**REGISTRATION
      RIGHTS AGREEMENT**




**THIS
      AGREEMENT** is made
      and entered into as of this 31 st day of
      May, 2005, by and among **JAMES RIVER COAL COMPANY** ,
      a
      Virginia corporation (the **“Company”** ),
      and
      the persons whose names appear in the signature pages hereto under the caption
      “Shareholders” (collectively, the **“Shareholders”** and
      individually a **“Shareholder”** ).




**W
      I T N E S S E T H** **:**




**WHEREAS,** in
      connection with the acquisition of Triad Mining, Inc., the Company issued
      338,295 shares of its Common Stock, to the Shareholders (such shares issued
      in
      such acquisition are referred to herein as the **“Shares”** );
      and




**WHEREAS,** the
      Shares have not been registered under the Securities Act of 1933, as amended
      (the **“Securities
      Act”** );
      and




**WHEREAS,** the
      Shareholders may desire to register some or all of the Shares under the
      Securities Act at a future date; and




**WHEREAS,** the
      Company has previously granted “piggyback” registration rights with respect to
      4,544,708 shares of its Common Stock (the **“Initial
      Registrable Shares”** )
      pursuant to that certain Registration Rights Agreement dated May 6, 2004, among
      the Company and the signatories thereto (collectively, the **“Initial
      Holders”** );
      and




**WHEREAS,** the
      parties hereto desire to provide the Shareholders with certain demand and
“piggyback” registration rights with respect to the sale of all or a portion of
      the Shares;




**NOW,
      THEREFORE,** for and
      in consideration of the premises and the mutual covenants and agreements
      contained herein, and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto agree as
      follows:




**1** **.** **Definitions** **.** As used
      herein, unless the context otherwise requires, the following capitalized terms
      shall have the meanings set forth below:




( a ) **“** **Commission** **”** means
      the Securities and Exchange Commission or any other federal agency at the time
      administering the Securities Act.




(b) **“** **Common
      Stock** **”** means
      the Company’s common stock, par value $0.01 per share.




(c) **“** **Consulting
      Agreements** **”** means
      the Consulting Agreements between the Company and each of Joseph A. Aull and
      Tim
      Aull, dated the date hereof.









(d) **“** **Exchange
      Act** **”** means
      the Securities Exchange Act of 1934, as amended (or any similar successor
      statute), and the rules and regulations thereunder, all as the same shall be
      in
      effect at the time.




(e) **“** **Material
      Event** **”** means
      any event as a result of which any prospectus included in a registration
      statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.




(f) **“** **Performance
      Shares** **”** means
      the shares of Common Stock, if any, issued by the Company pursuant to Section
      ___ of the Consulting Agreements.




(g) **“** **Person** **”** means
      any individual, corporation, association, partnership, business trust, joint
      stock company, limited liability company, unincorporated association, joint
      venture or other entity, or governmental or political subdivision or agency
      thereof.




(h) **“** **Registrable
      Securities** **”** means
      (i) the Shares; (ii) the Performance Shares; and (iii) any other securities
      issued or issuable in respect of or in exchange for any of the Shares or
      Performance Shares by way of a stock dividend or other distribution on the
      Shares or Performance Shares, stock split or in connection with a combination
      of
      shares, recapitalization, merger, consolidation, reclassification or exchange
      offer.




(i) **“** **Registration
      Expenses** **”** means
      all expenses incident to the Company's performance of or compliance with **Article
      2** or **Article
      3** ,
      including, without limitation, all Commission filing fees and National
      Association of Securities Dealers, Inc. or stock exchange listing fees, all
      fees
      and expenses of complying with state securities or blue sky laws, all printing
      expenses, the fees and disbursements of counsel for the Company and of its
      independent public accountants, including the expenses of any special audits
      or
“cold comfort” letters required by or incident to such performance and
      compliance; provided, however, that Registration Expenses do not include (i)
      the
      fees and costs of counsel and advisors to the selling Shareholders, (ii)
      underwriting discounts and commissions, and (iii) transfer taxes, if any,
      relating to sale of shares by the Shareholders.




**2** **.** **** **Demand
      Registration under the Securities Act** **.**




**2.1** **Number
      and Timing of Request** **.**




(a) At
      any
      time after the date hereof, the holders of Registrable Securities constituting
      at least thirty three percent (33%) of the total number of Registrable
      Securities then outstanding may request the Company to register under the
      Securities Act all of the Registrable Securities held by such requesting
      holder(s).




(b) The
      holders of the Registrable Securities may make only one such registration
      request; provided, however, that if, subsequent to such request, the Company
      issues any Performance Shares, Joseph A. Aull and Tim Aull shall collectively
      have the right to make one additional such request (the “ **Second
      Demand** ”).




2




(c) Promptly
      following receipt of any request under this **Section
      2.1** ,
      the
      Company shall immediately notify all other Shareholders, and shall use its
      reasonable best efforts to register under the Securities Act, for public sale
      in
      the manner specified in **Section
      2.4** ,
      the
      total number of shares of Registrable Securities specified in the original
      request and in any requests received from the other Shareholders within twenty
      (20) days after receipt of such notice from the Company.




(d) Notwithstanding
      anything in this Agreement to the contrary, the Company shall not, under any
      circumstances, be required to file a registration statement with the Commission
      to register any Registrable Securities prior to November 28, 2005 **** (the
      “ **Lockup
      Date** ”).




**2.2** **Right
      to Delay Registration** **.** If, at
      the time the Company receives a request for registration under this **Article
      2** ,
      in the
      good faith judgment of the board of directors of the Company a non-public
      material event has occurred and is continuing or is likely to occur within
      ninety (90) days and public disclosure thereof would have a material adverse
      affect on the Company or on the proposed material transaction involving the
      Company, then the Company may, at its option, delay the imposition of its
      obligations under this **Article
      2** for up
      to ninety (90) days; provided, however, if the Company elects to delay such
      obligations, the holders of a majority of the Registrable Securities requesting
      such registration may elect to withdraw such registration request, and, if
      such
      request is withdrawn in its entirety, such request shall not count as a request
      hereunder.




**2.3** **Other
      Securities** **.** The
      Company shall be entitled to include in any registration statement referred
      to
      in this **Article
      2** ,
      for
      sale in the manner specified herein, shares of Common Stock to be sold by or
      for
      the account of other Persons who may then be holding “piggyback” registration
      rights, including, without limitation the Initial Holders.




