Document:

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                                                                    EXHIBIT 10.4

                            NATURAL RESOURCE PARTNERS
                       ANNUAL INCENTIVE COMPENSATION PLAN

1. INTENT.

         The purpose of this Annual Incentive Compensation Plan (the "Plan") is
to motivate the key employees of GP Natural Resource Partners LLC (the
"Company") and its affiliates who perform services for Natural Resource Partners
L.P. (the "Partnership") and its subsidiaries to produce outstanding results,
encouraging superior performance, increasing productivity, and to aid in the
ability to attract and retain such key employees.

2. PLAN GUIDELINES.

         The administration of the Plan and any potential financial remuneration
to come as a result of its implementation is subject to the determination by the
Compensation Committee of the Company's Board of Directors that the performance
goals for the applicable period have been achieved. The Plan is an additional
compensation program designed to encourage Plan participants (designated by the
Company's Compensation Committee) to exceed specified objective performance
targets for the designated period. The Compensation Committee will review the
performance results for the designated period and thereafter determine the
payments due under the Plan, if any.

3. PERFORMANCE TARGETS.

         3.1 Designation of Performance Targets. The Compensation Committee
shall determine the performance target or targets to be used for each calendar
year (a "Plan Year") for determining the bonuses to be paid as a result of this
Plan. Performance targets may be based on Partnership, business units and/or
individual achievements, criteria and/or goals and/or incentive distribution
rights of the Company with respect to the Partnership or any combination or
weighting of the same or on such other factors as the Compensation Committee may
determine, whether subjective or objective. Different performance targets may be
established for different participants or groups of participants for any Plan
Year. Except as provided in Section 3.3, satisfactory results as determined by
the Compensation Committee, in its sole discretion, must be achieved in order
for a performance payment to occur under the Plan.

         3.2 Equitable Adjustment to Performance Targets. The performance
targets applicable to any participant for a Plan Year shall be subject to
equitable adjustment at the sole discretion of the Compensation Committee to
reflect the occurrence of any unexpected significant events during the Plan
Year.

         3.3 Waiver of Performance Targets. The Compensation Committee may
waive, in whole or in part, the requirement that performance targets be achieved
in order to pay a bonus under this Plan whenever the Compensation Committee
determines such a bonus payment will be in the best interests of the
Partnership.

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4. PARTICIPANTS.

         Employees of the Company and its affiliates eligible to participate in
the Plan shall be designated annually by the Compensation Committee and may be
based on the recommendation of the Company's President and Chief Executive
Officer.

5. PARTICIPATION LEVELS.

         A participant's designated level of participation in the Plan will be
determined under criteria established or approved by the Compensation Committee
for that Plan Year or designated performance period. Levels of participation in
the Plan may vary according to a participant's position and the relative impact
such participant can have on the Company's and/or affiliates' operations. Care
will be used in communicating to any participant his performance targets and
potential performance amount for a Plan Year. The amount of bonus a participant
may receive for any Plan Year will depend upon the performance level(s) achieved
(unless waived) for that Plan Year, as determined by the Compensation Committee.
No participant shall have any claim to be granted any award under the Plan, and
there is no obligation for uniformity of treatment of participants. The terms
and conditions of awards need not be the same respecting each participant.

6. AWARD PAYOUT.

         Earned awards will be determined after the end of the Plan Year or
designated performance period. Awards will be paid in cash as soon as reasonably
practical following the Compensation Committee's determination, unless otherwise
determined by the Compensation Committee. The Compensation Committee will have
the discretion, by participant and by grant, to reduce or increase the amount of
any award that otherwise would be payable to an individual by reason of the
satisfaction of the applicable performance targets. In making any such
determination, the Compensation Committee is authorized to take into account
such factors it determines are appropriate.

7. TERMINATION OF EMPLOYMENT.

         A participant's termination of employment for any reason prior to a
performance payment under the Plan will result in the participant's forfeiture
of any right, title or interest in receiving a performance payment under the
Plan, except to the extent waived by the Compensation Committee, in its sole
discretion.

8. AMENDMENT AND TERMINATION.

         The Company's Compensation Committee, at its sole discretion, may amend
the Plan in whole or in part and may terminate the Plan at any time.

9. ADMINISTRATION OF PLAN.

         9.1 Administration. The Compensation Committee may delegate all or part
of the responsibility for the administration of the Plan to the President and
Chief Executive Officer of the Company and other employees. The Compensation
Committee (or the person(s) to which

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such administrative authority has been delegated) shall have the authority to
interpret and construe any and all provisions of the Plan, including all
performance targets and whether and to what extent achieved. Any determination
made by the Compensation Committee (or the person(s) to which administrative
authority has been delegated) shall be final and conclusive and binding on all
persons.

         9.2 Indemnification. Neither the Company, any participating affiliate,
the Board of Directors, any member or any committee thereof, nor any employee of
the Company or any participating affiliate shall be liable for any act,
omission, interpretation, construction or determination made in connection with
the Plan in good faith; and the members of the Company's Board of Directors, the
Compensation Committee and the employees of the Company and any participating
affiliate shall be entitled to indemnification and reimbursement by the Company
to the maximum extent permitted by law in respect of any claim, loss, damage or
expense (including counsel's fees) arising from their acts, omission and conduct
in their official capacity with respect to the Plan if taken or omitted in good
faith.

