Document:

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                                                                     EXHIBIT 4.4

                          REGISTRATION RIGHTS AGREEMENT

                                   DATED AS OF

                                    __, 2005

                                  BY AND AMONG

                         INTERNATIONAL COAL GROUP, INC.

                                       AND

                          THE HOLDERS IDENTIFIED HEREIN

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                          REGISTRATION RIGHTS AGREEMENT

      This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of __,
2005, is made by and among International Coal Group, Inc., a Delaware
corporation (formerly known as ICG Holdco, Inc.) (the "Company"), and the
Holders listed on Schedule A hereto, as such schedule may be updated from time
to time.

                                    RECITALS

      A. In connection with the consummation of the business combination between
the Company and Anker Coal Group, Inc. ("Anker") pursuant to the Business
Combination Agreement among the Company, ICG, Inc. (formerly known as
International Coal Group, Inc.), ICG Merger Sub, Inc., Anker Merger Sub, Inc.
and Anker dated as of March 31, 2005, the Holders that are stockholders of Anker
will each be issued shares of the common stock ("Common Stock") of the Company,
the exact amount of which will be indicated on Schedule A hereof.

      B. In connection with the consummation of the business combination between
the Company and CoalQuest Development LLC ("CoalQuest") pursuant to the Business
Combination Agreement among the Company, ICG, Inc., CoalQuest Merger Sub, LLC,
CoalQuest and its members dated as of March 31, 2005, the Holders that are
members of CoalQuest will each be issued shares of Common Stock of the Company,
the exact amount of which will be indicated on Schedule A hereof (all such
shares of Common Stock, together with the shares of Common Stock to be issued to
stockholders of Anker, the "Holder Shares").

      C. Pursuant to the terms of both such Business Combination Agreements, the
Company agreed to enter into this Agreement.

                                   AGREEMENTS

      NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

           Article I. Definitions and Certain Interpretative Matters

      1.1 Definitions. For purposes of this Agreement, the following terms have
the following meanings:

            (a) "Advice": As defined in Section 3.3.

            (b) "Affiliate": As defined in Rule 12b-2 under the Exchange Act.

            (c) "Agreement": As defined in the introductory paragraph hereof.

            (d) "Business Day": Any day, other than a Saturday or Sunday, on
which national banking institutions in New York, New York, are open.

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            (e) "Common Stock": As defined in Recital A.

            (f) "Company": As defined in the introductory paragraph hereof.

            (g) "Exchange Act": The Securities Exchange Act of 1934, as amended.

            (h) "Founding Holders" Holders who have rights to participate in a
registration of the Company's securities and each of such Person's Affiliates,
if such Affiliate becomes the owner of the registrable securities and has become
a party to the Registration Rights Agreement among WLR Recovery Fund II, L.P.,
Contrarian Capital Management LLC, Varde Partners, Inc., Greenlight Capital,
Inc., Stark Trading, Sheperd International Coal Holdings Inc. and the Company,
dated as of April [-], 2005.

            (i) "Holders": The holders of Common Stock listed on the signature
pages and/or Schedule A hereto and (i) any Person to whom any of such holders
transfers all of the Holders Shares owned by such Holder or (ii) any Person to
whom any of such holders transfers any Holder Shares and who is entitled to the
rights of the Holder hereunder in accordance with Section 7.3 hereof.

            (j) "Holder Shares": As defined in Recital B.

            (k) "Indemnified Party": As defined in Section 4.3.

            (l) "Indemnifying Party": As defined in Section 4.3.

            (m) "Initial Public Offering": The Company's first Public Offering.

            (n) "Losses": As defined in Section 4.1.

            (o) "NYSE": The New York Stock Exchange

            (p) "Other Holders" Any Person having rights to participate in a
registration of the Company's securities.

            (q) "Person": Any individual, corporation, general or limited
partnership, limited liability company, joint venture, trust or other entity or
association, including without limitation any governmental authority.

            (r) "Piggyback Notice": As defined in Section 2.1.

            (s) "Piggyback Registration": As defined in Section 2.1.

            (t) "Prospectus": The prospectus included in the applicable
Registration Statement, as supplemented by any and all prospectus supplements
and as amended by any and all amendments (including post-effective amendments)
and including all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.

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            (u) "Public Offering": means any primary public offering of Common
Stock by the Company pursuant to an effective Registration Statement under the
Securities Act, other than pursuant to a registration statement in Form S-4 or
S-8 or any successor or similar form.

            (v) "Registrable Securities": (i) the Holder Shares and (ii) any
securities paid, issued or distributed in respect of any such shares by way of
stock dividend, stock split or distribution, or in connection with a combination
of shares, recapitalization, reorganization, merger or consolidation, or
otherwise; provided, however, that as to any Registrable Securities, such
securities will irrevocably cease to constitute "Registrable Securities" upon
the earliest to occur of: (A) the date on which the securities are disposed of
pursuant to an effective registration statement under the Securities Act; (B)
the date on which the securities are distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act; (C) the date on which
the securities may be freely sold publicly without either registration under the
Securities Act or compliance with any restrictions, including without limitation
restrictions as to volume or manner of sales, under Rule 144(k) (or any
successor provision); (D) the date on which the securities have been transferred
to any Person other than a Holder; or (E) the date on which the securities cease
to be outstanding.

            (w) "Registration Expenses": As defined in Section 3.4.

            (x) "Registration Statement": Any registration statement of the
Company under the Securities Act that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), and all exhibits and all materials incorporated by
reference or deemed to be incorporated by reference in such registration
statement.

            (y) "Rule 144": Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.

            (z) "SEC": The Securities and Exchange Commission.

            (aa) "Securities Act": The Securities Act of 1933, as amended.

            (bb) "Underwritten Registration" or "Underwritten Offering": A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

            (cc) Certain Interpretative Matters. Unless the context otherwise
requires, (a) all references to Articles or Sections are to Articles or Sections
of this Agreement, (b) each term defined in this Agreement has the meaning
assigned to it, (c) all uses of "herein," "hereto," "hereof" and words similar
thereto in this Agreement refer to this Agreement in its entirety, and not
solely to the Article, Section or provision in which it appears, (d) "or" is
disjunctive but not necessarily exclusive, and (e) words in the singular include
the plural and vice versa. Unless otherwise specified, the use of the term "day"
will be deemed to be a calendar day and not a Business Day.

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                       Article II. Piggyback Registration

      2.1 Right to Piggyback. If at any time, and from time to time, the Company
proposes to file a registration statement under the Securities Act with respect
to an offering of any class of equity securities (other than a registration
statement (a) relating to its Initial Public Offering, (b) on Form S-4, Form S-8
or any successor forms thereto or (c) filed solely in connection with an
offering made solely to existing stockholders or employees of the Company),
whether or not for its own account, then the Company will give written notice
(the "Piggyback Notice") of such proposed filing to the Holders at least 45 days
before the anticipated filing date. Such notice will offer the Holders the
opportunity to register such amount of Registrable Securities as each Holder may
request on the same terms and conditions as the registration of the Company's or
Other Holders' securities, as the case may be (a "Piggyback Registration"). The
Company will include in each Piggyback Registration all Registrable Securities
for which the Company has received written requests for inclusion within 15 days
after delivery of the Piggyback Notice, subject to Section 2.2.

      2.2 Priority on Piggyback Registrations. If the Piggyback Registration is
an Underwritten Offering, the Company will cause the managing underwriter of
that proposed offering to permit the Holders that have requested Registrable
Securities to be included in the Piggyback Registration to include all such
Registrable Securities on the same terms and conditions as any similar
securities, if any, of the Company. Notwithstanding the foregoing, if the
managing underwriter or underwriters of such Underwritten Offering advises the
Company and the selling Holders that, in its good faith determination, the total
amount of securities that the Company, such Holders and any Other Holders
propose to include in such offering is such as to materially and adversely
affect the success of such Underwritten Offering, then:

            (a) if such Piggyback Registration is a primary registration by the
Company for its own account, the Company will include in such Piggyback
Registration: (i) first, all securities to be offered by the Company; (ii)
second, up to the full amount of securities requested to be included in such
Piggyback Registration by the Holders and the Founding Holders allocated pro
rata among such Holders and Founding Holders, on the basis of the amount of
securities requested to be included therein by each such Holder or Founding
Holders; and (iii) third, up to the full amount of securities requested to be
included in such Piggyback Registration by any Other Holders (other than the
Founding Holders) in accordance with the priorities, if any, then existing among
the Company and such Other Holders so that the total amount of securities to be
included in such Underwritten Offering is the full amount that, in the opinion
of such managing underwriter, can be sold without materially and adversely
affecting the success of such Underwritten Offering; and

            (b) if such Piggyback Registration is an underwritten secondary
registration for the account of holders of securities of the Company, the
Company will include in such registration: (i) first, all securities of the
Persons exercising "demand" registration rights requested to be included
therein; (ii) second, up to the full amount of securities proposed to be
included in the registration by the Company; (iii) third, up to the full amount
of securities requested to be included in such Piggyback Registration by the
Holders and the Founding Holders allocated pro rata among such Holders and
Founding Holders, on the basis of the amount of securities requested to be
included therein by each such Holder or Founding Holders;

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and (iv) fourth, up to the full amount of securities requested to be included in
such Piggyback Registration by the Founding Holders (other than the Founding
Holders) in accordance with the priorities, if any, then existing among the
Company and such Founding Holders so that the total amount of securities to be
included in such Underwritten Offering is the full amount that, in the written
opinion of such managing underwriter, can be sold without materially and
adversely affecting the success of such Underwritten Offering.

            (c) If so requested (pursuant to a timely written notice) by the
managing underwriter in any Underwritten Offering, the Holders participating in
such Underwritten Offering will agree not to effect any public sale or
distribution (or any other type of sale as the managing underwriter reasonably
determines is necessary in order to effect the Underwritten Offering) of any
such Registrable Securities, including a sale pursuant to Rule 144 (but
excluding any Registrable Securities included in such Underwritten Offering),
during the 10 days prior to, and during the 90 days (or such additional period
as the managing underwriter reasonably determines is necessary in order to
effect the Underwritten Offering) following, the closing date of such
Underwritten Offering; provided that each Holder participating in such
Underwritten Offering is subject to the same restrictions (other than with
respect to any shares included in such offering). In the event of such a
request, the Company may impose, during such period, appropriate stop-transfer
instructions with respect to the Registrable Securities subject to such
restrictions. Notwithstanding anything to the contrary set forth herein, if the
Company or the underwriters shall release any Registrable Securities or any
other securities (the "Released Securities") held by any Holder (the "Released
Holder") from the requirements of this Section 2.2(c) (or the equivalent
restrictions to which such Holders are subject) before the end of the period set
by the Company or the underwriters, then a number of Registrable Securities held
by each other Holder shall be released from the provisions of this Section
2.2(c) in the same proportion as the number of Released Securities bear to the
total number of Registrable Securities and other securities held by such
Released Holder which were subject to this Section 2.2(c).

      2.3 Withdrawal of Piggyback Registration.

            (a) If at any time after giving the Piggyback Notice and prior to
the effective date of the Registration Statement filed in connection with the
Piggyback Registration, the Company determines for any reason not to register or
to delay the Piggyback Registration, the Company may, at its election, give
written notice of its determination to all Holders, and (i) in the case of a
determination not to register, will be relieved of its obligation to register
any Registrable Securities in connection with the abandoned Piggyback
Registration, without prejudice, and (ii) in the case of a determination to
delay the Piggyback Registration, will be permitted to delay the registration
for a period not exceeding 180 days.

            (b) Any Holder of Registrable Securities requesting to be included
in a Piggyback Registration may withdraw its request for inclusion by giving
written notice to the Company of its intention to withdraw from that
registration, provided, however, (i) the Holder's request must be made in
writing, in the case of an Underwritten Registration, at least five Business
Days prior to the anticipated effective date of the Registration Statement, or
if the registration is not an Underwritten Registration, at least five Business
Days prior to the anticipated filing date of the Registration Statement covering
the Piggyback Registration, and

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(ii) the withdrawal will be irrevocable and, after making the withdrawal, a
Holder will no longer have any right to include its Registrable Securities in
that Piggyback Registration.

            (c) The Company shall be deemed to have satisfied its obligations to
any Holder under this Article II with respect to any particular Piggyback
Registration notwithstanding an election to withdraw under this Section 2.3.

