THIS NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT UNLESS SOLD
PURSUANT TO RULE 144 OF THAT ACT OR UNLESS THE SALE, PLEDGE, HYPOTHECATION OR
TRANSFER IS OTHERWISE EXEMPT FROM REGISTRATION. THE COMPANY MAY REQUEST A
WRITTEN OPINION OF COUNSEL (FROM COUNSEL ACCEPTABLE TO THE COMPANY) SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
WITH SUCH SALE, PLEDGE OR HYPOTHECATION, OR OTHER TRANSFER. THIS NOTE OR ANY
SECURITY ISSUABLE UPON THE CONVERSION HEREOF MUST BE SURRENDERED TO THE COMPANY
OR ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE SALE, PLEDGE,
HYPOTHECATION OR ANY OTHER TRANSFER OF ANY INTEREST IN THIS NOTE OR ANY SUCH
SECURITY.

                           CONVERTIBLE PROMISSORY NOTE

$1,691,885.67                                                     March 25, 2003
                                                            Knoxville, Tennessee

         FOR VALUE RECEIVED, National Coal Corporation, a Tennessee corporation
("Company"), promises to pay to the order of The Webb Group ("Holder"), or its
registered assigns, the principal sum of ONE MILLION SIX HUNDRED NINETY-ONE
THOUSAND EIGHT HUNDRED EIGHTY-FIVE DOLLARS AND 67/100 ($1,691,885.67), or such
lesser amount as shall equal the outstanding principal amount hereof, together
with interest from the date of this Convertible Promissory Note (this "Note") on
the unpaid principal balance at a rate equal to 12% per annum, computed on the
basis of the actual number of days elapsed and a year of 365 or 366 days, as the
case may be, compounded annually. Interest on the outstanding principal balance
of this Note shall be payable at Note Maturity Date as described in Section 2.
Subject to Section 5, all unpaid principal, together with any then unpaid and
accrued interest and other amounts payable hereunder, shall be due and payable
on the Note Maturity Date (as defined below). Subject to Section 5, any unpaid
principal and accrued and unpaid interest on the Note Maturity Date shall be
payable in cash. Upon payment in full of all principal and interest payable
hereunder, this Note shall be surrendered to the Company for cancellation.

         This Note is being issued as a corrected promissory note to the
Promissory Note dated March 25, 2003 (the "Original Note") to incorporate terms
originally agreed to by the Company and the Holder but inadvertently omitted
from the original note, it being understood and agreed that there has been no
extinguishment of the obligations of the Company under the Original Note, but,
rather, such obligations are restated herein. This Note and the similar
Convertible Promissory Note originally issued to the Holder and reissued as of
the date hereof are collectively referred to as the "Notes." Concurrently
herewith, the Holder also acquired Warrants to Purchase Common Stock (the
"Warrants").



<PAGE>






     The following is a statement of the rights of the Holder and the conditions
to which this Note is subject,  and to which the Holder,  by the  acceptance  of
this Note, agrees:


1.       Certain Definitions.
         --------------------

          (a)  "Common  Stock"  means  shares of the common  stock,  $0.0001 par
               value per share, of the Company.

          (b)  "Event of Default"  means any of the events  specified as such in
               Section 4(a).

          (c)  "Holder" means the person or entity specified in the introductory
               paragraph of this Note or any transferee  that is at the time the
               registered  holder of this Note.  The Holder or  transferee is an
               "accredited  investor" as defined under U.S.  federal  securities
               laws or  otherwise  will  qualify to allow this  offering to take
               place as a private placement under applicable securities laws.

          (d)  "Note  Maturity Date" shall mean the earlier of (i) September 25,
               2003, or, (ii) the date as of which the outstanding principal and
               accrued  interest  on this  Note and all other  payments  payable
               hereunder  are due and payable by the Holder  pursuant to Section
               4.2.

     Other  capitalized  terms not defined in this Note have the same meaning as
in the Warrants.

2.       Interest.
         --------

         This Note will bear interest at a rate of 12% per annum. Accrued
interest on this Note shall be due and payable in cash on the Note Maturity
Date, whether by acceleration, scheduled maturity or otherwise, unless such
amounts are converted into Common Stock pursuant to the terms set forth herein.
Subject to Section 5, any accrued interest on this Note shall be payable in cash
or, at the option of the Holder, in shares of Common Stock valued at the
arithmetic mean of the Closing Sale Price of the Company's Common Stock for the
30 day period ending on the day prior to the Note Maturity Date.

