Amended And Restated Put And Call Option Agreement - ALLIANCE RESOURCE PARTNERS LP - 3-27-2001

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Amended And Restated Put And Call Option Agreement - ALLIANCE RESOURCE PARTNERS LP - 3-27-2001 Powered By Docstoc
					EXHIBIT 10.17 AMENDED AND RESTATED PUT AND CALL OPTION AGREEMENT AMENDED AND RESTATED PUT AND CALL OPTION AGREEMENT, dated as of February 12, 2001 (the "Agreement"), between ARH WARRIOR HOLDINGS, INC., a Delaware corporation ("AWH"), and ALLIANCE RESOURCE PARTNERS, L.P., a Delaware limited partnership (the "MLP"), amending and restating that certain Put and Call Option Agreement, dated as of January 26, 2001 (the "Original Put and Call Agreement"), between AWH and the MLP. WITNESSETH: WHEREAS, AWH has formed Warrior Coal, LLC, a Delaware limited liability company ("Warrior Coal"), and owns all of the limited liability company member interests in and to Warrior Coal; and WHEREAS, contemporaneously with the execution and delivery of the Original Put and Call Agreement, Warrior Coal entered into (i) a Stock Purchase and Sale Agreement, dated as of the date hereof (the "Stock Purchase Agreement"), among Warrior Coal, as purchaser, and David Roberts, Paul Roberts and Julie Hober, as sellers, pursuant to which Warrior Coal purchased all of the issued and outstanding shares of capital stock of Warrior Coal Corporation ("WCC"), Warrior Coal Mining Company ("WCMC") and Roberts Bros. Coal Co., Inc. ("RBCC"), and (ii) an Asset Purchase and Sale Agreement, dated as of the date hereof (the "Asset Purchase Agreement"), among Warrior Coal, as purchaser, and Christian Coal Corp. and Richland Mining Co., Inc., as sellers, pursuant to which Warrior Coal purchased certain assets, and assumed certain liabilities, of Christian Coal Corp. and Richland Mining Co., Inc.; WHEREAS, contemporaneously with the execution and delivery of the Original Put and Call Agreement, SGP Land, LLC ("SGP Land") entered into an Asset Purchase and Sale Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof, the "Cardinal Asset Purchase Agreement"), between SGP Land, as purchaser, and Cardinal Trust, LLC ("Cardinal Trust"), as seller, pursuant to which SGP Land purchased certain assets and assumed certain liabilities of Cardinal Trust; WHEREAS, AWH has contributed capital to Warrior Coal for the purpose of financing the acquisitions contemplated by the Stock Purchase Agreement and the Asset Purchase Agreement; WHEREAS, contemporaneously with the execution and delivery of the Stock Purchase Agreement and the Asset Purchase Agreement, AWH and the MLP entered into the Original Put and Call Agreement, pursuant to which (i) AWH acquired the right to put to the MLP during a specified period, and the MLP became obligated to purchase from AWH, all of AWH's limited liability company interests in and to Warrior Coal, upon the terms and conditions set forth therein, and (ii) the MLP acquired the right to call from AWH during a specified period, and

AWH became obligated to sell to the MLP, all of AWH's limited liability company interests in and to Warrior Coal, upon the terms and conditions set forth therein; and WHEREAS, AWH and the MLP desire to amend and restate the Original Put and Call Agreement in its entirety upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, AWH and the MLP hereby agree as follows: Section 1. Definitions. Where used in this Agreement, the following terms shall have the meanings set forth in this Section 1 (such meanings to be, when appropriate, equally applicable to both the singular and plural forms of the terms defined):

AWH became obligated to sell to the MLP, all of AWH's limited liability company interests in and to Warrior Coal, upon the terms and conditions set forth therein; and WHEREAS, AWH and the MLP desire to amend and restate the Original Put and Call Agreement in its entirety upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, AWH and the MLP hereby agree as follows: Section 1. Definitions. Where used in this Agreement, the following terms shall have the meanings set forth in this Section 1 (such meanings to be, when appropriate, equally applicable to both the singular and plural forms of the terms defined): "Asset Purchase Agreement" shall have the meaning specified in the second Whereas clause hereof. "AWH" shall have the meaning specified in the preamble hereof. "Call Option" means the right of the MLP to purchase from AWH and to cause AWH to sell to the MLP (or its designee) Warrior Coal, as contemplated by Section 3 hereof. "Call Option Period" shall mean the period from and including April 12, 2003 to and including December 31, 2006. "Call Option Price" means the sum of (i) $10,000,000.00, (ii) an amount of interest equal to the product of (x) the amount set forth in clause (i) hereof multiplied by (y) twelve percent (12%) per annum, compounded annually (determined based on a 360-day year, actual days elapsed from January 26, 2001 up to (but not including) the date on which the purchase and sale of Warrior Coal shall be consummated in connection with the exercise of the Call Option), and (iii) an amount equal to the product of (x) the amount determined pursuant to clause (ii) hereof and (y) twenty-five percent (25%). "Capital Lease" means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP. "Capital Lease Obligation" means, with respect to Warrior Coal or any Subsidiary thereof and a Capital Lease, the amount of the obligation of Warrior Coal or such Subsidiary as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of Warrior Coal or such Subsidiary. "Cardinal Asset Purchase Agreement" shall have the meaning specified in the third Whereas clause hereof. 2

"Cardinal Trust" shall have the meaning specified in the third Whereas clause hereof. "Consolidated Subsidiary" means, with respect to any Person at any time, any Subsidiary the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP. "Debt" means, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by it (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations;

"Cardinal Trust" shall have the meaning specified in the third Whereas clause hereof. "Consolidated Subsidiary" means, with respect to any Person at any time, any Subsidiary the accounts of which would be consolidated with those of such first Person in its consolidated financial statements in accordance with GAAP. "Debt" means, with respect to any Person, without duplication, (a) its liabilities for borrowed money; (b) its liabilities for the deferred purchase price of property acquired by it (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease Obligations; (d) all liabilities secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks or other financial institutions (whether or not representing obligations for borrowed money), other than any thereof incurred in the ordinary course of business of such Person and which are issued (i) to support such Person's obligations in respect of workmen's compensation or unemployment insurance laws, the payment or retirement benefits or performance guarantees relating to coal deliveries or insurance deductibles and aggregating, in the case of Warrior Coal and its Subsidiaries, no more than $2,000,000 at any time outstanding for all of the foregoing or (ii) in respect of current trade payables of such Person; and (f) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (e) hereof. Debt of such Person shall include all obligations of such Person of the character described in clauses (a) through (f) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. "GAAP" means generally accepted accounting principles consistently applied in the United States. 3

"Guaranty" and, with correlative meaning, "Guaranteed" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such person: (a) to purchase such Debt or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Debt, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other person or otherwise to advance or make available funds of the purchase or payment of such Debt; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt of the ability of any other person to make payment of the Debt; or (d) otherwise to assure the owner of such Debt against loss in respect thereof. In any computation of the Debt of the obligor under any Guaranty, the Debt that is the subject of such Guaranty shall be assumed to be a direct obligation of such obligor. The amount of any Guaranty shall be equal to the

"Guaranty" and, with correlative meaning, "Guaranteed" means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such person: (a) to purchase such Debt or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Debt, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other person or otherwise to advance or make available funds of the purchase or payment of such Debt; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt of the ability of any other person to make payment of the Debt; or (d) otherwise to assure the owner of such Debt against loss in respect thereof. In any computation of the Debt of the obligor under any Guaranty, the Debt that is the subject of such Guaranty shall be assumed to be a direct obligation of such obligor. The amount of any Guaranty shall be equal to the outstanding amount of the Debt guaranteed, or such lesser amount to which the maximum exposure of such person shall have been specifically limited. "Inventory" means inventory held for sale or lease in the ordinary course of business. "Lien" means, with respect to any Person, any mortgage, lien, pledge, charge, security interest, production payment or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements); provided, however, "Lien" shall not include any of the following: (i) any negative pledge, or (ii) any royalty interest or overriding royalty interest under any lease, sublease or other similar agreement entered into in the ordinary course of business. "Material Adverse Effect" means a material adverse effect on the business, operations, affairs, financial condition, assets or properties of Warrior Coal and its Subsidiaries, taken as a whole (unless the context shall expressly require otherwise). 4

"Original Put and Call Agreement" shall have the meaning specified in the preamble hereof. "Permitted Liens" means each of the following: (a) Liens for property taxes, assessments or other governmental charges which are not yet due and payable and delinquent or the validity of which is being contested in good faith; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the amount, applicability or validity thereof is being contested by Warrior Coal or any Subsidiary thereof on a timely basis in good faith and in appropriate proceedings, and Warrior Coal or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of Warrior Coal or such Subsidiary. (c) Liens incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases, performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property;