                      Article III. Procedures and Expenses

      3.1 Registration Procedures. In connection with the Company's registration
obligations pursuant to Article II, the Company will effect such registrations
to permit the sale of Registrable Securities by a Holder in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company will as promptly as reasonably practicable:

            (a) prepare and file with the SEC a Registration Statement on an
appropriate form under the Securities Act available for the sale of the
Registrable Securities by the selling Holders in accordance with the intended
method or methods of distribution thereof; provided, however, that the Company
will, before filing, furnish to each selling Holder and the managing
underwriter, if any, copies of the Registration Statement or Prospectus proposed
to be filed;

            (b) prepare and file with the SEC any amendments and post-effective
amendments to the Registration Statement as may be necessary and any supplements
to the Prospectus as may be required, in the opinion of the Company and its
counsel, by the rules, regulations or instructions applicable to the
registration form used by the Company or by the Securities Act or rules and
regulations thereunder to keep the Registration Statement effective until the
earlier of (i) all Registrable Securities covered by the Registration Statement
are sold in accordance with the intended plan of distribution set forth in the
Registration Statement or supplement to the Prospectus or (ii)(x) at any time
following the first anniversary of the Effective Date and on or before the fifth
anniversary of the date of this Agreement, 180 days following the first day of
effectiveness of such Registration Statement and (y) at any time following the
fifth anniversary of the date of this Agreement, 90 days following the first day
of effectiveness of such Registration Statement;

            (c) promptly following its actual knowledge thereof, notify the
selling Holders and the managing underwriter, if any,

                  (i) when a Prospectus or any Prospectus supplement or
      amendment has been filed and, with respect to a Registration Statement or
      any post-effective amendment, when the Registration Statement has become
      effective,

                  (ii) of any request by the SEC or any other governmental
      authority for amendments or supplements to a Registration Statement or
      related Prospectus or for additional information,

                  (iii) of the issuance by the SEC or any other governmental
      authority of any stop order suspending the effectiveness of a Registration
      Statement or the initiation of any proceedings for that purpose,

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                  (iv) of the receipt by the Company of any written notification
      with respect to the suspension of the qualification or exemption from
      qualification of any of the Registrable Securities for sale in any
      jurisdiction or the initiation or threatening of any proceeding for such
      purpose,

                  (v) of the occurrence of any event which makes any statement
      made in the Registration Statement or Prospectus untrue in any material
      respect or which requires the making of any changes in a Registration
      Statement or Prospectus or other documents so that it will not contain any
      untrue statement of a material fact or omit to state any material fact
      required to be stated therein or necessary to make the statements therein
      not misleading, and

                  (vi) of the Company's reasonable determination that a
      post-effective amendment to a Registration Statement would be appropriate;

            (d) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable date;

            (e) furnish to each selling Holder and the managing underwriter, if
any, at least one conformed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements (but excluding
all schedules, all documents incorporated or deemed incorporated therein by
reference and all exhibits);

            (f) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling Holders, the managing underwriter, if
any, and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions within the United States as the selling Holders or the
managing underwriter reasonably request in writing and maintain each
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective; provided,
however, the Company will not be required to qualify generally to do business in
any jurisdiction in which it is not then so qualified or take any action which
would subject it to general service of process or taxation in any jurisdiction
in which it is not then so subject;

            (g) as promptly as practicable upon the occurrence of any event
contemplated by Section 3.1(c)(v) or 3.1(c)(vi) hereof, prepare a supplement or
post-effective amendment to each Registration Statement or a supplement to the
related Prospectus, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading;

            (h) in the case of an Underwritten Offering, enter into customary
and reasonable agreements (including an underwriting agreement) and take all
other actions

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reasonably necessary or desirable to expedite or facilitate the disposition of
the Registrable Securities, and in connection therewith:

                  (i) use its reasonable best efforts to obtain opinions of
      counsel to the Company and updates thereof (which counsel and opinions (in
      form, scope and substance) are reasonably satisfactory to the managing
      underwriter, if any, and each selling Holder) addressed to each selling
      Holder and the managing underwriter covering the matters customarily
      covered in opinions requested in Underwritten Offerings and such other
      matters as may be reasonably requested by any selling Holder or any
      underwriter, and

                  (ii) use its reasonable best efforts to obtain "comfort"
      letters and updates thereof from the independent certified public
      accountants of the Company addressed to the each selling Holder and the
      managing underwriter covering the matters customarily covered in "comfort"
      letters in connection with Underwritten Offerings;

            (i) upon reasonable notice and at reasonable times during normal
business hours, make available for inspection by a representative of each
selling Holder and any underwriter participating in any disposition of
Registrable Securities and any attorney or accountant retained by any selling
Holder or any underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the officers, directors and
employees of the Company to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with the
Registration Statement; and

            (j) use its reasonable best efforts to comply with all applicable
rules and regulations of the SEC relating to such registration and make
generally available to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act, provided that the Company
will be deemed to have complied with this Section 3.1(h) if it has satisfied the
provisions of Rule 158 under the Securities Act (or any similar rule promulgated
under the Securities Act).

      3.2 Information from Holders.

            (a) The Company may require each selling Holder that has requested
inclusion of its Registrable Securities in any Registration Statement to furnish
to the Company such information regarding such Holder and its plan and method of
distribution of such Registrable Securities as the Company may, from time to
time, reasonably request in writing. The Company may refuse to proceed with the
registration of such Holder's Registrable Securities if such Holder unreasonably
fails to furnish such information within a reasonable time after receiving such
request.

            (b) Each selling Holder will as expeditiously as possible (i) notify
the Company of the occurrence of any event that makes any statement made in a
Registration Statement or Prospectus regarding such selling Holder untrue in any
material respect or that requires the making of any changes in a Registration
Statement or Prospectus so that, in such regard, it will not contain any untrue
statement of a material fact or omit any material fact

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required to be stated therein or necessary to make the statements not misleading
and (ii) provide the Company with such information as may be required to enable
the Company to prepare a supplement or post-effective amendment to any such
Registration Statement or a supplement to such Prospectus.

            (c) With respect to any Registration Statement for an Underwritten
Offering, the inclusion of a Holder's Registrable Securities therein will be
conditioned upon such Holder's participation in such Underwritten Offering and
the execution and delivery by such Holder of an underwriting agreement in form,
scope and substance as is customary in Underwritten Offerings.

      3.3 Suspension of Disposition.

            (a) Each selling Holder will be deemed to have agreed that, upon
receipt of any notice from the Company of the occurrence of any event of the
kind described in Section 3.1(c)(ii), 3.1(c)(iii), 3.1(c)(iv), 3.1(c)(v) or
3.1(c)(vi), such Holder will discontinue disposition of Registrable Securities
covered by a Registration Statement or Prospectus until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
3.1(g) or until it is advised in writing (the "Advice") by the Company that the
use of the applicable Prospectus may be resumed and has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus.

      3.4 Registration Expenses.

            (a) All fees and expenses incurred by the Company in complying with
Article II and Section 3.1 ("Registration Expenses") will be borne by the
Company. These fees and expenses will include without limitation (i) all
registration and filing fees (including without limitation fees and expenses (x)
with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (y) of compliance with securities or blue sky laws
(including without limitation reasonable fees and disbursements of counsel for
the underwriters and selling Holders in connection with blue sky qualifications
of the Registrable Securities and determination of the eligibility of the
Registrable Securities for investment under the laws of such jurisdictions as
the managing underwriter or underwriters, if any, or the selling Holders may
designate)), (ii) printing expenses (including without limitation the expenses
of printing certificates for securities in a form eligible for deposit with The
Depository Trust Company and of printing Prospectuses if the printing of
Prospectuses is requested by the selling Holders), (iii) fees and disbursements
of counsel for the Company, (iv) reasonable fees and disbursements (not to
exceed $50,000) of one counsel for all selling Holders collectively (which
counsel will be selected by the Holders holding a majority of the securities
sought to be included in the Registration Statement), (v) fees and disbursements
of all independent certified public accountants referred to in Section
3.1(h)(ii) (including the expenses of any special audit and "comfort" letters
required by or incident to such performance), and (vi) fees and expenses of all
other Persons retained by the Company. In addition, the Company will pay its
internal expenses (including without limitation all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange, if any,
on which similar securities issued by the Company are then listed or the
quotation of such securities on NYSE if similar securities issued by the Company
are then quoted on NYSE.

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            (b) Notwithstanding anything contained herein to the contrary, (i)
all costs and fees of counsel (except as specifically set forth in Section
3.4(a)) and experts retained by the selling Holders and (ii) all underwriting
fees, discounts, selling commissions and stock transfer taxes applicable to the
sale of Registrable Securities will be borne by the Holder owning such
Registrable Securities.

            (c) Notwithstanding anything contained herein to the contrary, each
selling Holder may have its own separate counsel in connection with the
registration of any of its Registrable Securities, which counsel may participate
therein to the full extent provided herein; provided, however, that all fees and
expenses of such separate counsel will be paid for by such selling Holder.

                          Article IV. Indemnification

      4.1 Indemnification by the Company. The Company will indemnify and hold
harmless, to the fullest extent permitted by law, each Holder owning Registrable
Securities registered pursuant to this Agreement, its officers, directors,
agents and employees, each Person who controls such Holder (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, owners, agents and employees of any such controlling
Person, from and against all losses, claims, damages, liabilities, costs
(including without limitation reasonable attorneys' fees and disbursements) and
expenses (collectively, "Losses") arising out of or based upon any untrue or
alleged untrue statement of a material fact contained or incorporated by
reference in any Registration Statement, Prospectus or preliminary prospectus,
or arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based solely
upon information furnished in writing to the Company by or on behalf of such
Holder expressly for use therein; provided, however, that the Company will not
be liable to any Holder to the extent that any Losses arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary prospectus if either (i) (A) such Holder failed
to send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by such Holder of a Registrable Security to the
Person asserting the claim from which such Losses arise and (B) the Prospectus
would have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission or (ii) the untrue statement or alleged untrue
statement or omission or alleged omission is corrected in an amendment or
supplement to the Prospectus previously furnished by or on behalf of the
Company, if the Holder was furnished with copies of the Prospectus as so amended
or supplemented and the Holder thereafter failed to deliver such Prospectus as
so amended or supplemented prior to or concurrently with the sale of a
Registrable Security to the Person asserting the claim from which such Losses
arise.

      4.2 Indemnification by Holders. Each Holder (severally and not jointly)
will indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its officers, directors, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), and the directors, officers, owners, agents and
employees of any such controlling Person, from and against all Losses, as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained or incorporated by reference in any Registration
Statement, Prospectus or preliminary

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prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with information so
furnished in writing by or on behalf of such Holder to the Company expressly for
use in such Registration Statement, Prospectus or preliminary prospectus. In no
event will the liability of any Holder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation.

      4.3 Conduct of Indemnification Proceedings. If any Person becomes entitled
to indemnity hereunder (an "Indemnified Party"), such Indemnified Party will
give prompt notice to the party from which indemnity is sought (the
"Indemnifying Party") of any claim or of the commencement of any action or
proceeding with respect to which the Indemnified Party seeks indemnification or
contribution pursuant hereto; provided, however, that the failure to so notify
the Indemnifying Party will not relieve the Indemnifying Party from any
obligation or liability except to the extent that the Indemnifying Party has
been prejudiced materially by such failure. If such an action or proceeding is
brought against the Indemnified Party, the Indemnifying Party will be entitled
to participate therein and, to the extent it may elect by written notice
delivered to the Indemnified Party promptly after receiving the notice referred
to in the immediately preceding sentence, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party will have the right to employ its own counsel
in any such case, but the fees and expenses of that counsel will be at the
expense of the Indemnified Party unless (i) the employment of the counsel has
been authorized in writing by the Indemnifying Party, (ii) the Indemnifying
Party has not employed counsel (reasonably satisfactory to the Indemnified
Party) to take charge of such action or proceeding within a reasonable time
after notice of commencement thereof, or (iii) the Indemnified Party reasonably
concludes, based upon the opinion of counsel, that there may be defenses or
actions available to it which are different from or in addition to those
available to the Indemnifying Party which, if the Indemnifying Party and the
Indemnified Party were to be represented by the same counsel, could result in a
conflict of interest for such counsel or materially prejudice the prosecution of
defenses or actions available to the Indemnified Party. If any of the events
specified in clause (i), (ii) or (iii) of the immediately preceding sentence are
applicable, then the reasonable fees and expenses of separate counsel for the
Indemnified Party will be borne by the Indemnifying Party; provided, however,
that in no event will the Indemnifying Party be liable for the fees and expenses
of more than one separate firm for all Indemnified Parties. If, in any case, the
Indemnified Party employs separate counsel, the Indemnifying Party will not have
the right to direct the defense of the action or proceeding on behalf of the
Indemnified Party. All fees and expenses required to be paid to the Indemnified
Party pursuant to this Article IV will be paid periodically during the course of
the investigation or defense, as and when reasonably itemized bills therefor are
delivered to the Indemnifying Party in respect of any particular Loss that is
incurred. Notwithstanding anything contained in this Section 4.3 to the
contrary, an Indemnifying Party will not be liable for the settlement of any
action or proceeding effected without its prior written consent. The
Indemnifying Party will not, without the consent of the Indemnified Party (which
consent will not be unreasonably withheld), consent to entry of any judgment or
enter into any settlement or otherwise seek to terminate any action or
proceeding in which any Indemnified Party is or could be a party and as to which
indemnification or contribution could be sought by such Indemnified Party under
this Article IV, unless such

                                       11
<PAGE>

judgment, settlement or other termination provides solely for the payment of
money and includes as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnified Party of a release, in form and substance
reasonably satisfactory to the Indemnified Party, from all liability in respect
of such claim or litigation for which such Indemnified Party would be entitled
to indemnification hereunder.

      4.4 Contribution, etc.

            (a) If the indemnification provided for in this Article IV is
unavailable to an Indemnified Party under Section 4.1 or 4.2 in respect of any
Losses or is insufficient to hold the Indemnified Party harmless, then each
applicable Indemnifying Party (severally and not jointly), in lieu of
indemnifying the Indemnified Party, will contribute to the amount paid or
payable by the Indemnified Party as a result of the Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party or
Indemnifying Parties, on the one hand, and the Indemnified Party, on the other
hand, in connection with the actions, statements or omissions that resulted in
the Losses as well as any other relevant equitable considerations. The relative
fault of the Indemnifying Party or Indemnifying Parties, on the one hand, and
the Indemnified Party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or related to information supplied by,
the Indemnifying Party or Indemnifying Parties or the Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses will be deemed to include any legal
or other fees or expenses incurred by such party in connection with any action
or proceeding.

            (b) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 4.4 were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding anything contained in this Section 4.4 to the contrary, an
Indemnifying Party that is a selling Holder will not be required to contribute
any amount in excess of the amount by which the total price at which the
Registrable Securities were sold by the selling Holder to the public exceeds the
amount of any damages which such selling Holder has, in the aggregate, otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.

