Exhibit 4.2


    
      

    

     

    Exhibit
      4.2

     

     

    

      AMENDMENT
        NO. 2 TO RIGHTS AGREEMENT

      


      


      This
        Amendment No. 2, dated August 2, 2007 (“Amendment No. 2”) to the Rights
        Agreement (the “Rights Agreement”) dated as of May 25, 2004 (and amended as of
        November 3, 2006) between James River Coal Company, a Virginia corporation
        (the
“Company”), and Computershare Trust Company, N.A., as rights agent (the “Rights
        Agent”), successor to SunTrust Bank, is made by and between the Company and the
        Rights Agent. All capitalized terms not otherwise defined herein shall have
        the
        meanings ascribed thereto in the Rights Agreement.

      


      RECITALS

      


      WHEREAS,
        the Board of Directors of the Company has determined that it is in the best
        interests of the Company and its shareholders to amend the Rights Agreement;
        and

      


      WHEREAS,
        the Company has determined to amend the Rights Agreement in accordance with
        Section 27 of the Rights Agreement and the Rights Agent is directed to join
        in
        this Amendment No. 2 to the Rights Agreement as set forth herein.

      


      AGREEMENT

      


      NOW,
        THEREFORE, the parties hereto, intending to be legally bound, hereby agree
        as
        follows:

      


      1.    The
        definition of Approved Acquisition in Section 1 of the Rights Agreement is
        hereby amended to delete the definition in its entirety, and to insert in
        lieu
        thereof the following:

      


      “APPROVED
        ACQUISITION” means any acquisition of Common Stock that (i) causes a Person to
        become the Beneficial Owner of (A) 20% or more of the shares of Common Stock
        then outstanding, or (B) if already a Beneficial Owner of 20% or more of
        the
        shares of Common Stock then outstanding, an additional 2% or more of the
        shares
        of Common Stock then outstanding, and (ii) is approved in advance by a majority
        of the Board of Directors.

      


      2.    The
        definition of Distribution Date in Section 1 of the Rights Agreement is hereby
        amended to delete the definition in its entirety, and to insert in lieu thereof
        the following:

      


      “DISTRIBUTION
        DATE” means the earlier of (i) the Close of Business on the tenth day (or such
        later day as may be designated by action of a majority of the Board of
        Directors) after the Share Acquisition Date, and (ii) the Close of Business
        on
        the tenth Business Day (or such later day as may be designated by action
        of a
        majority of the Board of Directors) after the date of the commencement by
        any
        Person (other than an Excluded Person) of, or of the first public announcement
        of the intention by any Person (other than an Excluded Person) to commence,
        a
        tender or exchange offer if, upon consummation thereof, such Person, together
        with all Affiliates and Associates of such Person, would be the Beneficial
        Owner
        of 20% or more of the shares of Common Stock then outstanding.


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      


      


      3.    Section
        2
        of the Rights Agreement is hereby amended to delete that Section in its
        entirety, and to insert in lieu thereof the following:

      


      SECTION
        2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights Agent
        to
        act as agent for the Company and the holders of the Rights (who, in accordance
        with SECTION 3, shall prior to the Distribution Date also be the holders
        of the
        Common Stock) in accordance with the terms and conditions hereof, and the
        Rights
        Agent hereby accepts such appointment. The Company may from time to time
        appoint
        such co-Rights Agents as it may deem necessary or desirable, upon ten (10)
        days’
prior written notice to the Rights Agent. The Rights Agent shall have no
        duty to
        supervise, and shall in no event be liable for, the acts or omissions of
        any
        such co-Rights Agent. If the Company appoints one or more co-Rights Agents,
        then
        the respective duties of the Rights Agent and any co-Rights Agents shall
        be as
        the Company shall determine.

      


      4.    Section
        21 of the Rights Agreement is hereby amended to delete that Section in its
        entirety, and to insert in lieu thereof the following:

      


