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Exhibit 10.1

 
FIFTH AMENDMENT TO TERM CREDIT AGREEMENT

 
THIS FIFTH AMENDMENT TO TERM CREDIT AGREEMENT (this “Agreement”), is made and
entered into as of November 20, 2009 (the “Effective Date”), by and among James
River Coal Company, a corporation organized under the laws of Virginia (“JRCC”),
and certain of JRCC’s subsidiaries identified on the signature pages hereof, as
borrowers (such subsidiaries, together with JRCC, are referred to hereinafter
each individually as a “Borrower”, and collectively, jointly and severally, as
the “Borrowers”), and the other credit parties hereto, identified on the
signature pages hereof as Guarantors (together, the Borrowers and Guarantors,
the “Credit Parties”), the lenders party hereto from time to time (the
“Lenders”), Morgan Stanley Senior Funding, Inc., a corporation formed under the
laws of Delaware (“MS”), as administrative agent for the Lenders (in such
capacity, together with its successors and assigns, if any, the “Administrative
Agent”) and as sole-bookrunner and lead arranger (in such capacity, together
with its successors and assigns, if any, the “Lead Arranger”), and Morgan
Stanley & Co. Incorporated, as collateral agent for the Lenders (in such
capacity, together with its successors and assigns, if any, the “Collateral
Agent”).

W I T N E S S E T H:
 
WHEREAS, the Borrowers, the other Credit Parties signatory thereto, the Lenders
and L/C Issuers party thereto, and the Administrative Agent are parties to that
certain Term Credit Agreement, dated as of February 26, 2007 (as amended,
restated, supplemented and revised from time to time, the “Credit Agreement”),
pursuant to which the Lenders have committed to make certain loans and other
extensions of credit to the Borrowers upon the terms and conditions set forth
therein; and
 
WHEREAS, the Borrowers wish to terminate the (i) Term Letter of Credit
Commitment under the Credit Agreement in accordance with Section 3.01(b) of the
Credit Agreement other than with respect to each of the existing Term Letters of
Credit listed on Schedule A hereto (the “Continuing Term Letters of Credit”) and
(ii) Term Letter of Credit Usage under the Credit Agreement in accordance with
Section 3.01(c) of the Credit Agreement other than with respect to each of the
Continuing Term Letters of Credit;
 
WHEREAS, in connection with the termination of the Term Letter of Credit
Commitment and the Term Letter of Credit Usage, in each case other than with
respect to each of the Continuing Term Letters of Credit, the Borrowers have
also requested that the Administrative Agent, under the terms of the Credit
Agreement, leave outstanding each of the Continuing Term Letters of Credit until
the earlier of the (i) expiry date set forth on Schedule A for such Continuing
Term Letter of Credit, and (ii) first date such Continuing Term Letter of Credit
is drawn, terminated, returned, replaced or cancelled, in each case, in full;
 
WHEREAS, the Borrowers have requested that the Lenders and the Administrative
Agent make certain changes to the Credit Agreement and that the Lenders consent
to certain actions of the Borrowers; and
 
WHEREAS, the Lenders and the Administrative Agent are willing, upon and subject
to certain conditions, to amend the Credit Agreement in certain respects, all in
accordance with and subject to the terms and conditions set forth herein.
 

 
 

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NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
that capitalized terms used herein and not otherwise defined herein shall have
the meanings given to such terms in the Credit Agreement and as follows:
 
 
1.
Amendments to the Credit Agreement.

 
(a)            Section 1.01 of the Credit Agreement, Definitions, is hereby
amended by adding the following definitions in the appropriate alphabetical
order:

“Cash Collateral Agreement” means the Cash Collateral Agreement, in
substantially the form set forth as Exhibit C-3 hereto, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance
therewith.

“Conversion Stock” means the shares of common stock of JRCC into which the
Convertible Note Debt will be convertible under the terms of the Convertible
Note Debt Documents.

 “Continuing Term Letter of Credit” means each of the Term Letters of Credit
listed on Schedule A to the Fifth Amendment to Term Credit Agreement, dated as
of November 20, 2009.

“Convertible Note Debt” means unsecured Indebtedness under the Convertible
Senior Notes.

“Convertible Note Debt Documents” means the Convertible Senior Notes Indenture
and all other agreements, instruments and documents executed in connection with
the Convertible Senior Notes.

“Convertible Senior Notes” means, collectively, the 4.5% convertible senior
notes due 2015 issued by JRCC on the terms set forth in the Convertible Senior
Notes Offering Memorandum.
 
“Convertible Senior Notes Indenture” means the indenture dated November 20, 2009
between JRCC and U.S. Bank National Association, as trustee, pursuant to which
the Convertible Senior Notes are issued.
 
“Convertible Senior Notes Offering Memorandum” means the offering memorandum
dated November 12, 2009 for the Convertible Senior Notes.

“Fifth Amendment Date” means the effective date of the Fifth Amendment to Term
Credit Agreement dated as of November 20, 2009.

“Fifth Amendment Date Cash Collateral Amount” means $62,041,675.50, which amount
is inclusive of $5,222,034.80 of cash collateral for the Term Letters of Credit
delivered by JRCC to the Collateral Agent prior to the Fifth Amendment Date,
which amounts shall be transferred to the Account (as defined in the Cash
Collateral Agreement) and shall constitute Cash Collateral in respect of the
Continuing Term Letters of Credit on and after the Fifth Amendment Date.

 
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(b)            Section 1.01 of the Credit Agreement, Definitions, is hereby
amended by deleting the definitions of “Availability Period”, “Commitment Fee”,
“Maturity Date”, “Permitted Indebtedness”, “Term Letter of Credit Commitment”
and “Term Letter of Credit Obligations” in their entirety and substituting in
lieu thereof the following:

“Availability Period” means the period from the Closing Date to the Fifth
Amendment Date.
 
“Commitment Fee” shall mean a fee on the amount of the Term Letter of Credit
Obligations payable on each Interest Payment Date or such other applicable date
set forth in Section 4.04, in cash in an amount equal to the Term Letter of
Credit Obligations times (a) four percentage points (4.00%) per annum from the
Closing Date through the effective date of the Second Amendment; (b) four and
three fourths percentage points (4.75%) per annum from the effective date of the
Second Amendment through the effective date of the Third Amendment; (c) five and
a half percentage points (5.50%) per annum from the effective date of the Third
Amendment through the effective date of the Fifth Amendment; (d) one and three
fourths percentage points (1.75%) from the Fifth Amendment Date through December
31, 2009; (e) three percentage points (3%) from January 1, 2010 through March
31, 2010; and (f) four percentage points (4%) from April 1, 2010 through the
Maturity Date.
 
 “Maturity Date” means the earlier of (a) October 9, 2010 and (b) the date on
which the last outstanding Continuing Term Letter of Credit expires, or is
drawn, returned, replaced or cancelled, in each case, in full.
 
“Permitted Indebtedness” means:
 
(a)          the Indebtedness listed on Schedule P-2 and extensions, renewals
and replacements thereof;
 
(b)          Indebtedness of the Credit Parties under this Agreement or other
Loan Documents;
 
(c)          purchase money Indebtedness and Capitalized Lease Obligations
incurred after the Closing Date to acquire equipment or real property in the
ordinary course of business; provided that (i) the aggregate amount of all such
Indebtedness does not exceed five million Dollars ($5,000,000) at any time
outstanding, (ii) the Indebtedness when incurred shall not be more than 90% of
the lesser of the cost or fair market value of the acquired asset as of the time
of acquisition of the asset financed, (iii) such Indebtedness is issued and any
Liens securing such Indebtedness are created prior to or within 60 days after
the acquisition of the asset financed, and (iv) no Lien securing such
Indebtedness shall extend to or cover any property or asset other than the asset
so financed;
 
(d)          intercompany Indebtedness owed to a Credit Party, which
Indebtedness constitutes Pledged Debt;
 

 
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(e)          Indebtedness under performance bonds, bid bonds, appeal bonds,
surety bonds, completion guarantees and letter of credit obligations made in the
ordinary course of business (i) in compliance with workers’ compensation,
unemployment insurance and other social security or employment laws or
regulations or similar legislation or to secure public, statutory or regulatory
obligations or (ii) pursuant to any leases specifically permitted by this
Agreement including Mining Leases entered into in the ordinary course of
business;
 
(f)          Contingent Obligations with respect to endorsements of checks and
other negotiable instruments for deposit or collection;
 
(g)          Guarantees by a Credit Party of Indebtedness of another Credit
Party if such Credit Party could have directly incurred such Indebtedness
hereunder;
 
(h)          to the extent constituting Contingent Obligations, indemnification
obligations and other similar obligations of the Borrowers and their
Subsidiaries in favor of directors, officers, employees, consultants or agents
of the Borrowers or any of their Subsidiaries extended in the ordinary course of
business or to the extent constituting accruals for payroll, vacation or bonus
payments incurred in the ordinary course of business or pursuant to obligations
under employment agreements;
 
(i)          unsecured Indebtedness incurred in the ordinary course of business
in an aggregate amount for all Credit Parties and its Subsidiaries taken as a
whole not to exceed an amount equal to ten million Dollars ($10,000,000);
 
(j)          any Operating Lease entered into in the ordinary course of
business;
 
(k)          the Convertible Note Debt; and
 
(l)          any Permitted Refinancing of any of the foregoing.
 
