10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 10-K

(Mark One)

¨ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2008

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: N/A

AMERICAN ROCK SALT COMPANY LLC

(Exact Name of Registrant as Specified in its Charter)

New York	16-1516458
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)
3846 Retsof Road, Retsof, New York	14539
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (585) 243-9510 ext. 1164

Securities registered pursuant to Section 12 (b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  x    No  ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  ¨    NA  x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Not Applicable  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x    Smaller reporting company  ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant: Because the registrant is privately held and there is no public trading market for the registrant’s equity securities, the registrant is unable to calculate the aggregate market value so held.

EXPLANATORY NOTE

American Rock Salt Company LLC (the “Company”) is not required to file reports under the Securities Exchange Act of 1934, as amended. This Form 10-K is only being filed for informational purposes pursuant to the indenture governing the Company’s 9  ¹/2% Senior Secured Notes due 2014.

American Rock Salt Company LLC

Table Of Contents

			PAGE NUMBER
Part I.
	Cautionary Note Regarding Forward-Looking Statements
	Market Share, Ranking and Industry Data
	Item 1.	Business	2
	Item 1A.	Risk Factors	9
	Item 1B.	Unresolved Staff Comments	16
	Item 2.	Properties	16
	Item 3.	Legal Proceedings	16
	Item 4.	Submission of Matters to a Vote of Security Holders	16
Part II
	Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
	Item 6.	Selected Financial Data	17
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 8.	Financial Statements and Supplementary Data	27
		Report of Independent Registered Public Accounting Firm
		Balance Sheets
		Statements of Operations
		Statements of Changes in Members’ Equity (Deficit)
		Statements of Cash Flows
		Notes to Financial Statements
	Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	43
	Item 9A (T).	Controls and Procedures	43
	Item 9B.	Other Information	44
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance	45
	Item 11.	Executive Compensation	48
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	52
.	Item 14.	Principal Accountant Fees and Services	53
Part IV	Item 15.	Exhibits and Financial Statement Schedules	54
	Signatures		57
	Exhibit Index		59

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Part I

CAUTIONARY NOTE REGARDING

FORWARD-LOOKING STATEMENTS

This Form 10-K contains forward looking statements. These statements relate to future events or our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements, expressed or implied by these forward-looking statements. These risks and other factors include, among other things, those listed in the section entitled “Risk Factors” set forth in Item 1A below and elsewhere in this Form 10-K. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. In evaluating these statements, you should specifically consider various factors, including the risks outlined in “Risk Factors”. These factors may cause our actual results to differ materially from any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this Form 10-K.

MARKET SHARE, RANKING, AND INDUSTRY DATA

We obtained the market and competitive position data used throughout this Form 10-K from our own research, surveys, or studies conducted by third parties and industry or general publications. Industry publications and surveys generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. While we believe that each of these studies and publications is reliable, we have not independently verified such data. Similarly, we believe our internal research is reliable, but it has not been verified by any independent sources.

Item 1

Business

Company Overview

American Rock Salt Company LLC (sometimes referred to herein as the “Company” or “we” or “us”) is a producer of highway deicing rock salt in North America. We own and operate a rock salt mine located approximately 35 miles south of Rochester, New York. Our mine is located in the heart of the western and central New York and Pennsylvania snow belt, with on-site access to truck and rail transportation.

Our principal customers are government agencies that purchase rock salt for ice control on public roadways. Our served market area encompasses New York, Pennsylvania, Massachusetts and six other states. Sales to customers in New York and Pennsylvania accounted for approximately 86.7% of our total sales for fiscal year 2008. No single customer accounted for more than 4.0% of our annual sales during fiscal year 2008.

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We have mineral rights to over 10,000 underground acres, of which approximately 80% are located within a one-mile radius of our drill holes. Based solely on data extrapolated from areas within that one-mile radius, we believe that we have approximately 6,509 acres of proven salt reserves with approximately 50 years of remaining mineable reserves at current production rates. In addition, we operate 19 distribution centers in seven states for storage and distribution of rock salt and we operate a fleet exceeding 1,000 rail cars. We believe that our cash flows are not materially impacted by economic cycles due to the stable end use markets for rock salt and the lack of cost effective alternatives.

We are located adjacent to Interstate 390, with an entrance approximately 3/10 of a mile from our front gate. We also have on-site rail loading capabilities and ready access to three Class I long-haul rail lines. The following maps show the location of, and access to road and rail transportation from, our mine:

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Industry Overview

Rock salt is the principal deicing agent used in the United States due to its effectiveness, low cost, and availability. It is easy to ship, handle, store, apply, and is non-toxic and relatively harmless to the environment when properly used. Demand for highway deicing salt continues to grow in the United States and in the Company’s markets. While annual demand for rock salt is subject to variations in snow and ice conditions, the lack of cost effective alternatives, steadily increasing highway infrastructure and the overriding concern for public safety insulates the demand for rock salt from economic cycles. The deicing rock salt market is a highly regional one with a limited number of producers. Transportation and handling costs constitute a significant portion of the overall delivered cost of rock salt. As a result, the proximity of a mine to end users can provide a significant cost advantage.

New York State and the surrounding regions are some of the hardest hit segments of the nation in terms of severe snow and ice conditions. Our primary markets in western and central New York and Pennsylvania are consistently impacted by lake-effect snow. Harsh winters and a very large, mobile population cause New York State and its local municipalities

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consistently to be the largest consumers of rock salt in the nation. We estimate that annual purchases by New York State and its local municipalities over the last five winter seasons have averaged over 3.5 million tons. Pennsylvania is also a major consumer of rock salt, but no salt is mined within the state. We estimate that, over the same period, annual purchases by Pennsylvania and its local municipalities averaged approximately 1.9 million tons.

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Background

Company History

Our mine was first conceived by Akzo Nobel Salt, Inc. (including its predecessors) in the early 1960’s. Mineral rights were acquired over time and state and local planning decisions were made in anticipation of our mine’s eventual development including (a) proper zoning, (b) bounding the site by Interstate Route 390 (I-390) to the west, Route 408 to the south, and Route 63 to the east, and (c) leaving room for a railroad spur to pass under I-390.

In January 1997, American Rock Salt was formed and the Company’s founding members entered into a $4.2 million asset purchase agreement with Akzo to acquire the assets related to our mine. The assets consisted primarily of mining and environmental permits, surface acreage, mineral rights and mineral rights options, certain mining equipment and certain business information and records (consisting principally of all project related surveys, geological exploration studies, engineering reports, construction drawings, and design plans).

Our founding members negotiated a package of governmental grants, loans, tax credits, waivers, and abatements valued at over $25.0 million to help develop our mine. Included in the package were over $8.5 million in grants from New York State, a $9.8 million grant to the Genesee & Wyoming Railroad for construction of a railroad spur, a $0.6 million grant to the local water authority for the mine area, and a 30-year local property tax discount agreement.

Construction of our mine began in November 1998 and was substantially completed in December 2001. Through August 2002, our management made modifications to improve the mine, fine-tuned its processes, and ramped-up production. The Company attained full operating capacity during fiscal 2003.

On June 12, 2007, the Company entered into an Agreement of Merger (the “Merger Agreement”) dated as of June 12, 2007, but effective as of June 13, 2007, with ARS Mergeco LLC, a New York limited liability company (“Mergeco”) and a wholly-owned subsidiary of American Rock Salt Holdings LLC, a New York limited liability company (“Holdings”). Upon consummation of the merger and pursuant to the terms of the Merger Agreement, each of the membership interests in the Company was converted into a corresponding membership interest in Holdings, Mergeco was merged with and into the Company, and the Company became a wholly-owned subsidiary of Holdings. Holdings is a holding company and has no assets or operations other than its ownership of all of the equity interests of the Company.

Mineral Rights

We currently own or have the rights to approximately 10,000 acres, of which approximately 80% are located within a one-mile radius of our drill holes. Based solely on data extrapolated from areas located within that one-mile radius, we believe that we have approximately 149 million tons of proven mineral rights. We pay a royalty related to the acquisition of mineral rights of 2.5% of the gross income from the mine as reported for purposes of computing percentage depletion for federal income tax purposes. The consistency and quality of the underlying salt deposit has been verified by numerous geological surveys performed by Akzo and its predecessors. As part of the verification of the salt reserves and of the mining permit application process, the consulting firm of Alpha Geosciences, Inc. was retained by Akzo to conduct the geologic exploration program for the mine and to provide geologic logs of holes drilled to establish the thickness, depth, continuity, and quality of the salt reserves.

We are currently mining the B6 Salt Seam, which averages over 19 feet in thickness over the more than 8,000 acres of mineral rights owned by the Company within a one-mile radius of our drill holes and equates to approximately 249 million tons of salt reserves. This is the same seam that was mined continuously for over 110 years at the Retsof mine. To ensure mine working stability, an average of approximately six feet of salt in total is left in place in the mine’s roof and floor, and with a 60% extraction ratio in the production areas, the remaining 40% is retained as solid permanent pillars. The approximately 149 million remaining tons of salt equal the future mineable reserves. Based on tests conducted to date, exploratory results, and the quality control measures discussed below, and further based on mining history within the region of our mine, management believes that all of such reserves meet applicable industry standards, including standards requiring an average sodium chloride (NaCl) content of over 97%. A total of approximately 22.9 million tons have been extracted

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through September 30, 2008. Depletion of salt deposits and mineral rights occurs as the minerals are extracted, based on units-of-production and engineering estimates of total reserves. The reserve estimates are primarily a function of the area and volume covered by the mining rights and estimates of extraction rates utilized by the Company with the reasonable expectation of reliably operating the mine on a long-term basis. The above estimates are based solely on data extrapolated from areas located within a one-mile radius of our drill holes. We also own approximately 2,000 additional acres of mineral rights beyond that one-mile radius. Established criteria for proven and probable reserves are primarily applicable to mining deposits of discontinuous metal, where both presence of ore and its variable grade need to be precisely identified. However, the massive continuous nature of evaporative deposits, such as salts, require proportionately less data for the same degree of confidence in mineral reserves, both in terms of quantity and quality. Reserve studies performed by Akzo, its predecessors, and a third-party engineering firm suggest that our salt reserves most closely resemble proven reserves and we have therefore classified our reserves as proven reserves.

We have established Quality Assurance/Quality Control (QA/QC) measures to ensure that our products meet the specifications of the customers we serve. Among other things, we conduct random sample testing on a daily basis to determine the physical properties, chemical properties, and moisture content of our salt. This testing is designed to ensure that our salt meets customer standards and the industry standards published by ASTM International, including standards related to sodium chloride (NaCl) content.

Production Method

We use the drill and blast mining method at our mine. Rooms are mined in a planned pattern by undercutting, drilling, and blasting. An undercutter cuts a horizontal slot or kerf along the floor of the advancing room to provide a free face for blasting. A drilling rig drills a series of holes into the face and an ammonium nitrate-fuel oil mixture is pneumatically packed into the holes. The room is then blasted, creating a “muck” pile of salt ready to be transported to underground crushing and screening stations. Large mining vehicles move the blasted salt to conveyor belts, which transport the salt to an underground screening plant, where further crushing and screening, if necessary, takes place. After crushing and screening, salt is automatically hoisted to the surface where it is directly loaded into railcars or trucks, or added to an on-site stockpile for later truck shipment. We believe that we have one of the most automated systems in the industry. After salt is placed on the conveyor belt, the processing and loading functions are completely automated. We believe that the mine and the operating equipment are maintained in good working condition.

Seasonality

The “salting” season runs primarily from October to March with the highest demand typically in December, January, and February. Consumption of highway deicing rock salt is impacted by the severity of winter weather. While it is true that individual snow storms with large accumulations require a great deal of salt, numerous small snow and ice storms tend to require more salt. For example, we believe that a 2-inch snowstorm requires nearly as much salt as a 6-inch storm. It is the type of storm that dictates the frequency of application and the total amount of salt needed. In addition, freezing rain and ice storms also require substantial amounts of salt.

Marketing and Distribution

Bid Market

Our principal customers are states, counties, and municipalities that purchase bulk salt for ice control on public roadways. Annual supply contracts generally are awarded on the basis of lowest price of tendered bids once the purchaser is assured that the minimum requirements for purity, service, and delivery can be met. The bid market eliminates the need for us to invest significant time and effort in marketing and advertising or to have a large direct sales force or network of dealers or distributors.

Salt is contracted at a “delivered price,” wherein the mine is responsible for substantially all of the freight and handling costs incurred to deliver the salt to the customer. Generally, the delivered price increases as the distance between the customer and the mine increases. While in general each mine can best supply its local area more profitably than competitors, the competitive advantage is directly impacted by factors such as mode of freight, available inventory and fuel prices, thereby at times allowing us to supply distant customers as profitably as we supply our local customers.

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Logistics

In our industry, salt sold to customers within 100-150 miles of a mine is usually shipped by truck directly to the customer from the stockpile located at a mine. All other salt is typically first shipped by rail to various strategically located stockpiles, stored until needed, and then shipped by truck from the stockpiles to customers. Historically, salt sold locally is more profitable due to: (i) lower transportation costs, (ii) lower handling costs as salt is moved only once from a mine to the customers, and (iii) elimination of expenses for off-site stockpile storage facilities. Nonetheless, as a result of continuing improvements in our logistical capabilities, the gross profit per ton of salt sold from stockpiles has been steadily increasing.

We sell to our target markets by distributing approximately half of our salt by direct truck shipments from our mine to customers in western New York and western Pennsylvania, while distributing approximately half by railcar to our 19 stockpiles which serve the rest of New York and Pennsylvania and the seven other states where we have sales. The concentrated demand period for rock salt, limited customer storage facilities and delivery distance considerations necessitate off-site stockpiles in order to deliver rock salt within 3-5 days of an order. The Company currently operates 19 such off-site stockpiles and plans to add two or three additional stockpiles in the next 12 months. The Company currently operates a fleet exceeding 1,000 railcars on a year-round basis to transport the salt from our mine to our stockpiles. In addition, we are located adjacent to Interstate 390 and have on-site rail loading capabilities and ready access to three Class I long-haul rail lines.

Market Area

New York State and the area east and southeast of Lake Ontario and Lake Erie in particular, is one of the hardest hit areas of the country in terms of winter severity. Bad winters coupled with a very large, mobile population result in New York State consistently being the largest consumer of rock salt in the United States. The harsh winter weather that western and central New York and Pennsylvania experience is in part attributable to a phenomenon known as lake-effect snow. Lake-effect snow is generated from the temperature contrast between cold arctic air moving west-to-east over the relatively warm waters of the Great Lakes. Generally, the greater the contrast between arctic air and water temperature, the greater the amount of snowfall. Lake-effect snows are common over the Great Lakes region because these large bodies of water can hold their summer heat well into the winter, rarely freeze over, and provide the long fetch (or the distance an air mass travels over water) which allows the air to gain the heat and moisture required to fuel the snow squalls. Furthermore, because winds accompanying arctic air masses generally originate from a southwest to northwest direction, lake-effect snow typically falls on the east or southeast sides of the lakes. Lake Ontario and Lake Erie stretch west-to-east lengthwise, which places western New York and Pennsylvania, located immediately east and southeast of the lakes, directly in the path of the largest west-to-east fetch in the United States.

Competition

Highway deicing salt is a highly regional market with a number of competitors that have significant cost advantages in the proximity of their production facilities. The geographic dispersion of rock salt mines allows some of our major competitors to prosper in their respective locales. United States rock salt mines are concentrated around the five major underground salt deposits in the United States and the primary means of competition among rock salt producers is price. There are three large integrated producers in the North American deicing market: Cargill, Inc., Compass Minerals Group, Inc., and Morton International. In addition to the three large nationally recognized companies, there are several smaller regional producers of highway deicing salt. There are also importers of salt into North America, and the imports are generally confined to the eastern seaboard of the United States.

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Employees

The Company had 266 full-time salaried and hourly employees as of September 30, 2008. The Company’s hourly production employees are covered by a labor agreement with the United Steel Workers International Union, AFL-CIO-CLC, formerly the Paper, Allied-Industrial, Chemical & Energy Workers International Union, Local 1-0763, which expires in October 2012.

Salt mining is considerably less hazardous than other forms of underground mining. In fact, the Company enjoys a reduced workers’ compensation insurance rate for the mine’s underground workers as a result of a more favorable experience rating. In addition, there are no known long-term health problems associated with salt mining.

Environmental, Health and Safety Matters

The production and distribution of deicing products are subject to various federal, state and local laws and regulations that regulate: (i) the conduct of our mining operations, including safety procedures followed by our employees; (ii) the use of our products by our customers; (iii) the handling of raw materials; (iv) the air and water quality impacts of our facility; (v) the disposal, storage and management of hazardous and solid wastes; (vi) the remediation of contamination at our facility and sites; and (vii) post-mining land reclamation. The regulations governing these activities are subject to change from time to time, so we cannot estimate with certainty the costs that we will incur to assure future compliance. We intend to comply with all applicable regulatory requirements associated with our business operations and will implement such modifications to our practices and to our facilities as is necessary.

We did not make any material capital expenditures in order to comply with applicable environmental, health and safety standards during fiscal 2008.

Item 1A

Risk Factors

You should carefully consider the following risks and all of the information set forth in this annual report on Form 10-K. The risks facing our Company are not limited to those listed below. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, or results of operations.

The demand for our products changes seasonally and is dependent upon weather conditions.

Our business is highly seasonal, with operating results varying from quarter to quarter. The “salting” season runs primarily from October through March, with the highest demands typically in December, January, and February. During our history, we have generated approximately 75% of our sales during the months of December through March, when the need for highway deicing is at its peak. We need to produce and stockpile sufficient highway deicing salt during the remainder of the year to meet estimated demand for the winter season.

Consumption of highway deicing salt is impacted by the severity of winter weather, including the number of snow storms and the accumulations associated with those storms. Weather conditions which impact our highway deicing product line include levels of temperature, precipitation, snow days, and duration and timing of snowfall in our relevant geographic markets. Lower than expected sales during this period could have a material adverse effect on the timing of our cash flows and therefore our ability to service our obligations with respect to our indebtedness.

We operate in a highly competitive market.

Highway deicing salt is a highly regional market with a number of competitors that have significant cost advantages associated with the proximity of their production facilities to their customers. Although the primary means of competition is price, there are a number of other considerations affecting competition including product performance, cost of transportation in the distribution of salt, brand reputation, quality of client service, and customer support. To remain competitive, we may need to invest in production, marketing, customer service and support, and our distribution networks. We may have to adjust the prices of some of our products to stay competitive. We cannot assure you that we will have sufficient resources to continue to make such investments or that we will maintain our competitive position. Some of our competitors have greater financial and other resources than we do.

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We must generally bid competitively to acquire contracts.

Principal customers in our industry are states, counties, and municipalities that purchase bulk salt for ice control on public roadways. Annual supply contracts generally are awarded on the basis of the lowest price of tendered bids once the purchaser is assured that its minimum requirements for quality, service, and delivery can be met. While this bid process mitigates the need to make expenditures for marketing and reduces the need for a large sales force, it requires us to rely primarily on our ability to be price competitive to maintain our existing accounts and acquire new accounts. The loss of accounts as a result of the competitive bid process could have a material adverse effect on our business.

We may be subject to certain penalties if we fail to meet performance requirements in our sales contracts.

We are a party to various salt sales contracts which include specific performance provisions governing delivery and product specifications. If we fail to meet our performance requirements, we could be subject to penalties. The amount of such performance penalties, if any, is dependent upon our failure to meet such requirements, as well as other factors such as weather patterns and related product demand in our served markets. As a result, we cannot estimate the likelihood or amount of any such performance penalties.

Increasing costs or a lack of availability of transportation services could have an adverse effect on our ability to deliver products at competitive prices.

Because of salt’s relatively low production cost, transportation and handling costs tend to be a significant component of the total delivered cost of sales. The high relative cost of transportation tends to favor manufacturers located close to the customer. We contract shipping, trucking and rail services to move salt from our production facilities to our stockpiles and to our customers. In many instances, we have committed to deliver salt, under penalty of non-performance, up to nine months or more prior to having produced the salt for delivery to our customers. A reduction in the dependability or availability of transportation services or a significant increase in transportation service rates could impair our ability to deliver salt economically to our markets and impair our ability to expand our markets.

We may be adversely affected by the environmental regulations to which we are subject.

We are subject to numerous environmental, health and safety laws and regulations in the United States, including laws and regulations relating to land reclamation and remediation of hazardous substance releases, and discharges to air and water. For example, the U.S. Comprehensive Environmental Response, Compensation, and Liability Act, or “CERCLA,” imposes liability, without regard to fault or to the legality of a party’s conduct, on certain categories of persons (known as “potentially responsible parties”) who are considered to have contributed to the release of “hazardous substances” into the environment. Although we are not currently incurring material liabilities pursuant to CERCLA, we may in the future incur material liabilities, under CERCLA and other environmental cleanup laws, with regard to our mining facilities, adjacent or nearby third party facilities or offsite disposal locations. Under CERCLA, or its various state equivalents, one party may, under certain circumstances, be required to bear more than its proportional share of cleanup costs at a site where it has liability if payments cannot be obtained from other responsible parties. Liability under these laws involves inherent uncertainties. Violations of environmental, health and safety laws are subject to civil, and in some cases criminal, sanctions.

Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at ongoing operations, which will be charged against income from future operations. Present and future environmental laws and regulations applicable to our operations may require substantial capital expenditures and may have a material adverse effect on our business, financial condition, and results of operations.

Our operations are dependent on our having received the required permits and approvals from governmental authorities.

We hold numerous environmental, mining, and other permits and approvals issued by governmental authorities that are necessary to maintain operations at our facilities. A decision by a governmental agency to deny or delay issuing a new or renewed permit or approval, or to revoke or substantially modify an existing permit or approval, could have a material adverse effect on our ability to continue operations at the affected facility. Expansion of our existing operations also is predicated upon securing the necessary environmental or other permits or approvals.

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Our business could suffer if we are unsuccessful in negotiating new collective bargaining agreements.

We have a collective bargaining agreement covering our hourly production employees with the United Steel Workers International Union, AFL-CIO-CLC, Local 763, which will expire in October 2012. Although we believe that our relations with our employees are good, we cannot assure you that we will be successful in negotiating new collective bargaining agreements, that such negotiations will not result in significant increases in the cost of labor or that a breakdown in such negotiations will not result in the disruption of our operations.

