THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Alpha Natural Resources, Inc. (ANR)

4/13/2006 Proxy Information

Payments by Affiliates of AMCI to Mr. Quillen. In 2005, certain affiliates of AMCI paid Michael J. Quillen, a member of our board of directors and our President and Chief Executive Officer, $250,000 pursuant to an agreement the AMCI affiliates and Mr. Quillen entered into in 2003 in connection with our acquisition of the U.S. coal production and marketing assets of AMCI, which we refer to in this proxy statement as “U.S. AMCI,” which payments were in respect of compensation deferred from his prior employment with U.S. AMCI. The purpose of this agreement was in part to recognize Mr. Quillen’s efforts in connection with our acquisition of U.S. AMCI.

Also at the time of the U.S. AMCI acquisition and in further recognition of Mr. Quillen’s efforts in connection with the development and growth of U.S. AMCI over the previous five years and the contribution of U.S. AMCI to us, Hans J. Mende and Fritz R. Kundrun, who are members of our board of directors, and D. Scott Kroh, our Executive Vice President, who we refer to collectively in this proxy statement as the “AMCI Owners,” entered into an incentive agreement with Mr. Quillen. Under this incentive agreement, as amended, the AMCI Owners agreed to compensate Mr. Quillen upon our repayment of indebtedness that we incurred to our stockholders in connection with our Internal Restructuring, any sale or disposition by the AMCI Owners of our common stock received by them in the Internal Restructuring or any merger or consolidation of us with a third party or sale of all or substantially all of our assets to an unaffiliated party. The amount of the payment to Mr. Quillen under this incentive agreement will be equal to 5% of the net amount, if any, by which the value of the consideration received by the AMCI Owners exceeds an agreed upon net value of their interest in ANR Holdings, LLC at the time of the U.S. AMCI acquisition, minus 5% of certain of the AMCI Owners’ expenses for the transaction for which Mr. Quillen is paid. Mr. Quillen received a payment of approximately $22.9 million under the incentive agreement as a result of our repayment of indebtedness to our stockholders, including the AMCI Owners, in connection with our initial public offering in 2005. The incentive agreement terminates on the earlier to occur of March 11, 2010 and one year after the date Mr. Quillen ceases to be an officer or employee of ANR Holdings, LLC or any of its subsidiary or affiliated companies. In the event that the AMCI Owners have not transferred all of our common stock received by them in the Internal Restructuring in one or more transactions of the type listed above by March 11, 2010, the AMCI Owners have agreed to pay Mr. Quillen consideration equal to 5% of the amount by which the agreed or appraised fair market value of common stock on that date exceeds the agreed upon value referred to above.

Transactions with Mr. Kroh. Mr. Kroh is a 50% owner of Robindale Energy Services, Inc., which is engaged in the business of waste coal sales and related businesses in Pennsylvania. From time to time, Robindale has sold and purchased and may in the future sell or purchase waste coal and related products to or from us. During 2005, we paid an aggregate of $1.0 million to Robindale as payment for trucking services and waste coal, and we had sales of $0.5 million to Robindale. We have agreed that Mr. Kroh’s continued relationship with Robindale will not cause a breach of his employment agreement with us, and Mr. Kroh has agreed that he will not participate in any decisions to enter into any transactions that might be proposed between Robindale and Alpha.

Office Lease from Related Parties. We lease office space in Latrobe, Pennsylvania from the KMKT Partnership, which is 25% owned by Mr. Kroh, 25% owned by Mr. Mende, and 25% owned by Mr. Kundrun. The initial term of the lease extends through March 31, 2007 and provides for rental payments of $15,500 per month.

Coal Transaction with Foundation. On October 26, 2004, we agreed to purchase an aggregate of 500,000 tons of coal from subsidiaries of Foundation Coal Holdings, Inc., which we refer to in this proxy statement as “Foundation,” with an option to purchase up to 25,000 tons more upon agreement of the parties. We paid Foundation an aggregate of $34.1 million during 2005 in connection with coal purchases pursuant to this agreement. The coal is deliverable in monthly installments during the period from January 2005 through March 2006. At the time the agreement was entered into, Mr. Mende and our former directors Messrs. Krueger and Macaulay were members of our board of directors who also served as directors of Foundation, and First Reserve and entities affiliated with AMCI beneficially owned an aggregate of 12.6% of the outstanding shares of Foundation’s common stock as of September 30, 2005.