“Term Letter of Credit Commitment” means (a) prior to the Fifth Amendment Date,
the Maximum Term Letter of Credit Amount minus the sum of (i) the Term Letter of
Credit Usage and (ii) the aggregate of all Conversion Amounts; and (b) on and
after the Fifth Amendment Date, the face amount of all Continuing Term Letters
of Credit minus the face amount of each Continuing Term Letter of Credit that
has expired, terminated or that has been drawn, returned, replaced or cancelled,
in each case, in full. For the avoidance of doubt, any Term Letter of Credit
Commitment existing prior to the Fifth Amendment Date other than with respect to
the Continuing Term Letters of Credit shall be deemed to have been terminated in
full as of the Fifth Amendment Date.
 
“Term Letter of Credit Obligations” means (a) prior to the Fifth Amendment Date,
the Term Letter of Credit Commitment plus the amount of all outstanding Term
Letters of Credit; and (b) on and after the Fifth Amendment Date, the aggregate
undrawn amount available to be drawn under all outstanding Continuing Term
Letters of Credit plus all drawn and unreimbursed amounts, fees and all other
obligations and liabilities under or relating to all Continuing Term Letters of
Credit.
 

 
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(c)           Section 2.01(b) of the Credit Agreement is hereby amended by
deleting the final sentence of such Section in its entirety and inserting the
following in lieu thereof:
 
“Prior to the Fifth Amendment Date, all provisions of Annex A shall apply to the
Term Letter of Credit Commitment, the Term Letters of Credit issued thereunder
and the Term Letter of Credit Obligations.  On and after the Fifth Amendment
Date, the provisions of Section 2.10 shall apply to the Term Letter of Credit
Commitment, the Continuing Term Letters of Credit and the Term Letter of Credit
Obligations, and the provisions of Annex A shall cease to have any force or
effect.”
 
(d)           Article II of the Credit Agreement is amended to insert a new
Section 2.10 as follows:
 
“SECTION 2.10  Term Letter of Credit Commitment Provisions Subsequent to the
Fifth Amendment Date.  Notwithstanding any other provision of this Agreement,
any other Loan Document or any agreement entered into regarding the issuance,
renewal or expiry of the Term Letters of Credit:
 
(a)          Issuance.  No Term Letters of Credit shall be, or shall be required
to be, issued, extended or renewed on or after the Fifth Amendment Date.  On or
after the Fifth Amendment Date, the face amount of each Continuing Term Letter
of Credit shall not be increased above the face amount as of the Fifth Amendment
Date.
 
(b)          Release of Synthetic Term Sub-Accounts to the
Lenders.  Notwithstanding the provisions of Section 2.09, on the Fifth Amendment
Date, the balance, if any, of amounts on deposit in, or credited to, the
Synthetic Term Account shall be returned to the Lenders in accordance with the
balances in their respective Synthetic Term Sub-Accounts.  The balance of the
Synthetic Term Account shall have been reduced by all Conversion Amounts and all
other amounts utilized or required to collateralize or pay for such Lender’s
Participation prior to the Fifth Amendment Date.
 
(c)          Cash Collateralization Account.  The Borrowers have remitted to the
Administrative Agent the Fifth Amendment Date Cash Collateral Amount on the
Fifth Amendment Date (the “Cash Collateral”), which amount is equal to 105% of
the maximum amount available to be drawn under each of the Continuing Term
Letters of Credit.  Such Cash Collateral shall be held by the Administrative
Agent or the Collateral Agent in a non-interest bearing cash collateral account
(the “Cash Collateral Account”) maintained at a bank or financial institution
acceptable to the Collateral Agent pursuant to the Cash Collateral
Agreement.  The Cash Collateral Account shall be in the name of the
Administrative Agent or the Collateral Agent and shall be pledged to, and
subject to the control of, the Administrative Agent and the Collateral Agent,
for the benefit of the Secured Parties (as defined in the Cash Collateral
Agreement), in a manner satisfactory to the Collateral Agent.  Pursuant to the
Cash Collateral Agreement, the Borrowers have pledged and granted to the
Administrative Agent and the Collateral Agent, on behalf of the Secured Parties,
a first priority security interest in all such Cash Collateral and all proceeds
thereof, as security for the payment of all amounts due in respect of the Term
Letter of Credit Obligations and the other Term Loan Obligations, whether or not
then due.
 

 
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(d)         Use of Cash Collateral Account.  The use of the Cash Collateral in
the Cash Collateral Account shall be governed by the Cash Collateral
Agreement.  Notwithstanding anything to the contrary in this Agreement or any
other Loan Document, in the event that any L/C Issuer or the Administrative
Agent shall make any payment on or pursuant to any Continuing Term Letter of
Credit (including due to a draw on a Continuing Term Letter of Credit or due to
the Borrowers’ failure to pay any amounts due to any L/C Issuer), the amount of
such payment shall then automatically and immediately become due and payable to
the Administrative Agent and shall be deemed a Term Letter of Credit
Obligation.  The Borrowers irrevocably agree to reimburse the Administrative
Agent for all Term Letter of Credit Obligations due to the L/C Issuer or the
Administrative Agent immediately upon such Term Letter of Credit Obligations
becoming due and payable in accordance with the terms of the Cash Collateral
Agreement.  Upon the Borrowers’ failure to reimburse the Administrative Agent
for such amounts in accordance with the Cash Collateral Agreement, the
Administrative Agent and the Collateral Agent agree to utilize the amounts in
the Cash Collateral Account to satisfy the Borrowers’ Term Letter of Credit
Obligations and each Borrower irrevocably and unconditionally authorizes the
Administrative Agent and the Collateral Agent to withdraw from the Cash
Collateral Account all amounts due on account of the Borrowers and to debit the
Cash Collateral Account for the benefit of the Administrative Agent and the L/C
Issuer in accordance with the Cash Collateral Agreement.  No Person other than
the Administrative Agent and the Collateral Agent shall have the right to make
any withdrawal of Cash Collateral from the Cash Collateral Account or to
exercise any other right or power with respect thereto.  Each Borrower agrees
that its right, title and interest in and to the Cash Collateral shall be
limited to the right to require that the Administrative Agent and the Collateral
Agent use the Cash Collateral in the Cash Collateral Account to satisfy the
Borrowers’ Term Letter of Credit Obligations under the Credit Documents and this
Section 2.10.  Each Borrower agrees that it has and will have no right to
require the return of any Cash Collateral in the Cash Collateral Account, other
than the release and delivery of the balance of the remaining Cash Collateral,
if any, to the Revolving Loan Agent or the Borrowers, as applicable, upon the
Maturity Date as set forth in Section 2.10(g) below.  Pursuant to the Cash
Collateral Agreement, each Borrower has granted to the Administrative Agent and
the Collateral Agent for the benefit of the Secured Parties a first priority
security interest in its rights and interests in the Cash Collateral Account to
secure the Term Letter of Credit Obligations of the Borrowers under this Section
2.10 and the Loan Documents.
 
(e)         Acknowledgements. Each party hereto acknowledges and agrees that (i)
except as provided in Section 2.10(g), no Borrower, no Guarantor and no other
Person (except the Secured Parties, in each case solely as expressly set forth
herein and in the Cash Collateral Agreement), shall have any right, title or
interest in or to the Cash Collateral in the Cash Collateral Account and no
obligations with respect thereto, (ii) the Cash Collateral in the Cash
Collateral Account are and at all times will continue to be property of the
Borrowers (or the Administrative Agent or the Collateral Agent to the extent
such amounts are required to reimburse the Administrative Agent or the L/C
Issuer for the Term Letter of Credit Obligations), and (iii) such Cash
Collateral on deposit at any time in the Cash Collateral Account shall
constitute “Collateral” under the Credit Documents and are available in any
manner to satisfy any Obligation of any Borrower or Guarantor under the Credit
Documents.
 

 

 
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(f)          Fees and Expenses. The Borrowers agree to pay to the Administrative
Agent for the benefit of the Administrative Agent, as compensation to the
Administrative Agent for the Continuing Term Letters of Credit (i) all costs and
expenses incurred by the Administrative Agent on account of such Continuing Term
Letters of Credit and (ii) the Commitment Fee as set forth in Section 4.04.  All
costs and expenses described in clause (i) of the preceding sentence shall be
payable by the Borrowers to the Administrative Agent for its own account
promptly on demand from time to time.  In addition, the Borrowers shall pay to
each L/C Issuer, on demand and for its own account, such fees (including all per
annum fees), charges and expenses of each L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Continuing Term
Letters of Credit or otherwise payable pursuant to the application and related
documentation under which such Continuing Term Letter of Credit is issued.
 
(g)         Release of Cash Collateral to the Borrowers. The Cash Collateral
shall be released at such time and in such manner as set forth in the Cash
Collateral Agreement.
 
(h)         Obligation Absolute. The obligation of the Borrowers to reimburse
the Administrative Agent for payments made by any L/C Issuer with respect to any
Continuing Term Letter of Credit shall be absolute, unconditional and
irrevocable, without necessity of presentment, demand, protest or other
formalities. Such obligations of Borrowers shall be paid strictly in accordance
with the terms hereof under all circumstances including the following:
 
(i) any lack of validity or enforceability of any Continuing Term Letter of
Credit, any application or agreement with any L/C Issuer, the Agreement or the
other Loan Documents or any other agreement;
 
(ii) the existence of any claim, set-off, defense or other right that any
Borrower or any of their respective Affiliates may at any time have against a
beneficiary or any transferee of any Continuing Term Letter of Credit (or any
Persons or entities for whom any such transferee may be acting), the
Administrative Agent, any Lender, or any other Person, whether in connection
with the Agreement, the Continuing Term Letters of Credit, the transactions
contemplated herein or therein or any unrelated transaction (including any
underlying transaction between any Borrower or any of their respective
Affiliates and the beneficiary for which the Continuing Term Letter of Credit
was procured);
 

 
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(iii) any draft, demand, certificate or any other document presented under any
Continuing Term Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
 
(iv) payment by the Administrative Agent (except as otherwise expressly provided
in paragraph (i)(ii)(C) below) or any L/C Issuer under any Continuing Term
Letter of Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of such
Continuing Term Letter of Credit or such guaranty;
 
(v) any other circumstance or event whatsoever that is similar to any of the
foregoing; or
 
(vi) the fact that a Default or an Event of Default has occurred and is
continuing.
 