3.       Prepayment.
         ----------

         The Company shall have the right, but not the obligation, at any time
prior to the Note Maturity Date, upon five (5) business days written notice (the
"Notice Period") to prepay the Note(s) in cash in an amount equal to the
Principal Amount thereof plus accrued interest. During the Notice Period, the
Holder may exercise its conversion rights as outlined in Section 5 herein,
which, if exercised, would negate the Company's prepayment option.



<PAGE>





4.       Events of Default.
         -----------------

          4.1  Event of Default.  Each of the following  events shall constitute
               an "Event of Default" under this Note:

               (a)  Subject to Section 5, the  Company  fails to pay all amounts
                    owed within ten business  days of the Note  Maturity Date as
                    required under the terms of this Note.

               (b)  The Company  (i) applies for or consents to the  appointment
                    of a receiver, trustee, liquidator or custodian of itself or
                    of all  or a  substantial  part  of its  property,  (ii)  is
                    unable, or admits in writing its inability, to pay its debts
                    for borrowed  money  generally as they come due or its trade
                    payables  within 90 days of  invoice,  (iii) makes a general
                    assignment  for  the  benefit  of  its  creditors,  (iv)  is
                    dissolved or liquidated in full or in part,  (v) commences a
                    voluntary  case or  other  proceeding  seeking  liquidation,
                    reorganization or other relief with respect to itself or its
                    debts under any bankruptcy,  insolvency or other similar law
                    now or hereafter in effect or consents to any such relief or
                    to the  appointment of or taking  possession of its property
                    by any official in an involuntary  case or other  proceeding
                    commenced  against  it,  or (vi)  takes any  action  for the
                    purpose of effecting any of the foregoing,  and an order for
                    relief  entered or such  proceeding  shall not be dismissed,
                    discharged or stayed within 60 days of commencement.

               (c)  Proceedings  for the  appointment  of a  receiver,  trustee,
                    liquidator   or  custodian  of  the  Company  or  all  or  a
                    substantial part of the property thereof,  or an involuntary
                    case   or    other    proceedings    seeking    liquidation,
                    reorganization  or other  relief with  respect to Company or
                    the debts thereof under any bankruptcy,  insolvency or other
                    similar law now or hereafter  in effect shall be  commenced,
                    and an order for relief entered or such proceeding shall not
                    be  dismissed,  discharged  or  stayed  within  60  days  of
                    commencement.

               (d)  The  Company  (i)  fails to issue  Conversion  Shares to the
                    Holder or to cause its  Transfer  Agent to issue  Conversion
                    Shares, or, if applicable, cash, upon proper exercise by the
                    Holder of the conversion  rights of the Holder in accordance
                    with the terms of this Note,  (ii) fails to  transfer  or to
                    cause its  Transfer  Agent to transfer any  certificate  for
                    Conversion  Shares issued to the Holder as and when required
                    by this Note,  and such  transfer is  otherwise  lawful,  or
                    (iii) fails to remove any restrictive legend or to cause its
                    Transfer Agent to transfer any certificate or any Conversion
                    Shares  issued to the  Holder as and when  required  by this
                    Note or any other related  agreement and such legend removal
                    is  otherwise  lawful,  and any such  failure  described  in
                    subclauses  (i),  (ii) or (iii)  continues  uncured for five
                    Business Days.



<PAGE>





               (e)  The  Company  fails to perform or observe,  in any  material
                    respect,  any other covenant,  term,  provision,  condition,
                    agreement or  obligation  of the Company  under this Note or
                    any related agreement,  provided the Holder has provided the
                    Company notice and an opportunity to cure within ten trading
                    days of any such event of default under this Section 4.1(e).

               (f)  The Company (or any subsidiary  thereof if guaranteed by the
                    Company)  defaults  (unless  the default is the subject of a
                    bona fide  dispute and the  Company  has set aside  adequate
                    reserves) in any of its  obligations  under any of the other
                    Notes.