"Original Put and Call Agreement" shall have the meaning specified in the preamble hereof. "Permitted Liens" means each of the following: (a) Liens for property taxes, assessments or other governmental charges which are not yet due and payable and delinquent or the validity of which is being contested in good faith; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the amount, applicability or validity thereof is being contested by Warrior Coal or any Subsidiary thereof on a timely basis in good faith and in appropriate proceedings, and Warrior Coal or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of Warrior Coal or such Subsidiary. (c) Liens incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases, performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; (d) any attachment or judgment Lien for the payment of money in an aggregate amount not to exceed $1,000,000, provided that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are contested by Warrior Coal or any Subsidiary thereof on a timely basis in good faith and in appropriate proceedings, and Warrior Coal or such Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of Warrior Coal or such Subsidiary; and (e) leases or subleases granted to others, zoning restrictions, easements, licenses, reservations, provisions, covenants, conditions, waivers, restrictions on the use of property or irregularities of title (and with respect to leasehold interests, mortgages, obligations, liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee), and not interfering with, the ordinary conduct of the business of Warrior Coal or any Subsidiary thereof, provided that such Liens do not, in the aggregate, materially detract from the value of such property or impair the use of such property. 5

"Person" shall mean an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Put Option" means the right of AWH to sell Warrior Coal to the MLP (or its designee) and to cause the MLP (or its designee) to purchase Warrior Coal from AWH, as contemplated by Section 2 hereof. "Put Option Period" shall mean the ten day period from and including January 2, 2003 to and including January 11, 2003. "Put Option Price" means the sum of (i) $10,000,000.00 and (ii) an amount of interest equal to the product of (x) the amount set forth in clause (i) hereof multiplied by (y) twelve percent (12%) per annum, compounded annually (determined based on a 360-day year, actual days elapsed from January 26, 2001 up to (but not including) the date on which the purchase and sale of Warrior Coal shall be consummated in connection with the Put Option). "RBCC" shall have the meaning specified in the second Whereas clause hereof. "SGP Land" shall have the meaning specified in the third Whereas clause hereof. "SGP Revolving Credit Agreement" shall mean the Revolving Credit Agreement, dated as of January 26, 2001,

"Person" shall mean an individual, partnership, limited liability company, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof. "Put Option" means the right of AWH to sell Warrior Coal to the MLP (or its designee) and to cause the MLP (or its designee) to purchase Warrior Coal from AWH, as contemplated by Section 2 hereof. "Put Option Period" shall mean the ten day period from and including January 2, 2003 to and including January 11, 2003. "Put Option Price" means the sum of (i) $10,000,000.00 and (ii) an amount of interest equal to the product of (x) the amount set forth in clause (i) hereof multiplied by (y) twelve percent (12%) per annum, compounded annually (determined based on a 360-day year, actual days elapsed from January 26, 2001 up to (but not including) the date on which the purchase and sale of Warrior Coal shall be consummated in connection with the Put Option). "RBCC" shall have the meaning specified in the second Whereas clause hereof. "SGP Land" shall have the meaning specified in the third Whereas clause hereof. "SGP Revolving Credit Agreement" shall mean the Revolving Credit Agreement, dated as of January 26, 2001, between Alliance Resource GP, LLC, a Delaware limited liability company, as lender, and Warrior Coal, as borrower, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof. "Stock Purchase Agreement" shall have the meaning specified in the second Whereas clause hereof. "Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, joint venture, association, trust or other entity of which (or in which) more than 50% of (a) the issued and outstanding shares of capital stock or partnership interests (or their equivalent) having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interests in the capital or profits of such partnership, limited liability company, joint venture or association with ordinary voting power to elect a majority of the board of directors (or Persons performing similar functions) of such partnership, limited liability company, joint venture or association, or (c) the beneficial interests in such trust or other entity with ordinary voting power to elect a majority of the board of trustees (or Persons performing similar functions) of such trust or other entity, is at the time, directly or indirectly, owned or controlled by such Person, 6

by such Person and one or more of its Subsidiaries, or by one or more of such Person's other Subsidiaries. "Third Party Consents" shall have the meaning specified in Section 8 hereof. "Warrior Coal" shall have the meaning set forth in the first Whereas clause hereof. "WCC" shall have the meaning specified in the second Whereas clause hereof. "WCMC" shall have the meaning specified in the second Whereas clause hereof. Section 2. Put Option. During the Put Option Period, AWH shall have the right to put and sell to the MLP (or to any Subsidiary of the MLP designated by the MLP), and the MLP (or such designee) shall have the obligation to purchase from AWH, all of the limited liability company interests in and to Warrior Coal held by AWH provided (i) AWH shall have given not less than ninety (90) days or more than one hundred fifty (150) days written notice to the MLP prior to the commencement of the Put Option Period of its desire to put Warrior Coal to MLP,

by such Person and one or more of its Subsidiaries, or by one or more of such Person's other Subsidiaries. "Third Party Consents" shall have the meaning specified in Section 8 hereof. "Warrior Coal" shall have the meaning set forth in the first Whereas clause hereof. "WCC" shall have the meaning specified in the second Whereas clause hereof. "WCMC" shall have the meaning specified in the second Whereas clause hereof. Section 2. Put Option. During the Put Option Period, AWH shall have the right to put and sell to the MLP (or to any Subsidiary of the MLP designated by the MLP), and the MLP (or such designee) shall have the obligation to purchase from AWH, all of the limited liability company interests in and to Warrior Coal held by AWH provided (i) AWH shall have given not less than ninety (90) days or more than one hundred fifty (150) days written notice to the MLP prior to the commencement of the Put Option Period of its desire to put Warrior Coal to MLP, (ii) after giving effect to such put, the MLP (or such designee) shall own not less than 100% of the limited liability company interests in and to Warrior Coal, (iii) the MLP shall pay or cause to be paid to AWH the Put Option Price, (iv) all Third Party Consents shall have been obtained or waived in writing and (v) since January 26, 2001, there shall not have occurred a material adverse change in the business, operations, affairs, financial condition, assets or properties of Warrior Coal and its Subsidiaries, taken as a whole. Promptly following the exercise by AWH of the Put Option, the parties hereto shall cooperate with one another and shall negotiate in good faith a purchase and sale agreement containing terms and conditions reasonable and customary for a transaction of the type so contemplated, including representations and warranties regarding AWH's title in and to the limited liability company interests of Warrior Coal and Warrior Coal's title in and to the limited liability company interests or capital stock (or their equivalent) of each Subsidiary, if any, of Warrior Coal, for the purpose of consummating the sale of Warrior Coal by AWH to the MLP (or such designee); provided, however, that in no event shall the consideration payable by the MLP (or such designee) to AWH upon consummation of such transaction be greater or less than the Put Option Price. If the Put Option shall have been exercised, AWH and the MLP (or its designee) shall consummate the purchase and sale of Warrior Coal during the Put Option Period; provided, however, that if the purchase and sale of Warrior Coal in connection with the exercise of such Put Option shall not have been consummated during the Put Option Period and the parties hereto shall be diligently proceeding in good faith and using their best efforts to consummate such purchase and sale, then the right of AWH to put and sell Warrior Coal to the MLP during the Put Option Period shall continue thereafter for not more than fifteen (15) days to the extent necessary to consummate such transaction. Section 3. Call Option. During the Call Option Period, the MLP (or any subsidiary of the MLP designated by the MLP) shall have the right to call and purchase from AWH, and AWH shall have the obligation to sell to the MLP (or such designee), all of the limited liability company interests in and to Warrior Coal held by AWH provided (i) the MLP shall have given written notice to AWH, which notice may not be given prior to the commencement of the Call 7

Option Period, (ii) after giving effect to such call, the MLP (or such designee) shall own not less than 100% of the limited liability company interests in and to Warrior Coal, (iii) the MLP shall pay or caused to be paid to AWH the Call Option Price and (iv) all Third Party Consents shall have been obtained or waived in writing. Promptly following the exercise by the MLP of the Call Option, the parties hereto shall cooperate with one another and shall negotiate in good faith a purchase and sale agreement, containing terms and conditions reasonable and customary for a transaction of the type so contemplated, including representations and warranties regarding AWH's title in and to the limited liability company interests of Warrior Coal and Warrior Coal's title in and to the limited liability company interests or capital stock (or their equivalent) of each Subsidiary, if any, of Warrior Coal, for the purpose of consummating the purchase of Warrior Coal by the MLP (or its designee) from AWH; provided, however, that in no event shall the consideration payable by the MLP (or such designee) to AWH upon consummation of such transaction be greater or less than the Call Option Price. If the Call Option shall have

