##### 



Exhibit
10.5
 Execution Version
 Asset Purchase Agreement
 AMONG
 CNX Gas Company LLC
 Buyer
 and
 American Land Holdings of Indiana, LLC; Beaver Dam Coal
Company; Black Beauty Coal Company, LLC; Caballo Coal
Company; Central States Coal Reserves of Indiana, LLC;
Coal Reserve Holding Limited Liability Company #1;
Hayden Gulch Terminal, Inc.; Midwest Coal Reserves of
Indiana, LLC; Peabody Coal Company, LLC; Peabody
Development Company, LLC; Peabody Natural Gas, LLC; and
Peabody Natural Resources Company
 Seller
 Dated as of April 1, 2007




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TABLE OF CONTENTS
 Recitals
    
    
    1Agreements
    
    
    1ARTICLE I.Definitions
    
    
    11.1
    
    
    Defined Terms
    
    
    11.2
    
    
    Other Definitions
    
    
    81.3
    
    
    Rules of Construction
    
    
    10ARTICLE II.Sale and Purchase
    
    
    102.1
    
    
    Sale and Purchase of Assets
    
    
    102.2
    
    
    Purchase Price
    
    
    132.3
    
    
    Buyer Assumed Liabilities; Seller Retained Liabilities
    
    
    13ARTICLE III.Adjustments; Actions Prior to Closing
    
    
    143.1
    
    
    Purchase Price Adjustments
    
    
    143.2
    
    
    Adjusted Purchase Price Calculation
    
    
    153.3
    
    
    Allocated Values; Post-Closing Allocations
    
    
    163.4
    
    
    Updated Schedules and Exhibits
    
    
    173.5
    
    
    Taxpayer Identification Numbers
    
    
    173.6
    
    
    Consents
    
    
    173.7
    
    
    Asset Due Diligence
    
    
    173.8
    
    
    Adjustments for Environmental Defects
    
    
    183.9
    
    
    Adjustments for Title Defects
    
    
    193.10
    
    
    Sellers Response to Title Defect Notice
    
    
    203.11
    
    
    Liens
    
    
    21ARTICLE IV.Surface Use and Other Activities
    
    
    214.1
    
    
    Surface Use Agreements
    
    
    214.2
    
    
    Cooperative Development
    
    
    22ARTICLE V.Closing and Actions Prior to Closing
    
    
    225.1
    
    
    Closing
    
    
    225.2
    
    
    Sellers Closing Deliveries
    
    
    235.3
    
    
    Buyers Closing Deliveries
    
    
    235.4
    
    
    Transfer Documents
    
    
    23ARTICLE VI.Transfer Period Covenants
    
    
    246.1
    
    
    Transfer Period
    
    
    246.2
    
    
    Further Assurances
    
    
    246.3
    
    
    Obtaining Consents and Delivery of Notices
    
    
    246.4
    
    
    Governmental Filings
    
    
    256.5
    
    
    Recording Fees, Transfer Taxes and Similar Costs
    
    
    256.6
    
    
    Transition Services
    
    
    25
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ARTICLE VII.Buyers Representations and Warranties
    
