EXHIBIT 2.1


                               PURCHASE AGREEMENT

                                 by and between

                               NATIONAL COAL CORP.

                                       AND

                           MANN STEEL PRODUCTS, INC.,

                                       AND

                                FRANK C. MANN, II

                                       AND

                                 WILLIAM T. MANN


                                  JUNE 18, 2007


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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
ARTICLE  1      DEFINITIONS ...................................................1
         1.1       DEFINITIONS ................................................1
         1.2       RULES OF INTERPRETATION ....................................6

ARTICLE  2      PURCHASE AND SALE OF STOCK ....................................7
         2.1       PURCHASE AND SALE OF STOCK .................................7
         2.2       TRANSFERRED ASSETS .........................................8
         2.3       NON-ASSIGNMENT OF ASSETS ...................................8
         2.4       AMOUNTS HELD IN TRUST ......................................8
         2.5       TRANSFER TAXES .............................................8
         2.6       WORKING CAPITAL ADJUSTMENT .................................9
         2.7       CORPORATE INDEBTEDNESS .....................................9

ARTICLE  3      PURCHASE PRICE; CLOSING AND DELIVERIES ........................9
         3.1       CLOSING ....................................................9
         3.2       SELLER'S DELIVERIES ........................................9
         3.3       SELLER'S DELIVERIES .......................................10

ARTICLE  4      REPRESENTATIONS AND WARRANTIES OF THE SELLER .................10
         4.1       ORGANIZATION ..............................................10
         4.2       AUTHORIZATION AND VALIDITY ................................10
         4.3       NO CONFLICT OR VIOLATION ..................................11
         4.4       CONSENTS AND APPROVALS ....................................11
         4.5       COMPLIANCE WITH LAW .......................................11
         4.6       LITIGATION ................................................11
         4.7       DISPUTES ..................................................11
         4.8       TITLE .....................................................12
         4.9       PERSONAL PROPERTY USED IN THE BUSINESS ....................12
         4.10      CONTRACTS AND LEASES ......................................12
         4.11      RENEGOTIATIONS ............................................12
         4.12      EQUIPMENT LEASES ..........................................12
         4.13      TAX RETURNS ...............................................12
         4.14      LABOR MATTERS .............................................12


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         4.15      FINANCIAL ADVISORS ........................................13
         4.16      REAL PROPERTY .............................................13
         4.17      ENVIRONMENTAL MATTERS .....................................14
         4.18      RESERVES ..................................................15
         4.19      PERMITTING ................................................15
         4.20      DISTANCE AND POST-MINING LAND USE WAIVERS .................15
         4.21      ADVERSE EVENTS OR CIRCUMSTANCES ...........................15
         4.22      FINANCIAL STATEMENTS ......................................15
         4.23      NO UNDISCLOSED LIABILITIES ................................16
         4.24      DISCLOSURE ................................................16
         4.25      RELATIONSHIPS WITH RELATED PERSONS ........................16
         4.26      EMPLOYEE TERMINATIONS .....................................16
         4.27      INSURANCE .................................................16

ARTICLE  5      REPRESENTATIONS AND WARRANTIES OF THE BUYER ..................16
         5.1       ORGANIZATION ..............................................16
         5.2       AUTHORIZATION AND VALIDITY ................................16
         5.3       CONSENTS AND APPROVALS ....................................17
         5.4       NO CONFLICT OR VIOLATION ..................................17
         5.5       FINANCIAL ADVISORS ........................................17
         5.6       PERMITTING ................................................17

ARTICLE  6      SURVIVAL OF REPRESENTATION AND WARRANTIES ....................17
         6.1       SURVIVAL OF REPRESENTATIONS AND WARRANTIES ................17

ARTICLE  7      CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES ...............18
         7.1       CONDITIONS PRECEDENT TO PERFORMANCE BY THE SELLER .........18
         7.2       CONDITIONS TO EACH PARTY'S OBLIGATIONS ....................19

ARTICLE  8      COVENANTS ....................................................20
         8.1       COVENANTS OF SELLER .......................................20
         8.2       COVENANTS OF BUYER ........................................21
         8.3       COVENANTS OF THE PARTIES ..................................23

ARTICLE  9      EMPLOYEES ....................................................25
         9.1       EMPLOYEE RECORDS ..........................................25
         9.2       PAYMENTS TO CERTAIN EMPLOYEES .............................25

ARTICLE  10     INDEMNIFICATION...............................................25


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         10.1      SURVIVAL ..................................................25
         10.2      INDEMNIFICATION BY THE OWNERS .............................25
         10.3      INDEMNIFICATION BY THE BUYER ..............................26
         10.4      CLAIMS ....................................................27
         10.5      BASKET ....................................................27

ARTICLE  11     TERMINATION...................................................28
         11.1      TERMINATION ...............................................28
         11.2      EFFECT OF TERMINATION; REMEDIES ...........................28
         11.3      EXPENSE REIMBURSEMENT .....................................28
         11.4      EARNEST MONEY DEPOSIT .....................................29

ARTICLE  12     MISCELLANEOUS ................................................29
         12.1      EXPENSES ..................................................29
         12.2      NOTICES ...................................................29
         12.3      AMENDMENTS ................................................30
         12.4      WAIVER ....................................................31
         12.5      HEADINGS ..................................................31
         12.6      ASSIGNMENT ................................................31
         12.7      PARTIES IN INTEREST .......................................31
         12.8      COUNTERPARTS ..............................................31
         12.9      SEVERABILITY ..............................................31
         12.10     ENTIRE AGREEMENT ..........................................32
         12.11     GOVERNING LAW .............................................32


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                               PURCHASE AGREEMENT

         This is an Purchase Agreement (this "Agreement"),  dated as of June 18,
2007, by and between National Coal Corp., a Florida  corporation,  (the "Buyer")
and Mann Steel Products, Inc., an Alabama corporation, (the "Corporation"),  and
Frank C.  Mann,  II and  William  T.  Mann  (collectively,  the  "Owners")  (the
Corporation and the Owners collectively the "Seller").

                                    RECITALS

         A. The  Corporation  is  engaged  in the  business  of mining  coal and
activities directly or indirectly relating thereto.

         B. The Owners desire to sell to the Buyer all right, title and interest
of the Owners in and to the Stock of the  Corporation,  being all of the issued,
outstanding  Stock  of  the  Corporation,   along  with  the  retention  by  the
Corporation  of all  the  Corporate  Assets  (defined  below),  and  except  the
Transferred Assets (defined below), for the consideration and upon the terms and
conditions hereinafter set forth.

         C.  The  Buyer  desires  to  purchase  the  Corporate  Stock  with  the
Corporation  retaining the Corporate Assets (other than the Transferred  Assets)
and the Corporate  Liabilities  (defined below) from the Seller,  and the Seller
desires to sell,  convey,  assign and transfer to the Buyer, the Corporate Stock
with the Corporation  retaining the Corporate Assets (other than the Transferred
Assets)  and the  Corporate  Liabilities,  all in the manner and  subject to the
terms and conditions set forth in this Agreement.

         NOW  THEREFORE,   in  consideration  of  the  mutual   representations,
warranties,  covenants and  agreements set forth herein and of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Seller and the Buyer agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

         1.1 DEFINITIONS.  As used herein, the following terms have the meanings
set forth below:

                   "Accounts  Receivable" means all accounts  receivable and the
right to  payment  from  customers  of the  Seller  and the full  benefit of all
security  for  such  accounts  or  debts   including  all  accounts   receivable
representing  amounts receivable in respect of goods shipped or products sold or
services rendered to customers.

                  "Affiliate"  means,  with  respect to a specific  Person,  any
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common  control with the Person  specified.  The
term "control" means the possession,  direct or indirect, of the power to direct
or cause the  direction  of the  management  and  policies of a Person,  whether
through ownership, by contract or otherwise.

                  "Black Lung  Liabilities"  shall mean any Liability or benefit
obligations  related to black  lung  claims  and  benefits  under the Black Lung
Benefits Act of 1972, 30 U.S.C. ss.ss. 901 et


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SEQ.,  the Federal Mine Safety and Health Act of 1977, 30 U.S.C.  ss.ss.  801 ET
SEQ_, the Black Lung Benefits Reform Act of 1977,  Pub. L. No. 95-239,  92 Stat.
95 (1978), the Black Lung Benefits Amendments of 1981, Pub. L. No. 97-119, Title
11, 95 Stat.  1643, in each case as amended,  if  applicable,  and  occupational
pneumoconiosis, silicosis or other lung disease liabilities and benefits arising
under state law or  regulation  or any other  Federal law or  regulation  now or
hereafter in existence.

                  "Business"  shall  mean the  business  of the  Corporation  in
exploring for, mining, loading and shipping coal from the Real Property.

                  "Business Days" means any day other than a Saturday, Sunday or
other day on which  national  or state  banking  associations  are  required  or
permitted by law to be closed in Alabama.

                  "Claim" means any written action, suit,  Proceeding,  hearing,
investigation, litigation, charge, complaint, claim, or demand.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Corporate  Liabilities" means Liabilities of the Corporation,
including any and all accrued  liabilities due to be paid in the future,  listed
on Schedule 4.23, and which Schedule 4.23 shall be updated weekly and on the day
before the Closing and provided to the Buyer.

                  "Davis  Creek  Property"  means the  property  subject to that
certain  Coal Mining Lease dated  February,  2005  between  United  States Steel
Corporation  and Mann Steel  Products,  Inc and that  certain  Coal Mining Lease
dated  April,  2005 between  RGGS Land and  Minerals  Ltd.,  L.P. and Mann Steel
Products, Inc.

                  "Employees"  mean the employees of the Corporation at the date
of the Closing.

                  "Environmental  Law" means any  applicable  federal,  state or
local law, statute,  rule,  regulation or ordinance  relating to the regulation,
pollution,  preservation or protection of human health, safety, the environment,
or  natural  resources  or to  emissions,  discharges,  Releases  or  threatened
Releases of  pollutants,  contaminants,  Hazardous  Materials or wastes into the
environment  (including ambient air, soil surface water, ground water, wetlands,
land or  subsurface  strata),  including,  but not limited to, common law claims
such as nuisance, negligence and trespass.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974,  as  amended.  "GAAP"  means  generally  accepted  accounting  principles,
consistently applied.

                  "Governmental    Authority"   means   any   court,   tribunal,
arbitrator,  authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.


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                  "Hazardous   Materials"   means  (a)  petroleum  or  petroleum
products,  fractions,  derivatives  or  additives,  natural  or  synthetic  gas,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls and radon
gas; (b) any  substances  defined as or included in the definition of "hazardous
wastes,"  "hazardous   materials,"   "extremely  hazardous  wastes,"  "extremely
hazardous substances,"  "restricted hazardous wastes," "toxic substances," toxic
chemicals or "toxic  pollutants,"  "contaminants"  or  "pollutants"  or words of
similar  import  under  any  Environmental   Law;  (c)  radioactive   materials,
substances and waste,  and radiation;  and (d) any other  substance  exposure to
which is regulated under any Environmental Law.

                  "Indebtedness"  of any Person  means any  obligations  of such
Person,  whether or not  contingent,  (a) for borrowed  money,  (b) evidenced by
notes, bonds,  indentures or similar instruments,  (c) for the deferred purchase
price of goods and services,  other than trade payables incurred in the ordinary
course  of  business,  (d)  under  capital  leases,  and  (e) in the  nature  of
guarantees of the obligations  described in clauses (a) through (d) above of any
other Person.

                  "Knowledge"  means  an  individual  will  be  deemed  to  have
"Knowledge" of a particular  fact or other matter if such individual is actually
aware of such fact or other  matter,  provided  that,  with  respect  to Seller,
Seller will be deemed to have  "Knowledge" of a particular fact or other matter,
if any  officer or  director  of the  Corporation,  the  geologist,  or the mine
superintendent at each of the Corporation's mines is actually aware of such fact
or other matter.

                  "Laws"   means  all  laws,   statutes,   rules,   regulations,
ordinances  and other  pronouncements  having  the  effect of law of the  United
States,  any foreign country or any domestic or foreign state,  county,  city or
other  political  subdivision  or of any  Governmental  Authority  and includes,
without limitation, all Environmental Laws.

                  "Liabilities" means all Indebtedness,  obligations, claims and
other liabilities of a Person, whether absolute, accrued,  contingent,  fixed or
otherwise or whether due or to become due.