                              Article V. Rule 144

      Upon consummation of a Public Offering, the Company will file all reports
required to be filed by it under the Securities Act and the Exchange Act and
will cooperate with any Holder to the extent required from time to time to
enable such Holder to sell its Registrable Securities without registration under
the Securities Act within the limitations of the exemptions provided by Rule 144
(or any successor provision). Upon the request of any Holder, the Company will
deliver to such Holder a written statement as to whether it has complied with
such filing requirements. Notwithstanding the foregoing, nothing in this Article
V will require the

                                       12
<PAGE>

Company to register any securities, or file any reports, under the Exchange Act
if such registration or filing is not required under the Exchange Act.

              Article VI. Participation in Underwritten Offerings

      Notwithstanding anything contained herein to the contrary, no Person may
participate in any Underwritten Offering pursuant to a registration hereunder
unless that Person (a) agrees to sell its securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements (provided that such arrangements treat all Holders on
an equal and pari passu basis) and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.

                           Article VII. Miscellaneous

      7.1 Notices. All notices, requests, claims, demands and other
communications hereunder will be in writing and will be given or made by
delivery in person, by overnight courier, by facsimile transmission, by
electronic transmission or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party specified in a notice given in accordance
with this Section 7.1):

            (a) If to the Company:

                International Coal Group, Inc.
                2000 Ashland Drive
                Ashland, Kentucky 41101
                Facsimile: 606-920-7820
                Attention: Chief Financial Officer

                with a copy to:

                Jones Day
                222 E. 41st Street
                New York, New York  10017
                Facsimile: 212-755-7306
                Attention: Randi L. Strudler

            (b) If to a Holder, to such Holder's address on file with the
Company's transfer agent.

All such notices and communications will be deemed to have been delivered or
given upon receipt, if delivered personally, by electronic transmission or by
overnight courier; when receipt is acknowledged, if sent by facsimile
transmission and three Business Days after being deposited in the mail, if
mailed.

      7.2 Confidentiality. Each Holder will, and will cause its officers,
directors, employees, legal counsel, accountants, financial advisors and other
representatives to, hold in confidence any material nonpublic information
received by them pursuant to this Agreement,

                                       13
<PAGE>

including without limitation any material nonpublic information included in any
Registration Statement or Prospectus proposed to be filed with the SEC or
provided pursuant to Section 3.1(i). This Section 7.2 shall not apply to any
information which (a) is or becomes generally available to the public, (b) was
already in the Holder's possession from a non-confidential source prior to its
disclosure by the Company, or (c) is or becomes available to the Holder on a
non-confidential basis from a source other than the Company, provided that such
source is not known by the Holder to be bound by confidentiality obligations.

      7.3 Assignment. None of the parties to this Agreement may assign or
delegate any of its rights or obligations under this Agreement without the prior
written consent of each of the other parties hereto. Notwithstanding the
foregoing, the rights of a Holder hereunder may be assigned by a Holder to any
transferee or assignee of Registrable Securities which is a member of such
Holder's immediate family or a trust for the benefit of an individual Holder or
a family member of such Holder that acquires at least five percent (5%) of the
number of Holder Shares initially held by such Holder hereunder (or all of the
remaining Registratrable Securities held by such Holder) (as adjusted for stock
splits, stock dividends, reverse stock splits, stock combinations or other
similar capitalization changes); provided, however, the transferor shall furnish
to the Company written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned and such transferee shall furnish to the Company its agreement in
writing to be subject to all obligations of a Holder set forth in this
Agreement..

      7.4 No Third-Party Beneficiaries. Except as expressly set forth herein,
this Agreement will be binding upon and inure solely to the benefit of the
parties hereto and their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or will confer upon any other Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement.

      7.5 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, both written and oral, among the parties with
respect to the subject matter hereof.

      7.6 Amendment and Waiver. This Agreement may not be amended or modified or
any provision hereof waived except by an instrument in writing signed by all of
the parties to this Agreement.

      7.7 Counterparts. This Agreement may be executed by facsimile signature
and in any number of counterparts, each such counterpart to be deemed an
original and all such counterparts, taken together, to constitute one
instrument.

      7.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or unenforceable under any law or public policy, all other
terms and provisions of this Agreement will nevertheless remain in full force
and effect. Upon a determination that any term or other provision is invalid,
illegal or unenforceable, the parties hereto will endeavor in good faith to
replace the invalid, illegal or unenforceable provisions with valid, legal and
enforceable provisions the effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.

                                       14
<PAGE>

      7.9 Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.

      7.10 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties will be
entitled to specify performance of the terms hereof, in addition to any other
remedy at law or equity.

      7.11 Further Assurances. The parties hereto will do such further acts and
things necessary to ensure that the terms of this Agreement are carried out and
observed.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       15
<PAGE>

      IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first written above.

                                     INTERNATIONAL COAL GROUP, INC.

                                     By:________________________________________
                                        Name:
                                        Title:

                                     HOLDERS:

                                     ________________

                                     By:________________________________________
                                        Name:
                                        Title:

                                     ________________

                                     By:________________________________________
                                        Name:
                                        Title:

                                     ________________

                                     By:________________________________________
                                        Name:
                                        Title:

<PAGE>

                                                                      Schedule A<PAGE>

                                                                    EXHIBIT 10.7

                                 LEASE AGREEMENT

      THIS LEASE AGREEMENT, made and entered into on this the 21st day of May,
1998 ("Effective Date"), by and between KENTUCKY UNION COMPANY, a Kentucky,
corporation, of Post Office Box 89, Hazard, Kentucky 41702, Party of the First
Part, hereinafter referred to as LESSOR, and LESLIE RESOURCES, INC., of 1021
Tori Drive, Hazard, Kentucky 41701, Party of the Second Part, hereinafter
referred to as LESSEE.

                                   WITNESSETH:

      That for and in consideration of the mutual agreements, obligations and
undertakings as hereinafter set out and for and in consideration of the
royalties and rentals to be paid to LESSOR and agreed to be paid by LESSEE, all
as hereinafter set out, LESSOR and LESSEE have this day agreed and contracted
and do hereby agree and contract each with the other as follows:

SECTION 1: RIGHTS GRANTED

      LESSOR, to the extent of its right, title and interest therein, does
hereby lease and let unto LESSEE for the uses and purposes hereinafter set
forth, for a term of five (5) years commencing as of the above date of this
Lease, subject to prior termination as hereinafter provided, and subject to all
exceptions, reservations, terms and conditions hereinafter set forth or referred
to, the right and privilege of prospecting and exploring for, transporting,
processing, disposing of refuse, mining and removing by the deep-mining,
contour, surface, mountain-top-removal, hi-wall and auger-mining (but, in the
case of auger-mining, only with the express written consent of LESSOR sixty [60]
days prior to the commencement of augering) methods only (i.e., excluding
hydraulic, gasification, in situ combustion, solution and all other mining
methods) all of the mineable and merchantable coal seams contained in and above
the 800 Elevation and lying and being in Breathitt County, Kentucky and being
described as follows:

      Being only that portion of the Kentucky Union Company property which has
      been released and surrendered by ARK Land Company in a Partial Release and
      Surrender Agreement dated the 29th day of September, 1993 (which is shown
      on Exhibit A and attached hereto) and located on the South Fork of
      Quicksand Creek, Ben Branch and Improvement Branch of Quicksand Creek in
      Breathitt County, Kentucky, and being hereinafter referred to as the
      Leased Premises.

      The boundary of the Leased Premises will be extended and new areas will be
      added to this Lease as they become available, as per the Partial Release
      and Surrender Agreement from ARK Land Company, under the same terms and
      conditions of this Lease.

      TO HAVE AND TO HOLD unto the LESSEE, its successors and assigns with
covenants of Special Warranty.

<PAGE>

      Together with such rights of ingress and egress to enter upon, mine and
remove said coal and, in addition thereto, such other mining rights and
privileges on and over the above described tracts and parcels of land referred
to hereinabove under which LESSOR claims title.

      By way of enlargement, and not by way of restriction, LESSOR, only insofar
as it has the legal right to do so under the deeds and other instruments by
which it claims the Leased Premises, hereby grants unto LESSEE the exclusive
right and privilege of mining, excavating, and removing the herein leased coal,
by all modern and efficient surface and underground mining methods (but, in the
case of auger-mining, only with the express written consent of LESSOR 60 days
prior to the commencement of augering) and the exclusive right and privilege of
processing, marketing, transporting, and shipping the herein leased coal. LESSEE
is also granted the exclusive right and privilege to exercise and use,
pertaining to the Leased Premises, any and all rights, easements, and privileges
which are or may become necessary, convenient, or incidental to LESSEE for and
in the exploration, development, mining, excavation, removal, processing,
marketing, and transportation of the herein leased coal and coals from all other
properties, the herein leased coal being referred to hereinbelow as "Leased
Coal" and the other aforementioned coals being collectively referred to
hereinbelow as "Foreign Coal." The rights, easements, and privileges granted,
demised, and leased hereunder include but are not limited to the right of LESSOR
(i) to the free and uninterrupted use and possession of, and rights-of-way into,
upon, over, across, and through, the Leased Premises for the construction,
operation, repair, maintenance, and reclamation of all types of coal mines
allowed hereunder, together with related roads, railroads, tramways, haulways,
exploration sites, hollow fills, work and service areas, culverts, drains,
ponds, pollution control structures, telephone, water, electrical, and other
utility lines, devices and structures, coal tipples, coal preparation plants,
coal processing and storage areas, and all other machinery, devices,
improvements, structures and appurtenances which, at such points, and in such
manners, by LESSEE, in its sole discretion, from time to time may be deemed
necessary, convenient, or incidental in or for its exploration, development,
mining, removal, processing, marketing, and/or transporting said Leased Coal
and/or Foreign Coal, (ii) to use, move, remove, waste, and disturb, pursuant to
the aforesaid, the surface, subsurfaces, earth, and strata of the Leased
Premises, and the crops, timber, and improvements appurtenant thereto, (iii) to
remove overburden from the Leased Premises and deposit it onto other property,
and to remove overburden from other property and deposit it upon the Leased
Premises, and (iv) to use,

                                        2
<PAGE>

change, alter, relocate, increase, and diminish, pursuant to the aforesaid, the
streams, springs, waters, aquifers, and water tables of the surface, subsurface,
and strata of the Leased Premises. The parties agree that the coal and mining
rights herein granted are intended to be exclusive. LESSEE does and shall have
the right to re-enter the Leased Premises at any time following the expiration,
termination, or forfeiture of this Lease for the sole purpose of performing all
of its reclamation obligations and obtaining final bond release.

      It is understood and agreed, however, that this Lease does not let and
lease any rights whatsoever, other than such as are vested in LESSOR, in and by
the deed or deeds under which the LESSOR derived title, including but not
limited to the Partial Release and Surrender Agreement shown as Exhibit "A",
which rights are hereby leased and let, and this Lease is made subject to any
and all terms, conditions, exceptions and reservations, if any, contained in the
deed or deeds under which the LESSOR derived title.

      The LESSEE agrees that it has seen the Partial Release and Surrender
Agreement shown as Exhibit "A" and LESSEE expressly agrees that it will be bound
by all of the terms and conditions contained in said Agreement.

      It is understood and agreed that all of the mineable and merchantable coal
in and above the 800 Elevation, and which lies within the boundaries of the
lands heretofore described, and which can be mined and removed by surface and
underground mining methods, excepting that which may prove faulty and cannot be
profitably mined under normal conditions of the coal market, shall be mined and
removed by LESSEE. At the expiration of the said period of five (5) years, if
LESSEE has not mined and removed all of said mineable and merchantable Leased
Coal, then this Lease may be extended at the option of the Lessee and renewed
for two (2) additional periods of five (5) years upon the same terms,
conditions, covenants, stipulations and agreements herein contained (except this
provision for renewal), by LESSEE providing LESSOR with a six (6) month written
notice of its intent to renew, subject to the payment of the same royalties,
rentals and other payments herein reserved and provided for; provided, however,
if, during the original period of five (5) years, or any extension thereof,
LESSEE shall have mined and removed all of the said mineable and merchantable
Leased Coal, shall have paid LESSOR all royalties, rentals and other payments
due or accrued hereunder, and shall have performed and observed all of the
terms, conditions, covenants, stipulations and agreements on its part to be kept
and performed hereunder, and the LESSEE shall have given sixty (60) days'
written notice

                                        3
<PAGE>

thereof to the LESSOR, pursuant to Section 23 hereinafter, then this Lease shall
cease and terminate.

SECTION 2: EXCEPTIONS AND RESERVATIONS; THIRD PARTY RIGHTS

      2.1: EXCEPTIONS AND RESERVATIONS

      Excepting and reserving to LESSOR any and all interest it acquired by
virtue of the deed or deeds hereinabove expressly set forth and herein leased,
including the right and privilege of searching for, mining and removing coal,
with the same rights as herein provided, for any and all veins, seams or portion
or portions thereof not herein specifically leased, together with full and free
rights of ingress and egress that may be necessary or convenient in the proper
development of the same, or other lands now owned or leased by LESSOR or
hereinafter acquired, provided that the proper exercise of the rights and
privileges hereby excepted and reserved shall be exercised with due regard for
the requirements, conveniences, safety and economical mining of, and shall not
interfere with or render more costly, the operation of the LESSEE hereunder.

      2.2: THIRD PARTY RIGHTS

      This Lease is made expressly subject to all of the terms, provisions and
conditions of the deed or deeds which LESSOR and its successors hold title to
the Leased Premises, outstanding rights covering electric, power, gas, telephone
and other utility lines over, across and under the Leased Premises, public
easements, and presently existing coal, oil and other leases or rights,
especially the Partial Release and Surrender Agreement with ARK Land Company.
LESSEE covenants with LESSOR that in LESSEE'S operations hereunder it will not
violate any of the terms, provisions and conditions of any deed or other
instrument of title under which LESSOR or its successors claim title and will
not violate the rights of any third persons not parties to this Lease. LESSEE
agrees to save LESSOR harmless from the breach by LESSEE of any such conditions,
limitations and covenants referred to herein.

