Exhibit 10.1


    
      

    

     

    Exhibit
      10.1

       

      WAIVER,
        CONSENT AND SECOND AMENDMENT
        TO TERM CREDIT AGREEMENT

      


       

      THIS
        WAIVER, CONSENT
        AND SECOND AMENDMENT
        TO TERM CREDIT AGREEMENT (this
        “Agreement”),
        is
        made and entered into as of August 7, 2007 (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. (“MS”),
        a
        corporation formed under the laws of Delaware, 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, 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 have requested that the Lenders make certain changes to the Credit
        Agreement and that the Lenders consent to certain actions of the Borrowers;
        and

       

      WHEREAS,
        the
        Lenders 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.

       

      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.     Waiver.
        The
        Administrative Agent and the undersigned Lenders, subject to the terms and
        conditions of this Agreement, including without limitation the conditions
        to
        effectiveness specified in Section
        8
        below,
        hereby waive any Default or Event of Default solely occurring by reason of
        the
        Borrower’s failure to comply with (a) the Minimum Consolidated EBITDA covenant
        set forth in Section
        10.01
        solely
        for the period ending on June 30, 2007 and (b) the Leverage Ratio covenant
        set
        forth in Section
        10.02
        solely
        for the period ending on June 30, 2007.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


       

      


       

      2.    Consent.
        (a)
Subject
        to the limitations set forth in Section
        9.05(e)
        of the
        Credit Agreement (as amended hereby), the Required Lenders hereby consent
        to
        JRCC’s issuance and/or sale of shares of common stock in JRCC (the “Equity
        Issuance”)
        under
        the Registration Statement on Form S-3 filed by JRCC with the Securities
&
Exchange Commission on June 7, 2007 (the “Shelf
        Registration”). 

       

      (b)    The
        parties hereto further agree that notwithstanding Section 3.01 and Section
        3.02
        of the Credit Agreement and Section 3.01 and Section 3.02 of the Revolving
        Credit Agreement, at least fifty percent (50%) of the Net Offering Proceeds
        of
        any Equity Issuance shall be, upon receipt, segregated into a Cash Management
        Account and offered as a mandatory prepayment to the Term Lenders (the “Equity
        Repayment”). Any Term Lender may, in its discretion, notify the Borrower, in
        writing within ten (10) Business Days, that such Term Lender does not want
        to
        accept such Term Lender’s pro rata share of the Equity Repayment. In the event
        any Term Lender sends such a notice, such Term Lender’s pro rata share of the
        Equity Repayment may be retained by JRCC, or used by Borrowers for any corporate
        purpose (including, without limitation, to prepay, purchase or otherwise
        redeem
        the 9.375% Senior Notes due 2012); provided however,
        that no
        prepayment of Indebtedness, other than the Obligations under the Credit
        Agreement and the obligations under the Revolving Credit Agreement, shall
        be
        permitted if, after giving effect to such prepayment on a pro forma basis,
        any
        Default or Event of Default shall have occurred. Notwithstanding the above,
        no
        Equity Repayment shall be required in connection with up to an aggregate
        amount
        of $40,000,000 of the Net Offering Proceeds of any Equity Issuance occurring
        prior to March 30, 2008. 

       

      3.     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:


       

      “Disqualified
        Equity Interest”
means
        any Equity Interest which, by its terms (or by the terms of any security
        into
        which it is convertible or for which it is exchangeable), or upon the happening
        of any event, (a) matures (excluding any maturity as the result of an optional
        redemption by the issuer thereof) or is mandatorily redeemable, pursuant
        to a
        sinking fund obligation or otherwise, or is redeemable at the option of the
        holder thereof, in whole or in part, on or prior to the date six months after
        the earlier of the Maturity Date or the date that the Commitments and the
        Obligations hereunder are no longer outstanding, or (b) is convertible into
        or
        exchangeable (unless at the sole option of the issuer thereof) for (i) debt
        securities or (ii) any Equity Interest referred to in (a) above, in each
        case at
        any time on or prior to the date six months after the earlier of the Maturity
        Date or the date that the Commitments and the Obligations hereunder are no
        longer outstanding, or (c) contains any repurchase obligation which may come
        into effect prior to payment in full of all Obligations.