                  "Liens"  means  any  mortgage,  pledge,  assessment,  security
interest,  lease, judgment lien, tax lien, mechanic's lien,  materialman's lien,
other lien, adverse Claim, levy, charge, Option, right of first refusal, charge,
debenture,  indenture, deed of trust, right-of-way,  restriction,  encroachment,
license,  lease, security agreement, or other encumbrance of any kind, and other
restrictions or limitations on the use or ownership of real or personal property
or  irregularities  in title thereto or any  conditional  sale  contract,  title
retention contract or other contract to give any of the foregoing.

                  "Loss"  means any loss,  Claim,  damage,  liability or expense
(including reasonable attorneys' fees).

                  "Material  Adverse  Effect" means (a) an adverse effect on the
validity or enforceability of this Agreement or any of the Related Agreements in
any material  respect,  (b) an adverse  effect on the  condition  (financial  or
other), business, assets, results of operations,  ability to conduct business or
properties of the Seller or the Buyer (as applicable),  or the Corporate Assets,
taken as a whole, in any material  respect,  or (c) an impairment of the ability
of the Seller


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or the Buyer (as applicable) to fulfill its obligations  under this Agreement or
any of the Related Agreements in any material respect.

                  "Mining  Title"  means  a  leasehold  interest  in  all  or an
undivided  interest in surface and/or coal together with no less than those real
properties,  easements,  licenses,  privileges, rights, and appurtenances as are
necessary to mine, remove,  process,  and transport coal in the manner presently
conducted.

                  "Non-Competition  Agreements" means Non-competition Agreements
to be entered into with each Owner in Form  satisfactory to the parties pursuant
to which  each  Owner  will  agree that for a period of five years from the date
hereof,  such Owner  shall not  directly  or  indirectly  own,  operate or be an
employee  of a coal  mine or coal  mining  business  in the  State  of  Alabama;
provided,  however,  that either Owner may be an employee or  consultant  to the
Buyer. The form of Non-Competition  Agreement shall be added as Exhibit A hereto
on or before June 30, 2007.

                  "Non-Reclamation  Environmental  Laws" means any Environmental
Law other than (i) the Surface  Mining Control and  Reclamation  Act of 1977, 30
U.S.C. 1201 et seq., as amended ("SMCRA") and (ii) any applicable  Alabama state
statute  existing or adopted to implement  and enforce SMCRA and the federal and
state regulations promulgated thereunder.

                  "Non-Reclamation  Environmental Liabilities" means Liabilities
arising from any  Environmental  Law other than under the Surface Mining Control
and Reclamation Act of 1977, 30 U.S.C.  ss. 1201 ET SEQ., as amended  ("SMCRA"),
and any  applicable  Alabama  state statue  existing or adopted to implement and
enforce SMCRA, and the federal and state regulations promulgated thereunder.

                  "Non-Reclamation  Permit"  means any  Permit  issued to Seller
under  authority of any law or regulation  other than SMCRA or its Alabama state
law equivalent and the regulations promulgated thereunder.

                  "Order"  means  any writ,  judgment,  decree,  injunction,  or
similar  order  of  any  Governmental  Authority,  in  each  such  case  whether
preliminary or final.

                  "Permit"    means   any   permit,    approval,    certificate,
registration,   license  or  other  authorization  required  under  any  law  or
regulation  to  operate  the  Business,  other  than the  Excluded  Permits  (as
hereafter defined).

                  "Permitted  Lien"  means  any Lien  (a)  which  is  listed  on
Schedule  1.1(a);  (b)  created  by the  Buyer;  (c) in favor of  lessors of any
Purchased  Asset to secure  payment of rentals or  royalties;  (d)  constituting
easements,  rights-of-way,  restrictions or minor defects or  irregularities  in
title incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions,  easements, licenses or restrictions on the use of the Real
Property or minor imperfections in title thereto,  none of which individually or
in the aggregate will have a Material Adverse Effect on mining operations on the
Real Property; (e) imposed by any Governmental Authority for Taxes, assessments,
or  charges  not yet due or which  are  being  contested  in good  faith  and by
appropriate   proceedings,   if  adequate  reserves  with  respect  thereto  are
maintained on the books of the  Corporation in accordance with GAAP; (f) imposed
by Law which was incurred


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in  the  ordinary  course  of  business,  such  as  carriers',  warehousemen's',
landlords', and mechanics' Liens and other similar Liens arising in the ordinary
course of business,  none of which  individually or in the aggregate will have a
Material Adverse Effect on mining operations on the Real Property;  (g) pursuant
to a pledge or deposit under workers' compensation,  unemployment  insurance, or
other  social  security  legislation  or securing  the  liability  to  insurance
carriers; (h) pursuant to a pledge or deposit to secure the performance of bids,
trade  contracts,  leases,  statutory  obligations,  surety  and  appeal  bonds,
performance  bonds,  and other  obligations  of a like  nature  incurred  in the
ordinary course of business; (i) consisting of rights and easements of owners of
undivided  interests in any Real Property where the  Corporation  owns less than
100% of the fee  interest;  (j)  consisting of rights and interests of owners of
interests in the surface of any Real Property where the Corporation does not own
or lease such  surface  interest;  (k) of lessees  of  minerals  other than coal
(including oil and gas) where the  Corporation  does not own or lease such other
minerals; (1) consisting of rights of others to subjacent or lateral support and
absence of subsidence  rights; (m) consisting of obligations or duties affecting
any property of the  Corporation to any  municipality  or public  authority with
respect to any franchise,  grant, license, or permit, none of which individually
or in the aggregate will have a Material Adverse Effect on mining  operations on
the Real Property;  and (n) constituting any extension,  renewal, or replacement
of the foregoing.

                  "Person"  means  any  natural  person,  corporation,   limited
liability company,  general partnership,  limited  partnership,  proprietorship,
other business organization,  entity, trust, union,  association or Governmental
Authority.

                  "Proceeding" means any action, suit, proceeding,  arbitration,
investigation or audit, whether or not by any Governmental Authority.

                  "Related Agreements" means (a) the Non-Competition  Agreements
and (b) any other  agreement,  certificate or similar document to be executed by
any party hereto as required by this Agreement.

                  "Related Person" means, with respect to a specific Person, any
officer,   director,    manager,    employee,   agent,   shareholder,    member,
representative, successor or assign of such Person.

                  "Release" means any release,  issuance,  disposal,  discharge,
dispersal,  leaching or migration into the indoor or outdoor environment or into
or out of any property,  including the movement of Hazardous  Materials  through
the  air,  soil,  surface  water,   ground  water  or  property  other  than  as
specifically  authorized by and in compliance  with all  Environmental  Laws and
Environmental Permits.

                  "Taxes"  means  any  and  all  taxes,  fees,  levies,  duties,
tariffs,  import and other charges,  imposed by any taxing  authority,  together
with any related  interest,  penalties or other  additions to tax, or additional
amounts imposed by any taxing authority,  and without limiting the generality of
the foregoing, shall include net income alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, franchise, profits,
license, transfer, recording, escheat, withholding, payroll, employment, excise,
severance, stamp, occupation,


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premium, property,  windfall profit,  environmental,  custom duty, or other tax,
governmental fee or other like assessment or charge of any kind whatsoever.

                  "Tax Returns" means all federal,  state, local, provincial and
foreign returns, declarations,  claims for refunds, forms, statements,  reports,
schedules,  and information  returns or statements,  and any amendments  thereof
(including,  without  limitation,  any  related  or  supporting  information  or
Schedule  attached  thereto)  required to be filed with any Taxing  authority in
connection with any Tax or Taxes.

         1.2      RULES OF INTERPRETATION.

                  (a)      The  singular  includes  the  plural  and the  plural
includes the singular.

                  (b)      The word "or" is not exclusive.

                  (c)      A  reference  to  a  Person  includes  its  permitted
successors  and  permitted  assigns.  (d) The words  "include,"  "includes"  and
"including" are not limiting.

                  (e)      A reference  in a document  to an  Article,  Section,
Exhibit,  Schedule,  Annex or  Appendix  is to the  Article,  Section,  Exhibit,
Schedule,  Annex  or  Appendix  of such  document  unless  otherwise  indicated.
Exhibits,  Schedules,  Annexes or  Appendices  to any  document  shall be deemed
incorporated  by reference in such  document.  To the extent that any disclosure
set forth in any  particular  Schedule  hereto is applicable  to the  disclosure
required to be made in any other  Schedule  hereto,  such  disclosure  shall for
purposes of this Agreement be deemed to be made on all relevant Schedules.

                  (f)      References to any  document,  instrument or agreement
(a) shall include all exhibits,  schedules and other  attachments  thereto,  (b)
shall include all  documents,  instruments  or agreements  issued or executed in
replacement thereof, and (c) shall mean such document,  instrument or agreement,
or replacement or predecessor  thereto,  as amended,  modified and  supplemented
from time to time and in effect at any given time.

                  (g)      The words  "hereof,"  "herein"  and  "hereunder"  and
words of similar  import when used in any document  shall refer to such document
as a whole and not to any particular provision of such document.

                  (h)      References to "days" shall mean calendar days, unless
the term "Business Days" shall be used.

                  (i)      This Agreement is the result of  negotiations  among,
and has been reviewed by the parties hereto;  accordingly,  this Agreement shall
be deemed to be the product of all of the  parties,  and no  ambiguity  shall be
construed in favor of or against any party.


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                                    ARTICLE 2
                           PURCHASE AND SALE OF STOCK

         2.1      PURCHASE AND SALE OF STOCK.  Upon the terms and subject to the
conditions  contained in this Agreement,  at the Closing, the Owners shall sell,
assign, transfer and convey to the Buyer and the Buyer shall purchase,  acquire,
and accept from the Owners the Owners' Stock in the Corporation  (the "Corporate
Stock"), and being all of the issued, outstanding stock of the Corporation;  the
Corporation shall retain all of the Corporation's  right, title, and interest in
and  to all of  its  assets  (the  "Corporate  Assets"),  not  herein  otherwise
transferred, including but not limited to the following assets:

                  (a)      the  leased  real  property  identified  on  Schedule
2.1(a) including the  Corporation's  Alabama mines (the "Real Property") and all
leases related thereto ( the "Real Property Leases"),  all of such Real Property
being shown on the maps attached as collective Schedule 4.16(b);

                  (b)      the  machinery,   equipment,   furniture,   fixtures,
vehicles,  tools,  supplies,  improvements and other tangible personal property,
having a per item value of not less than ONE THOUSAND ($1000.00) DOLLARS,  owned
by the  Corporation  and identified on Schedule  2.1(b) (the "Owned  Equipment")
and, to the extent transferable, all rights of the Corporation to warranties and
licenses received from manufacturers for the Owned Equipment;

                  (c)      the  machinery,   equipment,   furniture,   fixtures,
vehicles, tools, supplies, improvements and other tangible personal property, if
any, having a per item value of not less than ONE THOUSAND  ($1,000.00) DOLLARS,
which is leased by the  Corporation  and  identified on Schedule  2.1(c)(i) (the
"Leased Equipment",  and collectively with the Owned Equipment, the "Equipment")
and, to the extent transferable, all rights of the Corporation to warranties and
licenses received from  manufacturers  and lessors of the Leased Equipment.  The
Leased  Equipment is leased under the  equipment  leases  identified on Schedule
2.1(c)(ii) (the "Equipment  Leases" and together with the Real Property  Leases,
the "Leases");

                  (d)      all of the Corporation's Permits, approvals,  orders,
authorizations,  consents, licenses, certificates, franchises, exemptions of, or
filings or  registrations  with or issued by any Governmental  Authority,  which
have been  issued or  granted  to or are  owned,  used or held by the  Seller in
connection with the Business and the Real Property and all pending  applications
therefore,  to the extent transfer is permitted by law, all of which Permits are
listed on Schedule 2.1(d);

                  (e)      all rights and  interests of the  Corporation  in, to
and under the contracts,  including but not limited to the coal supply contracts
(the "Contract(s)")  which are listed on Schedule 2.1(e) hereto and all accounts
receivable due therefrom;

                  (f)      all stockpiled coal inventory, pit inventory and coal
located on the Real Property, at any loadout facility,  and in transit under any
Contract as of the  Closing,  [as  determined  by a survey  conducted on the day
before the Closing] (the "Stockpile and Pit Inventory");


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                  (g)      all maps, reserve studies,  engineering reports, core
hole and exploration data, title reports and opinions, mine projections, and all
other  books,  records,  files and other  documentation  and  written  materials
relating  to  the  business  of  the  Corporation  and  Corporate   Assets  (the
"Records");

                  (h)      all Real  Property,  Equipment  and  other  assets of
every  kind and nature  used by Seller in the mining  business  or  acquired  by
Seller for use in the business of the Corporation or associated therewith; and

                  (i)      all accounts of whatever  nature,  including  but not
limited to operation  accounts,  deposits,  trusts accounts,  payroll  accounts,
certificates of deposit,  escrow accounts,  letters of credit, and prepaid items
or accounts,  used in the operation of the business of the  Corporation,  all of
which are listed in attached Schedule 2.1 (i).