Option Period, (ii) after giving effect to such call, the MLP (or such designee) shall own not less than 100% of the limited liability company interests in and to Warrior Coal, (iii) the MLP shall pay or caused to be paid to AWH the Call Option Price and (iv) all Third Party Consents shall have been obtained or waived in writing. Promptly following the exercise by the MLP of the Call Option, the parties hereto shall cooperate with one another and shall negotiate in good faith a purchase and sale agreement, containing terms and conditions reasonable and customary for a transaction of the type so contemplated, including representations and warranties regarding AWH's title in and to the limited liability company interests of Warrior Coal and Warrior Coal's title in and to the limited liability company interests or capital stock (or their equivalent) of each Subsidiary, if any, of Warrior Coal, for the purpose of consummating the purchase of Warrior Coal by the MLP (or its designee) from AWH; provided, however, that in no event shall the consideration payable by the MLP (or such designee) to AWH upon consummation of such transaction be greater or less than the Call Option Price. If the Call Option shall have been exercised, AWH and the MLP (or its designee) shall enter into such purchase and sale agreement as soon as reasonably practicable following (but not more than 90 days after) receipt by AWH of such written notice; provided, however, that if the purchase and sale of Warrior Coal in connection with the exercise of such Call Option shall not have been consummated within such 90 days' period and the parties hereto shall be diligently proceeding in good faith to consummate such purchase and sale, then the right of the MLP to call and purchase Warrior Coal from AWH during such 90 days' period shall continue thereafter for such period of time as shall be reasonably necessary to consummate such transaction. Section 4. Representations and Warranties of the MLP. In order to induce AWH to enter into this Agreement, the MLP represents and warrants as of the date hereof as follows: (a) Existence, Power and Authority. The MLP is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware, and has full partnership power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. (b) Authorization; Enforceable Obligations. This Agreement has been duly authorized, executed and delivered by the MLP and constitutes the legal, valid and binding obligation of the MLP, enforceable against it in accordance with its terms, except as such enforceability may be limited by general principles of the law of equity or by any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws and laws affecting creditors' rights generally. (c) No Legal Bar. The execution, delivery and performance by the MLP of this Agreement (i) do not or will not violate the certificate of limited partnership, or other formation document of the MLP, and (ii) do not or will not violate or conflict with any law, governmental rule or regulation or any judgment, writ, order, injunction, award or decree of any court, arbitrator, administrative agency or other governmental authority applicable to the MLP. 8

Section 5. Representations and Warranties of AWH. In order to induce the MLP to enter into this Agreement, AWH represents and warrants as of the date hereof as follows: (a) Existence, Power and Authority. AWH is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to carry on its business as currently conducted and has full corporate power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. (b) Authorization; Enforceable Obligations. This Agreement has been duly authorized, executed and delivered by AWH and constitutes the legal, valid and binding obligation of AWH, enforceable against it in accordance with its terms. except as such enforceability may be limited by general principles of the law of equity or by any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws and laws affecting creditors' rights generally. (c) No Legal Bar. The execution, delivery and performance by AWH of this Agreement (i) do not or will not

Section 5. Representations and Warranties of AWH. In order to induce the MLP to enter into this Agreement, AWH represents and warrants as of the date hereof as follows: (a) Existence, Power and Authority. AWH is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to carry on its business as currently conducted and has full corporate power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. (b) Authorization; Enforceable Obligations. This Agreement has been duly authorized, executed and delivered by AWH and constitutes the legal, valid and binding obligation of AWH, enforceable against it in accordance with its terms. except as such enforceability may be limited by general principles of the law of equity or by any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws and laws affecting creditors' rights generally. (c) No Legal Bar. The execution, delivery and performance by AWH of this Agreement (i) do not or will not violate the certificate of incorporation, or by-laws or other formation document of AWH, and (ii) do not or will not violate or conflict with any law, governmental rule or regulation or any judgment, writ, order, injunction, award or decree of any court, arbitrator, administrative agency or other governmental authority applicable to AWH. Section 6. Affirmative and Negative Covenants. AWH covenants and agrees that, until the earlier of (x) the expiration of the Call Option Period (or, in the event the MLP shall have exercised its Call Option and, pursuant to the proviso contained in the last sentence of Section 3 hereof, the parties hereto shall be negotiating the sale of Warrior Coal beyond the Call Option Period, then the expiration of such additional period of time as contemplated by such proviso), (y) the sale of Warrior Coal by AWH to the MLP in connection with the exercise of the Put Option or the Call Option, as the case may be, and (y) the termination of this Agreement pursuant to Section 8 hereof: (a) Compliance with Laws, Etc. AWH shall cause Warrior Coal and its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, except to the extent failure so to comply, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (b) Preservation of Limited Liability Company Existence, Etc. AWH shall cause Warrior Coal and each Subsidiary thereof to preserve and maintain its existence, legal structure, rights (charter and statutory), permits, licenses, approvals, privileges, franchises and intellectual property; provided however, that AWH shall not be required to cause Warrior Coal or any Subsidiary thereof to preserve any right, permit, license, approval, privilege, franchise or intellectual property if the Board of Directors (or persons performing similar functions) of or on behalf of Warrior Coal or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the 9

business of Warrior Coal or such Subsidiary and that the loss thereof, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (c) Maintenance of Properties, Etc. AWH shall cause Warrior Coal and each Subsidiary thereof to maintain and preserve all of its properties that are used or useful in the conduct of Warrior Coal's or such Subsidiary's business in good working order and condition, ordinary wear and tear expected, except to the extent the failure to so maintain or preserve such properties, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (d) Disposition of Limited Liability Company Interests. AWH shall not sell, transfer, convey, pledge or otherwise dispose of any limited liability company interest in or to Warrior Coal, except as otherwise contemplated by Section 2 or 3 of this Agreement, and AWH shall not permit Warrior Coal to sell, transfer, convey, pledge or otherwise dispose of any of the limited liability company interests or capital stock (or their equivalent) of any Subsidiary of Warrior Coal.

business of Warrior Coal or such Subsidiary and that the loss thereof, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (c) Maintenance of Properties, Etc. AWH shall cause Warrior Coal and each Subsidiary thereof to maintain and preserve all of its properties that are used or useful in the conduct of Warrior Coal's or such Subsidiary's business in good working order and condition, ordinary wear and tear expected, except to the extent the failure to so maintain or preserve such properties, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. (d) Disposition of Limited Liability Company Interests. AWH shall not sell, transfer, convey, pledge or otherwise dispose of any limited liability company interest in or to Warrior Coal, except as otherwise contemplated by Section 2 or 3 of this Agreement, and AWH shall not permit Warrior Coal to sell, transfer, convey, pledge or otherwise dispose of any of the limited liability company interests or capital stock (or their equivalent) of any Subsidiary of Warrior Coal. (e) Liens, Etc. AWH shall not permit Warrior Coal or any Subsidiary thereof to create, incur, assume or suffer to exist any Lien on or with respect to any of its properties of any character (including, without limitation, accounts) whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction, a financing statement that names Warrior Coal or any Subsidiary thereof as Debtor, or sign or suffer to exist any security agreement authorizing any secured party thereunder to file such financing statement, or assign any accounts or other right to receive income, except: (i) Liens, if any, granted or created under or pursuant to the Stock Purchase Agreement or the Asset Purchase Agreement or any other agreement entered into in connection therewith; (ii) Permitted Liens; (iii) with respect to Warrior Coal and its Subsidiaries, taken as a whole, other Liens incurred in the ordinary course of business securing obligations in an amount not to exceed $1,000,000; (iv) Liens existing on the date hereof; (v) non-recourse Liens upon or in real property or equipment acquired or held by Warrior Coal or any Subsidiary thereof in the ordinary course of business to secure the purchase price of such property or equipment or to secure non-recourse, tax-exempt Debt incurred solely for the purpose of financing the acquisition, construction or improvement of any such property or equipment to be subject to such Liens, or Liens exiting on any such property or equipment at the time of acquisition (other than any such Liens created in contemplation of such acquisition that do not secure the purchase price), or extensions, renewals or 10

replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any property other than the property or equipment being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; (vi) the replacement, extension or renewal of any Lien permitted by clauses (iii) through (v) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby; (vii) Liens on personal property leased under leases (including synthetic leases) entered into by Warrior Coal or any Subsidiary thereof which are accounted for as operating leases in accordance with GAAP to the extent not prohibited under Section 6(i) hereof; (viii) easements, exceptions or reservations in any property of Warrior Coal or any Subsidiary thereof granted or reserved for the purpose of pipelines, roads, the removal of oil, gas, coal or other minerals, and other like purposes, for the joint or common use of real property, facilities and equipment, which are incidental to, and do

replacements of any of the foregoing for the same or a lesser amount; provided, however, that no such Lien shall extend to or cover any property other than the property or equipment being acquired, constructed or improved, and no such extension, renewal or replacement shall extend to or cover any property not theretofore subject to the Lien being extended, renewed or replaced; (vi) the replacement, extension or renewal of any Lien permitted by clauses (iii) through (v) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby; (vii) Liens on personal property leased under leases (including synthetic leases) entered into by Warrior Coal or any Subsidiary thereof which are accounted for as operating leases in accordance with GAAP to the extent not prohibited under Section 6(i) hereof; (viii) easements, exceptions or reservations in any property of Warrior Coal or any Subsidiary thereof granted or reserved for the purpose of pipelines, roads, the removal of oil, gas, coal or other minerals, and other like purposes, for the joint or common use of real property, facilities and equipment, which are incidental to, and do not materially interfere with, the ordinary conduct of the business of Warrior Coal or such Subsidiary; and (ix) Liens on documents of title and the property covered thereby securing obligations in respect of letters of credit that are commercial letters of credit (i.e., obtained for the purpose of paying all or a portion of the purchase price of such property) to the extent not prohibited under Section 6(f) hereof. (f) Debt. AWH shall not permit Warrior Coal or any of its Subsidiaries to create, incur, assume or suffer to exist any Debt, except: (i) Debt owed to the MLP or any Subsidiary thereof; (ii) Debt created under the SGP Revolving Credit Agreement; (iii) Debt assumed under or pursuant to the Stock Purchase Agreement or the Asset Purchase Agreement; and (iv) non-recourse Debt secured by Liens permitted by Section 6(e)(v) hereof. (g) Mergers, Etc. AWH shall not permit Warrior Coal or any Subsidiary thereof to merge into or consolidate with any Person or permit any Person to merge into it or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person, except that: 11