10. GENERAL PROVISIONS.

         10.1 Non-Guarantee of Employment. Nothing contained in this Plan shall
be construed as a contract of employment between the Company and/or a
participating affiliate and a participant, and nothing in this Plan shall confer
upon any participant any right to continued employment with the Company or a
participating affiliate, or to interfere with the right of the Company or a
participating affiliate to discharge a participant, with or without cause.

         10.2 Interests Not Transferable. No interest or payment under the Plan
shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment or other legal process, or encumbrance of any kind, and any
attempt to do so shall be void.

         10.3 Facility Payment. Any amounts payable hereunder to any person
under legal disability or who, in the judgment of the Compensation Committee or
its designee, is unable to properly manage his financial affairs, may be paid to
the legal representative of such person, or may be applied for the benefit of
such person in any manner which the Compensation Committee or its designee may
select, and each participating affiliate shall be relieved of any further
liability for payment of such amounts.

         10.4 Tax Withholding. The Company and/or any participating affiliate
may withhold from any payments otherwise due under this Plan to a participant
(or beneficiary) all amounts required by law to be withheld for purposes of
federal, state or local taxes.

         10.5 Gender and Number. Words in the masculine gender shall include the
feminine gender, the plural shall include the singular and the singular shall
include the plural.

         10.6 Controlling Law. The law of the State of Texas, without regard to
its conflict of laws principles, shall be controlling in all matters relating to
the Plan.

         10.7 No Rights to Award. No person shall have any claim to be granted
any award under the Plan, and there is no obligation for uniformity of treatment
of participants. The terms and conditions of awards need not be the same with
respect to each recipient.

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         10.8 Severability. If any provision of the Plan or any award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any person or award, or would disqualify the Plan or any
award under the law deemed applicable by the Compensation Committee, such
provision shall be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Compensation Committee, materially altering the intent of
the Plan or the award, such provision shall be stricken as to such jurisdiction,
person or award and the remainder of the Plan and any such award shall remain in
full force and effect.

         10.9 No Trust or Fund Created. Neither the Plan nor any award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any participating affiliate and a
participant or any other person. To the extent that any person acquires a right
to receive payments from the Company or any participating affiliate pursuant to
an award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any participating affiliate.

         10.10 Headings. Headings are given to the Sections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in
any way material or relevant to the construction or interpretation of the Plan
or any provision thereof.

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                                                                    EXHIBIT 10.5

                                                               EXECUTION VERSION

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                                OMNIBUS AGREEMENT

                                      among

                                 ARCH COAL, INC.

                                ARK LAND COMPANY

                WESTERN POCAHONTAS PROPERTIES LIMITED PARTNERSHIP

                  GREAT NORTHERN PROPERTIES LIMITED PARTNERSHIP

                           NEW GAULEY COAL CORPORATION

                          ROBERTSON COAL MANAGEMENT LLC

                        GP NATURAL RESOURCE PARTNERS LLC

                                   NRP (GP) LP

                         NATURAL RESOURCE PARTNERS L.P.

                                       and

                               NRP (OPERATING) LLC

================================================================================

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                                OMNIBUS AGREEMENT

      THIS OMNIBUS AGREEMENT ("Agreement") is entered into on, and effective as
of, the Closing Date (as defined herein) among Arch Coal, Inc., a Delaware
corporation ("Arch"), Ark Land Company, a Delaware corporation ("Ark"), Western
Pocahontas Properties Limited Partnership, a Delaware limited partnership
("WPP"), Great Northern Properties Limited Partnership, a Delaware limited
partnership ("GNP"), New Gauley Coal Corporation, a West Virginia corporation
("NGCC" and, together with WPP and GNP, the "WPP Group"), Robertson Coal
Management LLC, a Delaware limited liability company ("Robertson Coal
Management"), GP Natural Resource Partners LLC ("GP LLC"), NRP (GP) LP, a
Delaware limited partnership (including any permitted successors and assigns
under the Partnership Agreement (as defined herein), the "General Partner"),
Natural Resource Partners L.P., a Delaware limited partnership (the
"Partnership"), and NRP (Operating) LLC, a Delaware limited liability company
("OLLC"). The above-named entities are sometimes referred to in this Agreement
each as a "Party" and collectively as the "Parties."

                                R E C I T A L S:

      1. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article II, with respect to
those business opportunities that a Sponsor (as defined herein) will not engage
in for so long as such Sponsor participates in the control of the General
Partner unless the Partnership has declined to engage in any such business
opportunity for its own account.

      2. The Parties desire by their execution of this Agreement to evidence
their understanding, as more fully set forth in Article III, with respect to
certain indemnification obligations of the Sponsors in favor of the Partnership
Group (as defined herein).

      In consideration of the premises and the covenants, conditions and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
hereby agree as follows:

                                   ARTICLE I
                                   DEFINITIONS

            1.1 DEFINITIONS.

                  (a) As used in this Agreement, the following terms shall have
            the respective meanings set forth below:

            "Affiliate" is defined in the Partnership Agreement; notwithstanding
      the foregoing, "Affiliate" shall also include, with respect to any
      Sponsor, any other entity in which the Sponsor owns, through one or more
      intermediaries, 50% or more of the then outstanding voting securities or
      ownership interests of such entity.