**2.4** **Registration
      Procedure** **.** If and
      whenever the Company is required to effect the registration of any Registrable
      Securities under the Securities Act as provided in this **Article
      2** ,
      the
      Company will (subject to Section 2.1(d)), as expeditiously as reasonably
      possible:




(a) prepare
      and file with the Commission a registration statement on Form S-1 or S-3 under
      the Securities Act, and use its reasonable best efforts to cause such
      registration statement to become and remain effective until all Registrable
      Securities covered by such registration statement have been sold. Such
      registration statement shall be filed as a “shelf registration” pursuant to Rule
      415 promulgated under the Securities Act, providing for the sale of shares
      included therein on a delayed or continuous basis;




(b) prepare
      and file with the Commission such amendments and supplements to such
      registration and the prospectus used in connection therewith as may be
      necessary to comply with the provisions of the Securities Act with respect
      to
      the disposition of the Registrable Securities covered by such registration
      statement, including such amendments and supplements as may be necessary to
      reflect the intended method of disposition;




(c) use
      its
      reasonable best efforts to cause such registration statement to be declared
      effective by the Commission under the Securities Act as soon as




3




practicable
      to permit the disposition of the Registrable Securities by the holders on The
      Nasdaq National Market or such other exchange or market upon which the Company’s
      shares are traded;




(d) make
      available for inspection by any Shareholder covered by any registration
      statement filed pursuant to this Agreement all financial and other records, pertinent
      corporate documents and properties of the Company (collectively, the
“ **Records** ”)
      as
      shall be reasonably necessary to enable them to exercise their due diligence
      responsibility, and cause the Company’s officers, directors and employees to
      supply all information reasonably requested by any Shareholder in connection
      with such registration statement. Records which the Company determines in good
      faith to be confidential and which it notifies the Shareholders are confidential
      shall not be disclosed by the Shareholders unless (i) the disclosure of such
      Records is necessary to avoid or correct a misstatement or omission in the
      registration statement, (ii) the release of such Records is ordered pursuant
      to
      a subpoena or other order from a court of competent jurisdiction or (iii) the
      information in such Records has been made generally available to the public.
      Each Shareholder agrees by acquisition of its Registrable Securities that it
      will, upon learning that disclosure of such Records is sought in a court of
      competent jurisdiction, give notice to the Company and allow the Company, at
      the
      Company's expense, to undertake appropriate action to prevent disclosure of
      the
      Records deemed confidential;




(e) provide
      a
      legal opinion of the Company's outside counsel, dated the effective date of
      any
      registration statement filed pursuant to this Agreement (and, if such
      registration includes an underwritten public offering, dated the date of the
      closing under the underwriting agreement), with respect to the registration
      statement, each amendment and supplement thereto, the prospectus included
      therein (including the preliminary prospectus) and such other documents relating
      thereto in customary form and covering such matters of the type customarily
      covered by legal opinions of such nature (in a form reasonably acceptable to
      the
      holders of a majority of the Registrable Securities included in the
      registration);




(f) make
      every reasonable effort to prevent the issuance of any stop order suspending
      the
      effectiveness of any registration statement filed pursuant to this Agreement
      or of any order preventing or suspending the use of any preliminary prospectus
      and, if any such order is issued, to obtain the withdrawal of any such order
      at
      the earliest possible moment;




(g)if
      requested by any
      holder of Registrable Securities covered by any registration statement filed
      pursuant to this Agreement, promptly incorporate in a prospectus
      supplement or post-effective amendment such information as such holder
      reasonably requests to be included therein, including, without limitation,
      with
      respect to the number of Registrable Securities being sold by such holder,
      the
      purchase price being paid therefor and with respect to any other terms of any
      underwritten offering of the Registrable Securities to be sold in such offering;
      and make all required filings of such prospectus supplement or post-effective
      amendment as soon as practicable after being notified of the matters
      incorporated in such prospectus supplement or post-effective
      amendment;




4




(h) provide
      and cause to be maintained a transfer agent and registrar for all Registrable
      Securities covered by such registration statement from and after the effective
      date of such registration statement;




(i) if
      the
      Company shall maintain the listing of any shares of Common Stock on The Nasdaq
      National Market or any other securities exchange or national market
      system, use its reasonable best efforts to list all Registrable Securities
      covered by such registration statement on any securities exchange or national
      market system on which any of the Registrable Securities are then
      listed;




(j)promptly
      notify each
      seller of Registrable
      Securities :





(A)when
      such registration
      statement or any prospectus used in connection therewith, or any amendment
      or
      supplement thereto, has been filed and,
      with
      respect to such registration statement or any post-effective amendment thereto,
      when the same has become effective;





(B)of
      any written comments
      from the Commission with respect to any filing referred to in clause (i) and
      of
      any written request by the Commission for
      amendments or supplements to such registration statement or
      prospectus;





(C)of
      the notification to
      the Company by the Commission of its initiation of any proceeding with respect
      to the issuance by the Commission of any
      stop
      order suspending the effectiveness of such registration statement;
      and





(D)of
      the receipt by the
      Company of any notification with respect to the suspension of the effectiveness
      of such registration statement;




(k) furnish
      to each seller of Registrable
      Securities covered
      by any registration statement filed pursuant to this Agreement such number
      of
      conformed copies of
      such
      registration statement and of each amendment and supplement thereto (in each
      case including all exhibits and documents incorporated by reference), such
      number of copies of the prospectus contained in such registration statement
      (including each preliminary prospectus and any summary prospectus) and any
      other
      prospectus filed under Rule 424 promulgated under the Securities Act relating
      to
      such holder's Registrable
      Securities ,
      and
      such other documents as such seller may reasonably request to facilitate the
      intended disposition of its Registrable
      Securities ;





(l) register
      or qualify all Registrable Securities covered
      by any registration statement filed pursuant to this Agreement under such other
      securities or blue sky
      laws
      of such jurisdictions as each seller of Registrable
      Securities shall
      reasonably request, to keep such registration or qualification in effect for
      so
      long as such registration statement remains in effect, and take any other action
      which may be reasonably necessary or advisable to enable such seller of Registrable
      Securities to
      consummate the disposition in such jurisdictions of the Registrable
      Securities owned by
      such seller of Registrable
      Securities ,
      except
      that the Company




5


shall
      not
      for any such purpose be required (i) to qualify generally to do business as
      a
      foreign corporation in any jurisdiction wherein it would not but for the
      requirements of this Paragraph (l) be obligated to be so qualified, (ii) to
      subject itself to taxation in any such jurisdiction or (iii) to take any action
      which would subject it to general service of process in any jurisdiction wherein
      it would not but for the requirements of this Paragraph (l) be so
      subject;





(m) notify
      each seller of Registrable
      Securities covered
      by any registration statement filed pursuant to this Agreement, (A) at any
      time
      when a prospectus relating
      thereto is required to be delivered under the Securities Act, (B) of the
      happening of any event as a result of which any prospectus included in such
      registration statement, as then in effect, includes an untrue statement of
      a
      material fact or omits to state any material fact required to be stated therein
      or necessary to make the statements therein, in the light of the circumstances
      under which they were made, not misleading, and (C) at the request of any such
      seller of Registrable
      Securities ,
      promptly prepare and furnish to such seller of Registrable
      Securities a
      reasonable number of copies of a supplement to or an amendment of such
      prospectus as may be necessary so that, as thereafter delivered to the
      purchasers of such securities, such prospectus shall not include an untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary to make the statements therein, in the light of
      the
      circumstances under which they were made, not misleading;





(n) make
      available for inspection by any seller of Registrable
      Securities covered
      by any registration statement filed pursuant to this Agreement, any underwriter
      participating in any disposition pursuant to such registration statement and
      any
      attorney, accountant or other agent retained by any such seller or underwriter
      (collectively, the " **Inspectors** "),
      all
      financial and other records, pertinent corporate documents and properties of
      the
      Company (collectively, the " **Records** ")
      as
      shall be reasonably necessary to enable them to exercise their due diligence
      responsibility, and cause the Company's officers, directors and employees to
      supply all information reasonably requested by any such Inspector in connection
      with such registration statement. Records which the Company determines, in
      good
      faith, to be confidential and which it notifies the Inspectors are confidential
      shall not be disclosed by the Inspectors unless (i) the disclosure of such
      Records is necessary to avoid or correct a misstatement or omission in the
      registration statement, (ii) the release of such Records is ordered pursuant
      to
      a subpoena or other order from a court of competent jurisdiction or (iii) the
      information in such Records has been made generally available to the public.
      Each seller of Registrable
      Securities agrees
      by acquisition of its Registrable Securities that it will, upon learning that
      disclosure of such Records is sought in a court of competent jurisdiction,
      give
      notice to the Company and allow the Company, at the Company's expense, to
      undertake appropriate action to prevent disclosure of the Records deemed
      confidential; and





(o) enter
      into such customary agreements and take all such other reasonable actions as
      the
      holders of a majority of the Registrable Securities included in any registration
      statement filed pursuant to this Agreement reasonably request in order to
      expedite or facilitate the disposition of such Registrable Securities; provided,
      that no holder of Registrable Securities shall have any indemnification or
      contribution obligation inconsistent with Section 6 hereof.