(i) any of WCC, WCMC and RBCC (or all of them) may merge into Warrior Coal, provided that, in the case of any such merger, Warrior Coal shall be the surviving entity and shall have succeeded to all of the assets and properties of WCC, WCMC or RBCC (or all of them), as the case may be; (ii) any Subsidiary of Warrior Coal may merge into or consolidate with any wholly owned Subsidiary of Warrior Coal, provided that, in the case of any such merger or consolidation, the Person formed by such merger or consolidation shall be a wholly owned subsidiary of Warrior Coal and such Person shall have succeeded to all of the assets and properties of such Subsidiary; and (iii) any Subsidiary of Warrior Coal may merge into or consolidate with Warrior Coal, provided that Warrior Coal is the surviving entity and shall have succeeded to all of the assets and properties of such Subsidiary. (h) Sales, Etc., of Assets. AWH shall not permit Warrior Coal or any Subsidiary thereof to sell, lease, transfer or otherwise dispose of any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except;

(i) any of WCC, WCMC and RBCC (or all of them) may merge into Warrior Coal, provided that, in the case of any such merger, Warrior Coal shall be the surviving entity and shall have succeeded to all of the assets and properties of WCC, WCMC or RBCC (or all of them), as the case may be; (ii) any Subsidiary of Warrior Coal may merge into or consolidate with any wholly owned Subsidiary of Warrior Coal, provided that, in the case of any such merger or consolidation, the Person formed by such merger or consolidation shall be a wholly owned subsidiary of Warrior Coal and such Person shall have succeeded to all of the assets and properties of such Subsidiary; and (iii) any Subsidiary of Warrior Coal may merge into or consolidate with Warrior Coal, provided that Warrior Coal is the surviving entity and shall have succeeded to all of the assets and properties of such Subsidiary. (h) Sales, Etc., of Assets. AWH shall not permit Warrior Coal or any Subsidiary thereof to sell, lease, transfer or otherwise dispose of any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except; (i) sales of Inventory in the ordinary course of Warrior Coal's or its Subsidiaries' business; (ii) with respect to Warrior Coal and its Subsidiaries, taken as a whole, sale of assets that are obsolete or no longer used or useful for fair value in an aggregate amount not to exceed $500,000.00 over the term of this Agreement; (iii) sales of assets by Warrior Coal or any Subsidiary thereof to the MLP or any Subsidiary thereof; (iv) in a transaction authorized by Section 6(g) hereof; and (v) with respect to Warrior Coal and its Subsidiaries, taken as a whole, sales of other assets with a fair value in an amount not to exceed $500,000.00 individually or $1,000,000.00 in the aggregate over the term of this Agreement; provided however, that the purchase price paid to Warrior Coal or any such Subsidiary for such asset shall be no less than the fair market value of such asset at the time of such sale and such sale shall be in the best interest of Warrior Coal or such Subsidiary, as determined in good faith by the Board of Directors (or other person performing such functions) of Warrior Coal or such Subsidiary. (i) Restricted Payments. AWH shall not permit Warrior Coal or any such Subsidiary thereof to declare or pay any dividends, repurchase or redeem any capital stock or other equity interest, return any capital to its members or shareholders as such, make any distribution of assets to its members or shareholders as such (each of the foregoing being a "Restricted Payment"), except that any wholly-owned Subsidiary of 12

Warrior Coal shall be permitted to declare, make or incur a liability to make any such Restricted Payment to Warrior Coal or any wholly-owned Subsidiary of Warrior Coal. (j) Lease Obligations. AWH shall not permit Warrior Coal or any Subsidiary thereof to create, incur, assume or suffer to exist any obligations as lessee (excluding for this purpose obligations as lessee under Capital Leases) (i) for the rental or hire of real or personal property in connection with any sale and leaseback transaction, (ii) for the rental or hire of other personal property of any kind under operating leases or agreements to lease having an original term of one year or more that would cause the direct and contingent liabilities of Warrior Coal and its Subsidiaries, taken as a whole, in respect of all such obligations to exceed $1,000,000.00 payable in any period of 12 consecutive months, or (iii) for the rental or hire of other real property under leases or agreements to lease other than in the ordinary course of business. (k) Amendments of Constitutive Documents. AWH shall not permit Warrior Coal or any Subsidiary thereof to amend its Certificate of Formation, limited liability company operating agreement, charter, by-laws, partnership agreement or other constituent document in any manner that has a Material Adverse Effect. (l) Generally. Except for any transaction permitted under this

Warrior Coal shall be permitted to declare, make or incur a liability to make any such Restricted Payment to Warrior Coal or any wholly-owned Subsidiary of Warrior Coal. (j) Lease Obligations. AWH shall not permit Warrior Coal or any Subsidiary thereof to create, incur, assume or suffer to exist any obligations as lessee (excluding for this purpose obligations as lessee under Capital Leases) (i) for the rental or hire of real or personal property in connection with any sale and leaseback transaction, (ii) for the rental or hire of other personal property of any kind under operating leases or agreements to lease having an original term of one year or more that would cause the direct and contingent liabilities of Warrior Coal and its Subsidiaries, taken as a whole, in respect of all such obligations to exceed $1,000,000.00 payable in any period of 12 consecutive months, or (iii) for the rental or hire of other real property under leases or agreements to lease other than in the ordinary course of business. (k) Amendments of Constitutive Documents. AWH shall not permit Warrior Coal or any Subsidiary thereof to amend its Certificate of Formation, limited liability company operating agreement, charter, by-laws, partnership agreement or other constituent document in any manner that has a Material Adverse Effect. (l) Generally. Except for any transaction permitted under this Section 6, AWH shall not permit Warrior Coal or any Subsidiary thereof to enter into any transaction that is reasonably expected to have a Material Adverse Effect. (m) No Amendments To Credit Agreement. AWH shall not permit Warrior Coal to amend or modify any term or condition of the SGP Revolving Credit Agreement (or any credit agreement refinancing such indebtedness) except for such amendments or modifications thereof that do not increase or alter in any material respect the obligations of Warrior Coal thereunder or have a Material Adverse Effect. Section 7. Default; Termination. In the event that a party hereto shall have failed to perform or comply with in any material respect any agreement or covenant binding upon such party (such defaulting party, the "Defaulting Party", and the non-defaulting party, the "Non-Defaulting Party") and such default shall have continued unremedied for more than 45 days after receipt of notice in writing of such default from the Non-Defaulting Party (or such longer period as shall be reasonably necessary to cure such default provided the Defaulting Party is diligently proceeding in good faith to cure such default), then the Non-Defaulting Party may, by the giving of not less than 15 days' written notice to the Defaulting Party, terminate this Agreement. In the event of such termination, the nondefaulting party shall be entitled to such remedies as are available to it under applicable law. Section 8. Further Assurances. In the event that the Put Option is exercised by AWH or the Call Option is exercised by the MLP, each party hereto shall, at their own expense, cooperate with one another in good faith and execute and deliver such additional documents and take such further actions as such other party hereto may reasonably request in order to more fully give effect to the purposes and intent of this Agreement, to carry out the terms hereof and to fully and completely convey Warrior Coal to the MLP (or its designee) as contemplated hereby. 13

Without limiting the foregoing, the parties hereto agree to use their commercially reasonable efforts to obtain the consent of such third parties, including the consents of all lenders to the MLP or any of its Subsidiaries, if required (collectively, the "Third Party Consents"), as shall be necessary or appropriate for the purpose of consummating the sale of Warrior Coal by AWH to the MLP as contemplated by this Agreement. Section 9. Amendment and Restatement. The parties hereto agree that the Original Put and Call Agreement is amended and restated in its entirety upon the terms and conditions contained herein. Section 10. Miscellaneous. (a) Notices. Any notice required or permitted hereunder is to be in writing and may be given by telecopy, telex, cable or other customary means of electronic communication or by registered or certified mail (return receipt requested) or express courier, postage prepaid. All notices, statements, requests and demands given to or made upon any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given or