If we lose our senior management, our business may be adversely affected.

The success of our business is dependent on our senior management, as well as on our ability to attract and retain other qualified personnel. We cannot assure you that we will be able to attract and retain the personnel necessary for the development of our business. The loss of the services of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition, and results of operations. We do not currently maintain “key person” life insurance on any of our key employees.

We face competition from both existing products and products under development.

There are numerous alternative deicing products, both in existence and under development. While these products are currently believed to be substantially more expensive and less effective than rock salt, there can be no assurances that certain of the current or developing alternative deicing products will not become as or more effective than salt. There can be no assurances that alternative deicers, or new deicing agents to be used with salt, will not gain widespread acceptance and result in diminished demand for rock salt which could have a material adverse effect on our business.

Flooding in our mine could seriously impact our ongoing operations.

The Retsof mine, which was located approximately seven miles from our mine and had extensive workings below the Genesee River Valley, flooded in 1994. There can be no assurances that our mine, despite our use of more conservative mining methods and our direction of mining operations away from the valley, will not be exposed to the risk of flooding, which could have a material adverse effect on our business.

Mining is a highly regulated activity.

Mining activities are subject to a variety of governmental regulations, including the need to comply with laws relating to the reclamation of the land and other environmental legislation. Compliance with such regulation requires significant capital outlays. Existing, as well as future, legislation and regulation concerning mining operations could cause additional expense, operating restrictions, and delays in maintaining mining operations, the extent of which cannot be predicted.

Our mining permit will expire in October 2011. Permit renewal is an automatic action by the New York Department of Environmental Conservation (“DEC”) for mines wishing to continue in business, absent flagrant violation of permit terms or refusal of a permittee to correct violations of one or more permit conditions. In either of such cases, the DEC can revoke a permit or delay renewal until violations are corrected.

Pending legislation which affects environmental laws applicable to mining includes proposals which may substantially alter the Clean Water Act, Safe Drinking Water Act, and the Endangered Species Act. There can be no assurances that adverse regulatory developments and operating requirements will not impair our ability to operate our mine and will not have a material adverse effect on our business.

Our highway deicing customers principally consist of municipalities, counties, states and other governmental

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entities in the Northeastern U.S. We are required to comply with numerous laws and regulations administered by federal, state, local and foreign governments relating to, but not limited to, the production, transporting and storing of our products as well as the commercial activities conducted by our employees and our agents. Failure to comply with applicable laws and regulations could preclude us from conducting business with governmental agencies and lead to penalties, injunctions, civil remedies or fines.

The business of mining is subject to a variety of risks and hazards, not all of which can be covered by insurance.

The business of salt mining is generally subject to a number of risks and hazards, including environmental hazards, industrial accidents, labor disputes, unusual or unexpected geological conditions, changes in the regulatory environment and natural phenomena such as earthquakes, earth movement, and floods. Such occurrences could result in damage or impairment to, or destruction of, mineral properties or production facilities, personal injury or death, property or environmental damage, delays in mining, business interruption, monetary losses, and legal liability. While insurance is not commonly available for all these risks, we do maintain insurance against risks that are typical and reasonably insurable in the salt mining industry and in amounts that we believe to be reasonable but which will contain limits, deductibles, exclusions, and endorsements. There can be no assurance that the coverage and amount of insurance will be sufficient for the needs of the Company.

We depend upon geological surveys and studies and there can be no assurance as to the accuracy of such studies.

Continued salt production is dependent upon the existence of an adequate quantity and quality of salt in our salt deposits. While numerous geological surveys and studies have been performed to determine the size and quality of our salt deposits, there can be no assurances that our salt deposits will not be subject to premature depletion or contain pockets where quality is below production grade. Inadequate quantity or quality of our salt deposits would have a materially adverse effect on the results of operations of our business.

We have certain agreements with our affiliates which may create conflicts of interest.

We have entered into agreements with or have had certain transactions with related parties, including the payment of mine acquisition costs to persons who are members of Holdings. We have also obtained legal services from a law firm with which several of our affiliates are partners, and certain of our affiliates have received management, advisory and service fees from us. These transactions may create conflicts of interest which may not be resolved in the manner most favorable to holders of notes.

We are controlled by Holdings, which in turn is controlled by its principal members, whose interests in our business may be different than those of the holders of our notes.

Joseph G. Bucci, Gunther K. Buerman, and Neil L. Cohen, our principal founding members, collectively hold over 90% of the Class F membership interests in Holdings, which is our sole member. Because of their ownership interests in Holdings, Messrs. Bucci, Buerman, and Cohen have the power to elect all three of the Class F managers on our Board of Managers. Under the terms of our operating agreement, each Class F manager has three votes on all matters submitted to a vote of the Board of Managers, and each Class A manager has one vote on all matters submitted to a vote of the Board of Managers. Therefore, Messrs. Bucci, Buerman, and Cohen collectively have voting control over all matters submitted to a vote of the Board of Managers other than matters in which one or more of such individuals has a financial interest. Additionally, Messrs. Bucci, Buerman, and Cohen comprise the Executive Committee of the Board of Managers, which generally exercises the authority of the Board of Managers except with respect to certain items required to be submitted to a vote of the entire Board of Managers in accordance with our operating agreement.

As a result of the majority ownership interest by Messrs. Bucci, Buerman and Cohen, their interests could conflict with those of the holders of our notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of those individuals as equity holders in Holdings might conflict with the interests of a holder of our notes, as a debt holder. Messrs. Bucci, Buerman and Cohen or their affiliates might also have an interest in pursuing transactions that, in their judgment, could enhance their equity investments in Holdings, even though such transactions might involve risks to the holders of our notes.

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Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under our indebtedness.

As of September 30, 2008, we had approximately $96.2 million of indebtedness, including $38.6 million of indebtedness under our bank facility, $57.5 million of indebtedness under our senior secured notes, and $0.1 million of indebtedness under our promissory note payable to the Empire State Development Corporation. As a result, we are a leveraged company. This level of leverage could have important consequences to our financial condition, including the following:

• making it difficult for us to satisfy our obligations under the senior secured notes and our other indebtedness;

• limiting our ability to obtain additional debt financing or sell equity interests to fund our working capital, capital expenditures and other requirements;

• limiting our flexibility in planning for, or reacting to, changes in our industry;

• placing us at a competitive disadvantage to those of our competitors who operate on a less leveraged basis;

• making us more vulnerable to adverse changes in economic conditions;

• making it more difficult for us to make payments on the senior secured notes due to the debt service requirements of our other indebtedness; and

• requiring us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness, which would reduce the funds available for other purposes.

In addition, the indenture governing our senior secured notes and our bank facility contain financial and other restrictive covenants that may limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness.

Despite our substantial indebtedness we may still incur significantly more debt. This could exacerbate the risks described above.

The terms of the indenture governing our senior secured notes permit, and our bank facility, permits us to incur additional indebtedness in the future. We are able to borrow up to $30.0 million under our working capital facility, subject to certain conditions. The Company had outstanding borrowings in the amount of $19.0 million at September 30, 2008 under the working capital facility.

The proceeds from the collateral securing our indebtedness may not be sufficient to pay all amounts owed under such indebtedness.

If we default on our bank facility or our senior secured notes, the proceeds from the sale of the collateral may not be sufficient to satisfy in full our obligations under the bank facility and the notes. An intercreditor agreement sets forth the relative rights to the collateral of the lenders under the bank facility and the holders of the senior secured notes. Proceeds from the sale of the collateral will be used first to satisfy obligations under the bank facility and, thereafter, the senior secured notes. The lenders under the bank facility will have the sole ability to control foreclosure and sale of the collateral. The amount to be received upon such a sale would depend upon numerous factors, including, among others, the timing, manner, and ability to sell the collateral in an orderly sale, the condition of the collateral, the condition of the national and local economies, the availability of buyers and similar factors. The book value of the collateral should not be relied upon as a measure of realizable value for such assets. By their nature, portions of the collateral are illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the collateral could be sold in a short period of time or that the proceeds obtained from such a sale would be sufficient to pay all amounts owing under the bank facility and the senior secured notes. Additionally, the terms of the indenture governing our senior secured notes allow us to issue additional notes provided that we meet the Consolidated Fixed Charge Coverage Ratio (as defined in the indenture). Any additional

13

notes issued pursuant to the indenture will rank equal to the notes and will be entitled to the same rights and priority with respect to the collateral. Thus, the issuance of additional notes pursuant to the indenture may have the effect of significantly diluting the ability of a holder of our senior secured notes to recover payment in full from the then existing pool of collateral.

To the extent that holders of other secured indebtedness or third parties enjoy liens (including statutory liens), whether or not permitted by the indenture governing the senior secured notes, such holders or third parties may have rights and remedies with respect to the collateral securing the senior secured notes that, if exercised, could reduce the proceeds available to satisfy the obligations under the senior secured notes.

The ability of the trustee to foreclose on the collateral securing the senior secured notes may be limited.

The right of the trustee to repossess and dispose or otherwise exercise remedies in respect of the collateral securing the senior secured notes upon the occurrence of an event of default is likely to be significantly impaired by applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or against us prior to the trustee having repossessed and disposed of the collateral or otherwise completed the exercise of its remedies with respect to the collateral. Under the United States Bankruptcy Code, a secured creditor such as the trustee is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from such debtor, without bankruptcy court approval. Moreover, the Bankruptcy Code permits the debtor to continue to retain and to use collateral even though the debtor is in default under the applicable debt instruments if the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the collateral securing the obligations owed to it and may include cash payments or the granting of additional security, if and at such times as the bankruptcy court in its discretion determines, for any diminution in the value of such collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the lack of a precise definition of the term “adequate protection” and the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the senior secured notes could be delayed following commencement of a bankruptcy case, whether or when the trustee could repossess or dispose of the collateral or whether or to what extent holders of the senior secured notes would be compensated for any delay in payment or loss of value of the collateral through the requirement of “adequate protection.” Furthermore, if a bankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on the notes; holders of the senior secured notes would hold “under-secured claims.” Applicable federal bankruptcy laws do not permit the payment or accrual of interest, costs, and attorney’s fees for “under-secured claims” during a debtor’s bankruptcy case.

Moreover, the trustee may need to evaluate the impact of the potential liabilities before determining to foreclose on collateral consisting of real property because a secured creditor that holds a lien on real property may be held liable under environmental laws for the costs of remediating or preventing release or threatened releases of hazardous substances at such real property. Consequently, the trustee may decline to foreclose on such collateral or exercise remedies available if it does not receive indemnification to its satisfaction from the holders of the senior secured notes.

The trustee’s ability to foreclose on the collateral securing the notes may be subject to lack of perfection, the consent of third parties, prior liens, and practical problems associated with the realization of the trustee’s lien on the collateral.

The lien on the collateral securing the senior secured notes is junior in some respects to the lien securing our bank facility.

Although the senior secured notes are secured by substantially all of our assets, we maintain a $49.6 million bank facility, and the lien on the collateral securing that bank facility is senior to the lien on the collateral securing the notes in accordance with an intercreditor agreement. As a result, upon any distribution to our creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, the lenders under the bank facility will be entitled to be paid in full from the proceeds of the collateral securing such debt before any payment may be made with respect to the senior secured notes.

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Restrictive covenants in our bank facility and the indenture governing the senior secured notes may restrict our ability to operate our business.

Our bank facility and the indenture governing the senior secured notes contain covenants that limit our ability, among other things, to:

• incur additional indebtedness or contingent obligations;

• make certain payments or investments;

• create liens;

• pay dividends and make other distributions;

• redeem subordinated debt;

• enter into transactions with our affiliates;

• sell assets;

• acquire the assets of, or merge or consolidate with, other entities; and

• allow subsidiaries to issue capital stock.

Our ability to comply with these covenants may be affected by events beyond our control. We cannot assure you that we will satisfy these covenants. A breach of any of these covenants could result in a default under the indenture governing the senior secured notes or our bank facility, which could allow all amounts outstanding thereunder to be declared immediately due and payable, in which case we may be required to adopt an alternative strategy that may include actions such as reducing or delaying acquisitions and capital expenditures, selling assets, restructuring or refinancing our indebtedness, seeking additional equity capital or filing for bankruptcy. If we default under our bank facility, we could be prohibited from making any payments on the senior secured notes. In addition, the lenders under our bank facility could require immediate repayment of the entire principal amount of their loans. If those lenders require immediate repayment, we may not be able to repay them and also repay the senior secured notes in full.

In addition, the indenture governing the senior secured notes and our bank facility require us to maintain financial ratios. We may not be able to maintain these ratios. Covenants in our bank facility may also impair our ability to finance future operations or capital needs or to enter into acquisitions or joint ventures or engage in other favorable business activities.

To service our indebtedness, including the senior secured notes, we will require a significant amount of cash. The ability to generate cash depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness, including our senior secured notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, climate, and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations that our business plans will be implemented as scheduled, or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness, including our senior secured notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the senior secured notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including the bank facility and the senior secured notes, on commercially reasonable terms or at all.

We may not have the ability to raise the funds necessary to finance any change of control offer required by the indenture governing the senior secured notes.

If we undergo a change of control (as defined in the indenture governing our senior secured notes) we may need to refinance large amounts of our debt, including the senior secured notes and borrowings under our bank facility. If a change

15

of control occurs, we must offer to buy back the senior secured notes for a price equal to 101% of the principal amount of the senior secured notes, plus any accrued and unpaid interest. We cannot assure you that there will be sufficient funds available for us to make any required repurchases of the notes upon a change of control. The bank facility will provide that the occurrence of certain change of control events with respect to us will constitute a default under the bank facility. Therefore, if a change of control were to occur, we may be required to repay or refinance all borrowings under the bank facility. Any future debt which we incur may also contain restrictions on repayment upon a change of control. If any change of control occurs, we cannot assure you that we will have sufficient funds to satisfy all of our debt obligations.

The market price for our senior secured notes may be volatile.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the senior secured notes. The market for the senior secured notes, if any, may be subject to similar disruptions. Any such disruptions may adversely affect the value of our senior secured notes.

Item 1B

Unresolved Staff Comments

None.

Item 2

Properties

Information regarding our mine and properties, including a map showing the location of our principal mining facility, is included in Item 1, “Business,” of this report. In addition, we own and are a party to non-mining leases of property that permit us to perform activities ancillary to our mining operations, such as storage, depot, and warehouse leases. We believe that all of the leases were entered into on market terms.

Item 3

Legal Proceedings

The Company is involved in various routine legal proceedings from time to time. These typically involve commercial claims, personal injury claims, and workers’ compensation claims. While the Company cannot predict the outcome of such proceedings, it does not believe that these proceedings will have a material adverse effect on its business.

Item 4

Submission of Matters to a Vote of Security Holders

There were no matters brought to the holder of our membership interests for a vote during the fourth quarter of fiscal 2008.

Part II

Item 5

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

There is no public market for the equity securities of the Company.

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Holders

The Company’s outstanding common equity consists of Class A Units and Class F Units. As of September 30, 2008, there were 6,250 Class A Units outstanding, all of which were held by Holdings, and 12,750 Class F Units outstanding, all of which were held by Holdings.

Dividends

The Company may from time to time make distributions to its member subject to the restrictions of the Company’s bank facility and the indenture governing its senior secured notes, which contain certain covenants and financial ratios restricting the Company’s ability to make such distributions. Per the agreement governing Holdings’ credit facility, Holdings is required to cause the Company to pay an annual cash dividend to Holdings. The amount of the dividend must be no less than 75.0% of its “available free cash flow”, wherein “available free cash flow” includes a number of financial components in its determination but cannot exceed the amount the Company is permitted to pay as a cash distribution under its existing credit facilities or the indenture governing its senior secured notes. During fiscal 2008, the Company made a permitted cash distribution in the amount of $8.4 million from fiscal year end 2007 earnings. As a Restricted Subsidiary, as defined in the agreement governing Holdings’ credit facility, the Company is subject to financial and other restrictions that are comparable to existing restrictions under the Company’s senior secured notes.

Item 6

Selected Financial Information

The following table sets forth selected financial and operating data of the Company for each year in the five-year period ended September 30, 2008. The financial data and certain operating data have been derived from the Company’s audited financial statements. The financial and operating data should be read in conjunction with the financial statements and related notes included under Item 8 of this report and in conjunction with other financial information included elsewhere in this Form 10-K.

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	Fiscal Years Ended September 30,
	2008			2007			2006			2005			2004
	(dollars in thousands)
Income Statement Data:
Total sales	$	190,188		$	121,288		$	95,653		$	104,613		$	96,502
Cost of sales		132,013			92,006			63,833			74,060			67,973
Gross income		58,175			29,281			31,820			30,553			28,529
Operating expenses		8,615			7,621			7,940			8,234			6,634
Other income (expense):
Interest expense		(11,843	)		(11,719	)		(12,007	)		(11,399	)		(8,021	)
Other Interest		—			—			—			—			(2,679	)
Interest income		332			407			124			95			124
Other financing charges		—			(22	)		(70	)		(12	)		(152	)
Other, net(1)		56			83			2,182			12			12
Net income to members(2)		38,105			10,409			14,108			11,015			11,179
Balance Sheet Data:
Cash and equivalents	$	1,642		$	2,615		$	2,458		$	2,234		$	3,102
Property and equipment, net		82,891			81,803			83,363			84,263			81,011
Total assets		138,969			137,813			144,690			135,955			125,293
Long term debt, including current portion		77,206			112,713			120,672			127,417			100,173
Total debt		96,206			128,713			141,722			141,117			112,923
Members’ equity (deficit)		30,863			1,108			(3,301	)		(12,798	)		249
Statements of Cash Flows Data:
Cash flows provided by operating activities	$	46,550		$	22,138		$	8,384		$	6,475		$	14,100
Cash flows used in investing activities		(6,714	)		(3,202	)		(4,068	)		(12,725	)		(3,321	)
Cash flows provided by (used in) financing activities		(40,810	)		(18,778	)		(4,092	)		5,382			(16,774	)
Other Financial Data:
Capital expenditures	$	6,714		$	3,202		$	4,068		$	2,725		$	2,673
EBITDA		57,734			28,009			31,762			27,497			26,890
Ratio of earnings to Fixed Charges(3)		3.68			1.76			2.01			1.82			1.91

⁽¹⁾ The increase in Other Income, net, during fiscal year 2006 is due to the $2.1 million received in connection with the settlement of the litigation with the EPC Contractor, as discussed in Note 8 to our financial statements included elsewhere in this Form 10-K.

⁽²⁾ Because we are a limited liability company that has elected to be treated as a partnership for tax purposes, all of our profits and losses are allocated to our member and the Company is not subject to a taxation on those amounts.

⁽³⁾ For purposes of computing the ratio of earnings to fixed charges, earnings consist of net income before fixed charges (the company does not incur income taxes). Fixed charges consist of interest expense including the amortization of deferred debt issuance costs, the amortization of capitalized interest, and the interest component of our operating rents.

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Item 7

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The statements in this discussion regarding the industry outlook, our expectations regarding the future performance of our business, and the other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the section entitled “Risk Factors” included in Item 1A of this Form 10-K. You should read the following discussion with the section entitled “Risk Factors” and the financial statements and notes thereto included elsewhere in this annual report on Form 10-K.

Company Overview

We are a producer of highway deicing rock salt in North America. We own and operate a rock salt mine located approximately 35 miles south of Rochester, New York. Our mine is located in the heart of the western and central New York and Pennsylvania snow belt, with on-site access to truck and rail transportation.

Salt mines and mining operations are long-lived assets. Based solely on data extrapolated from areas within a one-mile radius of our drill holes, we believe that our mine currently has approximately 50 years of remaining mineable reserves at current production rates.

While winter weather conditions in individual markets can vary from year to year, our target markets in New York and Pennsylvania are the most impacted by harsh winter snow and ice conditions and overall demand across the region is relatively stable. Our served markets in New York, Pennsylvania, Massachusetts and six other states have an aggregate regional demand for over 11.2 million tons per year of rock salt, and Pennsylvania and New England currently have no operating rock salt mines.

Most of our sales are based on annual supply contracts with set pricing and reserved volume generally awarded on the basis of lowest price of bids tendered. This allows us to plan our production and staffing schedule, and our inventory placement and sales distribution strategy for the upcoming season. We routinely adjust the size of our workforce, as well as the number of hours and days worked, to reflect seasonal demand.

As a result of our strategic initiatives to increase profitability by optimizing pricing, bidding, and distribution while reducing freight costs, we have successfully increased revenues and EBITDA from $96.5 million and $26.9 million, respectively, in fiscal 2004 to $190.2 million and $57.7 million in fiscal 2008 (see “EBITDA” below for a reconciliation of EBITDA to net income, the most directly comparable financial measure prepared in accordance with GAAP). For the 2008-2009 season, our awarded contract tonnage has increased as compared to the prior two winter seasons.

Critical Accounting Policies

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, or GAAP, we are required to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. We have identified the following as critical accounting policies that are most important to the portrayal of our financial condition and results of operation.

Salt Deposits, Mineral Rights, and Mine Development Costs

Salt deposits and mineral rights are underground reserves with respect to which the Company has extraction rights. Mine Development Costs are primarily underground assets used in the production of salt with amortization lives linked to the quantity of available production reserves. Depletion of salt deposits and mineral rights and amortization of mine development costs occur as the minerals are extracted based on units-of-production and engineering estimates of total reserves. As such, our mineral rights interests include estimates of probable mineral reserves. As such, the carrying values, depletion and amortization expense charges for these assets are dependent upon estimates of proven mineral reserves. The impact of revisions to our reserve estimates is recognized on a prospective basis.

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Mine Reclamation Cost

We have calculated the estimated net future cost of dismantling, restoring, and reclaiming our mine and its related mine site in accordance with federal, state, and local regulatory requirements, and in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. SFAS No. 143 requires that we recognize the legal obligation of our mine reclamation costs at fair value as a liability when incurred and capitalize such costs by increasing the carrying amount of our mine assets.

