EXHIBIT 10.3

COAL LEASE

THIS LEASE made and entered into this 20th day of April 2010, is by and between:
(i) Ranger Energy Investments, LLC, a Delaware limited liability company
(“Lessee”); and (ii) National Coal Corporation, a Tennessee corporation
(“Lessor”).

W I T N E S S E T H:

That for and in consideration of the payments herein provided and the
performance and observance by Lessor and Lessee of the terms and conditions
herein agreed to be kept and performed, Lessor hereby demises, grants, leases
and lets unto said Lessee the exclusive right, option and privilege to mine coal
by all mining methods, including both surface and underground mining methods
(whether now in use or invented or utilized in the future) and to remove,
develop, process, sell and market coal (the “Coal”) within that certain tract of
land more particularly described on Exhibit “A” and as shown on the map
designated as Exhibit “B” both of which are attached hereto, and made a part of
this Lease, which property, along with all mining rights and privileges set
forth in this Lease are hereinafter collectively referred to as the “Property”.

It is mutually covenanted and agreed between the parties hereto as follows:

1. Lessee’s Rights. Lessor, for the consideration herein set forth, further
gives, grants, lets and demises unto Lessee, the following rights to conduct
activities on the Property related to its contemplated operations (collectively
the “Mining Operations”), and any related rights or privileges:

a. All the mining rights, easements and privileges as may be reasonably
necessary for or incidental to the mining (by all mining methods), removing,
development, processing, sale and marketing of the Coal including, without
limitation, the right to enter in,

 

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upon and under the Property and erect any necessary structures, rooms, mines,
tramroads, air shafts, power lines, substations, drains and drainways, and to
operate the same therein or thereunder as may be reasonably necessary for the
mining, development, excavating and removal of the Coal to market.

b. The right to conduct Mining Operations in conjunction with operations on
other lands as a single operation, without regard to property lines, and, in
particular, to exercise all rights granted hereby in connection with mining from
other tracts and other mining and coal related activities, including but not
limited to the right to deposit fill, slurry, mine spoil, coal refuse and coal
combustion by-products, including, but not limited to bottom ash and fly ash,
from whatever origin, on the Property, including in mining voids and abandoned
mine works or other voids within the Property.

c. With respect to any surface overlying the Property that is now, or in the
future, owned by Lessor or its affiliates, Lessor shall, and shall cause its
affiliates to, lease such surface property to Lessee for no additional rent or
consideration pursuant to a reasonable and customary mining surface lease
promptly upon written request by Lessee. Exhibit “C” attached hereto and
incorporated herein by reference, is a map indicating the approximate location
of all surface property owned by Lessor and its affiliates overlying the
Property.

2. Term. The term of this Lease shall be until the earlier of exhaustion of all
mineable and merchantable Coal or July 4, 2093 (the “Term”). Lessee however may
surrender or terminate this Agreement at anytime during the Term by giving
Lessor sixty (60) days written notice thereof.

 

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3. Minimum Royalties.

Commencing upon execution of this Lease and on a year-to-year basis during the
Term thereafter, Lessee covenants and agrees to pay Lessor a minimum annual
royalty (the “Minimum Royalty”) in an amount equal to Two Dollars ($2.00) per
acre for each acre of land included within the Property as of January 1 of such
calendar year, with such amount pro-rated for partial years. All Minimum Royalty
payments shall be recoupable by the Lessee in the following manner. If the total
amount of the Production Royalties paid by Lessee pursuant to Section 4(a)
hereof during any calendar year reaches the amount of the Minimum Royalty paid
by Lessee for that calendar year, Lessee may thereafter mine and sell additional
Coal from the Property during such calendar year without paying Lessor any
Production Royalty therefor, until the Production Royalty which would otherwise
be payable for such coal equals the amount of any remaining unrecouped Minimum
Royalty, including the current year’s Minimum Royalty.