            "Assets" means all assets conveyed, contributed, or otherwise
      transferred by the Sponsors to the Partnership Group prior to or on the
      Closing Date.

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            "Closing Date" means the date of the closing of the Partnership's
      initial public offering of Common Units.

            "Common Units" is defined in the Partnership Agreement.

            "Conflicts Committee" is defined in the Partnership Agreement.

            "control" means the possession, directly or indirectly, of the power
      to direct or cause the direction of the management and policies of a
      Person, whether through ownership of voting securities, by contract, or
      otherwise.

            "Covered Environmental Losses" is defined in Section 3.1.

            "Environmental Laws" means all federal, state, and local laws,
      statutes, rules, regulations, orders, and ordinances, now or hereafter in
      effect, relating to protection of human health and the environment
      including, without limitation, the federal Comprehensive Environmental
      Response, Compensation, and Liability Act, the Superfund Amendments
      Reauthorization Act, the Surface Mining Control and Reclamation Act, the
      Mine Health and Safety Acts of 1969 and 1977, the Resource Conservation
      and Recovery Act, the Clean Air Act, the Clean Water Act, the Federal
      Water Pollution Control Act, the Toxic Substances Control Act, the
      Hazardous Materials Transportation Act, the Safe Drinking Water Act, the
      Emergency Planning and Community Right-to-Know Act, and other
      environmental conservation and protection laws, each as amended from time
      to time.

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

            "Group Member" is defined in the Partnership Agreement.

            "Limited Partner" is defined in the Partnership Agreement.

            "Mechanics Lien" means the unperfected lien filed on March 21, 2002
      against Ark in the amount of $40,504.40 by Ash Block, Inc.

            "Majority Sponsor" means the WPP Group and any Affiliate of the WPP
      Group, Robertson Coal Management or Corbin J. Robertson, Jr.

            "Minority Sponsor" means Arch and Ark.

            "Partnership Agreement" means the First Amended and Restated
      Agreement of Limited Partnership of Natural Resource Partners L.P., dated
      as of the Closing Date, as such agreement is in effect on the Closing
      Date, to which reference is hereby made for all purposes of this
      Agreement. No amendment or modification to the Partnership Agreement
      subsequent to the Closing Date shall be given effect for the purposes of
      this Agreement unless consented to by each of the Parties to this
      Agreement.

            "Partnership Group" is defined in the Partnership Agreement.

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            "Person" is defined in the Partnership Agreement.

            "Restricted Business" is defined in Section 2.1.

            "Second Offer" is defined in Section 2.4(c).

            "Sponsor" means any of the Majority Sponsor or the Minority Sponsor,
      and "Sponsors" means both the Majority Sponsor and the Minority Sponsor.

            "Subsidiary" is defined in the Partnership Agreement.

            "Unit" is defined in the Partnership Agreement.

                                   ARTICLE II
                             BUSINESS OPPORTUNITIES

            2.1 RESTRICTED ACTIVITIES

                  (a) Restricted Businesses. For so long as a Sponsor
            participates in the control of the General Partner, and except as
            permitted by Section 2.2, each Sponsor and its Affiliates shall be
            prohibited from, directly or indirectly, owning, operating or
            investing in any business having assets engaged in the following
            activities (each, a "Restricted Business"):

                        (i) owning or entering into leases with a party other
                  than an Affiliate of a Sponsor of any fee coal reserves within
                  the United States owned by a Sponsor or its Affiliate; or

                        (ii) owning or entering into subleases with a party
                  other than an Affiliate of a Sponsor of any coal reserves
                  within the United States controlled by a paid-up lease owned
                  by a Sponsor or its Affiliate.

                  (b) Restrictions on Controlling Investments in New Entities.
            For so long as a Sponsor participates in the control of the General
            Partner, the Sponsors and their Affiliates shall be prohibited from
            the following actions:

                        (i) The Majority Sponsor and its Affiliates may not,
                  through one or more transactions, form or purchase (1) a
                  general partner interest in any partnership (publicly traded
                  or private) that principally engages in a Restricted Business,
                  (2) a managing member interest in any limited liability
                  company (publicly traded or private) that principally engages
                  in a Restricted Business or (3) a controlling interest in any
                  corporation (publicly traded or private) that principally
                  engages in a Restricted Business; provided, however, that the
                  Majority Sponsor may form or purchase a general partner
                  interest in any private partnership, a managing member
                  interest in any private limited liability company or a
                  controlling interest in any private corporation, each
                  principally engaging in a Restricted Business, subject to
                  Sections 2.3 and 2.4.