         At the Closing,  the Stock and the  Corporate  Assets will be delivered
free and clear of all Liens  other than  Permitted  Liens.  Except as  otherwise
expressly provided herein, the Corporate Assets will otherwise be transferred on
an AS IS, WHERE IS basis and with all faults.

         2.2      TRANSFERRED  ASSETS.  Notwithstanding any provision of Section
2.1, the Owners  shall  retain all of its right,  title and interest in, and the
definition of Corporate  Assets shall not include any of the equipment listed on
Schedule 2.2 (collectively, the "Transferred Assets").

         2.3      NON-ASSIGNMENT OF ASSETS.  This Agreement shall not constitute
an  agreement  to assign or transfer  any assets of the Seller,  if an attempted
transfer or assignment thereof,  without the approval,  authorization or consent
of, or granting or issuance of any license or permit by, any third party thereto
(or with  respect  thereto),  would  constitute  a breach  thereof or in any way
negatively  affect the rights of the Seller or the  Buyer,  as the  assignee  or
transferee of such asset, as the case may be, thereunder.  If the Closing occurs
and such authorization, consent, approval, license or permit is required for the
transfer or assignment of any asset of the Seller at or before the Closing,  but
not  obtained,  the  Seller  will  cooperate  with  the  Buyer  without  further
consideration  (other than as provided in clause (b) of this Section 2.3) in any
arrangement reasonably acceptable to the Buyer and the Seller,  designed to both
(a)  provide the Buyer with the  benefits  of any such asset,  and (b) cause the
Buyer to bear all costs and obligations of or under any such asset. Any transfer
or  assignment  to the  Buyer of any  asset  that  shall  require  the  consent,
approval,  authorization  of, or  granting of any license or permit by any third
party for such assignment or transfer as aforesaid shall be made subject to such
consent, approval, authorization, license or permit being obtained.

         2.4      AMOUNTS HELD IN TRUST. Any amounts received by the Corporation
after the Closing  with  respect to any  Transferred  Asset shall be held by the
Corporation in trust for the Owners until promptly (not later than 15 days) paid
to the Owners.  Likewise,  any amounts  received by the Owners after the Closing
payable to the Corporation  (other than with respect to the Transferred  Assets)
shall be held by the Owners in trust for the Buyer or Corporation until promptly
(not later than 15 days) paid to the Buyer or Corporation, as appropriate.

         2.5      TRANSFER TAXES.  The Buyer shall be liable for all sales,  use
and other  transfer Taxes imposed by law upon Buyer and all filing and recording
fees arising from or relating to the


                                       8
<PAGE>


consummation of the transactions  contemplated by this Agreement,  including all
transfer Taxes imposed by law upon Buyer with respect to the Real Property.

         2.6      WORKING CAPITAL ADJUSTMENT.  The Purchase Price (as defined in
Section3.3) shall be increased or decreased, as applicable,  with respect to the
working  capital of the Corporation as follows  (hereinafter  referred to as the
"Working Capital Adjustment"):

                  (a)      The  Purchase  Price shall be increased by an amount,
if any, by which Working  Capital (as defined  below) of the  Corporation at the
end of the Business  day prior to Closing  exceeds  $0.00 (the  "Target  Working
Capital").

                  (b)      The  Purchase  Price shall be decreased by an amount,
if any, by which Working  Capital of the  Corporation at the end of the Business
day prior to Closing is less than the Target Working Capital.

                  (c)      No later than  thirty  (30) days  after the  Closing,
Seller  will  cause its  regular  accountant  to  prepare a  calculation  of the
Corporation's  working capital (the "Closing Working Capital  Statement") of the
Corporation as of the Closing Date,  using the same  methodologies,  assumptions
and  accounting  practices as were used in the  preparation  of the December 31,
2006 balance sheet of the Corporation.  If the Closing Working Capital Statement
results  in a  Working  Capital  Adjustment,  the  party  required  to  pay  the
adjustment  shall pay the  adjustment  to the other party no later than five (5)
business days after the date on which the Closing Working  Capital  Statement is
delivered.

                  (d)      For purposes hereof, the term "working capital" shall
mean the  Corporation's  current  assets less its current  liabilities as of the
close of business.  Current assets and current  liabilities  used in calculating
working capital shall be those assets and liabilities listed on Schedule 2.6(d).

         2.7      CORPORATE INDEBTEDNESS.  At or prior to Closing, Sellers shall
cause all of the Equipment  financing  obligations of the Corporation  listed on
Schedule 2.7 to be repaid in full.

                                    ARTICLE 3
                     PURCHASE PRICE; CLOSING AND DELIVERIES

         3.1      CLOSING.  The parties shall hold a closing (the  "Closing") as
soon as reasonably  possible after  satisfaction of the conditions to closing in
Article 7, but in no event later than  September 30, 2007, or such later date to
which the Seller and the Buyer shall agree (the "Closing Date").

         3.2      SELLER'S  DELIVERIES.  The  sale,  transfer,   assignment  and
delivery  by  the  Owners  of  all  of  the  outstanding,  issued  Stock  of the
Corporation to the Buyer, as herein  provided,  shall be effected on the Closing
Date by each Seller's  execution and the delivery of: (i) the Related Agreements
to  which  the  Seller  is a party,  (ii)  other  instruments  of  transfer  and
conveyance  reasonably  satisfactory  in form and  substance  to counsel for the
Buyer and the Seller, which shall include, without limitation,  all documents of
title  and  instruments  of  conveyance  necessary  to  transfer  record  and/or
beneficial  ownership to the Buyer,  of the  Corporate  Stock,  and any property
constituting Corporate Assets owned by the Corporation which requires execution,


                                       9
<PAGE>


endorsement  and/or delivery of a document in order to vest record or beneficial
ownership thereof in the Buyer, (iii) a certificate executed by Seller as to the
accuracy of the  representations and warranties as of the date of this Agreement
and as of the Closing Date, and as to Seller's  compliance  with and performance
of the covenants and  obligations  to be performed or complied with at or before
the  Closing,  (iv) a  certificate  of the  Secretary of Seller  certifying  and
attaching copies of all requisite resolutions of Seller's Board of Directors and
Shareholders  approving  the  execution  and  delivery  of  this  Agreement  and
consummation  of the  contemplated  transactions;  and (v)  evidence  reasonably
satisfactory to Buyer of the repayment of the corporate obligations set forth in
Schedule 2.7.

         3.3      SELLER'S DELIVERIES. At the Closing:

                  (a)      In exchange for the Corporate  Stock, the Buyer shall
transfer to or at the direction of the Owners the following consideration,  (the
"Purchase Price"): Fifty-Five Million Dollars ($55,000,000.00),  payable in cash
in  immediately  available  funds to the  account or accounts  specified  by the
Owners;

                  (b)      The Seller shall execute and deliver to the Buyer the
Related  Agreements  to which the Buyer is a party and such other  agreements as
are reasonably satisfactory in form and substance to counsel for the Seller; and

                  (c)      Buyer shall deliver to Seller a certificate  executed
by Buyer as to the accuracy of the representations and warranties as of the date
of this Agreement and as of the Closing Date, and as to Buyer's  compliance with
and  performance  of the covenants and  obligations  to be performed or complied
with at or before the  Closing,  and a  certificate  of the  Secretary  of Buyer
certifying and attaching copies of all requisite resolutions of Buyer's Board of
Directors   approving  the   execution  and  delivery  of  this   Agreement  and
consummation of the contemplated transactions.

                                    ARTICLE 4
                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

         In order to induce the Buyer to enter into this Agreement,  each Seller
jointly and severally makes the  representations  and warranties set forth below
which are true, correct and complete on the date hereof (subject to the approval
of each Seller's Board of Directors) and shall be true,  correct and complete as
of the Closing:

         4.1      ORGANIZATION.  The Corporation is a corporation duly organized
and validly existing under the Laws of the State of Alabama.

         4.2      AUTHORIZATION AND VALIDITY.  The Corporation has all requisite
corporate  power and  authority  to enter into this  Agreement  and the  Related
Agreements  to which it is a party,  subject  to the  receipt  of the  consents,
waivers,  authorizations  and approvals set forth on Schedule 4.2. The execution
and delivery of this Agreement and the performance of the obligations  hereunder
have been duly authorized by all necessary  corporate action by the Corporation.
This  Agreement and the Related  Agreements to which each Seller is a party have
been, or will be,


                                       10
<PAGE>


duly executed by each Seller party thereto and  constitute its valid and binding
obligation, enforceable against it in accordance with their terms.

         4.3      NO  CONFLICT  OR  VIOLATION.  Subject  to the  receipt  of the
consents,  waivers,  authorizations and approvals set forth on Schedule 4.2, the
execution,  delivery and  performance  by each Seller of this  Agreement and the
Related  Agreements  to which it is a party (a) do not and will not  violate  or
conflict with any provision of the organizational or governing  documents of the
Corporation,  (b) do not and will not  violate any  provision  of any Law or any
Order  applicable to such Seller,  and (c) do not and will not violate or result
in a  breach  of or  constitute  (with  due  notice  or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which such Seller is a party
or by which it is bound or to which any of such  Seller's  properties  or assets
are subject,  except for any such violation,  conflict,  breach or default which
would not reasonably be expected to have a Material Adverse Effect.

         4.4      CONSENTS  AND  APPROVALS.  Schedule  4.2 sets forth a true and
complete list of each material consent, waiver, authorization or approval of any
Governmental  Authority  or of any other  Person that is required in  connection
with the execution,  delivery and performance of this  Agreement,  including but
not limited to the  consents of the lessors  under the Leases and  consents  and
approvals of other parties to any of the Contracts (the  "Consents")  other than
such  consents,  waivers,  authorizations  or  approvals  which  will not have a
Material Adverse Effect.

         4.5      COMPLIANCE  WITH LAW.  Except as set forth on Schedule 4.5, no
Seller  has  received  written  notice  or,  to  Seller's  Knowledge,  any other
communication (whether written or oral), of any violation of any Law, nor is any
Seller in default with respect to any Order, applicable to the Corporate Assets,
other than violations or defaults the consequences of which would not reasonably
be expected to have a Material Adverse Effect.

         4.6      LITIGATION.  Except as set forth on Schedule 4.6, there are no
Claims, actions,  suits,  Proceedings or investigations related to the Corporate
Assets or Business pending or threatened in writing, before any federal or state
court brought by or against any Seller that could reasonably be expected to have
a Material  Adverse  Effect,  nor to  Seller's  Knowledge,  has any such  Claim,
action, suit, or investigation been threatened  verbally.  No event has occurred
or  circumstance  exists as a result of action or  inaction  by  Seller,  or, to
Seller's  Knowledge,  by any other  person,  that may give rise to or serve as a
basis for the  commencement  of any such  Claim,  action,  suit,  Proceeding  or
investigation.  Seller has  delivered  or made  available to Buyer copies of all
pleadings, correspondence, and other documents relating to each matter listed in
Schedule 4.6.

         4.7      DISPUTES.  Except as set forth in  Schedule  4.7,  to Seller's
Knowledge  there are no existing  Claims by or disputes  between  Seller and any
other Person owning,  controlling or occupying lands or realty adjoining or near
any  of  the  Real  Property  or  the  Business  operations   regarding  adverse
possession,  the  location of boundary  lines,  encroachments,  mineral  rights,
subsidence,  water quality or quantity, flood damage, blasting damage, trespass,
waste,  transportation of coal or other materials, noise, dust, nuisances or any
other similar matter.