Without limiting the foregoing, the parties hereto agree to use their commercially reasonable efforts to obtain the consent of such third parties, including the consents of all lenders to the MLP or any of its Subsidiaries, if required (collectively, the "Third Party Consents"), as shall be necessary or appropriate for the purpose of consummating the sale of Warrior Coal by AWH to the MLP as contemplated by this Agreement. Section 9. Amendment and Restatement. The parties hereto agree that the Original Put and Call Agreement is amended and restated in its entirety upon the terms and conditions contained herein. Section 10. Miscellaneous. (a) Notices. Any notice required or permitted hereunder is to be in writing and may be given by telecopy, telex, cable or other customary means of electronic communication or by registered or certified mail (return receipt requested) or express courier, postage prepaid. All notices, statements, requests and demands given to or made upon any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given or made (i) in the case of notice delivered by overnight express courier, one business day after the business day such notice was delivered to such courier, (ii) in the case of notice delivered by first class mail, three business days after being deposited in the mail, postage prepaid, return receipt requested, (iii) in the case of notice by hand, when delivered, or (iv) in the case of notice by any customary means of telecommunication, when sent provided confirmation of receipt or answer back has been received, in each case if addressed: to AWH, to it at: ARH Warrior Holdings, Inc. 1717 South Boulder Avenue Tulsa, OK 74119 Attention: Thomas L. Pearson Telephone: (918) 295-7606 Telecopy: (918) 295-7361 to the MLP, to it at: Alliance Resource Partners, L.P. c/o Alliance Resource Management, L.P. 1717 South Boulder Avenue Tulsa, OK 74119 Attention: Michael L. Greenwood Telephone: (918) 295-7622 Telecopy: (918) 295-7357 14

or such other address for notice as any party hereto may designate for itself in a notice to the other party, except in cases where it is expressly provided herein that such notice, statement, request or demand shall not be effective until received by the party to whom it is addressed. (b) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. (c) Assignment. Except as otherwise permitted hereunder, no party to this Agreement shall assign its rights or delegate its obligations hereunder to any other Person without the prior written consent of the other party hereto. (d) Integration. This Agreement constitutes the entire agreement between AWH and the MLP with respect to the subject matter hereof and there are no promises, undertakings, representations or warranties by AWH or the MLP relative to the subject matter hereof not expressly set forth or referred to herein.

or such other address for notice as any party hereto may designate for itself in a notice to the other party, except in cases where it is expressly provided herein that such notice, statement, request or demand shall not be effective until received by the party to whom it is addressed. (b) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF OKLAHOMA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS. (c) Assignment. Except as otherwise permitted hereunder, no party to this Agreement shall assign its rights or delegate its obligations hereunder to any other Person without the prior written consent of the other party hereto. (d) Integration. This Agreement constitutes the entire agreement between AWH and the MLP with respect to the subject matter hereof and there are no promises, undertakings, representations or warranties by AWH or the MLP relative to the subject matter hereof not expressly set forth or referred to herein. (e) Severability. The provisions of this Agreement are severable, and if any clause or provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such clause or provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability of such clause or provision in any other jurisdiction or the remaining provisions hereof in any jurisdiction. (f) Counterparts. This Agreement may be executed in any number of counterparts and by each party hereto on separate counterparts, each complete set of which, when so executed and delivered by all parties, shall be an original, but all such counterparts shall together constitute but one and the same instrument. (g) Headings, Bold Type and Table of Contents. The section headings, subsection headings, and bold type used herein have been inserted for convenience of reference only and do not constitute matters to be considered in interpreting this Agreement. 15

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above. ARH WARRIOR HOLDINGS, INC.
By: /s/ Thomas L. Pearson -----------------------------------------Name: Thomas L. Pearson Title: Senior Vice President - Law and Administration, General Counsel and Secretary

ALLIANCE RESOURCE PARTNERS, L.P. By: Alliance Resource Management GP, LLC, its Managing General Partner
By: /s/ Michael L. Greenwood -------------------------------------Name: Michael L. Greenwood Title: Senior Vice President, Chief Financial Officer and Treasurer

16

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above. ARH WARRIOR HOLDINGS, INC.
By: /s/ Thomas L. Pearson -----------------------------------------Name: Thomas L. Pearson Title: Senior Vice President - Law and Administration, General Counsel and Secretary

ALLIANCE RESOURCE PARTNERS, L.P. By: Alliance Resource Management GP, LLC, its Managing General Partner
By: /s/ Michael L. Greenwood -------------------------------------Name: Michael L. Greenwood Title: Senior Vice President, Chief Financial Officer and Treasurer

16

Exhibit 10.18 January 1, 2001 Mr. Robert G. Sachse 2685 East 37th Street Tulsa, OK 74105 Re: Consulting Agreement Dear Robert: This letter will confirm the basis upon which Alliance Resource Management GP, LLC ("Alliance") has engaged you ("Consultant") to provide certain advisory and consulting services with respect to strategic planning, marketing, and potential acquisitions and mergers involving Alliance, acting as the managing general partner of Alliance Resource Partners, L.P. ("ARLP"). Specifically, the terms and conditions of our understanding are as follows: 1. Advisory and Consulting Services. During the term of this agreement, Consultant agrees to perform to the best of his abilities such advisory and consulting work for Alliance and ARLP as the Board of Directors of Alliance, its President and Chief Executive Officer, or his designees, may from time to time request. Consultant agrees to perform such of the following advisory and consulting services as Alliance reasonably requests: (a) To the extent Alliance deems it appropriate and reasonable, Consultant will familiarize himself with the business, operations, properties, financial condition and prospects of Alliance and ARLP, each's strategic development plans, management succession plans, and such other facets of Alliance as its President and Chief Executive Officer shall direct. (b) Consultant will advise and assist Alliance and ARLP and each's management in the formulation of potential strategic alliances with power generators as well as transportation and transmission companies.

Exhibit 10.18 January 1, 2001 Mr. Robert G. Sachse 2685 East 37th Street Tulsa, OK 74105 Re: Consulting Agreement Dear Robert: This letter will confirm the basis upon which Alliance Resource Management GP, LLC ("Alliance") has engaged you ("Consultant") to provide certain advisory and consulting services with respect to strategic planning, marketing, and potential acquisitions and mergers involving Alliance, acting as the managing general partner of Alliance Resource Partners, L.P. ("ARLP"). Specifically, the terms and conditions of our understanding are as follows: 1. Advisory and Consulting Services. During the term of this agreement, Consultant agrees to perform to the best of his abilities such advisory and consulting work for Alliance and ARLP as the Board of Directors of Alliance, its President and Chief Executive Officer, or his designees, may from time to time request. Consultant agrees to perform such of the following advisory and consulting services as Alliance reasonably requests: (a) To the extent Alliance deems it appropriate and reasonable, Consultant will familiarize himself with the business, operations, properties, financial condition and prospects of Alliance and ARLP, each's strategic development plans, management succession plans, and such other facets of Alliance as its President and Chief Executive Officer shall direct. (b) Consultant will advise and assist Alliance and ARLP and each's management in the formulation of potential strategic alliances with power generators as well as transportation and transmission companies. (c) Consultant will advise and assist Alliance and ARLP and each's management in (i) identifying potential acquisition targets, (ii) considering the desirability of effecting a growth transaction and, if Alliance believes such a transaction to be desirable, in developing a general strategy for accomplishing such a transaction, (iii) assisting in the preparation and distribution of materials concerning such merger and/or acquisition candidates, (iv) making presentations to the Board of Directors of Alliance concerning any proposed transaction, and (v) the course of the negotiation of a transaction and participate, if requested, in such negotiations.