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                        (ii) The Minority Sponsor and its Affiliates may not,
                  through one or more transactions, form or purchase (1) a
                  general partner interest in any partnership (publicly traded
                  or private) that principally engages in a Restricted Business,
                  (2) a managing member interest in any limited liability
                  company (publicly traded or private) that principally engages
                  in a Restricted Business or (3) a controlling interest in any
                  corporation (publicly traded or private) that principally
                  engages in a Restricted Business; provided, however, that the
                  Minority Sponsor may form or purchase a general partner
                  interest in any partnership (publicly traded or private), a
                  managing member interest in any limited liability company
                  (publicly traded or private) or a controlling interest in any
                  corporation (publicly traded or private), each principally
                  engaging in a Restricted Business, so long as (1) the Minority
                  Sponsor sells such general partner interest, managing member
                  interest or controlling interest to the Partnership or a third
                  party within six months of the date of the acquisition by the
                  Minority Sponsor or (2) the General Partner (with the
                  concurrence of the Conflicts Committee) agrees that the
                  interest in the Restricted Business will be subject to Section
                  2.4 of this Agreement without further reference to this
                  paragraph. If, at any time after six months from the date of
                  such formation or acquisition by the Minority Sponsor, the
                  Minority Sponsor continues to own the interest in the
                  Restricted Business despite a good faith, reasonable attempt
                  to divest such interest, it may seek an extension from the
                  Conflicts Committee for such time as is reasonably necessary
                  to divest such interest. The Conflicts Committee, in its
                  discretion, may either (1) grant an extension to the Minority
                  Sponsor to complete the divestiture of such interest or (2)
                  subject such interest to Section 2.4(c).

                  If the Conflicts Committee does not grant an extension or if
                  the Minority Sponsor's interest in the Restricted Business is
                  not otherwise subject to Section 2.4, then if at any time
                  after six months from the date of such formation or
                  acquisition by the Minority Sponsor, the Minority Sponsor
                  continues to own such interest despite a good faith,
                  commercially reasonable attempt to divest such interest, it
                  must promptly notify the General Partner in writing of its
                  decision to either (1) immediately cause its directors to
                  resign from the board of directors of GP LLC and it shall
                  thereafter be forever free to continue to own and operate such
                  interest in the Restricted Business; provided, however, that
                  the Minority Sponsor shall thereafter continue to relinquish
                  its rights to designate directors of GP LLC until such time as
                  the Minority Sponsor divests of its interest in the Restricted
                  Business or (2) initiate a sale of its interest in the
                  Restricted Business to the Partnership as described below and
                  engage an independent investment banking firm with a national
                  reputation to determine the fair market value of the
                  Restricted Business. Such investment banking firm will
                  determine the fair market value of the interest in the
                  Restricted Business within 30 days and furnish the Minority
                  Sponsor and the General

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                  Partner its opinion of such value. The Minority Sponsor and
                  the General Partner shall have 30 days from the receipt of
                  such opinion to determine::

                              (A) if the Minority Sponsor and the General
                        Partner (with the concurrence of the Conflicts
                        Committee) agree on the fair market value as determined
                        by the investment banking firm, in which case the
                        Minority Sponsor shall sell the interest in the
                        Restricted Business to any member of the Partnership
                        Group;

                              (B) if the Minority Sponsor desires to sell the
                        interest in the Restricted Business to the Partnership
                        Group at the valuation determined by the investment
                        banking firm but the General Partner (with the
                        concurrence of the Conflicts Committee) does not elect
                        to purchase the interest in the Restricted Business at
                        such valuation, in which case the Minority Sponsor will
                        be forever free to continue to own and operate the
                        interest in the Restricted Business; or

                              (C) if the Minority Sponsor does not elect to sell
                        the interest in the Restricted Business at the valuation
                        determined by the investment banking firm but the
                        General Partner (with the concurrence of the Conflicts
                        Committee) desires the purchase the interest in the
                        Restricted Business at such valuation, in which case the
                        Minority Sponsor will cause its designated directors to
                        resign immediately from the board of directors of GP
                        LLC, and the Minority Sponsor will be forever free to
                        continue to own and operate the interest in the
                        Restricted Business; provided, however, that the
                        Minority Sponsor shall thereafter continue to relinquish
                        its rights to designate directors of GP LLC until such
                        time as the Minority Sponsor divests of its interest in
                        the Restricted Business.

                  All fees of the investment banking firm for its services
                  pursuant to the preceding paragraph shall be (1) split equally
                  between the Minority Sponsor and the Partnership in the case
                  of clause (A) above; (2) the sole obligation of the
                  Partnership in the case of clause (B) above; or (3) the sole
                  obligation of the Minority Sponsor in the case of clause (C)
                  above.

            2.2 PERMITTED EXCEPTIONS.

            Notwithstanding any provision of Section 2.1 to the contrary, and
      subject to Section 2.3 in the case of assets retained by a Sponsor
      pursuant to Section 2.2(a) or Section 2.2(b)(i), any Sponsor or its
      Affiliate may engage, directly or indirectly, in the following activities
      under the following circumstances:

                  (a) owning, operating or investing in any Restricted Business
            (whether comprised of one asset or a group of related assets) that
            is retained by a Sponsor or its Affiliate as of the Closing Date;
            provided, however that if after the Closing Date the Restricted
            Business (whether comprised of one asset or a group of

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            related assets) has a fair market value (as determined in good faith
            by the board of directors, or other governing body, of the Sponsor
            that owns, operates or invests in the Restricted Business) greater
            than $10 million, the Sponsor must offer the Restricted Business to
            the Partnership Group in accordance with Section 2.4;

                  (b) owning, operating or investing in a Restricted Business
            that is acquired by a Sponsor or its Affiliate after the Closing
            Date if:

                        (i) the fair market value of the Restricted Business
                  (whether comprised of one asset or a group of related assets)
                  (as determined in good faith by the board of directors, or
                  other governing body, of the Sponsor that will own, operate or
                  invest in the Restricted Business) is equal to or less than
                  $10 million at the time of such acquisition by such Sponsor or
                  its Affiliate; provided, however, that if the fair market
                  value of the Restricted Business (whether comprised of one
                  asset or a group of related assets) subsequently exceeds $10
                  million, the Sponsor must offer the Restricted Business to the
                  Partnership Group in accordance with Section 2.4.