4. Production Royalties.

a. Lessee covenants and agrees to pay Lessor, as a production royalty
(“Production Royalties”), six percent (6%) of the Gross Sales Price of Coal
mined and sold from the Property using underground mining methods, and eight
percent (8%) of the Gross Sales Price of Coal mined and sold from the Property
using surface mining methods, inclusive of auger, highwall miner, and thin seam
miner methods. All such payments shall be made, without demand or setoff, to
Lessor at the address for Lessor set forth in Section 18 hereof, until such
times as Lessor, by written notice to Lessee, may otherwise appoint or direct.
“Gross Sales Price” shall mean the monthly average amount of money received per
ton, directly or indirectly, from the sale of Coal F.O.B. railroad cars, trucks
or barges or any other form of transportation or upon such other shipping terms
as are applicable at any tipples, docks or other load-out facilities

 

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at which the Coal is processed and loaded into railroad cars, trucks, barges or
any other form of transportation, without any deduction for selling expenses,
sales commissions or demurrage charges. If the Coal is transported directly to
the consumer, the Gross Sales Price calculation shall include the amount of
money per ton paid or payable by the consumer. If the Coal is sold in the pit or
at the mine, the Gross Sales Price shall include the trucking costs to any
tipples, docks or other load-out facilities.

b. On or before the 30th day of each calendar month, Lessee shall account to
Lessor for all Coal mined, removed and sold during the preceding calendar month,
and Lessee shall pay to Lessor the Production Royalty due for the preceding
calendar month.

5. Determination of Quantity and Inspection of Records. For the purpose of
calculating Production Royalties payable hereunder, the quantity in tons of Coal
mined and removed from the Property shall be determined by the method used by
the purchaser of such coal to pay for same.

Lessee, or its permitted Sublessee, shall keep the books and accounts for all
Coal mined and removed from the Property, and said books shall be open at all
reasonable times for inspection by the Lessor, and the Lessor shall have the
right to enter in and upon the Property for inspection purposes, and for such
other rightful purposes as may be deemed necessary. However, for safety purposes
the Lessor shall, in advance and except in cases of emergency, notify Lessee’s
designated representative of Lessor’s desire to enter the Property. Furthermore,
Lessor shall indemnify and save harmless Lessee for any injury or damage to
persons or property that it or its agents, contractors, employees or designees
may suffer or incur during said inspection, unless the result of the intentional
or negligent act or omission of Lessee or its agents, contactors, employees or
designees.

 

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6. Prudence. Unless otherwise agreed in writing by Lessor and Lessee, Lessee
covenants to utilize modern mining methods and coal cleaning machinery and
equipment, all in a manner consistent with prudent mining practices in East
Tennessee.

7. Compliance with Laws and Regulations. Lessee shall be responsible for
complying with all laws and governmental regulations, including environmental
laws and regulations, related to or controlling mining and related operations by
Lessee with respect to the Coal then in effect, which responsibility shall
survive termination of this Lease. If Lessee violates any applicable laws or
governmental regulations, then Lessee shall indemnify Lessor and hold it
harmless from any penalties, fines, costs, and expenses, imposed upon or
incurred by Lessor as a result of said violation or violations. Notwithstanding
any of the foregoing, Lessor shall not declare a default hereunder solely as a
result of one or more operational violations which Lessee cures or abates as
promptly as practicable.

8. Environmental Obligations. Upon the expiration or earlier termination of this
Lease, Lessee shall leave the Property in a secure state, consistent with good
mining practice and in compliance in all material aspects with applicable mining
regulations. Notwithstanding any termination or expiration of this Lease, Lessee
shall have, and Lessor hereby grants to Lessee, all rights of entry onto the
Property necessary in connection with Lessee’s performance of reclamation
obligations and compliance with applicable mining laws and regulations.

9. Assignment and Subletting. Lessee covenants and agrees that it will not sell,
assign, sublease, license, mortgage, pledge or otherwise transfer or encumber
(collectively, “transfer”) this Lease or any rights, interests or estates
created by this Lease, either voluntarily or by operation of law, without having
first obtained the written consent of Lessor, which consent shall not be
unreasonably withheld, delayed or conditioned, and in the case of an assignment,
without

 

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obtaining and presenting to Lessor a covenant of assumption by the assignee,
wherein such assignee expressly agrees to and with Lessor to assume and be bound
by all of the covenants, terms, conditions and provisions hereof to the same
extent as if said assignee had been named as the original Lessee.
Notwithstanding anything herein to the contrary, Lessee may transfer this Lease,
or any rights, interests or estates created by this Lease to an entity that is
an Affiliate of Lessee, its permitted successors or assigns, without consent.
For purposes of this Lease, “Affiliate” shall mean an entity of which Jim
Justice or his lineal descendants, collectively, are beneficial owners of
fifty-one percent (51%) or more of any class of equity security or interest.