Impairment of Long-Lived Assets

In the event that relevant facts and circumstances indicate that the carrying amounts of our long-lived assets may be impaired, an evaluation of recoverability is performed. If such an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down is required. If our review indicates that the assets will not be recoverable, the carrying value of the Company’s assets would be reduced to their estimated fair value.

Other Significant Accounting Policies

Other significant accounting policies not involving the same level of estimates and assumptions as those discussed above are important to an understanding of our financial statements. For example, our policies related to our inventory allowances, revenue recognition, and legal contingencies require judgments and estimates.

Results of Operations

The following table sets forth certain historical financial information for the fiscal years ended September 30, 2008 2007, and 2006. We record sales to customers based upon total billings including shipping and handling costs necessary to transport our products from the production or storage sites to the delivery point. In establishing our prices to our customers, we must take into account the estimated cost of transportation of our products since we assume responsibility for such costs. We manage the profitability and attractiveness of existing and prospective customers and product lines by analyzing, among other factors, the customer billings net of related shipping and handling costs. This allows for a more comparable look at the relative profitability of our business as well as providing a more accurate analysis of the business trends.

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The following table and discussion should be read in conjunction with the information contained in our financial statements and the notes thereto included elsewhere in this Form 10-K.

	2008			2007			2006
Sales
Bulk	$	184,672,825		$	118,921,281		$	93,755,596
Packaged		5,515,468			2,366,250			1,897,617
Total sales		190,188,293			121,287,531			95,653,213
Cost of sales		132,013,382			92,006,449			63,833,668
Gross income		58,174,911			29,281,082			31,819,545
Operating expenses		8,614,709			7,620,832			7,940,016
Income from operations		49,560,202			21,660,250			23,879,529
Other income (expense)
Interest expense		(11,842,796	)		(11,719,402	)		(12,006,524	)
Interest income		331,873			407,247			123,836
Other financing charges		—			(21,737	)		(70,422	)
Other, net		55,836			82,570			2,181,742
Total other expense		(11,455,087	)		(11,251,322	)		(9,771,368	)
Net income	$	38,105,115		$	10,408,928		$	14,108,161

Fiscal Year Ended September 30, 2008 Compared to Fiscal Year Ended September 30, 2007

Sales

Total sales for the fiscal year ended September 30, 2008 of $190.2 million increased $68.9 million, or 56.8%, as compared to $121.3 million during fiscal 2007. Sales primarily consist of bulk salt sales, as well as packaged salt sales. The increase was primarily attributable to a 39.9% increase in tonnage sold combined with a 12.0% increase in average sales price per ton. The increase in sales volume and price per ton are directly related to strong winter weather conditions in our served market areas and our successful bidding results, as well as a favorable change in our customer mix between local and remote stockpiles over fiscal 2007.

Gross Income

Gross income for the fiscal year ended September 30, 2008 of $58.2 million increased by $28.9 million, or 98.6%, compared to $29.3 million for fiscal 2007. The increase in gross income was primarily attributable to the increase in tonnage sold in addition to the increase in average sales price per ton referred to above. Gross profit per ton for the fiscal year ended September 30, 2008 increased by 42.7% as compared to the same period in fiscal 2007, due to the fact that gross profit per ton for the fiscal year ended September 30, 2007 was depressed as a result of our inventory staging activities and temporary cessation of production during that period, and also as a result of our successful bidding results and favorable customer mix. Cost of goods sold for fiscal 2008 increased by $40.0 million, or 43.5%, as compared to the same period in fiscal 2007. The increase in cost of goods sold is primarily related to the increase in volume sold in addition to an increase in fuel expense as a result of higher prices of diesel as compared to the prior fiscal year. On a percentage of sales basis, cost of goods sold decreased by 6.5% due to the same factors that caused the increase in gross profit per ton as discussed above.

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Operating Expenses

Operating expenses of $8.6 million for fiscal 2008 increased $1.0 million, or 13.2%, as compared to $7.6 million for fiscal 2007. Operating expenses primarily consist of selling, general and administrative expenses, miscellaneous overhead and non-production related depreciation and amortization expenses. The increase in operating expenses was primarily due to a $1.0 million increase in stockpile expenses, which include repairs, permitting and environmental fees, and general stockpile operating expenses. In addition, there was a $0.1 million increase in accounting fees related to compliance with Section 404 of the Sarbanes Oxley Act of 2002. The above increases were partially offset by a $0.1 million decrease related to idle rail car expense.

Other Income (Expense)

Other expense of $11.5 million for fiscal 2008 increased by $0.2 million, or 1.8%, compared to $11.3 million in fiscal 2007. The increase is primarily due to a $2.6 million increase in interest expense related to the purchase of certain of our 9  ¹/2% Senior secured Notes due 2014 during fiscal 2008, which includes a $1.3 million increase related to the accelerated amortization of deferred financing costs and a $1.3 million increase in bond premium paid. The increase is also due to a $0.1 million decrease in interest income related to a lower average cash balance in the daily credit sweep. The $2.7 million increase in interest expense related to the bond purchase described above is partially offset by a net reduction of $1.8 million in annual interest expense related to our purchases of Senior Secured Notes during the current and prior fiscal years. The increase is also offset by a reduction in interest expense of $0.7 million related to a reduced balance outstanding under the Company’s credit facility and lower interest rates on that outstanding balance when compared to fiscal 2007.

Fiscal Year Ended September 30, 2007 Compared to Fiscal Year Ended September 30, 2006

Sales

Total sales for the fiscal year ended September 30, 2007 of $121.3 million increased $25.6 million, or 26.8%, as compared to $95.7 million during fiscal 2006. Sales primarily consist of bulk salt sales, as well as packaged salt sales. The increase was primarily attributable to a 17.9% increase in tonnage sold combined with a 7.6% increase in sales price per ton. The increase in tonnage sold was due to an increase in seasonal tonnage commitments as well as the late arriving but significantly colder and snowier winter weather conditions in fiscal 2007, as compared to fiscal 2006.

Gross Income

Gross income for fiscal 2007 of $29.3 million decreased by $2.5 million, or 8.0%, compared to $31.8 million for fiscal 2006. The decrease in gross income was primarily attributable to a 22.3% increase in average cost of sales per ton partially offset by a 7.6% increase in revenue per ton sold over fiscal 2006. Total cost of sales for the year increased by $28.2 million or 44.1% as compared to fiscal 2006, while on a percentage of sales basis, total cost of sales increased by 9.1%. Total cost of sales increased as a result of the combination of the 17.9% increase in volume and the 22.3% increase in cost of sales per ton. Gross profit per ton decreased by 22.0% as a result of the increase in cost of sales price per ton, partially offset by the increase in the average sales price per ton referred to above. The increase in cost of sales per ton is primarily due to the temporary cessation of salt production and inventory staging activities during the first and second quarters of fiscal 2007 and increased freight and handling due to higher fuel costs. Many of these factors were related to the milder than normal winter weather we experienced during those first two fiscal quarters, which resulted in less efficient absorption of our production, freight and handling costs during fiscal year 2007.

Operating Expenses

Operating expenses of $7.6 million for fiscal 2007 decreased $0.3 million, or 3.8%, as compared to $7.9 million for fiscal 2006. Operating expenses primarily consist of selling, general and administrative expenses, miscellaneous overhead and non-production related depreciation and amortization expenses. The decrease in operating expenses for fiscal 2007 is primarily attributable to a $0.2 million decrease in accounting expense related to the change in accounting principle we adopted during fiscal 2006, as discussed in Note 2 to our audited financial statements included elsewhere in this Form 10-K, as well as a $0.1 million decrease in other miscellaneous general and administrative expenses.

22

Other Income (Expense)

Other expense of $11.3 million for fiscal 2007 increased $1.5 million, or 15.3%, as compared to $9.8 million in fiscal 2006. This increase is related to the $2.1 million received in connection with the settlement of the litigation with the EPC Contractor in fiscal year 2006, as discussed in Note 8 to our financial statements included elsewhere in this Form 10-K, in addition to an increase of $0.1 million in interest expense related to our bank facility. The increase in other expense was partially offset by a $0.4 million decrease in bond interest expense related to our repurchase of certain of our 9 1/2% Senior Secured Notes due 2014 during the first and fourth quarters of fiscal 2007 and a $0.3 million increase in interest income related to a higher average cash balance in the daily credit sweep.

Liquidity and Capital Resources

Historical Cash Flow

We have used the cash generated from operations, borrowings under revolving lines of credit, and borrowings under construction and post-construction financing facilities to meet our working capital needs and to fund capital expenditures. Our ongoing cash flows have served to significantly strengthen our working capital position, while funding debt service, capital expenditures and permitted distributions to our members. Additional information regarding our cash flows for fiscal 2008 is provided below. For any short or long term cash requirements we will continue to access funding through our revolving line of credit.

Fiscal Year Ended September 30, 2008 Compared to Fiscal Year Ended September 30, 2007

Operating Activities—Net cash provided by operating activities was $46.6 million as compared to $22.1 million during fiscal 2007. The $24.5 million increase is primarily related to the vigorous winter weather and improved contract awards which increased salt sales during the fiscal year, leading to increased gross income, as discussed above.

For the fiscal year ended September 30, 2008, the $46.6 million in net cash provided by operating activities was primarily attributable to net income of $38.1 million and a decrease in inventory of $2.4 million related to increased sales occurring in fiscal year 2008. Cash provided by operating activities during fiscal 2008 was also the result of depreciation and amortization of $7.8 million; and increases in accrued expenses and accounts payable of $3.8 million, a result of late timing of invoicing. This positive cash flow activity was offset by an increase in accounts receivable of $5.6 million, a result of an increase in sales late in the fourth quarter of fiscal 2008, payments for which were not yet due.

Investing Activities—Net cash flow used in investing activities for fiscal 2008 and 2007 was $6.7 million and $3.2 million respectively. The $3.5 million increase is attributable to the increased purchase of property and equipment in fiscal 2008 as compared to prior year, including purchases of heavy equipment, stockpile and mine facility improvements and miscellaneous ordinary course purchases.

Financing Activities—Net cash used in financing activities during fiscal 2008 was $40.8 million as compared to $18.8 million used during fiscal 2007. The $22.0 million increase is primarily attributable to a $27.5 million increase in cash used to purchase certain of our 9 ¹/2 % Senior Secured Notes due 2014 as well as a $2.4 million increase in distributions to Holdings, our sole member. These increases were partially offset by an increase of $8.1 million of net activity under the Company’s revolving line of credit during fiscal 2008 as compared to fiscal 2007.

Fiscal Year Ended September 30, 2007 Compared to Fiscal Year Ended September 30, 2006

Operating Activities – Net cash provided by operating activities was $22.1 million for fiscal 2007 compared to $8.4 million during fiscal 2006. The $13.7 million increase is primarily related to the late but vigorous winter weather and associated increased sales occurring in fiscal year 2007 which resulted in an $18.4 million positive cash flow change related to a decrease in inventory from increased sales across our market region when compared with fiscal 2006 and an increase in sales late in the season, offset by a $4.4 million decrease in cash flow related to an increase in accounts receivable due to the increased sales late in the fourth quarter of fiscal 2007.

23

For the fiscal year ended September 30, 2007, the $22.1 million in net cash from operating activities was primarily attributable to net income of $10.4 million and a decrease in inventory of $7.5 million related to the fiscal year 2006 build up of inventory and the subsequent late arriving but vigorous winter weather and increased sales occurring in fiscal year 2007. Cash provided by operating activities during fiscal 2007 was also the result of normal depreciation and amortization of $5.8 million; a decrease in prepaid expenses and other assets of $0.4 million, a result of timing of the amortization of our prepaid expenses; and increases in accrued expenses and accounts payable of $0.7 million and $0.8 million, respectively, a result of late timing of invoicing. This positive cash flow activity was offset by an increase in accounts receivable of $3.6 million, a result of an increase in sales late in the fourth quarter of fiscal 2007.

Investing Activities – Net cash flow used in investing activities for fiscal 2007 and 2006 was $3.2 million and $4.1 million respectively. The $0.9 million decrease is attributable to a decrease in the purchase of property and equipment in fiscal 2007 as compared to the prior fiscal year.

Financing Activities – Net cash used in financing activities during fiscal 2007 was $18.8 million as compared to $4.1 million used during fiscal 2006. During the fiscal year ended September 30, 2007, repayments, net of borrowing, on our revolving credit facility totaled $5.1 million, and we used an additional $6.0 million to repurchase certain of our 9 1/2% Senior Secured Notes due 2014 and made principal payments of $2.0 million under our term loan facility. We also paid a distribution of $6.0 million to our then-current members during fiscal 2007, out of fiscal year end 2006 earnings. The $14.7 million increase in cash used in financing activities was used to decrease our borrowing under our senior credit facility, repurchase certain of our 9 1/2% Senior Secured Notes due 2014 and pay a higher distribution to our then-current members.

Contractual Cash Obligations

The following table summarizes our contractual cash obligations as of September 30, 2008, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.

	Payment due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(dollars in thousands)
Long-Term Debt Obligations	$	77,206	$	2,168	$	4,675	$	5,143	$	65,220
Operating Lease Obligations		28,629		4,924		8,354		6,573		8,778
Interest Payable on Long-Term Debt		35,169		6,011		11,914		11,712		5,532
Line of Credit		19,000		19,000		—		—		—
Total	$	160,004	$	32,103	$	24,943	$	23,428	$	79,530

Seasonality

We experience a substantial amount of seasonality in salt sales. The result of this seasonality is that sales and operating income are generally higher in the first and fourth quarters and lower during the second and third quarters of each calendar year. Sales of highway and consumer deicing salt products are seasonal as they vary based on the severity of the winter conditions in areas where the product is used. Following industry practice, we and our customers stockpile significant quantities of deicing salt in the second, third and fourth calendar quarters.

24

EBITDA

EBITDA represents net income before interest expense, depreciation, depletion, and amortization (the Company does not incur income taxes). EBITDA does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculations of EBITDA may not be comparable to those reported by other companies. Investors should carefully consider the specific items included in our computation of EBITDA. EBITDA is included herein because it is a basis upon which we assess our liquidity position and performance and because certain covenants in our borrowing arrangements are tied to similar measures. EBITDA is also included herein because we believe that it presents useful information to investors regarding a company’s ability to service and/or incur indebtedness. This belief is based on negotiations with lenders who have indicated that the amount of indebtedness we have been permitted to incur is based, in part, on measures similar to our EBITDA. EBITDA does not take into account working capital requirements, capital expenditures, debt service requirements and other commitments, and accordingly, EBITDA is not necessarily indicative of amounts that may be available for discretionary use.

The following table reconciles EBITDA to net income for the periods indicated (dollars in thousands):

American Rock Salt Company LLC

EBITDA Reconciliation to Net Income

	Twelve Months Ended September 30,
	2008			2007			2006
Net Income to Members	$	38,105,115		$	10,408,928		$	14,108,161
Interest Expense		11,842,796			11,719,402			12,006,524
Depletion, Depreciation and Amortization		7,785,742			5,880,819			5,647,676
EBITDA	$	57,733,653		$	28,009,149		$	31,762,361
Add/Subtract
Interest Expense		(11,842,796	)		(11,719,402	)		(12,006,524	)
Changes in working capital and other assets and liabilities		659,545			5,848,175			(11,371,608	)
Net cash provided by operating activities	$	46,550,402		$	22,137,922		$	8,384,229
Net cash (used in) investing activities	$	(6,713,646	)	$	(3,202,272	)	$	(4,068,209	)
Net cash (used in) financing activities	$	(40,810,114	)	$	(18,778,120	)	$	(4,092,372	)

25

Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS No. 162 will be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with General Accepted Accounting Principles. We have not yet assessed the impact of adopting SFAS No. 162 on our financial statements.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which replaces SFAS No. 141. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for us beginning October 1, 2009 and will apply prospectively to business combinations completed on or after that date.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for us beginning October 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. We do not believe SFAS No. 160 will have a material impact on our financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 is effective for us beginning October 1, 2008; FSP 157-2 delays the effective date for certain items to October 1, 2009. We do not believe SFAS No. 157 will have a material impact on our financial statements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

The Company’s business is subject to a variety of market risks, including but not limited to, interest rate risks and commodity pricing risks. Although the Company’s senior secured notes have a fixed interest rate, its bank facility is subject to variable interest rates keyed to LIBOR. As of September 30, 2008, we had $38.6 million outstanding under our bank facility and $57.5 million outstanding under our senior secured notes. Borrowings under our bank facility are subject to a variable rate. As of September 30, 2008 the variable rate was 3.0%. Our senior secured notes bear interest at a rate of 9.5% per annum. Our bank facility, with an available aggregate amount of up to $49.6 million, currently consists of (a) a $19.6 million term loan facility, and (b) a $30.0 million working capital facility. The working capital facility permits us to borrow up to $30.0 million in revolving loans with a sub-limit available for the issuance of letters of credit. As of September 30, 2008, there was $19.0 million drawn and $2.0 million of standby letters of credit outstanding under the working capital facility.

26

Our earnings and cash flows are affected by changes in interest rates applicable to our bank facility. Assuming our current debt structure, a $19.6 million term loan facility, and an average level of borrowings under our revolving credit facility at variable rates, and assuming a one hundred basis point increase in the average interest rate under these borrowings, we estimate that our interest expense for the fiscal year ended September 30, 2008 would have increased by approximately $0.2 million.

Item 8

Financial Statements and Supplementary Data

INDEX TO AUDITED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	28
Balance Sheets as of September 30, 2008 and 2007	29
Statements of Operations for the three years ended September 30, 2008	30
Statements of Changes in Members’ Equity (Deficit) for the three years ended September 30, 2008	31
Statements of Cash Flows for the three years ended September 30, 2008	32
Notes to Financial Statements	33

27

Report of Independent Registered Public Accounting Firm

To the Board of Managers and Executive Committee

of American Rock Salt Company, LLC

In our opinion, the accompanying balance sheets and the related statements of operations, changes in members’ equity (deficit) and of cash flows present fairly, in all material respects, the financial position of American Rock Salt Company LLC at September 30, 2008 and September 30, 2007 and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2008 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Rochester, NY

December 5, 2008

28

American Rock Salt Company LLC

Balance Sheets

September 30, 2008 and 2007

	2008		2007
Assets
Current assets
Cash and equivalents	$	1,641,686	$	2,615,044
Accounts receivable, net of reserve for doubtful accounts of approximately $58,000 and $54,000 in 2008 and 2007 respectively		15,515,512		9,957,325
Inventory, net		32,992,606		35,388,490
Prepaid expenses		765,901		607,982
Total current assets		50,915,705		48,568,841
Property and equipment, net		82,891,028		81,803,234
Other assets
Salt deposits and mineral rights, net		2,480,224		2,539,534
Mine acquisition costs, net		380,447		376,256
Financing costs, net of accumulated amortization of approximately $5,412,000 and $3,188,000 in 2008 and 2007 respectively		2,301,316		4,525,073
Total other assets		5,161,987		7,440,863
	$	138,968,720	$	137,812,938
Liabilities and Member’s Equity
Current liabilities
Revolving line of credit	$	19,000,000	$	16,000,000
Current portion of long-term debt		2,167,915		2,057,604
Accounts payable		5,111,291		3,568,432
Accrued expenses		6,217,996		3,918,824
Related party payables		571,072		504,832
Total current liabilities		33,068,274		26,049,692
Long-term debt, net of current portion		75,037,789		110,655,704
Total liabilities		108,106,063		136,705,396
Member’s Equity
Class A Units, 6,250 units issued and outstanding at September 30, 2008 and 2007		10,150,783		364,326
Class F Units, 12,750 units issued and outstanding at September 30, 2008 and 2007		20,711,874		743,216
		30,862,657		1,107,542
	$	138,968,720	$	137,812,938

The accompanying notes are an integral part of these financial statements.

29

American Rock Salt Company LLC

Statements of Operations

Years Ended September 30, 2008, 2007 and 2006

	2008			2007			2006
Sales
Bulk	$	184,672,825		$	118,921,281		$	93,755,596
Packaged		5,515,468			2,366,250			1,897,617
Total sales		190,188,293			121,287,531			95,653,213
Cost of sales		132,013,382			92,006,449			63,833,668
Gross income		58,174,911			29,281,082			31,819,545
Operating expenses		8,614,709			7,620,832			7,940,016
Income from operations		49,560,202			21,660,250			23,879,529
Other income (expense)
Interest expense		(11,842,796	)		(11,719,402	)		(12,006,524	)
Interest income		331,873			407,247			123,836
Other financing charges		—			(21,737	)		(70,422	)
Other, net		55,836			82,570			2,181,742
Total other expense		(11,455,087	)		(11,251,322	)		(9,771,368	)
Net income	$	38,105,115		$	10,408,928		$	14,108,161

The accompanying notes are an integral part of these financial statements.

30

American Rock Salt Company LLC

Statements of Changes in Members’ Equity (Deficit)

Years Ended September 30, 2008, 2007 and 2006

	Class A Units			Class F Units			Total
Members’ (deficit) - September 30, 2006	$	(1,085,988	)	$	(2,215,398	)	$	(3,301,386	)
Net income		3,424,017			6,984,911			10,408,928
Distribution to members		(1,973,703	)		(4,026,297	)		(6,000,000	)
Member’s equity - September 30, 2007	$	364,326		$	743,216		$	1,107,542
Net income		12,532,772			25,572,343			38,105,115
Distribution to members		(2,746,315	)		(5,603,685	)		(8,350,000	)
Member’s equity - September 30, 2008	$	10,150,783		$	20,711,874		$	30,862,657

The accompanying notes are an integral part of these financial statements.