                                       11
<PAGE>


         4.8      TITLE.  The Seller will have, and at the Closing will transfer
to Buyer,  good and  marketable  title to the  Corporate  Stock,  the  Corporate
Assets,  and  Records.  At the  Closing,  the  Corporation  shall own all of the
Corporate Assets free and clear of all Liens, other than Permitted Liens.

         4.9      PERSONAL  PROPERTY  USED IN THE  BUSINESS.  Schedule  4.9 sets
forth  a true  and  complete  list  of all the  material  machinery,  equipment,
vehicles and other tangible personal property owned or leased by Corporation and
used in the Business.  Except as shown on Schedule 4.9,  Corporation has used no
other such material  personal property in the ordinary course of Business during
the twelve (12) months  preceding the date hereof except such personal  property
as has  been  junked,  scrapped  or sold and  replaced  by  equivalent  personal
property.

         4.10     CONTRACTS AND LEASES.

                  (a)      Other than as set forth on Schedule  4.10,  no Seller
nor, to any Seller's  Knowledge,  any other party to any of the Contracts or the
Leases,  has  commenced  any  action  against  any of the  parties to any of the
Contracts or the Leases or given or received any written  notice or, to Seller's
Knowledge,  any other form of notice, of any material default or violation under
any Contract or Lease.  Each of the  Contracts and the Leases is, and will be at
the Closing, valid, binding and in full force and effect against the Corporation
and, to the Seller's  knowledge the other parties  thereto,  and is  enforceable
according to its terms,  except as otherwise set forth on Schedule 4.10.  Seller
is not in material default under any Lease or Contract and no event has occurred
which,  with  the  passage  of time or  expiration  of any  grace  period  would
constitute  a  material  default  of  Seller's  obligations  under such Lease or
Contract,  and to  Seller's  Knowledge,  no other  party  to any  such  Lease or
Contract is in default thereunder.

         4.11     RENEGOTIATIONS.  Except as set forth on Schedule  4.11,  there
are no  renegotiations  of, or attempts to renegotiate,  any Contracts or Leases
and no Person has made written demand or, to Seller's  Knowledge,  other form of
demand (whether written or oral) for such renegotiation.

         4.12     EQUIPMENT LEASES.  Schedule  2.1(c)(ii) is a true and complete
list of all  Equipment  Leases,  indicating  the  names of the  parties  to such
Leases,  each item of property  or  equipment  subject to such lease,  and as to
capital leases, the payoff amount under each such capital lease that, if paid to
the lessor thereunder,  would fully satisfy the remaining obligations under such
capital lease.

         4.13     TAX RETURNS. The Corporation has filed all Tax Returns that it
was  required to file.  All such Tax Returns  were  correct and  complete in all
material  respects.  All material Taxes owed by the Corporation  (whether or not
shown on any Tax Return) have been paid.  The  Corporation  is not currently the
beneficiary of any extension of time within which to file any Income Tax Return.
The  Corporation  has  withheld  and paid all  Taxes  required  to be have  been
withheld and paid in  connection  with  amounts  paid or owing to any  employee,
independent  contractor,  creditor,  stockholder,  or other third party, and all
Forms W-2 and 1099  required with respect  thereto have been properly  completed
and timely filed.

         4.14     LABOR MATTERS.  The Seller represents and warrants that (a) no
Employee of the  Corporation is currently  represented by a labor union or other
collective labor organization or


                                       12
<PAGE>


association;  (b) there are no collective  bargaining agreements or memoranda of
understanding  by which the Corporation is bound or applicable to any Employees;
(c)  to  the  Knowledge  of  the  Seller,  there  is  no  union  or  independent
organizational  activity among any Employees underway;  (d) there are no pending
or threatened or actual actions  against the  Corporation by any employees;  (e)
all  employees  have has been paid as  required;  and (f) all  bonuses and other
earned amounts have been paid.

         4.15     FINANCIAL  ADVISORS.  Neither the Seller nor any Person on the
Seller's behalf has agreed to pay any brokerage fee,  finder's fee or commission
which could become the obligation of the Buyer with respect to the  transactions
contemplated by this Agreement.

         4.16     REAL PROPERTY

                  (a)      Seller (i) has  heretofore  made  available  to Buyer
true and complete  copies of the Leases  (inclusive of  subleases)  covering the
Real Property and (ii) has set forth on the list in Schedule 2.1(a) with respect
to each Real Property,  as applicable:  the parties;  the date of the agreement;
recording  information;  recoupment  balances as of May 31, 2007; and overriding
royalties.

                  (b)      To the Seller's  Knowledge,  the maps attached hereto
as  collective  Schedule  4.16(b)  accurately  and  completely  depicts the Real
Property in all  material  respects;  provided,  however,  that such maps do not
depict,  and were not prepared in accordance  with, an engineer's  survey of the
Real  Property,  but rather depicts an  approximate  representation  of the Real
Property.

                  (c)      The Seller has Mining Title to the Real Property.

                  (d)      The Seller has obtained all  easements  and rights of
way required to use and operate the Real  Property in all  material  respects in
the manner in which the Real  Property is currently  being used and operated and
in the manner in which the  Permits  affecting  the  specific  Real  Property so
provide.

                  (e)      Except as set forth on Schedule  4.16(e),  the Seller
has not received  written  notice of, and has no Knowledge  of, any  Proceedings
pending or, to the  Knowledge  of the Seller,  threatened  regarding  the use or
possession of the Real  Property,  including  subsidence  claims,  condemnation,
expropriation or similar Claims.

                  (f)      Except  as  set  forth  on  Schedule   4.16(f),   the
Corporation is not a party to any lease, assignment or similar arrangement under
which the  Corporation  is a lessor,  grantor,  or assignor  with respect to, or
under which any portion of, the Real  Property is made  available for use by any
third party.

                  (g)      Except as set forth on Schedule 4.16(g) and except as
provided in the Real Property Leases,  to Seller's  Knowledge:  (i) there are no
matters  that  materially  adversely  affect  the  rights  of Seller to the Real
Property,  and (ii) each of the  Lessors  under  the Real  Property  Leases  has
adequate  rights to the Real Property to enter into the Real Property Leases and
perform its obligations thereunder.


                                       13
<PAGE>


                  (h)      to Seller's Knowledge, there are no existing disputes
between the  Corporation,  on one hand, and any of the lessors or sublessor with
respect to the Real  Property or any other  party  having  rights  under or with
respect  to any of the Real  Property,  on the  other  hand  that  would  have a
material  adverse  effect on the  Corporation's  rights under the Real  Property
Leases.

                  (i)      Except as shown on Schedule 4.16(i),  Seller has done
nothing  to  impair  or  encumber  the Real  Property  Leases  or any  fixtures,
improvements and transportation facilities located on the Real Property;

                  (j)      Except as set forth in  Schedule 4.16(j),  Seller has
received  no  written  notice or, to  Seller's  Knowledge,  other  communication
(whether  written or oral) of claims that the Corporation has failed to mine any
coal which it should have mined or mined any coal that it did not have the right
to mine or mined any coal in such reckless and imprudent fashion as to give rise
to any claims for loss, waste or trespass and, to Seller's  Knowledge,  no facts
exist upon which such a claim could be based. Seller has made available to Buyer
the most recent  complete and correct  version of all of the following  items to
the extent such items are (i) in the  possession or under the control of Seller,
(ii) relate to or affect the Corporate  Assets and Business,  including the coal
reserves, coal ownership, mining conditions, mines, and mining plans on the Real
Property,  and (iii)  material  or  relevant  to the  conduct  of the  Business:
geological data, reserve data, existing mine maps,  surveys,  core hole logs and
associated data, coal measurements,  coal samples, lithologic data, coal reserve
calculations or reports,  washability  analyses or reports,  mine plans,  mining
permit applications and supporting data, engineering studies and all other books
and records, information, maps, reports and data.

                  (k)      Except  as  shown  on  Schedule  4.16(k),   the  Real
Property  includes all real  property and interests in real property used by the
Corporation  in the  operation  of the  Business  during the twelve  (12) months
preceding the date hereof or in which Seller has an interest and which is useful
in mining the Real Property.

         4.17     ENVIRONMENTAL MATTERS. Except as set forth on Schedule 4.17:

                  (a)      The Corporation has complied and is now in compliance
in  all  material  respects,  with  all  Environmental  Laws  applicable  to the
Corporate Assets.

                  (b)      During the prior five (5) years,  the Corporation has
not received any written, or to Seller's Knowledge, other communication from any
Governmental Authority or any other Person alleging that the Business and/or the
Corporate Assets are not in full compliance with any  Environmental  Law, except
for notices of violation received in the ordinary course of business.

                  (c)      To  the  Knowledge  of the  Seller,  no  Release  has
occurred on or beneath the Real  Property,  except for  inventories of Hazardous
Materials to be used, and wastes generated therefrom,  in the ordinary course of
business  of the Seller  (which  inventories  and wastes,  if any,  were and are
stored or disposed of in  accordance  with  applicable  Environmental  Laws) and
except for any such Release which would not result in a Material Adverse Effect.


                                       14
<PAGE>


                  (d)      All Permits  required  for  operation of the Business
and Corporate Assets in the manner currently  operated are described in Schedule
2.1(d). Except as otherwise disclosed in Schedule 4.17(d), the Permits described
in such Schedules are in full force and effect.  There is no Proceeding  pending
or, to the Knowledge of Seller,  threatened  which might affect (i) the validity
of any Permit, or (ii) the ability of the Corporation to obtain on or before the
Closing  Date  any  Permit  which  has not  been  obtained  at the  date of this
Agreement.

                  (e)      To Seller's Knowledge, all underground storage tanks,
and the capacity and  contents of such tanks,  located on the Real  Property are
identified in Schedule 4.17(e); and except as described in such Schedule,  there
is no asbestos contained in or forming part of any Real Property.

                  (f)      There is no Proceeding  pending against Seller, or to
Seller's  Knowledge,  any Purchased Asset, nor is any such Proceeding,  known by
Seller to be,  threatened,  in which any material violation of any Environmental
Law by Seller, or concerning a Purchased Asset is alleged,  nor to the Knowledge
of Seller is there any basis for any such Proceeding.

         4.18     RESERVES.  The  Sellers  have no  Knowledge  that the  reports
prepared  by  McGehee  Engineering  Corp.  relating  to the  Corporation's  coal
reserves that have been  delivered to the Buyer are  inaccurate or incomplete in
any material respect.

         4.19     PERMITTING.  Schedule 2.1(d) sets forth a complete and correct
list of all material  Permits,  whether for coal mining,  reclamation,  or other
operational  purposes,  currently held by the Corporation in connection with the
conduct of the Business related to the Corporate Assets.  The Permits constitute
all material permits,  licenses,  and governmental  authorizations  necessary to
conduct the Business as currently  conducted by the  Corporation.  Except as set
forth on Schedule  4.19,  the  Corporation  (a) has not been subject to any bond
forfeiture,  permit  suspension or  revocation  or similar  effort or Proceeding
instituted by any Governmental Authority, (b) is in material compliance with all
terms and  conditions  of its Permits,  (c) is in material  compliance  with all
Laws,  including,  without  limitation,  all  Environmental  Laws, or (d) is not
permit blocked on the Applicant Violator System by any Governmental Authority.

         4.20     DISTANCE  AND  POST-MINING  LAND USE  WAIVERS.  All  landowner
distance and  post-mining  land use waivers filed in connection with the Permits
are identified on Schedule 4.20.

         4.21     ADVERSE EVENTS OR CIRCUMSTANCES. Except as otherwise disclosed
in the  Schedules  hereto or in the  Financial  Statements,  the Owners  have no
Knowledge  of any event or  circumstance  that has occurred  that is  reasonably
likely  to  result  in  a  Material  Adverse  Effect  on  the  Corporation.  The
representation  contained in this Section 4.21 specifically  excludes any events
or  circumstances  generally known in the coal mining industry and any events or
circumstances  that  would  affect  the  financial  markets  or the coal  mining
industry as a whole,  including,  but not limited to, changes in laws,  rules or
regulations, general industry pricing conditions, and other changes not directly
relating to the Corporation's business or operations.

