AMENDMENT


TO


EMPLOYMENT
AGREEMENT







THIS
AMENDMENT is made and entered into as of this 31st day of December, 2008, by and
between James River Coal Company, a Virginia corporation (the “Company”) and
Peter T. Socha (“Executive”);




W I T N E S S E T
H:




WHEREAS,
the Company and Executive entered into an Employment Agreement, dated as of May
7, 2004 (the “Employment Agreement”), providing for the terms and conditions of
Executive’s employment by the Company; and




WHEREAS,
the parties now desire to amend the Employment Agreement in the manner
hereinafter provided to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended;




NOW, THEREFORE, in consideration of the
premises and the mutual covenants and agreements contained herein and in the
Employment Agreement, the parties hereby agree as follows:





1.           Sections
4(a)(2)(iii) and (iv) are hereby amended by deleting those sections in their
entirety and substituting the following:





“(iii)     
Health and Life
Insurance Coverage.  To the extent permitted by the applicable
plans, the Company shall provide Executive (and any spouse or dependents covered
at the time of the Executive’s termination) with medical, dental, and group term
life insurance (pursuant to the same Company plans that are medical, dental, and
group term life insurance that are in effect for active employees of the
Company), for the remaining Term of the Employment Agreement or for twelve
months after the Date of Termination, whichever is greater (the “Insured
Period”).  The coverages provided for in this section shall be applied
against and reduce the period for which COBRA will be provided.




(1)           To
the extent that such medical or dental plan coverage is provided under a
self-insured plan maintained by the Company (within the meaning of Section
105(h) of the Code):




(X)           the
charge to Executive for each month of coverage will equal the monthly COBRA
charge established by the Company for such coverage in which the Executive or
the Executive’s spouse or dependents (as applicable) are enrolled from time to
time, based on the coverage generally provided to salaried employees, and
Executive will be required to pay such monthly charge in accordance with the
Company’s standard COBRA premium payment requirements; and















(Y)           not
later than 10 days after Executive’s Date of Termination (subject to delay under
Section 7 below), the Company will pay Executive a lump sum in cash equal, in
the aggregate, to the monthly COBRA charge established by the Company for the
coverage being provided on Executive’s Date of Termination to the Executive and
any covered dependents, less the amount Executive was paying for such coverage
on the Date of Termination, for each month of coverage in the Insured
Period.  In calculating the total lump sum amount payable for the
Insured Period, the Company’s monthly COBRA charge will be increased by 10% on
each January in the projected payment period and such increased amount shall
apply to each successive month in the calendar year in which the increase became
applicable.




(2)           To
the extent that such medical or dental plan coverage is provided under a
fully-insured medical reimbursement plan (within the meaning of Section 105(h)
of the Code), there will be no charge to Executive for such
coverage.




(3)            For
purposes of any individual executive life insurance policy (or policies)
maintained by the Company for Executive, the Company shall pay the Executive a
lump sum payment in cash equal to the monthly premium charges as of the Date of
Termination for such policy (or policies) multiplied by the number of months in
the Insured Period.  Such payment will be made within ten days of the
Date of Termination.





(iv)           Executive
will become fully vested in any amounts credited under a deferred compensation
plan in which Executive participates and Executive’s benefits under such plan
will be paid in accordance with the terms of such plan, including, as
applicable, the six-month delay referenced in Section 7 below.”





2.           Section
4(d) is hereby amended by deleting that section in its entirety and substituting
the following:





“(d)           GOOD
REASON.  The term “Good Reason” means the occurrence (without
Executive’s express written consent) of any one of the following acts by the
Company, or failures by the Company to act, unless, in the case of any act or
failure to act described below, such act or failure to act is corrected within
thirty (30) days after written notice thereof by the Executive to the
Company:





(1)           a
material reduction in Executive’s authority, duties or
responsibilities,





(2)           a
material reduction in Executive’s Base Salary,





2








(3)           the
relocation of Executive’s office from its location on the Effective Date to a
location more than 35 miles away, or





(4)           the
Company’s material breach of any other provision of this agreement, which shall
include the failure to require a successor to honor this Agreement.





Executive’s
right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness, except
for a Disability as defined in subsection (e) below.”





