COAL MINING LEASE

THIS AGREEMENT, made and entered into this 30th day of July, 1979 by and between EVELYN C. BACH, a Widow, of 2375 Ohio Boulevard, Terre Haute, Indiana, 47803; MARY FRANCES MARSHALL AND VINCENT MARSHALL, her husband, of 1177 Leavitt, Apt. 105, Flossmere, Illinois, 60422; NANCY PILLON, divorced and not remarried, of 2375 Ohio Boulevard, Terre Haute, Indiana, 47803; JOSEPHINE PORTERFIELD AND ALEXANDER R. PORTERFIELD, her husband, of 619 Banyan Road, Edge wood, Maryland, 21040; and STEVE C. BACH AND ROSEMARY H. BACH, his wife, of 512 Walnut Street, Mt. Vernon, Indiana, 47620, all being parties of the first part, hereinafter called "LESSOR" and FALCON COAL COMPANY INC., a Delaware Corporation, of 1200First Security Plaza, Lexington, Fayette County, Kentucky, 40507, being party of the second part, hereinafter called "LESSEE".

WITNESSETH THAT:

For and in consideration of the sum of Ten Thousand ($10,000.00) Dollars advance royalty, receipt of which is hereby acknowledged, it being understood that this amount is to be recouped from the coal mined in subsequent years and in further consideration of the tonnage royalties herein specified and of the covenants and agreements to be kept and performed by the LESSEE, LESSOR does hereby grant, demise, lease and let unto LESSEE, its successors and assigns, exclusively, all of the several seams or measures of merchantable, commercially mineable and economically recoverable coal in and underlying those certain tracts of land located on Fugates Fork and Ben Smith Branch in Breathitt County, Kentucky, containing 150 acres, more or less, and more particularly described in EXHIBIT "A" attached hereto and made a part hereof for all purposes, upon the following terms and conditions, to-wit:

(1) Mining Rights Granted: To the extent and only to the extent LESSOR has such rights, LESSOR does hereby grant unto LESSEE the right and license to enter upon the leased premises at any and all times during the term of this Lease, and to use so much of the surface thereof as may be necessary or desirable in searching and exploring for coal and in determining the thickness and depth of the coal and for the deposit thereon of waste materials, including spoilage from strip mining or auger mining or otherwise from the mining operations conducted on the premises or adjacent premises in which LESSEE may be operating coal mines; also the right and license to dig, mine and remove said coal therefrom without limitation as to depth below the surface by any lawful means or methods of mining, together with all and singular the rights, privileges, licenses and easements necessary, incident to, or convenient for the proper prosecution of the business of mining and removing said coal and also the rights-of-way over and under said premises and the right to use roads and railroads and underground entries, openings and tunnels in, upon or under said premises for the purpose of transportation of persons, machinery and coal from other tracts of land during the term of this Lease, and the right to occupy so much of the surface of the leased premises as may be reasonable or necessary for the storing, cleaning and processing of said coal and depositing the refuse therefrom, and the right to erect upon such premises such buildings, structures, and fixtures as may be necessary or desirable to the prosecution of such coal mining, and/or processing of said coal, provided no dwelling houses for miners or others shall be maintained upon the leased premises.

(2) Exceptions and Reservations: The LESSOR excepts and reserves from this Lease, and this Lease is made subject to the following:

(a) All rights, titles, interests and estates in the land comprising the leased premises which are not specifically herein leased.

(b) All the oil and gas in and underlying the leased premises, together with the right to drill for and extract the same in the manner and to the extent as permitted under the statutes and the general law of Kentucky.

(c) All easements and rights-of-way of record in the office of the Breathitt County Court Clerk on the date of execution.

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