         4.22     FINANCIAL  STATEMENTS.  The Corporation has delivered to Buyer
unaudited financial  statements for the Corporation for the years ended December
31, 2005 and 2006, as well as unaudited  financial  statements  for the calendar
quarter ending March 31, 2007 (the


                                       15
<PAGE>


"Financial  Statements").  Except as set forth on Schedule 4.22, to the Seller's
knowledge the Financial  Statements are (i) complete and correct in all material
respects and have been  prepared  from the books and records of the  Corporation
and (ii)  present  fairly the  financial  condition of the  Corporation  and its
results  of  operations  as at and for the  period  then  ended.  The  Financial
Statements  have been  prepared in a consistent  manner in  conformity  with the
Corporation's historical accounting practices.

         4.23     NO  UNDISCLOSED  LIABILITIES.  Except as set forth in Schedule
4.23,  other than Debts,  liabilities  or  obligations  arising in the  ordinary
course  of  business  since  March  31,  2007,  the  Corporation  has no  Debts,
liabilities or obligations of any nature  relative to the Business and Corporate
Assets  (whether  absolute,  accrued,  contingent,  or otherwise)  that would be
required to be reflected  on the balance  sheet of the  Corporation  prepared in
accordance with GAAP. Seller has paid and satisfied all vendors and suppliers to
the Business, except for payment not yet due and payable.

         4.24     DISCLOSURE.  The  representations or warranties made by Seller
in this  Agreement,  as  qualified  by the  Schedules,  do not contain an untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements  herein or therein,  in light of the  circumstances in which they
were made, not misleading.

         4.25     RELATIONSHIPS  WITH  RELATED  PERSONS.  Except as set forth on
Schedule  4.25, no Related  Person of the  Corporation  has, or since January 1,
2004 has had,  any  material  interest in the  Corporate  Assets or any property
(whether real, personal,  or mixed and whether tangible or intangible),  used in
or pertaining to the Business.

         4.26     EMPLOYEE TERMINATIONS. The Corporation has not terminated more
than 50 employees at the Business since April 1, 2007.

         4.27     INSURANCE.  Schedule  4.27 sets forth the  insurance  policies
held by the  Corporation,  including  but not limited to liability  and property
insurance, and workers comp, including coverage for statutory black lung claims.
All listed policies are in full force and effect.

                                    ARTICLE 5
                   REPRESENTATIONS AND WARRANTIES OF THE BUYER

         In order to induce the Seller to enter into this  Agreement,  the Buyer
makes  the  representations  and  warranties  set forth  below,  which are true,
correct and complete on the date hereof and shall be true,  correct and complete
as of the Closing:

         5.1      ORGANIZATION.  The Buyer is a corporation  duly  organized and
validly existing under the Laws of the State of Tennessee,  and is authorized to
do business in every  jurisdiction in which the failure to be so qualified could
result in a Material Adverse Effect. The Buyer has all requisite corporate power
and  authority  to  own  its   properties  and  assets  and  to  consummate  the
transactions contemplated hereby.

         5.2      AUTHORIZATION  AND  VALIDITY.  The  Buyer  has  all  requisite
corporate  power and  authority  to enter into this  Agreement  and the  Related
Agreements to which it is a party.  The execution and delivery of this Agreement
and the Related Agreements to which it is a party and


                                       16
<PAGE>


the  performance  of the  obligations  hereunder and  thereunder  have been duly
authorized by all necessary  corporate  action by the Buyer.  This Agreement and
the Related Agreements to which the Buyer is a party have been, or will be, duly
executed  by  the  Buyer  and  constitute  its  valid  and  binding  obligation,
enforceable against it in accordance with their terms.

         5.3      CONSENTS AND  APPROVALS.  Except as disclosed on Schedule 5.3,
no consent,  approval or action of,  filing with or notice to, any  Governmental
Authority  or any  other  Person,  on the  part  of the  Buyer  is  required  in
connection with the execution, delivery and performance of this Agreement or any
of the Related  Agreements to which the Buyer is a party or the  consummation of
the transactions contemplated hereby or thereby.

         5.4      NO CONFLICT OR VIOLATION.  Except with respect to the consents
and  approvals  identified  in  Section  7.2(c),  the  execution,  delivery  and
performance by the Buyer of this  Agreement and the Related  Agreements to which
it is a party (a) do not and will not violate or conflict  with any provision of
the organizational or governing  documents of the Buyer, (b) do not and will not
violate any provision of any Law or any Order  applicable to the Buyer,  and (c)
do not and will not  violate  or result in a breach of or  constitute  (with due
notice  or lapse of time or both) a  default  under any  contract,  lease,  loan
agreement,  mortgage,  security agreement, trust indenture or other agreement or
instrument to which the Buyer is a party or by which it is bound or to which any
of the Buyer's properties or assets are subject,  except for any such violation,
conflict,  breach or default  which would not  reasonably  be expected to have a
Material Adverse Effect.

         5.5      FINANCIAL  ADVISORS.  Neither  the Buyer nor any Person on the
Buyer's behalf has agreed to pay any brokerage  fee,  finder's fee or commission
which could become the obligation of the Seller with respect to the transactions
contemplated by this Agreement.

         5.6      PERMITTING. Except as set forth on Schedule 5.6, Buyer (a) has
not been subject to any bond  forfeiture,  permit  suspension  or  revocation or
similar effort or Proceeding instituted by any Governmental Authority, (b) is in
material  compliance  with all terms and  conditions  of its permits,  (c) is in
material  compliance  with  all  Laws,   including,   without  limitation,   all
Environmental  Laws,  or (d) is not  permit  blocked on the  Applicant  Violator
System by any Governmental Authority.

                                    ARTICLE 6
                    SURVIVAL OF REPRESENTATION AND WARRANTIES

         6.1      SURVIVAL    OF    REPRESENTATIONS    AND    WARRANTIES.    The
representations  and  warranties  of  Seller  set  forth  in  Article  4 of this
Agreement  shall  survive the Closing for two years after the date  hereof.  The
representations and warranties of Buyer set forth in Article 5 of this Agreement
shall  survive the Closing for two years after the date hereof.  Any  proceeding
related to any such  representations or warranties must be instituted within the
such two year period, or shall be thereafter waived and barred.


                                       17
<PAGE>


                                    ARTICLE 7
                 CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES

         7.1      CONDITIONS   PRECEDENT  TO  PERFORMANCE  BY  THE  SELLER.  The
obligation of the Seller to consummate  the  transactions  contemplated  by this
Agreement  is  subject to the  fulfillment,  at or before  the  Closing,  of the
following  conditions,  any one or more of which may be waived by the  Seller in
its sole discretion:

                  (a)      REPRESENTATIONS,  WARRANTIES  AND  OBLIGATIONS OF THE
BUYER.  All  representations  and warranties made by the Buyer taken as a whole,
shall be true and correct in all material respects on the date of this Agreement
and  on  and as of the  Closing  Date  (except  to  the  extent  that  any  such
representation  and warranty is made as of a specified  date, in which case such
representation  and  warranty  shall  continue  to be made as of such  specified
date),  and the  covenants  and  agreements  of the Buyer to be  performed on or
before the Closing Date shall have been duly performed in all material  respects
in  accordance  with this  Agreement,  and the  Seller  shall  have  received  a
certificate,  dated the  Closing  Date and  signed by an officer of the Buyer to
that effect; and

                  (b)      RELEASE OF OBLIGATIONS.  The Owners shall be released
from any and all obligations  under those certain letters of credit put in place
to satisfy the bonding requirements of the Alabama Surface Mining Commission, as
well as all bonds, letters of credit and guaranties set forth on Schedule 8.2(e)
simultaneously with Closing.

         7.2      CONDITIONS   PRECEDENT  TO  PERFORMANCE  BY  THE  BUYER.   The
obligations of the Buyer to consummate  the  transactions  contemplated  by this
Agreement  are  subject to the  fulfillment,  at or before the  Closing,  of the
following conditions, any one or more of which may be waived by the Buyer in its
sole discretion:

                  (a)      REPRESENTATIONS,  WARRANTIES  AND  OBLIGATIONS OF THE
SELLER. All  representations and warranties made by the Seller shall be true and
correct in all material  respects on the date of this Agreement and on and as of
the Closing Date (except to the extent that any such representation and warranty
is made as of a specified date, in which case such  representation  and warranty
shall  continue to be made as of such  specified  date),  and the  covenants and
agreements  of the Seller to be  performed  on or before the Closing  Date shall
have been duly  performed  in all  material  respects  in  accordance  with this
Agreement,  and the Buyer shall have received a  certificate,  dated the Closing
Date and signed by an officer of each Seller, to that effect.

                  (b)      BOARD APPROVAL.  The Buyer's Board of Directors shall
have approved this Agreement and the Related Agreements, and the consummation of
the transactions contemplated hereby and thereby;  PROVIDED,  HOWEVER, that such
approval  shall be  obtained on or prior to the later of (i) July 18,  2007,  or
(ii)  the day  which  is 14 days  after  receipt  by the  Buyer  of the  audited
Financial  Statements for 2005, 2006 and reviewed  financial  statements for the
period ended May 31, 2007 required to be delivered  pursuant to Section  8.1(h),
and if the Buyer has not terminated this Agreement on or prior to such date, the
condition  contained in this Section  7.2(d) shall no longer have any effect and
shall not be a condition to the Buyer's  obligation  to close,  and if the Buyer
has not  terminated  this  Agreement on or prior to July 18, 2007, the condition
contained in


                                       18
<PAGE>


this Section 7.2(b) shall no longer have any effect and shall not be a condition
to the  Buyer's  obligation  to close.  (c) DUE  DILIGENCE.  The Buyer  shall be
satisfied in its  reasonable  discretion  with the results of its due  diligence
investigation  of the  Corporation  and its  assets and  liabilities;  PROVIDED,
HOWEVER, that such due diligence investigation shall be completed on or prior to
the later of (i) July 18, 2007,  or (ii) the date that is 14 days after  receipt
by the Buyer of the audited  Financial  Statements  for 2005,  2006 and reviewed
financial  statements for the period ended May 31, 2007 required to be delivered
pursuant to Section  8.1(h),  and if the Buyer has not terminated this Agreement
on or prior to such date,  the condition  contained in this Section 7.2(d) shall
no longer have any effect and shall not be a condition to the Buyer's obligation
to close and if the Buyer has not terminated  this Agreement on or prior to July
18, 2007,  the condition  contained in this Section  7.2(c) shall no longer have
any effect and shall not be a condition to the Buyer's  obligation to close. (d)
FINANCING.  The Buyer's lender for this transaction  shall be satisfied with its
due diligence review of the Business and Corporate  Assets;  PROVIDED,  HOWEVER,
that such due  diligence  review  shall be completed on or prior to the later of
(i) August 18, 2007 or (ii) the day which is 21 days after  receipt by the Buyer
of the audited financial  statements for 2004, 2005, 2006 and reviewed financial
statements  for the period ended May 31, 2007 required to be delivered  pursuant
to Section  8.1(h),  and if the Buyer has not  terminated  this  Agreement on or
prior to such date,  the  condition  contained in this  Section  7.2(d) shall no
longer have any effect and shall not be a condition to the Buyer's obligation to
close.

                  (e)      FINANCIALS.    Buyer   shall   have   received   from
Corporation's  accountant the financial  statements  required by Section 8.1(h).
(f)  CONSENTS.  The Seller shall have  obtained all consents and  approvals  set
forth on Schedule 4.2

         7.3      CONDITIONS  TO  EACH  PARTY'S   OBLIGATIONS.   The  respective
obligations of each party to consummate the  transactions  contemplated  by this
Agreement shall be subject to the fulfillment or waiver on or before the Closing
of the following conditions:

                  (a)      INJUNCTIONS. There shall not be outstanding any Order
prohibiting the consummation of the transactions  contemplated by this Agreement
and no action shall have been  commenced  which could  reasonably be expected to
prohibit the consummation of the transactions contemplated hereby.

                  (b)      NO  CHANGE  IN LAW.  There  shall  not have  been any
action taken or any statute  enacted by any  Governmental  Authority which would
render the parties unable to consummate the transactions  contemplated hereby or
make the transactions  contemplated  hereby illegal or prohibit the consummation
of the transactions contemplated hereby.