6




**2.5** **Underwriter;
      Expenses** **.** (a) The
      Company shall not be required to use an underwriter in connection with any
      registration under this **Article
      2** ,
      and the
      Company shall select counsel and accountants to prepare the registration
      statement requested hereunder.




(b) The
      Company will pay all Registration Expenses in connection with each registration
      of Registrable Securities requested pursuant to this **Article
      2** ; provided
      that such fees or expenses for which the Company shall not be liable shall
      be
      borne by all holders pro rata on the basis of the amount of securities so
      registered; provided, however, that if any such cost or expense is attributable
      solely to one selling Shareholder and does not constitute a normal cost or
      expense of such a registration, such cost or expense shall be allocated to
      that
      selling Shareholder.




**3.** **"** **Piggyback"
      Registration Under the Securities Act** **.**




**3.1** **“** **Piggyback
      Rights** **.**




( a ) Right
      to Include Registrable Securities .
      If the
      Company at any time after the date hereof while Registrable Securities are
      outstanding, proposes to register any
      shares of its Common Stock under the Securities Act (other than by a
      registration on Form S-4, Form S-8 or any successor or similar forms, or a
      registration effected pursuant to the Second Demand) whether or not for sale
      for
      its own account, then it shall give written notice to all holders of Registrable
      Securities of the proposed filing, and the notice shall inform such holders
      of
      their rights under this **Section
      3.1** .
      Upon
      the written request of any such holder, made within thirty (30) days after
      receipt of any such notice by the Company, to register any of its Registrable
      Securities (which request shall specify the Registrable Securities intended
      to
      be disposed of by such holder), the Company will use its reasonable best efforts
      to cause such Registrable Securities to be included among the securities to
      be
      covered by the registration statement otherwise proposed to be filed by the
      Company, all to the extent requisite to permit the sale or other disposition
      of
      such Registrable Securities by the holder. Anything herein to the contrary
      notwithstanding, if at any time after giving written notice of its intention
      to
      register any securities and prior to the effective date of the registration
      statement filed in connection with such registration, the Company shall in
      good
      faith determine for any reason not to register or to delay registration of
      such
      securities, then the Company may, at its election, give written notice of such
      determination to each holder of Registrable Securities and, thereupon, (i)
      in
      the case of a determination not to register, shall be relieved of its obligation
      under this **Section
      3.1** to
      register any Registrable Securities in connection with such registration (but
      not from its obligation to pay the Registration Expenses in connection
      therewith), and (ii) in the case of a determination to delay registration,
      shall
      be permitted to delay the registration of any Registrable Securities, for the
      same period as the delay in registering such other securities. Any holder of
      Registrable Securities may withdraw its request for inclusion, in whole or
      in
      part, at any time at least forty-eight (48) hours prior to the effective time
      of
      the registration statement for such offering. The Company will pay all
      Registration Expenses in connection with each registration of Registrable
      Securities requested pursuant to this **Section
      3.1** ;
      provided that such fees or expenses for which the Company shall not be liable
      shall be borne by all holders pro rata on the basis of the amount of securities
      so registered; provided, however, that if any such cost or expense is
      attributable solely to




7


one
      selling Shareholder and does not constitute a normal cost or expense of such
      a
      registration, such cost or expense shall be allocated to that selling
      Shareholder.




( b) Priority
      in Cutback Registrations . If
      the
      managing underwriter with respect to a registration under this Section 3.1
      advises the Company that, in its opinion,
      the number of securities requested to be included in such registration
      (including securities of the Company which are not Registrable Securities)
      exceed the number which can be sold in such offering without a reduction in
      the
      anticipated number of, or in the selling price anticipated to be received for,
      the securities to be sold in such public offering, then: (i) if such
      registration is a primary registration on behalf of the Company, the Company
      will include therein: (x) first up to the full amount of securities to be
      included therein for the account of the Company that, in the opinion of the
      managing underwriter, can be sold, and (y) second, up to the full amount of
      the
      Initial Registrable Shares and the Registrable Securities which the holders
      thereof propose to include in such registration that, in the opinion of the
      managing underwriter, can be sold without adversely affecting the success of
      the
      offering; and (ii) if such registration is an underwritten secondary
      registration on behalf of holders of equity securities of the Company, the
      Company will include therein: (x) first up to the full amount of securities
      to
      be included therein for the account of the Company that, in the opinion of
      the
      managing underwriter, can be sold, (y) second, up to the full amount of the
      Initial Registrable Shares and the Registrable Securities which the holders
      thereof propose to include in such registration that, in the opinion of the
      managing underwriter, can be sold, and (z) third, all other securities proposed
      to be sold by any other Persons that, in the opinion of the managing
      underwriter, can be sold without adversely affecting the success of the
      offering.





To
      the
      extent that the number of securities held by any particular group to be included
      in any such offering must, in the opinion of the managing underwriter, be so
      reduced, the aggregate number of shares held by such group that, in the opinion
      of the managing underwriter, can be sold in such offering, will be allocated
      pro
      rata among the members of such group in proportion to the number of securities
      eligible for registration in such offering held by each member of such group
      (or, in the case of such a group other than the Initial Holders and the
      Shareholders, in accordance with the priorities then existing among the Company
      and such holders or, if none, as the Company may otherwise determine). For
      purposes of the Section 3.1(b), the Initial Holders and the Shareholders shall
      be considered as one group, and any reduction in shares to be registered will
      be
      allocated pro rata as one group among the Initial Registrable Shares and the
      Registrable Securities which the holders thereof propose to be included in
      such
      registration.




(c) Delay
      of Registration .
      No
      holder of Registrable Securities shall have any right to take any action to
      restrain, enjoin or otherwise delay any registration as the
      result of any controversy that might arise with respect to the interpretation
      or
      implementation of this Agreement.