31

American Rock Salt Company LLC

Statements of Cash flows

Years Ended September 30, 2008, 2007 and 2006

	2008			2007			2006
Cash flows from operating activities
Net income	$	38,105,115		$	10,408,928		$	14,108,161
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		5,474,786			4,761,845			4,648,473
Depletion		59,310			38,528			45,692
Amortization of mine acquisition and financing costs		2,251,646			1,080,446			953,511
Loss on sale or disposal of equipment		137,736			—			284,426
Changes in
Accounts receivable, net		(5,558,187	)		(3,618,947	)		869,402
Inventory		2,395,884			7,544,165			(10,892,970	)
Prepaid expenses		(157,919	)		431,096			(351,755	)
Accounts payable		1,542,859			761,931			(848,909	)
Accrued expenses		2,299,172			729,930			(431,802	)
Net cash provided by operating activities		46,550,402			22,137,922			8,384,229
Cash flows from investing activities
Purchase of property and equipment		(6,713,646	)		(3,202,272	)		(4,068,209	)
Net cash (used in) investing activities		(6,713,646	)		(3,202,272	)		(4,068,209	)
Cash flows from financing activities
Repayments on long-term debt		(2,057,604	)		(1,959,015	)		(3,699,344	)
Payment of financing costs		(18,750	)		—			—
Borrowings (repayments) on revolving line of credit		3,000,000			(5,050,000	)		7,350,000
Distribution to Members		(8,350,000	)		(6,000,000	)		(4,611,365	)
Extinguishment of Senior Secured Notes		(33,450,000	)		(6,000,000	)		(3,045,000	)
Borrowings (repayments) of related party payables		66,240			230,895			(86,663	)
Net cash (used in) financing activities		(40,810,114	)		(18,778,120	)		(4,092,372	)
Net increase (decrease) in cash and equivalents		(973,358	)		157,530			223,648
Cash and equivalents - beginning of year		2,615,044			2,457,514			2,233,866
Cash and equivalents - end of year	$	1,641,686		$	2,615,044		$	2,457,514

The accompanying notes are an integral part of these financial statements.

32

American Rock Salt Company LLC

Notes to Financial Statements

For the years ended September 30, 2008, 2007 and 2006

1. The Company

American Rock Salt Company LLC (the “Company”) primarily sells bulk rock salt for use in deicing roads. The Company bids on supply contracts for salt produced at the Hampton Corners Mine to be provided to State Departments of Transportation and local municipalities as well as industrial consumers throughout the Northeastern United States. The Company was formed on January 30, 1997, construction of the Hampton Corners Mine began in November 1998, and it was substantially completed in December 2001. The Company steadily increased sales as production and distribution capacity came online during a ramp-up phase in fiscal 2001 and 2002. The Company attained full operating capacity during fiscal 2003.

On June 12, 2007, the Company entered into an Agreement of Merger (the “Merger Agreement”) dated as of June 12, 2007, but effective as of June 13, 2007, with ARS Mergeco LLC, a New York limited liability company (“Mergeco”) and a wholly-owned subsidiary of American Rock Salt Holdings LLC, a New York limited liability company (“Holdings”). Upon consummation of the merger and pursuant to the terms of the Merger Agreement, each of the membership interests in the Company was converted into a corresponding membership interest in Holdings, Mergeco was merged with and into the Company, and the Company became a wholly-owned subsidiary of Holdings. Holdings is a holding company and has no assets or operations other than its ownership of all of the equity interests of the Company.

In connection with the holding company reorganization described above, Holdings entered into a seven and one-half year $100.0 million aggregate principal amount senior unsecured term loan facility on July 3, 2007 with Morgan Stanley Senior Funding, Inc. as the initial lender and administrative agent. In connection with that loan, the Company became a Restricted Subsidiary, as defined, of Holdings. Holdings is required to cause the Company to pay a cash dividend to Holdings annually, commencing April 2008, which will allow the timing of the dividend to be consistent with past practices of the Company. The amount of the dividend must be no less than 75.0% of its “available free cash flow”, wherein “available free cash flow” includes a number of financial components in its determination but cannot exceed the amount the Company is permitted to pay as a cash distribution under its existing credit facilities or the indenture governing its senior secured notes. As a Restricted Subsidiary, the Company is subject to financial and other restrictions that are comparable to existing restrictions under the Company’s senior secured notes.

2. Summary of Significant Accounting Policies

Basis of Accounting

The financial statements are prepared on the accrual basis of accounting, in accordance with US GAAP.

Cash and Equivalents

The Company considers all highly liquid debt instruments with a maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant risk on cash and equivalents.

Inventory

Inventory is stated at the lower of cost or market, on an average cost basis. The Company records reserves for unusable raw materials and supplies inventory. The amount of unusable raw materials is immaterial during the ordinary course of business.

33

Fixed Assets and Depreciation

The Company amortizes its mine development costs using the units-of-production method. Mine development costs, primarily underground assets used in the production of salt, totaled $69.8 million as of September 30, 2008 and are included on the Company’s balance sheet in property and equipment, net. Under the units-of-production method, the assets are amortized based on the tons of salt extracted compared to the total tons of proven salt reserves. This accounting method reflects the usage patterns of these assets, links their estimated useful lives to the life of the Company’s proven salt reserves, and is the industry predominant accounting practice for similar assets. Mine development costs consist of materials, labor, engineering, and consulting costs incurred to construct the mine. Also, costs related to the construction of the production and service shafts are included in mine development costs.

Property and Equipment

Property and equipment is stated at cost and is depreciated over its estimated useful life using the straight-line method. Major renewals and betterments are capitalized. Maintenance, repairs, and minor renewals are expensed as incurred. When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts.

Depreciable lives are as follows:

Buildings	20 - 40 years
Mine development costs	176 Million Tons
Land improvements	15 years
Machinery and Equipment	3-10 years
Furniture and fixtures	5 - 7 years
Vehicles	3 - 5 years
Computers and peripheral equipment	3 - 5 years

Salt Deposits and Mineral Rights

Salt deposits and mineral rights are underground reserves on which the Company has extraction rights. Salt deposits and mineral rights are amortized as the minerals are extracted, based on units-of-production and engineering estimates of total reserves. The impact of revisions to reserve estimates is recognized on a prospective basis. Salt deposits and mineral rights are presented net of accumulated depletion of approximately $0.4 million, $0.3 million, and $0.2 million at September 30, 2008, 2007 and 2006, respectively.

Mine Reclamation Costs

In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS)” No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets. The objective of SFAS No. 143 is to establish an accounting standard for the recognition and measurement of an obligation related to the retirement of certain long-lived assets. The retirement obligation must be one that results from the acquisition, construction, or normal operations of a long-lived asset. SFAS No. 143 requires the legal obligation associated with the retirement of a tangible long-lived asset to be recognized at fair value as a liability when incurred and the cost to be capitalized by increasing the carrying amount of the related long-lived asset.

34

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

Financing Costs

Financing costs include legal, professional and other related fees incurred in connection with obtaining financing, and are being amortized over the terms of the related obligations.

Revenue Recognition

The Company recognizes revenue upon transfer of title or in accordance with contracted terms which are primarily FOB destination. The Company sells mineral products, primarily salt and mixed salt products. Sales include customer billings excluding sales tax charged on the product and include shipping and handling costs. The shipping and handling costs are expensed when the product is sold.

Income Taxes

No provision is made for income taxes in the accompanying financial statements as the Company is wholly-owned by another limited liability company and is therefore treated as a disregarded entity for tax purposes. The taxable income and loss and any available credits of the Company and Holdings are includable on the individual tax returns of the members of Holdings.

Impairment of Long-Lived Assets

In the event that facts and circumstances indicate that the carrying amounts of long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down is required. If this review indicates that the assets will not be recoverable, the carrying value of the Company’s assets would be reduced to their estimated fair value.

Members’ Equity

The Company’s authorized, issued and outstanding membership interests consist of 6,250 Class A Units and 12,750 Class F Units. Holdings is currently the sole member of the Company and holds all issued and outstanding Class A and Class F units, as a consequence of which the Company is treated as a “disregarded entity” for tax purposes and all profits and losses of the Company are allocated to Holdings.

35

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

Fair Value Disclosures of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents approximate their fair values at September 30, 2008 and 2007.

The estimated fair value of the Company’s long-term debt is approximately $77,205,704 as of September 30, 2008. The estimated fair value was based on market yields for similar instruments.

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Supplemental Disclosure of Cash Flow Activities

Supplemental information regarding cash flow activities for the year ended September 30:

	2008		2007
Cash paid for interest	$	11,095,439	$	11,616,188

3. Inventory

Inventory consists of the following at September 30:

	2008			2007
Supplies	$	1,945,201		$	1,080,484
Finished Goods, Salt		31,096,035			34,346,451
		33,041,236			35,426,935
Less:
Reserve		(48,630	)		(38,445	)
	$	32,992,606		$	35,388,490

36

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

4. Property and Equipment

Property and equipment consisted of the following at September 30:

	2008			2007
Land	$	683,882		$	683,882
Buildings		3,318,954			3,318,954
Land improvements		3,998,910			3,406,348
Machinery & Equipment		31,032,742			27,685,335
Furniture and fixtures		52,056			49,774
Vehicles		492,930			370,736
Computers and peripheral equipment		1,040,819			861,375
Mine development costs		69,812,948			69,812,948
Assets held for sale		371,052			—
		110,804,293			106,189,352
Less: Accumulated Depreciation		(30,841,458	)		(26,572,940	)
		79,962,835			79,616,412
Construction in progress		2,928,193			2,186,822
	$	82,891,028		$	81,803,234

5. Leases

The Company has entered into several agreements for the storage and handling of its salt at several stockpiles; several of these agreements include land and building rent. In addition, the Company has various lease agreements for railcars. These stockpile and railcar lease obligations extend through 2016. Most leases contain renewal and purchase options. No leases contain restrictions on the Company’s activities concerning capital distributions, additional debt, or further leasing. Rental expenses for all operating leases amounted to approximately $5,310,000, $5,221,000, and $4,817,000 during fiscal 2008, 2007 and 2006, respectively.

Future minimum rental payments under operating leases with non-cancelable terms in excess of one year are as follows.

	Property		Equipment		Total
2009	$	198,589	$	4,725,483	$	4,924,072
2010		99,630		4,707,347		4,806,977
2011		62,018		3,485,401		3,547,419
2012		32,709		3,274,531		3,307,240
2013		14,400		3,251,642		3,266,042
Thereafter		253,200		8,524,627		8,777,827
	$	660,546	$	27,969,031	$	28,629,577

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American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

6. Long-Term Debt

Long-term debt consisted of the following at September 30:

	2008			2007
Senior Secured Notes
Senior Secured Notes at September 30, 2008 of $57,505,000, currently requiring semi annual interest payments through the final maturity date of March 15, 2014 at an annual rate of 9.50%. Some or all of the notes may be redeemed at any time prior to March 15, 2009 at a make-whole redemption price. After March 15, 2009, the notes are redeemable at a redemption price of 104.75%, to be adjusted annually to 100% by March 15, 2012.	$	57,505,000		$	90,955,000
Senior Term Loan
Senior Term Loan at September 30, 2008, currently requiring quarterly principal and interest payments through the final maturity date of March 16, 2012 at an annual rate equal to the LIBOR rate plus up to 1.375%, based on a pricing grid leverage ratio or a base rate (the higher of the Federal Funds Rate plus 0.5% or the prime rate plus the applicable margin for base rate loans), at the Company’s option. The interest rate is 3.0% as of September 30, 2008.		19,628,558			21,659,261
Promissory note payable to the Empire State Development Corporation
Due April 1, 2011, interest at 4.0% per annum payable in 120 equal installments of principal and interest		72,146			99,047
		77,205,704			112,713,308
Less: Current maturities of long-term debt		(2,167,915	)		(2,057,604	)
	$	75,037,789		$	110,655,704

On March 7, 2006, the Company amended its bank facility primarily in order to reduce the pricing grid leverage ratio and to eliminate certain financial covenants, as previously reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2006. At September 30, 2008, the Company’s bank facility in the aggregate principal amount of $49,628,558 consisted of: (a) a $19,628,558 term loan, and (b) a $30,000,000 working capital facility. Both the term loan and the working capital facility bear interest at an annual rate equal to the LIBOR rate plus up to 1.375%, based on a pricing grid leverage ratio or a base rate (the higher of the Federal Funds Rate plus 0.5% or the prime rate plus the applicable margin for base rate loans), at the Company’s option. The term loan has a maturity of eight years commencing March 7, 2006. The working capital facility has an initial term of five years commencing March 7, 2006.

At September 30, 2008, the term loan had a balance of approximately $19,628,558 bearing interest at a rate of 3.0%.

38

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

The working capital facility permits the Company to borrow up to $30,000,000 in revolving loans with a $7,000,000 sub-limit available for the issuance of letters of credit. Availability of the working capital facility is subject to a borrowing base formula. As of September 30, 2008, the Company had $19,000,000 drawn and $2,000,000 of standby letters of credit outstanding under the working capital facility, with approximately $9,000,000 of remaining availability thereunder. Amounts under the working credit facility outstanding at September 30, 2008 bore an interest rate of 3.0%.

The aggregate maturities of long-term debt for each of the five fiscal years subsequent to September 30, 2008 and thereafter are as follows:

2009	$	2,167,915
2010		2,284,145
2011		2,391,297
2012		2,504,087
2013		2,638,761
Thereafter		65,219,499
	$	77,205,704

7. Related Party Transactions

Legal Services

Certain legal costs were incurred by the Company and paid to an organization affiliated with several of our affiliates of approximately $296,000, $327,000, and $443,000 during fiscal 2008, 2007 and 2006, respectively. These amounts are included in operating expenses.

Goods and Services

Certain affiliates received management and services fees of approximately $342,000, $294,000, and $294,000 during fiscal 2008, 2007, and 2006, respectively. These amounts are included in operating expenses.

Additionally, certain affiliates received payments for goods and services aggregating approximately $4,692,000, $2,086,000, and $1,646,000 during fiscal 2008, 2007, and 2006, respectively. In fiscal 2008, approximately $4,136,000 of the total $4,692,000 is included in cost of sales with the remaining balance in operating expenses. In fiscal 2007, approximately $1,686,000 of the total $2,086,000 is included in cost of sales with the remaining balance in operating expenses. In fiscal 2006, approximately $1,360,000 of the total $1,646,000 is included in cost of sales with the remaining balance in operating expenses.

39

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

Financing Costs

Certain costs were incurred from an affiliate for financial advisory fees of approximately $113,000, $35,000, and $197,500 for fiscal 2008, 2007 and 2006, respectively. These amounts are included in operating expenses.

Non-operating Mineral Interests (“NOMIs”)

We pay a royalty (“NOMI”) related to the acquisition of mineral rights equal to 2.5% of the gross income from the mine as reported for purposes of computing percentage depletion for federal income tax purposes. Certain affiliates receive a portion of such royalty payments. NOMI expense to such affiliates was approximately $4,014,000, $2,659,000, and $2,346,000 during fiscal 2008, 2007, and 2006, respectively. These amounts are included in cost of sales.

8. Commitments and Contingencies

Engineering and Procurement Contract/Litigation

The Company was involved in litigation with Frontier-Kemper Constructors, Inc., Flatiron Constructors, Inc. (formerly known as Flatiron Constructors, LLC, and also known as Flatiron Structures LLC), Jointly and Severally with Frontier-Kemper Constructors, Inc. and d/b/a Frontier-Kemper/Flatiron Joint Venture (together, the “EPC Contractor” or “FKF”), whom the Company engaged to design and construct its mine facility, as well as the EPC Contractor’s bonding companies, Travelers Casualty and Surety Company of America and Liberty Mutual Insurance Company (the “Bonding Companies”), and Willis Corroon Corporation of Missouri, Willis Limited, Willis Faber and Dumas (collectively “Willis”) and Lloyd’s U/W at London, Sponsoring Syndicates (“Lloyd’s), the insurance brokers and underwriters, respectively, of certain liquidated damages insurance purchased to insure the timely completion of the mine facility. On June 30, 2005, the Company, the EPC Contractor and the Bonding Companies reached a settlement agreement with respect to the litigation, pursuant to which the parties agreed to dismiss all claims and counterclaims, subject to limited exceptions, with no findings or admissions of liability by any party. All of the settled claims were dismissed with prejudice. In July 2005, the Company paid a total of $10.0 million to the EPC Contractor, including $4.2 million of mine construction retention previously withheld and owed to the EPC Contractor and the last invoice dated December 2001 totaling $1.0 million, both of which had been previously recorded as accrued liabilities on the Company’s balance sheet. The remaining $4.8 million of the settlement payment was for additional mine construction expenditures and was also recorded on June 30, 2005 as capitalized mine development costs. The Company agreed to share with the EPC Contractor one-half of any payment received by the Company in connection with its claims against Willis Corroon Corporation of Missouri, Willis Limited, Willis Faber and Dumas and Lloyd’s U/W at London, Sponsoring Syndicates, third party defendants in the action (the “Willis Parties”). Other terms of the settlement are confidential by agreement of the parties. The settlement also freed the Company from any further obligation under a $32.1 million bond the Company posted as security to discharge a mechanic’s lien the EPC Contractor had filed against the Hampton Corners Salt Mine arising out of the dispute between the parties. The settlement did not include the settling parties’ claims against Willis and Lloyd’s, which claims remained pending.

40

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

On October 18, 2005, the court in which the remaining litigation against Willis and Lloyd’s was pending granted summary judgment to the Company on its claims against Willis for breach of its obligations to the Company as insurance brokers in connection with the above-mentioned liquidated damages insurance, and the Company and the EPC Contractor subsequently agreed to a settlement of their claims against Willis and Lloyd’s. The claims against the Willis Parties were settled on February 27, 2006 for $4.2 million, one-half of which was retained by the Company and one-half of which was paid over to the EPC Contractor, both net of litigation expenses, pursuant to the terms of the original settlement. The Company’s amount ($2.1 million) had been included as Other Income in the Statement of Operations for the fiscal year ended September 30, 2006.

Union Agreement

On October 31, 2008, the Company entered into a four-year labor agreement with the United Steel Workers International Union, AFL-CIO-CLC, formerly the Paper, Allied-Industrial, Chemical & Energy Workers International Union, Local 1-0763. The labor agreement covers all hourly production and maintenance workers employed by the Company. The labor agreement expires on October 31, 2012.

Livingston County IDA Assistance

On September 1, 1998, Livingston County Industrial Development Agency (“IDA”) approved the Payment-in-Lieu-of-Tax (“PILOT”) Agreement between the Company and the IDA. Under the terms of the Agreement, the Company receives abatements on a percentage of property taxes through 2031, exemption from mortgage taxes related to the financing of the mine and exemption from sales and use taxes otherwise payable on all purchases made to construct the mine. Under the agreement, the Company is required to maintain a staffing level of 124 full time or equivalent employees (“Full Time Employees”). If the Full Time Employees fall below 75 percent of 165 (124), the PILOT payments increase based on a pre-defined formula. The Company had 266 Full Time Employees as of September 30, 2008.

41

American Rock Salt Company LLC

Notes to Financial Statements (Continued)

For the years ended September 30, 2008, 2007 and 2006

Sales Contracts

The Company has various salt sales contracts that include performance provisions governing delivery and product quality. These sales contracts either require the Company to maintain performance bonds for stipulated amounts or contain contractual penalty provisions in the event of nonperformance. The amount of such performance penalties, if any, would be dependent upon failure to perform and factors such as weather patterns and resultant product demand in the Company’s geographic markets and as a result cannot be estimated. For the three fiscal years ended September 30, 2008, the Company has not incurred any penalties related to these sales contracts. At September 30, 2008, the Company had approximately $14,000,000 of outstanding performance bonds.

Rail Carrier Agreements

The Company has agreements with rail carriers for the transportation of its rock salt. These agreements have minimum usage requirements that obligate the Company to pay, in the aggregate, a minimum of $1,900,000 per annum. In fiscal 2008, 2007 and 2006, the Company met its minimum usage requirements. The current agreements expire in 2011. Based on current projections, the Company expects to meet the minimum usage requirements for the remainder of the agreements.

9. Employee Benefit Plan

The Company administers a 401(k) defined contribution plan covering substantially all employees. Total expense related to the employer matching contribution was approximately $343,000, $275,000, and $216,000 in fiscal 2008, 2007, and 2006, respectively.

10. Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS No. 162 will be effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with General Accepted Accounting Principles. The Company has not yet assessed the impact of adopting SFAS No. 162 on its financial statements.

In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which replaces SFAS No. 141. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141R is effective for the Company beginning October 1, 2009 and will apply prospectively to business combinations completed on or after that date.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51, which changes the accounting and reporting for minority interests. Minority interests will be recharacterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for the

42

Company beginning October 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. The Company does not believe SFAS No. 160 will have a material impact on its financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. In February 2008, the FASB issued FASB Staff Position (“FSP”) 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 is effective for the Company beginning October 1, 2008; FSP 157-2 delays the effective date for certain items to October 1, 2009. The Company does not believe SFAS No. 157 will have a material impact on its financial statements.

11. Subsequent Events

On December 15, 2008 the Company purchased $1,000,000 of its 9 ¹/2% Senior Secured Notes due 2014 for an aggregate purchase price of $963,750. This amount comprises principal, premium and accrued interest for the Notes purchased. The Company intends to retire all such Notes.

Item 9

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A (T)

Controls and Procedures

Evaluation of disclosure controls and procedures

The Company’s management, with the participation of its Principal Executive Officers and Principal Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the Company’s Principal Executive and Principal Financial Officers concluded that the Company’s disclosure controls and procedures as of September 30, 2008 (the end of the period covered by this Report) have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management Report on Internal Control Over Financial Reporting

The Company’s management, with the participation of its Principal Executive Officers and Principal Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States (“GAAP, US”) and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the Company;

43

• provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, US and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes and conditions or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even internal controls determined to be effective can provide only reasonable assurance that information required to be disclosed in and reports filed under the Exchange Act is recorded, processed, summarized and represented within the time periods required.

Management of the Company has assessed the effectiveness of its internal control over financial reporting at September 30, 2008. To make this assessment, the Company used the criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management of the Company believes that as of September 30, 2008, the Company’s internal control over financial reporting was effective.

This Form 10-K does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this Form 10-K.

Changes in internal control over financial reporting

There were no changes to the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2008 that materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Item 9B

Other Information

None.