      


      “Mandated
        Capital Expenditures”
means
        the amount of any Capital Expenditures required to be made by the Credit
        Parties
        as the result of any law or regulation, directive, guideline or decision
        of any
        Governmental Authority (including without limitation the Mine Improvement
        and
        New Emergency Response Act of 2006 and MSHA safety initiatives implemented
        in
        2006 and 2007); provided that the aggregate amount of all such Capital
        Expenditures shall not exceed $5,000,000 within any consecutive period of
        twelve
        months. 


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


      


      “Minimum
        Liquidity”
means
        cash and Cash Equivalents of the Credit Parties held in Cash Management Accounts
        plus
        Revolving Availability. 

      


      “Minimum
        Liquidity Threshold”
has
        the
        meaning ascribed to such term in Section 10.04.

      


      “Second
        Amendment Date”
means
        the effective date of the Waiver, Consent and Second Amendment to Term Credit
        Agreement dated as of August __, 2007.

      


      “Shelf
        Registration”
means
        that certain Registration Statement on Form S-3 filed by JRCC with the
        Securities & Exchange Commission on June 7, 2007. 

       

      (b) Section
        1.01 of the Credit Agreement, Definitions,
        is
        hereby amended by deleting the definitions of “Applicable
        Margin”,
        “Applicable
        Payment Fee”
and
        “Applicable
        Reduction Fee”
and
        substituting in lieu thereof the following:

      


      "Applicable
        Margin”
means,
        three and three quarter percentage points (3.75%) in the case of Base Rate
        Loans
        and four and three quarter percentage points (4.75%) in the case of LIBOR
        Rate
        Loans. 

      


      “Applicable
        Payment Fee”
means
        (a) on or prior to the 2nd
        anniversary of the Second Amendment Date, three percentage points, (b) on
        or prior to the 3rd
        anniversary of the Second Amendment Date, two percentage points, and
        (c) after the 3rd
        anniversary of the Second Amendment Date zero percentage points, in each,
        case,
        times the amount of the Term Loan B Loans being paid for any reason other
        than
        (i) payments from Excess Cash Flow under Section
        3.02(d)
        and
        (ii) payments from Net Casualty/Condemnation Proceeds under Section
        3.02(a).
        

       

      “Applicable
        Reduction Fee”
means
        (a) on or prior to the 2nd
        anniversary of the Second Amendment Date, three percentage points, (b) on
        or prior to the 3rd
        anniversary of the Second Amendment Date, two percentage points, and
        (c) after the 3rd
        anniversary of the Second Amendment Date zero percentage points, in each
        case
        times the amount of the Term Letter of Credit Commitment being reduced for
        any
        reason other than (i) reductions due to mandatory payments from Excess Cash
        Flow under Section
        3.02(d)
        or
        (ii) reductions due to mandatory payments from Net Casualty/Condemnation
        Proceeds under Section
        3.02(a).

       

      (c)     Section
        3.01
        of the
        Credit Agreement, Voluntary
        Prepayments/Reductions of the Commitments,
        is
        hereby amended by inserting
        the following as a new Section 3.01(d).

       


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


       

      

        "Prepayment
          of Obligations. If the Borrower pays after acceleration or prepays all
          or any
          portion of the Obligations, whether voluntarily or involuntarily and whether
          before or after acceleration of the Obligations, the Borrower shall pay
          to the
          Administrative Agent, for the benefit of Lenders as liquidated damages
          and
          compensation for the costs of being prepared to make funds available hereunder
          an amount equal to the Applicable Prepayment Fee multiplied by the principal
          amount of the Obligations paid after acceleration or prepaid. The Credit
          Parties
          agree that the Applicable Prepayment Fee is a reasonable calculation of
          the
          Lenders' lost profits in view of the difficulties and impracticality of
          determining actual damages resulting from an early repayment of the Obligations.
          Notwithstanding anything contained hereunder, including but not limited
          to the
          provisions of Sections 3.01(a), 3.01(b) and 3.01(c), the Borrower shall
          not be
          permitted to make any voluntary prepayment of the Obligations or reduction
          in
          the Term Letter of Credit Commitments prior to the 1st anniversary of the
          Second
          Amendment Date."