SECTION 3: NO WARRANTIES; SUPERIOR TITLE; DEFENSE OF TITLE

      THIS LEASE IS MADE WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OF THE
QUANTITY, QUALITY, MINEABILITY OR MERCHANTABILITY OF COAL (IF ANY) CONTAINED IN
THE LEASED SEAMS, AND WITHOUT EXPRESS OR IMPLIED WARRANTY OF THE CONDITION OF
THE LEASED PREMISES, ANY MINE ENTRIES, WORKING PLACES, STRUCTURES OR SURFACE OR
SUBSURFACE CONDITIONS. However, LESSOR WARRANTS SPECIALLY the title to its
interest in the Leased Premises.

                                        4
<PAGE>

LESSEE acknowledges that (i) it has made an independent examination of data
available concerning the Leased Premises; (ii) has inspected the Leased Premises
and is familiar with the physical condition thereof; and (iii) has fully
informed itself as to all existing conditions and limitations applicable to the
Leased Premises set forth in LESSOR'S title instruments, or imposed by any law,
ordinance or governmental rules or regulations. However, if any part of the
Leased Coal be lost to the holder of any outstanding title which LESSOR shall
recognize as superior to LESSOR'S title, or which shall be held superior to
LESSOR'S title by final adjudication with respect thereto by a court which will
accept jurisdiction to determine the controversy, LESSEE shall not be required
to mine and remove the coal so lost. If LESSEE has mined and removed all or some
portion of the coal so lost and has paid LESSOR therefor on the percentage or
tonnage royalty basis hereinafter described, and shall in addition pay the
holders of such outstanding title for such coal pursuant to final adjudication
as aforesaid, then, and in such event, LESSOR shall repay to LESSEE the amount
of royalty, without interest, so paid to the holders of such outstanding title,
but in no event more than the amount paid to LESSOR for the coal so lost, and
LESSOR shall not otherwise be liable to LESSEE on account of the mining and
removing of such coal by LESSEE or for the failure to LESSOR'S title to any part
of the coal so lost. If such loss of title should make another area of the
leased premises unprofitable to mine because of lack of access thereto, LESSEE
shall not be obligated to mine or pay royalty on the coal in such area. In the
event LESSOR shall hereafter acquire any outstanding title to any portion of the
leased premises which is superior to the title of LESSOR, such portion shall
immediately become a part of the leased premises and shall become subject to the
provisions of this Lease. The designation of any coal seam by name shall not
constitute a warranty as to the existence of such seam within the leased
premises, it being further understood that the use of any such name is employed
for general reference purposes only and may not be geologically correct.

SECTION 4: EXPLORATION

      Should exploration by LESSEE be contemplated, LESSEE shall notify LESSOR
in advance and afford LESSOR the opportunity to be in attendance thereof. Copies
of all information and data respecting the Leased Coal obtained by or in the
possession of LESSEE, from prospecting and exploratory activities conducted on
the Leased Premises shall be made available to LESSOR.

                                        5
<PAGE>

SECTION 5: DILIGENCE & RECOVERY; COMMINGLING OF COAL; COMMENCEMENT OF MINING;
           COMPLIANCE WITH LAW

      5.1: DILIGENCE & RECOVERY

      It is understood that LESSEE shall, at all times, operate, develop and
prosecute the mining operations on the Leased Premises, and will purchase and
maintain sufficient equipment so as to have the capacity for mining, preparing
and shipping coal from the said lands, to the end that the mineable and
merchantable coal hereby leased and let will be fully mined and removed from the
said property within the life of this Lease. LESSEE shall further conduct its
operations hereunder so as to cause no damage, injury or destruction to seams
which may be present within the leased boundary but which are not demised herein
nor shall LESSEE render any other seam not so demised unmineable.

      5.2: COMMINGLING OF COAL

      Coal mined from the Leased Premises shall not, without LESSOR'S consent,
be commingled, combined or admixed with other coal so as to produce a lower
royalty realization to LESSOR than would have been realized had the coal been
sold separately.

      5.3: COMMENCEMENT OF MINING; COMPLIANCE WITH LAW

      LESSEE covenants and agrees that during the term of this Lease it will
mine, remove and pay royalty on all of the mineable and merchantable Leased Coal
that can be mined during the term of this Lease; that it will commence mining as
soon as it is practicable after receiving a permit with the Natural Resources
and Environmental Protection Cabinet of the Commonwealth of Kentucky, and all
other permits required or necessary to conduct mining operations, and thereafter
prosecute, pursue and continue its mining operations hereunder with due
diligence until the termination of this Lease; that it will post all required
reclamation bonds; that it will conduct its mining operations hereunder in a
skillful, careful, efficient, workmanlike and prudent manner, according to
generally recognized modern, approved and appropriate methods of mining, having
due regard to the safety and preservation of other seams; and that with regard
to all of its activities on the Leased Premises, it will comply in every respect
with the laws of Kentucky and the political subdivisions thereof and of the
United States of America, which may now or hereafter be in effect, and with all
valid and applicable rules, regulations or orders thereunder, regulating
extraction, transportation and processing of coal, operation of mines, grading,
filling, restoration and reclamation of surface, drainage and treatment of
water, all related activities, and any other activities upon the Leased
Premises. LESSEE shall carry

                                        6
<PAGE>

Workers' Compensation Insurance coverage in amounts as required by law and shall
operate under and in compliance with the Kentucky Workers' Compensation Act and
the regulations promulgated thereto. LESSEE shall commit no waste of coal in,
under or to the Leased Premises or any part thereof. LESSEE, upon request
herefor, shall provide LESSOR with copies of all applicable permits, bonds, bond
releases, licenses and governmental approvals applicable to mining, water
pollution, coal refuse disposal and operation and maintenance of permanent
structures and roads. Notwithstanding the other provisions of this Section 5.3,
it is understood that one or more routine violations shall not constitute a
default hereunder so long as such violation(s) are cured, abated, or contested
in good faith as soon as practicable.

SECTION 6: ROYALTIES

      6.1: TONNAGE ROYALTY RATES; ROYALTIES BASED ON GROSS WEIGHT; WASHED COAL

      As rental for the term commencing on the effective date hereof, LESSEE
hereby covenants and agrees to pay unto LESSOR, without necessity or previous
demand, at the times hereinafter specified and at such place or places as LESSOR
shall from time to time designate in writing, for each and every ton of two
thousand (2,000) pounds of coal mined or produced from the Leased Premises,
tonnage royalties in the amount of One Dollar and Fifty Cents ($1.50) per
saleable ton or seven percent (7%) of the gross sales price as sold, whichever
shall be greater. If the coal is washed, then royalties will be based upon the
clean coal basis and upon the gross weight of coal as loaded for shipment to
market. All coal mined hereunder shall be sold at arm's length.

      6.2: GROSS SALES PRICE - GENERALLY

      The term "gross sales price" (sometimes "GSP") as used in this Lease means
the sales price to LESSEE'S consumer F.O.B. at the final local loading point,
before deduction of commission or selling expense. However, coal sold by LESSEE
for export, trans-shipment by lake or to independent retail coal yards, or other
comparable conditions, shall be considered as sold to LESSEE'S consumer.

      The minimum tonnage royalty or rental and any additional royalty above the
minimum tonnage royalty will be calculated at the end of each month based upon
the current month's gross sales price per ton.

                                        7
<PAGE>

      The gross sales price of all coal produced each month shall be averaged
each month to determine the amount of royalties due by dividing the total
selling price of all coal produced by the total tonnage of all such coal.

      6.3: GROSS SALES PRICE - COAL NOT SOLD AT ARM'S LENGTH OR SOLD FOR LESS
           THAN PREVAILING MARKET VALUE

      In the event any of the Leased Coal shall be sold by LESSOR at other than
an arm's length sale or for less than the fair market value thereof, or used or
consumed on or off the Leased Premises without sale by LESSEE, the selling price
for the purpose of computing tonnage royalty shall be at LESSOR'S option, the
fair market value of such coal as prepared and loaded at the point of sale or,
if used or consumed, at the time of use or consumption.

      6.4: WHEELAGE ROYALTIES

      The LESSEE shall owe wheelage to LESSOR in the amount of Ten Cents ($0.10)
per ton for all coal mined from LESSEE'S other operations and hauled and
transported into, over, through or under the property leased to LESSEE
hereunder, which wheelage obligation shall expire as of August 1, 2007.

      6.5: WEIGHT OF COAL MINED; AUDIT PROCEDURE

      LESSEE, on or before the 25th day of each calendar month, shall furnish to
LESSOR a report, on forms approved by LESSOR, showing the quantity of coal taken
from the Leased Premises and the gross sales price thereof, during the preceding
month, using the weights at the tipple furnished by the railroad company over
whose railroad the coal is shipped. The weighing of the coal shall occur prior
to any intermingling of the Leased Coal with that owned by another. If coal
shall be taken and shall not be shipped by rail, the quantity thereof shall be
ascertained by scale weight, truck weight or such other manner satisfactory to
LESSOR. In the event Leased Coal is intermingled and/or stockpiled with other
coal at the tipple and/or any other location, then, and in that event, the
Leased Coal shall be ascertained by scale weight, truck weight or other manner
satisfactory to LESSOR, and shall be weighed prior to any intermingling or
stockpiling. LESSEE shall also comply with any further reasonable rules and
regulations that may be prescribed by LESSOR for the correct ascertainment and
report of the coal mined hereunder, and the gross sales price received therefor
and, upon ten (10) days prior written notice, LESSOR, its officers, accountants
and authorized employees, shall have free access at all reasonable times to the
books and records of LESSEE to check tonnage shipped and sold, the

                                        8
<PAGE>

gross sales price of coal, and the amount received therefor, if it so desires,
for the purpose of making calculations of the amount of royalties due under the
terms hereof.

      In the event LESSOR shall cause the books and records of LESSEE to be
audited, as it may do periodically and at reasonable times at LESSOR'S cost, and
such audit shall show for any calendar year an underpayment by LESSEE of
royalties and other payments due hereunder, LESSEE shall promptly pay all of
said deficit together with eight percent (8%) interest per annum from the date
said sum or sums were due until paid and the costs of the audit. In case of
disagreement as to the sums due, the parties shall name an independent
nationally recognized auditing firm to re-audit said books and records.

      6.6 PAYMENT

      LESSEE covenants and agrees to pay to LESSOR, on or before the 25th day of
each calendar month, the tonnage royalties for all coal mined from the Leased
Premises during the preceding calendar month. The 25th day of each month is
hereinafter referred to as "Payment Date."

      The royalty called for herein shall be paid by check or money order,
mailed to LESSOR at Post Office Box 89, Hazard, Kentucky 41702, or delivered to
the LESSOR'S office at Hazard, Kentucky, or at any place designated by it in
writing, together with a report of the tons of coal mined during the period
covered by the payment.

      6.7: MINIMUM ROYALTY

      LESSEE agrees to mine a sufficient amount of coal from the Leased Premises
during the term of this Agreement to yield LESSOR production royalties in the
amount of Fifty Thousand Dollars ($50,000.00) for the first lease year and One
Hundred Thousand Dollars ($100,000.00) for each lease year thereafter. For
purposes of this section, a lease year shall be a twelve month period commencing
upon the Effective Date specified at the beginning of this Agreement or on any
anniversary date thereof, whichever is applicable.

      6.8: RECOUPMENT

      Should LESSEE fail in any year to mine tonnage from the leasehold
sufficient to pay the minimum royalty required for any such year, then it shall
and does have the right in any one of the immediately next succeeding five (5)
years during the life of this Lease, and after the required minimum royalty for
such succeeding year or years shall have been paid for, to mine and remove
sufficient coal from the Leased Premises, free of royalty, to reimburse itself
for the

                                        9
<PAGE>

minimum royalty in excess of actual tonnage mined in any such preceding year or
years; but in no event shall any credit be carried forward to any subsequent
year for any coal mined in excess of the required minimum during any given year.

SECTION 7: TAXES

      LESSEE shall pay taxes, levies or assessments including, but not limited
to, ad valorem, property, excise, license, unmined mineral tax, privilege or
severance taxes that may be legally assessed, imposed or levied by any
governmental authority upon or with respect to (a) the Leased Premises; (b)
LESSEE'S interest in this Lease; (c) all improvements and other property placed
upon the Leased Premises by LESSEE; (d) the coal mined and removed hereunder;
(e) the production or severance of coal from the Leased Premises; or (f) the
exercise of any right or privilege by LESSEE in connection with its operations
hereunder, when the same become due and, if any such taxes be paid by LESSOR,
then LESSEE shall repay to LESSOR the amount thereof promptly upon demand and,
if a portion of the assessed property is leased to a Third Party, then the
amount of tax LESSEE will be required to pay will be prorated based on the
amount of coal or property under Lease to the LESSEE and, in case of default in
payment of such taxes by LESSEE to the collecting authority or authorities, or
in reimbursing LESSOR for any such taxes paid by it, any such taxes may be
regarded and treated by LESSOR as rent reserved, and shall be collectible as
rent under the laws of Kentucky, or in any manner herein provided for the
collection of royalties and rentals hereunder. Notwithstanding the foregoing,
LESSEE shall have the right, at its expense, to challenge in good faith, by
legal and proper means, in the name, place and stead of LESSOR (if necessary),
the amount, validity and equitability of any such taxes, levies or assessments;
provided, however, that LESSEE shall at all times protect LESSOR'S title to the
Leased Premises from tax liens, tax sales or any other encumbrances or
impairments resulting directly or indirectly from any such challenge and LESSEE
shall be responsible for any interest, penalty or similar charges incurred as a
result of any such challenge.