Coal Transactions with the AMCI affiliates. During 2005, we were parties to coal purchase and sale transactions involving entities affiliated with AMCI valued at approximately $136.8 million. We are obligated to deliver 300,000 firm tons and 200,000 optional tons of coal during April 2005 through March 2006 to AMCI Metall & Kohle AG, a company owned by Mr. Mende and Mr. Kundrun, under an arrangement whereby we sell coal to AMCI Metall & Kohle AG at a price that is $1.00 per metric ton less than the price at which AMCI Metall & Kohle AG resells the coal to an international customer. Other than this arrangement with AMCI Metall & Kohle AG for coal shipped during April 2005 through March 2006, we have not paid or agreed to pay any commission or fee to Mr. Mende or Mr. Kundrun or any entities affiliated with AMCI in connection with our coal transactions with entities affiliated with AMCI during 2005.

Mr. Krueger and Mr. Macaulay, former members of our board of directors, are members of the board of directors of AMCI Holdings Australia PTY LTD, one of the entities affiliated with AMCI in which an affiliate of First Reserve Fund X, L.P. holds a 49% equity interest and with which we have engaged in coal purchase and sale transactions that are included within the coal purchase and sale transactions described in the first sentence of the preceding paragraph.

Solomons Mining Company. In March 2003, we consummated the U.S. AMCI acquisition pursuant to the terms of a Contribution Agreement dated December 31, 2002, as amended, among ANR Holdings, LLC, affiliates of First Reserve and selling entities affiliated with U.S. AMCI. We refer to the selling entities as the “AMCI Parties.” In connection with the U.S. AMCI acquisition, we acquired all of the equity interests of Solomons Mining Company and we agreed to operate Solomons for the account of the AMCI Parties until Solomons could be sold. We also agreed to pay the AMCI Parties $5.0 million in cash upon the disposition of Solomons, subject to certain adjustments based on the net proceeds of any sale, the cumulative profits or operating losses of Solomons and our costs in managing Solomons. The AMCI Parties in turn agreed to indemnify us for all liabilities associated with the operation of Solomons.

On September 2, 2003, we transferred substantially all of the assets of Solomons and cash to the lessor of Solomons’ mining properties in connection with the settlement of a lease dispute. In connection with the settlement, ANR Holdings, LLC, First Reserve and the AMCI Parties agreed that Solomons would advance $3.1 million in installments to the lessor for the account of the AMCI Parties, by applying a portion of previously withheld funds and tax distributions due the AMCI Parties as members of ANR Holdings, LLC. The AMCI Parties also agreed to provide us an additional $1.0 million for Solomons’ operating expenses. The agreement also gave First Reserve the right to purchase membership interests of ANR Holdings, LLC from the AMCI Parties if the AMCI Parties failed to make their required payments, which purchase right was terminated in connection with the Internal Restructuring. We also entered into an agreement to purchase 350,000 tons of coal from a third party for the account of the AMCI Parties between April 2004 through November 2005. We refer to this agreement as the “Coal Supply Agreement.” On April 22, 2004, ANR Holdings, LLC, First Reserve and the AMCI Parties entered into an agreement under which we took the coal to be delivered under the Coal Supply Agreement and paid the AMCI Parties the difference between the agreed fair market value of the coal ($54.50 per ton), and the price paid under the Coal Supply Agreement ($34.50 per ton). We withheld up to 40% of the net proceeds to fund Solomons’ reclamation and other liabilities. As of November 30, 2005, the third party had shipped approximately 388,000 tons of coal pursuant to the Coal Supply Agreement.

On January 25, 2006, Alpha NR Holding, Inc., affiliates of First Reserve and the AMCI Parties entered into a letter agreement amending the terms of the Contribution Agreement to discharge in full the obligations of the AMCI Parties to satisfy reclamation and other claims arising in connection with Solomons in exchange for a cash payment of approximately $4.1 by one of the AMCI Parties. We believe that the amount of this cash payment and prior amounts withheld or paid to us under the arrangements described above will be sufficient to satisfy all claims expected to arise related to Solomons. Transactions with Natural Resource Partners, L.P. Natural Resource Partners, L.P. is our largest landlord based on the aggregate of $22.1 million that we paid it in lease, royalty and property tax reimbursement and royalty payments during 2005. In 2005, Mr. Krueger, a former member of our board of directors, served as a member of the board of directors of GP Natural Resource Partners, LLC, the general partner of Natural Resource Partners, L.P., until his resignation from the board of directors of Natural Resource Partners, L.P.’s general partner on December 12, 2005, and First Reserve was a substantial equity owner of Natural Resource Partners, L.P. until First Reserve sold all of its equity ownership in Natural Resource Partners, L.P. on December 9, 2005. We believe the production and minimum royalty rates contained in our leases with Natural Resource Partners, L.P. are consistent with current market royalty rates.