     4.2  Acceleration.  If an Event of Default  (other than an Event of Default
          specified in Section 4.1(b) or (c)) with respect to the Company occurs
          and is  continuing,  then  the  Holder  may  declare  the  outstanding
          principal  and accrued  interest  on this Note and all other  payments
          payable hereunder to be forthwith due and payable immediately, without
          presentment,  demand,  protest or further  notice of any kind,  all of
          which are  hereby  expressly  waived by the  Company,  to the  fullest
          extent  permitted by applicable law. If an Event of Default  specified
          in  Section  4.1(b)  or  (c)  occurs  and  is  continuing,   then  the
          outstanding  principal and accrued interest on this Note and all other
          payments  payable  hereunder  shall become and be immediately  due and
          payable  without  any  declaration  or  other  act on the  part of the
          Holder.   The  Holder  by  notice  to  the   Company  may  rescind  an
          acceleration and its consequences if the rescission would not conflict
          with any judgment or decree and if all existing Events of Default have
          been cured or waived.  No such rescission  shall affect any subsequent
          default or impair any right thereto.

5.       Conversion.
         ----------

     5.1  Conversion.  Subject to the  limitations set forth in Section 5.5, the
          Holder  may,  at any time  before  this Note has been  repaid in full,
          elect to convert all or any portion of the outstanding  principal (and
          accrued  interest due, if elected by the Holder) into shares of Common
          Stock at the Conversion Rate.

     5.2  Conversion Procedure in the Event of Conversion.


          (a)  Each  conversion  of this Note shall be effected by the surrender
               of this Note at the  principal  office of the Company at any time
               during normal business  hours,  together with a written notice by
               the Holder stating that the Holder desires to convert the entire,
               or a specified  increment of,  principal of this Note into Common
               Stock.  Each  conversion  of a Note  will be  deemed to have been
               effected  as of the close of  business  on the date on which this
               Note has been  surrendered and the notice has been received,  and
               at that  time,  the  rights of the Holder of this Note will cease
               and the person or persons in whose name or names any  certificate
               or certificates for Common Stock are to be issued upon conversion
               will be deemed to have  become the Holder or Holders of record of
               the shares of Common Stock represented thereby.



<PAGE>





          (b)  Within two trading days after a conversion has been effected, the
               Company will deliver to the converting holder:

               (i)  a certificate  or  certificates  representing  the number of
                    shares of Common Stock  issuable by reason of  conversion in
                    such name or names and such denomination or denominations as
                    the converting holder has specified; and

               (ii) a replacement Note representing the principal amount of this
                    Note  delivered  to  the  Company  in  connection  with  the
                    conversion but which was not converted.

          (c)  The issuance of certificates  for Common Stock upon conversion of
               this Note will be made without  charge to the Holder of this Note
               for any tax in  respect  thereof or other  cost  incurred  by the
               Company in connection with conversion and the related issuance of
               Common Stock.  Upon  conversion of any portion of this Note,  the
               Company will take all actions as are necessary in order to ensure
               that the Common Stock issuable with respect to conversion will be
               validly issued, fully paid and nonassessable.

          (d)  The Company will not close its books against the transfer of this
               Note or of the shares of Common  Stock  issued or  issuable  upon
               conversion of this Note in any manner which  interferes  with the
               timely conversion of this Note, and will at all times reserve for
               issuance the maximum  number of shares of Common Stock into which
               this Note is convertible.

     5.3  Fractional Shares; Interest. No fractional shares shall be issued upon
          conversion  of this Note.  In lieu of Company  issuing any  fractional
          shares to the Holder upon the  conversion of this Note,  Company shall
          pay to the Holder an amount in cash equal to the  product  obtained by
          multiplying  the Conversion  Rate applied to effect such conversion by
          the fraction of a share not issued pursuant to the previous  sentence.
          Upon  conversion  of this Note in full or the  payment of  outstanding
          amounts specified in this Note, the Company shall be released from all
          its obligations and liabilities under this Note.

     5.4  Conversion Rate. The initial  Conversion Rate shall be $0.50 per share
          of Common Stock. The Conversion Rate shall be subject to adjustment as
          described in Section 6.