      SECTION
        21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights Agent
        may
        resign and be discharged from its duties under this Agreement upon 30 days’
written notice mailed to the Company and to each transfer agent of the Common
        Stock and Preferred Stock by registered or certified mail, and, subsequent
        to
        the Distribution Date, to the holders of the Rights Certificates by first-class
        mail. In the event that the transfer agency relationship in effect between
        the
        Company and the Rights Agent terminates, the Rights Agent will be deemed
        to
        resign automatically on the effective date of such termination; and any required
        notice will be sent by the Company. The Company may remove the Rights Agent
        or
        any successor Rights Agent upon 30 days’ written notice, mailed to the Rights
        Agent or successor Rights Agent, as the case may be, and to each transfer
        agent
        of the Common Stock and Preferred Stock by registered or certified mail,
        and
        subsequent to the Distribution Date, to the holders of the Rights Certificates
        by first-class mail. If the Rights Agent shall resign or be removed or shall
        otherwise become incapable of acting, the Company shall appoint a successor
        to
        the Rights Agent. The successor rights agent must be a corporation authorized
        to
        do business in the United States and have assets of at least Fifty Million
        Dollars ($50,000,000). If the Company shall fail to make such appointment
        within
        a period of 30 days of giving notice of such removal or after it has been
        notified in writing of such resignation or incapacity by the resigning or
        incapacitated Rights Agent or by the holder of a Rights Certificate (who
        shall,
        with such notice, submit his Rights Certificate for inspection by the Company),
        then the registered holder of any Rights Certificate may apply to any court
        of
        competent jurisdiction for the appointment of a new Rights Agent. After
        appointment, the successor Rights Agent shall be vested with the same powers,
        rights, duties and responsibilities as if it had been originally named as
        Rights
        Agent without further act or deed; but the predecessor Rights Agent shall
        deliver and transfer to 


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      the
        successor Rights Agent any property at the time held by it hereunder, and
        execute and deliver any further assurance, conveyance, act or deed necessary
        for
        the purpose. Not later than the effective date of any such appointment, the
        Company shall file notice thereof in writing with the predecessor Rights
        Agent
        and each transfer agent of the Common Stock and the Preferred Stock, and,
        subsequent to the Distribution Date, mail a notice thereof in writing to
        the
        registered holders of the Rights Certificates. Failure to give any notice
        provided for in this SECTION 21, or any defect therein, shall not affect
        the
        legality or validity of the resignation or removal of the Rights Agent or
        the
        appointment of the successor Rights Agent, as the case may be.

      


      5.    Section
        23(b) of the Rights Agreement is hereby amended to delete that Subsection
        in its
        entirety, and to insert in lieu thereof the following:

      


      (b)    If,
        following the occurrence of a Share Acquisition Date (i) a Person who is
        an
        Acquiring Person shall have transferred or otherwise disposed of a number
        of
        shares of Common Stock in one transaction or series of transactions, not
        directly or indirectly involving the Company or any of its Subsidiaries,
        which
        did not result in the occurrence of a Triggering Event such that such Person
        is
        thereafter the Beneficial Owner of 20% or less of the outstanding Common
        Stock,
        and (ii) there are no other Persons immediately following the occurrence
        of the
        event described in clause (i) who are Acquiring Persons, then the right of
        redemption shall be reinstated and thereafter be subject to the provisions
        of
        this SECTION 23.

      


      6.    A
        new
        Section 35 shall be added to the Rights Agreement as follows:

      


      SECTION
        35. FORCE MAJEURE. Notwithstanding anything to the contrary contained herein,
        the Rights Agent shall not be liable for any delays or failures in performance
        resulting from acts beyond its reasonable control including, without limitation,
        acts of God, terrorist acts, shortages of supply, breakdowns or malfunctions,
        interruptions or malfunctions of computer facilities, loss of data due to
        power
        failures or mechanical difficulties with information storage or retrieval
        systems, labor difficulties, war or civil unrest.

      


      7.    Except
        as
        amended hereby, the Rights Agreement remains in full force and
        effect.

      


      [Signatures
        on following page]


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      IN
        WITNESS WHEREOF, the parties hereto have executed this Amendment No. 2 by
        their
        duly authorized representatives effective the date set forth above.

      


      
        	
                JAMES
                  RIVER COAL COMPANY

              	
                COMPUTERSHARE
                  TRUST COMPANY, N.A.

                 

              
	
                By:
                   /s/
                  Peter T. Socha   

              	
                By:
                   /s/
                  Dennis V. Moccia   

              
	
                Name:
                  Peter
                  T. Socha   

              	
                Name:
                  Dennis
                  V. Moccia   

              
	
                Title:
                  Chief
                  Executive Officer  

              	
                Title:
                  Managing
                  Director   

              
	 	 
	 	
                Address
                  for notice:

              
	 	 
	 	
                730
                  Peachtree Street, NE

              
	 	
                Suite
                  840

              
	 	
                Atlanta,
                  GA 30308

              
	 	
                Attn:
                  Sandra Benefield