(i)           Indemnification; Nature of Lenders’ Duties.
 
(i) In addition to amounts payable as elsewhere provided in the Agreement, the
Borrowers hereby agree to pay and to protect, indemnify, and save harmless the
Administrative Agent, each L/C Issuer and each Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys’ fees and allocated costs of internal counsel)
that the Administrative Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance, continuance or maintenance
of or any draw or attempted draw under any Continuing Term Letter of Credit or
guaranty thereof, or (B) the failure of the Administrative Agent or any Lender
seeking indemnification or of any L/C Issuer to honor a demand for payment under
any Continuing Term Letter of Credit or guaranty thereof as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct of such
indemnified person (as finally determined by a court of competent jurisdiction).
 

 
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(ii) As between the Administrative Agent and any Lender on the one hand and, on
the other hand, the Borrowers, the Borrowers assume all risks of the acts and
omissions of, or misuse of any Continuing Term Letter of Credit by,
beneficiaries of any Continuing Term Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law, neither the
Administrative Agent nor any Lender shall be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
issued by any party in connection with the application for and issuance of any
Continuing Term Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged, (B) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Continuing Term Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason, (C) failure of the
beneficiary of any Continuing Term Letter of Credit to comply fully with
conditions required in order to demand payment under such Continuing Term Letter
of Credit; provided, that in the case of any payment by the Administrative Agent
under any Continuing Term Letter of Credit or guaranty thereof, the
Administrative Agent shall be liable to the extent such payment was made solely
as a result of its gross negligence or willful misconduct (as finally determined
by a court of competent jurisdiction) in determining that the demand for payment
under such Continuing Term Letter of Credit or guaranty thereof complies on its
face with any applicable requirements for a demand for payment under such
Continuing Term Letter of Credit or guaranty thereof, (D) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they may be in cipher, (E)
errors in interpretation of technical terms, (F) any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Continuing Term Letter of Credit or guaranty thereof or of the
proceeds thereof, (G) the credit of the proceeds of any drawing under any
Continuing Term Letter of Credit or guaranty thereof, and (H) any consequences
arising from causes beyond the control of the Administrative Agent or any
Lender. None of the above shall affect, impair, or prevent the vesting of any of
the Administrative Agent’s or any Lender’s rights or powers hereunder or under
the Agreement.
 
(iii) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrowers in favor of any L/C Issuer
in any letter of credit application, reimbursement agreement or similar
document, instrument or agreement between or among Borrowers and any L/C Issuer.
 
(j)           Letter of Credit Amounts. Unless otherwise specified herein, the
amount of a Continuing Term Letter of Credit at any time shall be deemed to be
the stated amount of such Continuing Term Letter of Credit as in effect at such
time; provided, however, that with respect to any Continuing Term Letter of
Credit that, by its terms or the terms of any document issued in connection with
such Continuing Term Letter of Credit, provides for one or more automatic
increases in the stated amount thereof, the amount of such Continuing Term
Letter of Credit shall be deemed to be the maximum stated amount of such
Continuing Term Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.”
 

 
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(e)           Section 3.02(b) of the Credit Agreement is hereby amended by
inserting the following new sentence at the end of such Section:
 
“Notwithstanding anything in this Agreement to the contrary, this Section
3.02(b) shall not apply to the incurrence of the Convertible Note Debt or the
conversion of the Convertible Note Debt into the Conversion Stock, all in
accordance with the terms and conditions of the Convertible Note Debt
Documents.”
 
(f)          Section 4.04 of the Credit Agreement is hereby amended and replaced
in its entirety as follows:
 
“SECTION 4.04  Fees.   The Borrowers hereby agree to pay to the Administrative
Agent, for the account of the Lenders in accordance with their Pro Rata Shares,
the following amounts: (a) prior to the Fifth Amendment Date, the Commitment
Fee, payable in Dollars on each Interest Payment Date and on the date upon which
any Term Letter of Credit or Continuing Term Letter of Credit expires,
terminates, is drawn or is renewed or replaced, and upon the date of any
reduction in the Term Letter of Credit Commitment, (b) the fees and expenses, if
any, set forth in the Agent’s Fee Letter and, prior to the Fifth Amendment Date,
in Annex A hereto, (c) substantially contemporaneously with the effectiveness of
the Third Amendment, the Borrowers hereby agree to pay the Third Amendment Fee
to each Lender that, on or before May 12, 2008, executes and delivers its
consent to the Third Amendment, (d) substantially contemporaneously with the
effectiveness of the Fourth Amendment, the Borrowers hereby agree to pay the
Fourth Amendment Fee to each Lender that, on or before November 12, 2008,
executes and delivers its consent to the Fourth Amendment, (e) on the earlier of
February 28, 2009 and the date of repayment of the Term Loan Obligations, the
Borrowers hereby agree to pay the Supplemental Fourth Amendment Fee to each
Lender that delivered its consent to the Fourth Amendment on or before November
12, 2008, and (f) substantially contemporaneously with the effectiveness of the
Fifth Amendment, the Borrowers hereby agree to pay all fees (including the
Applicable Reduction Fee and Commitment Fee with respect to the total Term
Letter of Commitment as of the Fifth Amendment Date) accrued through the Fifth
Amendment Date.  Notwithstanding the foregoing, from and after the Fifth
Amendment Date the Borrowers shall pay the Commitment Fee with respect to the
Term Letter of Credit Obligations outstanding at such time, in Dollars in
arrears on the last Business Day of each calendar month and on the date upon
which any Continuing Term Letter of Credit expires, terminates, is drawn or is
renewed or replaced, and such Commitment Fee, together with any fees and
expenses set forth in the Agent’s Fee Letter referenced in clause (b) of the
preceding sentence shall be paid to the Administrative Agent for its own account
and not for the account of the Lenders.”
 
(g)           Section 7.01(a) of the Credit Agreement is hereby amended by
inserting the following new sentence at the end of such Section:

Notwithstanding anything to the contrary in this Agreement, on and after the
Fifth Amendment Date, this Section 7.01(a) shall have no force and effect.

(h)           Section 7.01(e) of the Credit Agreement is hereby amended by
inserting the following new sentence at the end of such Section:

 
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Notwithstanding anything to the contrary in this Agreement, on and after the
Fifth Amendment Date, this Section 7.01(e) shall have no force and effect.

 
(i)           Section 9.05 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end of such Section:
 
“Nothing in this Section 9.05 shall prohibit the incurrence of the Convertible
Note Debt or the conversion of the Convertible Note Debt into the Conversion
Stock, all in accordance with the terms and conditions of the Convertible Note
Debt Documents.”
 
(j)           Section 9.17 of the Credit Agreement is hereby amended by
inserting the following new sentence at the end of such Section:
 
“Nothing in this Section 9.17 shall prohibit the incurrence of the Convertible
Note Debt, the payment of principal and interest on the Convertible Note Debt,
or the conversion of the Convertible Note Debt into the Conversion Stock and/or
cash, all in accordance with the terms and conditions of the Convertible Note
Debt Documents.”
 
(k)           Section 13.11(a) of the Credit Agreement is hereby amended by
adding a sentence to the end of the paragraph as follows:
 
“Notwithstanding anything to the contrary in this Agreement or any of the Loan
Documents, the Collateral Agent shall not be required to release any Lien on any
Collateral unless and until (I) all Commitments have been terminated and all
Obligations owed to the Lenders, the Administrative Agent or the L/C Issuer
(other than Hedging Obligations and those contingent Obligations for
reimbursement and indemnity that expressly survive the termination of this
Agreement) have been paid in cash and satisfied in full and (II) the Credit
Parties have delivered to the Administrative Agent a general release for the
benefit of each Lender, the Administrative Agent, the Collateral Agent and the
L/C Issuer in form and substance reasonably acceptable to the Administrative
Agent, and upon the occurrence of the foregoing, the Collateral Agent shall, at
the request and expense of the Credit Parties, release such Liens, authorize the
Credit Parties to file termination statements with respect to such Liens and
deliver to the Credit Parties documentation in form and substance reasonably
satisfactory to the Credit Parties evidencing such release.”
 