                                       19
<PAGE>


                               ARTICLE 8 COVENANTS

         8.1       COVENANTS OF SELLER. The Seller covenants as follows:

                  (a)      ACCESS TO  PROPERTIES  AND RECORDS;  CONFIDENTIALITY.
The Seller shall cooperate in a commercially  reasonable manner with the Buyer's
due  diligence   investigation   of  the  Corporate  Assets  and  the  Corporate
Liabilities, and shall afford to the Buyer, and to the accountants,  counsel and
representatives  of the Buyer,  reasonable  access during normal  business hours
throughout  the period  before the Closing (or the earlier  termination  of this
Agreement  pursuant  to  Article  10) to all books  and  records  of the  Seller
relating to the Corporate Assets and the Corporate Liabilities.  Upon reasonable
prior notice, the Seller shall also afford the Buyer reasonable  access,  taking
into  account  the  Seller's  resources  and other  commitments,  during  normal
business  hours,  to all  Corporate  Assets  throughout  the  period  before the
Closing.  During  the  period  from the date  hereof to the  Closing  Date,  all
information  provided  to the Buyer or its  agents or  representatives  by or on
behalf of the Seller or its agents or representatives  (whether pursuant to this
Section or  otherwise)  will be governed and  protected  by the  confidentiality
agreement executed by the Buyer.

                  (b)      FURTHER  ASSURANCES.  At the  request  and  the  sole
expense  of the Buyer,  at any time after the  Closing  Date,  the Owners  shall
execute and deliver such  documents  as the Buyer or its counsel may  reasonably
request to effectuate  the purposes of this  Agreement.  After the Closing Date,
Owners agree to furnish to Buyer, as promptly as practical, such information and
assistance  relating  to the  Business  and  Corporate  Assets as is  reasonably
requested by Buyer,  including but not limited to, all books,  records and other
documents  relating  thereto,  including  tax and  financial  records,  and will
provide Buyer access to Owners employees and consultants to gain information.

                  (c)      CONDUCT OF OPERATIONS. From the date hereof until the
Closing,  the Seller shall carry on the Business related to the Corporate Assets
in the  ordinary  course  and in  material  compliance  with the  provisions  of
applicable Law, except as otherwise  permitted or contemplated by this Agreement
or as  otherwise  consented  to by the Buyer in writing,  such consent not to be
unreasonably withheld or delayed. From the date hereof until the Closing, Seller
will  maintain  the  Corporate  Assets,  including  all  buildings,   equipment,
machinery and tangible property in good repair and working order,  ordinary wear
and tear excepted, consistent with past practice. Seller will not enter into any
new  agreements,  including  but not limited to coal supply  agreements,  vendor
agreements,  employment agreements,  etc., without the prior written approval of
the Buyer, not to be unreasonably withheld.

                  (d)      NO  SOLICITATION.  The  Seller  agrees  that it shall
immediately   cease  and  cause  to  be  terminated   all  existing  and  future
discussions,  negotiations and  communications  with any Persons for the term of
this  Agreement with respect to any proposal or offer to acquire in any manner a
material  portion  of  the  Stock  and  the  Corporate  Assets  other  than  the
transactions contemplated by this Agreement (each an "Acquisition Proposal").

                  (e)      NOTIFICATION AND DISCLOSURE. Between the date of this
Agreement and the Closing Date,  Seller will promptly notify Buyer in writing if
Seller becomes aware of any fact or


                                       20
<PAGE>


condition  that  causes  or  constitutes  a breach  of the  representations  and
warranties  of  Seller or Buyer as of the date of this  Agreement,  or if Seller
becomes aware of the occurrence  after the date of this Agreement of any fact or
condition that would (except as expressly  contemplated by this Agreement) cause
or constitute a breach of any such representation or warranty of Seller or Buyer
had such  representation  or warranty  been made as of the time of occurrence or
discovery of such fact or condition.

                  (f)      RECLAMATION.  Seller will, to the extent  required by
Law,  maintain and continue  contemporaneous  reclamation  of the Real  Property
through the Closing Date in accordance  with  applicable law and consistent with
past practices.

                  (g)      CONSENTS.   Seller   shall   use   its   commercially
reasonable  efforts to secure all Consents  prior to Closing.  In the event of a
Closing prior to the date Seller obtains any such Consents,  Seller will use its
best efforts to obtain such Consents within sixty (60) days after Closing.

                  (h)      FINANCIAL  STATEMENTS OF BUSINESS.  On or before June
30, 2007,  Buyer shall have  received  from the  Corporation  audited  financial
statements for the Corporation for the period beginning  January 1, 2005 through
December 31, 2006, and Seller shall have delivered to Buyer reviewed  financials
statements  for the period  beginning  January 1, 2007 and ending May 31,  2007.
Further,  at least seven (7) days prior to Closing the Seller  shall  deliver to
the Buyer  reviewed  financial  statements  for each calendar  quarter which has
passed within 30 days prior to the Closing Date.

                  (i)      SCHEDULES.  Seller  shall  revise the  Schedules on a
weekly basis and on the day before the Closing, if necessary, to reflect changes
or events  since the date of this  Agreements,  and with  respect  to the weekly
updates,  shall  immediately  be  delivered to the Buyer and with respect to the
update  on the day  before  the  closing,  shall be  delivered  to the  Buyer at
Closing.

                  (j)      RESTRICTION.  Seller  shall  not,  without  the prior
written  consent of the  Buyer,  sell any real  property  owned by it within the
exterior  boundary  of the Real  Property  to any  third  party,  or lease  such
property,  until the Permits have been  reclaimed  and all bonds posted by Buyer
have been released.

         8.2      COVENANTS OF BUYER. The Buyer covenants as follows:

                  (a)      FURTHER  ASSURANCES.  At the  request  and  the  sole
expense of the  Seller,  at any time after the  Closing  Date,  the Buyer  shall
execute and deliver such  documents as the Seller or its counsel may  reasonably
request to effectuate the purposes of this Agreement.

                  (b)      ACCESS TO BOOKS AND RECORDS.  After the Closing,  the
Buyer agrees to furnish or cause to be  furnished to the Seller,  as promptly as
practicable,  such  information  and  assistance  relating  to  the  Stock,  the
Corporate  Assets and the Corporate  Liabilities as is reasonably  necessary for
the preparation and filing of any Tax Return, claim for refund or other required
or optional filings  relating to Tax matters,  for the preparation for and proof
of facts during any Tax audit, for the preparation for any Tax protest,  for the
prosecution or defense of any suit or other  proceeding  relating to Tax matters
and for the answer to any inquiry from any


                                       21
<PAGE>


Governmental  Authority  relating  to Tax  matters.  The Buyer  agrees to retain
possession, at its own expense, of all accounting,  business,  financial and Tax
records and  information  (i) relating to the Corporate  Assets or the Corporate
Liabilities  that are in existence on the Closing  Date and  transferred  to the
Buyer  hereunder,  or (ii) coming  into  existence  after the Closing  Date that
relate to the Corporate Assets or the Corporate  Liabilities before the Closing,
for a period of at least  six years  from the  Closing  Date,  and will give the
Seller  notice  and an  opportunity  to  retain  any such  records  if the Buyer
determines  to destroy or  dispose of any or all of them after such  period.  In
addition,  from and after the  Closing,  the Buyer  agrees that it will  provide
access to the Seller and its attorneys,  accountants  and other  representatives
(after  reasonable notice and during normal business hours and without charge to
Owner or  costs to the  Buyer),  to the  books,  records,  documents  and  other
information  relating to the Corporation,  the Corporate Assets or the Corporate
Liabilities  as the Seller may deem  necessary to properly  prepare  for,  file,
prove, answer,  prosecute and/or defend any such Tax Return,  claim, filing, Tax
audit,  Tax protest,  suit,  proceeding  or answer.  Such access shall  include,
without  limitation,  access to any computerized  information  retrieval systems
relating to the Corporation, Corporate Assets or the Corporate Liabilities.

                  (c)      WORKERS'  COMPENSATION;   OCCUPATIONAL  DISEASE.  The
Buyer will continue the existing or obtain new workers' compensation  insurance,
including  occupational  disease coverage  (including black lung), in accordance
with all Laws  applicable to the Buyer,  covering all of the Employees  hired by
the  Buyer.  The  Buyer  will  post any  necessary  bonds  and  meet  all  other
requirements necessary to obtain such insurance coverage.

                  (d)      REPLACEMENT OF CORPORATE GUARANTEES.  Effective as of
the Closing, the Buyer shall replace and cause the Owners and Related Persons to
be discharged from,  effective as of the Closing Date, all corporate  guarantees
and  indemnities  set forth in Schedule  8.2(d);  provided,  however,  that with
respect  to the  letters  of credit  posted  by the  Corporation  to secure  the
Corporation's bonding obligations with the Alabama Surface Mining Commission, if
the  Buyer is  replacing  the  letters  of  credit,  and the  Buyer  has  posted
replacement  bonds or  letters of credit and has  provided  reasonable  security
therefor,  Buyer shall have up to fourteen (14) days after Closing to obtain the
release of Owners' guarantees of those letters of credit or such additional time
as is reasonably  required by the Alabama Surface Mining  Commission  through no
fault of Buyer.  With respect to any such personal  guarantees  and  indemnities
listed on Schedule  8.2(d) which are not, as of the Closing Date,  replaced with
corporate  guaranties  or  indemnities  obtained  by the Buyer,  the Buyer shall
continue  to use its  commercially  reasonable  efforts to replace and cause the
Owners and Related  Persons to be discharged from their  respective  Liabilities
under such guarantees and indemnities.

                  (e)      REPLACEMENT OF BONDS AND LETTERS OF CREDIT. Effective
as of the Closing,  the Buyer shall cause all letters of credit,  surety  bonds,
performance  bonds and similar  bonds  posted by the Owners with  respect to the
Corporate Assets as set forth on Schedule 8.2(e),  other than the bonds relating
to the Permits, to be terminated and released.

                  (f)      NOTIFICATION AND DISCLOSURE. Between the date of this
Agreement and the Closing Date,  Buyer will promptly notify Seller in writing if
Buyer becomes aware of any fact or condition that causes or constitutes a breach
of the  representations and warranties of Buyer or Seller as of the date of this
Agreement, or if Buyer becomes aware of the occurrence after the


                                       22
<PAGE>


date of this  Agreement of any fact or condition that would (except as expressly
contemplated  by this  Agreement)  cause  or  constitute  a  breach  of any such
representation  or  warranty  of Buyer or  Seller  had  such  representation  or
warranty  been made as of the time of  occurrence  or  discovery of such fact or
condition.

                  (g)      NAME OF  CORPORATION.  As promptly as practical after
the  Closing,  and in any event no later than 14 days after  closing,  the Buyer
shall cause the name of the  Corporation to be changed to a name not using "Mann
Steel" or the name "Mann" as part of the name.

         8.3      COVENANTS OF THE PARTIES.

                  (a)      CONSENTS.  The parties shall  promptly  apply for and
diligently prosecute all applications for, and shall use commercially reasonable
efforts  promptly to obtain,  such consents,  authorizations  and approvals from
such Governmental Authorities as shall be necessary or appropriate to permit the
consummation of the transactions  contemplated by this Agreement,  and shall use
commercially  reasonable  efforts  to bring  about the  satisfaction  as soon as
practicable of all the conditions  necessary to effect the  consummation  of the
transactions   contemplated  by  this  Agreement.   Seller  shall  promptly  and
diligently  commence  to use  commercially  reasonable  efforts  to  obtain  the
Consents  from  third  parties  and to  continue  to do so  after  the  Closing.
Notwithstanding  anything to the contrary  contained herein,  the parties hereto
agree that as a  condition  to  obtaining  the consent of any third party to any
coal supply  contract or any other  Contract to permit the  consummation  of the
transactions  contemplated  hereby, no party hereto shall have any obligation to
(i) pay any  remuneration  to third parties in exchange for such party's consent
or  approval;  (ii) file any lawsuit or take other legal  action as against such
third party with respect to any thereof,  or (iii) make any amendment thereof or
waive any rights thereunder if as a result of such amendment or waiver such coal
supply  contract or any other Contract  would contain terms and conditions  that
are less favorable in any material respect than the terms and conditions of such
coal supply contract or other Contract as in existence on the Closing Date.