Mr. Robert G. Sachse January 1, 2001 Page 2 (d) Secondarily to the advisory and consulting services described above, Consultant will advise and assist Alliance and ARLP and each's management in developing similar strategies and analyses in diversification opportunities (i.e., other than traditional coal acquisitions), that may be available to ARLP. (e) Consultant will render such other advisory and consulting services as Alliance, acting through its President and Chief Executive Officer, may reasonably request, giving due consideration to Consultant's experience and expertise. 2. Extent of Advisory and Consulting Services. Consultant shall devote approximately fifty percent (50%) of his normal business time (i.e., estimated at approximately 125 days annually), attention and energies as well as his best talents and abilities to the business of Alliance and ARLP in accordance with the President and Chief Executive Officer's instructions and directions. Consultant will, upon request of Alliance's President and Chief Executive Officer, perform such advisory and consulting work at Alliance's offices in Tulsa, Oklahoma, or at such

Mr. Robert G. Sachse January 1, 2001 Page 2 (d) Secondarily to the advisory and consulting services described above, Consultant will advise and assist Alliance and ARLP and each's management in developing similar strategies and analyses in diversification opportunities (i.e., other than traditional coal acquisitions), that may be available to ARLP. (e) Consultant will render such other advisory and consulting services as Alliance, acting through its President and Chief Executive Officer, may reasonably request, giving due consideration to Consultant's experience and expertise. 2. Extent of Advisory and Consulting Services. Consultant shall devote approximately fifty percent (50%) of his normal business time (i.e., estimated at approximately 125 days annually), attention and energies as well as his best talents and abilities to the business of Alliance and ARLP in accordance with the President and Chief Executive Officer's instructions and directions. Consultant will, upon request of Alliance's President and Chief Executive Officer, perform such advisory and consulting work at Alliance's offices in Tulsa, Oklahoma, or at such other places and at such other times as Alliance and Consultant shall from time to time agree upon, subject only to reimbursement of Consultant's reasonable travel and living expenses. During the term of this Agreement, Consultant will not engage in any other coal business or coal-related business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage, except to the extent permitted with the express written authorization of Alliance. The preceding sentence does not preclude Consultant from owning for investment purposes less than One Percent (1%) of the outstanding equity interests in any publicly-traded entity engaged in the coal business or coal-related business activities so long as Consultant does not directly or indirectly participate in the management of such entity. 3. Term. Subject to the provisions for termination set forth in Paragraph 11 below, Consultant is retained for a term of three (3) years and this Consulting Agreement shall be effective beginning August 14, 2000, and terminate on August 13, 2003. Consultant and Alliance agree that, on or after March 31, 2003, both parties will initiate discussions in good faith to define the role and relationship, if any, of Consultant with Alliance subsequent to the termination date of this Consulting Agreement. 4. Consulting Fee. For services performed hereunder, Consultant shall receive as compensation the sum of One Hundred Fifty Thousand Dollars ($150,000) per annum, payable monthly in equal amounts of Twelve Thousand Five Hundred Dollars ($12,500). Within ten (10) days following receipt of Consultant's invoice for services and reimbursement of reasonable expenses, if any, for the preceding month, Alliance shall reimburse Consultant for such expenses, subject to its right to review and retroactively adjust any inappropriate expense reimbursement in the future. In addition to the foregoing, for services performed hereunder, Consultant shall receive as compensation (a) the sum of Seven Thousand Five Hundred Dollars ($7,500) per calendar quarter (or pro rata portion thereof) paid by Alliance as follows: (a) 250 common units

Mr. Robert G. Sachse January 1, 2001 Page 3 of ARLP, plus (b) the cash difference between $7,500 less the market value of such 250 common units payable on the last day of each calendar quarter calculated by the closing price per common unit averaged over the immediately preceding two (2) week period as reported in The Wall Street Journal, and (c) group health coverage (i.e., medical, prescription drug, dental, and vision coverage) for Consultant and his family (i.e., Mrs. Elizabeth H. Sachse, spouse, and Robert B. Sachse, son) substantially similar to that offered participants in the Alliance Coal, LLC and Affiliates health plan. 5. Limitation of Reimbursable Expenses. Whenever possible and practical, Consultant will take advantage of reduced rates for airfare, lodging and car rental. Consultant shall not be reimbursed for first class airfare.

Mr. Robert G. Sachse January 1, 2001 Page 3 of ARLP, plus (b) the cash difference between $7,500 less the market value of such 250 common units payable on the last day of each calendar quarter calculated by the closing price per common unit averaged over the immediately preceding two (2) week period as reported in The Wall Street Journal, and (c) group health coverage (i.e., medical, prescription drug, dental, and vision coverage) for Consultant and his family (i.e., Mrs. Elizabeth H. Sachse, spouse, and Robert B. Sachse, son) substantially similar to that offered participants in the Alliance Coal, LLC and Affiliates health plan. 5. Limitation of Reimbursable Expenses. Whenever possible and practical, Consultant will take advantage of reduced rates for airfare, lodging and car rental. Consultant shall not be reimbursed for first class airfare. 6. Independent Contractor. Consultant is an independent contractor under this Consulting Agreement with Alliance. Neither Alliance, nor Consultant have the authority to bind the other to any third person or otherwise to act in any way as the representative of the other, unless otherwise expressly agreed to in writing signed by both parties hereto. Consultant shall not be deemed for any purpose to be the employee, agent, servant or representative of Alliance. Alliance shall have no direction or control of Consultant except in results to be obtained. The parties agree that this Consulting Agreement, or its implementation, does not create a joint employer, single employer, alter ego, agency relationship or successor relationship between Alliance and ARLP, on one hand, and Consultant, on the other hand. Furthermore, Consultant acknowledges that he is solely responsible for, and Consultant shall not be entitled to secure from Alliance, any health and welfare benefits (including by way of illustration and not limitation, medical, dental, vision, life, accidental death and dismemberment, pension, profit sharing, worker's compensation, or other similar benefits), except as specifically provided in Paragraph 4 above. 7. Taxes and Unemployment Compensation. Consultant shall pay and hereby assumes exclusive liability for payment of any and all Federal, state and other locally imposed income taxes, contributions, assessments and taxes for unemployment insurance, old age benefits, annuities or other purposes which are measured by or based upon the compensation paid to Consultant under this Consulting Agreement. In addition, Consultant agrees to reimburse Alliance for any of the aforesaid taxes or contributions which by law Alliance may be required to pay because of Consultant's failure to pay the same. 8. Insurance. (a) Consultant, from the time of commencement of the advisory and consulting services described hereinabove until the termination of this Consulting Agreement, shall maintain at his own expense appropriate personal insurance including homeowners, automobile

Mr. Robert G. Sachse January 1, 2001 Page 4 liability. (b) Alliance will provide to Consultant coverage under its automobile liability insurance covering owned, nonowned and hired vehicles used by Consultant only during the performance of services rendered hereunder with combined single limits of at least Five Hundred Thousand Dollars ($500,000) per occurrence, covering liability for bodily injury or sickness, including death and property damage. 9. Indemnity and Contribution. Alliance agrees to indemnify Consultant to the full extent lawful against any and all claims, losses and expenses incurred (including all reasonable fees and disbursements of Consultant incurred in connection with the performance of services hereunder) including, but not limited to, such expenses as may be

Mr. Robert G. Sachse January 1, 2001 Page 4 liability. (b) Alliance will provide to Consultant coverage under its automobile liability insurance covering owned, nonowned and hired vehicles used by Consultant only during the performance of services rendered hereunder with combined single limits of at least Five Hundred Thousand Dollars ($500,000) per occurrence, covering liability for bodily injury or sickness, including death and property damage. 9. Indemnity and Contribution. Alliance agrees to indemnify Consultant to the full extent lawful against any and all claims, losses and expenses incurred (including all reasonable fees and disbursements of Consultant incurred in connection with the performance of services hereunder) including, but not limited to, such expenses as may be incurred with investigation of and preparation for any pending or threatened claims in any litigation or other proceedings arising therefrom) arising out of Consultant's engagement hereunder; provided, however, that Consultant shall notify Alliance of any such claim and, so long as in the reasonable judgment of Consultant there is no conflict of interest, Alliance shall have the option to defend Consultant with counsel of it's own choosing (including counsel retained to also defend Alliance), and provided, further, there shall be excluded from any such indemnification any claim, loss or expense that arises primarily out of or is based primarily upon any action or failure to act by Consultant, other than an action or failure to act undertaken at the request of or with the written consent of Alliance, that is found in a final judicial determination (or a settlement tantamount thereto) to constitute bad faith, willful misconduct, or gross negligence on the part of Consultant. In the event that the foregoing indemnity is unavailable or insufficient to hold Consultant harmless, then Alliance shall contribute to amounts paid or payable by Consultant in respect of any such claims, losses and expenses in such proportion as approximately reflects the relative benefits received by, and fault of, Alliance and Consultant in connection with the matters as to which such claims, losses and expenses relate and other equitable considerations. 10. Termination of Agreement. Notwithstanding the provisions of Paragraphs 3 and 4 hereinabove, the retention of Consultant shall terminate upon the first to occur of the following events: (a) the demise of Mr. Robert G. Sachse, (b) the mental illness or disability of Mr. Robert G. Sachse, if he is unable to perform substantially his duties for a period of two continuous months; provided, however, a decision to so terminate the consulting services provided by Consultant herewith must be made by the Board of Directors of Alliance in good faith, and must be based upon medical reports and reasonable medical advice which shall establish or indicate the Consultant's incapacity may continue for an indefinite period. When, after such two months of disability or mental illness, the Board of Directors of Alliance decides to terminate Consultant's retention hereunder, such

Mr. Robert G. Sachse January 1, 2001 Page 5 termination shall be effective thirty (30) days after written notice of such decision has been delivered to Consultant. The compensation provided for under the terms of this Consulting Agreement shall continue during the period of Consultant's disability or mental illness until this Consulting Agreement shall be terminated by Alliance; (c) the termination of the term of this Consulting Agreement on August 13, 2003, unless otherwise extended by the parties hereto; (d) the breach by either party hereto of any material term of this Consulting Agreement; provided written notice of the breach setting forth sufficient detail(s) of the alleged breach is tendered by the non-breaching party and

