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Exhibit 10.11

AMENDMENT No. 1 AND WAIVER (this “Amendment and Waiver”) dated as of
February 22, 2006, to the CREDIT AGREEMENT dated as of May 31, 2005 (the “Credit
Agreement”), among JAMES RIVER COAL COMPANY (the “Borrower”), the LENDERS from
time to time party thereto, PNC BANK, NATIONAL ASSOCIATION, as Administrative
Agent, and MORGAN STANLEY SENIOR FUNDING, INC., as Syndication Agent.
 
A. Pursuant to the Credit Agreement, the Lenders have extended credit to the
Borrower, and have agreed to extend credit to the Borrower, in each case
pursuant to the terms and subject to the conditions set forth therein.
 
B. The Borrower has requested that the Lenders agree to (i) waive compliance
with (A) the requirements set forth in Sections 2.11(c) and 6.04 of the Credit
Agreement to the extent, and only to the extent, necessary to permit the
consummation of the transactions described on Annex A attached hereto (the
“Transactions”), and (B) certain requirements set forth in the Credit Agreement
and (ii) amend certain provisions of the Credit Agreement, in each case pursuant
to the terms and subject to the applicable conditions set forth herein.
 
C.  The undersigned Lenders are willing, pursuant to the terms and subject to
the applicable conditions set forth herein, to grant such waivers and approve
such amendments.
 
D. Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Credit Agreement (as amended hereby).
 
Accordingly, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the applicable conditions set forth herein,
the parties hereto hereby agree as follows:
 
SECTION 1.  Waivers.  (a) Subject to the applicable conditions set forth herein,
the undersigned Lenders hereby waive compliance with the requirements set forth
in Sections 2.11(c) and 6.04 of the Credit Agreement to the extent, but only to
the extent, necessary to permit the consummation of the Transactions; provided
that the Borrower or any of its Subsidiaries shall not incur any other
Indebtedness in financing the Transactions.
 
(b)   Subject to the applicable conditions set forth herein, the undersigned
Lenders hereby waive compliance with Section 6.12 for any period of the fiscal
quarters
ending December 31, 2005, March 31, 2006 and June 30, 2006.
 

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(c)   Subject to the applicable conditions set forth herein, the undersigned
Lenders hereby waive compliance with Section 6.15(a) for the fiscal year ended
December 31, 2005.
 
SECTION 2.  Amendment of Section 1.01. Section 1.01 of the Credit Agreement is
amended by inserting the following clause to the end of the definition of
“Applicable Rate”:
 
“Notwithstanding the foregoing, the Loan ABR Spread shall be 2.00% and the Loan
Eurodollar Spread shall be 3.00% from the effective date of the Amendment and
Waiver through September 30, 2006.”
 
SECTION 3.  Amendment of Section 2.12(b). Section 2.12(b) of the Credit
Agreement is amended by deleting the reference to “Participation fees and
fronting fees accrued up to the last day of March, June, September and December”
and inserting “Participation fees and fronting fees accrued up through the last
day of March, June, September and December” in lieu thereof.
 
SECTION 4.  Amendment of Section 2.12(c). Section 2.12(c) of the Credit
Agreement is amended by deleting the reference to “2.75% per annum” in
subclause (i)(a) thereof and inserting “3.00% per annum, from the effective date
of the Amendment and Waiver through September 30, 2006, and 2.75% per annum
thereafter” in lieu thereof.
 
SECTION 5.  Amendment of Section 2.13(e). Section 2.13(e) of the Credit
Agreement is amended by deleting the first sentence thereof and inserting in
lieu thereof the following sentence “All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by reference to
the Alternate Base Rate at times when the Alternate Base Rate is based on the
Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in
a leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).”
 
SECTION 6.  Amendment of Schedule 2.21(b). Schedule 2.12(b) of the Credit
Agreement is amended by deleting the reference to “ACT/365/66” and inserting
“ACT/360” in lieu thereof.
 
SECTION 7.  Amendment of Section 5.01. Section 5.01 is amended by adding the
following paragraph:
 
“ (i)  within 45 days after the end of each of the first two fiscal months of
each fiscal quarter in the 2006 fiscal year of the Borrower, its consolidated
balance
sheet and related statements of operations, stockholders’ equity and cash flows
as of the end of and for such fiscal month and the then elapsed portion of the
fiscal year, all certified by one of its Financial Officers as presenting in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.”
 