                  (b)      PUBLICITY.  Each of the  Seller  and the Buyer  shall
consult with the other  regarding  their initial press  releases with respect to
the execution of this  Agreement.  Thereafter,  so long as this  Agreement is in
effect, neither the Seller or the Buyer, nor any of their respective affiliates,
shall  issue  any press  release  or other  announcement  with  respect  to this
Agreement or the transactions  contemplated  hereby without the prior consent of
the other party (such consent not to be unreasonably  withheld),  except for any
SEC form 8-K filing, press release or other announcement that may be required by
law or the rules of a national  securities exchange or trading market applicable
to Buyer as a publicly traded company,  in which case the party required to make
the release or announcement shall use its reasonable best efforts to provide the
other party with a reasonable  opportunity to review and comment on such release
or  announcement  in advance of its issuance  (including  the 8-K  filing).

                  (c)      PERMIT  MATTERS.  Promptly  after  execution  of this
Agreement,  the Buyer shall file, for pre-approval,  drafts of (x) all documents
and information  necessary to obtain any necessary  replacements  of, or changes
to, any Permits and (y) all notices of change of ownership  and control,  as may
be required by law; provided,  however,  that if such filing cannot be made on a
confidential  basis,  the  filing  shall be made  immediately  after the  public
disclosure of the


                                       23
<PAGE>


transaction  contemplated  hereby.  Immediately  upon  Closing  (or as  soon  as
possible under appropriate  regulation),  the Buyer shall file (i) all documents
and information  necessary to obtain, and thereafter shall diligently pursue the
obtaining of any necessary  replacements of, or changes to, any Permits and (ii)
all notices of change of ownership  and control,  as may be required by law. The
Seller shall  cooperate with the Buyer in all  commercially  reasonable  ways to
file and prosecute such  applications at the sole cost and expense of the Buyer.
Except as otherwise provided in this Agreement, the Buyer shall bear any risk or
expense associated with not having  appropriate  Permits in effect following the
Closing,  except that Seller  covenants  and agrees its shall not do anything to
cause the Permits to be revoked or suspended prior to the time notices of change
of ownership and control with respect to the Permits are accepted.

                  (d)      SUCCESSOR  OPERATOR.  Simultaneous  with the Closing,
the Corporation shall file, at Buyer's sole cost and expense, all forms to cause
the change of  ownership  and control to cause the Buyer to be named as Owner on
the Permits listed on Schedule 8.3(d),  and to allow the Corporation to continue
coal mining  operations  under the Permits until the acceptance of the notice of
change of ownership and control regarding the Permits.

                  (e)      OBTAINING   TRANSFER.   Both  before  and  after  the
Closing,  the Owners and the Buyer shall  cooperate with one another and provide
commercially  reasonable  assistance  as needed to the  other to  effect,  where
necessary,  the  assignment  of the  Contracts  and the  assignment or change of
ownership  and control  for the Permits and take such other steps as  reasonably
necessary  to allow  Corporation  to continue and conduct  operations  until the
notice of change of ownership and control is accepted for the Permits.

                  (f)      COOPERATION IN BUYER FINANCING. Prior to the Closing,
Buyer shall use  commercially  reasonable  efforts to complete the financing for
the  transactions  contemplated  hereby,  and Seller  shall  provide  reasonable
assistance  to  Buyer  in  connection  with the  financing  of the  contemplated
transactions.  Notwithstanding  the foregoing,  Seller shall not be obligated to
provide  assistance with Buyer's  financing in any manner or to any extent which
would  interfere  with the business or operations of Seller or Seller's  Related
Persons.

                  (g)      COOPERATION   RELATED   TO   ROCK   RESERVE.    Buyer
acknowledges  that Owners have a relationship with the Lessor of the Davis Creek
Property and said Lessor would like for Owners to mine a rock quarry, which lies
beneath a coal seam that the  Corporation  leases.  Buyer  will  cooperate  with
Owners'  efforts  to mine such rock  quarry so long as it does not  unreasonably
interfere  with the  Corporation's  ability (i) to mine the coal lying above the
rock or (ii) to  complete  reclamation  of the coal seam and obtain a release of
Buyer's bonds  relating to such  reclamation  obligation  within the time period
reasonably expected by Buyer if mining of such rock had not been conducted.


                                       24
<PAGE>


                                    ARTICLE 9
                                    EMPLOYEES

         9.1      EMPLOYEE  RECORDS.  Prior to the  Closing,  the  Seller  shall
provide the Buyer with  records  and other  relevant  data  within the  Seller's
control or access  relating to the  employment  history of, and benefit  matters
relating to the  employees  of the  Corporation,  as the Buyer shall  reasonably
request, to the extent legally permitted. Schedule 9.1 hereto lists all employee
benefits of the Company.

         9.2      PAYMENTS TO CERTAIN EMPLOYEES. Schedule 9.2 provides a list of
certain employees,  as well as amounts to be paid to such employees  conditioned
upon their  continued  employment with the  Corporation  after the Closing.  The
Buyer shall enter into an  agreement  with each such  employee  relating to such
payments,  pursuant to which 10% of such  payment  will be paid at  Closing,  an
additional 10% on December 31, 2007, and the balance on December 31, 2008 if the
employee remains employed by the Corporation at the time such payment is due. If
the employee is terminated by the Corporation  without good cause,  the employee
shall be entitled to the remaining balance upon such  termination.  The total of
all of the payments shall be deducted from the Purchase Price.  At Closing,  the
Buyer shall place in escrow an amount equal to the aggregate  payments set forth
on Schedule 9.2. As set forth above, the money in escrow shall be distributed to
the named employees. If the conditions of payment are not fulfilled, any and all
unpaid money shall be paid pro rata to the Owners.  Neither the  Corporation nor
the Buyer has any rights to the payments contemplated under this Section 9.2.

                                   ARTICLE 10
                                 INDEMNIFICATION

         10.1     SURVIVAL. Except as otherwise set forth in this Section 10. 1,
the  representations  and warranties  made in this  Agreement  shall survive the
Closing  and  remain in full force and effect for a period of one year after the
Closing Date. If notice of any claim for  indemnification  under this Section 10
shall have been given within the applicable survival period, the representations
and warranties that are the subject of such indemnification  claim shall survive
until such time as such claim is finally resolved.

         10.2     INDEMNIFICATION BY THE OWNERS.

                  (a)      From  and  after  the  Closing  Date and for one year
thereafter,  the  Owners  shall  indemnify  and hold  harmless  the  Buyer,  its
Affiliates  (including,  after the Closing,  the Corporation),  their respective
officers,  directors,  employees and agents from and against any and all claims,
losses, liabilities,  actions or causes of action, assessments,  damages, fines,
penalties,  costs and expenses (including,  without limitation,  reasonable fees
and  out-of-pocket  disbursements of counsel)  (collectively,  "LOSSES"),  based
upon, arising out of, or resulting from, any of the following:

                           (i)      any  breach  by  the  Seller  of  any of the
representations or warranties made by the Seller in this Agreement;

                           (ii)     any  failure by the Seller to perform any of
his or its covenants or agreements contained in this Agreement.


                                       25
<PAGE>


                  (b)      Notwithstanding  Section 10.2(a),  the Buyer's rights
to  indemnification  under this Section 10 shall be limited as follows:

                           (i)      the  amount of any  Losses  incurred  by the
Buyer shall be reduced by the net amount the Buyer or the  Corporation  recovers
(after deducting all attorneys' fees, expenses and other costs of recovery) from
any insurer or other third party liable for such Losses, and the Buyer shall use
reasonable  best  efforts  to  effect  any  such  recovery.  There  shall  be no
duplicative payments or indemnities by any Seller;

                           (ii)     if the amount of any limitation  pursuant to
this Section  10.2(b) is determined  after payment by any Seller to the Buyer of
any amount otherwise  required to be paid pursuant to this Section 10, the Buyer
shall repay to such Seller,  promptly after such determination,  any amount that
such  Seller  would not have had to pay  pursuant  to this  Section  10 had such
determination been made at the time of such payment;

                           (iii)    in no event  shall any  Seller be liable for
consequential or punitive damages.  After the Closing, the Buyer shall take, and
shall cause the  Corporation  to take,  all  reasonable  steps to  mitigate  any
Losses,  upon becoming aware of any event which could  reasonably be expected to
give rise  thereto.

                           (iv)     in no event  shall  the  Seller's  liability
hereunder exceed $12,000,000 in the aggregate.

         10.3     INDEMNIFICATION BY THE BUYER.

                  (a)      From and  after  the  Closing  Date the Buyer and the
Corporation  shall indemnify and hold harmless the Seller,  from and against any
and all Losses based upon or resulting from any of the following:

                           (i)      any  breach  by  the  Buyer  of  any  of the
representations or warranties made by the Buyer in this Agreement; or

                           (ii)     any  failure by the Buyer to perform  any of
its covenants or agreements contained in this Agreement; or

                           (iii)    any  Losses  suffered  or  incurred  by  any
Seller as a result of Buyer's or the Corporation's post-closing operation except
for Losses (i) that are attributable to the operations of the Corporation  prior
to the  Closing,  or (ii) that  result  from or are caused by, any breach of any
covenant or agreement, or any misrepresentation made herein, by any such Seller.

                  (b)      Notwithstanding  Section 10.3(a), the Seller's rights
to indemnification under this Section 10 shall be limited as follows:

                           (i)      the  amount of any  Losses  incurred  by the
Seller shall be reduced by the net amount the Seller recovers  (after  deducting
all attorneys'  fees,  expenses and other costs of recovery) from any insurer or
other third party  liable for such Losses,  and the Seller shall use  reasonable
best efforts to effect any such recovery;


                                       26
<PAGE>


                           (ii)     if the amount of any limitation  pursuant to
this Section  10.3(b) is determined  after payment by the Buyer to the Seller of
any amount otherwise required to be paid pursuant to this Section 10, the Seller
shall repay to the Buyer, promptly after such determination, any amount that the
Buyer  would  not  have  had  to pay  pursuant  to  this  Section  10  had  such
determination been made at the time of such payment;

                           (iii)    in no event  shall the  Buyer be liable  for
consequential or punitive damages.  After the Closing, the Seller shall take all
reasonable steps to mitigate any Losses,  upon becoming aware of any event which
could reasonably be expected to give rise thereto.

         10.4     CLAIMS.  When a party  seeking  indemnification  under Section
10.2 or 10.3 (the  "Indemnified  Party")  receives  notice of any claims made by
third  parties  (individually,  a "Third Party Claim" and  collectively,  "Third
Party  Claims")  or has any other claim for  indemnification  other than a Third
Party Claim, which is to be the basis for a claim for indemnification hereunder,
the  Indemnified  Party shall give prompt  written  notice  thereof to the other
party (the "Indemnifying Party") reasonably indicating (to the extent known) the
nature of such claims and the basis thereof; provided,  however, that failure of
the Indemnified  Party to give the Indemnifying  Party prompt notice as provided
herein  shall  not  relieve  the  Indemnifying  Party of any of its  obligations
hereunder.  Upon notice from the Indemnified  Party, the Indemnifying Party may,
but shall not be required to,  assume the defense of any such Third Party Claim,
including its compromise or settlement, and the Indemnifying Party shall pay all
reasonable  costs and expenses  thereof and shall be fully  responsible  for the
outcome thereof,  provided,  however,  that in such case, the Indemnifying Party
shall have no  obligation  to pay any further costs or expenses of legal counsel
of the  Indemnified  Party  thereafter  incurred in connection with such defense
other than  reasonable  costs of  investigation.  No compromise or settlement in
respect of any Third  Party  Claims may be effected  by the  Indemnifying  Party
without the  Indemnified  Party's prior written consent (which consent shall not
be unreasonably  withheld),  unless the sole relief is monetary damages that are
paid in full by the Indemnifying Party. The Indemnifying Party shall give notice
to the  Indemnified  Party as to its intention to assume the defense of any such
Third  Party Claim  within 30 days after the date of receipt of the  Indemnified
Party's notice in respect of such Third Party Claim. If the  Indemnifying  Party
does not,  within 30 days after the  Indemnified  Party's notice is given,  give
notice to the  Indemnified  Party of its  assumption of the defense of the Third
Party Claim, the Indemnifying Party shall be deemed to have waived its rights to
control the defense thereof. If the Indemnified Party assumes the defense of any
Third Party Claim because of the failure of the  Indemnifying  Party to do so in
accordance with this Section 10.4, it may do so in such reasonable  manner as it
may deem appropriate,  and the Indemnifying Party shall pay all reasonable costs
and expenses of such  defense.  The  Indemnifying  Party shall have no liability
with respect to any compromise or settlement  thereof effected without its prior
written consent (which consent shall not be  unreasonably  withheld or delayed),
unless the sole relief  granted was equitable  relief for which it would have no
liability or to which it would not be subject.