Investment in Excelven Pty Ltd. In August 2004, we and the AMCI Parties entered into an agreement with Excelven Pty Ltd, pursuant to which we agreed to acquire a 24.5% interest in Excelven for a purchase price of $5.0 million in cash, and the AMCI Parties agreed to acquire a 24.5% interest in Excelven for a purchase price of $5.0 million in cash. Excelven, through its subsidiaries, owns the rights to the Las Carmelitas mining venture in Venezuela and the related Palmarejo export port facility on Lake Maracaibo in Venezuela. We and the AMCI Parties each funded $3.25 million of our respective subscription obligations in September 2004, an additional $1.25 million in December 2004 and the remaining $500,000 in March 2005. The Las Carmelitas mine, which is not yet in operation, is currently expected to produce approximately two million tons of low sulfur thermal coal per year over a 15-year mine life. The project is currently in the developmental stage, with preliminary governmental mining and environmental approvals having been obtained. Final governmental approval of the project, which is subject to the submission of a detailed mine plan, is currently expected in 2006 with mining to commence in 2007.

Distributions to Members of ANR Holdings, LLC and Our Stockholders. From January 1, 2005 through the date of the Internal Restructuring on February 11, 2005, ANR Holdings, LLC made periodic distributions totaling $1.1 million to its members, including First Reserve, entities affiliated with AMCI, and Alpha Coal Management, LLC (an entity through which members of our management held interests in ANR Holdings, LLC prior to our Internal Restructuring), on dates and in amounts calculated in accordance with its governing documents, sufficient to enable the members to pay their estimated income tax liability associated with their ownership of ANR Holdings, LLC.

In connection with our Internal Restructuring we assumed the obligation of ANR Holdings, LLC to make distributions to (1) affiliates of AMCI in an aggregate amount of $6.0 million, representing the approximate incremental tax resulting from the recognition of additional tax liability resulting from our Internal Restructuring and (2) First Reserve Fund IX, L.P. in an aggregate amount of approximately $4.5 million, representing the approximate value of tax attributes conveyed as a result of the Internal Restructuring. The distributions to affiliates of AMCI have been or will be paid in five equal installments on the dates for which estimated income tax payments are due in each of April 2005, June 2005, September 2005, January 2006 and April 2006. The distributions to First Reserve Fund IX, L.P. will be paid in three installments of approximately $2.1 million, $2.1 million and $0.3 million on December 15, 2007, 2008 and 2009, respectively. These distributions will be payable in cash or, to the extent we are not permitted by the terms of our credit facility or the indenture governing our senior notes to pay them in cash, in shares of our common stock.

Nova Scotia Port Agreement. In connection with our acquisition of U.S. AMCI, we entered into an agreement with Messrs. Mende, Kundrun and Kroh and others that gives us a right of first refusal to acquire an ocean going port in Nova Scotia if the owners of the port propose to sell it to a third party. This right of first refusal expires on March 11, 2008.

Transactions in Connection with Internal Restructuring. On February 11, 2005, we and ANR Holdings, LLC completed a series of transactions in connection with the Internal Restructuring which involved transactions with the First Reserve Stockholders and the AMCI Parties and certain of our managers and key employees. These transactions included the following:

• Amendment to AMCI Related Agreements: We amended certain of the post-closing arrangements that were part of our 2003 acquisition of U.S. AMCI from the AMCI Parties. In connection with the Internal Restructuring, the AMCI Parties posted for our benefit a letter of credit that provides, for a period of ten years, financial assurances supporting the obligations of the AMCI Parties to indemnify us under the contribution agreement in respect of certain retiree medical liabilities. The letter of credit is initially in the amount of $6.8 million, declining to $3.8 million in the sixth and seventh years, and further declining to $1.8 million in the eighth through tenth years. We also terminated an escrow of $2.8 million in respect of certain retiree medical liabilities retained by the AMCI Parties and certain arrangements under which the AMCI Parties could have been required to transfer some of their membership interests in ANR Holdings, LLC to First Reserve as security for certain indemnification and escrow obligations by the AMCI Parties.

• Releases and Indemnities: Each former member of ANR Holdings, LLC (including members of our management team) released us and our past, present and future affiliates from any and all claims such member may have against ANR Holdings, LLC relating to events occurring prior to the closing. We, in turn, agreed to indemnify them with respect to any action which may be brought against any former member by reason of the fact that the member was a member, managing member, executive committee member or officer of ANR Holdings, LLC prior to the closing of the Internal Restructuring, other than with respect to any acts committed in bad faith or that were the result of active and deliberate dishonesty or from which the member gained financial profit or another advantage to which the member was not legally entitled. Additionally, First Reserve Fund IX, L.P. agreed to indemnify us against certain pre-closing liabilities, including tax liabilities, associated with Alpha NR Holding, Inc. in an amount not to exceed $15.0 million for the first two years following consummation of the agreement, at which time the amount for which First Reserve Fund IX, L.P. will be obligated to indemnify will decline to $10.0 million for two additional years.