SECTION 8: PRESERVATION OF RECORDS: ACCESS TO RECORDS; RIGHT TO OBTAIN
           INFORMATION

      8.1: PRESERVATION OF RECORDS REGARDING QUANTITY AND PRICE

      LESSEE shall keep and preserve all records used in preparing monthly
statements to LESSOR as required herein, accurate books of account, railroad
and/or truck weigh sheets, and any other records necessary to show accurately
the weights of coal mined from the Leased

                                       10
<PAGE>

Premises, the railroad or other weights after processing and cleaning, and
showing the gross sales price of each ton of coal produced and shipped from the
Leased Premises, and also all records of sampling, testing, processing and
transportation from the Leased Premises. If LESSOR so requests, LESSEE shall
furnish to LESSOR the weights furnished by the railroad company over whose
railroad the coal is shipped, and its first weighing point, for all coal shipped
by rail and, if coal shall not be shipped by rail, the quantity thereof shall be
ascertained by scale weight, truck weight or such other manner satisfactory to
the LESSOR.

      8.2: RIGHT TO OBTAIN INFORMATION

      LESSEE hereby grants to LESSOR, or its agents, the right to obtain from
any railroad, trucker, towing, trucking or barge company or other carrier
(collectively "Railroad et al.") on or by which coal mined hereunder shall be
shipped, information as to the quantity of coal mined hereunder and shipped over
such Railroad et al. at such time or times as LESSOR may desire such
information, and this provision shall constitute full authority in the absence
of any further express authority to such Railroad et al., to give such
information to LESSOR or its agents.

SECTION 9: MONTHLY STATEMENTS

      LESSEE agrees to furnish the LESSOR at its address to which payments are
to be made as provided in this Lease, before each of the Payment Dates of each
calendar month, a statement signed by an authorized representative of LESSEE
showing the quantities of coal mined during the time period to which the
statement applies. Such statement shall set forth separately the quantities of
coal sold and the gross sales price of each such sale.

      In the event that the total quantities of coal reported to have been mined
from the Leased Premises is fifteen percent (15%) less than the quantities
reasonably determined by LESSOR'S engineer to have been removed from the Leased
Premises by volumetric measurements, then the monthly reports and royalty
payable pursuant thereto shall be adjusted to reflect the amounts determined by
such volumetric measurements. If LESSEE or LESSEE'S engineer disputes the
determination of LESSOR'S engineer, LESSEE and LESSOR shall jointly select an
independent engineer to determine the amount of coal mined by LESSEE and the
determination of such engineer shall be binding. If LESSEE, during any calendar
month, shall mine coal from the Leased Premises and also from other properties
in the same geographical area, then LESSEE shall cause its registered
professional mining engineer to make accurate volumetric measurements of the
quantity of coal mined both from the Leased Premises and from other

                                       11
<PAGE>

properties and shall furnish copies of such measurements, certified as accurate
by such engineer, to LESSOR at the end of each such month.

SECTION 10: MINE MAPS AND OTHER DATA REGARDING LEASED PREMISES

      LESSEE shall have an experienced and competent registered mining engineer
prepare a map on a scale of one hundred (100) feet to one (1) inch, which shall
show accurately and completely the pit location of LESSEE'S operations by
survey, together with the boundaries of the property, the location of all
rights-of-way, streams, roads, buildings, mine workings, underground roadways,
entries and passages, the location and identifying number of each drill hole,
all elevations and coal sections showing the nature of the roof, draw slate,
thickness of coal and impurities as each occurs within the demised seams, nature
of the top and bottom and any other information as may be reasonably requested
by LESSOR. LESSEE shall also have an experienced and competent registered
engineer to make surveys, determine elevations, prepare and keep on a scale of
four hundred (400) feet to one (1) inch a map of said coal, which map shall be
posted every month and shall show accurately and completely, by true meridian,
the boundaries of all the lands hereinbefore described, the location of all
roads, streams, buildings and other improvements, all mine workings of LESSEE
within said boundary of land and cross sections of said coal taken at
sufficiently frequent intervals, not to exceed two hundred (200) foot intervals,
as to reflect the average thickness of the Leased Coal, together with elevations
in accordance with common surface and underground mining practices, and any
additional information that can be practicably obtained and that may be
necessary to the safe and proper conduct of the operations hereunder, or that
may be reasonably required by LESSOR. In measuring all mines, all strip pits and
underground development shall be measured accurately and located correctly; and,
with respect to Hi-Wall mining and auger mining operations, logs shall be kept,
all holes located by surveying, the hole diameter shall be shown on the map and
the depth of each hole plotted. The size of the aforesaid map shall accord with
standards furnished by LESSOR, and a copy of said map shall be sent to LESSOR on
or before the 20th day of January, the 20th day of April, the 20th day of July
and the 20th day of September of each year, properly posted in accordance
herewith for the three (3) months ending on the last day of the calendar month
immediately preceding; and LESSOR, its agents or engineers or other persons in
its behalf, shall have access to the maps, plans and tracing of LESSEE and may
take therefrom such additional copies that may be desired. If LESSEE shall fail
to furnish the map or maps

                                       12
<PAGE>

provided for herein for thirty (30) days and demand thereof shall have been made
by LESSOR, LESSOR may, at its option, have its engineer make surveys and prepare
such map or maps at the cost of LESSEE. Before any place is abandoned, it shall
be measured and mapped and LESSOR shall be notified so that LESSOR'S engineer
may also inspect the proposed area to be abandoned.

      All boundaries shall be surveyed prior to mining and if, during the mining
operations on the leasehold LESSEE shall remove or destroy any internal or
external tract boundary corner, tree or other boundary marker, ridge line,
stream or natural boundary or point, LESSEE agrees, as soon as practicable
thereafter, to resurvey such boundary and place such permanent points and
monuments as may be adequate and proper for the accurate relocation of the
boundary so affected.

      LESSEE agrees to promptly furnish to LESSOR a map of the relocated
boundary, together with a copy of the surveyor's notes and such other supporting
data as may have been used by LESSEE in making such boundary relocation.

SECTION 11: CONDUCT OF MINING; PLANS

      LESSEE agrees to work and mine the Leased Coal in substantial conformity
with general plans of mining and descriptions thereof, which shall in advance of
development be prepared by LESSEE's engineer upon a map showing the proposed
plans and which shall be submitted by LESSEE to LESSOR and shall be subject to
the approval of LESSOR. Such approval shall be given within thirty (30) days in
writing after the plans are formally submitted, or disapproved within that time.
Formal submission of the plan shall be in writing, stating that LESSOR shall
have thirty (30) days to approve or disapprove of the plans. The basis for any
disapproval of the mining plans by LESSOR shall be confined to those factors
having to do with the amount of overall mineable and merchantable coal recovery
from the Leased Premises. In the event LESSOR should disapprove any mine plans
submitted by LESSEE, the parties each agree that they will work together in good
faith and with all possible diligence to try to resolve their differences with
respect to the proposed plans.

SECTION 12: SECURITY INTEREST AND LIEN FOR ROYALTIES, RENTALS AND OTHER
            PAYMENTS: OTHER LIENS

      All royalties, rentals and other amounts due hereunder from LESSEE to
LESSOR shall be and always remain and constitute, until paid to LESSOR, a lien
upon, and LESSEE does hereby grant to LESSOR a security interest in all property
of LESSEE which shall be brought

                                       13
<PAGE>

upon or used in connection with the Leased Premises including, without
limitation, all improvements, buildings, structures, equipment, machinery,
mining records and property receivable upon release of reclamation bonds, and a
lien on and security interest in the leasehold estate hereby created. No
mortgage or deed of trust or other lien on the leasehold estate hereby created
or on any property placed in the Leased Premises, or both, shall have the effect
of a lien superior or precedent to the security interest of LESSOR.

SECTION 13: DETERMINING LIMITS OF MINEABLE AND MERCHANTABLE COAL; PRIVILEGE OF
            INSPECTING THE WORKS

      The term "mineable and merchantable" coal as used in this Lease means coal
that, when reached in the normal mining process, could be mined at a profit by
the use of good business practices and up-to-date machinery and by the use of
modern mining and cleaning methods under the supervision of qualified mining
engineers and mining personnel; provided, however, that when, in the mining
process, local conditions shall render a particular section or area of the mine
unprofitable under the foregoing definition, such particular section shall be
determined to be unmineable and unmerchantable only after due consideration of
the following factors: (1) the area of coal beyond the local conditions which
will be lost or rendered unmineable or otherwise adversely affected; (2) the
extent and nature of the local condition; (3) past experiences, if any, with
similar conditions in the mine; (4) anticipated costs in overcoming the
condition as compared to the loss of or adverse effects upon the coal beyond the
condition; and (5) the past and present profitability of the mine as a whole.

      LESSEE shall, in the course of its mining operations, fully and adequately
test around such portion or portions of the seam of coal being mined where such
seam appears to consist of coal that is not mineable and merchantable (and
record on its maps and give notice to LESSOR of its findings) and, based on the
results of such testing, shall reasonably and properly establish the extent and
limits of such portion or portions of said seam of coal. If LESSEE shall
reasonably and properly determine that an area of coal is not mineable and
merchantable, and if LESSEE shall notify LESSOR, in writing, thereof and allow
LESSOR a reasonable opportunity to examine such area of coal (with the
understanding that LESSOR shall make such examination as promptly as reasonably
possible but in no event later than thirty (30) days after receiving such
notice), then, subject to LESSOR'S right to dispute LESSEE'S aforesaid
determination, such coal need not be mined or paid for. (LESSEE shall not
abandon any mine without prior written notice to LESSOR as aforesaid. LESSEE
shall be under no obligation to pay royalty on any

                                       14
<PAGE>

mineable and merchantable coal left in place because of requirements of law, or
for the reasonable protection of gas wells, oil wells, power lines, telephone
lines or structures or improvements on the surface.)

SECTION 14: LOSS OF RECOVERABLE COAL

      LESSEE agrees that if at any time LESSEE does not conduct its mining
operations in substantial accordance with the terms of this Lease and the
general plans provided for hereinafter, or according to modern and efficient
methods of mining, and loss of coal shall thereby result, then LESSEE shall pay
LESSOR for coal so lost at the rate of royalty provided for herein as though
said coal had been actually mined and sold. In the event LESSEE fails to pay for
said lost coal as provided herein, LESSOR shall have the right to take whatever
legal action necessary to collect for such lost coal.

SECTION 15: ENCROACHMENT OF BOUNDARIES

      LESSEE shall not at any time mine within twenty-five (25) feet of the
boundary line of adjoining premises unless (a) the written consent of the owners
of adjoining premises shall be first had and obtained; (b) such mining complies
with all applicable laws, rules and regulations; and (c) obtain written
permission from LESSOR to lease and mine adjoining property prior to mining all
of the mineable and merchantable coal from LESSOR'S property.

SECTION 16: LESSOR'S INSPECTION

      LESSOR, its agents, officers, engineers and other persons on its behalf,
shall have the right, after reasonable notice to LESSEE, to enter LESSEE'S mines
on the Leased Premises and the mines of LESSEE on other lands operated in
conjunction with the Leased Premises from time to time in order to inspect,
examine, survey or measure the mining operations of LESSEE, or any part thereof,
as well as mined-out areas, to verify or correct reports made by LESSEE as to
quantities of coal mined from the Leased Premises, or for any other lawful
purpose and, for such purposes, may freely use the means of access to the mining
operations of LESSEE without hindrance or molestation. LESSEE shall furnish to
LESSOR'S employees and agents transportation to and from the underground
workings for any purposes deemed necessary by the LESSOR.

SECTION 17: DISPOSAL OF WASTE

      LESSEE shall not dispose of any refuse or by-products from mining or
processing coal upon the Leased Premises which would result in the sterilization
of LESSOR'S coal reserves. Should LESSEE need such area for disposal, then, in
that event, LESSEE must have prior

                                       15
<PAGE>

written consent of LESSOR, which consent shall not be unreasonably withheld. It
shall be LESSEE'S responsibility to comply with all Federal, State and local
laws governing disposal of waste material. LESSEE shall exercise strict care in
the handling, transportation and disposal of refuse designated as "hazardous" by
Federal, State or local regulations.

SECTION 18: INDEMNITY; WORKERS' COMPENSATION; INSURANCE

      18.1: INDEMNITY

      LESSEE covenants and agrees to indemnify and save harmless LESSOR, its
officers, directors, stockholders, employees, agents and engineers from and
against [a] any and all claims, demands, actions and/or causes of action
(regardless of when accrued or asserted) by or on behalf of any person, firm,
corporation or governmental body or agency for damages, injuries, death,
penalties, fines, assessments or otherwise, caused by, arising out of, resulting
from, or as a consequence of (i) the acts or omissions of LESSEE, its officers,
agents, employees, licensees, invitees and/or contractors, subcontractors or any
one or more of them, or any other person or entity acting by direct or indirect
authority of LESSEE, or (ii) the use and enjoyment of the Leased Premises
pursuant to this Lease; and [b] any and all reasonable costs, counsel fees, and
expenses incurred in or about any such claim or action brought thereon, all of
which costs, counsel fees and expenses shall be reimbursed to LESSOR by LESSEE
immediately upon receipt of an Invoice from LESSOR showing that same have been
paid. The above indemnity provisions shall survive the termination of this
Lease.

      18.2: INSURANCE

      LESSEE further covenants and agrees to obtain and maintain the following
insurance and to provide copies of the policies (or certificates thereof) to
LESSOR:

      (a) Comprehensive General Public Liability Insurance adequate to cover any
and all claims but not less than One Million Dollars ($1,000,000.00) for any one
(1) person and Three Million Dollars ($3,000,000.00) for any one (1) accident or
personal injury and not less than Five Million Dollars ($5,000,000.00) property
damage for any one (1) accident. Such liability insurance shall provide coverage
against losses arising out of legal liability due to coal mining operations or
any other uses of or operations on the Leased Premises pursuant to this Lease,
including, but not limited to, those coverages commonly referred to as [i]
premises and operations; [ii] contractual; [iii] contingent; [iv] products; [v]
hired cars; [vii] non-ownership; [vii] liability arising out of employees' use
of personal cars for personal business;

                                       16
<PAGE>

[viii] subsidence, pollution or contamination of water, gob pile slides and
movement of overburden.