10. Taxes. Lessee shall pay all taxes, levies, assessments and other charges
imposed by the United States, the State of Tennessee or any political
subdivision thereof upon all equipment and improvements of Lessee placed on the
Property, and all ad valorem taxes and all other taxes and assessments of
whatsoever kind or nature with respect to the Property.

11. Removal of Improvements Upon Termination. Notwithstanding all other
provisions herein, at the termination of this Lease, whether by expiration,
forfeiture, surrender or earlier termination for any reason, Lessee shall have
for a period of six (6) months thereafter the right and privilege of removing
all of the personal property, machinery, equipment and improvements placed by
Lessee in, on or underlying the Property.

12. Indemnification and Insurance.

a. Lessee covenants and agrees to indemnify, defend and save harmless Lessor and
its/their officers, directors, shareholders, employees, agents, heirs, personal
representatives, successors and assigns from all costs, expenses, damages, fees,
liabilities, obligations, penalties, charges, disbursements and claims, both
direct and indirect (including, without limitation, reasonable attorneys’ fees
and court costs), which arise out of or are asserted,

 

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either in whole or in part, directly or indirectly, because of (i) the use,
occupancy, exercise or operations by Lessee or its sublessees, assignees,
contractors, employees, agents or representatives, or any of their successors or
assigns, of the Property or the property interests or rights granted to Lessee
pursuant to this Lease other than for claims brought by third-parties relating
to the adequacy of surface rights related to mining of the coal; (ii) any
misrepresentation or breach of any covenant, agreement, obligation or warranty
on the part of Lessee contained herein; or (iii) any act or omission by Lessee
or its sublessees, assignees, contractors, employees, agents or representatives,
or any of their successors or assigns, in the course of mining operations,
reclamation activities, or otherwise in pursuance of the terms hereof or
exercise of the rights or privileges granted hereunder other than for claims
brought by third-parties relating to the adequacy of surface rights related to
mining of the coal.

b. Lessee shall maintain comprehensive and general liability insurance with a
reputable company or companies in an amount not less than $5,000,000.00,
combined single limit. All said insurance shall protect both Lessee and Lessor
in the exercise of the rights granted and conveyed hereunder.

c. Lessee shall maintain proper polices of Workers’ Compensation insurance in
full compliance with the laws of the State of Tennessee and of the United States
now in effect or which may hereinafter be enacted regulating the operations of
coal mining, same including but not limited to so-called “Black Lung Insurance”.

13. Mining. Lessee covenants and agrees to diligently conduct its mining
operations on the Property in a workmanlike manner so as to mine and remove all
of the mineable and merchantable coal. As used herein, “mineable and
merchantable coal” shall mean coal that, when reached during Lessee’s operations
hereunder, can be mined at a profit in the then

 

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prevailing coal market, by the use of such modern mining methods and such modern
mining and cleaning equipment as are reasonably adapted to practical, efficient,
and economical mining under the conditions found. This definition will be
applied to the general conditions of the property, or a particular portion or
section thereof, and not to local coal conditions (for example, thickness of
seam or character of coal), temporary labor costs and/or market conditions that
may make mining temporarily less profitable. In determining whether any of the
coal can be mined at a profit, due consideration will be given to the profits or
losses of Lessee on coal theretofore mined from the Leased Premises.

14. Unknown or Missing owners; loss of title. In the event other persons or
entities own an interest in the Property, then and in such event, all payments
due hereunder shall be reduced proportionately by the percentage of the interest
owned by such other parties.

15. Possible Adverse Claims. It is understood that in the event an adverse claim
to the rights granted herein or to the Property or any portion thereof covered
by this Lease is made or asserted by other parties, then and in that event, the
Lessee shall have the right, at its option, to withhold payment to Lessor of
royalties due hereunder or pay the same into a court of competent jurisdiction
until such time as such adverse claim is finally resolved and shall have the
further right, insofar as the rights of Lessor hereunder are concerned, to
acquire, by lease or purchase, from such adverse claimant, their asserted
interest in the Property.