**3.2** **Registration
      Procedures** **.** If
      and
      whenever the Company is required to use its reasonable best efforts to effect
      the registration of any Registrable Securities under the Securities Act as
      provided in **Section
      3.1** ,
      the
      Company will as expeditiously as possible:




(a) prepare
      and file with the Commission the appropriate registration statement to effect
      such registration and use its reasonable best efforts to cause such registration
      statement to become and remain effective for the period of the disposition




8




contemplated
      thereby; provided, however, that the Company may discontinue any registration
      of
      its securities which are not Registrable Securities (and, under the
      circumstances specified in **Section
      3.1(a)** ,
      its
      securities which are Registrable Securities) at any time prior to the effective
      date of the registration statement relating thereto;




(b) prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith
      as may be necessary to comply with the provisions of the Securities Act with
      respect to the disposition of all Registrable Securities covered by such
      registration statement, including such amendments and supplements as may be
      necessary to reflect the intended method of disposition;




(c) use
      its
      reasonable best efforts to cause such registration statement to be declared
      effective by the Commission under the Securities Act as soon as practicable
      to permit the disposition of the Registrable Securities by the holders on The
      Nasdaq National Market or such other exchange or market upon which the Company’s
      shares are traded;




(d) make
      available for inspection by any Shareholder covered by any registration
      statement filed pursuant to this Agreement all financial and other
      records, pertinent
      corporate documents and properties of the Company (collectively, the
“ **Records** ”)
      as
      shall be reasonably necessary to enable them to exercise their due diligence
      responsibility, and cause the Company’s officers, directors and employees to
      supply all information reasonably requested by any Shareholder in connection
      with such registration statement. Records which the Company determines in good
      faith to be confidential and which it notifies the Shareholders are confidential
      shall not be disclosed by the Shareholders unless (i) the disclosure of such
      Records is necessary to avoid or correct a misstatement or omission in the
      registration statement, (ii) the release of such Records is ordered pursuant
      to
      a subpoena or other order from a court of competent jurisdiction or (iii) the
      information in such Records has been made generally available to the public.
      Each Shareholder agrees by acquisition of its Registrable Securities that it
      will, upon learning that disclosure of such Records is sought in a court of
      competent jurisdiction, give notice to the Company and allow the Company, at
      the
      Company's expense, to undertake appropriate action to prevent disclosure of
      the
      Records deemed confidential;




(e) provide
      a
      legal opinion of the Company's outside counsel, dated the effective date of
      any
      registration statement filed pursuant to this Agreement (and, if such
      registration includes an underwritten public offering, dated the date of the
      closing under the underwriting agreement), with respect to the registration
      statement, each amendment and supplement thereto, the prospectus included
      therein (including the preliminary prospectus) and such other documents relating
      thereto in customary form and covering such matters of the type customarily
      covered by legal opinions of such nature (in a form reasonably acceptable to
      the
      holders of a majority of the Registrable Securities included in the
      registration);




(f) make
      every reasonable effort to prevent the issuance of any stop order suspending
      the
      effectiveness of any registration statement filed pursuant to this Agreement
      or of any order preventing or suspending the use of any preliminary prospectus
      and, if any such order is issued, to obtain the withdrawal of any such order
      at
      the earliest possible moment;




(g) if
      requested by any holder of Registrable Securities covered by any registration
      statement filed pursuant to this Agreement, promptly incorporate in a prospectus
      supplement or post-effective amendment such information as such holder
      reasonably requests to be included therein, including, without limitation,
      with
      respect to the number of Registrable Securities being sold by such holder,
      the
      purchase price being paid therefor and with respect to any other terms of any
      underwritten offering of the Registrable Securities to be sold in such offering;
      and make all required filings of such prospectus supplement or post-effective
      amendment as soon as practicable after being notified of the matters
      incorporated in such prospectus supplement or post-effective
      amendment;








9




(h) provide
        and cause to be maintained a transfer agent and registrar for all Registrable
        Securities covered by such registration statement from and after the effective
        date of such registration statement;
  (i) if
          the
          Company shall maintain the listing of any shares of Common Stock on The
          Nasdaq
          National Market or any other securities exchange or national market system,
          use
          its reasonable best efforts to list all Registrable Securities covered
          by such
          registration statement on any securities exchange or national market system
          on
          which any of the Registrable Securities are then listed;
  (j) promptly
          notify each seller of Registrable
          Securities :
 
 (A)  
          when such registration statement or any prospectus used in connection therewith,
          or any amendment or supplement thereto, has been filed and, with respect
          to such
          registration statement or any post-effective amendment thereto, when the
          same
          has become effective;
 
 (B)  
          of any written comments from the Commission with respect to any filing
          referred
          to in clause (i) and of any written request by the Commission for amendments
          or
          supplements to such registration statement or prospectus;
 
 (C)  
          of the notification to the Company by the Commission of its initiation
          of any
          proceeding with respect to the issuance by the Commission of any stop order
          suspending the effectiveness of such registration statement; and
 
 (D)  
          of the receipt by the Company of any notification with respect to the suspension
          of the effectiveness of such registration statement;
 
 (k) furnish
          to each seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement such number
          of
          conformed copies of such registration statement and of each amendment and
          supplement thereto (in each case including all exhibits and documents
          incorporated by reference), such number of copies of the prospectus contained
          in
          such registration statement (including each preliminary prospectus and
          any
          summary prospectus) and any other prospectus filed under Rule 424 promulgated
          under the Securities Act relating to such holder's Registrable
          Securities ,
          and
          such other documents as such seller may reasonably request to facilitate
          the
          intended disposition of its Registrable
          Securities ;
 
 (l) register
          or qualify all Registrable Securities covered
          by any registration statement filed pursuant to this Agreement under such
          other
          securities or blue sky laws of such jurisdictions as each seller of Registrable
          Securities shall
          reasonably request, to keep such registration or qualification in effect
          for so
          long as such registration statement remains in effect, and take any other
          action
          which may be reasonably necessary or advisable to enable such seller of Registrable
          Securities to
          consummate the disposition in such jurisdictions of the Registrable
          Securities owned by
          such seller of Registrable
          Securities ,
          except
          that the Company
  10
  shall
          not
          for any such purpose be required (i) to qualify generally to do business
          as a
          foreign corporation in any jurisdiction wherein it would not but for the
          requirements of this Paragraph (l) be obligated to be so qualified, (ii)
          to
          subject itself to taxation in any such jurisdiction or (iii) to take any
          action
          which would subject it to general service of process in any jurisdiction
          wherein
          it would not but for the requirements of this Paragraph (l) be so
          subject;
 
 (m) notify
          each seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement, (A) at
          any time
          when a prospectus relating thereto is required to be delivered under the
          Securities Act, (B) of the happening of any event as a result of which
          any
          prospectus included in such registration statement, as then in effect,
          includes
          an untrue statement of a material fact or omits to state any material fact
          required to be stated therein or necessary to make the statements therein,
          in
          the light of the circumstances under which they were made, not misleading,
          and
          (C) at the request of any such seller of Registrable
          Securities ,
          promptly prepare and furnish to such seller of Registrable
          Securities a
          reasonable number of copies of a supplement to or an amendment of such
          prospectus as may be necessary so that, as thereafter delivered to the
          purchasers of such securities, such prospectus shall not include an untrue
          statement of a material fact or omit to state a material fact required
          to be
          stated therein or necessary to make the statements therein, in the light
          of the
          circumstances under which they were made, not misleading;
 