(l)           Section 14.01 of the Credit Agreement is hereby amended by
deleting the current notice information for the Administrative Agent and the
Collateral Agent and inserting the following in lieu thereof:
 
“if to the Administrative Agent, at the following address:
 
Morgan Stanley Senior Funding, Inc.
1585 Broadway
New York, NY 10036
Telephone:  (212) 761-3915
Facsimile:  (212) 507-4687
Email:  Stephen.B.King@morganstanley.com
Attn:  Stephen B. King

 
11

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with a copy to:
 
Sullivan & Cromwell LLP
1888 Century Park East, 21st Floor
Los Angeles, CA 90067
Telephone:  (310) 712-6600
Facsimile:   (310) 407-2684
Email:  feldsteinh@sullcrom.com
Attn:  Hydee R. Feldstein
 
and a copy to:
 
Morgan Stanley Senior Funding, Inc.
One Pierrepont Plaza, 7th Floor
300 Cadman Plaza West
Brooklyn, NY 11201
Telephone:  (718) 754-4454
Facsimile:   (212) 507-6680
Email: Dana.Weisberg@morganstanley.com
Attn: Dana Weisberg
 
if to the Collateral Agent, at the following address:
 
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Telephone:  (212) 761-3915
Facsimile:  (212) 507-4687
Email:  Stephen.B.King@morganstanley.com
Attn:  Stephen B. King
 
with a copy to:
 
Sullivan & Cromwell LLP
1888 Century Park East, 21st Floor
Los Angeles, CA 90067
Telephone:  (310) 712-6600
Facsimile:  (310) 407-2684
Email:  feldsteinh@sullcrom.com
Attn:  Hydee R. Feldstein

 
12

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and a copy to:
 
Morgan Stanley & Co. Incorporated
One Pierrepont Plaza, 7th Floor
300 Cadman Plaza West
Brooklyn, NY 11201
Telephone:  (718) 754-4454
Facsimile:   (212) 507-6680
Email: Dana.Weisberg@morganstanley.com
Attn: Dana Weisberg”

2.           Affirmation and Acknowledgment.
 
(a)           Borrowers.  The Borrowers hereby ratify and confirm all of their
Obligations to the Lenders, the Administrative Agent and each L/C Issuer,
including, without limitation, the Term Letter of Credit Obligations, and the
Borrowers hereby affirm their absolute and unconditional promise to pay to the
Lenders, the Administrative Agent and each L/C Issuer, as applicable, all
indebtedness, obligations and liabilities in respect of the Letters of Credit,
and all other amounts due under the Credit Agreement and the other Loan
Documents as amended hereby.  The Borrowers hereby confirm that the Obligations
are and remain secured pursuant to the Loan Documents and pursuant to all other
instruments and documents executed and delivered by the Borrowers as security
for the Obligations.

(b)           Guarantors.  Each Guarantor hereby ratifies and confirms its
Guaranty of the Guaranteed Obligations set forth in Article XII of the Credit
Agreement, including, without limitation, its Guaranty of the Obligations of the
Credit Parties set forth in the Credit Agreement as amended by this Agreement,
the Cash Collateral Agreement and any other Loan Document, and each Guarantor
hereby ratifies and confirms all of its obligations and liabilities under each
of the Loan Documents.  Each Guarantor hereby confirms that its Guaranty and all
other obligations and liabilities under each of the Loan Documents are and
remain secured pursuant to the Loan Documents and pursuant to all other
instruments and documents executed and delivered by the Guarantors as security
for its Guaranty and all other obligations and liabilities.

3.           Grant of Security Interest.   In addition to the security interests
in favor of the Collateral Agent for the benefit of each Lender, the
Administrative Agent, the Collateral Agent and the L/C Issuer, each Borrower and
each Guarantor hereby assigns and transfers to the Administrative Agent, and
hereby grants to the Administrative Agent, for the benefit of each Lender,
itself, the Collateral Agent and the L/C Issuer, as security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) and observance of all Obligations under the Loan
Documents a first priority Lien and security interest and a right of setoff
against the Cash Collateral Account and all amounts contained therein or
credited thereto, including the Fifth Amendment Date Cash Collateral Amount, and
all products, proceeds and profits in or from such Cash Collateral Account or
the amounts therein or credited thereto, and each Borrower and each Guarantor
agrees that the Cash Collateral Account shall be in the name of and under the
sole and exclusive dominion and control of the Administrative Agent or the
Collateral Agent until released in accordance with the terms of this Agreement
and the Cash Collateral Agreement.

4.           No Other Amendments.  Except for the amendments expressly set forth
and referred to in Section 1 hereof, the Credit Agreement shall remain unchanged
and in full force and effect.  Nothing in this Agreement is intended or shall be
construed to be a novation of any Obligations or any part of the Credit
Agreement or any of the other Loan Documents or to affect, modify or impair the
continuity or perfection of the Administrative Agent’s Liens under the Credit
Agreement and Loan Documents.

 
13

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5.           Waivers and Consents.  Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by each of the parties
hereto.
 
 
6.           Representations, Warranties and Covenants.  To induce the
undersigned Lenders and Administrative Agent to enter into this Agreement, the
Credit Parties hereby warrant, represent and covenant to and with the Lenders
and the Administrative Agent that: (a) this Agreement has been duly authorized,
executed and delivered by the Credit Parties; (b) this Agreement and the Credit
Agreement as amended hereby constitute legal, valid and binding obligations of
the Credit Parties, enforceable in accordance with their respective terms; (c)
after giving effect to this Agreement, no Default or Event of Default has
occurred and is continuing as of this date; (d) no approval or consent of, or
filing with, any governmental agency or authority is required to make valid and
legally binding the execution, delivery or performance by the Credit Parties of
this Agreement or the Credit Agreement as amended hereby; and (e) after giving
effect to this Agreement, all of the representations and warranties made by the
Credit Parties in the Credit Agreement are true and correct in all material
respects on and as of the date of this Agreement (except to the extent that any
such representations or warranties expressly referred to a specific prior date
and except for changes therein expressly permitted or expressly contemplated by
the Credit Agreement or the other Loan Documents).  Any breach by the Credit
Parties of any of its representations, warranties and covenants contained in
this Section 6 shall be an Event of Default under the Credit Agreement.
 
 
7.            Conditions to Effectiveness.  This Agreement shall not become
effective unless and until the Administrative Agent has received (a)
$2,654,109.25 in immediately available funds, representing payment by the
Borrowers of all fees (including the Applicable Reduction Fee and Commitment Fee
with respect to the total Term Letter of Commitment as of the Fifth Amendment
Date) accrued through the Fifth Amendment Date for the account of the Lenders
(which amount the Administrative Agent acknowledges it received from JRCC on
November 13, 2009); (b) the Fifth Amendment Date Cash Collateral Amount in
immediately available funds, representing the cash collateralization of the
Continuing Term Letters of Credit, such amount to be held pursuant to this
Agreement and the Cash Collateral Agreement; (c) confirmation from Sullivan &
Cromwell LLP that $75,000 in immediately available funds in payment of the fees,
expenses and disbursements of Sullivan & Cromwell LLP now due and payable have
been wired to Sullivan & Cromwell LLP; (d) duly executed, completed and
delivered counterparts of the Cash Collateral Agreement; (e) one or more
counterparts of this Agreement, duly executed, completed and delivered by the
Borrowers, the other Credit Parties and the Required Lenders; (f) duly executed
and delivered counterparts of the acknowledgment and consent to this Agreement
of General Electric Capital Corporation, as administrative agent and collateral
agent under the Revolving Credit Agreement, in substantially the form attached
as Schedule B hereto; and (g) copies of notices delivered by the L/C Issuer by
registered mail to the beneficiary of each Continuing Term Letter of Credit that
it elects not to renew such Continuing Term Letter of Credit after the current
expiry date applicable to such Continuing Term Letter of Credit; provided,
however, that the fulfillment of the conditions specified in clauses (a), (b),
(c), (d), (f) and (g) above shall not be a condition to the effectiveness of the
amendments of the Credit Agreement provided in Sections 1(a), 1(e), 1(i) and
1(j) of this Agreement or to the effectiveness of the amendment of the
definition of the term “Permitted Indebtedness” provided in Section 1(b) of this
Agreement, which amendments shall be effective immediately upon the fulfillment
of the condition specified in clause (e) above.
 

 
14

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8.           Reimbursement of Expenses.  The Borrowers hereby agree to reimburse
the Administrative Agent on demand for all reasonable fees and reasonable
out-of-pocket costs and expenses (including without limitation the reasonable
and actual fees and expenses of its counsel) incurred by the Administrative
Agent in connection with the negotiation, documentation and consummation of this
Agreement and the other documents executed in connection herewith and the
transactions contemplated hereby.
 
9.           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE
PERFORMED ENTIRELY WITHIN SAID STATE AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.
 
10.        Severability of Provisions.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  To the extent
permitted by applicable law, the Borrowers hereby waive any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
 
11.        Counterparts.  This Agreement may be executed in any number of
several counterparts, all of which shall be deemed to constitute but one
original and shall be binding upon all parties, their successors and permitted
assigns.  Delivery of an executed signature page of this Agreement by facsimile
transmission or electronic transmission shall be as effective as delivery of a
manually executed counterpart hereof.
 
12.        Entire Agreement.  The Credit Agreement as amended through this
Agreement embodies the entire agreement between the parties hereto relating to
the subject matter thereof and supersedes all prior agreements, representations
and understandings, if any, relating to the subject matter thereof.
 
13.        No Strict Construction.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
 
14.        No Third Party Reliance.  This Agreement is solely for the benefit of
the parties signatory hereto, their successors and permitted assigns.  No
waiver, consent or amendment pursuant to this Agreement may be relied upon by
any third parties.
 

 
15

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15.        Release. The Credit Parties hereby remise, release, acquit, satisfy
and forever discharge the Lenders, the Administrative Agent, the Collateral
Agent, and the L/C Issuer and their respective agents, employees, officers,
directors, predecessors, attorneys and all others acting or purporting to act on
behalf of or at the direction of the Lenders, the Administrative Agent, the
Collateral Agent, or the L/C Issuer of and from any and all manner of actions,
causes of action, suit, debts, accounts, covenants, contracts, controversies,
agreements, variances, damages, judgments, claims and demands whatsoever, in law
or in equity, which any of such parties ever had or now has against the Lenders,
the Administrative Agent, the Collateral Agent, and the L/C Issuer their
respective agents, employees, officers, directors, attorneys and all persons
acting or purporting to act on behalf of or at the direction of the Lenders or
the Administrative Agent (“Releasees”), for, upon or by reason of any matter,
cause or thing whatsoever arising from, in connection with or in relation to the
Credit Agreement or any of the other Loan Documents (including this Agreement
and the Cash Collateral Agreement) through the date hereof.  Without limiting
the generality of the foregoing, the Credit Parties waive and affirmatively
agree not to allege or otherwise pursue any defenses, affirmative defenses,
counterclaims, claims, causes of action, setoffs or other rights they do, shall
or may have as of the date hereof, including, but not limited to, the rights to
contest any conduct of the Lenders, Administrative Agent or other Releasees on
or prior to the date hereof.
 