      

       

      (d)    Section
        9.05
        of the
        Credit Agreement, Limitation
        on Issuance of Equity Interests,
        is
        hereby amended by deleting the word “or” following clause (c) thereof and
        inserting the following new clause (e) immediately following clause (d)
        thereof:

       

      “or
        (e)
        issuances of Equity Interests (other than Disqualified Equity Interests)
        consisting solely of common stock of JRCC, under the Shelf Registration to
        the
        holders of any Indebtedness in exchange for, or as a redemption or repayment
        of,
        any or all such Indebtedness.”

       

      (e)    Section
        9.15,
        Securities
        Accounts; Deposit Accounts,
        of the
        Credit Agreement is hereby amended by deleting such Section in its entirety
        and
        inserting the following in lieu thereof:

       

      “SECTION
        9.15 Securities
        Accounts; Deposit Accounts.
        Subject
        to the Security Agreement and except as permitted by SECTION 5.01(v), it
        shall
        not establish or maintain any Securities Account, Deposit Account or similar
        account unless the Collateral Agent shall have received a Control Agreement
        in
        respect of such Securities Account, Deposit Account or similar account;
provided that,
        this
        requirement shall not apply to (A) any Deposit Account with an average daily
        balance of less than $100,000, so long as the aggregate daily balances in
        all
        such accounts do not exceed $1,000,000, (B) any payroll, withholding tax
        or
        other fiduciary account or (C) any account for payment of workers compensation
        and employment claims. Each Credit Party shall comply in all material respects
        with the provisions of each Control Agreement to which it is a
        party.

       

      (f)    Section
        9.18,
        Minimum
        Revolver Availability Covenant.
        The
        Credit Agreement is hereby amended by inserting the following as a new Section
        9.18. 

       

      “It
        shall
        not permit Revolving Availability to be less than $10,000,000 at any time,
        unless and until Consolidated EBITDA for the twelve (12)-month period ended
        on
        the last date of any fiscal quarter ending on or after September 30, 2008
        as
        reported under Section 10.01 is greater than $75,000,000, from and after
        which
        date this Section 9.18 shall no longer apply.”

       


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      (g)    Section
        10.01,
        Minimum
        Consolidated EBITDA,
        of the
        Credit Agreement is hereby amended by deleting such Section in its entirety
        and
        inserting the following in
        lieu
        thereof:

       

      “SECTION
        10.01    Minimum
        Consolidated EBITDA.
        The
        Credit Parties  shall
        not
        permit Consolidated EBITDA:

       

      (a)     for
        the
        nine (9) month period ending as of September 30, 2007 to be  less
        than
$19.0
        million,
        and

       

      (b)    for
        the
        twelve (12)-month period ending on any date set forth in the  table
        below to be less than the amount set forth opposite such date:

       

      


      
        	
                Measurement
                  Period Ending

                 

              	
                Consolidated
                  EBITDA

                 

              
	
                December 31,
                  2007

              	
                23.2

              
	
                March
                  31, 2008

              	
                24.1

              
	
                June
                  30, 2008

              	
                34.5

              
	
                September
                  30, 2008

              	
                40.4

              
	
                December 31,
                  2008

              	
                47.0

              
	
                March
                  31, 2009

              	
                54.1

              
	
                June
                  30, 2009

              	
                61.3

              
	
                September
                  30, 2009

              	
                72.2

              
	
                December 31,
                  2009

              	
                78.9

              
	
                March
                  31, 2010

              	
                78.9

              
	
                June
                  30, 2010

              	
                78.1

              
	
                September
                  30, 2010

              	
                76.5

              
	
                December 31,
                  2010

              	
                78.8

              


      

      


       