         10.5     BASKET.  No party shall have any  obligation  to indemnify any
other party for Losses under any  indemnity  claim until such time,  if ever, as
the  aggregate  amount of all such  Losses  incurred by the Buyer in the case of
indemnification   under   Section   10.2  or  by  the  Seller  in  the  case  of
indemnification under Section 10.3 shall exceed $250,000, and then only to the


                                       27
<PAGE>


extent of such excess;  provided,  however, that this limitation shall not apply
to Buyer's obligation to pay the Purchase Price.

                                   ARTICLE 11
                                   TERMINATION

         11.1     TERMINATION.  This  Agreement  may be  terminated  at any time
prior to the Closing:

                  (a)      By mutual consent of the Buyer and the Seller;

                  (b)      By either the Seller or the Buyer after September 30,
2007, or such later date to which the Closing has been extended  pursuant to the
terms hereof, if the Closing has not occurred by such date;  provided,  however,
that as of such date the party  terminating  this  Agreement  is not in material
default or breach under this Agreement; or

                  (c)      Provided the  terminating  party is not  otherwise in
material  default or breach of this Agreement,  and has not failed or refused to
close  without  justification  hereunder,  by either  the  Buyer or the  Seller,
without  prejudice to other rights and remedies which the terminating  party may
have,  if the other  party  shall (i) have  materially  failed  to  perform  its
covenants or agreements contained herein required to be performed on or prior to
the Closing Date, or (ii) have materially breached any of its representations or
warranties contained herein;  provided,  however, that in the case of clause (i)
or (ii),  the  defaulting  party shall have a period of ten (10) days  following
written  notice  from  the  non-defaulting  party  to cure  any  breach  of this
Agreement, if such breach is curable.

         11.2     EFFECT OF TERMINATION;  REMEDIES.  In the event of termination
pursuant to Section 10. 1, this Agreement shall become null and void and have no
effect  (other than  Section  8.3(b) and  Articles 10 and 11, and 12 which shall
survive termination),  with no Liability on the part of the Seller or the Buyer,
or  their  respective  Affiliates  or  Related  Persons,  with  respect  to this
Agreement, except for (i) the Liability of a party for its own expenses pursuant
to Section 11.1; and (ii) any Liability  arising out of the material breach by a
party of any  covenant  or  agreement  contained  in this  Agreement;  provided,
however, that notwithstanding any other provision of this Agreement,  the Seller
and  its  Affiliates  and  Related  Persons  shall  have  no  further  liability
whatsoever  to the Buyer or any of its  Affiliates or Related  Persons,  and the
Buyer and its  Affiliates  and Related  Persons  shall have no further  remedies
whatsoever  against the Seller or any of its Affiliates or Related  Persons upon
payment of the Expense Reimbursement or an amount equal thereto.

         11.3     EXPENSE  REIMBURSEMENT.  If either  party  hereto  shall  have
terminated this Agreement  pursuant to Section 11.1(c) hereto, and prior to such
termination the terminating party shall have satisfied the conditions  precedent
to the other party's  obligation to consummate the transactions  contemplated by
this  Agreement  set forth in Section 7, then the  non-terminating  party  shall
reimburse  the  terminating  party  for the  actual  amount  of its  reasonable,
documented,  out-of-pocket expenses, including reasonable internal costs for its
personnel,  incurred in connection  with the  negotiation  and execution of this
Agreement and the transactions contemplated hereby (the "Expense Reimbursement")
in an amount not to exceed Two Hundred Fifty Thousand  Dollars  ($250,000.00) in
the aggregate. The Expense Reimbursement shall,


                                       28
<PAGE>


within ten (10) business days  following the occurrence of the event giving rise
to the obligation to pay the Expense Reimbursement,  be paid by wire transfer of
immediately  available  funds  to such  account  as the  terminating  party  may
designate in writing to the  non-terminating  party. The obligation to make such
payment shall not relieve the  non-terminating  party from any other obligations
or liabilities to the other party hereunder.

         11.4     EARNEST MONEY DEPOSIT.  Within one (1) day after execution and
delivery of this  Agreement,  Buyer shall  deposit in escrow the sum of $250,000
pending consummation of the transactions contemplated by this Agreement pursuant
to  the  terms  of  an  Escrow  Agreement  (the  "Deposit  Escrow   Agreement"),
substantially  in the form and of the content attached hereto as Exhibit C among
Buyer, Seller and a bank selected by Seller and reasonably  acceptable to Buyer,
as escrow  agent (the  "Escrow  Agent").  In the event  Seller  terminates  this
Agreement  pursuant to section 11.1(c) hereof,  the escrowed funds shall be paid
to the  Seller  upon  the  terms  and  conditions  of the  Escrow  Agreement  as
liquidated  damages. If the Buyer terminates this Agreement because of a failure
of a condition  precedent to the Buyer's  obligations to close the  transactions
contemplated  hereby,  the earnest  money shall be returned to Buyer.  Buyer and
Seller hereby  acknowledge that the amount of damages which would be incurred by
the Seller as a result of the Buyer's default under this Agreement are difficult
to  ascertain  and that the amount of  liquidated  damages  provided for in this
Section 11.4 is reasonable and does not include any amount as a penalty. Subject
to and at the Closing,  the escrowed funds shall be released to Seller and Buyer
shall receive a credit  toward the Purchase  Price in the amount of the escrowed
funds so released.

                                   ARTICLE 12
                                  MISCELLANEOUS

         12.1     EXPENSES.  Except as provided in Sections 11.3 and 11.4 above,
whether or not the transactions contemplated hereby are consummated,  the Seller
and the Buyer  shall bear their own  expenses,  including,  without  limitation,
fees, disbursements and other costs of any brokers, finders, investment bankers,
attorneys, accountants and other advisors, in connection with this Agreement and
the transactions contemplated hereby.

         12.2     NOTICES.  All notices under this  Agreement  shall be given to
the  parties  at the  following  addresses  (i) by  personal  delivery;  (ii) by
facsimile transmission;  (iii) by registered or certified mail, postage prepaid,
return receipt requested;  or (iv) by nationally  recognized  overnight or other
express courier services:

                  (a)      If to the Buyer:

                           National Coal Corporation
                           8915 George Williams Road
                           Knoxville, Tennessee 37923
                           Attention: Daniel A. Roling, President
                           Telephone: 865-690-6900
                           Facsimile: 865-691-9982


                                       29
<PAGE>


                           With a copy to:

                           National Coal Corporation
                           8915 George Williams Road
                           Knoxville, Tennessee 37923
                           Attention: Charles W. Kite, General Counsel
                           Telephone: 865-690-6900
                           Facsimile: 865-691-9982

                           If to the Seller:

                           William T. Mann
                           9 Office Park Circle, Suite 216,
                           Birmingham, Alabama 35223
                           Telephone: (205) 870-9090
                           Facsimile: (205) 870-9092

                           And

                           Frank C. Mann, II
                           9 Office Park Circle, Suite 216,
                           Birmingham, Alabama 35223
                           Telephone: (205) 870-9090
                           Facsimile: (205) 870-9092

                           With a copy to:

                           Gene Price
                           420 North 20th Street
                           Suite 3400
                           Birmingham, Alabama 35203
                           Telephone: 205-251-3000
                           Facsimile: 205-244-5698

         All notices shall be effective and shall be deemed  delivered (i) if by
personal  delivery,  on the date of delivery if delivered during normal business
hours of the recipient,  and if not delivered during such normal business hours,
on the next Business Day following delivery;  (ii) if by facsimile transmission,
on the next  Business  Day  following  dispatch of such  facsimile;  (iii) if by
courier  service,  on the third (3rd) Business Day after dispatch  thereof,  and
(iv) if by mail, on the fifth (5th)  Business Day after  dispatch  thereof.  Any
party hereto may change its address by notice to all parties hereto delivered in
accordance with this Section 12.2.

         12.3     AMENDMENTS.  No  supplement,  modification  or  waiver of this
Agreement shall be binding unless in writing and executed by each party hereto.


                                       30
<PAGE>


         12.4     WAIVER.  At any time  prior to the  Closing,  the Buyer or the
Seller may (a) extend the time for the  performance of any of the obligations or
other  acts of the  other  party  hereto,  (b)  waive  any  inaccuracies  in the
representations  and  warranties of the other party  contained  herein or in any
document  delivered  pursuant  hereto,  and (c) waive compliance with any of the
obligations of the other party or any of the  conditions to its own  obligations
contained  herein to the extent  permitted by law. Any  agreement on the part of
the Buyer,  on the one hand,  and the  Seller,  on the other  hand,  to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of the Buyer and the Seller. The failure of a party to exercise
any right or remedy shall not be deemed or  constitute a waiver of such right or
remedy in the future. No waiver of any of the provisions of this Agreement shall
be  deemed or shall  constitute  a waiver of any  other  similar  or  dissimilar
provision  hereof,  nor shall any such waiver  constitute  a  continuing  waiver
unless otherwise expressly provided.

         12.5     HEADINGS.  The headings  contained in this  Agreement  are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.

         12.6     ASSIGNMENT.  Neither  this  Agreement  nor any of the  rights,
interests or  obligations  hereunder  shall be assigned by either of the parties
hereto  (whether by operation  of law or  otherwise)  without the prior  written
consent of the other  party;  provided,  however,  Buyer shall have the right to
assign its rights  under this  Agreement to any  Affiliate  of Buyer;  provided,
further,  that in the event of such  assignment  by Buyer,  Buyer  shall  remain
liable for all of its obligations under this Agreement. Subject to the preceding
sentence,  this Agreement shall be binding upon, inure to the benefit of, and be
enforceable  by the  parties  and  their  respective  successors  and  permitted
assigns.

         12.7     PARTIES IN INTEREST.  This Agreement shall be binding upon and
inure  solely to the  benefit of the  parties  hereto and their  successors  and
permitted  assigns,  and nothing in this  Agreement,  expressed  or implied,  is
intended  to confer  upon any other  Person any rights or remedies of any nature
under or by reason of this Agreement.

         12.8     COUNTERPARTS.  This  Agreement  may be executed in one or more
counterparts (including via facsimile or e-mail signatures), each of which shall
be deemed to constitute an original,  but all of which shall  constitute one and
the same instrument,  and shall become  effective when one or more  counterparts
have been signed by each of the parties hereto.

         12.9     SEVERABILITY.  If any term, provision, covenant or restriction
of this  Agreement is held by a court of competent  jurisdiction  to be invalid,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected,  impaired or  invalidated.  It is hereby  stipulated  and
declared to be the  intention of the parties  that they would have  executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter  declared invalid,  void or  unenforceable.  In such
case, the parties hereto shall promptly meet and negotiate substitute provisions
for those  rendered or declared  illegal or  unenforceable  so as to preserve as
nearly  as  possible  the  contemplated  economic  effects  of the  transactions
contemplated hereby.


                                       31
<PAGE>


         12.10    ENTIRE   AGREEMENT.   This  Agreement  and  the  Exhibits  and
Schedules  hereto and the Related  Agreements  constitute  the entire  agreement
among the parties hereto and supersede all prior  agreements and  understandings
oral or written,  among the parties  hereto with  respect to the subject  matter
hereof and thereof. There are no warranties, representations or other agreements
between the parties in connection  with the subject  matter hereof except as set
forth specifically herein or contemplated hereby.

         12.11    GOVERNING  LAW.  This  Agreement  shall  be  governed  by  and
construed  according  to the laws of the State of Alabama  without  regard to or
application of its conflict of laws rules.

         IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized  representatives  of the Buyer and the Seller on the date
first above written.


BUYER:                                NATIONAL COAL CORPORATION

                                      By:   /s/ Daniel Roling
                                          ---------------------------
                                      Name:  Daniel Roling
                                      Title: Chief Executive Officer

SELLER                                MANN STEEL PRODUCTS, INC.

                                      By:   /s/ William T. Mann
                                          ---------------------------
                                      Name:  William T. Mann
                                      Title: Vice President & Owner

                                      /s/ Frank C. Mann
                                      -------------------------------
                                      Frank C. Mann

                                      /s/ William T. Mann
                                      -------------------------------
                                      William T. Mann


                                       32