16. Warranty. Lessor does hereby covenant to and with Lessee, its successors and
assigns, that Lessor has good right to execute this Lease, that the Property is
free and clear of all liens and encumbrances of whatsoever nature, or all
necessary consents have been obtained, or if the Coal is subject to liens and
encumbrances, that Lessor will pay all amounts owing in connection with such
liens and encumbrances on the Coal as same become due and that Lessor

 

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does hereby warrant specially its title to the Property against all claims of
all persons claiming by, through or under Lessor. Notwithstanding anything
herein to the contrary, this Lease is subject to all the terms and conditions
contained in: (i) that certain Limited Warranty Deed from Tennessee Mining, Inc.
to Champion International Corporation (“Champion”) dated July 21, 1994 and of
record in Deed Book Z18, page 265, in the Register’s Office for Anderson County,
Tennessee, and in Book 324, Page 715, in the Register’s Office for Campbell
County, Tennessee; that certain Assignment of Real Property Purchase Rights from
Tennessee Mining, Inc. to Cumberland Timber Company, LLC, of record in Book
1278, Page 754, in the Register’s Office for Anderson County, Tennessee; that
certain deed from Cumberland Timber Company, LLC to National Coal Corporation of
record in Book 1342, Page 716 in the Register’s Office for Anderson County,
Tennessee (the “Deeds”); (ii) that certain Assignment between Cumberland Timber
Company, LLC and National Coal Corporation of record in Book 1342, Page 834 in
the Register’s Office for Anderson County, Tennessee (the “Assignment”);
(iii) that certain Reciprocal Easement between Champion and TMI dated July 21,
1994 of record in Deed Book A19, page 49 in the Anderson County, Tennessee,
Register’s Office and Deed Book 325, page 543 in the Campbell County, Tennessee
Register’s Office (the “Reciprocal Easement”); and (iv) that certain Second
Amendment to Asset Purchase and Sale Agreement dated January 25, 1996 between
Addington Enterprises, Inc. (“Addington”) and Champion of record in Book 1251,
page 990 in the Anderson County, Tennessee Register’s Office and Book M45 page
181 in the Campbell County, Tennessee, Register’s Office (the “Second
Amendment”).

17. Force Majeure. In the event of any delay on the part of Lessor or Lessee in
the fulfillment or performance of any of its obligations, covenants, or
agreements hereunder, other than financial obligations when due, by reason of
any law, order, rule, regulation or act of

 

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government authority, fire, flood, earthquake, accident, explosion, war, civil
commotion, rail car shortage, or embargoes, destruction or breakdown of
equipment, labor disputes or other cause beyond the reasonable control of the
Lessee and which is not caused by the intentional or negligent act or omission
of Lessee, its agents or employees, then it shall not be liable in damages to
the other for such delay and the time fixed for the fulfillment or performance
by it or any such obligation, covenant or agreement may be extended by a period
necessary to accommodate any such case and the effects thereof. Lessee shall,
however, upon the happening of any event of force majeure, use all reasonable
efforts to remove as promptly as possible the cause of such force majeure;
provided, however, that Lessee shall not be required to compromise or settle
strikes, lockouts or other labor disputes.

18. Default; Forfeiture.

a. In the event of failure of the Lessee to make payment of any monies due
Lessor hereunder and said failure continues for ten (10) days after written
notice from Lessor, then Lessor, at Lessor’s option, may give Lessee written
notice of Lessor’ intention to declare a default. If said default is not
corrected within ten (10) days following the receipt of said notice, then
Lessor, at Lessor’s option, may declare this Lease forfeited and re-enter and
take possession of the Coal. In the event of any such forfeiture, Lessee shall
have the right to enter and utilize the Property at any and all times for the
purposes set out in Section 11 hereof and for reclamation purposes.

b. In the event of failure of Lessee to perform any other obligation required to
be performed hereunder and said failure continues for a period of thirty
(30) days, then Lessor, at Lessor’s option, may give Lessee written notice of
Lessor’ intention to declare a default. If said default is not corrected or
corrective measures have not been begun within thirty (30) days

 

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after the receipt of said notice (and thereafter continued with reasonable
diligence until such default is cured), then Lessor, at Lessor’s option, may
declare this Lease forfeited and re-enter and take possession of the Coal. In
the event of any such forfeiture, Lessee shall have the right to enter and
utilize the Property at any and all times for the purposes set out in Sections
11 hereof and for reclamation purposes.

c. In the event of any such default which is not cured as herein provided,
Lessor shall have all remedies at law and equity.

d. In the event of any dispute between the parties concerning this Lease and/or
the performance or obligations of the parties hereunder, the prevailing party
shall be entitled to recover its reasonable attorney’s fees.