3.           Section
4(g) is hereby amended by deleting that section in its entirety and substituting
the following:





“(g)           DATE
OF TERMINATION.  Executive’s Date of Termination shall be the date
specified in the notice of termination (which, unless otherwise required by this
Agreement, may be immediate) as the date upon which Executive’s employment with
the Company is to cease.  In the case of termination by Executive for
Good Reason, the Date of Termination shall not be less than thirty (30) days nor
more than sixty (60) days from the date the notice of termination is given, and
the notice of termination shall clearly specify the act or failure to act that
constitutes “Good Reason” and shall be given no more than ninety (90) days after
the date of such act or failure to act.”





4.           Section
6(d) is hereby amended by adding the following sentence to the beginning of such
section:





“The Company agrees that it will
require any successor to the Company to honor this Agreement.”





5.           The
Original Agreement is amended by adding the following new Section 7 at the end
thereof:





“SECTION
7.   SECTION 409A





(a)           EXPENSE
REIMBURSEMENTS.  To the extent that any expense reimbursement provided
for by this Agreement does not qualify for exclusion from Federal income
taxation, the Company will make the reimbursement only if: (i) Executive incurs
the corresponding expense during the term of this Agreement or the period of two
years thereafter and submits the request for reimbursement no later than two
months prior to the last day of the calendar year following the calendar year in
which the expense was incurred so that the Company can make the reimbursement on
or before the last day of the calendar year following the calendar year in which
the expense was incurred; (ii) the amount of expenses eligible for such
reimbursement during a calendar year will not affect the amount of expenses
eligible for such reimbursement in another calendar year; and (iii) the right to
such reimbursement is not subject to liquidation or exchange for another benefit
from the Company.





3








(b)           MEANING
OF TERMINATION OF EMPLOYMENT. Solely as necessary to comply with Section 409A,
for purposes of Section 4 and this Section 7, “termination of employment” or
“employment termination” or similar terms shall have the same meaning as
“separation from service” under Section 409A(a)(2)(A)(i) of the
Code.





(c)           TAX
TREATMENT.  This Agreement will be construed and administered to
preserve the exemption from Section 409A of payments that qualify as short-term
deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the
two-times compensation exemption of Treas. Reg.
§1.409A-1(b)(9)(iii).  Executive acknowledges and agrees that the
Company has made no representation to Executive as to the tax treatment of the
compensation and benefits provided pursuant to this Agreement and that Executive
is solely responsible for all taxes due with respect to such compensation and
benefits.





(d)           SIX
MONTH DELAY.  This Agreement
will be construed and administered to preserve the exemption from Section 409A
of payments that qualify as a short-term deferral or that qualify for the
two-times separation pay exception.  With respect to other amounts
that are subject to Section 409A, it is intended, and this Agreement will be so
construed, that any such amounts payable under this Agreement and the Company’s
and Executive’s exercise of authority or discretion hereunder shall comply with
the provisions of Section 409A and the treasury regulations relating thereto so
as not to subject Executive to the payment of interest and additional tax that
may be imposed under Section 409A.  As a result, in the event
Executive is a “specified employee” on the date of Executive’s termination of
employment (with such status determined by the Company in accordance with rules
established by the Company in writing in advance of the “specified employee
identification date” that relates to the date of Executive’s termination of
employment, or in the absence of such rules established by the Company, under the default rules for identifying specified employees
under Section 409A), any payment that is subject to Section 409A, that is
payable to Executive in connection with Executive’s termination of employment,
shall not be paid earlier than six months after such termination of employment
(if Executive dies after the date of Executive’s termination of employment but
before any payment has been made, such remaining payments that were or could
have been delayed will be paid to Executive’s estate without regard to such
six-month delay).”





6.           Except
as provided herein, the Original Agreement shall be unchanged.








4








The Employment Agreement in effect
between the Company and Executive and this Amendment embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.





IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as of the date first written
above.





JAMES
      RIVER COAL COMPANYBy: /s/ Samuel M. Hopkins
      IIName:
      Samuel M. Hopkins IITitle:
      Vice PresidentEXECUTIVE/s/ Peter T.
      SochaName:  Peter
      T. Socha