 (n) make
          available for inspection by any seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement, any underwriter
          participating in any disposition pursuant to such registration statement
          and any
          attorney, accountant or other agent retained by any such seller or underwriter
          (collectively, the " **Inspectors** "),
          all
          financial and other records, pertinent corporate documents and properties
          of the
          Company (collectively, the " **Records** ")
          as
          shall be reasonably necessary to enable them to exercise their due diligence
          responsibility, and cause the Company's officers, directors and employees
          to
          supply all information reasonably requested by any such Inspector in connection
          with such registration statement. Records which the Company determines,
          in good
          faith, to be confidential and which it notifies the Inspectors are confidential
          shall not be disclosed by the Inspectors unless (i) the disclosure of such
          Records is necessary to avoid or correct a misstatement or omission in
          the
          registration statement, (ii) the release of such Records is ordered pursuant
          to
          a subpoena or other order from a court of competent jurisdiction or (iii)
          the
          information in such Records has been made generally available to the public.
          Each seller of Registrable
          Securities agrees
          by acquisition of its Registrable Securities that it will, upon learning
          that
          disclosure of such Records is sought in a court of competent jurisdiction,
          give
          notice to the Company and allow the Company, at the Company's expense,
          to
          undertake appropriate action to prevent disclosure of the Records deemed
          confidential; and
 
 (o) enter
          into such customary agreements and take all such other reasonable actions
          as the
          holders of a majority of the Registrable Securities included in any registration
          statement filed pursuant to this Agreement reasonably request in order
          to
          expedite or facilitate the disposition of such Registrable Securities;
          provided,
          that no holder of Registrable Securities shall have any indemnification
          or
          contribution obligation inconsistent with Section 6 hereof.
  11
  **2.5** **Underwriter;
          Expenses** **.** (a) The
          Company shall not be required to use an underwriter in connection with
          any
          registration under this **Article
          2** ,
          and the
          Company shall select counsel and accountants to prepare the registration
          statement requested hereunder.
  (b) The
          Company will pay all Registration Expenses in connection with each registration
          of Registrable Securities requested pursuant to this **Article
          2** ;
          provided that such fees or expenses for which the Company shall not be
          liable
          shall be borne by all holders pro rata on the basis of the amount of securities
          so registered; provided, however, that if any such cost or expense is
          attributable solely to one selling Shareholder and does not constitute
          a normal
          cost or expense of such a registration, such cost or expense shall be allocated
          to that selling Shareholder.
  **3.** **"** **Piggyback"
          Registration Under the Securities Act** **.**
  **3.1** **“** **Piggyback
          Rights** **.**
  ( a ) Right
          to Include Registrable Securities .
          If the
          Company at any time after the date hereof while Registrable Securities
          are
          outstanding, proposes to register any shares of its Common Stock under
          the
          Securities Act (other than by a registration on Form S-4, Form S-8 or any
          successor or similar forms, or a registration effected pursuant to the
          Second
          Demand) whether or not for sale for its own account, then it shall give
          written
          notice to all holders of Registrable Securities of the proposed filing,
          and the
          notice shall inform such holders of their rights under this **Section
          3.1** .
          Upon
          the written request of any such holder, made within thirty (30) days after
          receipt of any such notice by the Company, to register any of its Registrable
          Securities (which request shall specify the Registrable Securities intended
          to
          be disposed of by such holder), the Company will use its reasonable best
          efforts
          to cause such Registrable Securities to be included among the securities
          to be
          covered by the registration statement otherwise proposed to be filed by
          the
          Company, all to the extent requisite to permit the sale or other disposition
          of
          such Registrable Securities by the holder. Anything herein to the contrary
          notwithstanding, if at any time after giving written notice of its intention
          to
          register any securities and prior to the effective date of the registration
          statement filed in connection with such registration, the Company shall
          in good
          faith determine for any reason not to register or to delay registration
          of such
          securities, then the Company may, at its election, give written notice
          of such
          determination to each holder of Registrable Securities and, thereupon,
          (i) in
          the case of a determination not to register, shall be relieved of its obligation
          under this **Section
          3.1** to
          register any Registrable Securities in connection with such registration
          (but
          not from its obligation to pay the Registration Expenses in connection
          therewith), and (ii) in the case of a determination to delay registration,
          shall
          be permitted to delay the registration of any Registrable Securities, for
          the
          same period as the delay in registering such other securities. Any holder
          of
          Registrable Securities may withdraw its request for inclusion, in whole
          or in
          part, at any time at least forty-eight (48) hours prior to the effective
          time of
          the registration statement for such offering. The Company will pay all
          Registration Expenses in connection with each registration of Registrable
          Securities requested pursuant to this **Section
          3.1** ;
          provided that such fees or expenses for which the Company shall not be
          liable
          shall be borne by all holders pro rata on the basis of the amount of securities
          so registered; provided, however, that if any such cost or expense is
          attributable solely to
   12
   one
          selling Shareholder and does not constitute a normal cost or expense of
          such a
          registration, such cost or expense shall be allocated to that selling
          Shareholder.
  ( b ) Priority
          in Cutback Registrations . If
          the
          managing underwriter with respect to a registration under this Section
          3.1
          advises the Company that, in its opinion, the number of securities requested
          to
          be included in such registration (including securities of the Company which
          are
          not Registrable Securities) exceed the number which can be sold in such
          offering
          without a reduction in the anticipated number of, or in the selling price
          anticipated to be received for, the securities to be sold in such public
          offering, then: (i) if such registration is a primary registration on behalf
          of
          the Company, the Company will include therein: (x) first up to the full
          amount
          of securities to be included therein for the account of the Company that,
          in the
          opinion of the managing underwriter, can be sold, and (y) second, up to
          the full
          amount of the Initial Registrable Shares and the Registrable Securities
          which
          the holders thereof propose to include in such registration that, in the
          opinion
          of the managing underwriter, can be sold without adversely affecting the
          success
          of the offering; and (ii) if such registration is an underwritten secondary
          registration on behalf of holders of equity securities of the Company,
          the
          Company will include therein: (x) first up to the full amount of securities
          to
          be included therein for the account of the Company that, in the opinion
          of the
          managing underwriter, can be sold, (y) second, up to the full amount of
          the
          Initial Registrable Shares and the Registrable Securities which the holders
          thereof propose to include in such registration that, in the opinion of
          the
          managing underwriter, can be sold, and (z) third, all other securities
          proposed
          to be sold by any other Persons that, in the opinion of the managing
          underwriter, can be sold without adversely affecting the success of the
          offering.
 