    
    267.1
    
    
    Organization and Standing
    
    
    267.2
    
    
    Power
    
    
    267.3
    
    
    Authorization and Enforceability
    
    
    267.4
    
    
    Liability for Brokers Fees
    
    
    267.5
    
    
    Alien Status
    
    
    267.6
    
    
    Litigation
    
    
    267.7
    
    
    Orders
    
    
    267.8
    
    
    No Conflicts
    
    
    267.9
    
    
    Regulatory Approvals
    
    
    277.10
    
    
    Buyer Due Diligence
    
    
    277.11
    
    
    Disclosure
    
    
    277.12
    
    
    Effectiveness of Representations and Warranties
    
    
    27ARTICLE VIII.Sellers Representations and Warranties
    
    
    278.1
    
    
    Organization and Standing
    
    
    288.2
    
    
    Power
    
    
    288.3
    
    
    Authorization and Enforceability
    
    
    288.4
    
    
    Liability for Brokers Fees
    
    
    288.5
    
    
    Alien Status
    
    
    288.6
    
    
    Litigation
    
    
    288.7
    
    
    Orders
    
    
    288.8
    
    
    Rentals and Royalties
    
    
    288.9
    
    
    No Conflicts
    
    
    298.10
    
    
    Compliance with Laws
    
    
    298.11
    
    
    Environmental Conditions
    
    
    308.12
    
    
    Taxes
    
    
    308.13
    
    
    Regulatory Approvals
    
    
    308.14
    
    
    Limited Title Warranty as to Assets
    
    
    308.15
    
    
    Material Contracts
    
    
    318.16
    
    
    Employees
    
    
    318.17
    
    
    No Material Adverse Change
    
    
    318.18
    
    
    Undisclosed Material Liabilities
    
    
    328.19
    
    
    Insurance
    
    
    328.20
    
    
    Intellectual Property
    
    
    328.21
    
    
    Conveyance by Seller
    
    
    328.22
    
    
    Disclosure
    
    
    328.23
    
    
    Effectiveness of Representations and Warranties
    
    
    32ARTICLE IX.Other Covenants
    
    
    329.1
    
    
    Certain Affirmative Covenants of Peabody Subs
    
    
    329.2
    
    
    Certain Negative Covenants of Seller
    
    
    339.3
    
    
    Confidentiality and Publicity
    
    
    349.4
    
    
    DISCLAIMERS
    
    
    359.5
    
    
    Indiana Dormant Minerals Act Filings
    
    
    36
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ARTICLE X.Conditions Precedent
    
    
    3610.1
    
    
    Conditions to Buyers Obligations
    
    
    3610.2
    
    
    Conditions to Sellers Obligations
    
    
    37ARTICLE XI.Termination, Effect of Termination and Specific Performance
    
    
    3811.1
    
    
    Termination
    
    
    3811.2
    
    
    Effect of Termination
    
    
    3811.3
    
    
    Specific Performance
    
    
    38ARTICLE XII.Indemnification
    
    
    3912.1
    
    
    Indemnification by Seller
    
    
    3912.2
    
    
    Indemnification by Buyer
    
    
    4012.3
    
    
    Procedure for Certain Indemnified Claims
    
    
    4012.4
    
    
    Determination of Indemnification Amounts and Related Matters
    
    
    4112.5
    
    
    Time and Manner of Certain Claims
    
    
    4112.6
    
    
    Peabody Guaranty
    
    
    4212.7
    
    
    Other Indemnification
    
    
    4212.8
    
    
    Exclusivity
    
    
    42ARTICLE XIII.Miscellaneous Provisions
    
    
    4213.1
    
    
    Data and Information Review
    
    
    4213.2
    
    
    Expenses
    
    
    4313.3
    
    
    Brokers
    
    
    4313.4
    
    
    Waivers
    
    
    4313.5
    
    
    Notices
    
    
    4313.6
    
    
    Entire Agreement; Prior Representations; Amendments; No Merger
    
    
    4413.7
    
    
    Jurisdiction
    
    
    4513.8
    
    
    WAIVER OF JURY TRIAL
    
    
    4513.9
    
    
    Binding Effect; Benefits
    
    
    4513.10
    
    
    Headings, Exhibits and Schedules
    
    
    4513.11
    
    
    Counterparts
    
    
    4513.12
    
    
    GOVERNING LAW
    
    
    4613.13
    
    
    Severability
    
    
    4613.14
    
    
    Third Persons; Joint Ventures
    
    
    4613.15
    
    
    Construction
    
    
    4613.16
    
    
    Attorneys Fees
    
    
    4613.17
    
    
    Risk of Loss
    
    
    4613.18
    
    
    Tax Consequences
    
    
    4713.19
    
    
    Commercially Reasonable Efforts
    
    
    4713.20
    
    
    Time
    
    
    4713.21
    
    
    Reserved Rights
    
    
    4713.22
    
    
    Rule Against Perpetuities
    
    
    47List of Exhibits and Schedules
    
    
    50
 iii




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Asset Purchase Agreement
  Recitals
   Agreements
  ARTICLE I.
 Definitions
 Defined Terms
  1