                        (ii) in the case of an acquisition of a Restricted
                  Business (whether comprised of one asset or a group of related
                  assets) with a fair market value (as determined in good faith
                  by the board of directors, or other governing body, of the
                  Sponsor that will own, operate or invest in the Restricted
                  Business) greater than $10 million at the time of such
                  acquisition by the Sponsor, the Partnership Group has been
                  offered the opportunity to purchase the Restricted Business in
                  accordance with Section 2.4 and the Partnership Group (with
                  the concurrence of the Conflicts Committee) has elected not to
                  purchase the Restricted Business.

                        (iii) the investment in the Restricted Business is held
                  solely by means of an equity interest in the entity that owns
                  the Restricted Business and such equity interest does not
                  constitute control of the Restricted Business.

            2.3 LIMITATION ON ACQUISITIONS BY THE MAJORITY SPONSOR.

                  (a) Notwithstanding Section 2.2, the fair market value (as
            determined in good faith by the board of directors, or other
            governing body, of the Majority Sponsor) of all Restricted
            Businesses owned, operated or invested in by the Majority Sponsor
            (other than those owned or operated by the Majority Sponsor as of
            the Closing Date) may not exceed $75 million in the aggregate. For
            purposes of this Section 2.3, the fair market value of any entity
            owning the Restricted Businesses purchased by the Majority Sponsor
            shall be determined based on the fair market value of the entity as
            a whole, without regard for any lesser ownership interest therein to
            be acquired by the Majority Sponsor.

            2.4 PROCEDURES.

                  (a)

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                        (i) If the Majority Sponsor desires to acquire a
                  Restricted Business not otherwise permitted by Section 2.2 and
                  such Restricted Business constitutes greater than 50% of the
                  aggregate value of the entire acquisition, then the Majority
                  Sponsor shall (1) notify the General Partner in writing of
                  such acquisition opportunity, (2) deliver to the General
                  Partner all information prepared by or on behalf of the
                  Sponsor relating to such Restricted Business and the proposed
                  acquisition and (3) offer the Partnership Group the
                  opportunity to purchase such Restricted Business in accordance
                  with this Section 2.4. The offer shall set forth the terms
                  relating to the purchase of the Restricted Business. As soon
                  as practicable, but in any event within 60 days after receipt
                  of such written notification, the General Partner shall notify
                  the Sponsor in writing that either (1) the General Partner has
                  elected, with the approval of the Conflicts Committee, not to
                  cause a Group Member to purchase the Restricted Business, in
                  which event the Sponsor may consummate the proposed
                  acquisition opportunity and own, operate or invest in such
                  Restricted Business or (2) the General Partner has elected to
                  cause a Group Member to purchase the Restricted Business, in
                  which event the procedures outlined in this Section 2.4 shall
                  apply.

                        (ii) if (1) the Minority Sponsor desires to acquire a
                  Restricted Business or an entity that engages in a Restricted
                  Business not otherwise permitted by Section 2.2, in each case
                  with a fair market value (as determined in good faith by the
                  board of directors or other governing body of the Minority
                  Sponsor) in excess of $10 million or (2) the Majority Sponsor
                  desires to acquire a Restricted Business or an entity that
                  engages in a Restricted Business (not otherwise permitted by
                  Section 2.2) and such Restricted Business constitutes 50% or
                  less of the aggregate value of the entire acquisition, then
                  not later than six months after the consummation of the
                  acquisition by such Sponsor of the Restricted Business, such
                  Sponsor shall (1) notify the General Partner in writing of
                  such acquisition, (2) deliver to the General Partner all
                  information prepared by or on behalf of the Sponsor relating
                  to such acquisition and (3) offer the Partnership Group the
                  opportunity to purchase the Restricted Business in accordance
                  with this Section 2.4. The offer shall set forth terms
                  relating to the purchase of the Restricted Business. As soon
                  as practicable, but in any event within 60 days after receipt
                  of such written notification, the General Partner shall notify
                  the Sponsor in writing that either (1) the General Partner has
                  elected, with the approval of the Conflicts Committee, not to
                  cause a Group Member to purchase the Restricted Business, in
                  which case the Sponsor may continue to own, operate or invest
                  in such Restricted Business or (2) the General Partner has
                  elected to cause a Group Member to purchase the Restricted
                  Business, in which event the procedures outlined in this
                  Section 2.4 shall apply.

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                        (iii) For purposes of this Section 2.4, a "Restricted
                  Business" excludes a general partner interest or a managing
                  member interest, which interests are addressed in Section 2.1.

                  (b) If the Sponsor and the General Partner (with the
            concurrence of the Conflicts Committee) are able to agree on the
            fair market value of the Restricted Business that is subject to the
            offer delivered pursuant to Section 2.4(a)(i) or (ii) above and the
            other terms of the offer, a Group Member shall purchase the
            Restricted Business for the agreed upon fair market value as soon as
            commercially practicable after such agreement has been reached. The
            purchase agreement for the Restricted Business will provide for the
            purchase price to be paid, at the option of the Sponsor, in cash,
            Units, or an interest-bearing promissory note (the interest rate and
            other terms of which shall be mutually agreed upon by the Sponsor
            and the General Partner) or any combination thereof.