      (b) Environmental Impairment Liability Insurance covering damages and
claims arising out of the creation of any condition which contravenes any common
law, statutory or regulatory duty to avoid pollution of every kind and nature
including, without limitation, laws and regulations treating conservation,
aesthetics and water and air pollution in an amount sufficient to cover any and
all claims but not less than One Million Dollars ($1,000,000.00).

      (c) Standard Workers' Compensation and Employers' Liability Insurance to
cover any and all claims but a minimum limit of One Hundred Thousand Dollars
($100,000.00) for employers' liability, such policy to include the Federal Coal
Mine Health and Safety Act Endorsement.

      18.3: FINANCIAL RESPONSIBILITY

      As a condition precedent to this Lease becoming effective, and thereafter
annually and at such other times as may be requested by LESSOR, LESSEE agrees
that it will furnish LESSOR evidence of LESSEE'S financial responsibility to
carry out its obligations under this Lease and shall furnish to LESSOR
certificates of insurance showing that LESSEE has in effect and maintenance the
insurance coverages required in Section 18.2 above.

SECTION 19: BLACK LUNG OBLIGATION

      19.1: COMPLIANCE WITH LAW

      Not in limitation of the foregoing, LESSEE agrees that it shall comply
with all of the terms and provisions of the Black Lung Benefits Act, Title IV of
the Federal Mine Safety and Health Act of 1977, 30 U.S.C. 901 et. seq., and the
Internal Revenue Code, 26 U.S.C. 1 et. seq., Black Lung Benefits Reform Act of
1977 (P.L. 95-239), Black Lung Benefits Review Act of 1981 and the Black Lung
Benefits Amendments Act of 1981 (P.L. 97-119), 95 Stat. 1635, as now or
hereafter amended, and all rules and regulations adopted pursuant thereto
(collectively "Acts").

      19.2: LESSEE TO BE OPERATOR

      LESSEE acknowledges that as between itself and LESSOR it is, and shall be
deemed to be, the operator of any coal mine or coal preparation facility for the
extraction, preparation or transportation of coal from the Leased Premises and
of all related activities including, but not limited to, coal mine construction
or maintenance engaged in by LESSEE or persons under

                                       17
<PAGE>

contract with LESSEE pursuant to the terms of this Lease with respect to any
claim for black lung benefits ("Benefits") filed by or on account of its
employees or former employees. LESSEE shall secure and shall require any other
person or entity who operates, controls or supervises a coal mine or coal
preparation facility on the Leased Premises or performs services of
construction, maintenance, transportation or other activities related to coal
mining or preparation under the terms of this Lease, or who otherwise may be
liable for the payment of Benefits, to secure the payment of such Benefits to or
on account of employees or former employees in accordance with all applicable
laws, rules and regulations and shall provide LESSOR, upon request, with
appropriate certification that each of them has provided security in compliance
with all applicable laws, rules and regulations for the payment of such
Benefits.

      LESSEE does hereby agree that it will indemnify and hold LESSOR harmless
from any liability or expenses including, but not limited to, reasonable
attorney's fees and expenses which LESSOR may suffer directly as a result of or
with respect to any claim for Benefits filed by or on account of any of LESSEE'S
employees or former employees, or employees or former employees of others who
may be required to secure the payment of Benefits.

SECTION 20: DECISIONS CONCERNING MINING

      Notwithstanding anything in this Lease to the contrary, this Lease does
not empower LESSOR to make any decision and LESSOR hereby expressly waives and
disclaims any right to make any decisions with respect to the terms and
conditions under which the Leased Coal is extracted or prepared such as, but not
limited to, the manner of extraction or preparation or the amount of such coal
to be produced, all within the meaning of the Acts. The parties hereto do
acknowledge, however, that LESSOR has reserved certain rights and has imposed
certain requirements under the terms of this Lease solely for the purpose of
preventing waste and protecting the reserved rights of LESSOR.

SECTION 21: USE AND REMOVAL OF EQUIPMENT & IMPROVEMENTS

      Upon termination of this Lease, other than by forfeiture, and provided
LESSEE is not then in default of any of the terms of this Lease, LESSEE shall
remove all mobile machinery and equipment owned or controlled by it from the
Leased Premises within thirty (30) days after said termination or said machinery
and equipment shall revert to and become the property of LESSOR; and/or all of
the permanent improvements and attachments thereto including, but not limited
to, loading facilities, tipple, railroad siding and stationery machinery and
equipment

                                       18
<PAGE>

contained in said loading facility and/or tipple, placed upon the Leased
Premises, or any addition thereto, shall, within sixty (60) days, be valued and
appraised by two disinterested persons, one to be chosen by each of the parties
hereto and, in case of disagreement, those two shall choose a third and the
third such chosen, or a majority of them, shall value the improvements and
attachments thereto, and LESSOR shall have option to purchase any and/or all of
said permanent improvements and attachments, at such valuation, within thirty
(30) days after written notice of such valuation by the appraisers. If LESSOR
elects not to exercise the option contained herein, LESSEE shall have the
privilege of removing said permanent improvements from the Leased Premises, or
any additions or attachments thereto, within three (3) months after LESSOR
notifies LESSEE that it elects not to exercise the option contained herein. Upon
failure to remove the same within said period, said permanent improvements and
attachments shall revert to and become the property of LESSOR.

SECTION 22: ASSIGNMENT AND SUBLETTING

      LESSEE, without LESSOR'S prior consent, may transfer this Lease or its
rights herein to the parent, subsidiary or affiliate of LESSEE but may not
permit mining on the leased premises to he conducted by an independent
contractor, except as hereinbefore provided. LESSEE shall not mortgage nor
assign, convey, lease, underlet, sublet or set over any of its estate, interest
or rights hereunder, or any part thereof, or any improvements made or placed
upon the leasehold, either voluntarily or by operation of law, to any person or
persons whomsoever, or any corporation whatsoever, for any time whatsoever, or
to allow any third party to mine the leased premises under any form of agreement
or contract, nor create, suffer or permit any lien or encumbrance thereon, in
whole or in part, without the license and consent of the LESSOR, in writing, for
that purpose being first had and obtained, which consent shall not be
unreasonably withheld, and in the case of such assignment or transfer, the
transferees shall assume in writing all the obligations of the LESSEE in a form
satisfactory to the LESSOR; however, LESSEE herein shall not be relieved by
reason of such assignment from its primary responsibilities and liabilities for
the performance of the terms and conditions of this Lease, including but not
limited to the payment of all rents and royalties herein provided for; and
neither this Lease nor the term created thereby, nor any rights and privileges
hereby conferred, shall be subject to sale or disposition thereof, in whole or
in part, by or under the judgment, decree or order of any court or by or through
any judicial process of law or in equity, except for the purpose of enforcing,
at the

                                       19
<PAGE>

insistence of the LESSOR, its rights and remedies hereunder, including the lien
provided in this Lease to secure the payment of all rents and royalties and
other sums of money, and to secure the performance of all terms of this Lease.

      Any transfer of fifty percent (50%) or more of the outstanding capital
stock of LESSEE shall be deemed an assignment requiring the prior written
consent of LESSOR provided, however, that LESSOR'S consent shall not be required
for the transfer of all or any part of the stock of LESSEE to AEI Holding
Company, Inc. or any affiliate thereof.

      Any assignment, transfer, sublease, lien or encumbrance, either voluntary
or involuntary, by operation of law or otherwise, in violation of this Section,
shall, at LESSOR'S option, cause an immediate forfeiture hereof, and the rights
and interests of LESSEE shall forthwith cease and terminate.

SECTION 23: DEFAULTS; REMEDIES

      23.1: DEFAULTS; FORFEITURES; GENERALLY

      If at any time:

      (a) LESSEE shall fail to pay as and when due (i) any of the rentals or
royalties (including, without limitation, tonnage or minimum royalties) required
to be paid under the terms of this Lease or (ii) any sums of money required to
be paid for taxes or on account of coal lost or not mined, and any such failure
continues for a period of thirty (30) days or more after written notice of such
failure shall have been received by LESSEE, or

      (b) LESSEE shall fail to perform or be guilty of a breach of any one or
more of the other material terms, conditions, covenants, stipulations and
agreements of this Lease relating to matters other than the payment of money
and, if any such failure or breach shall continue for a period of at least sixty
(60) days or more after written notice of such failure or breach shall have been
received by LESSEE without being cured, if cure is possible within such sixty
(60) day period or, if not, without LESSEE commencing to cure within such sixty
(60) day period and thereafter diligently pursuing cure of any such failure or
breach, then, in the case of either (a) or (b), LESSOR shall have the right to
elect to forfeit and terminate this Lease and all of the rights of LESSEE
hereunder, whereupon all of LESSEE'S rights hereunder and the leasehold estate
thereby created shall immediately be forfeited and terminated, and LESSOR shall
have the right at any time thereafter, with or without further notice or demand,
to re-enter into or upon the Leased Premises and hold and possess the same, and
all of the property of LESSEE thereon, free

                                       20
<PAGE>

and clear from any claims of LESSEE thereto. No action, suit, demand or actual
re-entry shall be required to accomplish any forfeiture and the declaration by
LESSOR shall be sufficient without more. A forfeiture shall not excuse LESSEE
from its obligations to LESSOR for damages for breach of this Lease by LESSEE.

      Notwithstanding the foregoing, it is understood that all sums of money
required to be paid by LESSEE under the terms of this Lease, including e.g.
rentals, royalties and taxes, shall bear interest from the date when such sums
are due until actually paid at the rate of eight percent (8%) per annum and, in
addition, LESSEE shall reimburse LESSOR for all of its reasonable expenses
incurred in collecting any such sums from LESSEE, including without limitation.

      23.2: LESSEE'S BANKRUPTCY, INSOLVENCY, ETC.

      If LESSEE shall: (a) discontinue business (b) make a general assignment
for the benefit of its creditors (c) apply for or consent to the appointment of
a receiver, trustee or liquidator for all or a substantial part of its assets,
(d) be adjudicated a bankrupt or insolvent, or (e) file a voluntary petition in
bankruptcy or file a petition or an answer seeking reorganization or an
arrangement with creditors or seeking to take advantage of any other law
(whether Federal or State) relating to relief for debtors, or admit (by answer,
default or otherwise) the material allegations of any petition filed against it
in any bankruptcy, reorganization, insolvency or other proceedings (whether
Federal or State) relating to relief for debtors, (f) suffer or permit to
continue unstayed and in effect for thirty (30) consecutive days any judgment,
decree or order entered by a court or governmental agency of competent
jurisdiction, which (i) assumes control of LESSEE, (ii) approves a petition
seeking reorganization of LESSEE or any other judicial modification of the
rights of any of its creditors, or (iii) appoints a receiver, trustee or
liquidator for LESSEE or for all or a substantial part of any of its business or
assets, then, and in any such event, LESSEE shall be in default and LESSOR shall
be entitled to exercise its remedies under this Lease. To the extent that any
portion of this Section is held to be unenforceable, such holding shall not
render the remaining portions of this Section or any portions of this Lease
unenforceable.

SECTION 24: TERMINATION OF LEASE AFTER EXHAUSTION OF MINING

      If at any time while this Lease remains in effect LESSEE shall have
completed its mining operations and shall have mined, removed and paid royalty
on all of the mineable and merchantable Leased Coal and, if LESSEE shall have
fully discharged all of its obligations

                                       21
<PAGE>

hereunder and is not then in default, said LESSEE shall have the right to
terminate this Lease by giving LESSOR sixty (60) days written notice of its
intent to terminate. In the event this Lease is terminated by LESSEE under the
terms of this Section, for the purpose of evidencing upon the public records the
termination of this Lease, LESSEE shall execute, acknowledge and deliver to
LESSOR a proper release.

SECTION 25: OTHER REMEDIES

      All royalties, rentals and other payments herein agreed to be paid to
LESSOR shall be due and payable, without demand made therefor, on the respective
dates when due, as provided for hereinabove and shall be deemed and treated as
rents reserved upon contract by the LESSOR, and all remedies now or hereafter
given by the laws of Kentucky to landlords for the collection of rents shall
exist in favor of the LESSOR for the collection of same; and, if any of said
royalties, rentals or other payments shall remain unpaid for thirty (30) days
after the same become due and payable as hereinbefore provided, LESSOR shall
have the right to enforce the payment of same by remedies given by law to
landlords against delinquent tenants for non-payment of rent. In order to secure
the payment of all said royalties, rentals and other payments and also to secure
the payment of all taxes and assessments required to be paid by the LESSEE under
the terms of this Lease and to secure the performance of all the terms,
conditions and obligations of this Lease, to be kept and performed by LESSEE, a
lien is hereby expressly retained, reserved, created, given and imposed upon
this leasehold and upon all tipples, buildings, structures, tracks, wire,
rolling stock and machinery and equipment of every kind, including all property,
both real, personal and mixed, placed upon the Leased Premises or used in
connection with this mining operation.