<PAGE>





     5.5  Conversion  Restrictions.   Notwithstanding  anything  herein  to  the
          contrary,  the Holder may not  convert,  and the Company may not cause
          the Holder to convert,  this Note to the extent such conversion  would
          result  in  the  Holder,   together   with  any   affiliate   thereof,
          beneficially owning (as determined in accordance with Section 13(d) of
          the Exchange Act and the rules  promulgated  thereunder)  in excess of
          9.99% of the then  issued  and  outstanding  shares of  Common  Stock,
          including  shares issuable upon conversion or exercise of this Note or
          any other  instrument  of the Company  (including  the  Warrant  which
          accompanied  this Note) held by the Holder after  application  of this
          Section  5.5.  Since the Holder will not be obligated to report to the
          Company  the number of shares of Common  Stock it may hold at the time
          of a conversion hereunder, unless the conversion at issue would result
          in the  issuance  of shares of Common  Stock in excess of 9.99% of the
          then  outstanding  shares of Common Stock without  regard to any other
          shares which may be  beneficially  owned by the Holder or an affiliate
          thereof,  the  Holder  shall  have the  authority  and  obligation  to
          determine  whether the restriction  contained in this Section 5.5 will
          limit any particular  conversion  hereunder and to the extent that the
          Holder  determines  that  the  limitation  contained  in this  Section
          applies, the determination of which portion of the principal amount of
          this Note is convertible shall be the responsibility and obligation of
          the  Holder.  If the Holder has  delivered a  Conversion  Notice for a
          principal amount of this Note that, without regard to any other shares
          that the Holder or its affiliates may  beneficially  own, would result
          in the  issuance  in excess of the  permitted  amount  hereunder,  the
          Company  shall  notify  the  Holder of this  fact and shall  honor the
          conversion for the maximum  principal amount permitted to be converted
          on the  Conversion  Date in accordance  with this Section 5.5. If this
          Note was not  surrendered  on the  Conversion  Date, the Company shall
          provide the Holder written notice of the amount actually converted. If
          the Holder  surrendered  this Note on the Conversion Date, the Company
          shall, at the option of the Holder, either retain any principal amount
          tendered for  conversion in excess of the permitted  amount  hereunder
          for future  conversions  or return such excess  portion of the Note to
          the Holder.  The  provisions  of this Section 5.5 may be waived by the
          Holder (but only as to itself and not to any other holder of a Note or
          Warrant)  in whole or in part  (x)  upon not less  than 61 days  prior
          notice to the Company and (y)  immediately  upon written notice to the
          Company in the event of the  occurrence  or notice of an  intended  or
          pending  Change of Control.  Other holders of Notes and Warrants shall
          be  unaffected  by any such waiver.  For purposes of this Section 5.5,
          "Change  of  Control"  means  (i) the  consolidation,  merger or other
          business combination of the Company with or into another Person (other
          than (A) a  consolidation,  merger or other  business  combination  in
          which holders of the Company's voting power  immediately  prior to the
          transaction  continue  after  the  transaction  to hold,  directly  or
          indirectly,  the  voting  power of the  surviving  entity or  entities
          necessary to elect a majority of the members of the board of directors
          (or their  equivalent if other than a  corporation)  of such entity or
          entities,  or (B) pursuant to a merger effected solely for the purpose
          of changing the jurisdiction of  incorporation  of the Company),  (ii)
          the sale or  transfer  of all or  substantially  all of the  Company's
          assets,  (iii)  a  purchase,  tender  or  exchange  offer  made to and
          accepted by the holders of more than 50% of the outstanding  shares of
          Common Stock,  or (iv) the execution by the Company of an agreement to
          which the Company is a party or by which it is bound providing for any
          of the events set forth in (i), (ii) or (iii) above.



<PAGE>





6.       Adjustment of Conversion Rate.
         -----------------------------

         The Conversion Rate shall be adjusted from time to time as follows:

     6.1  Adjustment of  Conversion  Rate upon  Subdivision  or  Combination  of
          Common Stock. If the Company at any time after the date of issuance of
          this  Note   subdivides   (by  any  stock   split,   stock   dividend,
          recapitalization  or otherwise) one or more classes of its outstanding
          shares of Common Stock into a greater number of shares, the Conversion
          Rate  in  effect   immediately  prior  to  such  subdivision  will  be
          proportionately  reduced  and the  number of  shares  of Common  Stock
          obtainable  upon  conversion  of this  Note  will  be  proportionately
          increased.  If the  Company at any time after the date of  issuance of
          this Note combines (by combination,  reverse stock split or otherwise)
          one or more classes of its  outstanding  shares of Common Stock into a
          smaller number of shares,  the Conversion  Rate in effect  immediately
          prior to such  combination will be  proportionately  increased and the
          number of shares of Common Stock  obtainable  upon  conversion of this
          Note will be  proportionately  decreased.  Any  adjustment  under this
          Section  6.1 shall  become  effective  at the close of business on the
          date the subdivision or combination becomes effective