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2




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3




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Schedule
1.1a Schedule 1.1a
   4




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Exhibit A Exhibits A-1 through A-19
    5




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Schedule 2.1(c)(iii) Schedule 1.1b
 6




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ad valorem
 Schedule 1.1c
  Schedules 1.1d
 7




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Other Definitions
 TERM
    
    SECTIONAdjusted Purchase Price
    
    2.2Adjustment Period
    
    3.1(a)Agreement
    
    PreambleAllocated Values
    
    3.3(a)Assets
    
    2.1(c)Assumed Liabilities
    
    2.3(a)Buyer
    
    PreambleBuyer ERC Actions
    
    2.1(c)(v)(B)Buyer Group
    
    3.7(e)CNX
    
    PreambleCap
    
    12.4(a)Closing
    
    5.1Confidential Information
    
    9.3(a)Contract Operating Agreement
    
    6.6Deed
    
    5.4(a)Environmental Defects Amount
    
    3.8(b)(ii)Environmental Defects Deadline
    
    3.8(a)Equipment
    
    2.1(c)(ii)ERC Rights
    
    2.1(c)(v)(B)
 8




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TERM
    
    SECTIONExcess Title Defects Amount
    
    3.10(c)Excluded Assets
    
    2.1(d)Final Adjustment Certificate
    
    3.2(b)(i)Final Purchase Price
    
    3.2(b)(i)Final Title Defect Notice Deadline
    
    3.9(b)(i)Indemnified Losses
    
    3.7(e)Indemnitee
    
    12.3Indemnitor
    
    12.3Initial Adjustment Certificate
    
    3.2(a)Initial Title Defect Notice Deadline
    
    3.9(a)(i)Litigation Matter
    
    12.3Material Contracts
    
    2.1(c)(iii)Mineral Acre Compensation Threshold
    
    3.10(b)Minimum Damage Requirement
    
    12.4(a)Net Mineral Acre Threshold
    
    3.10(a)Oil and Gas Books and Records
    
    2.1(c)(vii)Oil and Gas Interests
    
    2.1(c)(i)Partial Assignment Leases
    
    2.1(c)(iv)Peabody Guaranty
    
    12.6Peabody Predecessors
    
    8.6Peabody Subs
    
    PreamblePost-Closing Consent
    
    6.3(a)Purchase Price
    
    2.2Replacement Interests
    
    3.8(b)(iii)Reviewable Data
    
    13.1Right of First Refusal
    
    5.2(d)Seller Group
    
    3.7(e)
 9




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TERM
    
    SECTIONSeller Retained Liabilities
    
    2.3(b)Surface Use Agreement (SUA)
    
    4.1(a)Taking
    
    13.17(b)Title Defect Notice
    
    3.9(a)(i)Transfer Period
    
    6.1Wells
    
    2.1(c)(ii)
 Rules of Construction
 ARTICLE II.
 Sale and Purchase
 Sale and Purchase of Assets
 Sale and Purchase
 Transfer of Beneficial Title
 10




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Assets
 Oil and Gas Interests Exhibit A Exhibits A-1 through A-19
 Wells and Equipment Exhibit B Exhibit B
 Contracts Schedule 2.1(c)(iii)
 Partial Assignment Leases Exhibit C
 ERC Rights and Other Credits
   11




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Other Tax Credits
 Books and Records
 Insurance Claims
 Excluded Assets
 12




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Exhibits A-1 through
A-19 Exhibits A-1 through A-19 Exhibit A Exhibits A-1 through A-19
 Purchase Price
 Buyer Assumed Liabilities; Seller Retained Liabilities
 Buyer Assumed Liabilities
    13