      (h)    Section
        10.02,
        Leverage
        Ratio,
        of the
        Credit Agreement is hereby amended by deleting such Section in its entirety
        and
        inserting the following in lieu thereof:

       

      “SECTION
        10.02     Leverage
        Ratio.
        The
        Credit Parties shall not permit  the
        Leverage Ratio for the Credit Parties as of any date set forth in the table
        below to be  greater
        than the amount set forth opposite such date:

       

      


      
        	
                Measurement
                  Period Ending

                 

              	
                Leverage
                  Ratio

                 

              
	
                September
                  30, 2007

              	
                4.5x

              
	
                December 31,
                  2007

              	
                4.9x

              
	
                March
                  31, 2008

              	
                5.0x

              


      


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


      


      
        	
                Measurement
                  Period Ending

                 

              	
                Leverage
                  Ratio

                 

              
	
                June
                  30, 2008

              	
                3.6x

              
	
                September
                  30, 2008

              	
                3.0x

              
	
                December 31,
                  2008

              	
                2.6x

              
	
                March
                  31, 2009

              	
                2.2x

              
	
                June
                  30, 2009

              	
                2.0x

              
	
                September
                  30, 2009

              	
                1.7x

              
	
                December 31,
                  2009

              	
                1.5x

              
	
                March
                  31, 2010

              	
                1.5x

              
	
                June
                  30, 2010

              	
                1.5x

              
	
                September
                  30, 2010

              	
                1.6x

              
	
                December 31,
                  2010

              	
                1.5x

              


      

      


      (i)    Section
        10.03,
        Capital
        Expenditures,
        of the
        Credit Agreement is hereby amended by deleting such Section in its entirety
        and
        inserting the following in lieu thereof:

       

      “SECTION
        10.03     Capital
        Expenditures.
        The
        Credit Parties shall not make or agree to make any Capital Expenditure (other
        than Mandated Capital Expenditures) for the most recently ended Fiscal Year
        that
        would cause the aggregate amount of all such Capital Expenditures made by
        the
        Credit Parties to exceed the amount set forth opposite such Fiscal
        Year:

      


      
        	
                Fiscal
                  Year Ending

              	
                Capital
                  Expenditures (other than Mandated Capital
                  Expenditures)

              
	
                December 31,
                  2007

              	
                $56.1
                  million

              
	
                December 31,
                  2008

              	
                $56.1
                  million

              
	
                December
                  31, 2009 and each Fiscal Year thereafter

              	
                $66.0
                  million

              


      

      


      provided,
        however,
        to the
        extent that actual Capital Expenditures (exclusive of Mandated Capital
        Expenditures) for any Fiscal Year are less than the maximum amount set forth
        above for such Fiscal Year, such unused amount may be carried forward and
        used
        only in the next Fiscal Year (where it shall be deemed to be spent
        last).”

      


      (j)    Section
        10.04,
        Minimum
        Liquidity Threshold.
        The
        Credit Agreement is hereby amended by adding a new Section 10.04 as
        follows:

       

      “SECTION
        10.04    Minimum
        Liquidity Threshold.
        The
        Credit Parties shall not permit the Minimum Liquidity for the Credit Parties
        to
        be less than the amount set forth below (the “Minimum
        Liquidity Threshold”).

       

      
        	
                Measurement
                  Date

              	
                Minimum
                  Liquidity

              
	
                At
                  all times beginning from and after August 7, 2007 

              	
                $10
                  million

              
	
                On
                  December 31, 2007 

              	
                $25
                  million

              
	
                On
                  March 31, 2008 

              	
                $20
                  million

              
	
                At
                  all other times 

              	
                $10
                  million

              


      

      



      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      


      provided,
        however,
        that if
        as of the end of any fiscal quarter ended on or after September 30, 2008
        that
        the Credit Parties’ Consolidated EBITDA for the twelve (12)-month period ending
        on the most recent date set forth in Section 10.01 is more than $75,000,000,
        then from and after such date, the Credit Parties shall no longer be required
        to
        meet the Minimum Liquidity Threshold. 