     6.2  Distribution of Assets.  If the Company declares or makes any dividend
          or other  distribution of its assets (or rights to acquire its assets)
          to holders of Common  Stock,  by way of return of capital or otherwise
          (including,  without  limitation,  any  distribution of cash, stock or
          other securities,  property or options by way of a dividend, spin off,
          reclassification,    corporate    rearrangement   or   other   similar
          transaction)  (a  "Distribution"),  at any time after the  issuance of
          this Note, then, in each such case:

          (a)  the Conversion Rate in effect  immediately  prior to the close of
               business  on the  record  date  fixed  for the  determination  of
               holders of Common  Stock  entitled  to receive  the  Distribution
               shall be reduced,  effective  as of the close of business on such
               record date, to a price determined by multiplying such Conversion
               Rate by a  fraction  of  which  (A) the  numerator  shall  be the
               Closing  Sale  Price  of the  Common  Stock  on the  trading  day
               immediately  preceding  such  record  date minus the value of the
               Distribution  (as determined in good faith by the Company's Board
               of Directors)  applicable  to one share of Common Stock,  and (B)
               the  denominator  shall be the  Closing  Sale Price of the Common
               Stock on the trading day immediately  preceding such record date;
               and

          (b)  the number of Conversion  Shares  obtainable  upon  conversion of
               this Note shall be  increased  to a number of shares equal to the
               number of shares of Common Stock obtainable  immediately prior to
               the  close  of   business  on  the  record  date  fixed  for  the
               determination  of holders of Common Stock entitled to receive the
               Distribution  multiplied  by the  reciprocal  of the fraction set
               forth in the immediately preceding clause (a).



<PAGE>





     6.3  Certain  Events.  If any event occurs of the type  contemplated by the
          provisions  of this Section 6 but not  expressly  provided for by such
          provisions  (including,  without  limitation,  the  granting  of stock
          appreciation rights,  phantom stock rights or other rights with equity
          features),  then  the  Company's  Board  of  Directors  will  make  an
          appropriate adjustment in the Conversion Rate and the number of shares
          of  Common  Stock  obtainable  upon  conversion  of this Note so as to
          protect the rights of the holders of the Notes;  provided that no such
          adjustment will increase the Conversion Rate or decrease the number of
          shares of Common Stock obtainable as otherwise  determined pursuant to
          this Section 6.

     6.4  Notices.

          (a)  Immediately  upon any  adjustment  of the  Conversion  Rate,  the
               Company  will give written  notice  thereof to the holder of this
               Note,  setting forth in reasonable  detail,  and certifying,  the
               calculation of such adjustment.

          (b)  The Company will give  written  notice to the holder of this Note
               at least 20 days  prior to the date on which the  Company  closes
               its books or takes a record (A) with  respect to any  dividend or
               distribution  upon the Common Stock,  (B) with respect to any pro
               rata  subscription  offer to holders  of Common  Stock or (C) for
               determining  rights to vote with  respect to any Organic  Change,
               dissolution or liquidation,  provided that such information shall
               be made known to the public prior to or in conjunction  with such
               notice being provided to such holder.

          (c)  The Company will also give  written  notice to the holder of this
               Note at least 20 days  prior  to the  date on which  any  Organic
               Change, dissolution or liquidation will take place, provided that
               such information shall be made known to the public prior to or in
               conjunction with such notice being provided to such holder.

7.       Costs.
         -----

         In addition to all unpaid principal and accrued interest due and
payable hereunder, the Company agrees to pay to the Holder upon demand all
reasonable costs and expenses incurred (including, without limitation reasonable
fees and expenses of counsel) in connection with (a) the enforcement of the
terms of or protection of the Holder's rights under this Note, (b) any waiver
requested by the Company of the Holder's rights under this Note, (c) any
proposed amendment, modification, refinancing, restructuring or work-out of the
credit evidenced hereby and (d) collecting any obligations under this Note
through reorganization, bankruptcy or any other proceeding.



<PAGE>





8.       Usury.
         -----

         It is the express intent of the Company and the Holder that the payment
of all or any portion of the outstanding principal amount of and accrued
interest under this Note be exempt from the application of any applicable usury
or similar laws under any state, federal or foreign jurisdiction. The Company
hereby irrevocably waives, to the fullest extent permitted by law, any objection
or defense which the Company may now or hereafter have to the payment when due
of any and all Note principal or accrued interest arising out of or relating to
a claim of usury or similar laws and the Company hereby agrees that neither it
nor any of its affiliates shall in the future bring, commence, maintain,
prosecute or voluntarily aid in any action at law, proceeding in equity or other
legal proceeding against the Holder based on a claim that the Company's payment
obligations under this Note violate the usury or similar laws of any state,
federal or foreign jurisdiction. Notwithstanding the foregoing, if any interest
is paid on this Note that is deemed to be in excess of the then legal maximum
rate, then that portion of the interest payment representing an amount in excess
of the then legal maximum rate shall be deemed a payment of principal and
applied against the principal of this Note.