• Stockholder Agreement. We entered into a stockholder agreement with our management stockholders, the First Reserve Stockholders, the AMCI Parties and Madison Capital Funding LLC that became effective upon consummation of the Internal Restructuring and replaced the former member agreement among these parties and ANR Holdings, LLC. As part of the stockholder agreement:

• Agreement on Board Composition: Our board of directors consisted of seven members upon consummation of our initial public offering. The board may be subsequently expanded to include additional independent directors as may be required by the rules of any exchange on which shares of our common stock are traded. The stockholder agreement, as it applies subsequent to the sale by the First Reserve Stockholders of all of their shares of our common stock in the Resale Offering, provides that the AMCI Parties will designate two nominees for election (initially, Messrs. Kundrun and Mende), and that our board of directors will designate as directors our chief executive officer (Mr. Quillen) and two other nominees who must be “independent” as that term is defined by the New York Stock Exchange rules (initially Messrs. Draper and Fox), and who are reasonably acceptable to the AMCI Parties. If at any time, the AMCI Parties and their affiliates as a group beneficially own less than 15% of our outstanding shares of common stock, then the AMCI Parties will only be entitled to designate one director, and if the AMCI Parties and their affiliates as a group beneficially own less than 7.5% of our outstanding shares of common stock, then the AMCI Parties will no longer be entitled to designate any directors pursuant to the stockholder agreement. If the AMCI Parties lose the right to designate one or both of their director designees due to a reduction in their percentage holdings of our outstanding shares of common stock below the applicable thresholds described in the preceding sentence, then the AMCI Parties are obligated to cause the resignation or removal of their director designee or designees, as applicable, upon our request; and

• Registration Rights: Each of the First Reserve Stockholders and the AMCI Parties have the right in certain circumstances to require us to register their shares of common stock in connection with a public offering and sale. In addition, in connection with other registered offerings by us, stockholders who acquired shares of our common stock in the Internal Restructuring have the ability to exercise certain piggyback registration rights with respect to the shares. The First Reserve Stockholders exercised their registration rights in full in connection with the Resale Offering.

Code of Ethics

We have adopted a Code of Business Ethics, which is available on our website at www.alphanr.com. The Code addresses matters including: (1) conflicts of interest, (2) corporate opportunities, (3) confidentiality, (4) fair dealing, (5) protection and proper use of company assets, (6) compliance with laws, rules, and regulations, and (7) such other matters as the board deems appropriate. The Code of Business Ethics applies to all of our directors, officers and employees. The Code requires all covered persons to avoid conflicts of interest that may be to our detriment. No waiver of the Code of Business Ethics will be granted except by a vote of the board of directors or the audit committee, which will determine whether a waiver is appropriate and ensure that the waiver is accompanied by appropriate controls designed to protect us. Any amendments to, or waivers from, a provision of our Code of Business Ethics that applies to our principal executive officer, principal financial officer, controller, or persons performing similar functions and that relates to any element of the Code enumerated in paragraph (b) of Item 406 of Regulation S-K shall be disclosed by posting such information on our website. The board of directors has determined that Business Interests (as defined in the Code of Business Ethics) that the board of directors of ANR Holdings, LLC or we approved or waived prior to the adoption of the Code on February 10, 2005, including the relationship of First Reserve, AMCI, and Messrs. Macaulay, Krueger and Mende with Foundation, or that are contemplated by Article XI of our certificate of incorporation, as amended from time to time (dealing with, among other things, corporate opportunities), do not constitute a prohibited conflict of interest and are permitted under the Code.

3/30/2005 Proxy Information

Payments by Affiliates of AMCI to Mr. Quillen. In connection with our acquisition of the U.S. coal production and marketing assets of AMCI (“U.S. AMCI”) on March 11, 2003, certain affiliates of AMCI entered into an agreement with Michael J. Quillen, a member of our board of directors and our President and Chief Executive Officer, pursuant to which they paid Mr. Quillen $250,000 in 2004 and have agreed to pay Mr. Quillen $250,000 in 2005 in respect of compensation deferred from his prior employment with U.S. AMCI. The purpose of this agreement was in part to recognize Mr. Quillen’s efforts in connection with our acquisition of U.S. AMCI.