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Seller Retained Liabilities
 ARTICLE III.
 Adjustments; Actions Prior to Closing
 Purchase Price Adjustments
 Revenue Adjustment ad valorem
 Cost Adjustment
 14




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Prepaid and Accrued Expenses
     Adjusted Purchase Price Calculation
 Initial Adjustment Certificate
 Final Adjustment Certificate; Final Purchase Price
  15




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Allocated Values; Post-Closing Allocations
 Schedule 3.3(a)
 16




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Updated Schedules and Exhibits
 Taxpayer Identification Numbers
 Consents
 Asset Due Diligence
   17




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Adjustments for Environmental Defects
 Notice of Environmental Defects
 18




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Defect Adjustments
    Adjustments for Title Defects
 Initial Notice of Title Defects
  19




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Final Notice of Title Defects
   Sellers Response to Title Defect Notice
 Above the Net Mineral Acre Threshold
 Below the Net Mineral Acre Threshold
 20




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Below Mineral Acres Compensation Threshold
 Liens
 ARTICLE IV.
 Surface Use and Other Activities
 Surface Use Agreements
 Surface Use Agreements
  21




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Surface Use Agreement Terms
 Cooperative Development
 ARTICLE V.
 Closing and Actions Prior to Closing
 Closing
 22




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Sellers Closing Deliveries
 Officers Certificate
 FIRPTA Certificate
 Contract Operating Agreement
 Right of First Refusal Agreement Schedule 5.2(d)
 Peabody Guaranty
 Other
 Buyers Closing Deliveries
 Adjusted Purchase Price
 Officers Certificate
 Contract Operating Agreement
 Right of First Refusal Agreement
 Other
 Transfer Documents
 23




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Oil and Gas Deed, Assignment, Assumption, and Bill of Sale Exhibit D
 Other Transfer Documents
 ARTICLE VI.
 Transfer Period Covenants
 Transfer Period
 Further Assurances
   Obtaining Consents and Delivery of Notices
  24




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Governmental Filings
   Recording Fees, Transfer Taxes and Similar Costs
 Transition Services
 25




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ARTICLE VII.
 Buyers Representations and Warranties
  Organization and Standing
 Power
 Authorization and Enforceability
 Liability for Brokers Fees
 Alien Status
 Litigation
 Orders
 No Conflicts
  26




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Regulatory Approvals
 Buyer Due Diligence
 Disclosure
 Effectiveness of Representations and Warranties
 ARTICLE VIII.
 Sellers Representations and Warranties
  27




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Organization and Standing
 Power
 Authorization and Enforceability
 Liability for Brokers Fees
 Alien Status
 Litigation
 Orders
 Rentals and Royalties
 28




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No Conflicts
    Compliance with Laws
  Schedule
8.10(b)
      29




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Environmental Conditions
    Taxes Schedule 8.12
 Regulatory Approvals
 Limited Title Warranty as to Assets
 30




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Material Contracts Schedule 2.1(c)(iii)
     Employees Schedule 8.16
   No Material Adverse Change
   31




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Undisclosed Material Liabilities Schedule 8.18
 Insurance
 Intellectual Property
 Conveyance by Seller
 Disclosure
 Effectiveness of Representations and Warranties
 ARTICLE IX.
 Other Covenants
 Certain Affirmative Covenants of Peabody Subs
 32
            Certain Negative Covenants of Seller
    33




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Confidentiality and Publicity
         34