9.       Unconditional Obligation: Fees, Waivers, Other.
         ----------------------------------------------

         The Company and the Holder (by acceptance of this Note) agree as
follows:

          (a)  No  forbearance,  indulgence,  delay or failure to  exercise  any
               right or remedy  with  respect  to this Note  shall  operate as a
               waiver,  nor as an  acquiescence  in any  default,  nor shall any
               single or partial  exercise of any right or remedy  preclude  any
               other or further exercise thereof.

          (b)  The Company hereby  expressly  waives demand and  presentment for
               payment,  notice  of  nonpayment,  notice of  dishonor,  protest,
               notice of protest,  bringing of suit, and diligence in taking any
               action to  collect  amounts  called for  hereunder,  and shall be
               directly and  primarily  liable for the payment of all sums owing
               and to be owing  hereon,  regardless  of and  without any notice,
               diligence,  act or omission with respect to the collection of any
               amount called for  hereunder or in  connection  with any right at
               any and all times which the Holder had or is existing  hereunder.
               10. Notices. -------

         All notices and other communications provided for hereunder shall be in
writing and delivered, mailed or transmitted by any standard form of
telecommunication. Notices and other communications to the Holder shall be
directed to it at its address noted on the Company's records; and notices and
other communications to the Company shall be directed to it at its address at
National Coal Corporation, 319 Ebenezer Road, Knoxville, Tennessee 37923; or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other party pursuant hereto. Any notice or other
communication shall be deemed to have been duly given (a) when sent by Federal
Express or other overnight delivery service of recognized standing, on the
business day following deposit with such service; (b) when mailed by registered
or certified mail, first class postage prepaid and addressed as aforesaid
through the United States Postal Service, upon receipt; (c) when delivered by
hand, upon delivery; and (d) when telecopied, upon confirmation of receipt. Any
party hereto may by notice so given change its address for future notice
hereunder.



<PAGE>





11.      Payment.
         -------

     Except  with  respect to  payments  in kind that are  permitted  hereunder,
payment shall be made in lawful tender of the United States.

12.      No Third Party Rights.
         ---------------------

         Nothing expressed in or to be implied from this Note is intended to
give, or shall be construed to give, any person, other than the parties hereto
and their permitted successors and assigns, any benefit or legal or equitable
right, remedy or claim under or by virtue of this Note.

13.      Replacement of Note.
         -------------------

         Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Note (or any security issued on
conversion of this Note), the Company will issue a replacement instrument, at
the Holder's expense, representing such securities in lieu of such lost, stolen,
destroyed or mutilated instrument, provided that the Holder agrees to indemnify
the Company for any losses incurred by the Company with respect to such
instrument.

14.      Amendment.
         ---------

         Except as expressly provided herein, neither this Note nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument referencing this Note and signed by the Company and the Holder. This
Note is one of two similar Notes issued by the Company. Notwithstanding the
foregoing, this Note may be amended, waived, discharged or terminated by a
written instrument referencing this Note and signed by the Company and the
holders of the outstanding Notes. Any such amendment, waiver, discharge or
termination effected in accordance with the preceding sentence shall be binding
upon each holder of any Notes of the Company outstanding.

15.      Governing Law.
         -------------

         This Note and all actions arising out of or in connection with this
Note shall be governed by and construed in accordance with the laws of the
United States of America and the State of Tennessee, without application of
conflicts of law principles.

16.      Waiver of Jury Trial.
         --------------------

         BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, AND
UNDERSTANDING THEY ARE WAIVING A CONSTITUTIONAL RIGHT, THE PARTIES HERETO WAIVE
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE
ANY DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO, THIS NOTE, THE AGREEMENT AND/OR ANY RELATED
AGREEMENT OR THE TRANSACTIONS COMPLETED HEREBY OR THEREBY.

         IN WITNESS WHEREOF, the Company has caused this Note to be issued as of
the date first written above.

                                                     NATIONAL COAL CORPORATION,
                                                     a Tennessee corporation


                                                     By:
                                                       ------------------------
                                                          Jon E. Nix, President