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SECTION 8.  Amendment of Section 6.13. Section 6.13 of the Credit Agreement is
amended in its entirety as follows:
 
“SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage Ratio
as of any date during any period set forth below to exceed the ratio set forth
opposite such period:
 
Period
Ratio
   
September 30 through December 31, 2005
3.50 to 1.00
January 1, 2006 through March 31, 2006
2.85 to 1.00
April 1, 2006 through September 30, 2006
2.50 to 1.00
October 1, 2006 through September 30, 2007
2.25 to 1.00
October 1, 2007 and thereafter
 2.00 to 1.00”

 
SECTION 9.  Amendment of Section 6.15(a). Section 6.15(a) of the Credit
Agreement is amended in its entirety as follows:
 
“SECTION 6.15. Maximum Capital Expenditures. (a) The aggregate amount of Capital
Expenditures made by the Borrower and the Subsidiaries in any fiscal year shall
not exceed the amount set forth below opposite such fiscal year:
 
Year
Amount
2006
$85,000,000
2007 and each fiscal year thereafter
 $80,000,000”

 
SECTION 10.  Representations and Warranties. The Borrower represents and
warrants to the Administrative Agent and the Lenders that:
 
(a)  This Amendment and Waiver has been duly authorized, executed and delivered
by the Borrower and constitutes a legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
 
(b)   None of the execution, delivery or performance by the Borrower of this
Amendment and Waiver or the compliance by the Borrower with the terms and
provisions hereof (i) will contravene any material provision of any applicable
law, statute, rule or regulation, or any order, writ, injunction or decree of
any Governmental Authority, (ii) will conflict or be inconsistent with, or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of Borrower or any of its respective Subsidiaries pursuant to the terms
of any indenture, mortgage, deed of trust, loan agreement, credit agreement or
any other material agreement or
 
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instrument to which Borrower or any of its respective Subsidiaries is a party or
by which Borrower or any of its respective Subsidiaries or any of the property
or assets of Borrower or any of its respective Subsidiaries are bound or to
which Borrower or any of its respective Subsidiaries may be subject or
(iii) will violate any provision of the certificate or articles of
incorporation, by-laws, certificate of partnership, partnership agreement,
certificate of limited liability company, limited liability company agreement or
equivalent organizational document, as the case may be, of Borrower or any of
its respective Subsidiaries.
 
(c)   The representations and warranties of Borrower set forth in the Loan
Documents are true and correct on and as of the date hereof, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case such representations and warranties are true and correct as of
such earlier date.
 
(d)   After giving effect to this Amendment and Waiver, no Default or Event of
Default shall have occurred and be continuing.
 
SECTION 11.  Amendment Fee. In consideration of the agreements of the Lenders
contained in this Amendment and Waiver, the Borrower agrees to pay to the
Administrative Agent, for the account of each consenting Lender that delivers an
executed counterpart of this Amendment and Waiver to the Administrative Agent
prior to 5:00 p.m., New York City time, on February 17, 2006, an amendment fee
in an amount equal to 0.25% of such Lender’s Revolving Exposures, Synthetic LC
Exposure, unused Revolving Commitments and Excess Credit-Linked Deposits as of
such date.
 
SECTION 12.  Conditions to Effectiveness. This Amendment and Waiver shall become
effective as of the date (the “Effective Date”) on which each of the following
conditions has been satisfied:
 
(a)   the Administrative Agent shall have received counterparts of this
Amendment and Waiver that, when taken together, bear the signatures of the
Borrower and the Required Lenders;
 
(b)   the Administrative Agent shall have received a certificate of a Financial
Officer of the Borrower, dated the Effective Date, to the effect that the
representations and warranties set forth in Section 10 hereof are true and
correct;
 
(c)   the Borrower shall have paid to the Administrative Agent, in immediately
available funds, for the account of each of the Lenders entitled thereto, the
Amendment Fee referred to in Section 11 hereof; and
 
(d)   to the extent invoiced, the Administrative Agent shall have received
payment or reimbursement of its reasonable out-of-pocket expenses in connection
with this Amendment and Waiver and any other out-of-pocket expenses of the
Administrative Agent required to be paid or reimbursed pursuant to the Credit
Agreement, including the reasonable fees, charges and disbursements of counsel
for the Administrative Agent.
 