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DISCLAIMERS THE PARTIES AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LEGAL
REQUIREMENTS TO BE OPERATIVE, THE DISCLAIMERS OF WARRANTIES CONTAINED IN THIS SECTION ARE
CONSPICUOUS DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LEGAL REQUIREMENT, RULE OR ORDER.
WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, SELLER EXPRESSLY
DISCLAIMS AND NEGATES AS TO ALL PERSONAL PROPERTY, FIXTURES, WELLS, AND EQUIPMENT INCLUDED IN THE
ASSETS: (I) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY; (II) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; (III) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY
TO MODELS OR SAMPLES OF MATERIALS; (IV) ANY RIGHTS OF BUYER UNDER APPLICABLE STATUTES TO CLAIM
DIMINUTION OF CONSIDERATION; AND (V) ANY CLAIM BY BUYER FOR DAMAGES BECAUSE OF DEFECTS IN ANY
PERSONAL PROPERTY, WELLS, FIXTURES, OR EQUIPMENT INCLUDED WITHIN SUCH ASSETS, WHETHER KNOWN OR
UNKNOWN, IT BEING EXPRESSLY UNDERSTOOD BY BUYER THAT PERSONAL PROPERTY, WELLS, FIXTURES AND
EQUIPMENT INCLUDED WITHIN THE ASSETS ARE BEING CONVEYED TO TRANSFEREE AS IS, WHERE IS, WITH ALL
FAULTS, AND IN THE PRESENT CONDITION AND STATE OF REPAIR. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT OR IN THE TRANSFER DOCUMENTS, WITH RESPECT TO THE OIL AND GAS INTERESTS, SELLER MAKES NO,
AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO (A) ITS RIGHTS TO OR OWNERSHIP
OF CBM OR CMM IN OR ASSOCIATED WITH THE OIL AND GAS INTERESTS; (B) THE QUANTITY OR QUALITY OF OIL
AND GAS CONTAINED IN THE OIL AND GAS INTERESTS; (C) ANY AND ALL GEOLOGIC, LAND OR TECHNICAL DATA
AND INFORMATION PROVIDED TO BUYER REGARDING THE OIL AND GAS INTERESTS; (D) THE GEOLOGY OR
OPERATIONAL
 35




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CONDITIONS EXISTING OR TO BE ENCOUNTERED ON OR WITH RESPECT TO THE LANDS CONTAINING THE
OIL AND GAS INTERESTS; OR (E) SELLERS RIGHTS TO OBTAIN ACCESS TO OR OVER THE SURFACE OF THE LANDS
CONTAINING THE OIL AND GAS INTERESTS, TO UTILIZE THE SURFACE OF SUCH LANDS IN CONNECTION WITH OIL
AND GAS ACTIVITIES OR OPERATIONS CONTEMPLATED BY THIS AGREEMENT, OR TO APPROPRIATE OR USE WATER
PRODUCED IN CONNECTION WITH CBM OPERATIONS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE
TRANSFER DOCUMENTS, SELLER MAKES NO,
AND HEREBY EXPRESSLY DISCLAIMS AND NEGATES, REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
CONCERNING THE ASSETS.
 Indiana Dormant Minerals Act Filings
 ARTICLE X.
 Conditions Precedent
 Conditions to Buyers Obligations
 Accuracy of Representations and Warranties
 Performance of Agreements
 Officers Certificates 36
        Legal Proceedings
 No Material Adverse Change
 Documents and Records
 Consents
 Closing Documents
 Surface Use Agreement
 Peabody Guaranty
 Conditions to Sellers Obligations
 Accuracy of Representations and Warranties 37
        Performance of Agreements
 Officers Certificate
 Legal Proceedings
 Consents
 Closing Documents
 Surface Use Agreement
 ARTICLE XI.
 Termination, Effect of Termination and Specific Performance
 Termination
 Effect of Termination
 Specific Performance
 38




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ARTICLE XII.
 Indemnification
 Indemnification by Seller
        39




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Indemnification by Buyer
      Procedure for Certain Indemnified Claims
 40




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Determination of Indemnification Amounts and Related Matters
    Time and Manner of Certain Claims
 bona fide
 41




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Peabody Guaranty Exhibit E
 Other Indemnification
 Exclusivity
 ARTICLE XIII.
 Miscellaneous Provisions
 Data and Information Review
 42




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Expenses
 Brokers
 Waivers
 Notices
 To Seller:
    
    Peabody Natural Gas, LLC701 Market StreetSt. Louis, Missouri 63101ATTN:
    