      


      (k)    Section
        11.01(a),
        Failure
        to Make Payments When Due,
        of the
        Credit Agreement is hereby amended by deleting such Section in its entirety
        and
        inserting the following in lieu thereof:

       

      “SECTION
        11.01(a)    Failure
        to Make Payments When Due.
        The
        Borrowers shall fail to pay (i) any principal or interest when due, or
        (ii) any fees, Lender Expenses or any other monetary Obligation, and such
        failure shall continue for a period of three (3) Business Days after such
        amount
        was due (in each case, whether by scheduled maturity, required prepayment,
        acceleration, demand or otherwise, including, in each instance the Applicable
        Payment Fee and the Applicable Reduction Fee).”

       

      (l)    Section
        11.02,
        Remedies,
        is
        hereby amended by adding the following sentence at the end of such
        section:

       

      “For
        the
        avoidance of doubt, the parties agree that for purposes of determining the
        amount of the Obligations due and payable as of any date, the Applicable
        Reduction Fee and the Applicable Payment Fee shall be due and payable with
        any
        such reduction, termination, acceleration or exercise of remedies.”

       

      4.    Affirmation
        and Acknowledgment of the Borrowers.  The
        Borrowers hereby ratify and confirm all of their Obligations to the Lenders,
        including, without limitation, the Loans, and the Borrowers hereby affirm
        their
        absolute and unconditional promise to pay to the Lenders all indebtedness,
        obligations and liabilities in respect of the Loans, 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.

       

      5.    No
        Other Waivers, Amendments or Consents.

       

      Except
        for the waiver in Section
        1,
        the
        consents in Section
        2
        hereof
        and the amendments
        expressly set forth and referred to in Section
        3
        hereof,
        the Credit Agreement shall remain unchanged and in full force and effect.
        The
        waiver and consents contained herein shall not extend beyond the terms expressly
        set forth herein for such waiver and consents, nor impair any right or power
        accruing to the Administrative Agent or any Lender with respect to any other
        Default or Event of Default or any Default or Event of Default which occurs
        after the date hereof. 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.

       


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      


       

      6.    Representations,
        Warranties and Covenants.
        To
        induce the undersigned Lenders to enter into this Agreement, the Credit Parties
        hereby warrant, represent and covenant to and with to 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
        7
        shall be
        an Event of Default under the Credit Agreement.

       

      8.    Conditions
        to Effectiveness.
        This
        Agreement shall not become effective unless and until the Administrative
        Agent
        has received (a) payment from the Borrowers of an amendment fee in an amount
        equal to 0.125% times
        the
        Commitments, (b) one or more counterparts of this Agreement, duly executed,
        completed and delivered by the Borrowers, the other Credit Parties and the
        Required Lenders and (c) a fully-executed amendment to the Revolving Credit
        Agreement, in the form attached hereto as Exhibit A.

       

      9.    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.

       

      10.       
        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.

       

      11.       
        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.

       


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      


      


       

      12.       
        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.

       

      13.      
        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. 

       

      14.       
        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.

       

      15.       
        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. 

       

      16.        
        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) 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.

       

      


      


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          9

          
            

          

        

        
          
          

        

      


      


      IN
        WITNESS WHEREOF,
        the
        parties have caused this Consent and Second Amendment to Revolving 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/ Peter T.
                  Socha                                   
                  

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title: 
                  CEO

                 

              
	 	
                JAMES
                  RIVER COAL SERVICE COMPANY

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                LEECO,
                  INC.

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                TRIAD
                  MINING, INC.

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              


      


      
        
          JAMES
            RIVER COAL COMPANY

          WAIVER,
            CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

          SIGNATURE
            PAGE

          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      


      
        	 	
                 

                 

                TRIAD
                  UNDERGROUND MINING, LLC

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  Member

                 

              
	 	
                BLEDSOE
                  COAL CORPORATION

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                JOHNS
                  CREEK ELKHORN COAL CORPORATION

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                JAMES
                  RIVER COAL SALES, INC.