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Part III

Item 10

Directors, Executive Officers and Corporate Governance

The following table sets forth information with respect to our Managers, executive officers, and key employees of the Company as of December 5, 2008:

Name	Age	Position
Joseph G. Bucci	65	Vice Chairman, Operations; Vice President, Real Estate; Executive Committee Member; and Class F Manager
Gunther K. Buerman	65	Chairman; Executive Committee Member; and Class F Manager
Neil L. Cohen	47	Vice Chairman, Finance and Marketing; Executive Committee Member; and Class F Manager
Mark Assini	49	Bidding Manager
Ann M. Blake	37	Chief Financial Officer and Controller
Gregory J. Norris	45	Plant Manager
Gary L. Perrin	52	Human Resources Manager
Charles T. Collins	43	Class A Manager
C. Wesley Gregory III	52	Class A Manager
Gregory O’Connell	66	Class A Manager
John M. Odenbach, Jr.	58	Class A Manager
E. Philip Saunders	71	Class A Manager
Thomas Terry, Jr.	75	Class A Manager

Board of Managers and Executive Committee

We have a nine-member Board of Managers and three-member Executive Committee. The members of the Executive Committee, taken together, own a majority of the membership interests in Holdings. The Executive Committee generally has the authority to exercise all the powers of the full Board of Managers, other than the power to take certain actions enumerated in the Company’s operating agreement. The members of the Executive Committee collectively fulfill the duties of chief executive officer. The Board of Managers consists of three Class F Managers, who serve ex officio by virtue of their election as Class F Managers of Holdings, and up to eight Class A Managers, who serve ex officio by virtue of their election as Class A Managers of Holdings. Each Class F Manager has three votes on all matters submitted to a vote of the Board of Managers, and each Class A Manager has one vote on all matters submitted to a vote of the Board of Managers. Managers hold office until their successors are duly elected and qualified as Managers of Holdings or their earlier removal or resignation.

45

A brief biography of each member of the Board of Managers is set forth below:

Executive Committee/Class F Managers

Joseph G. Bucci became a Manager of the Company and Vice President, Real Estate and Mineral Rights in October 1997. In 2002, he became Vice Chairman, Operations. From June 1, 2003 to September 2005 Mr. Bucci also served as Plant Manager responsible for all production and the day to day operation of our mine. Mr. Bucci, founder and owner of Bucci Real Estate, has been involved in real estate since 1968. He has been responsible for the purchases of mineral rights on behalf of the former International Salt Company, Akzo Nobel Salt and the Company since 1974. Mr. Bucci serves on the board of directors of The Bank of Castile and the Livingston County Chamber of Commerce. He holds a B.S. in history and education from SUNY Geneseo as well as New York State certification as a Licensed Real Estate Broker.

Gunther K. Buerman became a Manager of the Company in January 1997 and Chairman of the Board of Managers of the Company in 2002. He is a member of Harris Beach PLLC where he has been an associate or equity member since 1968 in the area of corporate and commercial law. He serves on the board of directors of a number of private entities and non-profit organizations. Mr. Buerman holds a J.D. from Syracuse University College of Law and a B.A. from St. Lawrence University.

Neil L. Cohen became a Manager of the Company in January 1997 and Vice Chairman, Finance and Marketing in 2002. He is the Chairman of Emerald Development Managers, LP, the manager of Emerald Infrastructure Development Fund L.P., which commenced operations in September 2008. He also serves as President and managing member of Cohen & Company, LLC, a private equity firm he founded in 1994. Mr. Cohen is currently a board member of a number of private entities and non-profit organizations. Mr. Cohen holds an M.S. in Management with concentrations in corporate strategy, finance, and management of technological innovation from MIT and a B.E.S. in Mathematical Sciences from The Johns Hopkins University.

Messrs. Bucci, Buerman, and Cohen are parties to a voting agreement which limits the ability of any such person to vote on any changes to the Company’s operating agreement which would have the effect of removing any party to the voting agreement from the Executive Committee or amending the rules for voting for Class F Managers.

Class A Managers

Charles T. Collins became a Manager of the Company in November 1998. Mr. Collins served as the Company’s Chief Financial Officer from January 1997 to November 1998. He is a Managing Director of Emerald Development Managers, LP, the manager of Emerald Infrastructure Development Fund L.P., which commenced operations in September 2008. He also serves as a managing director of Cohen & Company, LLC, a private equity firm he joined in 1996. Prior to joining Cohen & Company, Mr. Collins was a CPA and manager in the audit practice of Coopers & Lybrand, LLP, which he joined as an associate in 1988. He holds a B.S. in Accounting from New York University.

C. Wesley Gregory, III became a Manager of the Company in November 1998. Mr. Gregory is owner and manager of WeCare Holdings LLC and its affiliated entities, which provide goods and services to the water, wastewater and solid wastes industry. Prior to founding the WeCare family of companies in 1998, Mr. Gregory founded Waste Stream Environmental, Inc. in 1987 to provide goods and services to the municipal wastewater industry.

Gregory O’Connell became a Manager of the Company in November 1998. Mr. O’Connell has been the President and owner of O’Connell Construction Company Inc. for over 30 years.

John M. Odenbach, Jr. became a Manager of the Company in November 1998. Mr. Odenbach has served as Executive Vice President of Dolomite Products Company, Inc., a division of Oldcastle Materials, Inc., since 2007, and served as its President from 1990 to 2007.

46

E. Philip Saunders became a Manager of the Company in November 1998, and served as its Chief Executive Officer from May 2000 through September 2003. Mr. Saunders is Chief Executive Officer of Genesee Regional Bank and Swain Ski & Snowboard Center, and serves on the boards of directors of Roswell Hospital, Griffith Energy, Paul Smiths College, the American Red Cross, Lewis Tree Service, PCORE Electric Co., Inc., the National Association of Truckstop Operators Foundation, Genesee Valley Trust Company and Genesee Regional Bank. Mr. Saunders previously served on the boards of directors of Hahn Automotive, Fleet Bank of New York, Ryder Systems, Excellus, Inc. of Rochester, Rochester General Hospital and the Petroleum Marketing Education Foundation. Mr. Saunders previously served as Chief Executive Officer of Truckstops of America, Inc., Econo- Car International, Inc., Griffith Oil, Sugar Creek Corporation, Travel Ports of America, Inc. and Richardson Foods Corporation.

Thomas Terry, Jr. became a Manager of the Company in November 1998. Prior to 1998, Mr. Terry was the President and owner of Lewis Tree Service, Inc., a vegetation management company founded by the Terry family in the 1950s.

Operating Management

The Company’s operating management and key personnel have significant experience in the development and operation of various rock salt mines and have specific experience selling and distributing rock salt in the Northeastern market. The key operating personnel include the following:

Mark Assini was named the Company’s Bidding Manager in May 2007. He joined the Company in 2004 as Manager of Marketing Analysis. Prior to joining the Company, Mr. Assini served as a cost accountant at Pfaudler, Inc from 1995-2004. While at Eastman Kodak Company from 1981-1994, Mr. Assini maintained lead roles in Supply Chain Management as well as in Finance. Mr. Assini is certified in Material Requirements Planning by the American Production and Inventory Control Society and holds a B.S. in Production Management from Rochester Institute of Technology.

Ann M. Blake became the Company’s Chief Financial Officer in October 2008. Ms Blake has served as the Company’s Controller since May 2007. She joined the Company in 2006 as the Company’s Accounting Manager. Ms. Blake is a Certified Public Accountant and has over eight years of financial reporting and accounting experience. Prior to joining the Company, Ms. Blake was employed in the audit practice of Arthur Andersen, LLP, which she joined as an associate in 1999. Ms. Blake joined Xerox Corp in 2003 where she held positions as Senior Analyst, Consolidations and Reporting- North America; Senior Analyst, Accounting and Internal Control and Manager of Accounting, Xerox Information Management. She holds a B.S. in Accounting from St. John Fisher College.

Gregory J. Norris has been the Company’s Plant Manager since September 2005. Previously, he was the Company’s Engineering Manager. He joined the Company in June 2000. Mr. Norris has over 18 years of mine engineering experience, including five years working for Akzo Nobel Salt, Inc. at two different salt mines. He has worked in copper and silver mines for Copper Range Company, and has managed a 1.0 million tons-per-year limestone quarry for Southdown Inc.

Gary L. Perrin is the Company’s Human Resources Manager. He joined the Company in March 2001. Mr. Perrin has over 24 years of diversified management experience in Human Resources and Finance. Prior to joining the Company, Mr. Perrin was employed by Stroehmann Bakeries Inc. and the Quaker Oats Company. He has worked with organizations experiencing rapid growth and also has guided organizations through periods of downsizing, including layoffs and office/plant closings. Mr. Perrin has labor relations experience with the following unions: United Steel Workers of America (USWA), International Brotherhood of Teamsters (IBT), Bakery, Confectionary, Tobacco Workers International (BC&T), United Food and Commercial Workers (UFCW) and Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE).

47

Audit Committee

The members of the Company’s Executive Committee, Gunther K. Buerman, Joseph G. Bucci and Neil L. Cohen, have served as the Audit Committee of the Board of Managers. The Board of Managers formally appointed the Executive Committee members as the Audit Committee in December 2004, recognizing that they had previously been serving in that capacity. The Company’s Board of Managers has not determined that any member of the Audit Committee is an “audit committee financial expert” as defined in applicable Securities and Exchange Commission regulations. The Board of Managers believes that the collective knowledge and experience of the Audit Committee members is sufficient to perform the functions of the Audit Committee without any one member being deemed to be an “audit committee financial expert”.

Code of Ethics

As of September 30, 2008, the Company had not adopted a “Code of Ethics” as defined in applicable Securities and Exchange Commission regulations. The Board of Managers believes that our current internal control procedures and business practices are adequate to promote honest and ethical conduct and to deter wrongdoing by its executives.

Item 11

Executive Compensation

Compensation Discussion and Analysis

Introduction

This section addresses certain aspects of the compensation paid to our Named Executive Officers, as defined below. Although this discussion may address our historical practices, the focus is on the practices used in our most recent fiscal year.

Oversight

The Board of Managers does not have a separately designated Compensation Committee. Our entire Board of Managers performs the functions of the Compensation Committee with respect to our Co-Chief Executive Officers and in that capacity oversees the compensation paid to Messrs. Bucci, Buerman and Cohen, for their service in that role. The Board of Managers has taken no action with respect to the annual fee paid to our Co-Chief Executive Officers over past three fiscal years. The Executive Committee performs the function of the Compensation Committee with respect to our other executive officers and senior management and in that capacity oversees the compensation paid to those individuals. Among other things, the Executive Committee reviews the performance of our executive officers and makes determinations concerning the compensation levels of those officers. Mr. Bucci is not involved in determining his annual compensation for his role as an operational manager.

Objectives of Executive Compensation

The objective of our executive compensation is to attract, motivate and retain highly talented individuals. The Executive Committee periodically reviews the competitiveness of our executive compensation in order to evaluate whether it is achieving the desired goals and objectives. Our executive compensation program is principally designed to give executives incentives to focus on and achieve our business objectives. Key elements of the executive compensation program are competitive base salaries and annual performance-based bonuses.

Competitive Factors

In determining the compensation levels of our executive officers, the Executive Committee takes into account competitive market data from the mining industry as a whole and focuses on institutions of a size similar to us. Although the Executive Committee has not historically established specific targets in relation to peer group compensation, it has taken into account the total compensation paid to executive officers by our competitors. Information regarding pay practices at other companies in the mining industry is useful because we recognize that our compensation must be competitive in the marketplace and this information also assists us in assessing the overall reasonableness of our compensation.

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Elements of Our Compensation Program

Elements of Compensation

To date, our executive compensation has had three components: base salary, annual cash incentives and employee benefits. The Company previously maintained a plan under which it could grant awards of Units to certain employees and executive officers, but determined to discontinue this plan in fiscal 2008. No awards were ever granted under the plan.

Base salary is designed to provide competitive levels of compensation to our executive officers based upon the responsibilities assigned to them and taking into account their experience and qualifications. As was discussed above, we have established base salaries at levels we consider appropriate to recruit and retain executives and which are competitive with those paid by similar institutions. To ensure we remain competitive in base salaries, we use industry and region specific salary guidelines as a measure. The Executive Committee reviews base salaries on an annual basis to take into account reported cost of living adjustments as well as changes in responsibilities and the individual performance of our executives.

We have also made annual cash bonus payments, which are intended to recognize individual accomplishments, as well as the overall performance of the Company during the past year. Annual bonuses have not been awarded based upon the attainment of pre-established targets or other measurable criteria, but have been determined based on the Company’s performance and various factors determined relevant by the Executive Committee or the Board of Managers, as appropriate. On December 12, 2008, the Board of Managers approved a one-time cash bonus of $24,000 payable to each of Messrs. Buerman and Cohen to reflect the substantial amount of time they have invested in growing the Company. Messrs. Buerman and Cohen abstained from the Board of Managers vote on this matter.

We provide various benefits to all of our eligible employees, including executive officers, which include group life insurance, health insurance and a 401(k) plan. The 401(k) plan is a tax-qualified profit sharing plan under the Internal Revenue Code, and eligible employees meeting certain length of service requirements may make tax deferred contributions subject to certain limitations. We make discretionary matching contributions of up to 3% of employee compensation which vest to the employee over a five year period.

Perquisites and other personal benefits have not represented a significant part of total compensation for any of our executive officers.

Post-Termination Compensation

Other than the 401(k) plan mentioned above, we do not offer any other pension or post-employment benefits. We do not maintain employment agreements with any of our executive officers entitling them to severance or other post-employment benefits.

Role of Executive Officers in Compensation Decisions

The Board of Managers has the authority to make all final determinations with respect to the compensation paid to our Co-Chief Executive Officers for their service in that role. The Board of Managers has taken no action with respect to the annual fee paid to our Co-Chief Executive Officers during the past three fiscal years; however, as mentioned above, in December 2008 the Board of Managers approved a one-time cash bonus of $24,000 payable to each of Messrs. Buerman and Cohen. The Executive Committee makes all final determinations with respect to the compensation paid to our other executive officers. Because Messrs. Buerman, Bucci and Cohen, our Co-Chief Executive Officers, are members of the Board of Managers, they are entitled to participate in deliberations regarding executive compensation, including concerning the fees to be paid to them as compensation for their service as Co-Chief Executive Officers. Mr. Bucci is not involved in determining his annual compensation for his role as an operational manager.

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Changes in Executive Compensation

The discussion above relates to our recent practices, and most particularly those used in the most recent fiscal year. The Executive Committee continues to evaluate our executive compensation programs, but does not anticipate making any material changes in our executive compensation practices in the foreseeable future.

Tax Considerations

It has been the Executive Committee’s intent that all incentive payments be deductible to the Company, unless such deductibility would undermine our ability to meet our objectives. Currently, we believe that all of the compensation paid to our executive officers qualifies for a federal tax deduction in computing our taxable income. We have not historically relied on deferred compensation arrangements or made equity awards, so Section 409A of the Internal Revenue Code has not had any impact on our compensation programs to date.

Summary

In summary, we believe that the compensation paid to our executive officers has been consistent with our overall objectives and has enabled us to retain and motivate our management team.

Summary Compensation Table

The following table sets forth information concerning the compensation paid by the Company for the fiscal years ended September 30, 2008 and 2007 to (i) the three individuals who collectively serve as the Company’s chief executive officer, and (ii) the individual who served as the Company’s chief financial officer during the fiscal year ended September 30, 2008, (collectively, the “Named Executive Officers”):

Name and Principal Position	Fiscal Year	Salary		Bonus		All Other Compensation		Total
Joseph Bucci, Vice Chairman, Operations Vice President, Real Estate and Co-Chief	2008	$	109,992	$	100,000	$	98,000	$	307,992
Executive Officer(1)	2007	$	109,993	$	75,000	$	98,000	$	282,993
Gunther Buerman, Chairman and Co-Chief	2008	$	—	$	—	$	98,000	$	98,000
Executive Officer(1)	2007	$	—	$	—	$	98,000	$	98,000
Neil Cohen, Vice Chairman, Finance and	2008	$	—	$	—	$	98,000	$	98,000
Marketing and Co-Chief Executive Officer(1)	2007	$	—	$	—	$	98,000	$	98,000
Raymond Martel, Chief Financial Officer(2)(3)	2008	$	128,390	$	40,000	$	6,182	$	174,572
	2007	$	120,595	$	27,500	$	4,443	$	152,538

⁽¹⁾ Messrs. Bucci, Buerman, and Cohen collectively serve as Chief Executive Officer for the Company. Amounts included in “All Other Compensation” for Messrs. Bucci, Buerman and Cohen represent fees of $48,000 paid to such persons for service as a member of the Executive Committee and $50,000 for service as Co-Chief Executive Officer.

⁽²⁾ Effective October 13, 2008, Mr. Martel resigned as Chief Financial Officer and Chief Administrative Officer.

⁽³⁾ Amounts included in “Other Annual Compensation” for Mr. Martel represent employer matching contributions under the Company’s 401(k) plan

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Retirement Plans

We do not maintain a qualified or non-qualified defined benefit pension plan covering any of our employees. Our Named Executive Officers are eligible to participate in our tax-qualified Profit Sharing and Savings Plan on the same basis as other employees under the plan. The Company makes a discretionary matching contribution of up to 3% of employee compensation. The Summary Compensation Table above reflects the actual dollar amounts contributed to our Profit Sharing and Savings Plan on each Named Executive Officer’s behalf.

Compensation Committee Interlocks and Insider Participation

As of September 30, 2008, the Company did not have a compensation committee. The Executive Committee (consisting of our three Co-Chief Executive Officers, Mssrs. Bucci, Buerman and Cohen) functions as the compensation committee with respect to all of our executive officers other than our Co-Chief Executive Officers, and the entire Board of Managers functions as the compensation committee with respect to our Co-Chief Executive Officers. No interlocking relationship existed during the last completed fiscal year between the Company’s Board of Managers or Executive Committee and the board of directors or compensation committee of any other company, nor has any interlocking relationship existed in the past.

Compensation Committee Report

The information contained in this Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C promulgated by the SEC or the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act. The information contained in this Compensation Committee Report shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates it by reference.

The Executive Committee, serving as the Compensation Committee:

• has reviewed and discussed the Compensation Discussion and Analysis contained in this Annual Report on Form 10-K with the Company’s management, and

• based upon such review and discussion, recommended to the Board of Managers that such Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

Submitted by the Executive Committee (serving as the Compensation Committee):

Joseph G. Bucci

Gunther K. Buerman

Neil L. Cohen

Managers’ Fees

Each board member of the Executive Committee is entitled to compensation at a rate of $4,000 per month as a member of the Executive Committee. Additionally, each member of the Executive Committee is entitled to receive $50,000 annually as compensation for his role in fulfilling the duties of co-chief executive officer. All such fees paid to Executive Committee members are reported for each such individual in the Summary Compensation Table, above. These fees have remained level over past three fiscal years. As mentioned above, in December 2008 the Board of Managers approved a one-time $24,000 bonus payable to each Messrs. Buerman and Cohen. All Managers, including the Executive Committee members, are entitled to reimbursement for all reasonable out-of-pocket expenses incurred by them in connection with their performance of services in that capacity.

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Item 12

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The Company’s issued and outstanding membership interests consist of 6,250 Class A Units and 12,750 Class F Units. As of December 5, 2008, all issued and outstanding Units of the Company were held by Holdings. Holdings’ business address is 3846 Retsof Road, Retsof, New York 14539.

Item 13

Certain Relationships and Related Transactions, and Director Independence

Related Party Transactions

From time to time, we enter into agreements with Managers of the Company or their affiliates. We believe that the terms of these relationships are at least as favorable as those we could have obtained as a result of arm’s-length negotiations with unaffiliated third parties. Set forth below are descriptions of the material agreements or arrangements we have entered into with our Managers or their affiliates.

Legal Services

Gunther K. Buerman, one of the founders of the Company who currently serves as Co-Chief Executive Officer and Chairman of the Executive Committee, is a member of Harris Beach PLLC, a law firm which serves as general outside counsel to the Company. In addition, certain current and former members of Harris Beach PLLC own in the aggregate 150.5 Class A Units of Holdings (not including the Units owned by Mr. Buerman). The Company incurred legal expenses to Harris Beach PLLC of approximately $296,000 during fiscal 2008. Mr. Buerman has less than a 1% equity interest in Harris Beach PLLC.

Petroleum Product

E. Philip Saunders, a Class A Member of Holdings and a Class A Manager of the Company, is the Chairman of the Board of Griffith Energy, Inc., which provides petroleum product to the Company on an as-needed basis. The Company incurred approximately $2,795,000 in fees payable to Griffith Energy, Inc. during fiscal 2008. Mr. Saunders owns a 30% equity interest in Griffith Energy, Inc.

Non-Operating Mineral Interests (“NOMIs”)

Under the terms of the Company’s operating agreement, Joseph G. Bucci, Gunther K. Buerman, and Neil L. Cohen, in addition to certain other members of Holdings, hold certain Non-Operating Mineral Interests, or “NOMIs”, related to the Company’s initial acquisition of mineral rights. The NOMIs entitle the holders to receive payments equal to 2.5% of the gross income of our mine as reported for purposes of computing percentage depletion for federal income tax purposes. The Company paid approximately $3,958,000 to holders of NOMIs during fiscal 2008. The approximate dollar value of the interest of each of Messrs. Bucci, Buerman and Cohen in the NOMIs paid during fiscal 2008 is $1,265,000, $1,319,000 and $1,101,000, respectively.

Policies and Procedures for Approval of Related Party Transactions

Our Audit Committee reviews and discusses with management, the entire Board of Managers and our independent auditors any potential related party transactions. Our Board of Managers has the authority to approve all related party transactions.

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Manager Independence

The Company is a privately-held company, and is not subject to the listing standards of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be independent. For purposes of the following determinations on director independence, the Board of Managers has chosen to apply the independence criteria set forth in Nasdaq Rule 4200(a) (15). Under that standard, the Board of Managers believes that Messrs. O’Connell, Odenbach and Terry are “independent” for purposes of general board service.

The members of the Company’s Executive Committee, Gunther K. Buerman, Joseph G. Bucci and Neil L. Cohen, have served as the Audit Committee of the Board of Managers. The Board of Managers does not believe that Messrs. Buerman, Bucci and Cohen are “independent” for purposes of the heightened independence criteria for audit committees set forth in Nasdaq Rule 4350(d). The Board of Managers does not have a separately designated Compensation Committee or Nominating Committee, and the entire Board of Managers performs the functions of those committees, except that the Executive Committee performs the functions of the Compensation Committee with respect to our executive officers other than the Co-Chief Executive Officers. The Board of Managers believes that Messrs. O’Connell, Odenbach and Terry are “independent” for purposes of Nasdaq Compensation Committee and Nominating Committee standards. The Board of Managers does not believe that the Executive Committee members are “independent” for purposes of Nasdaq Compensation Committee standards.