16.        Loan Documents.  The Cash Collateral Agreement, this Agreement and
all other documents executed in connection herewith shall be deemed to be Loan
Documents for all purposes under the Credit Agreement.
 

[Remainder of page intentionally blank; next page is signature page]

 
\
 
 
 
 
 
 
 
 

 
 
16

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IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to Term Credit
Agreement to be duly executed by their respective officers or representatives
thereunto duly authorized, as of the date first above written.
 

 
BORROWERS:
 
JAMES RIVER COAL COMPANY
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
JAMES RIVER COAL SERVICE COMPANY
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
LEECO, INC.
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
TRIAD MINING, INC.
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President

 
17

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TRIAD UNDERGROUND MINING, LLC
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
BLEDSOE COAL CORPORATION
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
JOHNS CREEK ELKHORN COAL CORPORATION
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
JAMES RIVER COAL SALES, INC.
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
BLEDSOE COAL LEASING COMPANY
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President

 
18

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BLUE DIAMOND COAL COMPANY
 
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
MCCOY ELKHORN COAL CORPORATION
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
GUARANTORS:
 
BDCC HOLDING COMPANY, INC.
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
EOLIA RESOURCES, INC.
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President

 
19

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SHAMROCK COAL COMPANY, INCORPORATED
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
JOHNS CREEK COAL COMPANY
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President
 
 
JOHNS CREEK PROCESSING COMPANY
 
By: /s/ Samuel M. Hopkins, II                                           
Name: Samuel M. Hopkins, II
Title:   Vice President

 
 
 
 
 
 
 
 
 
 

 
 
20

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LENDER:
 
MORGAN STANLEY SENIOR FUNDING, INC.
 
By: /s/ Stephen B.
King                                                          
Name: Stephen B. King
Title: Vice President
 
 
ADMINISTRATIVE AGENT
 
MORGAN STANLEY SENIOR FUNDING, INC.
 
By: /s/ Stephen B.
King                                                          
Name: Stephen B. King
Title: Vice President
 
 
COLLATERAL AGENT
 
MORGAN STANLEY & CO. INCORPORATED
 
By: /s/ Stephen B.
King                                                          
Name: Stephen B. King
Title: Executive Director

 
 
 
 
 
 

 

 
21

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LENDER:
 
Restoration Holdings Ltd.
 
By: /s/ Pamela M. Lawrence                                                  
Name: Pamela M. Lawrence
Title: Director

 
 
 
 
 
 
 
 
 
 

 

 
22

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LENDER:
 
Libertyview Special Opportunities Fund, L.P.
Libertyview Loan Fund, LLC
Trust D (Kodak)
Libertyview Credit Opportunities Fund, L.P.
Libertyview Credit Select Fund, L.P.
Libertyview Funds, L.P.
 
By: /s/ Richard Meckler                                                         
Name: Richard Meckler
Title: Chief Investment Officer

 
 
 
 
 
 
 
 
 
 

 

 
23

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Schedule A
 
Continuing Term Letters Of Credit
 
Letter of Credit No.
 
Beneficiary
 
Maximum Face Amount
 
Issuance Date
 
Expiry Date
S00054990
 
National Union Fire Insurance Co (AIG)
 
$10,480,000
 
June 7, 2009
 
June 7, 2010
S00055004
 
Travelers Casualty and Surety
 
$19,000,000
 
June 6, 2009
 
June 6, 2010
S00054992
 
Old Republic Insurance
 
$920,000
 
July 5, 2009
 
July 5, 2010
S00057989
 
Western Indiana Energy Rural
 
$205,000
 
July 23, 2009
 
July 23, 2010
S00054991
 
Commonwealth of Kentucky
 
$19,982,310
 
August 22, 2007
 
August 22, 2010
S00055561
 
Indemnity National Insurance Company
 
$8,500,000
 
October 9, 2007
 
October 9, 2010
   
Total:
 
$59,087,310
       

 

 
 
 
 
 
 
 
 
 
 
 

 
A-1

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Schedule B
 
Form of Acknowledgment, Consent and Agreement
 

This Acknowledgement, Consent and Agreement is executed and delivered by (a)
General Electric Capital Corporation, a Delaware corporation, in its capacity as
Revolver Agent under that certain Intercreditor Agreement, dated as of February
26, 2007 (as amended, supplemented or otherwise modified from time to time in
accordance therewith, the “Intercreditor Agreement”) by and among the Revolver
Agent, the Term Agent and the Term Loan Collateral Agent, (b) Morgan Stanley
Senior Funding, Inc., a Delaware corporation, in its capacity as Term Agent
under the Intercreditor Agreement, and (c) Morgan Stanley & Co. Incorporated, a
Delaware corporation, in its capacity as Term Loan Collateral Agent under the
Intercreditor Agreement.  Capitalized terms used herein but not defined shall
have the meanings set forth in the Intercreditor Agreement.

1.           The Revolver Agent, for and on behalf of itself and the Revolver
Lenders, hereby acknowledges receipt of the Fifth Amendment to Term Credit
Agreement, dated as of November 20, 2009, a copy of which is attached hereto as
Annex A (the “Amendment”), together with the Cash Collateral Agreement, dated as
of November 20, 2009, a copy of which is attached hereto as Annex B (the “Cash
Collateral Agreement”).  The Revolver Agent, for and on behalf of itself and the
Revolver Lenders, hereby consents to the:

(i) execution and delivery by the Borrowers and other Obligors of the Amendment,
the Cash Collateral Agreement and any other documents contemplated thereby;
 
(ii) deposit of the Cash Collateral (as defined in the Cash Collateral
Agreement) in the Account (as defined in the Cash Collateral Agreement) as Term
Loan Priority Collateral under the Intercreditor Agreement;
 
(iii) the cash collateralization of the Continuing Term Letters of Credit (as
defined in the Amendment) pursuant to, and in accordance with, the Amendment and
the Cash Collateral Agreement, in each case, as in effect on the date hereof;
 
(iv) termination of the Term Letter of Credit Commitment (as defined in the Term
Credit Agreement) and the Term Letter of Credit Usage (as defined in the Term
Credit Agreement) in each case other than with respect to each of the Continuing
Term Letters of Credit as set forth in the Amendment; and
 
(v) other amendments to the Credit Agreement as set forth in the Amendment, as
in effect on the date hereof.
 
2.           The Revolver Agent, for and on behalf of itself and the Revolver
Lenders, hereby acknowledges and agrees that the Cash Collateral, the interests
of the Borrowers and other Obligors in the Account, and all proceeds thereof
(the “Term Loan Cash Collateral”) are, and shall constitute, Term Loan Priority
Collateral under the Intercreditor Agreement.

3.           The Obligors hereby acknowledge that they have granted a security
interest to the Revolver Agent, for the benefit of the Revolver Parties, in all
of the assets and all real and personal property of such Obligor (subject to the
Liens granted to the Term Collateral Agent with respect to the Term Loan
Priority Collateral), which assets include the Obligors’ right, title and
interest in the Account and the Cash Collateral and all proceeds thereof and,
for the avoidance of doubt, as security for the payment and performance of all
the Revolver Debt, each Obligor hereby pledges, transfers and assigns to the
Revolving Agent, for the benefit of the Revolver Parties, a continuing lien and
security interest in all right, title and interest of the Obligors in and to the
Account, the Cash Collateral and all proceeds thereof, from the date of the
establishment of the Account until the termination thereof pursuant to the terms
of the Cash Collateral Agreement as in effect on the date hereof (subject to the
first priority security interest granted to the Term Collateral Agent).

 
B-1

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

 

4.           Each of the Term Agent and the Term Loan Collateral Agent hereby
acknowledge that, pursuant to and in accordance with Section 2.15 of the
Intercreditor Agreement, the Revolver Agent has appointed it as its agent for
the purposes of perfecting its Lien in and on the Term Loan Cash Collateral for
so long as the Term Loan Cash Collateral is in the possession of or under
control of the Term Agent or the Term Loan Collateral Agent.  The Revolver Agent
hereby acknowledges that, pursuant to and in accordance with Section 2.15 of the
Intercreditor Agreement, neither the Term Agent nor the Term Loan Collateral
Agent shall have any duty or liability to protect or preserve any rights of the
Revolver Agent or any Lender pertaining to the Term Loan Cash Collateral while
the Term Loan Cash Collateral is in the possession of or under the control of
the Term Agent or the Term Loan Collateral Agent and, except for gross
negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction, the Revolver Agent,
for and on behalf of itself and the Revolver Lenders, hereby waives and releases
each of the Term Agent and Term Loan Collateral Agent and other Lenders from,
all claims and liabilities arising pursuant to the Term Agent’s and Term Loan
Collateral Agent’s role as agent or bailee with respect to the Term Loan Cash
Collateral, so long as Term Agent and Term Loan Collateral Agent shall use the
same degree of care with respect thereto as the Term Agent and Term Loan
Collateral Agent use for similar property pledged to the Term Agent and Term
Loan Collateral Agent as collateral for indebtedness of others to the Term Agent
and Term Loan Collateral Agent.

5.           Upon the termination and release of the Term Loan Cash Collateral
pursuant to the terms of the Cash Collateral Agreement, the Term Agent and Term
Loan Collateral Agent shall, upon the prior written request of the Revolver
Agent, deliver the remainder of the Term Loan Cash Collateral, if any, in their
possession to an account or accounts designated by the Revolver Agent (provided
the Revolver Agent’s respective Termination Date shall not already have
occurred), except as may otherwise be required by applicable law or court
order.  The Revolver Agent and the Obligors agree that any such Term Loan Cash
Collateral so delivered to the Revolver Agent shall be applied in accordance
with the terms and conditions of the Revolver Loan Documents.
 