Also at the time of the U.S. AMCI acquisition and in further recognition of Mr. Quillen’s efforts in connection with the development and growth of U.S. AMCI over the previous five years and the contribution of U.S. AMCI to us, Hans J. Mende and Fritz R. Kundrun, who are members of our board of directors, and D. Scott Kroh, our Executive Vice President (the “AMCI Owners”) entered into an incentive agreement with Mr. Quillen. Under this incentive agreement, as amended, the AMCI Owners agreed to compensate Mr. Quillen upon our repayment of indebtedness that we incurred to our stockholders in connection with our Internal Restructuring, any sale or disposition by the AMCI Owners of our Common Stock received by them in the Internal Restructuring or any merger or consolidation of us with a third party or sale of all or substantially all of our assets to an unaffiliated party. The amount of the payment to Mr. Quillen under this incentive agreement will be equal to 5% of the net amount, if any, by which the value of the consideration received by the AMCI Owners exceeds an agreed upon net value of their interest in ANR Holdings at the time of the U.S. AMCI acquisition, minus 5% of certain of the AMCI Owners’ expenses for the transaction for which Mr. Quillen is paid. Mr. Quillen received a payment of approximately $22.9 million under the incentive agreement as a result of our repayment of indebtedness to our stockholders, including the AMCI Owners, in connection with our initial public offering. The incentive agreement terminates on the earlier to occur of March 11, 2010 and one year after the date Mr. Quillen ceases to be an officer or employee of ANR Holdings or any of its subsidiary or affiliated companies. In the event that the AMCI Owners have not transferred all of our Common Stock received by them in the Internal Restructuring in one or more transactions of the type listed above by March 11, 2010, the AMCI Owners have agreed to pay Mr. Quillen consideration equal to 5% of the amount by which the agreed or appraised fair market value of Common Stock on that date exceeds the agreed upon value referred to above.

Transactions with Mr. Kroh. Mr. Kroh is a 50% owner of Robindale Energy Services, Inc. (“Robindale”), which is engaged in the business of waste coal sales and related businesses in Pennsylvania. From time to time, Robindale has sold and purchased and may in the future sell or purchase waste coal and related products to or from us. During 2004, we paid an aggregate of $0.8 million to Robindale as payment for trucking services and waste coal, and we had sales of $0.2 million to Robindale. We have agreed that Mr. Kroh’s continued relationship with Robindale will not cause a breach of his employment agreement with us, and Mr. Kroh has agreed that he will not participate in any decisions to enter into any transactions that might be proposed between Robindale and Alpha.

Office Lease from Related Parties. We lease office space in Latrobe Pennsylvania from the KMKT Partnership, which is 25% owned by Mr. Kroh, 25% owned by Mr. Mende, and 25% owned by Mr. Kundrun. The initial term of the lease extends through March 31, 2007 and provides for rental payments of $15,500 per month.

Loan to Executive. In connection with the hiring in October 2003 of David Stuebe, our Vice President and Chief Financial Officer, we extended to Mr. Stuebe a $100,000 relocation loan bearing interest at a rate of 6%. Mr. Stuebe repaid all outstanding principal and interest on this loan on March 31, 2004.

Coal Transaction with Foundation. On October 26, 2004, we agreed to purchase an aggregate of 500,000 tons of coal from subsidiaries of Foundation Coal Holdings, Inc. (“Foundation”), with an option to purchase up to 25,000 tons more upon agreement of the parties. The coal is deliverable in monthly installments during the period from January, 2005 through March, 2006. Messrs. Mende, Krueger and Macaulay are members of our board of directors who also serve as directors of Foundation. First Reserve and affiliates of the AMCI Parties beneficially own an aggregate of 25.8% of the outstanding shares of Foundation’s common stock as of January 10, 2005.

Coal Transactions with the AMCI Parties. During 2004 and during the period from January 1, 2005 to March 10, 2005, we purchased from and sold coal to entities affiliated with the AMCI Parties in transactions valued at approximately $68.3 million and $15.5 million, respectively. We are obligated to deliver 300,000 firm tons and 200,000 optional tons of coal during April of 2005 through March 2006 to AMCI Metall & Kohle AG, a company owned by Mr. Mende and Mr. Kundrun, under an arrangement whereby we sell coal to AMCI Metall & Kohle AG at a price that is $1.00 per metric ton less than the price at which AMCI Metall & Kohle AG resells the coal to an international customer. Other than this arrangement with AMCI Metall & Kohle AG for coal shipped during April 2005 through March 2006, since our acquisition of U.S. AMCI we have not paid or agreed to pay any commission or fee to Mr. Mende or Mr. Kundrun or any entities affiliated with AMCI in connection with our coal transactions with entities affiliated with AMCI.