SECTION 26: NO WAIVER

      A waiver by LESSOR of any particular default upon the part of LESSEE which
would entitle LESSOR to forfeit and terminate this Lease and re-enter and take
possession, shall not prevent the right of LESSOR to forfeit this Lease for any
other cause, or for the same cause occurring at any other time. The receipt by
LESSOR from LESSEE of payment of rentals, royalties or other sums after the
occurrence of any default that would authorize LESSOR to declare a forfeiture of
this Lease, or the continued recognition by LESSOR of LESSEE as its tenant after
the occurrence of any default entitling LESSOR to declare a forfeiture shall not
be deemed a waiver of LESSOR'S right of forfeiture, so long as the cause of
forfeiture continues to

                                       22
<PAGE>

exist. No action taken by LESSOR to terminate or forfeit this Lease shall waive
the right of LESSOR to collect and receive any rentals, royalties or other sums
of money that may be or become due and owing to it by LESSEE. Receipt and
acceptance by LESSOR of any amounts tendered by LESSEE shall not constitute an
agreement by LESSOR that such amounts are the proper amounts due or a waiver of
LESSOR'S claims for greater amounts. All payments by LESSEE to LESSOR shall
apply in the items longest past due, and the receipt of any such payment shall
not be a waiver of the right of forfeiture of any other remedy available to
LESSOR with respect to items which remain undischarged after crediting such
payments.

SECTION 27: NOTICES AND PAYMENTS

      Any notice which LESSOR may desire to serve upon LESSEE and any payment
which LESSOR may be required to make to LESSEE pursuant to the terms of this
Lease may be served or made by mailing such notice or payment by United States
registered or certified mail, postage prepaid, addressed to Leslie Resources,
Inc., 1021 Tori Drive, Hazard, Kentucky 41701, or addresses as may be designated
from time to time in writing, from LESSEE to LESSOR, and the mailing of such
notice shall constitute the giving of notice.

      Any notice that LESSEE may desire to serve upon LESSOR or any payment
which LESSEE is required to make to LESSOR pursuant to the terms of this Lease,
may be given or made by United States registered or certified mail, postage
prepaid, addressed to Kentucky Union Company at P. O. Box 89, Hazard, Kentucky
41702, or such other address or addresses as may be designated from time to
time, in writing, from LESSOR to LESSEE, and the mailing of any such notice
shall constitute the giving of notice.

SECTION 28: MISCELLANEOUS

      28.1: HEADINGS

      The headings of the sections and subsections of this Lease are for
convenience of reference only, and do not form a part hereof and in no way
modify, interpret or construe the meanings of the parties.

      28.2: BINDING EFFECT

      All of the terms, conditions, covenants, stipulations and agreements to be
performed and observed by the respective parties hereto shall be binding upon
their successors and assigns, and shall inure to the benefit of the other
parties and their successors and assigns, and said other

                                       23
<PAGE>

parties, their successors or assigns may enforce any and all of said terms,
conditions, covenants, stipulations and agreements.

      28.3: MEMORANDUM

      The parties agree not to record this Lease but, upon request of any party,
the parties will execute a Memorandum of this Lease reflecting the terms hereof
suitable for recordation.

      28.4: SURVIVAL

      All of LESSEE'S obligations under this Lease shall be construed to survive
the termination of this Lease to the extent reasonably necessary to protect
LESSOR and the Leased Premises from any danger or liability resulting from the
use of the Leased Premises during the term of this Lease. Any provisions of this
Lease which, by its terms, has or may have application after the termination or
forfeiture of this Lease, shall be deemed, to the extent of such application, to
survive termination and forfeiture.

      28.5: CONDEMNATION

      If, while this Lease remains in effect, the Leased Premises or any
material portion thereof shall be taken by the exercise of the power of eminent
domain, or condemnation or sale under threat of condemnation, this Lease shall
terminate with respect to the leased premises, or portion thereof affected
thereby, as of the date of such taking or sale. Any award, payment, fee,
settlement or other compensation in any form whatsoever paid, credited or due
and owing by the authority exercising the power of eminent domain or
condemnation or made by any court of competent jurisdiction shall become the
sole property of LESSOR.

      28.6: ENTIRE AGREEMENT

      This Lease constitutes the sole and entire existing agreement between the
parties and expresses all the obligations of and restrictions imposed upon the
parties. All prior agreements and commitments, whether written or oral, between
the parties are either superseded by specific sections of this Lease or, in the
absence of such coverage, specifically withdrawn.

      28.7: AMENDMENTS

      This Lease is subject to amendment, alteration or addition only by mutual
agreement, in writing, between the parties.

                      (THIS SPACE INTENTIONALLY LEFT BLANK)

                                       24
<PAGE>

      IN TESTIMONY WHEREOF, witness the signatures of the parties hereto, in
duplicate original, on this the day and year first above written.

                                     LESSOR:

                                     KENTUCKY UNION COMPANY

                                     BY: /s/ L.D. Gorman
                                         ---------------------------------------
                                         L.D. GORMAN, PRESIDENT

                                     BY: /s/ Elmer Whitaker
                                         ---------------------------------------
                                         ELMER WHITAKER, VICE PRESIDENT

                                     LESSEE:

                                     LESLIE RESOURCES, INC.,

                                     BY: /s/ Donald P. Brown
                                         ---------------------------------------

                                     ITS: President

STATE OF KENTUCKY

COUNTY OF PENNY

      Subscribed, acknowledged and sworn to by and before me by L. D. Gorman,
President of Kentucky Union Company, this the 21st day of May, 1998.

                                         /s/ James Harry Fields
                                         ---------------------------------------
                                         NOTARY PUBLIC/STATE AT LARGE

My Commission expires:

September 29th, 2000

STATE OF KENTUCKY

COUNTY OF FAYETTE

      Subscribed, acknowledged and sworn to by and before me by Elmer Whitaker,
Vice President of Kentucky Union Company, this the 21st day of May, 1998.

                                         /s/ James Harry Fields
                                         ---------------------------------------
                                         NOTARY PUBLIC/STATE AT LARGE

My Commission expires:

September 29th, 2000

                                       25
<PAGE>

STATE OF KENTUCKY

COUNTY OF BOYD

      Subscribed, acknowledged and sworn to by and before me by Donald P. Brown,
President, known to me to be the President of Leslie Resources, Inc., this the
22nd day of May, 1998.

                                         /s/ Lavina K. Conley
                                         ---------------------------------------
                                         NOTARY PUBLIC/STATE AT LARGE

My Commission expires:

June 13, 1998

                                       26
<PAGE>

      IN TESTIMONY WHEREOF, witness the signatures of the parties hereto, in
duplicate original, on this the day and year first above written.

                                     LESSOR:

                                     KENTUCKY UNION COMPANY

                                     BY: /s/ L.D. Gorman
                                         ---------------------------------------
                                         L.D. GORMAN, PRESIDENT

                                     BY: /s/ Elmer Whitaker
                                         ---------------------------------------
                                         ELMER WHITAKER, VICE PRESIDENT

                                     LESSEE:

                                     LESLIE RESOURCES, INC.,

                                     BY:  ______________________________________

                                     ITS: ______________________________________

STATE OF KENTUCKY

COUNTY OF PENNY

      Subscribed, acknowledged and sworn to by and before me by L. D. Gorman,
President of Kentucky Union Company, this the 21st day of May, 1998.

                                         /s/ James Harry Fields
                                         ---------------------------------------
                                         NOTARY PUBLIC/STATE AT LARGE

My Commission expires:

September 29th, 2000

STATE OF KENTUCKY

COUNTY OF FAYETTE

      Subscribed, acknowledged and sworn to by and before me by Elmer Whitaker,
Vice President of Kentucky Union Company, this the 21st day of May, 1998.

                                         /s/ James Harry Fields
                                         ---------------------------------------
                                         NOTARY PUBLIC/STATE AT LARGE

My Commission expires:

September 29th, 2000

                                       27
<PAGE>

This Instrument was prepared and / or approved by

/s/ Gary L. Colley
---------------------------------
Gary L. Colley, Attorney
Addington Corporate Center
2000 Ashland Drive
Ashland, Kentucky 41101

                                       28
<PAGE>

                     ASSIGNMENT OF REAL PROPERTY AGREEMENTS

      This Assignment of Real Property Agreements (the "Agreement"), dated as of
September 30, 2004, is among ICG HAZARD, LLC, a Delaware limited liability
company, with an address of 2000 Ashland Drive, Ashland, Kentucky 41101 (the
"Buyer"), and LESLIE RESOURCES INC., a Kentucky corporation, with an address of
2000 Ashland Drive, Ashland, Kentucky 41101 (the "Seller").

                                    RECITALS

A.          This Agreement is being entered into to effect the transactions
      contemplated by the Asset Purchase Agreement, dated May 13, 2004 as
      amended and restated on June 2, 2004 (as the same may be hereafter amended
      or supplemented, the "Purchase Agreement"), between the Buyer and Horizon
      Natural Resources Company ("Parent") and certain of its subsidiaries
      (collectively, the "Sellers"). Capitalized terms not otherwise defined
      herein shall have the meanings given to such terms in the Purchase
      Agreement.

B.          The Seller is one of the Sellers, and is a party to the real
      property agreements set forth on Schedule A hereto, which pertain to real
      property located in Breathitt County, Kentucky (the "Real Property
      Agreements").

C.          The Seller desires to assign to the Buyer, and the Buyer desires to
      assume, all of the Seller's right, title and interest in and to the Real
      Property Agreements, pursuant to the terms of the Purchase Agreement.

D.          The assignment of the Real Property Agreements covered hereby has
      been approved by Order Pursuant to 11 U.S.C. Sections 105(A), 362, 363,
      365, 1123 and 1146(C) and Fed. R. Bankr. P. 2002, 6004, 6006 and 9014: (A)
      Approving Asset Purchase Agreements, (B) Authorizing Sale of Substantially
      All Assets Free and Clear of All Liens, Claims, Interest and Other
      Encumbrances, and (C) Authorizing Assumption and Assignment of Certain
      Agreements, entered on September 16, 2004, by the United States Bankruptcy
      Court for the Eastern District of Kentucky, Ashland Division, in the
      Chapter 11 proceeding styled in In Re: Horizon Natural Resources Company,
      et al. (including Seller) (the "Sale Order," a copy of which is attached
      hereto and made a part hereof as Exhibit 1), such proceedings being
      jointly administered under Case No. 02-14261. Pursuant to the Sale Order
      and Section 1146 of the U.S. Bankruptcy Code, the execution and delivery
      of this instrument shall not be taxed under any law imposing a transfer
      tax, stamp tax or similar tax.

      NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

<PAGE>

1.    Assignment. The Seller hereby grants, assigns, transfers, conveys,
      delivers and sets over unto the Buyer all of its right, title, interest,
      duties and obligations in, to and under the Real Property Agreements.

2.    Assumption. The Buyer hereby assumes all of the Seller's right, title,
      interest, duties and obligations in, to and under the Real Property
      Agreements and agrees to be bound by all of the terms and conditions of
      the Real Property Agreements and to pay, perform and discharge when due,
      all duties and obligations of the Seller under the Real Property
      Agreements, in each case, however, only to the extent such obligations are
      Assumed Liabilities.

3.    Conflict. This Agreement is subject to all the terms and conditions of the
      Purchase Agreement and Sale Order. No provision of this Agreement shall be
      deemed to enlarge, alter or amend the terms or provisions of the Purchase
      Agreement or the Sale Order. Notwithstanding anything to the contrary set
      forth herein, if there is any conflict between the terms and conditions of
      this Agreement and the terms and conditions of the Purchase Agreement and
      the Sale Order, the terms and conditions of the Purchase Agreement and the
      Sale Order shall control.

4.    Governing Law. Except to the extent inconsistent with the United States
      Bankruptcy Code, this Agreement shall be governed by and construed
      according to the laws of the State of Delaware, without regard to or
      application of its conflict of laws rules. The parties to this Agreement
      agree that the Bankruptcy Court shall have exclusive jurisdiction, and the
      parties hereby submit to such jurisdiction, of any dispute arising under
      or related to this Agreement.

5.    Counterparts. This Agreement may be executed in one or more counterparts
      (including by means of facsimile signature pages) and all such
      counterparts taken together shall constitute one and the same Agreement.

6.    Severability. If any provision of this Agreement or its application is
      invalid, illegal or unenforceable in any respect, the validity, legality
      and enforceability of all other applications of that provision, and of all
      other provisions and applications hereof, will not in any way be affected
      or impaired. If any court shall determine that any provision of this
      Agreement is in any way unenforceable, such provision shall be reduced to
      whatever extent is necessary to make such provision enforceable.

7.    Entire Agreement. All prior negotiations and agreements by and among the
      parties hereto with respect to the subject matter hereof are suspended by
      this Agreement, the Purchase Agreement, the Sale Order and the Related
      Agreements, and there are no representations, warranties, understandings
      or agreements with respect to the subject matter hereof other than those
      expressly set forth in this Agreement, the Purchase Agreement, the Sale
      Order and the Related Agreements.

<PAGE>

8.    Headings. Section headings are not to be considered part of this
      Agreement, are solely for convenience of reference, and shall not affect
      the meaning or interpretation of this Agreement or any provision in it.

9.    No Third-Party Beneficiaries. Nothing in this Agreement shall confer any
      rights upon any person or entity other than the parties hereto and their
      respective successors and permitted assigns.

10.   Successors and Assigns. The terms of this Agreement shall be binding upon
      and shall insure to the benefit of the parties hereto and their respective
      successors and permitted assigns.

11.   Further Assurances. Each party hereto agrees, upon the reasonable request
      of the other party hereto, to make, execute and deliver any and all
      documents or instruments of any kind or character, and to perform all such
      other actions, that may be reasonably necessary or proper (without the
      expenditure of funds) to effectuate, confirm, perform or carry out the
      terms or provisions of this Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this Agreement as of the date first forth above.

BUYER:                               ICG HAZARD, LLC

                                     By:/s/ David Louis Wax
                                        ----------------------------

                                     Name: David Louis Wax

                                     Title: Vice President

SELLER:                              LESLIE RESOURCES, INC.

