ADMINISTRATIVE SERVICES AGREEMENT

by and among

ALLIANCE RESOURCE PARTNERS, L.P.

ALLIANCE RESOURCE MANAGEMENT GP, LLC

ALLIANCE RESOURCE OPERATING PARTNERS, L.P.

ALLIANCE HOLDINGS GP, L.P.

ALLIANCE GP, LLC

and

ALLIANCE RESOURCE HOLDINGS II, INC.

TABLE OF CONTENTS

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ADMINISTRATIVE SERVICES AGREEMENT

THIS ADMINISTRATIVE SERVICES AGREEMENT (this Agreement) is entered into this 15th day of May, 2006 (the Effective Date) by and among Alliance Resource Partners, L.P., a Delaware limited partnership (ARLP), Alliance Resource Management GP, LLC, a Delaware limited liability company and the managing general partner of ARLP (MGP), Alliance Resource Operating Partners, L.P., a Delaware limited partnership (OLP), Alliance Holdings GP, L.P., a Delaware limited partnership (AHGP), Alliance GP, LLC, a Delaware limited liability company and the general partner of AHGP (AGP), and Alliance Resource Holdings II, Inc. (ARH II).

RECITALS

The Parties hereto desire, by their execution of this Agreement, to evidence the terms and conditions upon which AGP will provide certain services to the ARLP Entities, the AHGP Entities and the ARH II Entities.

AGREEMENTS

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

ARTICLE 1: DEFINITIONS

1.1 Definitions. The definitions listed on Exhibit A shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

1.2 Construction. Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; (c) the terms include, includes, including or words of like import shall be deemed to be followed by the words without limitation; and (d) the terms hereof, herein or hereunder refer to this Agreement as a whole and not to any particular provision of this Agreement. The table of contents and headings contained in this Agreement are for reference purposes only, and shall not affect in any way the meaning or interpretation of this Agreement.

ARTICLE 2: SERVICES

2.1 Services. Beginning on the Effective Date, subject to the terms of this Article 2 and in exchange for the payment described in Section 2.3, AGP hereby agrees to provide each of the ARLP Entities, the AHGP Entities and the ARH II Entities with such general administrative and management services, including but not limited to human resources, information technology, financial and accounting services, legal services and other services (the Services) as may be necessary to manage the business of the ARLP Entities, the AHGP Entities and the ARH II Entities, as applicable, in accordance with the Services Standard; it being understood and agreed by the Parties that in connection with the provision of such Services, AGP shall employ or

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otherwise retain such personnel as may be necessary to provide the Services. The names of such personnel are set forth on Annex A hereto and will be updated on or about December 1 of each year in accordance with the procedures set forth in Section 2.5.

2.2 Provision of Insurance. ARLP hereby agrees to cause each of the ARLP Entities, the AHGP Entities and the ARH II Entities to be named as additional insureds in ARLPs insurance program, as in effect from time to time. Each of the ARLP Entities, the AHGP Entities and the ARH II Entities, as applicable, shall be allocated, and pay for, such insurance coverage in an amount equal to ARLPs cost of insuring the assets and operations of such partnership entities.

2.3 Payment for Services. (a) As remuneration for the provision by AGP to each of the ARLP Entities, the AHGP Entities and the ARH II Entities of the Services, AGP shall be entitled to receive, and the ARLP Entities, the AHGP Entities and the ARH II Entities, as applicable, agree to pay to AGP, an amount equal to the percentage of each employees compensation allocable to each of the ARLP Entities, the AHGP Entities and the ARH II Entities as the same are set forth on Annex A hereto. In addition, each of the ARLP Entities, the AHGP Entities and the ARH II Entities shall pay all sales, use, excise, value added or similar taxes, if any, that may be applicable from time to time in respect of the Services provided to such entities by AGP. The aggregate amount payable by the ARLP Entities, the AHGP Entities or the ARH II Entities to AGP pursuant to this Section 2.3(a) with respect to a given period of time shall be referred to herein as the Administrative Services Fee. It is the intention of the Parties that the Administrative Services Fee represents fair and reasonable compensation to AGP for the ARLP Entities, the AHGP Entities or the ARH II Entities, as applicable, allocable share of the base salaries, employer costs for employee benefits, bonuses paid and provided to such personnel by AGP, or any of its Affiliates. The amount of the Administrative Services Fee shall not be adjusted except in accordance with Section 2.5, notwithstanding any change in personnel or the Services provided to any of the ARLP Entities, the AHGP Entities or the ARH II Entities, respectively.

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