                  (c) If the Sponsor and the General Partner are unable to agree
            on the fair market value of the Restricted Business that is subject
            to the offer delivered pursuant to Section 2.4(a)(i) or (ii) above
            or the other terms of the offer within 60 days after receipt by the
            General Partner of the offer, then the Sponsor may not, for a period
            of two years following the date of the offer, sell the Restricted
            Business to a third party for less than the price set forth in the
            offer or on more favorable terms than the terms set forth in the
            offer; provided, however, that if during such two-year period, a
            change occurs in the Restricted Business that, in the good faith
            opinion of the board of directors or other governing body of the
            relevant Sponsor, affects the fair market value of such Restricted
            Business by more than 10% and the fair market value of the
            Restricted Business remains greater than $10 million, the Sponsor
            shall be obligated to re-offer such Restricted Business to the
            Partnership Group at the new fair market value (as determined in
            good faith by the board of directors, or other governing body, of
            the Sponsor that owns the Restricted Business) and the process with
            respect to the Second Offer (as defined below) shall commence. If,
            at the end of the two-year period, the Sponsor has not sold the
            Restricted Business to a third party and the Restricted Business
            still has a fair market value (as determined in good faith by the
            board of directors, or other governing body, of the Sponsor that
            owns the Restricted Business) greater than $10 million, the Sponsor
            must again offer to the Partnership Group the opportunity to
            purchase such Restricted Business in accordance with this Section
            2.4(c) (the "Second Offer"). The Second Offer shall set forth the
            terms relating to the purchase of the Restricted Business. As soon
            as practicable, but in any event within 60 days after receipt of the
            Second Offer, the General Partner shall notify the Sponsor in
            writing that either (1) the General Partner has elected, with the
            approval of the Conflicts Committee, not to cause a Group Member to
            purchase the Restricted Business, in which event the Sponsor may
            continue to own such Restricted Business without further obligation
            with respect to the Partnership Group, or (2) the General Partner
            has elected to cause a Group Member to purchase the Restricted
            Business, in which event a Group Member shall purchase the
            Restricted Business for the agreed upon fair market value as soon as
            commercially practicable after such agreement has been reached.

                                       8
<PAGE>

            The purchase agreement for the Restricted Business will provide for
            the purchase price to be paid, at the option of the Sponsor, in
            cash, Units, or an interest-bearing promissory note (the interest
            rate and other terms of which shall be mutually agreed upon by the
            Sponsor and the General Partner) or any combination thereof.

            2.5 SCOPE OF PROHIBITION. Except as provided in this Article II and
the Partnership Agreement, each Sponsor and its Affiliates shall be free to
engage in any business activity, including those that may be in direct
competition with any Group Member.

            2.6 ENFORCEMENT. The Sponsors agree and acknowledge that the
Partnership Group does not have an adequate remedy at law for the breach by a
Sponsor of the covenants and agreements set forth in this Article II, and that
any breach by a Sponsor of the covenants and agreements set forth in this
Article II would result in irreparable injury to the Partnership Group. The
Sponsors each further agree and acknowledge that any Group Member may, in
addition to the other remedies which may be available to the Partnership Group,
file a suit in equity to enjoin a Sponsor Entity from such breach, and consent
to the issuance of injunctive relief under this Agreement.

                                  ARTICLE III
                                 INDEMNIFICATION

            3.1 INDEMNIFICATION BY THE SPONSORS

                  (a) Subject to Section 3.2, the Sponsors, jointly and
            severally, shall indemnify, defend and hold harmless the Partnership
            Group for a period of three years after the Closing Date from and
            against all Covered Environmental Losses, defined as follows: any
            event or condition associated with ownership or operation of the
            Assets including, without limitation, (A) the cost and expense of
            any investigation, assessment, evaluation, monitoring, containment,
            cleanup, repair, restoration, remediation, or other corrective
            action required or necessary under Environmental Laws, (B) the cost
            or expense of the preparation and implementation of any closure,
            remedial, corrective action, or other plans required or necessary
            under Environmental Laws, (C) the cost and expense for any
            environmental or toxic tort pre-trial, trial, or appellate legal or
            litigation support work and (D) any violation or correction of
            violation of Environmental Laws associated with the Assets; but only
            to the extent that such violation complained of under this section
            or such events or conditions included under this section occurred
            before the Closing Date (collectively, "Covered Environmental
            Losses").

                  (b) The Sponsors, jointly and severally, shall indemnify,
            defend and hold harmless the Partnership Group from and against all
            federal, state and local income tax liabilities attributable to the
            ownership or operation of the Assets prior to the Closing Date,
            including any such income tax liabilities of the Sponsors and

                                       9
<PAGE>

            their Affiliates that may result from the consummation of the
            formation transactions for the Partnership Group.

                  (c) Ark shall indemnify, defend and hold harmless the
            Partnership Group from and against any and all claims, demands,
            costs, liabilities and expenses (including court costs and
            reasonable attorneys' fees) of every kind, character and
            description, whether known or unknown, accrued or contingent, and
            whether or not reflected on the books and records of Ark as of the
            Closing Date, arising from or relating to the liabilities assumed by
            the Partnership Group with respect to the Mechanics Lien. Ark hereby
            agrees that upon the request of the Partnership Group, Ark will
            escrow up to 150% of the amount of the Mechanics Lien, including
            accrued interest in an account specified by the Partnership Group.