 
*           *           *
 
 
 
 
 
 
 
 
 
 
 

 
B-2

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

 

IN WITNESS WHEREOF, each of the undersigned has caused this Acknowledgment,
Consent and Agreement to be duly executed by an officer or representative
thereunto duly authorized, as of the date of the Amendment.
 
REVOLVER AGENT:
 
GENERAL ELECTRIC CAPITAL CORPORATION
 
 
By: ______________________________________
Name:
Title:
 

 
 
 
TERM AGENT:
 
MORGAN STANLEY SENIOR FUNDING, INC.
 
By: ______________________________________
Name:
Title:
 
 
TERM LOAN COLLATERAL AGENT:
 
MORGAN STANLEY & CO. INCORPORATED
 
By: ______________________________________
Name:
Title:

 
B-3

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

 

 
 
ACKNOWLEDGED, AGREED AND ACCEPTED:
 
OBLIGORS:
 
JAMES RIVER COAL COMPANY
 
By: ______________________________________
Name:
Title:
 
 
JAMES RIVER COAL SERVICE COMPANY
 
By: ______________________________________
Name:
Title:
 
 
LEECO, INC.
 
By: ______________________________________
Name:
Title:
 
 
TRIAD MINING, INC.
 
By: ______________________________________
Name:
Title:

 
 
 
 
B-4

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

 

 
TRIAD UNDERGROUND MINING, LLC
 
By: ______________________________________
Name:
Title:
 
 
BLEDSOE COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK ELKHORN COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
JAMES RIVER COAL SALES, INC.
 
By: ______________________________________
Name:
Title:
 
 
BLEDSOE COAL LEASING COMPANY
 
By: ______________________________________
Name:
Title:
 
 
BLUE DIAMOND COAL COMPANY
 
By: ______________________________________
Name:
Title:

 
B-5

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

 

MCCOY ELKHORN COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
BDCC HOLDING COMPANY, INC.
 
By: ______________________________________
Name:
Title:
 
 
EOLIA RESOURCES, INC.
By: ______________________________________
Name:
Title:

 
 
 
 
 
 
 
 
 
 

 
 
B-6

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

 

SHAMROCK COAL COMPANY, INCORPORATED
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK COAL COMPANY
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK PROCESSING COMPANY
 
By:______________________________________
Name:
Title:

 

 

 

 
B-7

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

 

Exhibit C-3
 
Form of Cash Collateral Agreement
 
THIS CASH COLLATERAL AGREEMENT (as amended, modified and/or supplemented from
time to time, this “Agreement”), dated as of November 20, 2009, by and among
James River Coal Company, a corporation organized under the laws of Virginia
(“JRCC”), and certain of JRCC’s subsidiaries identified on the signature pages
hereof, as borrowers (such subsidiaries, together with JRCC, are referred to
hereinafter each individually as a “Borrower”, and collectively, jointly and
severally, as the “Borrowers”), and the other credit parties hereto, identified
on the signature pages hereof as Guarantors (together, the Borrowers and
Guarantors, are referred to hereinafter each individually as a “Credit Party”
and collectively, jointly and severally, as the “Credit Parties”), Morgan
Stanley Senior Funding, Inc., a corporation formed under the laws of Delaware
(“MS”), as administrative agent under the Credit Agreement (as defined below)
(in such capacity, together with its successors and assigns, if any, the
“Administrative Agent”) and Morgan Stanley & Co. Incorporated, as collateral
agent under the Credit Agreement (in such capacity, together with its successors
and assigns, if any, the “Collateral Agent”).  Capitalized terms used herein and
not otherwise defined herein shall have the meanings given to such terms in the
Credit Agreement.
 
W I T N E S S E T H:
 
WHEREAS, the Borrowers, the other Credit Parties signatory thereto, the Lenders
and L/C Issuers party thereto, the Administrative Agent and the Collateral Agent
are parties to that certain Term Credit Agreement, dated as of February 26, 2007
(as amended, restated, supplemented and revised from time to time, the “Credit
Agreement”), pursuant to which the Lenders have committed to make certain loans
and other extensions of credit to the Borrowers upon the terms and conditions
set forth therein;
 
WHEREAS, the Borrowers have given notice that they wish to terminate the (i)
Term Letter of Credit Commitment under the Credit Agreement in accordance with
Section 3.01(b) of the Credit Agreement other than with respect to each of the
existing Term Letters of Credit listed on Annex A hereto (the “Continuing Term
Letters of Credit”) and (ii) Term Letter of Credit Usage under the Credit
Agreement in accordance with Section 3.01(c) of the Credit Agreement other than
with respect to each of the Continuing Term Letters of Credit in each case on
the date hereof and as more specifically provided in that certain Fifth
Amendment to Term Credit Agreement, dated as of the date hereof, by and among
the Borrowers, the other Credit Parties signatory thereto, the Lenders party
thereto and L/C Issuers party thereto, the Administrative Agent and the
Collateral Agent (the “Amendment”);
 
WHEREAS, on the date hereof, the Continuing Term Letters of Credit remain
outstanding under the Credit Agreement;
 
WHEREAS, the Borrowers have also requested that the Administrative Agent leave
outstanding each Continuing Term Letter of Credit until the earlier of the (i)
expiry date set forth on Annex A for such Continuing Term Letter of Credit, and
(ii) first date such Continuing Term Letter of Credit is drawn, terminated,
returned, replaced or cancelled, in each case, in full;
 

 
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WHEREAS, it is a condition to the effectiveness of the Amendment and to the
Administrative Agent’s agreement to the foregoing that, among other things, the
Credit Parties execute and deliver this Agreement and deposit cash in the
Account (as defined below) on the date hereof in an amount equal to the Fifth
Amendment Date Cash Collateral Amount and otherwise satisfy all the conditions
precedent set forth in the Amendment; and
 
NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree, as follows:
 
ARTICLE ONE
 
DEFINITIONS
Section 1.01  Definitions:  The following terms shall have the meanings herein
specified:
 
“Account” shall have the meaning provided in Section 2.01 hereof.
 
“Cash Collateral” shall mean the Fifth Amendment Date Cash Collateral Amount,
representing an amount in cash equal to 105% of the maximum amount available to
be drawn under each of the Continuing Term Letters of Credit as of the date
hereof, deposited into the Account pursuant to the terms of the Amendment and
this Agreement, plus any additional amounts deposited in the Account pursuant to
Section 2.02, and all Proceeds (as defined in Section 9-102(a)(64) of the
Uniform Commercial Code of New York as in effect on the date hereof) of any or
all of the foregoing.  The Cash Collateral and the Account shall constitute
Collateral for purposes of the Credit Agreement and all other Loan Documents.
 
“Indemnitee” shall have the meaning provided in Section 7.01 hereof.
 
“Fifth Amendment Obligations” shall constitute Obligations (as defined in the
Credit Agreement), and shall mean and include:
 
(i)           any and all obligations, liabilities, fees, and indebtedness of
the Credit Parties owing to the Secured Parties (or any Person designated by the
Administrative Agent to issue or honor drawings under the Continuing Term
Letters of Credit), whether now or hereafter existing that are incurred under,
arise out of, or otherwise relate to the Continuing Term Letters of Credit,
including, but not limited to, the Term Letter of Credit Obligations;
 
(ii)          any and all sums advanced or incurred by the Secured Parties (or
any Person designated by the Administrative Agent to issue or honor drawings
under the Continuing Term Letters of Credit) in order to maintain the Account,
preserve the Cash Collateral and/or preserve the Secured Parties’ interest in
the Cash Collateral and/or the security interest of the Administrative Agent and
the Collateral Agent in the Account and the Cash Collateral;
 

 
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(iii)         in the event of any proceeding for the collection of any
indebtedness, obligations or liabilities of the Credit Parties referred to in
clause (i) above or the enforcement of this Agreement, the expenses of retaking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Account and the Cash Collateral, or of any exercise by the
Administrative Agent or the Collateral Agent of its rights hereunder, together
with reasonable attorneys’ fees and court costs; and
 
(iv)        any and all amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement under Article Seven of this Agreement.
 
“Secured Parties” shall mean each of the Administrative Agent, the Collateral
Agent, the L/C Issuer and the Lenders.
 
“Termination Date” shall mean the date upon which the last of the following to
occur shall have occurred: (i) each and every Continuing Term Letter of Credit
has expired according to its terms or has been terminated and returned to the
Administrative Agent or the L/C Issuer for cancellation, (ii) any and all
amounts drawn on any Continuing Term Letter of Credit (if any), together with
interest thereon, with respect to all Continuing Term Letters of Credit shall
have been repaid in full in cash to the Administrative Agent (and any Person
designated by the Administrative Agent to issue or honor drawings under the
Continuing Term Letters of Credit), (iii) all accrued and unpaid fees and costs
set forth in the Credit Agreement and in every other Loan Document have been
paid in full in cash to the Administrative Agent, and (iv) all other Obligations
(including the Fifth Amendment Obligations), other than those arising from
indemnities for which no request has been made then owing, have been paid in
full.
 
ARTICLE TWO
 
ESTABLISHMENT OF ACCOUNT, ETC.
 