Item 14

Principal Accountant Fees and Services

PricewaterhouseCoopers LLP is the Company’s independent registered public accounting firm. A summary of the aggregate fees billed by PricewaterhouseCoopers LLP for services provided during the fiscal years ended September 30, 2008 and 2007 are as follows:

	2008		2007
Audit Fees (1)	$	159,500	$	145,000
	$	159,500	$	145,000

⁽¹⁾ Related to services for the annual financial statement audits included in our Annual Reports on Form 10-K, quarterly reviews for the financial statements included in our Quarterly Reports on Form 10-Q and reviews of registration statements and other SEC filings.

The Company’s Audit Committee has not adopted any policies or procedures for the pre-approval of non-audit services. The Audit Committee has considered the role of PricewaterhouseCoopers LLP in providing audit, tax, and non-audit services and has concluded that such services are compatible with PricewaterhouseCoopers LLP’s role as the Company’s independent registered public accounting firm.

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Part IV

Item 15

Exhibits and Financial Statement Schedules

Financial Statements and supplementary data required by this Item 15, set forth below, are included in Item 8 of this Form 10-K on the pages indicated.

Balance Sheets as of September 30, 2008 and 2007	29
Statement of Operations for the three years ended September 30, 2008	30
Statement of Members’ Equity (Deficit) for the three years ended September 30, 2008	31
Statement of Cash Flows for the three years ended September 30, 2008	32
Notes to Financial Statements	33

The following exhibits are filed as part of this report on Form 10-K:

Exhibit No.	Description of Exhibit
2.1	Agreement of Merger, dated as of June 12, 2007, but effective as of June 13, 2007, by and between the Company and ARS Mergeco LLC (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 13, 2007 and incorporated herein by reference)
3.1	Articles of Organization of the Company (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.2	Amended and Restated Operating Agreement of the Company (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.3	Certificate of Amendment to the Amended and Restated Operating Agreement of the Company (filed as Exhibit 3.3 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.4	Second Amended and Restated Operating Agreement of the Company (filed herewith)
4.1	Indenture, dated as of March 17, 2004, by and between the Company and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333- 117215, and incorporated by reference herein)

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4.2	Form of Outstanding Note (included in Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
4.3	Form of Exchange Note (included in Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
4.4	Registration Rights Agreement, dated as of March 17, 2004, by and between the Company and Jefferies & Company, Inc. (filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.1	Credit Agreement, dated as of March 17, 2004, by and among the Company, Manufacturers and Traders Trust Company, and the lenders party thereto (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.2	Form of Revolving Loan Note dated March 17, 2004, issued by the Company under the Credit Agreement (filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.3	Security Agreement, dated as of March 17, 2004, by and between the Company and Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.4	Mortgage, Assignment of Production, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated as of March 17, 2004, given by the Company and Livingston County Industrial Development Agency in favor of Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.5	Assignment of Agreements, Permits and Contracts, dated as of March 17, 2004, by the Company in favor of Manufacturers and Traders Trust Company, as administrative agent (filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.6	Sinking Fund Collateral Account and Pledge Agreement, dated as of March 17, 2004, by the Company in favor of Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.7	Purchase Agreement, dated as of March 17, 2004, by and between the Company and Jefferies & Company, Inc. (filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.8	Pledge and Security Agreement, dated as of March 17, 2004, by the Company in favor of U.S. Bank National Association, as collateral agent (filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.9	Voting Agreement, dated as of October 28, 1998, by and among Joseph G. Bucci, Gunther K. Buerman and Neil L. Cohen (filed as Exhibit 10.9 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.10*	Membership Unit Purchase Plan of the Company (included in Exhibit 3.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)

55

10.11	Amended and Restated Credit Agreement by and among the Company, the financial institutions from time to time party thereto, and Manufacturers and Traders Trust Company as arranger, as agent, as collateral agent and as issuer of certain letters of credit pursuant thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 8, 2006 and incorporated by reference herein)
10.12*	Salary Arrangement between the Company and Ann M. Blake effective as of October 13, 2008 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2008 and incorporated by reference herein)
12.1	Statement re Computation of Ratio of Earnings to Fixed Charges (filed herewith)
24.1	Powers of Attorney (included on the signature page of this report)
31.1	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)
31.2	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)
31.3	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)
31.4	Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)

* Denotes management contract or arrangement

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SIGNATURES

The registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

December 22, 2008

AMERICAN ROCK SALT COMPANY LLC
By:	/s/ Ann M. Blake
	Ann M. Blake,
	Chief Financial Officer and Controller
	(Principal Financial Officer and Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ann M. Blake as his true and lawful attorney-in-fact, with full power of substitution, for him and his name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent with full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title	Date
By:	/s/ Joseph Bucci	Vice Chairman, Operations, Executive Committee Member and Manager (Co-Principal Executive Officer)	December 22, 2008
	Joseph G. Bucci
By:	/s/ Gunther K. Buerman	Chairman, Executive Committee Member and Manager (Co-Principal Executive Officer)	December 22, 2008
	Gunther K. Buerman
By:	/s/ Neil L. Cohen	Vice Chairman, Finance and Marketing, Executive Committee Member and Manager (Co-Principal Executive Officer)	December 22, 2008
	Neil L. Cohen
By:	/s/ Charles T. Collins	Manager	December 22, 2008
	Charles T. Collins
By:		Manager
	C. Wesley Gregory III

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By:		Manager
	Gregory O’Connell
By:		Manager
	John M. Odenbach, Jr.
By:	/s/ E. Philip Saunders	Manager	December 22, 2008
	E. Philip Saunders
By:	/s/ Thomas Terry Jr.	Manager	December 22, 2008
	Thomas Terry, Jr.

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EXHIBIT INDEX

Exhibit No.	Description of Exhibit
2.1	Agreement of Merger, dated as of June 12, 2007, but effective as of June 13, 2007, by and between the Company and ARS Mergeco LLC (filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 13, 2007 and incorporated by reference herein)
3.1	Articles of Organization of the Company (filed as Exhibit 3.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.2	Amended and Restated Operating Agreement of the Company (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.3	Certificate of Amendment to the Amended and Restated Operating Agreement of the Company (filed as Exhibit 3.3 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
3.4	Second Amended and Restated Operating Agreement of the Company (filed herewith)
4.1	Indenture, dated as of March 17, 2004, by and between the Company and U.S. Bank National Association, as Trustee (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333- 117215, and incorporated by reference herein)
4.2	Form of Outstanding Note (included in Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
4.3	Form of Exchange Note (included in Exhibit 4.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
4.4	Registration Rights Agreement, dated as of March 17, 2004, by and between the Company and Jefferies & Company, Inc. (filed as Exhibit 4.4 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.1	Credit Agreement, dated as of March 17, 2004, by and among the Company, Manufacturers and Traders Trust Company, and the lenders party thereto (filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.2	Form of Revolving Loan Note dated March 17, 2004, issued by the Company under the Credit Agreement (filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.3	Security Agreement, dated as of March 17, 2004, by and between the Company and Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.4	Mortgage, Assignment of Production, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated as of March 17, 2004, given by the Company and Livingston County Industrial Development Agency in favor of Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.5	Assignment of Agreements, Permits and Contracts, dated as of March 17, 2004, by the Company in favor of Manufacturers and Traders Trust Company, as administrative agent (filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)

59

10.6	Sinking Fund Collateral Account and Pledge Agreement, dated as of March 17, 2004, by the Company in favor of Manufacturers and Traders Trust Company, as collateral agent (filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.7	Purchase Agreement, dated as of March 17, 2004, by and between the Company and Jefferies & Company, Inc. (filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.8	Pledge and Security Agreement, dated as of March 17, 2004, by the Company in favor of U.S. Bank National Association, as collateral agent (filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.9	Voting Agreement, dated as of October 28, 1998, by and among Joseph G. Bucci, Gunther K. Buerman and Neil L. Cohen (filed as Exhibit 10.9 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.10*	Membership Unit Purchase Plan of the Company (included in Exhibit 3.2 to the Company’s Registration Statement on Form S-4, SEC File No. 333-117215, and incorporated by reference herein)
10.11	Amended and Restated Credit Agreement by and among the Company, the financial institutions from time to time party thereto, and Manufacturers and Traders Trust Company as arranger, as agent, as collateral agent and as issuer of certain letters of credit pursuant thereto (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 8, 2006 and incorporated by reference herein)
10.12*	Salary Arrangement between the Company and Ann M. Blake effective as of October 13, 2008 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2008 and incorporated by reference herein)
12.1	Statement re Computation of Ratio of Earnings to Fixed Charges (filed herewith)
24.1	Powers of Attorney (included on the signature page of this report)
31.1	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes- Oxley Act of 2002) (filed herewith)
31.2	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes- Oxley Act of 2002) (filed herewith)
31.3	Certificate of the Co-Chief Executive Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes- Oxley Act of 2002) (filed herewith)
31.4	Certificate of the Chief Financial Officer pursuant to 18 U.S.C. §1350 (Section 302 of the Sarbanes-Oxley Act of 2002) (filed herewith)

* Denotes management contract or arrangement

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EX-3.4

Exhibit 3.4

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

of

AMERICAN ROCK SALT COMPANY LLC

As of June 13, 2007

TABLE OF CONTENTS

ARTICLE 1—DEFINITIONS		1
ARTICLE 2—THE COMPANY		4
2.1.	Formation	4
2.2.	Name	4
2.3.	Purpose of the Company	4
2.4.	Term	4
2.5.	Offices	5
2.6.	Tax Classification of the Company	5
2.7.	Adoption of this Agreement	5
2.8.	Non-Operating Mineral Interests	5
ARTICLE 3—MEMBERS		7
3.1.	Members	7
3.2.	Place of Meetings	7
3.3.	Meetings of Members	7
3.4.	Notice of Meetings of Members	7
3.5.	Quorum	7
3.6.	Participation in Meetings by Conference Telephone Permitted	7
3.7.	Waiver of Notice	7
3.8.	Action by Members Without a Meeting	7
3.9.	Record Dates	8
3.10.	Resignation and Withdrawal of Members	8
3.11.	Members Are Not Agents	8
3.12.	Transactions of Members with the Company	8
3.13.	Pledge of Interests to Secure Institutional Financing	8
ARTICLE 4—MANAGEMENT		8
4.1.	Management of the Company	8
4.2.	Agency Authority of Managers and Others	9
4.3.	Limited Liability	9
4.4.	Number of Managers	9
4.5.	Election and Removal of Class A Managers	9
4.6.	Election and Removal of Class F Managers	9
4.7.	Compensation of Managers	9
4.8.	Managers May Engage in Other Activities	9
4.9.	Ratification of Prior Transactions	10
ARTICLE 5—MEETINGS OF BOARD OF MANAGERS		10
5.1.	Board Action	10
5.2.	Place of Meetings	10

5.3.	Meetings of Managers	10
5.4.	Notice of Meetings of Managers	10
5.5.	Quorum; Participation in Meetings by Conference Telephone Permitted; Vote Required for Action	11
5.6.	Waiver of Notice; Consent to Meeting	11
5.7.	Action by Board of Managers Without a Meeting	11
5.8.	Executive Committee	11
ARTICLE 6—OFFICERS		12
6.1.	General	12
6.2.	Appointment and Removal	12
6.3.	Limited Liability	12
ARTICLE 7—CAPITAL CONTRIBUTIONS		13
7.1.	Capital Contributions	13
7.2.	Additional Capital Contributions	13
ARTICLE 8—TAXABLE INCOME OR LOSS; TAX AND ACCOUNTING MATTERS		13
8.1.	Allocations	13
8.2.	Accounting Matters	13
ARTICLE 9—DISTRIBUTIONS		13
9.1.	Distributions	13
ARTICLE 10—TRANSFER OF UNITS		13
10.1.	Company’s Restriction on Transfer	13
10.2.	Member’s Restriction on Transfer	13
10.3.	Transfers Prohibited by Company’s Agreements	13
10.4.	Permitted Transfers	14
10.5.	Certain Conditions to Transfers; Assignees	14
10.6.	Effect of Assignments on Member Status	15
ARTICLE 11—CHANGE OF CONTROL TRANSACTION		15
11.1.	Change of Control Transaction	15
11.2.	Requirements for Change of Control Transaction	15
11.3.	Participation in Change of Control Transaction	15
11.4.	Approval of Change of Control Transaction	16
ARTICLE 12—ACCOUNTING, RECORDS, REPORTING TO AND BY MEMBERS		16
12.1.	Books and Records	16
12.2.	Delivery to Members and Inspection	16
12.3.	Filings	17
12.4.	Bank Accounts	17
12.5.	Accounting Decisions and Reliance on Others	17

ARTICLE 13—DISSOLUTION AND LIQUIDATION		17
13.1.	Dissolution	17
13.2.	Liquidation	18
13.3.	Liabilities	18
13.4.	Settling of Accounts	18
13.5.	Distribution of Net Proceeds	19
ARTICLE 14—INDEMNIFICATION AND INSURANCE		19
14.1.	Indemnification for Acts or Omissions	19
14.2.	Indemnification Against Environmental Liabilities	19
14.3.	Advance of Expenses	19
14.4.	Payments if Indemnification Unavailable	20
14.5.	Contractual Article	20
14.6.	Non-Exclusivity	20
14.7.	Insurance	20
ARTICLE 15—MISCELLANEOUS		20
15.1.	Termination of Restrictions on Transfer	20
15.2.	Entire Agreement	21
15.3.	Binding Agreement	21
15.4.	Amendments	21
15.5.	Form of Pronouns; Number; Construction	21
15.6.	No Waiver	21
15.7.	Third Parties	21
15.8.	Severability	22
15.9.	Governing Law	22
15.10.	Notices	22
15.11.	Titles and Subtitles	22
15.12.	Counterparts	22

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

of

AMERICAN ROCK SALT COMPANY LLC

THIS SECOND AMENDED AND RESTATED OPERATING AGREEMENT is made and entered into effective as of June 13, 2007 (the “Effective Date”) by and among AMERICAN ROCK SALT COMPANY LLC, a New York limited liability company (the “Company”), and AMERICAN ROCK SALT HOLDINGS LLC, a New York limited liability company, and, since the Effective Date, the sole member of the Company (the “Sole Member”).

WHEREAS, on the Effective Date, the Sole Member became the owner and holder of one hundred percent (100%) of the outstanding membership interests of the Company; and

WHEREAS, as part of same merger transaction by which the Sole Member became the sole member of the Company, the Company’s prior Members became the owners of all of the membership interests of the Sole Member, with Interests in the Sole Member that are identical to their previous Interests in the Company; and

WHEREAS, the Sole Member, with the approval of its members, desires to amend and restate the Company’s Amended and Restated Operating Agreement, dated October 28, 1998;

NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions contained herein, the parties hereby agree as follows:

ARTICLE 1—DEFINITIONS

Capitalized terms used in this Agreement without other definition shall, unless expressly stated otherwise, have the meanings specified in this Article:

Agreement means this Second Amended and Restated Operating Agreement, as originally executed and as amended from time to time.

Articles of Organization means the articles of organization of the Company filed with the New York Secretary of State on January 30, 1997, as amended from time to time.

Assignee has the meaning set forth in Section 10.5 of this Agreement.

Bankruptcy of a Person means:

(a) such Person (i) commences a voluntary case or proceeding under or pursuant to any Bankruptcy Law; or (ii) consents to the entry of an order for relief against it in an involuntary case under or pursuant to any Bankruptcy Law; or (iii) consents to the appointment of a trustee, receiver, assignee, liquidator or similar official under or pursuant to any Bankruptcy Law; or (iv) makes an

assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as they become due; or

(b) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against such Person in an involuntary case, or (ii) appoints a trustee, receiver, assignee, liquidator or similar official for such Person or substantially all of such Person’s properties, or (iii) orders the liquidation of the assets of such Person; and in each of the three foregoing cases, the order or decree is not dismissed within 120 days.

Bankruptcy Law means the United States Bankruptcy Code or any other federal or state law relating to insolvency or relief of debtors.

Capital Account means the capital account established as provided in Section 7.1 of the Agreement.

Capital Contributions means the contributions made by the Members to the Company pursuant to Section 7.1 of this Agreement and, in the case of all the Members, the aggregate of all such Capital Contributions.

Common Units means Class A Units and Class F Units.

Company means AMERICAN ROCK SALT COMPANY LLC, a New York limited liability company.

Disinterested — a Manager, Member or NOMI Holder shall be deemed to be “Disinterested” with respect to a proposed contract or transaction of the Company if such Manager, Member, or NOMI Holder does not have a Financial Interest in such proposed contract or transaction.

Financial Interest — a Manager, Member or NOMI Holder shall be deemed to have a “Financial Interest” in a proposed contract or transaction of the Company if such Manager, Member, or NOMI Holder has a direct or indirect substantial financial interest in the contract or transaction; provided, however, that a Manager, Member or NOMI Holder shall not be deemed to have a Financial Interest if: (a) the rates or charges involved in the contract or transaction are determined by competitive bids or the contract or transaction involves the rendering of services as a common or contract carrier or public utility at rates or charges fixed in conformity with law or governmental authority; (b) the transaction involves services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture or similar services; (c) the interest arises solely from the ownership of Units or NOMIs and such Person receives no extra or special benefit not shared on a pro rata basis; (d) the interest arises solely from a contractual relationship with the Company that has previously been approved by the Board of Managers; (e) the interest arises only from such Person’s ownership of less than a ten percent (10%) equity interest in (and not from any other basis pertaining to, e.g., management or control of) another Person (other than a partnership, limited liability partnership or limited liability company) that is a party to the contract or transaction; (f) the interest arises only from such Person’s position as a limited partner in a partnership that is a party to the contract or transaction in which such Person has an interest of less than ten percent (10%).

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Founders means Gunther K. Buerman, Joseph G. Bucci, Neil L. Cohen, Salt of the Earth, LLC (as successor to Bonadio & Co. LLP), Fedele V. Scutti and Charles L. Van Arsdale.

Income Tax Regulations means the regulations in force as final or temporary regulations that have been issued by the U.S. Department of the Treasury pursuant to its authority under the IRC.

Interest means a Member’s aggregate rights in the Company, including, without limitation, such Member’s rights to share in the Taxable Income or Loss of the Company, to receive distributions from the Company, and to vote and participate in the management of the Company as a Member under the terms of this Agreement.

IRC means the United States Internal Revenue Code of 1986, as amended, or any succeeding or successor law.

LLC Law means the New York Limited Liability Company Law, as from time to time in effect in the State of New York, or any corresponding provision or provisions of any succeeding or successor law; provided, however, that in the event that any amendment to the LLC Law, or any succeeding or successor law, is applicable to the Company only if the Company elects to be governed by the LLC Law as so amended or by such succeeding or successor law, as the case may be, then the term “LLC Law” shall refer to the LLC Law as so amended or to such succeeding or successor law only after the appropriate election by the Company, if made, has become effective.

Manager means a Person who is selected as a Manager pursuant to Section 4.5 or 4.6 of this Agreement, until his or her death, incapacity, resignation or removal, or until the expiration of his or her term and the election of his or her successor.

Member means the Sole Member and any Person who has been admitted to the Company as a Member in accordance with this Agreement, and who has not ceased to be a Member.

NOMIs has the meaning set forth in Section 2.8.1 of this Agreement.

NOMI Holders has the meaning set forth in Section 2.8.1 of this Agreement.

NOMIPs has the meaning set forth in Section 2.8.1 of this Agreement.

Percentage Interest means the percentage interest of each Member in the profits of the Company and is equal to (x) the total number of Common Units set forth opposite the name of such Member on Exhibit A, divided by (y) the total number of Common Units allocated to all Members on Exhibit A, in each case as Exhibit A may be amended from time to time.

Person means any association, corporation, joint stock company, estate, general partnership (including any limited liability partnership), limited association, limited liability company (including a professional service limited liability company), joint venture, limited partnership, natural person, real estate investment trust, business trust or other trust, custodian, nominee or any other individual or entity in its own or any representative capacity.

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Prior Agreement refers to that certain Amended and Restated Operating Agreement of American Rock Salt Company LLC, dated October 28, 1998, as amended prior to the Effective Date.

Project means the Hampton Corners Salt Mine Project.

Related Person means, with respect to any Person, (a) any spouse, parent, child or other member of the Person’s family (including relatives by marriage) to whom Common Units held by such Person have been transferred, directly or indirectly; (b) any custodian, trustee or other fiduciary for the account of the Person or members of his family to whom Common Units held by such Person have been transferred, directly or indirectly; and (c) any family limited partnership, limited liability company or other entity or person to which Common Units held by such Person have been transferred, directly or indirectly, in connection with bona fide estate planning transactions.

Secretary of State means the Secretary of State of the State of New York.

Secured Financing has the meaning set forth in Section 3.13 of this Agreement.

Sole Member has the meaning set forth in the Preamble to this Agreement.

Taxable Income or Loss means the Company’s taxable income or loss as determined in accordance with the income tax accounting method followed by the Company for federal income tax purposes pursuant to ARTICLE 8 of this Agreement.

Transferee means any Person who is not already a Member to whom one or more Units are transferred pursuant to this Agreement.

Unit means a unit of measurement of the Interest of a Member. Units may be Class A Units or Class F Units.

ARTICLE 2—THE COMPANY

2.1. Formation. The Company was formed by the filing of Articles of Organization with the Secretary of State pursuant to Section 209 of the LLC Law on January 30, 1997.

2.2. Name. The name of the Company is AMERICAN ROCK SALT COMPANY LLC.

2.3. Purpose of the Company. The Company may engage in any lawful business activity, except any business activity for which some other business entity or natural person is required by law to be used for such business. The Company has the authority to do all things necessary or convenient to accomplish the foregoing purpose.

2.4. Term. The Company began on the date of the filing of its Articles of Organization with the Secretary of State and shall continue until dissolved pursuant to Section 13.1 of this Agreement.