Transactions in Connection with the U.S. AMCI Acquisition. In connection with our acquisition of U.S. AMCI, we entered into a contribution agreement with certain affiliates of AMCI (the “AMCI Parties”) and First Reserve, pursuant to which the AMCI Parties agreed to contribute their North American coal operations (including working capital) to us in exchange for $53.9 million in cash, the issuance by ANR Holdings of 44.3473% of its common sharing ratios, and 44.4903% of its preferred sharing ratios, and the assumption by certain of our subsidiaries of various liabilities. Messrs. Mende, Kundrun and Kroh control the AMCI Parties. The contribution agreement included customary seller representations and warranties, customary covenants and other agreements among the AMCI parties, First Reserve and us and provides for indemnification for losses relating to specified events, circumstances and matters. The indemnification arrangements permit, under certain circumstances, the transfer by certain of the AMCI Parties to First Reserve of membership interests in ANR Holdings (shares of our Common Stock after giving effect to the Internal Restructuring) to compensate for indemnified losses.

The contribution agreement with the AMCI Parties also included a number of post-closing matters in addition to the indemnification agreement referred to above. The following summarizes the principal terms of these matters:

• The AMCI Parties established an escrow of $2.8 million in favor of us and First Reserve in respect of certain retiree medical liabilities retained by the AMCI Parties. This escrow arrangement was eliminated as part of our Internal Restructuring.

• Certain of the AMCI Parties entered into a pledge agreement with First Reserve under which these persons pledged to First Reserve all of their membership interests in ANR Holdings to secure their obligation under the contribution agreement to discharge certain retiree medical liabilities retained by the AMCI Parties. This pledge agreement was terminated in connection with the Internal Restructuring.

• The AMCI Parties gave First Reserve the right to purchase from them additional ANR Holdings membership interests having a fair market value of up to $7.5 million, at a purchase price equal to 75% of the fair market value, in the event payments are required to be made under the escrow agreement to satisfy the AMCI parties’ indemnification obligations under the contribution agreement to discharge certain retiree medical liabilities retained by the AMCI Parties. This right to purchase was terminated in connection with the Internal Restructuring.

• We reimbursed AMCI $2.0 million in transaction costs related to the acquisitions of our Predecessor and Coastal Coal Company.

• We entered into an agreement with certain of the AMCI Parties under which they granted us the right to acquire AMCI’s wholly owned subsidiary, AMCI Export Corporation, an export trading company. These rights expired on September 11, 2004. We also entered into an agreement with Messrs. Mende, Kundrun and Kroh and others that gives us the option to acquire an ocean going port in Nova Scotia from them for $2.0 million plus the amount of follow-on investments made in the port after the date of the agreement, payable in shares of our Common Stock. This purchase option expired on March 11, 2005. We also have a right of first refusal that expires on March 11, 2008 to acquire the port if the owners of the port propose to sell it to a third party.

• We paid $35.0 million for the working capital of U.S. AMCI, subject to a post-closing audit. On September 13, 2004, we, First Reserve and the AMCI Parties agreed that the net working capital actually acquired was approximately $34.1 million and the AMCI Parties paid the difference of $0.9 million to us. We further agreed that the AMCI Parties would be entitled to any refund of, and obligated to make any payment of, all federal black lung excise taxes of the companies contributed by the AMCI Parties to us, estimated to be $0.1 million, but only insofar as the taxes related to pre-closing or straddle periods ending on or prior to the closing date of the U.S. AMCI acquisition.

In conjunction with the U.S. AMCI acquisition, we agreed with the AMCI Parties to operate Solomons Mining Company (“Solomons”), one of the companies included in U.S. AMCI, for the account of the AMCI Parties until the time Solomons could be sold, and the AMCI parties agreed to indemnify us for all liabilities associated with the operation of Solomons. We also agreed that, upon the disposition of Solomons, we would pay to the AMCI Parties $5.0 million in cash (which we withheld in connection with the contribution transaction to fund Solomons’ operating losses), plus the net proceeds of the sale of Solomons, plus the cumulative profits or less the cumulative operating losses of Solomons from the date of our acquisition of U.S. AMCI to the date of sale of Solomons, less the actual costs incurred by ANR Holdings in managing Solomons. On September 2, 2003, substantially all of the assets of Solomons and cash were transferred to the lessor of Solomons’ mining properties in connection with the settlement of a lease dispute with the lessor. At that time, we, First Reserve and the AMCI Parties agreed that Solomons would advance to the lessor for the account of the AMCI Parties an aggregate of $3.1 million in cash in installments, by applying a portion of the withheld funds and a portion of the tax distributions that we would otherwise have made to the AMCI Parties under the ANR Holdings company agreement. The AMCI Parties also agreed to provide to us an additional $1.0 million to be used to pay operating expenses. This agreement also provides that should the AMCI Parties fail to perform any of their payment obligations, then First Reserve would have the right (but not the obligation) to purchase membership interests in ANR Holdings held by the AMCI Parties having a fair market value, as of March 11, 2003, equal to the payment the AMCI Parties failed to make. This right to purchase was terminated in connection with the Internal Restructuring.