 To
          the
          extent that the number of securities held by any particular group to be
          included
          in any such offering must, in the opinion of the managing underwriter,
          be so
          reduced, the aggregate number of shares held by such group that, in the
          opinion
          of the managing underwriter, can be sold in such offering, will be allocated
          pro
          rata among the members of such group in proportion to the number of securities
          eligible for registration in such offering held by each member of such
          group
          (or, in the case of such a group other than the Initial Holders and the
          Shareholders, in accordance with the priorities then existing among the
          Company
          and such holders or, if none, as the Company may otherwise determine).
          For
          purposes of the Section 3.1(b), the Initial Holders and the Shareholders
          shall
          be considered as one group, and any reduction in shares to be registered
          will be
          allocated pro rata as one group among the Initial Registrable Shares and
          the
          Registrable Securities which the holders thereof propose to be included
          in such
          registration.
  (c) Delay
          of Registration .
          No
          holder of Registrable Securities shall have any right to take any action
          to
          restrain, enjoin or otherwise delay any registration as the result of any
          controversy that might arise with respect to the interpretation or
          implementation of this Agreement.
   **3.2** **Registration
          Procedures** **.** If
          and
          whenever the Company is required to use its reasonable best efforts to
          effect
          the registration of any Registrable Securities under the Securities Act
          as
          provided in **Section
          3.1** ,
          the
          Company will as expeditiously as possible:
   (a) prepare
          and file with the Commission the appropriate registration statement to
          effect
          such registration and use its reasonable best efforts to cause such registration
          statement to become and remain effective for the period of the
          disposition
   13
   contemplated
          thereby; provided, however, that the Company may discontinue any registration
          of
          its securities which are not Registrable Securities (and, under the
          circumstances specified in **Section
          3.1(a)** ,
          its
          securities which are Registrable Securities) at any time prior to the effective
          date of the registration statement relating thereto;
  (b) prepare
          and file with the Commission such amendments and supplements to such
          registration statement and the prospectus used in connection therewith
          as may be
          necessary to comply with the provisions of the Securities Act with respect
          to
          the disposition of all Registrable Securities covered by such registration
          statement, including such amendments and supplements as may be necessary
          to
          reflect the intended method of disposition;
  (c) use
          its
          reasonable best efforts to cause such registration statement to be declared
          effective by the Commission under the Securities Act as soon as practicable
          to
          permit the disposition of the Registrable Securities by the holders on
          The
          Nasdaq National Market or such other exchange or market upon which the
          Company’s
          shares are traded;
  (d) make
          available for inspection by any Shareholder covered by any registration
          statement filed pursuant to this Agreement all financial and other records,
          pertinent corporate documents and properties of the Company (collectively,
          the
“ **Records** ”)
          as
          shall be reasonably necessary to enable them to exercise their due diligence
          responsibility, and cause the Company’s officers, directors and employees to
          supply all information reasonably requested by any Shareholder in connection
          with such registration statement. Records which the Company determines
          in good
          faith to be confidential and which it notifies the Shareholders are confidential
          shall not be disclosed by the Shareholders unless (i) the disclosure of
          such
          Records is necessary to avoid or correct a misstatement or omission in
          the
          registration statement, (ii) the release of such Records is ordered pursuant
          to
          a subpoena or other order from a court of competent jurisdiction or (iii)
          the
          information in such Records has been made generally available to the public.
          Each Shareholder agrees by acquisition of its Registrable Securities that
          it
          will, upon learning that disclosure of such Records is sought in a court
          of
          competent jurisdiction, give notice to the Company and allow the Company,
          at the
          Company's expense, to undertake appropriate action to prevent disclosure
          of the
          Records deemed confidential;
  (e) provide
          a
          legal opinion of the Company's outside counsel, dated the effective date
          of any
          registration statement filed pursuant to this Agreement (and, if such
          registration includes an underwritten public offering, dated the date of
          the
          closing under the underwriting agreement), with respect to the registration
          statement, each amendment and supplement thereto, the prospectus included
          therein (including the preliminary prospectus) and such other documents
          relating
          thereto in customary form and covering such matters of the type customarily
          covered by legal opinions of such nature (in a form reasonably acceptable
          to the
          holders of a majority of the Registrable Securities included in the
          registration);
   (f) make
          every reasonable effort to prevent the issuance of any stop order suspending
          the
          effectiveness of any registration statement filed pursuant to this
   14
   Agreement
          or of any order preventing or suspending the use of any preliminary prospectus
          and, if any such order is issued, to obtain the withdrawal of any such
          order at
          the earliest possible moment;
  (g) if
          requested by any holder of Registrable Securities covered by any registration
          statement filed pursuant to this Agreement, promptly incorporate in a prospectus
          supplement or post-effective amendment such information as such holder
          reasonably requests to be included therein, including, without limitation,
          with
          respect to the number of Registrable Securities being sold by such holder,
          the
          purchase price being paid therefor and with respect to any other terms
          of any
          underwritten offering of the Registrable Securities to be sold in such
          offering;
          and make all required filings of such prospectus supplement or post-effective
          amendment as soon as practicable after being notified of the matters
          incorporated in such prospectus supplement or post-effective
          amendment;
  (h) provide
          and cause to be maintained a transfer agent and registrar for all Registrable
          Securities covered by such registration statement from and after the effective
          date of such registration statement;
  (i) if
          the
          Company shall maintain the listing of any shares of common stock on The
          Nasdaq
          National Market or any other securities exchange or national market system,
          use
          its reasonable best efforts to list all Registrable Securities covered
          by such
          registration statement on any securities exchange or national market system
          on
          which any of the Registrable Securities are then listed;
  (j) promptly
          notify each seller of Registrable
          Securities :
 
 (A)
          when
          such registration statement or any prospectus used in connection therewith,
          or
          any amendment or supplement thereto, has been filed and, with respect to
          such
          registration statement or any post-effective amendment thereto, when the
          same
          has become effective;
 
 (B)
          of
          any written comments from the Commission with respect to any filing referred
          to
          in clause (i) and of any written request by the Commission for amendments
          or
          supplements to such registration statement or prospectus;
 
 (C)
          of
          the notification to the Company by the Commission of its initiation of
          any
          proceeding with respect to the issuance by the Commission of any stop order
          suspending the effectiveness of such registration statement; and
 
 (D)
          of
          the receipt by the Company of any notification with respect to the suspension
          of
          the effectiveness of such registration statement;
 
 (k) furnish
          to each seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement such number
          of
          conformed copies of such
  15
  registration
          statement and of each amendment and supplement thereto (in each case including
          all exhibits and documents incorporated by reference), such number of copies
          of
          the prospectus contained in such registration statement (including each
          preliminary prospectus and any summary prospectus) and any other prospectus
          filed under Rule 424 promulgated under the Securities Act relating to such
          holder's Registrable
          Securities ,
          and
          such other documents as such seller may reasonably request to facilitate
          the
          intended disposition of its Registrable
          Securities ;
 (l) register
          or qualify all Registrable Securities covered
          by any registration statement filed pursuant to this Agreement under such
          other
          securities or blue sky laws of such jurisdictions as each seller of Registrable
          Securities shall
          reasonably request, to keep such registration or qualification in effect
          for so
          long as such registration statement remains in effect, and take any other
          action
          which may be reasonably necessary or advisable to enable such seller of Registrable
          Securities to
          consummate the disposition in such jurisdictions of the Registrable
          Securities owned by
          such seller of Registrable
          Securities ,
          except
          that the Company shall not for any such purpose be required (i) to qualify
          generally to do business as a foreign corporation in any jurisdiction wherein
          it
          would not but for the requirements of this Paragraph (l) be obligated to
          be so
          qualified, (ii) to subject itself to taxation in any such jurisdiction
          or (iii)
          to take any action which would subject it to general service of process
          in any
          jurisdiction wherein it would not but for the requirements of this Paragraph
          (l)
          be so subject;
 
 (m) notify
          each seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement, (A) at
          any time
          when a prospectus relating thereto is required to be delivered under the
          Securities Act, (B) of the happening of any event as a result of which
          any
          prospectus included in such registration statement, as then in effect,
          includes
          an untrue statement of a material fact or omits to state any material fact
          required to be stated therein or necessary to make the statements therein,
          in
          the light of the circumstances under which they were made, not misleading,
          and
          (C) at the request of any such seller of Registrable
          Securities ,
          promptly prepare and furnish to such seller of Registrable
          Securities a
          reasonable number of copies of a supplement to or an amendment of such
          prospectus as may be necessary so that, as thereafter delivered to the
          purchasers of such securities, such prospectus shall not include an untrue
          statement of a material fact or omit to state a material fact required
          to be
          stated therein or necessary to make the statements therein, in the light
          of the
          circumstances under which they were made, not misleading;
 