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2.5. Offices. The principal executive office for the transaction of the business of the Company shall be at 3846 Retsof Road, Retsof, New York 14539 or such other location as may be fixed by the Board of Managers within or without the State of New York. The Board of Managers may at any time also establish other business offices within or without the State of New York.

2.6. Tax Classification of the Company. The Members intend and agree that the Company will be classified for federal tax purposes as a “disregarded entity” within the meaning of Section 301.7701-3 of the United States Treasury Regulations.

2.7. Adoption of this Agreement. The Sole Member hereby adopts this Agreement as the operating agreement of the Company pursuant to the LLC Law. This Agreement replaces all previous oral and written agreements and understandings among the parties, including, without limitation, the Prior Agreement. All Persons who acquire any Units subsequent to the execution of this Agreement shall adopt this Agreement as a condition of becoming a Member.

2.8. Non-Operating Mineral Interests.

2.8.1. The Company acknowledges that the Founders retained, as a separate investment, the right to acquire, and convey to the Company or others, any mineral rights or mineral right options relating to the Project. Rather than enter into a separate purchase agreement with Akzo Nobel Salt Inc. with respect to such mineral rights, the Founders permitted the Company to include such mineral rights among the assets purchased from Akzo Nobel Salt Inc. under the Asset Purchase Agreement, dated as of January 31, 1997, between the Company and Akzo Nobel Salt Inc. and Akzo Nobel Inc. in exchange for the non-operating mineral interests described in this Section 2.8 (“NOMIs”). The Company agrees to pay to the Founders or their assignees (the “NOMI Holders”) in respect of the NOMIs a payment equal to 2.50% of the gross income from the mine as reported for purposes of computing percentage depletion for federal income tax purposes from the sale of minerals from the Project (“NOMIPs”). The Company agrees to execute, deliver, and record such documents, and do such other acts and things, as the NOMI Holders may reasonably request for the purpose of documenting, and reflecting in the appropriate real estate records, the rights of the NOMI Holders under this Section 2.8.

2.8.2. The accounting periods for NOMIs shall be the calendar quarters ending on March 31, June 30, September 30, and December 31 of each year. Within 30 days after the end of each NOMI accounting period, the Company shall furnish to each NOMI Holder a written statement of the gross income from the mine for such NOMI accounting period (and, with respect to the first such statement, any previous periods). In the event that the preparation or audit of any tax return of the Company results in an adjustment in the gross income from the mine for a prior NOMI accounting period, such adjustment shall be set forth in the next statement furnished to NOMI Holders, and the payment of NOMIPs with respect to the NOMI accounting period in which such adjustment is made (and, if necessary, subsequent NOMI accounting periods) shall be increased or decreased to reflect such adjustment.

2.8.3. The Company will at all times keep complete, true and correct books of account containing sufficient detail to enable the amount of NOMIPs to be computed and

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verified. The Company further agrees to permit an independent certified public accountant reasonably acceptable to the Company and designated by NOMI Holders entitled to receive 25% or more of the NOMIPs, at the sole cost of such NOMI Holders, to have access for inspection of such books of account upon two weeks notice, not more frequently than twice per year. The Company shall retain such books of account for a period of six (6) years after the close of each applicable NOMI accounting period.

2.8.4. NOMIPs shall be paid to the NOMI Holders within 30 days after the end of each NOMI accounting period; subject, however, to the Company’s right to make such payments under, and in compliance with, the terms of the Secured Financing. No distributions may be made by the Company to its Members unless all NOMIPs with respect to the most recent NOMI accounting period and all prior NOMI accounting periods have been paid in full.

2.8.5. To the extent that the Company is required by law to withhold or to make tax or other payments on behalf of or with respect to any NOMI Holder, the Company may withhold such amounts from any NOMIP and make such payments as so required. For purposes of this Agreement, any such payments or withholdings shall be treated as a NOMIP to the NOMI Holder on behalf of whom the withholding or payment was made.

2.8.6. The NOMIs shall be allocated among the NOMI Holders as set forth on Exhibit B. Any NOMI Holder may assign his or its NOMIs in whole or in part, at any time or from time to time. Upon the assignment by any NOMI Holder of his or its NOMIs, Exhibit B shall be amended accordingly. Prior to receipt of a notice of assignment in form satisfactory to the Company, the Company may deem and treat the NOMI Holders reflected on Exhibit B as the absolute owners of the NOMIs for the purpose of receiving any NOMIPs. The Company may not assign its obligations with respect to the payment of NOMIPs without the prior consent in writing of NOMI Holders holding a majority of the NOMIs.

2.8.7. If the terms of a sale, exchange, lease, mortgage, pledge or other transfer of all or substantially all of the assets of the Company, or a merger or consolidation of the Company with or into another Person: (a) require the sale or contribution to the Company by the NOMI Holders of their NOMIs; and (b) such transaction is approved by NOMI Holders holding a majority of the NOMIs (and, if one or more NOMI Holders has a Financial Interest in such transaction, by Disinterested NOMI Holders whose NOMIs constitute a majority of the NOMIs of all Disinterested NOMI Holders), then each NOMI Holder shall execute, acknowledge and deliver such instruments of conveyance and transfer with respect to the NOMIs and any other documents reasonably necessary, and take such other actions as the Company reasonably requires to consummate the transaction.

2.8.8. The affirmative vote of NOMI Holders holding a majority of the NOMIs shall be required to amend or restate this Section 2.8. All Persons who acquire any NOMIs shall be deemed to have ratified and adopted this Section 2.8, as amended from time to time, as a condition to and a consequence of their acceptance of such NOMIs.

2.8.9. No NOMI Holder shall be deemed a Member of the Company by virtue of holding NOMIs. No payment of NOMIPs to any NOMI Holder shall be deemed a distribution by the Company to its Members, without regard to whether such NOMI Holder is also a Member. NOMIPs shall be deemed an excluded income item of the Company.

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ARTICLE 3—MEMBERS

3.1. Members. The Sole Member, and each Person admitted as a Member of the Company pursuant to Article 10 of this Agreement, shall be Members of the Company until they cease to be Members in accordance with the provisions of this Agreement. The Board of Managers may also determine to admit new Members or to issue additional Units to existing Members on such terms and conditions as the Board of Managers may deem appropriate, provided that such admission or issuance does not cause a default under the terms of the Secured Financing or any other material financial obligation of the Company or the Sole Member. The Sole Member’s name and Units are set forth on Exhibit A. Upon the admission of any new Member, Exhibit A shall be amended accordingly.

3.2. Place of Meetings. All meetings of the Members shall be held at any place within or without the State of New York that may be designated by the Board of Managers. In the absence of such designation, Members’ meetings shall be held at the principal executive office of the Company.

3.3. Meetings of Members. The Company shall not be required to hold any meetings of Members.

3.4. Notice of Meetings of Members. Upon a written request that a meeting of Members be called for any proper purpose, the Board of Managers shall promptly schedule a meeting of the Members for such proper purpose as soon as practicable (taking into consideration the required period of notice under this Section), and the Board of Managers shall promptly cause notice to be given to the Members of such meeting.

3.5. Quorum. The presence at any meeting in person or by proxy of the holders of a majority of the Units entitled to vote on each item of business to be transacted at such meeting shall constitute a quorum for the transaction of business. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any Members. The Members present may adjourn the meeting despite the absence of a quorum.

3.6. Participation in Meetings by Conference Telephone Permitted. Members may participate in a meeting through use of conference telephone or similar communications equipment, so long as all Members participating in such meeting can communicate with and hear one another. Such participation shall constitute presence in person at the meeting.

3.7. Waiver of Notice. Notice of a meeting need not be given to any Member who submits a signed waiver of notice, in person or by proxy, whether before or after the meeting. The attendance of any Member at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by such Member.

3.8. Action by Members Without a Meeting. Whenever Members of the Company are required or permitted to take any action by vote, such action may be taken without a meeting,

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without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken shall be signed by all of the Members entitled to vote thereon. Such action by written consent shall have the same force and effect as a unanimous vote of the Members entitled to vote.

3.9. Record Dates. The Board of Managers may fix a time in the future as a record date for the determination of the Members entitled to notice of and to vote at any meeting of Members, or to receive any distribution or any allotment of rights, or to exercise rights with respect to any change, conversion or exchange of Interests.

3.10. Resignation and Withdrawal of Members. No Member may resign or withdraw as a Member prior to the dissolution and winding up of the Company, but any Member may transfer his or its Interest in accordance with Article 10 of this Agreement.

3.11. Members Are Not Agents. Pursuant to Section 4.1 of this Agreement, the management of the Company is vested in the Board of Managers. The Members shall have no power to participate in the management of the Company except as expressly authorized in this Agreement. No Member, acting solely in the capacity of a Member, is an agent of the Company, nor does any Member, unless expressly and duly authorized in writing to do so by the Board of Managers or as expressly authorized by this Agreement, have any power or authority to bind or act on behalf of the Company in any way, to pledge its credit, to execute any instrument on its behalf or to render it liable for any purpose. A Member is not liable for any debts, obligations or liabilities of the Company or any other Member, whether arising in tort, contract or otherwise, solely by reason of being a Member or acting (or omitting to act) in such capacity.

3.12. Transactions of Members with the Company. Subject to the limitations set forth in this Agreement, a Member may lend money to and transact other business with the Company with the prior approval of the Board of Managers. Subject to other applicable law, such Member shall have the same rights and obligations with respect thereto as a Person who is not a Member.

3.13. Pledge of Interests to Secure Institutional Financing. Each Member agrees to execute and deliver to any bank or other institutional lender (the “Institutional Lender”) providing financing to the Company that is secured by a lien on all or substantially all of the assets of the Company (the “Secured Financing”) such pledge agreements and other documents and instruments, relating to his rights or Interest as a Member, as may be requested by the Institutional Lender in connection with the Secured Financing, provided that (a) if any Member is required to execute and deliver any documents pursuant to this Section 3.13, all Members shall be required to do so, and (b) no Member shall be required to guarantee the payment or collection of the obligations of the Company with respect to the Secured Financing.

ARTICLE 4—MANAGEMENT

4.1. Management of the Company. As set forth in the Articles of Organization, and subject to the terms of this Agreement, the business and affairs of the Company shall be managed by a Board of Managers, which shall have full and complete authority and power to manage and control the business, affairs and properties of the Company, to make all decisions

8

regarding the Company, except those decisions expressly reserved to the Members in this Agreement, and to perform any and all acts or activities customary or incident to the management of the Company’s business.

4.2. Agency Authority of Managers and Others. Any Manager, officer, employee or agent may be authorized by the Board of Managers to sign contracts, checks, drafts, instruments, and other obligations on behalf of the Company.

4.3. Limited Liability. No Manager shall have any personal liability to the Company or its Members for damages for the breach of duty in such capacity, except to the extent that:

(a) a judgment or other final adjudication adverse to the Manager establishes that his or her acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled, or

(b) in connection with a distribution by the Company prohibited by Section 508(a) of the LLC Law, the Manager did not act in accordance with Section 409 of the LLC Law.

4.4. Number of Managers. The authorized number of Managers which shall constitute the Board of Managers shall not exceed eleven (11), of whom three (3) shall be Class F Managers and up to eight (8) shall be Class A Managers. From time to time, the Board of Managers may also appoint or remove non-voting honorary managers of the Company, who shall not be Managers within the meaning of this Agreement, but who shall be entitled to attend and observe (but not vote at) regular meetings of the Board of Managers.

4.5. Election and Removal of Class A Managers. The Sole Member shall be deemed to have elected to serve as Class A Managers of the Company those persons who are elected and holding office as Class A Managers of the Sole Member, each to hold such office with the Company for so long as s/he serves as a Class A Manager of the Sole Member.

4.6. Election and Removal of Class F Managers. The Sole Member shall be deemed to have elected to serve as Class F Managers of the Company those persons who are elected and holding office as Class F Managers of the Sole Member, each to hold such office with the Company for so long as s/he serves as a Class F Manager of the Sole Member.

4.7. Compensation of Managers. Managers shall be reimbursed for all reasonable out-of-pocket expenses incurred with the prior approval of the Board of Managers. Managers shall not be entitled to any compensation for their services as Managers, except as may be approved by the holders of two-thirds of the Common Units.

4.8. Managers May Engage in Other Activities. The Managers are not obligated to devote all of their time or business efforts to the affairs of the Company. The Managers shall devote whatever time, effort and skill as they deem appropriate for the operation of the Company. Each Manager of the Company, either individually or with others, shall have the right to participate in other business ventures of every kind, provided that such Manager is not

9

involved in the management of any business venture(s) that compete(s) with the Company. No Manager, acting in the capacity of a Manager, shall be obligated to offer to the Company or to the Members any opportunity to participate in any other business venture. Neither the Company nor its Members shall have any right to any income or profit derived from any other business venture of a Manager.

4.9. Ratification of Prior Transactions. The Sole Member hereby consents to, ratifies and confirms all previous transactions or actions ratified or approved by, or approved in accordance with, the Prior Agreement.

ARTICLE 5—MEETINGS OF BOARD OF MANAGERS

5.1. Board Action. Each Class A Manager shall be entitled to one vote on all matters to be decided by the Board of Managers. Each Class F Manager shall be entitled to three votes on all matters to be decided by the Board of Managers. Every act or decision done or made by a majority of the votes cast by Managers present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Managers. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Managers, provided that any action taken is approved by at least a majority of the required quorum for such meeting. A Manager having a Financial Interest in a matter shall abstain from any vote on such matter, and action of the Board of Managers on such matter shall be made by the majority of votes cast by Disinterested Managers.

5.2. Place of Meetings. Meetings of the Board of Managers shall be held at any place within or without the State of New York that has been designated from time to time by the Board of Managers. In the absence of such designation, meetings of the Board of Managers shall be held at the principal executive office of the Company.

5.3. Meetings of Managers. Subject to Section 5.4 of this Agreement, meetings of the Board of Managers for any purpose or purposes may be called at any time by the Chairman of the Board of Managers or by any three Managers.

5.4. Notice of Meetings of Managers. Notice of the time and place of meetings shall be delivered personally or by telephone to each Manager, or sent by first-class mail or by facsimile transmission, addressed to such Manager at his or her address as it appears upon the records of the Company. If such notice is mailed, it shall be deposited in the United States mail at least ten (10) days prior to the time of the holding of the meeting. If such notice is sent by facsimile transmission, it shall be transmitted by the person giving the notice to the Manager at least forty-eight (48) hours prior to the time of the holding of the meeting. If such notice is delivered personally or by telephone as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Any notice given personally or by telephone may be communicated to either the Manager or to a person at the office of the Manager whom the person giving the notice has reason to believe will promptly communicate it to the Manager. Deposit in the mail, transmission by electronic means or delivery, personally or by telephone, as above provided, shall be due, legal and personal notice to such Managers. The notice need not specify the purpose of the meeting.

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5.5. Quorum; Participation in Meetings by Conference Telephone Permitted; Vote Required for Action. The presence at a meeting of the Board of Managers of Managers entitled to cast a majority of the votes entitled to be cast by the full Board of Managers constitutes a quorum for the transaction of business, except as hereinafter provided. Managers may participate in a meeting through use of conference telephone or similar communications equipment, so long as all Managers participating in such meeting can communicate with and hear one another. Such participation shall constitute presence in person at the meeting. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of Managers, provided that any action taken is approved by at least a majority of the required quorum for such meeting. The Managers present, whether or not a quorum is present, may, by a majority of the votes entitled to be cast by such Managers, adjourn any meeting to another time and place. If the meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time or place (other than adjournments until the time fixed for the next regular meeting of the Board of Managers, as to which no notice is required) shall be given prior to the time of the adjourned meeting to the Managers who were not present at the time of the adjournment.

5.6. Waiver of Notice; Consent to Meeting. Notice of a meeting need not be given to any Manager who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such Manager. All such waivers, consents and approvals shall be filed with the Company’s records and made a part of the minutes of the meeting.

5.7. Action by Board of Managers Without a Meeting. Any action required or permitted to be taken by the Board of Managers may be taken without a meeting if all the Managers shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board of Managers. Such action by written consent shall have the same force and effect as a unanimous vote of the Board of Managers.

5.8. Executive Committee.

5.8.1. There shall be an Executive Committee of the Board of Managers, which initially shall consist of Joseph G. Bucci, Gunther K. Buerman, and Neil L. Cohen (the “Initial Committee Members”). Any Initial Committee Member shall serve on the Executive Committee until his death, incapacity, or resignation, or until he ceases to be a Manager or ceases to hold, together with his Related Persons, 2,500 or more Common Units of the Sole Member.

5.8.2. The number of members constituting the entire Executive Committee shall initially equal the number of Initial Committee Members continuing to serve on the Executive Committee, until less than two Initial Committee Members are continuing to serve, at which time the number of members constituting the entire Executive Committee shall be increased to three (3). Any vacancy on the Executive Committee shall be filled by a Manager appointed by the Board of Managers. Any member of the Executive Committee appointed by the Board of Managers shall serve at the pleasure of the Board of Managers until his or her death, incapacity, resignation, or removal by the Board of Managers. Actions of the Executive

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Committee shall be made by the unanimous agreement of all Managers serving on the Executive Committee. Any Chief Executive Officer of the Company shall be a non-voting member of the Executive Committee.

5.8.3. The Executive Committee shall have, and may exercise between meetings of the Board of Managers, all the powers of the Board of Managers in the management of the business and affairs of the Company, except that the Executive Committee shall have not have the power:

(a) To amend or repeal any resolution of the Board of Managers that is not, by its terms, amendable or repealable by such committee;

(b) To take any action expressly prohibited by resolution of the Board of Managers;

(c) To appoint or remove the Chief Executive Officer or Chief Operating Officer of the Company; or

(d) To approve any contract or transaction in which any Manager or Member has a Financial Interest.

All actions of the Executive Committee shall be reported to the Board of Managers at the next meeting of the Board of Managers.

5.8.4. Members of the Executive Committee shall be entitled to compensation from the Company at a rate of $4,000 per month for their services on the Executive Committee, and shall be reimbursed for all reasonable out-of-pocket expenses incurred in connection with the performance of such duties.

ARTICLE 6—OFFICERS

6.1. General. The Board of Managers shall appoint such officers of the Company as it determines to be necessary or appropriate. Every officer must be at least 18 years of age. An officer may be, but need not be, a Member or Manager of the Company, and any number of offices may be held by the same person. Officers shall have such powers and shall perform such duties as may be prescribed from time to time by the Board of Managers.

6.2. Appointment and Removal. The officers shall be appointed by the Board of Managers. Each officer, including an officer elected to fill a vacancy, shall hold office at the pleasure of the Board of Managers and may be removed, with or without cause, at any time by the Board of Managers.

6.3. Limited Liability. No officer shall have any personal liability to the Company or its Members for damages for the breach of duty in such capacity, except to the extent that a judgment or other final adjudication adverse to the officer establishes that his or her acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled.

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ARTICLE 7—CAPITAL CONTRIBUTIONS

7.1. Capital Contributions. The Company has credited the Sole Member’s Capital Account with the amount of its Capital Contribution.

7.2. Additional Capital Contributions. The Sole Member shall not be obligated to contribute additional capital to the Company or to make up any deficit in its Capital Account.

ARTICLE 8—TAXABLE INCOME OR LOSS; TAX AND ACCOUNTING MATTERS

8.1. Allocations. All the Taxable Income or Loss of the Company shall be allocated to the Sole Member.

8.2. Accounting Matters. The Board of Managers shall cause to be maintained complete books and records accurately reflecting the accounts, business and transactions of the Company and using such accounting periods and methods as, in the judgment of the Board of Managers, is most appropriate.

ARTICLE 9—DISTRIBUTIONS

9.1. Distributions. The Board of Managers shall cause the Company to make distributions to the Members in such amounts and at such intervals as the Board of Managers shall determine from time to time.

ARTICLE 10—TRANSFER OF UNITS

10.1. Company’s Restriction on Transfer. The Company shall neither cause nor permit the transfer of any Units by Members to be made unless the transfer is permitted by this Agreement and has been made in accordance with its terms.

10.2. Member’s Restriction on Transfer. No Member may, directly or indirectly, voluntarily or involuntarily, sell, assign, transfer, pledge, gift, encumber or otherwise dispose of any Units now or hereafter owned by him except as permitted by this Agreement and made in accordance with its terms. Any direct or indirect, voluntary or involuntary, sale, assignment, transfer, pledge, gift, encumbrance or other disposition in violation of this Agreement shall be void and shall not (i) operate to pass legal or beneficial ownership to such Units, or (ii) make the intended recipient a third-party beneficiary of this Agreement. The parties acknowledge that the pledge of Units by Members to the Institutional Lender(s) providing Secured Financing to the Company is permitted by this Agreement.

10.3. Transfers Prohibited by Company’s Agreements. Notwithstanding anything to the contrary contained in this Agreement, no transfer of any Units shall be consummated if the transfer would violate any provision of any agreement to which the Company is a party or by which the Company or its assets are bound or affected, unless a written and signed consent to the transfer is obtained from all third parties who are intended to be benefited by the transfer restriction.

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10.4. Permitted Transfers. With notice to the Company, the following transfers may be made by a Member:

10.4.1. any transfer of Units pursuant to ARTICLE 11;

10.4.2. a bona fide pledge of such Member’s Units to secure the indebtedness of the Company and the transfer of the pledged Units to the pledgee or its permitted designee upon the default by the Company of such indebtedness;

10.4.3. a transfer of up to 500 Common Units by any one Member to an entity controlled by such Member for the benefit of any employees or consultants of any company controlled by that Member;

10.4.4. a transfer pursuant to a merger or consolidation of the Company with or into another Person;

10.4.5. a transfer of all, but not less than all, of such Member’s Units to a wholly owned subsidiary of such Member, provided that such subsidiary has agreed in writing to be bound by and subject to all of the terms and conditions of this Agreement.

10.5. Certain Conditions to Transfers; Assignees.

10.5.1. A Transferee will become a Member and be entitled to exercise the rights of a Member if he satisfies the conditions of Section 10.5.2 of this Agreement. Any Transferee who does not satisfy the conditions of Section 10.5.2 will not be a Member and will be a mere assignee (an “Assignee”) who is only entitled to receive, to the extent assigned, the distributions and allocation of profits and losses to which the transferring Member would otherwise be entitled.