Section 2.01  Establishment of Account:  The Administrative Agent has
established in its own name and for the benefit of the Secured Parties an
account (Account No. 406-99-776, Account Name:  Morgan Stanley Senior Funding,
Inc. (the “Account”) for purposes of this Agreement, which Account is maintained
at Citibank, N.A.  The Account is maintained by the Administrative Agent, titled
in the name of the Administrative Agent, and is under the sole dominion and
control of the Administrative Agent and the Collateral Agent for the benefit of
the Secured Parties.  The Administrative Agent and the Collateral Agent shall
have the sole right to make and authorize withdrawals of Cash Collateral from
the Account and to exercise all rights with respect to the Cash Collateral from
time to time therein pursuant to, and in accordance with the terms of, this
Agreement.  Unless and until released to JRCC on behalf of the Credit Parties in
accordance with the requirements of Article Four hereof, title to the Account
and the Cash Collateral will remain with the Administrative Agent.  All Cash
Collateral delivered to or held by the Administrative Agent or the Collateral
Agent pursuant hereto shall be held in the Account in accordance with the
provisions hereof.
 
Section 2.02  Deposits to the Account; Withdrawals from the Account:  (a)  On
the date hereof, JRCC has transferred on behalf of the Credit Parties the Fifth
Amendment Date Cash Collateral Amount to the Account.  In addition, on any date
on which the Administrative Agent notifies JRCC in writing that the aggregate
amount of the Cash Collateral is less than 105% of the maximum amount available
to be drawn at such time under each of the Continuing Term Letters of Credit,
JRCC, on behalf of the Credit Parties, shall within one (l) Business Day of
receipt of such notice from the Administrative Agent, deposit additional Dollars
into the Account in an amount equal to such deficiency.
 

 
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(b)         Without in any manner modifying the Credit Parties’ obligations to
pay the Obligations (including the Fifth Amendment Obligations) in accordance
with the terms and conditions set forth in the Credit Agreement or any other
Loan Document and without in any manner modifying the Collateral Agent’s or the
other Secured Parties’ right of recourse against the Credit Parties in respect
of the Fifth Amendment Obligations, each of the Administrative Agent and the
Collateral Agent agrees that it will only withdraw Cash Collateral from the
Account (and each Credit Party hereby irrevocably authorizes the Administrative
Agent and the Collateral Agent to withdraw Cash Collateral from the Account),
(i) to reimburse (without duplication) the Administrative Agent and the L/C
Issuer (or any Person designated by the Administrative Agent to issue or honor
drawings under the Continuing Term Letters of Credit) for any drawings honored
under the Continuing Term Letters of Credit as would otherwise be required
pursuant to the Credit Agreement or any other Loan Document, (ii) on any day on
which the Credit Parties are obligated to pay any fees or other costs in respect
of the Continuing Term Letters of Credit which are due and owing to the L/C
Issuer, to pay (without duplication) to the Administrative Agent the amount of
such fees or other costs then due and owing, in each case as would otherwise be
required pursuant to the Credit Agreement or any other Loan Document and (iii)
to reimburse the Secured Parties or any Indemnitee for any other Fifth Amendment
Obligations (including pursuant to Article Seven hereof).  The Administrative
Agent shall notify JRCC within 10 Business Days following any withdrawal
pursuant to this Section 2.02(b); provided that the failure to give any such
notice shall in no way affect, impair or diminish the rights of the Secured
Parties under this Agreement, the Credit Agreement or any other Loan Document.
 
Section 2.03   Investment of Funds Deposited in the Account:  The Account shall
be a non-interest bearing account.  Neither the Administrative Agent nor the
Collateral Agent shall have any responsibility to the Credit Parties for any
decrease in the value of the Cash Collateral in the Account or for any loss
resulting from the investment of the Cash Collateral deposited therein; except
to the extent that such loss is determined by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Administrative Agent or the Collateral Agent.  The
Cash Collateral on deposit in the Account shall be maintained as cash on deposit
or shall only be invested in Cash Equivalents reasonably acceptable to
Borrowers.
 
ARTICLE THREE
 
GRANT OF SECURITY INTEREST, ETC.
 
Section 3.01  Grant of Security Interest, etc.:  As security for the payment and
performance all of the Obligations (including the Fifth Amendment Obligations),
each Credit Party hereby pledges, transfers and assigns to the Administrative
Agent and the Collateral Agent, for the benefit of the Secured Parties, a first
priority Lien and security interest and a right of setoff against the Account
and all amounts contained therein or credited thereto, including the Fifth
Amendment Date Cash Collateral Amount, and all products, proceeds and profits in
or from such Account or the amounts therein or credited thereto and each
Borrower and each Guarantor agrees that the Account shall be in the name of and
under the sole and exclusive dominion and control of the Administrative Agent or
the Collateral Agent until released in accordance with the terms of the
Amendment and this Agreement.
 

 
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Section 3.02  Further Assurances:  Each Credit Party agrees that it will, at any
time and from time to time, at its expense, promptly execute and deliver all
further agreements, instruments and other documents and take all further action
that may be necessary or that the Administrative Agent or the Collateral Agent
may reasonably request in order to better perfect and protect the first priority
security interest purported to be created hereby or otherwise to enable the
Administrative Agent and the Collateral Agent to exercise and enforce their
rights and remedies hereunder (including, without limitation, any filings of
financing or continuation statements under the Uniform Commercial Code of the
State of New York and any action as may be requested from time to time by the
Collateral Agent so that “control” (as defined in Section 8-106 of the Uniform
Commercial Code as in effect in the State of New York on the date hereof) of the
Account and all the Cash Collateral of the type over which the Collateral Agent
may obtain such “control” is obtained).
 
Section 3.03  Appointment as Attorney-In-Fact:  To permit the Administrative
Agent and the Collateral Agent to carry out the terms of this Agreement and to
exercise their rights and remedies under this Agreement, the Credit Parties
hereby irrevocably appoint each of the Administrative Agent and the Collateral
Agent as their attorney-in-fact, with full authority in the place and stead of
the Credit Parties and in the name of the Credit Parties or otherwise, from time
to time in the Collateral Agent’s sole discretion to execute any instrument and
to take any other appropriate action which the Administrative Agent or the
Collateral Agent may deem reasonably necessary or advisable to accomplish the
purposes of this Agreement or to facilitate the assignment or other transfer by
the Administrative Agent or the Collateral Agent of any or all of its rights
hereunder, including, without limitation, (i) to receive, endorse and collect
all instruments made payable to the Credit Parties and representing any interest
payment or other distribution in respect of the Account or the Cash Collateral
and to give full discharge for the same, and (ii) to execute and deliver any and
all instruments and other documents that the Administrative Agent or the
Collateral Agent may reasonably request in connection with the exercise by the
Secured Parties of any or all of their rights hereunder.
 
ARTICLE FOUR
 
TERMINATION; RELEASE
 
At the request of the Credit Parties made on or after the Termination Date and
upon delivery by the Credit Parties of a general release for the benefit of the
Secured Parties in form and substance reasonably acceptable to the
Administrative Agent, the Collateral Agent and the Administrative Agent, at the
expense of the Credit Parties, will (x) execute and deliver to the Credit
Parties a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement and the security interest created hereby and (y)
except to the extent that Cash Collateral have been applied as provided in
Section 2.02(b) hereof, transfer all remaining Cash Collateral on deposit in the
Account (if any) to an account or accounts designated by the Revolving Loan
Agent on behalf of the Credit Parties, or in the absence of such instructions
from the Revolving Loan Agent, to JRCC on behalf of the Credit Parties.  Any
transfer and release of the Account or the Cash Collateral (or any other
Collateral) by the Secured Parties pursuant to this Article Four shall be made
without recourse, representation or warranty whatsoever.
 

 
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ARTICLE FIVE
 
REPRESENTATIONS AND WARRANTIES; COVENANTS
 
Each Credit Party represents and warrants to the Secured Parties that:  (a) this
Agreement has been duly authorized, executed and delivered by each Credit Party
and constitutes a legal, valid and binding obligation of each Credit Party
enforceable in accordance with its terms; (b) the pledge, assignment and
granting of a security interest in the Account and the Cash Collateral pursuant
to this Agreement creates, and upon the deposit in the Account of any other Cash
Collateral pursuant to this Agreement will create, a valid and perfected first
priority security interest in all of each Credit Party’s right, title and
interest (if any) in and to the Account and the Cash Collateral so deposited, as
the case may be, and the proceeds thereof subject to no other lien or
encumbrance or to any other agreement purporting to grant any party other than
the Secured Parties any lien or encumbrance on property or assets of the Credit
Parties which would include the Account or the Cash Collateral, in each case
which would be senior in right or preference to the security interests granted
hereby, and no financing statements under the Uniform Commercial Code or other
filings are required to be made in connection with the foregoing or to perfect
the security interests created hereby; (c) no consent of any other party
(including, without limitation, any stockholder or creditor of any of the Credit
Parties) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with
(except, in each case, as have been obtained or made on or prior to the date
hereof), any governmental authority is required to be obtained in connection
with the execution, delivery or performance of this Agreement; and (d) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of the organizational documents of any of the Credit Parties or of
any securities issued by any of the Credit Parties, or of any material
agreement, contract or other instrument to which any Credit Party is a party or
which purports to be binding upon any Credit Party or upon any Credit Party’s
assets and will not result in the creation or imposition of (or the obligation
to create or impose) any lien or encumbrance on any of the assets of any Credit
Party except as contemplated by this Agreement.  Each Credit Party covenants and
agrees that (a) it will not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of any interest hereunder or that any Credit Party may
purport to have in respect of the Account or the Cash Collateral or (ii) create
or suffer to exist any Lien upon or with respect to any interest hereunder or
that any Credit Party may purport to have in respect of the Account other than a
Permitted Encumbrance that is junior in right or preference to the security
interests granted hereby and (b) it will defend the Administrative Agent’s and
the Collateral Agent’s right, title and interest in and to the Account and the
Cash Collateral for the benefit of the Secured Parties (or the Administrative
Agent’s and the Collateral Agent’s right, title and security interest in and to
the Account and the Cash Collateral and the proceeds thereof) against the claims
and demands of all Persons whomsoever.
 