 (n) make
          available for inspection by any seller of Registrable
          Securities covered
          by any registration statement filed pursuant to this Agreement, any underwriter
          participating in any disposition pursuant to such registration statement
          and any
          attorney, accountant or other agent retained by any such seller or underwriter
          (collectively, the " **Inspectors** "),
          all
          financial and other records, pertinent corporate documents and properties
          of the
          Company (collectively, the " **Records** ")
          as
          shall be reasonably necessary to enable them to exercise their due diligence
          responsibility, and cause the Company's officers, directors and employees
          to
          supply all information reasonably requested by any such Inspector in connection
          with such registration statement. Records which the Company determines,
          in good
          faith, to be confidential and which it notifies the Inspectors are confidential
          shall not be disclosed by the Inspectors unless (i) the disclosure of such
          Records is necessary to avoid or correct a
  16
  misstatement
          or omission in the registration statement, (ii) the release of such Records
          is
          ordered pursuant to a subpoena or other order from a court of competent
          jurisdiction or (iii) the information in such Records has been made generally
          available to the public. Each seller of Registrable
          Securities agrees
          by acquisition of its Registrable Securities that it will, upon learning
          that
          disclosure of such Records is sought in a court of competent jurisdiction,
          give
          notice to the Company and allow the Company, at the Company's expense,
          to
          undertake appropriate action to prevent disclosure of the Records deemed
          confidential; and
 