10.5.2. A Transferee shall be admitted as a Member and have all of the rights of a Member only if:

(a) the Company receives a copy of the instrument effecting the transfer of the Units to the Transferee;

(b) the Transferee’s admission as a Member will not, in the opinion of legal counsel for the Company, jeopardize the then-effective federal income tax treatment of the Company, or violate, or cause the Company to violate, any applicable laws, rules, or regulations, including, but not limited to, any provisions of state and federal securities law;

(c) the Transferee makes such representations to the Company as the Company reasonably requires;

(d) the Transferee’s admission as a Member will not be a violation of any agreement to which the Company is a party, or by which the Company or its assets may be bound or affected;

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(e) the Transferee (other than pursuant to a transfer described in Section 10.4.2) agrees to pay all of the fees and costs incurred by the Company in connection with the transfer, including any legal fees incurred by the Company; and

(f) the Transferee agrees in writing to accept the Units subject to all the terms, conditions, rights and restrictions contained in this Agreement.

10.5.3. Upon admission of as a Member under this Section 10.5, such Transferee shall assume all of the obligations of the transferring Member with respect to the Interest acquired, and shall have all of the rights and powers of a Member, shall be subject to all of the restrictions applicable to Members, and shall attain the status of Member and shall in all respects be a Member of the Company.

10.6. Effect of Assignments on Member Status. Any Member who assigns or who is deemed to have assigned any of such Member’s Units to an Assignee shall forfeit such Member’s voting rights under this Agreement as to the Membership Interest assigned. Any Member who assigns all of such Member’s Membership Interest to an Assignee or Assignees shall no longer be a Member of the Company.

ARTICLE 11—CHANGE OF CONTROL TRANSACTION

11.1. Change of Control Transaction. A “Change of Control Transaction” means: (a) any bona fide sale of Common Units by Members or by the Company that results in any Person, or group of Persons acting in concert, owning more than fifty percent (50%) of the outstanding Common Units, in either case that did not own more than fifty percent (50%) prior to such sale; or (b) any merger or consolidation of the Company with or into any other Person that results in any Person, or group of Persons acting in concert, owning more than fifty percent (50%) of the outstanding Common Units or other common equity in the surviving Person, in either case that did not own more than fifty percent (50%) prior to such merger or consolidation.

11.2. Requirements for Change of Control Transaction. No Change of Control Transaction shall be permitted unless:

11.2.1. A Manager or Member who desires to consummate the Change of Control Transaction (the “Proponent”) shall give each Member written notice of the proposed terms of the Change of Control Transaction (the “Change of Control Transaction Notice”) at least 30 days prior to consummation thereof.

11.2.2. Any consideration received for Common Units by the holders thereof in connection with the Change of Control Transaction is allocated among such holders pro rata in accordance with the number of Common Units held immediately prior to the Change of Control Transaction by each Member.

11.3. Participation in Change of Control Transaction. Within ten (10) business days after receiving a Change of Control Transaction Notice, each Member shall give written notice to the Proponent and the Company whether such Member approves of the Change of Control Transaction. Failure to deliver a notice within such period of ten business days shall be deemed

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a vote to disapprove the Change of Control Transaction. If the Change of Control Transaction is approved in accordance with Section 11.4, the Company and/or the Proponent shall proceed to consummate the Change of Control Transaction. Each Member and Manager shall execute, acknowledge and deliver such instruments of conveyance and transfer and such other documents and take such other actions as the Proponent reasonably requires to consummate the Change of Control Transaction.

11.4. Approval of Change of Control Transaction. Consummation of a Change of Control Transaction meeting the requirements of Section 11.2 shall require the approval of the holders of two-thirds of the Common Units.

ARTICLE 12—ACCOUNTING, RECORDS, REPORTING TO AND BY MEMBERS

12.1. Books and Records. The books and records of the Company shall be kept, and the financial position and the results of its operations recorded, in accordance with the accounting methods selected by the Board of Managers. The books and records of the Company shall reflect all the Company’s transactions and shall be appropriate and adequate for the Company’s business. The Company shall maintain at its principal office all of the following:

(a) a current list of the full name and last known business or residence address of each Member and Assignee, set forth in alphabetical order, together with the Capital Contributions, Capital Account, Class A Units and Class F Units, and Percentage Interests of each Member or Assignee;

(b) a current list of the full name and residence address of each Manager;

(c) a copy of the Articles of Organization and any and all amendments thereto;

(d) a copy of this Agreement and any and all amendments hereto;

(e) copies of the financial statements of the Company, if any, for the six (6) most recent fiscal years;

(f) copies of the Company’s federal, state and local income tax returns and reports, if any, and any other tax returns or reports filed by or on behalf of the Company in any other jurisdiction, for its six (6) most recent fiscal years; and

(g) the Company’s books and records as they relate to the internal affairs of the Company for at least the current and its past four (4) fiscal years.

12.2. Delivery to Members and Inspection.

12.2.1. Upon the request of any Member, the Managers shall promptly deliver to the requesting Member, at the expense of the Company, a copy of the information required to be maintained under Sections 12.1(a) through 12.1(d) of this Agreement.

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12.2.2. Each Member and Manager has the right to:

(a) inspect and copy during the normal business hours of the Company the records described in Section 12.1 of this Agreement; and

(b) obtain from the Board of Managers, promptly after its becoming available, a copy of the Company’s federal, state and local income tax or information returns and reports and any tax returns and reports filed in any other jurisdiction, for each fiscal year of the Company.

12.2.3. Within ninety (90) days after the end of each fiscal year and within sixty (60) days of the end of each fiscal quarter, the Board of Managers shall cause each Member to be furnished with a copy of the balance sheet of the Company as of the last day of the applicable period, a statement of income or loss for the Company for such period and a statement of year-to-date results through such period. Annual statements shall be audited by the Company’s accountants.

12.2.4. Any inspection or copying by a Member under this Section 12.2 may be made by that Person or that Person’s agent or attorney.

12.3. Filings. The Managers, at Company expense, shall cause the income tax returns for the Company to be prepared and timely filed with the appropriate authorities. The Managers, at Company expense, shall also cause to be prepared and timely filed, with appropriate federal and state regulatory and administrative bodies, amendments to or restatements of, the Articles of Organization and all reports required to be filed by the Company with those entities under the LLC Law or other then-current applicable laws, rules and regulations. If a Manager required by the LLC Law to execute or file any document fails, after demand, to do so within a reasonable period of time or refuses to do so, any other Managers or Member may prepare, execute and file that document with the Secretary of State.

12.4. Bank Accounts. The Board of Managers shall maintain the funds of the Company in one or more separate bank accounts in the name of the Company, and shall not permit the funds of the Company to be commingled in any fashion with the funds of any Member, Manager or other Person.

12.5. Accounting Decisions and Reliance on Others. All decisions as to accounting matters, except as otherwise specifically set forth herein, shall be made by the Board of Managers. The Board of Managers may rely upon the advice of the Company’s accountants with respect to accounting matters.

ARTICLE 13—DISSOLUTION AND LIQUIDATION

13.1. Dissolution. The Company shall be dissolved and its affairs wound up only upon the vote of the holders of two-thirds of the Common Units. The Members and each Person who subsequently becomes a Member and a party to this Agreement hereby agree in advance that the business of the Company will automatically continue and will not dissolve upon the occurrence of any event described in Section 701(d) of the LLC Law.

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13.2. Liquidation.

13.2.1. Upon the dissolution of the Company under Section 13.1 of this Agreement, the Company shall cease to engage in any further business, except to the extent necessary to perform existing obligations, and shall wind up its affairs and liquidate its assets. The Board of Managers, or if there be no Managers then in office, the Members (by a vote of the holders of two-thirds of the Common Units) shall appoint a liquidating trustee (who may, but need not, be a Member) who shall have sole authority and control over the winding up and liquidation of the Company’s business and affairs and shall diligently pursue the winding up and liquidation of the Company in accordance with the LLC Law. As soon as practicable after his or her appointment, the liquidating trustee shall cause to be filed articles of dissolution as required by Section 705 of the LLC Law.

13.2.2. During the course of liquidation, the Members shall continue to share Taxable Income or Loss as provided in Section 8.1 of this Agreement, but there shall be no cash distributions to the Members until the Distribution Date (as defined in Section 13.3 of this Agreement).

13.3. Liabilities. Liquidation shall continue until the Company’s affairs are in such condition that there can be a final accounting, showing that all contingent, fixed or liquidated obligations and liabilities of the Company are satisfied or can be adequately provided for under this Agreement. The assumption or guarantee in good faith by one or more financially responsible Persons shall be deemed to be an adequate means of providing for such obligations and liabilities. When the liquidating trustee has determined that there can be a final accounting, the liquidating trustee shall establish a date (not to be later than the end of the taxable year of the liquidation, i.e., the time at which the Company ceases to be a going concern as provided in Section 1.704-1(b)(2)(ii)(g) of the Income Tax Regulations, or, if later, ninety (90) days after the date of such liquidation) for the distribution of the proceeds of liquidation of the Company (the “Distribution Date”). The net proceeds of liquidation of the Company shall be distributed to the Members as provided in Section 13.5 of this Agreement not later than the Distribution Date.

13.4. Settling of Accounts. Subject to Section 704 of the LLC Law, upon the dissolution and liquidation of the Company, the proceeds of liquidation shall be applied:

(a) First, to pay all debts, obligations and liabilities of the Company (whether by payment or by establishment of reserves), in the order of priority as provided by law, other than debts owing to the Members or on account of Members’ Capital Contributions;

(b) Second, to pay all debts of the Company owing to Members; and

(c) Then, to establish reasonable reserves for any remaining contingent or unforeseen liabilities of the Company not otherwise provided for, which reserves shall be maintained by the liquidating trustee on behalf of the Company in a regular interest-bearing trust account for a reasonable period of time as determined by the liquidating trustee.

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If any funds remain in such reserves at the end of such reasonable time, the remaining funds shall be distributed to the Members pursuant to Section 13.5 of this Agreement.

13.5. Distribution of Net Proceeds. Upon final liquidation of the Company, but not later than the Distribution Date, the net proceeds of liquidation shall be distributed to the Members holding Common Units in proportion to their Percentage Interests as set forth on Exhibit A.

ARTICLE 14—INDEMNIFICATION AND INSURANCE

14.1. Indemnification for Acts or Omissions. The Company shall indemnify, defend, and hold harmless each Manager and officer of the Company from and against any and all losses, claims, damages, liabilities, costs, expenses (including legal and other professional fees and disbursements), judgments, fines, settlements, and other amounts (“Indemnification Obligations”) relating to any liability or damage incurred by reason of any act performed or omitted to be performed by such Manager or officer in connection with the business of the Company, except to the extent that a court of competent jurisdiction has adjudicated that such Indemnification Obligation arises solely from the gross negligence, willful misconduct or bad faith of such Manager or officer. The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that such Indemnification Obligation resulted from the gross negligence, willful misconduct or bad faith of such Manager or officer.

14.2. Indemnification Against Environmental Liabilities. The Company shall indemnify, defend, and hold harmless, to the maximum extent permitted by law, each Member, Manager, and officer from and against any and all Indemnification Obligations, including without limitation, any taxes, response and remediation costs, stabilization costs, treatment, storage or disposal costs, environmental study, sampling or monitoring costs, imposed upon or incurred by any Member, Manager or officer arising after the date of this Agreement directly or indirectly from:

(a) the past, present, or future treatment, storage, disposal, generation, use, transport, movements, presence, release, threatened release, spill, installation, sale, emission, injection, leaching, dumping, escaping or seeping of any hazardous substance or material containing or alleged to contain a hazardous substance at or from any past, present or future properties or assets of the Company; and/or

(b) the violation or alleged violation by the Company or any third party of any environmental laws with regard to the past, present or future ownership, operation, use, or occupying of any properties or assets of the Company.

14.3. Advance of Expenses. To the fullest extent permitted by applicable law, expenses (including reasonable legal fees) incurred by a party entitled to indemnification pursuant to Section 14.1 or 14.2 in any proceeding referred to in such sections shall, from time to time, be advanced by the Company prior to the final disposition of such proceeding upon receipt

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by the Company of an undertaking by or on behalf of such party to repay such amount if it shall be determined by a court of competent jurisdiction having final or unappealed dispositive authority over such matter that such party is not entitled to be indemnified as authorized in this Article.

14.4. Payments if Indemnification Unavailable. If for any reason (other than the gross negligence or willful misconduct of such party) the foregoing indemnification is unavailable to a party otherwise entitled to indemnification pursuant to Sections 14.1 or 14.2, or is insufficient to hold him harmless, then the Company shall contribute to the amount paid or payable by such party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and such party on the other hand or, if such allocation is not permitted by applicable law, to reflect not only the relative benefits referred to above but also any other relevant equitable considerations.

14.5. Contractual Article. The rights conferred by this Article 14 are contract rights which shall not be abrogated by any amendment or repeal of this Article 14 with respect to events occurring prior to such amendment or repeal. No amendment of the LLC Law, insofar as it may reduce the permissible extent of the right of indemnification of any Person under this Article 14, shall be effective as to such Person with respect to any event, act or omission occurring or allegedly occurring prior to the effective date of such amendment, irrespective of the date of any claim or legal action in respect thereof. This Article 14 shall be binding on any successor to the Company, including without limitation any Person which acquires all or substantially all of the Company’s assets.

14.6. Non-Exclusivity. The indemnification provided by this Article 14 shall not be deemed exclusive of any other rights to which any Person covered hereby may be entitled other than pursuant to this Article 14. The Company is authorized to enter into agreements with any such Person providing rights to indemnification or advancement of expenses in addition to the provisions therefor in this Article 14, and the Board of Managers is authorized to adopt, in their discretion, resolutions providing any such person with any such rights.

14.7. Insurance.

14.7.1. The Company may maintain insurance, at its expense, to protect itself and any Member, Manager, or officer of the Company or of any other company, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this Article 14 or applicable law.

14.7.2. The Company shall carry and maintain such other insurance as may be required by the terms of the Secured Financing as in effect on the date hereof.

ARTICLE 15—MISCELLANEOUS

15.1. Termination of Restrictions on Transfer. The provisions of Articles 10, 11, and 12 shall terminate and be of no further force and effect immediately upon the closing of an initial firm commitment underwritten public offering of equity securities of the Company or its successor pursuant to an effective registration statement on Form S-1 under the Securities Act of 1933 covering the offer and sale of equity securities by the Company to the public at an aggregate offering price of at least $25,000,000.

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15.2. Entire Agreement. This Agreement, and the exhibits hereto, constitutes the entire agreement with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties with respect to the subject matter of this Agreement, including the Prior Agreement. No party hereto shall be liable or bound to the other in any manner by any warranties, representations or covenants with respect to the subject matter hereof except as specifically set forth herein.

15.3. Binding Agreement. Subject to the restrictions on transfers set forth in Articles 10 and 11, this Agreement shall inure to the benefit of and be binding upon the Members and their respective heirs, executors, legal representatives, successors and assigns. Whenever, a reference is made to any party or Member, such reference shall be deemed to include a reference to the heirs, executors, legal representatives, successors and assigns of such Member.

15.4. Amendments.

15.4.1. The affirmative vote of the holders of two-thirds of the Common Units (together with any approval of the NOMI Holders that may be required by Section 2.8.7) shall be required to adopt, amend, restate or revoke the Articles of Organization or this Agreement.

15.4.2. No amendment of this Agreement may, except pro rata in accordance with the number of Common Units held by each Common Member or with the written consent of any Common Member disproportionately adversely affected thereby, (a) alter the allocation to the Common Members for tax purposes of any items of income, gain, loss, deduction or credit, or (b) alter the manner of computing the distributions to Common Members.

15.5. Form of Pronouns; Number; Construction. Unless the context otherwise requires, as used in this Agreement, the singular number includes the plural and the plural number may include the singular. The use of any gender shall be applicable to all genders. Unless otherwise specified, references to Sections or Articles are to the Sections or Articles in this Agreement. Unless the context otherwise requires, the term “including” shall mean “including, without limitation”.

15.6. No Waiver. No consent or waiver, express or implied, by the Company or a Member to or of any breach or default by any Member or Manager in the performance by such Member or Manager of his or its obligations under this Agreement shall constitute a consent to or waiver of any similar breach or default by that or any other Member or Manager. Failure by the Company or a Member to complain of any act or omission to act by any Member or Manager, or to declare such Member or Manager in default, irrespective of how long such failure continues, shall not constitute a waiver by the Company or such Member of his or its rights under this Agreement.

15.7. Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any creditor of the Company or any other Person, other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

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15.8. Severability. If one or more provisions of this Agreement are held by a proper court to be unenforceable under applicable law, portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by law, shall be severed from this Agreement, and the balance of this Agreement shall be enforceable in accordance with its terms.

15.9. Governing Law. This Agreement shall be governed by and construed under the substantive laws of the State of New York, without regard to New York choice of law principles.

15.10. Notices. Unless otherwise provided in this Agreement, any notice or other communication herein required or permitted to be given shall be in writing and shall be given by electronic communication, hand delivery, registered or certified mail, with proper postage prepaid, return receipt requested, or courier service regularly providing proof of delivery, addressed to the party hereto as provided as follows:

(a) All communications intended for the Company shall be sent to the address of its principal executive office as set forth in Section 2.5 or such other address as the Company shall have provided for such purpose; and

(b) All communications intended for a Member shall be sent to the address of such Member set forth on Exhibit A to this Agreement, or such other address as such Member shall have provided for such purpose.

A notice or communication will be deemed effective: (a) if delivered by hand or sent by courier, on the day it is delivered unless that day is not a day upon which commercial banks are open for business in the city specified (a “Local Business Day”) in the address for notice provided by the recipient, or if delivered after the close of business on a Local Business Day, then on the next succeeding Local Business Day; (b) if sent by facsimile transmission, on the date transmitted, provided oral or written confirmation of receipt is obtained by the sender, unless the transmission and confirmation date is not a Local Business Day, in which case on the next succeeding Local Business Day; (c) if sent by registered or certified mail, on the fifth Local Business Day after the date of mailing.

15.11. Titles and Subtitles. The titles of the Articles and Sections of this Agreement are for convenience only and are not to be considered in construing this Agreement.

15.12. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and shall become effective when there exist copies hereof that, when taken together, bear the authorized signatures of each of the parties hereto. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

IN WITNESS WHEREOF, the Sole Member hereby executes this Second Amended and Restated Operating Agreement as the date first set forth above.

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AMERICAN ROCK SALT HOLDINGS LLC,
Sole Member
By:	/s/ Gunther K. Buerman
	Gunther K. Buerman
	Chairman

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EXHIBIT A

	Ownership Units
Investor Name (Address Omitted)	Class A Units	Class F Units
American Rock Salt Holdings LLC	6,250	12,750

EXHIBIT B

ALLOCATION OF NOMIs

Name of Founder (Addresses and Tax i.d. Numbers Omitted)	Allocation Percentage
Gunther K. Buerman	33.3230	%
Salt of the Earth, LLC	0.7833	%
Joseph G. Bucci	31.9522	%
Neil L. Cohen	27.8293	%
Fedele V. Scutti	2.5768	%
Charles L. VanArsdale	3.5354	%

EX-12.1

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

AMERICAN ROCK SALT CO. LLC

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES ⁽¹⁾

	Fiscal Years Ended September 30,
	2008		2007		2006		2005		2004
	(dollars in thousands)
Fixed Charges:
Plus: Interest Expense	$	11,843	$	11,719	$	12,007	$	11,399	$	10,700
Plus: Amortization of Capitalized Interest		1,664		1,075		1,014		1,014		1,014
Plus: Rentals		158		202		246		181		179
Plus: Amortization of Deferred Financing Costs		560		731		771		777		411
Total fixed charges		14,225		13,727		14,038		13,371		12,304
Earnings:
Net Income		38,105		10,409		14,108		11,015		11,179
Fixed Charges		14,225		13,727		14,038		13,371		12,304
Total		52,330		24,137		28,147		24,387		23,483
Ratio of earnings to fixed charges		3.68		1.76		2.01		1.82		1.91

(1) For purposes of computing the ratio of earnings to fixed charges, earnings consist of net income before fixed charges (the Company does not incur income taxes). Fixed charges consist of interest expense, including the amortization of deferred debt issuance costs, the amortization of capitalized interest, and a reasonable appropriation of the interest companent of our operating rents.

(2) As discussed in footnote 2 to the Company’s audited financial statements, in September 2006, the Company changed the method of amortizing mine development costs to a units-of-production method, which change has been retroactively applied. The Income Statement impacts of the change were to reduce cost of sales-products by $1,934, $2,036 and $2,919 for the fiscal years 2005, 2004, and 2003, respectively, with corresponding increases to Net Income to members for each year. The change had no impact on total operating cash flows.

EX-31.1

Exhibit 31.1

I, Gunther K. Buerman, certify that:

1. I have reviewed this report on Form 10-K of American Rock Salt Company LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15((f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	American Rock Salt Company LLC
Date: December 22 , 2008	/s/ Gunther K. Buerman
	Gunther K. Buerman
	Chairman, Executive Committee Member
	Co-Principal Executive Officer

EX-31.2

Exhibit 31.2

I, Joseph G. Bucci, certify that:

1. I have reviewed this report on Form 10-K of American Rock Salt Company LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15((f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	American Rock Salt Company LLC
Date: December 22, 2008	/s/ Joseph G. Bucci
	Joseph G. Bucci
	Vice Chairman, Operations Executive Committee Member
	Co-Principal Executive Officer

EX-31.3

Exhibit 31.3

I, Neil L. Cohen, certify that:

1. I have reviewed this report on Form 10-K of American Rock Salt Company LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15((f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	American Rock Salt Company LLC
Date: December 22, 2008	/s/ Neil L. Cohen
	Neil L. Cohen
	Vice Chairman, Finance and Marketing
	Executive Committee Member
	Co-Principal Executive Officer

EX-31.4

Exhibit 31.4

I, Ann M. Blake, certify that:

1. I have reviewed this report on Form 10-K of American Rock Salt Company LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15((f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	American Rock Salt Company LLC
Date: December 22, 2008	/s/ Ann M. Blake
	Ann M. Blake
	Principal Financial Officer