As part of the arrangement to operate Solomons, we entered into an agreement to purchase from a third party and for the account of the AMCI Parties 350,000 tons of coal at various times from April 2004 through November 2005 (the “Coal Supply Agreement”). On April 22, 2004, we, First Reserve and the AMCI Parties entered into an agreement (the “April 2004 Agreement”), under which we will take the coal to be delivered under the Coal Supply Agreement and will pay to the AMCI Parties the difference between the agreed fair market value of the coal as of the date of the April 2004 Agreement ($54.50 per ton), and the price to be paid to the third party under the Coal Supply Agreement ($34.50 per ton). We will withhold up to 40% of the net proceeds (up to $2.3 million) to fund Solomons’ reclamation obligations and any other Solomons’ liabilities for which the AMCI Parties agreed to provide indemnification. With the exception of reclamation obligations and any future claims by the lessor referred to above, the amounts withheld will be our exclusive recourse against the AMCI Parties for this indemnification. The AMCI Parties will not be obligated to fund certain of the payments that could otherwise be due to ANR Holdings under the September 2, 2003 agreement with ANR Holdings and First Reserve for so long as the third party under the Coal Supply Agreement performs its obligations under the Coal Supply Agreement according to its terms. We believe that the sources of indemnification available to us, which include the amounts withheld under the Coal Supply Agreement and recourse to certain of the AMCI Parties for matters related to reclamation and future claims by the lessor, will be sufficient to satisfy all claims expected to arise related to Solomons.

Transactions with NRP. NRP is our largest landlord based on the aggregate of $20.2 million that we paid it in lease, royalty and property tax reimbursement and royalty payments during 2004. In an unrelated transaction, in December 2003, Alex Krueger, a member of our board of directors, was appointed as a member of the board of directors of GP Natural Resource Partners, LLC, the general partner of NRP, and First Reserve became a substantial equity owner of NRP. We believe the production and minimum royalty rates contained in our leases with NRP are consistent with current market royalty rates.

Investment in Excelven Pty Ltd. In August 2004, we and the AMCI Parties entered into an agreement with Excelven Pty Ltd, pursuant to which we agreed to acquire a 24.5% interest in Excelven for a purchase price of $5.0 million in cash, and the AMCI Parties agreed to acquire a 24.5% interest in Excelven for a purchase price of $5.0 million in cash. Excelven, through its subsidiaries, owns the rights to the Las Carmelitas mining venture in Venezuela and the related Palmarejo export port facility on Lake Maracaibo in Venezuela. We and the AMCI Parties each funded $3.25 million of our respective subscription obligations in September 2004 and an additional $1.25 million in December 2004. The Las Carmelitas mine, which is not yet in operation, is currently expected to produce approximately two million tons of low sulfur thermal coal per year over a 15-year mine life. The project is currently in the developmental stage, with preliminary governmental mining and environmental approvals having been obtained. Final governmental approval of the project, which is subject to the submission of a detailed mine plan, is currently expected in 2005 with mining to commence in 2007. We and the AMCI Parties are also in preliminary negotiations with Excelven to provide promotion, marketing, sales and distribution services to Excelven for all coal extracted from the Las Carmelitas mine.

Distributions to Members of ANR Holdings and Our Stockholders. Since its formation in December 2002, ANR Holdings has made periodic distributions to its members, including First Reserve, entities affiliated with AMCI, and Alpha Coal Management, on dates and in amounts calculated in accordance with its governing documents, sufficient to enable the members to pay their estimated income tax liability associated with their ownership of ANR Holdings. The amounts of these distributions totaled $14.0 million during 2004 and $1.1 million during the period from January 1, 2005 through the date of Internal Restructuring.

On May 28, 2004, in connection with the closing under our credit agreement and the receipt by Alpha Natural Resources, LLC of the proceeds from the sale of its senior notes, ANR Holdings distributed an aggregate of $110.0 million to its members, including First Reserve, entities affiliated with AMCI, and Alpha Coal Management, in proportion to their common sharing ratios in ANR Holdings.