Mr. Robert G. Sachse January 1, 2001 Page 5 termination shall be effective thirty (30) days after written notice of such decision has been delivered to Consultant. The compensation provided for under the terms of this Consulting Agreement shall continue during the period of Consultant's disability or mental illness until this Consulting Agreement shall be terminated by Alliance; (c) the termination of the term of this Consulting Agreement on August 13, 2003, unless otherwise extended by the parties hereto; (d) the breach by either party hereto of any material term of this Consulting Agreement; provided written notice of the breach setting forth sufficient detail(s) of the alleged breach is tendered by the non-breaching party and such material breach or default hereunder is not cured within a reasonable time period, but in no event shall such cure period exceed thirty (30) days after notice is received; and (e) Subsequent to the first year of the three-year term hereunder, in the event that either Consultant or Alliance determine in good faith that an equitable adjustment in the per annum rate is in order as a result of (a) an increase or decrease of the time required by Consultant to fulfill the obligations hereunder, and/or (b) a material change in the Company's growth strategy, then Alliance and/or Consultant may provide notice of their respective intent to reopen discussions concerning the annual aggregate consulting fee paid hereunder. In such event, the parties agree to negotiate in good faith for a period of not more than thirty (30) days a mutually acceptable adjustment to the annual consulting rate fee. Should the parties not be able to reach an amicable agreement, either party may terminate this Consulting Agreement by providing sixty (60) days advance written notice of such termination. In the event this Consulting Agreement is terminated in accordance with this Paragraph 10, the parties acknowledge that the provisions of Paragraphs 5, 11, 12, 13, 14, 17 and 18 shall survive termination, except if the Agreement is terminated by Alliance pursuant to Paragraph 10(e), the terms of Paragraph 12(b) will not survive. 11. Nondisclosure by Consultant. Consultant acknowledges and agrees that any information obtained by Consultant while providing the advisory and consulting services to Alliance is highly confidential, and is important to Alliance and to the effective operation of its businesses. As a result, Consultant therefore agrees that while retained by Alliance, and at any time thereafter, it will make no disclosure of any kind, directly or indirectly, concerning any confidential matters relating to Alliance of any of its activities. Moreover, Consultant agrees to execute the Confidentiality Agreement designated Exhibit "A," and attached hereto and incorporated by reference herein. 12. Noncompetition by Consultant.

Mr. Robert G. Sachse January 1, 2001 Page 6 (a) During the term hereof and, except as otherwise consented to in writing by Alliance, Consultant agrees not to compete with Alliance and ARLP in the United States, including Alaska. Except as provided for in Paragraph 2 hereinabove, Consultant agrees that during the term of the Consulting Agreement, he will not work for, advise, consult with, serve or assist in any way, directly or indirectly, any party whose business is in any way competitive with the activities or businesses of Alliance and ARLP, and Consultant agrees further that he will himself not compete in any way, directly or indirectly, with Alliance and ARLP, and that he will not purchase or otherwise acquire any interest of any kind in a business which is in any way competitive with Alliance and ARLP.

Mr. Robert G. Sachse January 1, 2001 Page 6 (a) During the term hereof and, except as otherwise consented to in writing by Alliance, Consultant agrees not to compete with Alliance and ARLP in the United States, including Alaska. Except as provided for in Paragraph 2 hereinabove, Consultant agrees that during the term of the Consulting Agreement, he will not work for, advise, consult with, serve or assist in any way, directly or indirectly, any party whose business is in any way competitive with the activities or businesses of Alliance and ARLP, and Consultant agrees further that he will himself not compete in any way, directly or indirectly, with Alliance and ARLP, and that he will not purchase or otherwise acquire any interest of any kind in a business which is in any way competitive with Alliance and ARLP. (b) Upon termination of this Consulting Agreement, except as otherwise consented to in writing by Alliance, Consultant agrees not to compete with Alliance's and/or ARLP's interests in the United States, including Alaska, for a period of two (2) years following such termination. The interests of Alliance and ARLP protected from competition by the preceding sentence are expressly limited to those projects, business agreements, transactions, and other business transactions (whether successfully closed or not) in which Consultant has been (i) actively and directly involved on behalf of Alliance during the term of this Consulting Agreement and (ii) concerns confidential and propriety information that is subject to the Confidentiality Agreement referred to in Paragraph 11 above. (c) Within the two preceding paragraphs, the parties hereto recognizing that irreparable injury will result to Alliance and ARLP, each's business and property in the event of Consultant's breach of this agreement not to compete, in that such consulting services are based primarily upon this Consulting Agreement, agree that in the event of Consultant's breach of its agreement not to compete, Alliance and ARLP shall be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation thereof by Consultant, his partners, employees and all persons acting for or with him. 13. Notices. All notices made in connection with this Consulting Agreement shall be in writing, except as otherwise expressly permitted hereunder. Any notice or other communication in connection herewith shall be deemed duly given (a) two business days after it is sent by express, registered or certified mail, return receipt requested, postage prepaid or (b) on the business day after it is sent by overnight courier, in every case, addressed as follows: IF TO CONSULTANT, AT: Mr. Robert G. Sachse 2685 East 37th Street Tulsa, OK 74105

Mr. Robert G. Sachse January 1, 2001 Page 7 IF TO ALLIANCE, AT Alliance Resource Management GP, LLC 1717 South Boulder Avenue P.O. Box 22027 Tulsa, OK 74121-22027 Attn: Joseph W. Craft III and Thomas L. Pearson, Esq. or, in any case, any such other address as may be specified in writing to the other party hereto. Any party may give notice or other communication in connection therewith using any other means (including, but not limited to,

Mr. Robert G. Sachse January 1, 2001 Page 7 IF TO ALLIANCE, AT Alliance Resource Management GP, LLC 1717 South Boulder Avenue P.O. Box 22027 Tulsa, OK 74121-22027 Attn: Joseph W. Craft III and Thomas L. Pearson, Esq. or, in any case, any such other address as may be specified in writing to the other party hereto. Any party may give notice or other communication in connection therewith using any other means (including, but not limited to, personal delivery, messenger service, telecopy, telex, telephone or other oral communication or ordinary mail), but no such notice or other communication shall be deemed to have been duly given unless and until it is actually received by the individual for whom it is intended. 14. Mediation. (a) All disputes, controversies and claims (collectively, "Disputes") arising out of, relating to, or in connection with this Consulting Agreement, or the breach, termination of validity hereof, that are not otherwise resolved by negotiation between Alliance and Consultant, may be resolved by mediation. Any party to a Dispute may request that the matter be submitted to mediation by written notice to that effect. Within ten (10) days after receipt of said notice, the other party shall give written notice stating whether or not it consents to mediation; provided that no parties shall be required to submit to mediation unless it consents, which consent shall be in its sole discretion; and provided further that a request for mediation shall not in any way interfere with, compromise, limit or restrict the parties' right to seek any judicial remedies whatsoever. (b) If both parties consent, mediation shall be initiated in accordance with the Center for Public Resources' Model Procedure for Mediation of Business Disputes, provided that the mediation shall take place in Tulsa, Oklahoma or such other place as the parties may mutually determine. (c) Any settlement agreement mutually reached in the course of the mediation shall be recorded in a definitive agreement, which, when duly executed and delivered by both parties hereto shall be binding and conclusive upon the parties. 15. Assignment. This Consulting Agreement shall not be assignable by any party without the prior written consent of the other party (which consent shall not be unreasonably withheld). Notwithstanding the foregoing, the parties hereto understand that the personal

Mr. Robert G. Sachse January 1, 2001 Page 8 services of Consultant are essential to receive the benefits of this agreement. Any purported assignment in violation of this paragraph shall be void. 16. Amendment; Waivers, Etc. No amendment, modification or discharge of this Consulting Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party as to enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time.