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SECTION 13.  Effect of Amendment and Waiver. Except as specifically set forth
herein, this Amendment and Waiver shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Lenders, any Agent, the Collateral Agent, the Borrower under the Credit
Agreement or any other Loan Document, and shall not alter, modify, amend or in
any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Credit Agreement or any other Loan Document, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect. Nothing herein shall be deemed to entitle the Borrower to a consent
to, or a waiver, amendment, modification or other change of, any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document in similar or different circumstances.
After the date hereof, any reference to the Credit Agreement shall mean the
Credit Agreement as amended and waived hereby. This Amendment and Waiver shall
be a Loan Document for all purposes.
 
SECTION 14.  Applicable Law. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 15.  Counterparts. This Amendment and Waiver may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one agreement. Delivery of an executed
signature page to this Amendment and Waiver by facsimile or other electronic
transmission shall be effective as delivery of a manually signed counterpart of
this Amendment and Waiver.
 
SECTION 16.  Expenses. The Borrower agrees to reimburse the Administrative Agent
for its out-of-pocket expenses in connection with this Amendment and Waiver,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore LLP, counsel for the Administrative Agent.
 
SECTION 17.  Headings. The Section headings used herein are for convenience of
reference only, are not part of this Amendment and Waiver and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Amendment and Waiver.
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to
be duly executed by their respective authorized officers as of the day and year
first written above.
 

        JAMES RIVER COAL COMPANY, as Borrower,  
   
   
    By:   Samuel M. Hopkins  

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   Name: Samuel M. Hopkins      Title: Vice President

       
PNC BANK, NATIONAL ASSOCIATION, as Lender and as
Administrative Agent
 
   
   
    By:   /s/ Christopher N. Moravec  

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   Name: Christopher N. Moravec      Title:  SVP

 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Bear Stearns Corporate Lending Inc.

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  by  /s/ Victor Bulzacchelli  

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Name:  Victor Bulzacchelli   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Bank of America

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  by  /s/ Jonathan M. B  

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Name: Jonathan M. B   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
BRIDGEPORT CLO LTD
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
BRYN MAWR CLO, Ltd.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Caterpillar Financial Services

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  by  /s/ Christopher C. Patterson  

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Name: Christopher C. Patterson   Title: Global Operations Manager

 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
CUMBERLAND II CLO LTD.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

THE FOOTHILL GROUP, INC.

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  by  /s/ Dennis R. Ascher  

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Name: Dennis R. Ascher   Title: Sr. Vice President

 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
FOREST CREEK CLO, Ltd.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
LONG GROVE CLO, LIMITED
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
MARKET SQUARE CLO, Ltd.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
MARQUETTE PARK CLO LTD.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Muirfield Trading LLC

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  by  /s/ M. Cristina Higgins  

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Name: M. Cristina Higgins   Title: Assistant Vice President

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
ROSEMONT CLO LTD.
By:  Deerfield Capital Management LLC as
its Collateral Manager
 
 

  By  /s/ Peter Sakon  

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Name: Peter Sakon   Title: Vice President

 
 
 
 

 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Loan Funding XI LLC, as Term
Lender

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Katonah II, Ltd. by Sankaty Advisors LLC as Sub-Advisors

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Race Point CLO, Limited, as Term
Lender 

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for AVERY POINT CLO, LTD., as Term
Lender 

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Chatgham Light II CLO, Limited, by Sanakty Advisors LLC, as Collateral Manager

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Castle Hill I-INGOTS, Ltd., as
Term Lender 

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Race Point II CLO, Limited, as
Term Lender 

--------------------------------------------------------------------------------

  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Castle Hill III CLO, as Term
Lender 

--------------------------------------------------------------------------------

  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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 SIGNATURE PAGE TO AMENDMENT NO. 1 AND WAIVER, DATED AS OF   FEBRUARY 22, 2006,
TO JAMES RIVER COAL COMPANY CREDIT AGREEMENT
 
To Approve the Amendment and Waiver:

       
Name of Institution:
 
 

Sankaty Advisors, LLC as Collateral Manager for Castle Hill II-INGOTS, Ltd., as
Term Lender 

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  by  /s/ James F. Kellogg III  

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Name: James F. Kellogg III   Title: Managing Director

 
 
 
 
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ANNEX A
 
Transactions
 
The Borrower will purchase from the Indiana Land and Mineral Company, LLC
underground coal reserves and the unit train loadout and a permitted surface
mine reserve. The purchase price is expected to be $9,000,000 in cash (but will
not exceed $10,000,000 in cash).