In connection with our Internal Restructuring we assumed the obligation of ANR Holdings to make distributions to (1) affiliates of AMCI in an aggregate amount of $6.0 million, representing the approximate incremental tax resulting from the recognition of additional tax liability resulting from our Internal Restructuring and (2) First Reserve Fund IX, L.P. in an aggregate amount of approximately $4.5 million, representing the approximate value of tax attributes conveyed as a result of the Internal Restructuring (collectively, the “Sponsor Distributions”). The Sponsor Distributions to affiliates of AMCI will be paid in five equal installments on the dates for which estimated income tax payments are due in each of April 2005, June 2005, September 2005, January 2006 and April 2006. The Sponsor Distributions to First Reserve Fund IX, L.P. will be paid in three installments of approximately $2.1 million, $2.1 million and $0.3 million on December 15, 2007, 2008 and 2009, respectively. The Sponsor Distributions will be payable in cash or, to the extent we are not permitted by the terms of our credit facility or the indenture governing our senior notes to pay the Sponsor Distributions in cash, in shares of our Common Stock.

Transactions in Connection with Internal Restructuring. On February 11, 2005, we completed a series of transactions in connection with our Internal Restructuring which involved transactions with the First Reserve Stockholders and the AMCI Parties and certain of our managers and key employees. These transactions included the following:

• Amendment to AMCI Related Agreements: We amended certain of the post-closing arrangements that are part of our acquisition of U.S. AMCI discussed above. The AMCI Parties posted for our benefit a letter of credit that provides, for a period of ten years, financial assurances supporting the obligations of the AMCI Parties to indemnify us under the contribution agreement in respect of certain retiree medical liabilities. The letter of credit is initially in the amount of $6.8 million, declining to $3.8 million in the sixth and seventh years, and further declining to $1.8 million in the eighth through tenth years. The escrow and pledge agreements with the AMCI Parties and all of the First Reserve purchase right arrangements described in “— Transactions in Connection with the U.S. AMCI Acquisition” were terminated.

• Releases and Indemnities. Each former member of ANR Holdings (including members of our management team) released us and our past, present and future affiliates from any and all claims such member may have against ANR Holdings relating to events occurring prior to the closing. We, in turn, agreed to indemnify them with respect to any action which may be brought against any former member by reason of the fact that the member was a member, managing member, executive committee member or officer of ANR Holdings prior to the closing of the Internal Restructuring, other than with respect to any acts committed in bad faith or that were the result of active and deliberate dishonesty or from which the member gained financial profit or another advantage to which the member was not legally entitled.

Additionally, First Reserve Fund IX, L.P. agreed to indemnify us against certain pre-closing liabilities, including tax liabilities, associated with Alpha NR Holding, Inc. in an amount not to exceed $15.0 million for the first two years following consummation of the agreement, at which time the amount for which First Reserve will be obligated to indemnify will decline to $10.0 million for two additional years.

• Stockholder Agreement. We entered into a stockholder agreement with the First Reserve Stockholders, the AMCI Parties, Madison Capital Funding LLC and our management stockholders that became effective upon consummation of the Internal Restructuring and replaced the current member agreement among these parties and ANR Holdings. As part of the stockholder agreement:

• Agreement on Board Composition: Our board of directors consisted of seven members upon consummation of our initial public offering. The board may be subsequently expanded to include additional independent directors as may be required by the rules of any exchange on which shares of our Common Stock are traded. Each of the First Reserve Stockholders and the AMCI Parties will designate two nominees for election (initially, Messrs. Macaulay and Krueger, as to the First Reserve Stockholders, and Messrs. Kundrun and Mende as to the AMCI Parties). Our board of directors will designate as directors our chief executive officer (Mr. Quillen) and two other nominees who must be “independent” as that term is defined by the NYSE rules (initially Messrs. Draper and Fox), but the independent nominees must be reasonably acceptable to both the First Reserve Stockholders and the AMCI Parties. If at any time, either the First Reserve Stockholders or the AMCI Parties and their affiliates as a group beneficially own less than 15% of the outstanding shares of our Common Stock, then the applicable party will only be entitled to designate one director, and if either the First Reserve Stockholders or the AMCI Parties and their affiliates as a group beneficially own less than 7.5% of the outstanding shares of our Common Stock, then the applicable party will no longer be entitled to designate any directors pursuant to the stockholder agreement; and

• Registration Rights: Each of the First Reserve Stockholders and the AMCI Parties have the right in certain circumstances after consummation of our initial public offering to require us to register their shares of Common Stock in connection with a public offering and sale. In addition, in connection with other registered offerings by us, existing holders of shares of our Common Stock will have the ability to exercise certain piggyback registration rights with respect to the shares.