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                BLEDSOE
                  COAL LEASING COMPANY

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              


      

      



      
        
          


          JAMES
            RIVER COAL COMPANY

          WAIVER,
            CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

          SIGNATURE
            PAGE

          
          

        

        
          11

          
            

          

        

        
          
          

        

      


      


      
        	 	
                BLUE
                  DIAMOND COAL COMPANY

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                MCCOY
                  ELKHORN COAL CORPORATION

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	 
	 	
                GUARANTORS:

                 

              
	 	
                BDCC
                  HOLDING COMPANY, INC.

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                EOLIA
                  RESOURCES, INC.

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              


      


      
        
          


          JAMES
            RIVER COAL COMPANY

          WAIVER,
            CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

          SIGNATURE
            PAGE

          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      


      
        	 	
                SHAMROCK
                  COAL COMPANY, INCORPORATED

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                JOHNS
                  CREEK COAL COMPANY

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              
	 	
                JOHNS
                  CREEK PROCESSING COMPANY

                 

              
	 	
                
                  By:
                     /s/ Peter T.
                    Socha                                   
                    

                

              
	 	
                Name:
                  Peter T. Socha

              
	 	
                Title:
                  CEO

                 

              


      


      
        
          


          JAMES
            RIVER COAL COMPANY

          WAIVER,
            CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

          SIGNATURE
            PAGE

          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      


      
        	 	
                LENDER:

                 

                MORGAN
                  STANLEY SENIOR FUNDING, INC.

                 

              
	 	
                _________________________________________

                 

              
	 	
                By:  
                  /s/ Gavin
                  Balera                                                   
                  

              
	 	
                Name: 
                  Gavin Balera

              
	 	
                Title: 
                  Authorized Signatory

                 

              
	 	
                COLLATERAL
                  AGENT

                 

              
	 	
                MORGAN
                  STANLEY & CO. INCORPORATED

                 

              
	 	
                
                  By:  
                    /s/ Gavin
                    Balera                                                   
                    

                

              
	 	
                Name:
                  Gavin Balera

              
	 	
                Title:
                  Authorized Signatory

                 

              
	 	 


      

      



      
        
          


          JAMES
            RIVER COAL COMPANY

          WAIVER,
            CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

          SIGNATURE
            PAGE

          
          

        

        
          14

          
            

          

        

        
          
          

        

      


      


      
        	 	
                LENDER:

                 

              
	 	
                 
                  Sandelman Finance 2006-1, Ltd.

                 

              
	 	
                By:  
                  /s/ Michael Pascutti

              
	 	
                Name:
                  Michael Pascutti

              
	 	
                Title: 
                  Head of Relative Value

                 

              


      

      


      


       

      


       

      


       

       

       

       

       

       

       

      

        
          
            


            JAMES
              RIVER COAL COMPANY

            WAIVER,
              CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

            SIGNATURE
              PAGE

            
            

          

          
            15

            
              

            

          

          
            
            

          

        




      

        


        
          	 	
                  LENDER:

                   

                
	 	
                   
                    Sandelman Finance 2006-2, Ltd.

                   

                
	 	
                  By:  
                    /s/ Michael Pascutti

                
	 	
                  Name:
                    Michael Pascutti

                
	 	
                  Title: 
                    Head of Relative Value

                   

                


        

        


         

        
           

          

            
              
                


                JAMES
                  RIVER COAL COMPANY

                WAIVER,
                  CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

                SIGNATURE
                  PAGE

                
                

              

              
                15

                
                  

                

              

              
                
                

              

            



        

         

        
          

            


            
              	 	
                      LENDER:

                       

                    
	 	
                       
                        Trilogy Portfolio Company.

                       

                    
	 	
                      By:  
                        /s/ Paul Girechbera

                    
	 	
                      Name:
                        Paul S. Girechbera

                    
	 	
                      Title: 
                        Principal

                       

                    


            

            


            


             



           

           

          
             

             

             

            

              
                
                  


                  JAMES
                    RIVER COAL COMPANY

                  WAIVER,
                    CONSENT AND SECOND AMENDMENT TO TERM CREDIT AGREEMENT

                  SIGNATURE
                    PAGE