
certified or registered mail, on the fifth day after the mailing thereof, and
(iv) if by facsimile, the same day such facsimile was sent (with confirmation of
delivery).
Section 11.4    Fees and Expenses. Except to the extent expressly provided
otherwise in this Agreement, each party will bear its own costs and expenses
(including attorneys’, consultants’, and advisors’ fees and expenses) incurred
in connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby. Notwithstanding the foregoing, the
Shareholders, on the one hand, and Buyer, on the other hand, shall share equally
the costs of all filing fees associated with obtaining any required regulatory
approvals.
Section 11.5    Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but neither

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this Agreement nor any of its rights, interests or obligations may be assigned
by any party hereto, including by operation of law, without the prior written
consent of the other party, except that Buyer may assign all or any part of its
rights, obligations and duties under this Agreement or under any Ancillary
Agreement to any one or more of its Affiliates, provided that no such assignment
shall in any way release Buyer from any of its Liabilities under this Agreement.
Section 11.6    Third Party Beneficiaries. This Agreement is not intended, and
shall not be construed, to give any Person other than Buyer and the
Shareholders, and their respective successors and permitted assigns, any
interest or rights (including third party beneficiary rights) with respect to or
in connection with any agreement or provision herein or any matter contemplated
hereby, other than the Buyer Indemnified Parties and the Seller Indemnified
Parties to the extent provided in Article IX, the Seller Released Parties and
Buyer Released Parties to the extent provided in Section 6.9, and the Company
Indemnified Parties to the extent provided in Section 6.12.
Section 11.7    Consent to Jurisdiction. Each party irrevocably submits to the
jurisdiction of (a) the state courts located in the State of Alabama and (b) the
United States District Courts located in the State of Alabama, for the purposes
of any Action arising out of this Agreement or any transaction contemplated
hereby. Each party agrees to commence any such Action either in a United States
District Court located in the State of Alabama, or if such Action may not be
brought in such court for jurisdictional reasons, in a state court located in
the State of Alabama. Each party further agrees that service of any process,
summons, notice or document by U.S. registered mail to such party’s respective
address set forth in Section 11.3 shall be effective service of process for any
Action in the State of Alabama with respect to any matters to which it has
submitted to jurisdiction in this Section 11.7. Each party irrevocably and
unconditionally waives any objection to the laying of venue of any Action
arising out of this Agreement or the transactions contemplated hereby in (i) a
state court located in the State of Alabama, or (ii) a United States District
Court located in the State of Alabama, and hereby and thereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such Action brought in any such court has been brought in an
inconvenient forum.
Section 11.8    Governing Law. This Agreement will be governed by and construed
and interpreted in accordance with the laws of the State of Alabama, without
regard to its principles of conflicts of laws.
Section 11.9    Waiver of Jury Trial.
(a)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b)    EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) IT UNDERSTANDS

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AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER
VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET FORTH IN THIS SECTION
11.9.
Section 11.10    Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction will not affect
the validity or enforceability (i) of the offending term or provision in any
other situation or in any other jurisdiction or (ii) of any other term or
provision of this Agreement.
Section 11.11    Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the covenants or agreements of this
Agreement or the Ancillary Agreements were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, in addition to any
other remedy that they are entitled to pursue under this Agreement or the
Ancillary Agreements, the parties will be entitled to seek injunctions to
prevent any breach of this Agreement or the Ancillary Agreements and to seek
specific enforcement at law or in equity of the terms and conditions of this
Agreement and the Ancillary Agreements.
Section 11.12    Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the Ancillary Agreements constitute the entire agreement
among the parties hereto with respect to the subject matter hereof, and
supersede all prior understandings, agreements, statements, representations,
documents, instruments, communications and correspondence, whether written or
oral, express or implied, by or among the parties hereto and their respective
Affiliates, representatives and agents with respect to the subject matter hereof
and thereof.
Section 11.13    Construction. The parties and their respective counsel have
participated jointly in the negotiation and drafting of this Agreement and the
Ancillary Agreements. In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or the Ancillary Agreements.
Section 11.14    Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof. There may be included in the Schedules and elsewhere in this
Agreement items and information that are not “material,” and such inclusion
shall not be deemed to be an acknowledgment or agreement that any such item or
information (or any non-disclosed item or information of comparable or greater
significance) is “material,” or to affect the interpretation of such term for
purposes of this Agreement. Matters reflected in the Schedules are not
necessarily limited to matters required by this Agreement to be disclosed in the
Schedules. No disclosure in the Schedules relating to a possible breach or
violation of any Contract, Law or Order shall be construed as an admission or
indication that such breach or violation exists or has occurred. Any capitalized
term used in the Schedules and not otherwise defined therein shall have the
meaning given to such term in this Agreement. Any headings set forth in the
Schedules are for convenience of reference only and shall not affect the meaning
or interpretation of any of the disclosures set forth in the Schedules.
Section 11.15    Headings. The headings contained in this Agreement are included
for

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convenience only, and will not affect in any way the meaning or interpretation
of this Agreement.
Section 11.16    Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. The electronic
transmission of any signed original counterpart of this Agreement shall be
deemed to be the delivery of an original counterpart of this Agreement.
Section 11.17    No Presumption Against Drafting Party. Each of Buyer and the
Shareholders acknowledges that each party to this Agreement has been represented
by counsel in connection with the negotiation and drafting of this Agreement.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the drafting
party has no application and is expressly waived.
Section 11.18    Announcements. No party shall issue any press release or make
any public announcement relating to the subject matter of this Agreement or the
transactions contemplated by this Agreement without the prior approval of the
other parties, which approval shall not be unreasonably withheld, unless and
only to the extent that such disclosure is required to be made in order to
satisfy such party’s obligations under applicable securities Laws of the United
States of America.
[Signature page follows this page.]

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IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to
be executed as of the date first above written.

BUYER:
TRU ENERGY SERVICES, LLC
SELLERS:
ROBERT J. REED, as shareholder of Reed Minerals, C&H Mining and Reed Hauling,
and sole member of Reed Management 
By: /s/ Robert L. Benson
/s/ Robert J. Reed
      Name: Robert L. Benson
 
      Title: President
 
 
THE B&R FAMILY TRUST, as shareholder of Reed Minerals and C&H Mining

 
By: /s/ Robbin Reed Allen
 
Name: Robbin Reed Allen, as trustee
 
 
 
BENEFICIARIES:
 
 
 
ROBBIN REED ALLEN
 
/s/ Robbin Reed Allen
 
 
 
JAMES R. REED
 
/s/ James R. Reed