    Land DepartmentFax:
    
    314-342-7597Phone:
    
    314-342-3400Copies (which shall not
    
    Peabody Natural Gas, LLCconstitute notice)
    
    14062 Denver West Parkway Suite 110Lakewood, Colorado 80401
 43




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ATTN:
    
    Collon C. Kennedy, Esq.Fax:
    
    303-271-9049Phone:
    
    303-271-3600To Peabody Investments
    
    Peabody Investments Corp.Corp. under Section 12.6:
    
    701 Market StreetSt. Louis, Missouri 63101ATTN:
    
    Finance DepartmentFax:
    
    314-342-7597Phone:
    
    314-342-3400Copies (which shall not
    
    Peabody Natural Gas, LLCconstitute notice)
    
    14062 Denver West Parkway Suite 110Lakewood, Colorado 80401ATTN:
    
    Collon C. Kennedy, Esq.Fax:
    
    303-271-9049Phone:
    
    303-271-3600To Buyer:
    
    CNX Gas Company LLC5 Penn Center West, Suite 401Pittsburgh, PA 15276-0102ATTN:
    
    General Counsels OfficeFax:
    
    412-200-6762Phone:
    
    412-200-6700Copies (which shall not
    
    CNX Gas Corporationconstitute notice)
    
    5 Penn Center West, Suite 401Pittsburgh, PA 15276-0102ATTN:
    
    General Counsels OfficeFax:
    
    412-200-6795Phone:
    
    412-200-6778
  Entire Agreement; Prior Representations; Amendments; No Merger
 44




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in pari materia
 Jurisdiction
 WAIVER OF JURY TRIAL
 Binding Effect; Benefits
 Headings, Exhibits and Schedules
 Counterparts
 45




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GOVERNING LAW
 Severability
 Third Persons; Joint Ventures
 Construction
 Attorneys Fees
 Risk of Loss
  46
        Tax Consequences
 Commercially Reasonable Efforts
 Time
 Reserved Rights
 Rule Against Perpetuities
 Signatures appear on the following page.
 47




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BUYER:CNX GAS COMPANY LLC:By:Name:Title:SELLER:AMERICAN LAND HOLDINGS OF INDIANA, LLCBy:Name:Title:BEAVER DAM COAL COMPANYBy:Name:Title:BLACK BEAUTY COAL COMPANY, LLCBy:Name:Title:CABALLO COAL COMPANYBy:Name:Title:CENTRAL STATES COAL RESERVES OF INDIANA, LLCBy:Name:Title:COAL RESERVE HOLDING LIMITED LIABILITY COMPANY #1By:Name:Title:
 48




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HAYDEN GULCH TERMINAL, INC.By:Name:Title:MIDWEST COAL RESERVES OF INDIANA, LLCBy:Name:Title:PEABODY COAL COMPANY, LLCBy:Name:Title:PEABODY DEVELOPMENT COMPANY, LLCBy:Name:Title:PEABODY NATURAL GAS, LLCBy:Name:Title:PEABODY NATURAL RESOURCES COMPANYBy:Name:Title:
 49




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List of Exhibits and Schedules
 EXHIBITS
 No.
    
    DESCRIPTIONA
    
    List of Oil and Gas InterestsA-1 to A-19
    
    Description of Oil and Gas InterestsB
    
    Wells and EquipmentC
    
    Partial Assignment LeasesD
    
    Form DeedE
    
    Form of Peabody Guaranty
 50




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SCHEDULES
 No.
    
    DESCRIPTION1.1a
    
    Knowledge Persons1.1b
    
    Burdens on Production1.1c
    
    Third Party Consents1.1d
    
    Transfer Approvals2.1(c)(iii)
    
    Material Contracts3.3(a)
    
    Allocated Values5.2(d)
    
    Right of First Refusal Lands8.10(b)
    
    Permits and Bonds for Assets8.12
    
    Taxes Due on Assets8.16
    
    Labor Agreements and Disputes8.18
    
    Material Liabilities
 51