                                     By:/s/ Marc Merritt
                                        ----------------------------

                                     Name: Marc Merritt

                                     Title: Treasurer

<PAGE>

STATE OF NEW YORK
COUNTY OF NEW YORK

      The foregoing Assignment of Real Property Agreements was acknowledged
before me on September 29, 2004, by David Louis Wax, as Vice President of ICG
Hazard, LLC, a Delaware limited liability company, for and on behalf of company.

                                      /s/ Joseph Mignone
                                      ------------------------------------------
                                      Notary Public, State at Large
                                      My Commission Expires November 10, 2007

STATE OF NEW YORK
COUNTY OF NEW YORK

      The foregoing Assignment of Real Property Agreements was acknowledged
before me on September 29, 2004, by Marc Merritt, as Treasurer of Leslie
Resources, Inc., a Kentucky corporation, for and on behalf of the company.

                                        /s/ Margie Tuan
                                        ---------------------------------------
                                        Notary Public, State at Large
                                        My Commission Expires:  Jan. 3, 2006

THIS INSTRUMENT PREPARED BY:

/s/ Warren J. Hoffman
------------------------------------
Warren J. Hoffman, Esq.
Frost Brown Todd LLC
250 West Main Street
Suite 2700
Lexington, Kentucky  40507-1749
(859) 231-0000

<PAGE>

                                   SCHEDULE A

      The real property agreements being assigned or otherwise transferred by
this instrument are those leases or instruments described in this Schedule A and
being recorded at the indicated book/volume and page numbers identified in the
charts in this Schedule A.

<PAGE>

                                                                    Exhibit 10.7

                                                                      ICG-HZ-A-1

                                   SCHEDULE A

<TABLE>
<CAPTION>
 CONTRACT #     CONTRACT TYPE        LESSEE              LESSOR            CTY        ST     CONTRACT DATE    BOOK     PAGE    DOC
-------------   -------------  -----------------   -------------------  ---------     --     -------------   ------  --------  ----
<S>             <C>            <C>                 <C>                  <C>           <C>    <C>             <C>     <C>       <C>
                               Leslie Resources,   Aiken, Laura And
LA-013-016-LR     Fee Lease    Inc. (017)          Burley Et Al         Breathitt     KY       10/24/1973      28      123

                               Leslie Resources,   Ark Land Company
SA-013-040-LR      Sublease    Inc. (017)          (Sublease)           Breathitt     KY       05/22/1998      27      660

                               Leslie Resources,   Bedford, Archie &
LA-013-012-LR     Fee Lease    Inc. (017)          Violet, Et Al        Breathitt     KY       09/27/1963      28      591

                               Leslie Resources,   Clemons, Milo &
SA-013-056-LR   Surface Lease  Inc. (017)          Nancy                Breathitt     KY       03/03/1986      28      607

                               Leslie Resources,
   200101         Coal Lease   Inc. (017)          Dassler, Peter G.    Breathitt     KY       04/23/2004    55, 29  425, 377

                               Leslie Resources,   Fitch, Goldie &
SA-013-059-LR   Surface Lease  Inc. (017)          Arnold               Breathitt     KY       01/10/1986      21      604

                               Leslie Resources,
LA-013-033-LR   Surface Lease  Inc. (017)          Fugate, George       Breathitt     KY       04/10/1969      28      542

                               Leslie Resources,
SA-013-057-LR     Coal Lease   Inc. (017)          Fugate, George       Breathitt     KY       05/15/1973      28      618

                               Leslie Resources,
SA-013-075-LR   Surface Lease  Inc. (017)          Fugate, George       Breathitt     KY       04/27/1982      28      626

                               Leslie Resources,   Fugate, George &
   200076       Surface Lease  Inc. (017)          Shirley              Breathitt     KY       02/14/2002      28      505

                               Leslie Resources,   Fugate, Lonzo &
   200100       Surface Lease  Inc. (017)          Rebecca              Breathitt     KY       04/26/2004      29      394

                               Leslie Resources,
LA-013-074-LR     Fee Lease    Inc. (017)          George Fugate Heirs  Breathitt     KY       12/15/2003      29      157

                               Leslie Resources,
   200098       Surface Lease  Inc. (017)          George Fugate Heirs  Breathitt     KY       05/21/2004      29      367

                               Leslie Resources,   Goff, Leo &
LA-013-010-LR     Fee Lease    Inc. (017)          Josephine, Et Al     Breathitt     KY       09/12/1983      19       24

                               Leslie Resources,   Goff, Leo William &
SA-013-045-LR     Fee Lease    Inc. (017)          Josephine Et Al      Breathitt     KY       08/17/1984      19      721

                               Leslie Resources,   Hollon, John S.,
LA-013-038-LR     Fee Lease    Inc. (017)          Et Al                Breathitt     KY       08/29/1966      28      522

                               Leslie Resources,   Howard, Herbert &
LA-013-034-LR   Surface Lease  Inc. (017)          Minna L.             Breathitt     KY       04/22/1974      28      123

                               Leslie Resources,
SA-013-048-LR   Surface Lease  Inc. (017)          Howell, Jeff  Et Al  Breathitt     KY       10/20/1967      28      525
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
  CONTRACT #   CONTRACT TYPE       LESSEE             LESSOR            CTY      ST  CONTRACT DATE  BOOK   PAGE         DOC
-------------- ------------- -----------------  -------------------  ---------   --  -------------  ----  -------  ----------------
<S>            <C>           <C>                <C>                  <C>         <C> <C>            <C>   <C>      <C>
                                                                                                                   2ndagmt.11/24/81
                             Leslie Resources,  Hudson, Reeve &                                           572 (25       Db-15,
LA-013-025-LR  Surface Lease Inc. (017)         Pherbia              Breathitt   KY    11/18/1981    15    Acres)   Pg-566(20 Acs.)

                             Leslie Resources,  Hunshell, Henry H &
SA-013-049-LR  Surface Lease Inc. (017)         Ollie C              Breathitt   KY    03/03/1966    28     630

                                                Johnson, Paul D.
                             Leslie Resources,  (Family Ltd
LA-013-020-LR   Fee Lease    Inc. (017)         Partnership)         Breathitt   KY    09/03/2000    28       1

                             Leslie Resources,  Kentucky May Coal
SA-013-041-LR   Sublease     Inc. (017)         Company Inc          Breathitt   KY    10/27/1982    28     529

                             Leslie Resources,  Kentucky Union
SA-013-044-LR   Fee Lease    Inc. (017)         Company              Breathitt   KY    08/01/1977    28     587

                             Leslie Resources,  Kentucky Union
LA-013-039-LR   Fee Lease    Inc. (017)         Company              Breathitt   KY    05/21/1998    27     773

                             Leslie Resources,
    200088     Coal Lease    Inc. (017)         Kycoga Company, Llc  Breathitt   KY    09/25/2003    29     150

                             Leslie Resources,  Lee, Rebecca S.,
LA-013-011-LR  Coal Lease    Inc. (017)         Et Al                Breathitt   KY    08/19/1985    28     555

                             Leslie Resources,  Marshall, William
LA-013-054-LR   Fee Lease    Inc. (017)         Bach Et Al           Breathitt   KY    07/30/1979    23     118

                             Leslie Resources,  Miller Bros. Coal,
SA-013-076-LR   Sublease     Inc. (017)         Inc.                 Breathitt   KY    10/16/2002    29      95

                             Leslie Resources,  Miller Bros. Coal,
SA-013-077-LR   Sublease     Inc. (017)         Inc.                 Breathitt   KY    11/27/2002    29     103

                             Leslie Resources,  Miller Bros. Coal,
SA-013-078-LR   Sublease     Inc. (017)         Inc.                 Breathitt   KY    12/31/2002    29     118

                             Leslie Resources,  Miller Bros. Coal,
SA-013-079-LR   Sublease     Inc. (017)         Inc.                 Breathitt   KY    12/31/2002    29     110

                             Leslie Resources,  Miller Bros. Coal,
SA-013-080-LR   Sublease     Inc. (017)         Inc.                 Breathitt   KY    01/23/2003    29     125

                             Leslie Resources,  Miller, John D., Et
    200075       Fee Lease   Inc. (017)         Al                   Breathitt   KY    06/14/2002    28     696

                             Leslie Resources,  Morgan & Maggie
    200090     Surface Lease Inc. (017)         Campbell Heirs       Breathitt   KY    12/22/2003    29     207

                             Leslie Resources,  Reynolds, Eleanor &
LA-013-014-ROW Surface Lease Inc. (017)         Marion               Breathitt   KY    08/16/1973   124     522

                             Leslie Resources,
 LA-013-018-LR   Fee Lease   Inc. (017)         Roberts, Hayden      Breathitt   KY    04/30/1974    28     551

                             Leslie Resources,  Sewell, Juliet,
 LA-013-008-LR   Fee Lease   Inc. (017)         Et Al                Breathitt   KY    05/01/1980     3      36
</TABLE>

                                                                               2

<PAGE>

<TABLE>
<CAPTION>
 CONTRACT #    CONTRACT TYPE       LESSEE             LESSOR            CTY      ST  CONTRACT DATE  BOOK   PAGE        DOC
-------------  -------------- -----------------  -----------------   ---------   --  -------------  ----  -------   ---------
<S>            <C>            <C>                <C>                 <C>         <C> <C>            <C>   <C>       <C>
                              Leslie Resources,  Sizemore, Buddy,
LA-013-031-LR    Fee Lease    Inc. (017)         Et Al               Breathitt   KY    10/15/1976    28     546

                              Leslie Resources,  Spencer, Gloria
SA-013-028-LR  Surface Lease  Inc. (017)         And Franklin Dean   Breathitt   KY    12/07/1994    26     484

                              Leslie Resources,  Strong, Donald &
LA-013-024-LR  Surface Lease  Inc. (017)         Nettie              Breathitt   KY    05/09/1977     8     389

                              Leslie Resources,  The University
LA-013-029-LR    Fee Lease    Inc. (017)         Of Kentucky         Breathitt   KY    06/16/1992    28     600

                              Leslie Resources,
LA-013-015-LR    Fee Lease    Inc. (017)         Turner, John R.     Breathitt   KY    10/10/1973     2      96

                              Leslie Resources,  Turner, John
LA-013-019-LR    Fee Lease    Inc. (017)         Raymond, Et Al      Breathitt   KY    03/09/1976    28     577

                              Leslie Resources,  Turner, Marie Et
SA-013-043-LR    Coal Lease   Inc. (017)         Al                  Breathitt   KY    08/01/1966     2     129

                              Leslie Resources,  Turner, Marie R.
LA-013-022-LR    Fee Lease    Inc. (017)         (Trust)             Breathitt   KY    03/16/1981    16     394

                              Leslie Resources,  Turner, Marie,
LA-013-013-LR    Fee Lease    Inc. (017)         Et Al               Breathitt   KY    08/18/1969    28     538

                              Leslie Resources,  University Of
SA-013-042-LR    Coal Lease   Inc. (017)         Kentucky            Breathitt   KY    06/09/1998    28     610

                              Leslie Resources,  Watkins, Kelly &
LA-013-007-LR  Surface Lease  Inc. (017)         Emma                Breathitt   KY    12/02/1970    28     572

                              Leslie Resources,  Williams Estate,
LA-013-014-LR    Coal Lease   Inc. (017)         Grace               Breathitt   KY    12/06/1972    28     123

                              Leslie Resources,  Williams, Martha
LA-013-017-LR    Fee Lease    Inc. (017)         Et Al               Breathitt   KY    04/26/1974     2     366

                              Leslie Resources,  Wilson Noble
   200096      Surface Lease  Inc. (017)         Heirs               Breathitt   KY    01/15/2004    29   257-267

                                                 Ark Land
                              Leslie Resources,  Co/Cumberland
LA-013-073-LR  Misc Agreement Inc. (017)         River Coal Co       Breathitt   KY    05/22/1998    42     617     628, 633

                                                 Ark Land Company
                              Leslie Resources,  (Assignment Of
LA-013-053-LR  Assignment     Inc. (017)         Lease)              Breathitt   KY    11/25/1998    23     118

                                                 Ark Land Company
                              Leslie Resources,  (Assignment Of
LA-013-072-LR  Assignment     Inc. (017)         Leases)             Breathitt   KY    05/22/1998    28     123

               Easement/      Leslie Resources,
LA-013-032-LR  Right Of Wa    Inc. (017)         Fugate, George      Breathitt   KY    07/17/1970    28     123
</TABLE>

                                                                               3

<PAGE>

<TABLE>
<CAPTION>
  CONTRACT #   CONTRACT TYPE       LESSEE            LESSOR             CTY      ST  CONTRACT DATE  BOOK    PAGE       DOC
-------------  -------------- ---------------    ----------------    ---------   --  -------------  ----    ----       ---
<S>            <C>            <C>                <C>                 <C>         <C> <C>            <C>     <C>        <C>

                              Leslie
               Easement/Right Resources, Inc.    Miller, Helen,
LA-013-035-LR  Of Wa          (017)              Et Al               Breathitt   KY    12/11/1968    28      123

                              Leslie
               Easement/Right Resources, Inc.    Miller, Roy And
SA-013-058-LR  Of Wa          (017)              Eliza               Breathitt   KY    02/15/1967    27      660

                              Leslie
               Easement/Right Resources, Inc.    Strong, Donald &
LA-013-023-LR  Of Wa          (017)              Nettie              Breathitt   KY    05/09/1977    28      123
</TABLE>

4

<PAGE>

STATE OF KENTUCKY
COUNTY OF BREATHITT

      I, TONY WATTS, Clerk of the aforesaid County Court, certify that the
foregoing instrument was, on the 4th day of Nov. 2004, lodged for record:
whereupon the same, with the foregoing and this certificate have been duly
recorded in my office in Miscellaneous Contract Book No. 45 Page 186.

      Witness my hand this 4th day of Nov. 2004.

                                             TONY WATTS, CLERK

                                             BY:/s/ Stella Robinson D.C.
                                                -------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]