19. Notices. All notices required or permitted herein shall be in writing and
either 1) hand-delivered, 2) sent by facsimile transmission, 3) sent by United
States certified mail with return receipt requested, or 4) sent by nationally
recognized overnight carrier, addressed as follows:

TO LESSEE:

TO LESSOR:

National Coal Corporation

8915 George Williams Road

Knoxville, TN 37923

Telephone: 865-690-6900

Facsimile: 865-691-998

Attention: President

All notices shall be effective and shall be deemed delivered: (i) if by personal
delivery, on the date of delivery if delivered during normal business hours, and
if not delivered during

 

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such normal business hours, on the next business day following delivery; (ii) if
by facsimile transmission or overnight courier service, on the next business day
following dispatch of such facsimile or overnight courier package; and (iii) if
by mail, on the third (3rd) business day after dispatch thereof. Any party may
change its address by notice to the other parties.

20. Time Is of the Essence. Time is of the essence with respect to all
obligations and rights of the parties under this Lease.

21. Governing Law. This Lease shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Tennessee. Each party
agrees that any action brought in connection with this Lease against another
shall be filed and heard in a court of competent jurisdiction in Tennessee.

22. Landlord-Tenant Relationship. Notwithstanding anything contained in this
Lease to the contrary, it is expressly understood, stipulated and agreed that
the relationship between Lessor and Lessee shall be that of landlord and tenant
and nothing herein shall be construed or interpreted as establishing between
Lessor and Lessee a relationship of partners, joint venturers, principal and
agent, vendor and purchaser, or any other relationship except that of landlord
and tenant.

23. Benefit and Binding Effect. This Lease shall be binding upon and inure to
the benefit of each party hereto and each of their respective heirs, personal
representatives, administrators, executors, successors, and permitted assigns.

24. Severability. The invalidity or unenforceability of any provision of this
Lease shall not affect the validity or enforceability of any one or more of the
other provisions. The parties agree that this Lease and all provisions thereof
shall be interpreted so as to give effect and validity to all of the provisions
hereof to the fullest extent permitted by law.

 

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25. Memorandum of Lease. If requested by Lessee, Lessor shall execute a
recordable memorandum of this Lease. Lessee shall pay the cost of recordation.

26. Entire Agreement. This Lease contains the entire agreement of the parties.
There are no covenants, conditions, or representations other than those stated
herein. This Lease shall not be amended or changed in any manner unless in
writing and executed by the parties hereto.

27. Rule of Construction Shall Not Apply. This Lease is the result of
negotiations between the parties and includes modifications and revisions
requested by each respective party and the rule of construction by the drafter
shall not apply.

28. Certification. Each party hereto agrees at any time and from time to time,
within ten (10) days after written request, to execute, acknowledge and deliver
to the other a written instrument in recordable form certifying that this Lease
is unmodified and in full force and effect (or if there have been modifications,
that it is in full force and effect as modified and stating the modifications),
the dates to which rent and other charges have been paid in advance, if any,
stating whether or not to the best knowledge of the signer of such certificate
or the party requesting such certificate is in default in the performance of any
covenant, agreement or condition contained this Lease and, if so, specifying
each such default of which the signer may have knowledge, and such other
information as may be requested by the requesting party, it being intended that
any such statement delivered pursuant to this section may be relied upon by any
prospective purchaser of the fee or any mortgagee of the fee or any interest in
this Lease or any assignee of any interest in this Lease.

29. Counterparts. This Lease may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same instrument.

Remainder of Page Intentionally Left Blank; Signature Pages Follow

 

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IN WITNESS WHEREOF, the parties have executed this Lease effective the day and
year first above written.

 

LESSOR:     NATIONAL COAL CORPORATION     By:  

/s/ Daniel A. Roling

    Its:   President & CEO LESSEE:     RANGER ENERGY INVESTMENTS, LLC     By:  

/s/ Stephen W. Ball

    Its:   President