 
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ARTICLE SIX
 
RESPONSIBILITIES OF THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
 
Neither the Administrative Agent, the Collateral Agent nor any of their
respective directors, officers, agents, employees, affiliates, representatives
or agents shall be liable (i) for any failure to invest or reinvest the Cash
Collateral in the Account in any manner whatsoever, (ii) for any loss of any or
all of the Cash Collateral in the Account or (iii) for any action taken or
omitted to be taken by any Secured Party (x) in accordance with the advice of
counsel with respect to any question as to the construction of any provision
hereof or any action to be taken by the Administrative Agent or the Collateral
Agent hereunder, (y) in accordance with any instructions or other notice which
the Administrative Agent or the Collateral Agent believes in good faith to be
properly given by the Credit Parties hereunder or (z) in the absence of gross
negligence or willful misconduct of the Administrative Agent and the Collateral
Agent (as determined by a court of competent jurisdiction in a final and
non-appealable decision).
 
ARTICLE SEVEN
 
INDEMNITY
 
Section 7.01 Indemnity:  (a)  Each Credit Party agrees to indemnify, reimburse
and hold each Secured Party and their respective successors, permitted assigns,
employees, agents and servants (hereinafter in this Section 7.01 referred to
individually as “Indemnitee” and, collectively as “Indemnitees”) harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all costs, expenses or
disbursements (including reasonable attorneys’ fees and expenses) (for the
purposes of this Section 7.01 the foregoing are collectively called “expenses”)
of whatsoever kind and nature imposed on, asserted against or incurred by any of
the Indemnitees in any way relating to or arising out of this Agreement or any
other document executed in connection herewith or in any other way connected
with the establishment, maintenance and administration of the Account or the
transactions contemplated hereby or thereby or the enforcement of any of the
terms of, or the preservation of any rights under any thereof, or in any way
relating to or arising out of the control, possession, disposition, or use of
the Account or the Cash Collateral; provided that no Indemnitee shall be
indemnified pursuant to this Section 7.01(a) for losses, damages or liabilities
to the extent caused by the gross negligence or willful misconduct of such
Indemnitee (as determined by a final and non-appealable judgment of a court of
competent jurisdiction).  The provisions of this Article Seven shall in no way
limit the indemnification obligations under the Credit Agreement or any other
Loan Document, or the right of the Secured Parties to such indemnification under
the Credit Agreement or any other Loan Document.
 

 
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(b)            Without limiting the application of Section 7.01(a) hereof, the
Credit Parties agree to pay, or reimburse the Administrative Agent and the
Collateral Agent for any and all reasonable fees, costs and expenses of whatever
kind or nature incurred (including the fees and expenses of its counsel) in
connection with the establishment, maintenance and operation of the Account and
the creation, preservation or protection of the Administrative Agent’s and the
Collateral Agent’s Liens on, and security interest in, the Account and the Cash
Collateral for the benefit of the Secured Parties, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Account and the Cash Collateral and all other
fees, costs and expenses in connection with protecting or maintaining the
Account, the Cash Collateral and the Secured Parties’ interest therein and
protecting, maintaining or preserving the Account and the Cash Collateral and
the Secured Parties’ interest therein, whether through judicial proceedings or
otherwise, or in defending or prosecuting any actions, suits or proceedings
arising out of or relating to the Account and the Cash Collateral.
 
(c)            Without limiting the application of Section 7.01(a) or (b)
hereof, the Credit Parties agree to pay, indemnify and hold each Indemnitee
harmless from and against any loss, costs, damages and expenses which such
Indemnitee may suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Credit Parties in this Agreement or in any writing
contemplated by, made or delivered by the Credit Parties pursuant to or in
connection with, this Agreement.
 
(d)            If and to the extent that the obligations of the Credit Parties
under this Section 7.01 are unenforceable for any reason, the Credit Parties
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law.
 
Section 7.02  Indemnity Obligations Secured by the Account and Cash Collateral;
Survival:  Any amounts paid by any Indemnitee as to which such Indemnitee has
the right to reimbursement shall constitute Fifth Amendment Obligations secured
by the Account and the Cash Collateral.  The indemnity obligations of the Credit
Parties contained in this Article Seven shall continue in full force and effect
notwithstanding the occurrence of the Termination Date.
 
ARTICLE VIII
 
GENERAL
 
Section 8.01  Headings:  The headings in the Articles and Sections of this
Agreement are inserted for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
 
Section 8.02    Successors and Assigns:  All of the covenants, warranties,
undertakings and agreements of any Credit Party hereunder shall bind all Credit
Parties and their respective successors or assigns and shall inure to the
benefit of the Secured Parties and their respective successors and assigns;
provided that the Credit Parties may not assign or transfer any of their
respective rights or obligations hereunder without the prior written consent of
the Collateral Agent and the Administrative Agent; provided, however that no
such assignment shall relieve the Credit Parties of their obligations hereunder
if such assignee does not perform such obligations.
 

 
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Section 8.03   Governing Law:  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO
BE PERFORMED ENTIRELY WITHIN SAID STATE AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.  In addition, and notwithstanding any agreement among the
parties to the contrary, the Credit Parties’ jurisdiction for purposes of
Article 9 of the Uniform Commercial Code as in effect in the State of New York
is the State of New York.
 
Section 8.04  Counterpart and Facsimile:  This Agreement may be executed in any
number of several counterparts, all of which shall be deemed to constitute but
one original and shall be binding upon all parties, their successors and
permitted assigns.  Delivery of an executed signature page of this Agreement by
facsimile transmission or electronic transmission shall be as effective as
delivery of a manually executed counterpart hereof.
 
Section 8.05  No Third Party Beneficiaries:  This Agreement is solely for the
benefit of the parties signatory hereto, their successors and permitted
assigns.  No waiver, consent or amendment pursuant to this Agreement may be
relied upon by any third parties.
 
Section 8.06  Notices:  Any notice or other communication to be given or made to
a party hereto shall be made or given as set forth in the Credit Agreement.
 
Section 8.07  No Waiver, etc.:  No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude or require any other or future exercise thereof or
the exercise of any other right, power or privilege.  All rights, powers and
remedies granted to the Secured Parties hereunder and under all other
agreements, instruments and documents executed in connection with this
Agreement, the Credit Agreement or any other Loan Document shall be cumulative,
may be exercised singly or concurrently and shall not be exclusive of any rights
or remedies provided by law.  Time is of the essence of this Agreement.
 
Section 8.08   Severability of Provisions:  Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  To the extent permitted by applicable law, each Credit Party
hereby waives any provision of law that renders any provision hereof prohibited
or unenforceable in any respect.
 
Section 8.09  Amendment and Waiver:  None of the terms and conditions of this
Agreement may be waived, changed, modified or varied in any manner whatsoever
unless in writing duly signed by each party hereto.
 

 
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Section 8.10                      Survival:  For the avoidance of doubt and
notwithstanding anything to the contrary set forth herein or in the Credit
Agreement, the parties hereto acknowledge that so long as the Continuing Term
Letters of Credit and any Obligations relating thereto (including, without
limitation, any unpaid drawings thereunder) shall remain outstanding, all
obligations of the Credit Parties under the Credit Agreement relating to the
payment of any amounts owing with respect to the Continuing Term Letters of
Credit and any Obligations relating thereto shall remain in full force and
effect, together with all indemnity, expense and similar provisions contained
therein.
 
Section 8.11                      Loan Document: This Agreement and all other
documents executed in connection herewith shall be deemed to be Loan Documents
for all purposes under the Credit Agreement.
 
*    *    *
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their respective officers or representatives thereunto duly authorized, as of
the date first above written.
 

 
BORROWERS:
 
JAMES RIVER COAL COMPANY
 
 
By: ______________________________________
Name:
Title:
 
 
JAMES RIVER COAL SERVICE COMPANY
 
By: ______________________________________
Name:
Title:
 
 
LEECO, INC.
 
By: ______________________________________
Name:
Title:
 
 
TRIAD MINING, INC.
 
By: ______________________________________
Name:
Title:

 
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TRIAD UNDERGROUND MINING, LLC
 
By: ______________________________________
Name:
Title:
 
 
BLEDSOE COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK ELKHORN COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
JAMES RIVER COAL SALES, INC.
 
By: ______________________________________
Name:
Title:
 
 
BLEDSOE COAL LEASING COMPANY
 
By: ______________________________________
Name:
Title:

 
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BLUE DIAMOND COAL COMPANY
 
By: ______________________________________
Name:
Title:
 
 
MCCOY ELKHORN COAL CORPORATION
 
By: ______________________________________
Name:
Title:
 
 
GUARANTORS:
 
BDCC HOLDING COMPANY, INC.
 
By: ______________________________________
Name:
Title:
 
 
EOLIA RESOURCES, INC.
 
By: ______________________________________
Name:
Title:

 
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SHAMROCK COAL COMPANY, INCORPORATED
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK COAL COMPANY
 
By: ______________________________________
Name:
Title:
 
 
JOHNS CREEK PROCESSING COMPANY
 
By: ______________________________________
Name:
Title:

 
 
 
 
 
 
 
 
 
 

 
 
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ADMINISTRATIVE AGENT
 
MORGAN STANLEY SENIOR FUNDING, INC.
 
By: ______________________________________
Name:
Title:
 
 
COLLATERAL AGENT
 
MORGAN STANLEY & CO. INCORPORATED
 
By: ______________________________________
Name:
Title:

 
 
 
 
 
 
 
 
 
 

 
 
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