            3.2 LIMITATIONS REGARDING ENVIRONMENTAL INDEMNIFICATION

                  (a) The Sponsors shall have no indemnification obligation
            under Section 3.1 for (1) claims made after the third anniversary of
            the Closing Date or (2) claims made as a result of additions to or
            modifications of the Environmental Laws made after the Closing Date.

                  (b) The aggregate combined liability of the Sponsors in
            respect of all Covered Environmental Claims under Section 3.1(a)
            shall not exceed $10.0 million.

            3.3 INDEMNIFICATION PROCEDURES

                  (a) The Partnership Group agrees that within a reasonable
            period of time after it becomes aware of facts giving rise to a
            claim for indemnification under this Article III, it will provide
            notice thereof in writing to the Sponsor that contributed the
            property that is the subject of the claim, specifying the nature of
            and specific basis for such claim.

                  (b) Each Sponsor shall have the right to control all aspects
            of the defense of (and any counterclaims with respect to) any claims
            brought against the Partnership Group that are covered by the
            indemnification under this Article III, including, without
            limitation, the selection of counsel, determination of whether to
            appeal any decision of any court and the settling of any such matter
            or any issues relating thereto; provided, however, that no such
            settlement shall be entered into without the consent of the
            Partnership Group unless it includes a full release of the
            Partnership Group from such matter or issues, as the case may be.

                  (c) The Partnership Group agrees to cooperate fully with each
            Sponsor, with respect to all aspects of the defense of any claim
            covered by the indemnification under this Article III, including,
            without limitation, the prompt furnishing to each Sponsor of any
            correspondence or other notice relating thereto that the Partnership
            Group may receive, permitting the name of the Partnership Group to
            be utilized in connection with such defense, the making available to
            each Sponsor of any files, records or other information of the
            Partnership Group

                                       10
<PAGE>

            that each Sponsor considers relevant to such defense and the making
            available to each Sponsor of any employees of the Partnership Group;
            provided, however, that in connection therewith each Sponsor agrees
            to use reasonable efforts to minimize the impact thereof on the
            operations of the Partnership Group and further agree to maintain
            the confidentiality of all files, records, and other information
            furnished by the Partnership Group pursuant to this Section 3.3. In
            no event shall the obligation of the Partnership Group to cooperate
            with each Sponsor as set forth in the immediately preceding sentence
            be construed as imposing upon the Partnership Group an obligation to
            hire and pay for counsel in connection with the defense of any
            claims covered by the indemnification set forth in this Article III;
            provided, however, that the Partnership Group may, at its own
            option, cost and expense, hire and pay for counsel in connection
            with any such defense. Each Sponsor agrees to keep any such counsel
            hired by the Partnership Group informed as to the status of any such
            defense, but each Sponsor shall have the right to retain sole
            control over such defense.

                  (d) In determining the amount of any loss, cost, damage or
            expense for which the Partnership Group is entitled to
            indemnification under this Agreement, the gross amount of the
            indemnification will be reduced by (1) any insurance proceeds
            realized by the Partnership Group, and such correlative insurance
            benefit shall be net of any incremental insurance premium that
            becomes due and payable by the Partnership Group as a result of such
            claim and (2) all amounts recovered by the Partnership Group under
            contractual indemnities from third Persons.

                  (e) The date on which notification of a claim for
            indemnification is received by the Sponsors shall determine whether
            such claim is timely made under Section 3.2.

                                   ARTICLE IV
                                  MISCELLANEOUS

            4.1 CHOICE OF LAW; SUBMISSION TO JURISDICTION. This Agreement shall
be subject to and governed by the laws of the State of Texas, excluding any
conflicts-of-law rule or principle that might refer the construction or
interpretation of this Agreement to the laws of another state. Each Party hereby
submits to the jurisdiction of the state and federal courts in the State of
Texas and to venue in Houston, Texas.

                                       11
<PAGE>

            4.2 NOTICE. All notices or requests or consents provided for by, or
permitted to be given pursuant to, this Agreement must be in writing and must be
given by depositing same in the United States mail, addressed to the Person to
be notified, postpaid, and registered or certified with return receipt requested
or by delivering such notice in person or by telecopier or telegram to such
Party. Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices to be sent to a Party
pursuant to this Agreement shall be sent to or made at the address set forth
below such Party's signature to this Agreement or at such other address as such
Party may stipulate to the other Parties in the manner provided in this Section
4.2.

            if to Arch or Ark:

                Arch Coal, Inc.
                Attention: General Counsel
                CityPlace One, Suite 300
                St. Louis, MO 63141
                Telecopy:  (314) 994-2734

            if to WPP or NGCC:

                Western Pocahontas Properties Limited Partnership or
                New Gauley Coal Corporation
                Attention: Nick Carter
                P.O. Box 2827
                1035 Third Avenue, Suite 300
                Huntington, WV 25727
                Telecopy: (304) 522-5401

                with a copy to:

                Dwight Dunlap
                601 Jefferson, Suite 3600
                Telecopy: (713) 751-7510

            if to GNP:

                Great Northern Properties Limited Partnership
                Attention: Corbin J. Robertson, Jr.
                601 Jefferson, Suite 3600
                Telecopy: (713) 751-7510

                with a copy to:

                Dwight Dunlap
                601 Jefferson, Suite 3600

                                       12
<PAGE>

                Telecopy: (713) 751-7510

            if to Robertson Coal Management LLC

                Robertson Coal Management LLC
                Attention:  Corbin J. Robertson, Jr.
                601 Jefferson Street, Suite 3600
                Houston, TX 77002
                Telecopy: (713) 751-7510

                with a copy to:

                Dwight Dunlap
                601 Jefferson, Suite 3600
                Telecopy: (713) 751-7510

            if to any Group Member

                NRP (GP) LP
                Attention: Dwight Dunlap
                601 Jefferson, Suite 3600
                Telecopy: (713) 751-7510

            4.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the Parties relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written, relating to the
matters contained herein.

            4.4 TERMINATION. Article II of this Agreement will terminate with
respect to any Sponsor upon the sale or other disposition of (1) all of such
Sponsor's membership interest in GP LLC and limited partnership interest in the
General Partner and (2) the termination of its right to nominate and elect the
directors of GP LLC.

            4.5 AMENDMENT OR MODIFICATION. This Agreement may be amended or
modified from time to time after the Closing Date only by the written agreement
of all the Parties hereto; provided, however, that the Partnership may not,
without the prior approval of the Conflicts Committee, agree to any amendment or
modification of this Agreement that, in the reasonable discretion of the General
Partner, will adversely affect the holders of Common Units. Each such instrument
shall be reduced to writing and shall be designated on its face an "Amendment"
or an "Addendum" to this Agreement.

            4.6 ASSIGNMENT. No Party shall have the right to assign its rights
or obligations under this Agreement without the consent of the other Parties
hereto.

            4.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory parties had signed the
same document. All counterparts shall be construed together and shall constitute
one and the same instrument.

                                       13
<PAGE>

            4.8 SEVERABILITY. If any provision of this Agreement shall be held
invalid or unenforceable by a court or regulatory body of competent
jurisdiction, the remainder of this Agreement shall remain in full force and
effect.

            4.9 FURTHER ASSURANCES. In connection with this Agreement and all
transactions contemplated by this Agreement, each signatory party hereto agrees
to execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement and
all such transactions.

            4.10 RIGHTS OF LIMITED PARTNERS. The provisions of this Agreement
are enforceable solely by the Parties to this Agreement, and no Limited Partner
of the Partnership shall have the right, separate and apart from the
Partnership, to enforce any provision of this Agreement or to compel any Party
to this Agreement to comply with the terms of this Agreement.

                                       14
<PAGE>

            IN WITNESS WHEREOF, the Parties have executed this Agreement on, and
effective as of, the Closing Date.

                                     ARCH COAL, INC.

                                     By: /s/ Robert J. Messey
                                        ----------------------------------------
                                         Name:   Robert J. Messey
                                         Title:  Senior Vice President and Chief
                                                 Financial Officer

                                     ARK LAND COMPANY

                                         By: /s/ Steve McCurdy
                                            ------------------------------------
                                         Name:   Steve McCurdy
                                         Title:  President

                                     WESTERN POCAHONTAS PROPERTIES
                                     LIMITED PARTNERSHIP

                                     By: Western Pocahontas Corporation,
                                         Its General Partner

                                         By: /s/ Nick Carter
                                            ------------------------------------
                                         Name:   Nick Carter
                                         Title:  President

                                     GREAT NORTHERN PROPERTIES LIMITED
                                     PARTNERSHIP

                                     By: GNP Management Corporation,
                                         Its General Partner

                                         By: /s/ Dwight L. Dunlap
                                            ------------------------------------
                                            Name:   Dwight L. Dunlap
                                            Title:  Chief Financial Officer

                                     NEW GAULEY COAL CORPORATION

                                         By: /s/ Nick Carter
                                            ------------------------------------
                                            Name:   Nick Carter
                                            Title:  President

                                       15
<PAGE>

                                     ROBERTSON COAL MANAGEMENT LLC

                                     By:    Corbin J. Robertson, Jr.
                                            Its sole member

                                         By:  /s/ Corbin J. Robertson, Jr.
                                            ------------------------------------
                                            Name: Corbin J. Robertson, Jr.

                                     GP NATURAL RESOURCE PARTNERS LLC

                                         By:  /s/ Nick Carter
                                            ------------------------------------
                                            Name:  Nick Carter
                                            Title: President

                                     NRP (GP) LP

                                     By: GP Natural Resource Partners LLC,
                                         Its General Partner

                                         By:  /s/  Nick Carter
                                            ------------------------------------
                                            Name:  Nick Carter
                                            Title: President

                                     NATURAL RESOURCE PARTNERS L.P.

                                     By: NRP (GP) LP,
                                         Its General Partner

                                     By: GP Natural Resource Partners LLC,
                                         Its General Partner

                                         By:  /s/  Nick Carter
                                            ------------------------------------
                                            Name:  Nick Carter
                                            Title: President

                                     NRP (OPERATING) LLC

                                         By:  /s/  Nick Carter
                                            ------------------------------------
                                            Name:  Nick Carter
                                            Title: President

                                       16

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