Mr. Robert G. Sachse January 1, 2001 Page 8 services of Consultant are essential to receive the benefits of this agreement. Any purported assignment in violation of this paragraph shall be void. 16. Amendment; Waivers, Etc. No amendment, modification or discharge of this Consulting Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party as to enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. 17. Governing Law. This Consulting Agreement shall be governed by and construed in accordance with the internal laws of the State of Oklahoma, without given effect to the conflict of laws rules thereof. 18. Waiver of Jury Trial. (a) THE PARTIES TO THIS CONSULTING AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO RECOVER PUNITIVE, EXEMPLARY, OR SIMILAR DAMAGES IN ANY ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT OF OR RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS CONSULTING AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS CONSULTING AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS CONSULTING AGREEMENT OR THE SERVICES CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE WAIVERS SET FORTH IN SUBPARAGRAPH (a) ABOVE, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS CONSULTING AGREEMENT BY, AMONG OTHER THINGS, WAIVERS AND CERTIFICATIONS IN THIS SECTION. 19. Binding Effect. This Consulting Agreement shall be binding upon and enure to

Mr. Robert G. Sachse January 1, 2001 Page 9 the benefit of the parties hereto and their respective heirs, successors, and permitted assigns, if any. 20. Entire Agreement. This Consulting Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 21. Counterparts. This Consulting Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

Mr. Robert G. Sachse January 1, 2001 Page 9 the benefit of the parties hereto and their respective heirs, successors, and permitted assigns, if any. 20. Entire Agreement. This Consulting Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 21. Counterparts. This Consulting Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 22. Headings. The headings contained in this Consulting Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this consulting agreement. *** The foregoing represents the entirety of our agreement, superseding all prior communications and understandings of the subject, and I invite you to accept it by countersigning the enclosed copy of this letter, where indicated below, and returning the copy at your earliest opportunity. I look forward to the exciting opportunities that lie ahead for Alliance and the role that you will play in our future. Very truly yours,
By: /s/ Joseph W. Craft III ------------------------------------Joseph W. Craft III President and Chief Executive Officer

AGREED AND ACCEPTED this 26 day of March, 2001.
By: /s/ Robert G. Sachse ------------------------------Robert G. Sachse, an individual

Exhibit "A" January 1, 2001 Mr. Robert G. Sachse 2685 East 37th Street Tulsa, OK 74105 Re: Confidentiality Agreement Dear Robert: In regard to the Consulting Agreement executed contemporaneously herewith, you have been retained to provide certain advisory and consulting services to Alliance Resource Management GP, LLC and its affiliates (collectively, "Alliance"). In order for you to accomplish the tasks that you have been requested to undertake and complete, it will be necessary for you to receive information concerning Alliance that is regarded as highly

Exhibit "A" January 1, 2001 Mr. Robert G. Sachse 2685 East 37th Street Tulsa, OK 74105 Re: Confidentiality Agreement Dear Robert: In regard to the Consulting Agreement executed contemporaneously herewith, you have been retained to provide certain advisory and consulting services to Alliance Resource Management GP, LLC and its affiliates (collectively, "Alliance"). In order for you to accomplish the tasks that you have been requested to undertake and complete, it will be necessary for you to receive information concerning Alliance that is regarded as highly confidential. Before you are provided with such information, Alliance must have assurance that you recognize the confidential nature of this information and that you are willing to maintain the information in confidence. In consideration and as a condition to your being furnished with, or granted access to, such information: 1. You acknowledge that certain information, whether provided orally or in writing relating to Alliance including, but not limited to, technical, financial and marketing information, which Alliance or its representatives agree to furnish to you or which shall be acquired as a result hereto (collectively, the "Information") is confidential and proprietary information. 2. You agree that all information shall be retained in strict confidence by you and used for the sole purpose of providing the aforementioned advisory and consulting services and shall not be used by you in way detrimental to Alliance, nor used by you or any third party for its competitive benefit, or disclosed directly or indirectly to any third party without the prior written permission of Alliance; provided, however, that such restrictions shall not apply to Information which: (a) at the time of disclosure is in the public domain; (b) after disclosure becomes a part of the public domain by publication through no violation of this Confidentiality Agreement; (c) was in your possession prior to being furnished to you by or on behalf of Alliance; (d) is hereafter lawfully disclosed to you by a person other than Alliance, or any of its advisors, agents, employees, directors, officers, or other representatives, which person to the best of your knowledge, has a legal right to disclose the same and the Information disclosed was not acquired by such person, either directly or indirectly, in violation of an obligation of confidence to Alliance; or (e) is required to be disclosed by you in accordance with applicable law after written

Mr. Robert G. Sachse January 1, 2001 Page 2 notice thereof to Alliance. 3. Unless otherwise consented to in writing by Alliance, it is understood that all such Information may not be disclosed to your directors, officers, employees, and authorized representatives, if any. 4. You further agree not to disperse and duplicate any of the Information. All Information will remain the property of Alliance, and you will return all Information (original and copies) to Alliance, at the request of Alliance. All analyses, documents, memoranda, notes or other records maintained in any form whatsoever, prepared by you, based on, or containing Information shall be destroyed at the request of Alliance with written confirmation thereof by you of such destruction. 5. In the event that you are requested or required by oral questions, interrogatories, requests for Information or documents subpoena, civil investigation demand, or other similar process to disclose any of the Information

Mr. Robert G. Sachse January 1, 2001 Page 2 notice thereof to Alliance. 3. Unless otherwise consented to in writing by Alliance, it is understood that all such Information may not be disclosed to your directors, officers, employees, and authorized representatives, if any. 4. You further agree not to disperse and duplicate any of the Information. All Information will remain the property of Alliance, and you will return all Information (original and copies) to Alliance, at the request of Alliance. All analyses, documents, memoranda, notes or other records maintained in any form whatsoever, prepared by you, based on, or containing Information shall be destroyed at the request of Alliance with written confirmation thereof by you of such destruction. 5. In the event that you are requested or required by oral questions, interrogatories, requests for Information or documents subpoena, civil investigation demand, or other similar process to disclose any of the Information acquired by you in the course of your dealing hereunder with Alliance, or its representatives, it is agreed that you will provide Alliance with prompt notice of such requests so that Alliance may seek an appropriate protective order and/or waive compliance with the provisions of this Confidentiality Agreement. It is further agreed that if, in the absence of a protective order or the receipt of a waiver hereunder, you are, nonetheless, in the written opinion of counsel, compelled to disclose any of the Information to any tribunal or else stand liable for contempt or suffer other censor or penalty, you may disclose to such tribunal only that portion of the Information which is legally required without liability hereunder and you will exercise your best efforts at Alliance's expense to obtain a protective order or other reliable assurance that confidential treatment will be accorded to the Information furnished hereunder; provided, however, that a copy of the aforementioned written opinion of counsel shall be furnished to Alliance prior to any such disclosure. 6. Without the prior written notice of Alliance, you will not make any statement, any public announcement, or release to trade publications or to the press. With respect to customers, competitors, and other third parties with whom you have dealings during the term of the Consulting Agreement, you may identify yourself as an independent contractor or consultant to Alliance, but shall otherwise maintain the confidence of the terms and conditions of this Consulting Agreement, except as shall be necessary, in the opinion of your counsel, to comply with the requirements of applicable law and only after written notice thereof to MAPCO Coal. 7. This Confidentiality Agreement shall expire two (2) years from the date of termination of the aforementioned Consulting Agreement. 8. This Confidentiality Agreement shall be governed and construed in accordance with the laws of the State of Oklahoma.

Mr. Robert G. Sachse January 1, 2001 Page 3 Please indicate your agreement by signing this letter, where indicated below. Sincerely, Alliance Resource Management GP, LLC
By: /s/ Thomas L. Pearson --------------------------------

Mr. Robert G. Sachse January 1, 2001 Page 3 Please indicate your agreement by signing this letter, where indicated below. Sincerely, Alliance Resource Management GP, LLC
By: /s/ Thomas L. Pearson -------------------------------Thomas L. Pearson Senior Vice President

ACCEPTED AND ACKNOWLEDGED THIS 26 day of March 2001.
By: /s/ Robert G. Sachse ------------------------------Robert G. Sachse, an individual

EXHIBIT 21.1 LIST OF SUBSIDIARIES First Tier Subsidiary: Alliance Resource Operating Partners, L.P. ("AROP") (98.9999% limited partner interest) Second Tier Subsidiary: Alliance Coal, LLC ("ALLC") (AROP holds a 99.999% non-managing membership interest) Third Tier Subsidiaries: (ALLC holds a 100% membership interest in each of the third-tier subsidiaries) Alliance Land, LLC Alliance Properties, LLC Backbone Mountain, LLC Excel Mining, LLC Gibson County Coal, LLC Hopkins County Coal, LLC MC Mining, LLC Mettiki Coal, LLC Mettiki Coal (WV), LLC Mt. Vernon Transfer Terminal, LLC Pontiki Coal, LLC Webster County Coal, LLC White County Coal, LLC All of the above entities are formed under the laws of the state of Delaware.

EXHIBIT 21.1 LIST OF SUBSIDIARIES First Tier Subsidiary: Alliance Resource Operating Partners, L.P. ("AROP") (98.9999% limited partner interest) Second Tier Subsidiary: Alliance Coal, LLC ("ALLC") (AROP holds a 99.999% non-managing membership interest) Third Tier Subsidiaries: (ALLC holds a 100% membership interest in each of the third-tier subsidiaries) Alliance Land, LLC Alliance Properties, LLC Backbone Mountain, LLC Excel Mining, LLC Gibson County Coal, LLC Hopkins County Coal, LLC MC Mining, LLC Mettiki Coal, LLC Mettiki Coal (WV), LLC Mt. Vernon Transfer Terminal, LLC Pontiki Coal, LLC Webster County Coal, LLC White County Coal, LLC All of the above entities are formed under the laws of the state of Delaware.