 (o) enter
          into such customary agreements and take all such other reasonable actions
          as the
          holders of a majority of the Registrable Securities included in any registration
          statement filed pursuant to this Agreement reasonably request in order
          to
          expedite or facilitate the disposition of such Registrable Securities;
          provided,
          that no holder of Registrable Securities shall have any indemnification
          or
          contribution obligation inconsistent with Section 6 hereof.
  **4.** **Restrictive
          Legend** **.** Each
          certificate representing Registrable Securities issued, and, except as
          otherwise
          provided in **Section
          5** ,
          each
          certificate issued upon exchange or transfer of any Registrable Securities,
          shall be stamped or otherwise imprinted with legends substantially in the
          following form:
   “THE
          SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED (THE “FEDERAL ACT”), OR ANY STATE SECURITIES
          LAW, AND HAVE BEEN ACQUIRED BY THE REGISTERED OWNER HEREOF FOR PURPOSES
          OF
          INVESTMENT AND HAVE BEEN ISSUED OR SOLD IN RELIANCE ON STATUTORY EXEMPTIONS
          CONTAINED IN THE FEDERAL ACT OR AVAILABLE UNDER APPLICABLE STATE SECURITIES
          LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
          EXCEPT
          IN A TRANSACTION WHICH IS EXEMPT UNDER THE FEDERAL ACT AND ANY OTHER APPLICABLE
          STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH
          ACT
          AND LAWS; IN THE CASE OF RELIANCE UPON AN EXEMPTION, THE COMPANY MUST HAVE
          RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSACTION
          IS
          EXEMPT AND DOES NOT REQUIRE SUCH REGISTRATION OF THE SHARES.”
  “THE
          SALE
          OF THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
          RESTRICTIONS AS SET FORTH IN SECTION 10 OF THAT CERTAIN REGISTRATION RIGHTS
          AGREEMENT, AMONG JAMES
   17
   RIVER
          COAL COMPANY AND THE SHAREHOLDER SIGNATORIES THERETO, DATED AS OF MAY 31,
          2005.”
  **5.** **Notice
          of Proposed Transfer** **.**
  (a) Prior
          to
          any proposed transfer or other disposition of any Registrable Security
          (other
          than under circumstances described in **Sections
          2 or 3** ),
          the
          holder thereof shall give written notice to the Company of its intention
          to do
          so. Each such notice shall describe the manner of the proposed transfer
          or
          disposition and, if requested by the Company, shall be accompanied by an
          opinion
          of counsel reasonably satisfactory to the Company to the effect that the
          proposed transaction may be effected without registration under the Securities
          Act and applicable state securities laws, whereupon the holder shall be
          entitled
          to transfer or otherwise dispose of such Registrable Security in accordance
          with
          the terms of its notice. Each certificate for Registrable Securities transferred
          as provided above shall bear both legends set forth in **Section
          4** ,
          except
          that such certificate shall not bear the first such legend if (a) such
          transfer
          is in accordance with the provisions of Rule 144 under the Securities Act
          (or
          any other rule under the Securities Act permitting public sale without
          registration thereunder) or (b) the opinion of counsel referred to above
          is to
          the further effect that the transferee and any subsequent transferee (other
          than
          an affiliate of the Company) would be entitled to transfer such securities
          in a
          public sale without registration under the Securities Act or any applicable
          state securities law.
  (b) The
          foregoing restrictions on transfer and disposition of Registrable Securities
          shall terminate as to any particular shares of Registrable Securities when
          such
          shares shall have been effectively registered under the Securities Act
          and sold
          or otherwise disposed by the seller thereof in accordance with the method
          of
          disposition set forth in the registration statement covering such shares.
          Whenever a holder of Registrable Securities demonstrates to the Company
          (and its
          counsel) that the provisions of Rule 144(k) of the Securities Act are available
          to such holder without limitation, such holder shall be entitled to receive
          from
          the Company, without expense, a new certificate representing its shares
          of
          Registrable Securities not bearing the first legend set forth in **Section
          4** .
  **6.** **Indemnification** .
  **6.1** **Indemnification
          by the Company** **.** In the
          event of any registration of any Registrable Securities under the Securities
          Act, the Company will indemnify and hold harmless each seller of Registrable
          Securities covered by such registration statement, each of their respective
          officers, directors and partners and each other Person, if any, who controls
          such seller, within the meaning of Section 15 of the Securities Act, from
          and
          against any losses, claims, damages or liabilities, joint or several, to
          which
          such seller, director, officer, partner or controlling person may become
          subject
          under the Securities Act or otherwise, insofar as such losses, claims,
          damages
          or liabilities (or actions in respect thereof) arise out of or are based
          upon
          any untrue statement or alleged untrue statement of any material fact contained
          in any registration statement under which such Registered Securities were
          registered under the Securities Act, any preliminary prospectus, final
          prospectus or summary prospectus contained therein, or any amendment or
          supplement thereto, or any omission or alleged omission to state therein
          a
          material fact required to be stated therein or necessary to make the statements
          therein not misleading, or arise out of or are based upon
   18
   any
          violation by the Company of any rule or regulation or any action or inaction
          required by the Company in connection with such registration and the Company
          will reimburse each such seller, director, officer, partner and controlling
          person for any legal or any other expenses reasonably incurred by them
          in
          connection with investigating or defending any such loss, claim, damage,
          liability or action; provided, however, that the Company shall not be liable
          in
          any such case if and to the extent that any such loss, claim, damage or
          liability (or action in respect thereof) arises out of or is based upon
          an
          untrue statement or alleged untrue statement or omission or alleged omission
          made or omitted in such registration statement, any such preliminary prospectus,
          final prospectus, summary prospectus, amendment or supplement in reliance
          upon
          and in conformity with written information furnished to the Company by
          or on
          behalf of such seller, director, officer, partner or such controlling person
          specifically for use in such registration statement, prospectus, amendment
          or
          supplement, and, provided, further, that the Company shall not be liable
          to any
          Person who participates as an underwriter in the offering or sale of Registrable
          Securities or any other Person, if any, who controls such underwriter,
          within
          the meaning of the Securities Act, in any such case to the extent that
          any such
          loss, claim, damage or liability (or action in respect thereof) arises
          out of
          such Person's failure to send or give a copy of the final prospectus on
          file
          with the Commission at the time the registration statement becomes effective
          or
          in the amended prospectus filed with the Commission pursuant to Rule 424(b)
          or
          any successor rule, as the same may be then supplemented or amended, to
          the
          Person asserting an untrue statement or alleged untrue statement or omission
          or
          alleged omission, at or prior to the written confirmation of the sale of
          Registrable Securities to such Person if such statement or omission was
          corrected in such final prospectus and if under applicable law a copy of
          such
          final prospectus was required to have been given or sent to such Person
          by or on
          behalf of such underwriter. Such indemnity shall remain in full force and
          effect
          regardless of any investigation made by or on behalf of such seller, director,
          officer, partner or controlling person and shall survive the transfer of
          such
          securities by such seller.
  **6.2** **Indemnification
          by the Sellers** **.** Each
          holder of Registrable Securities that are registered by the Company pursuant
          to **Article
          2 or 3** will,
          jointly and severally, indemnify and hold harmless the Company, each director
          of
          the Company, each officer of the Company and each other Person, if any,
          who
          controls the Company within the meaning of the Securities Act, from and
          against
          any losses, claims, damages or liabilities, joint or several, to which
          the
          Company, or any such director, officer or controlling Person may become
          subject
          under the Securities Act or otherwise, insofar as such losses, claims,
          damages
          or liabilities (or actions in respect thereof) arise out of or are based
          upon
          any untrue statement or alleged untrue statement of a material fact contained
          in
          any registration statement under which such Registered Securities were
          registered under the Securities Act, any preliminary prospectus, final
          prospectus or summary prospectus contained therein, or any amendment or
          supplement thereto, or omission or alleged omission to state therein a
          material
          fact required to be stated therein or necessary to make the statements
          therein
          not misleading, if such statement or alleged statement or omission or alleged
          omission was made in reliance upon and in conformity with information furnished
          in writing to the Company by or on behalf of such seller in connection
          with such
          registration statement, prospectus, amendment or supplement specifically
          for use
          therein. Such indemnity shall remain in full force and effect, regardless
          of any
          investigation made by or on behalf of the Company or any such director,
          officer
          or controlling Person and shall survive the transfer of such securities
          by such
          holder. In no event shall any indemnity by a holder of Registrable Securities
          exceed the aggregate price to the public (minus
   19
   underwriter
          commissions and discounts) of the Registrable Securities of such holder
          included
          in such registration.
  **6.3** **Notices
          of Claims, etc** **.** Promptly
          after receipt by an indemnified party of notice of the commencement of
          any
          action or proceeding involving a claim referred to in this **Article
          6** ,
          such
          indemnified party will, if a claim in respect thereof is to be made against
          an
          indemnifying party, promptly give written notice to the latter of the
          commencement of such action, provided that the failure of any indemnified
          party
          to give notice as provided herein shall not relieve the indemnifying party
          of
          its obligations under this **Article
          6** ,
          except
          and to the extent that the indemnifying party is prejudiced by such failure
          to
          give notice. In case any such action is brought against an indemnified
          party,
          the indemnifying party shall be entitled to participate in and to assume
          the
          defense thereof, jointly with any other indemnifying party similarly notified
          to
          the extent that it may wish, with counsel reasonably satisfactory to such
          indemnified party, and after notice from the indemnifying party to such
          indemnified party of its election to assume the defense thereof, the
          indemnifying party shall not be liable to such indemnified party for any
          legal
          or other expenses subsequently incurred by the latter in connection with
          the
          defense thereof other than reasonable out-of-pocket costs of investigation
          and
          of liaison with counsel so selected, provided , however ,
          that,
          if the defendants in any such action include both the indemnified party
          and the
          indemnifying party and the counsel for the indemnified party reasonably
          concludes that there may be a conflict of interest between the indemnifying
          party and the indemnified party in the conduct of the defense of such action
          and
          has advised the indemnified party in writing, that such a conflict of interest
          exists, the indemnified party shall have the right to select separate counsel
          and to assume such legal defenses and otherwise to participate in the defense
          of
          such action, with the expenses and fees of such separate counsel and other
          expenses related to such participation to be reimbursed by the indemnifying
          party as incurred. No indemnifying party shall, without the prior written
          consent of the indemnified party, consent to the entry of any judgment
          or enter
          into any settlement with respect to any claim or action for which indemnity
          is
          sought hereunder, and no indemnifying party shall be liable for any settlement
          entered into without its prior written consent.
  **6.4** **Contribution** **.** In order
          to provide for just and equitable contribution to joint liability under
          the
          Securities Act in any case in which either (i) any holder of Registrable
          Securities exercising rights under this Agreement, or any controlling person
          of
          any such holder, makes a claim for indemnification pursuant to this **Article
          6** but it
          is judicially determined (by the entry of a final judgment or decree by
          a court
          of competent jurisdiction and the expiration of time to appeal or the denial
          of
          the last right of appeal) that such indemnification may not be enforced
          in such
          case notwithstanding the fact that this **Article
          6** provides
          for indemnification in such case, or (ii) contribution under the Securities
          Act
          may be required on the part of any such selling holder or any such controlling
          person in circumstances for which indemnification is provided under this **Article
          6** ;
          then,
          and in each such case, the Company and such holder will contribute to the
          aggregate losses, claims, damages or liabilities to which they may be subject
          (after contribution from others) (A) in such proportion so that such holder
          is
          responsible for the portion represented by the percentage that the public
          offering price of its Registrable Securities offered by the registration
          statement bears to the public offering price of all securities offered
          by such
          registration statement, and the Company is responsible for the remaining
          portion
          or (B) if the allocation provided by clause (A) above is not permitted
          by
          applicable law, in such proportion as is appropriate to reflect not
          only
   20
   the
          relative proceeds but also the relative fault of each of the contributing
          parties, on the one hand, and the party receiving contribution on the other
          hand
          in connection with statements or omissions that resulted in such losses,
          claims,
          damages, expenses or liabilities, as well as any other relevant equitable
          considerations; provided , however ,
          that,
          in any such case, (X) no such holder will be required to contribute any
          amount
          in excess of the public offering price of all such Registrable Securities
          offered by it pursuant to such registration statement; and (Y) no person
          or
          entity guilty of fraudulent misrepresentation (within the meaning of Section
          11(f) of the Securities Act) will be entitled to contribution from any
          person or
          entity who was not guilty of such fraudulent misrepresentation. Relative
          fault
          shall be determined by reference to, among things, whether the untrue or
          alleged
          untrue statement of a material fact or the omission or alleged omission
          to state
          a material fact relates to information supplied by the Company, or by the
          holder, and the relative intent, knowledge, access to information and
          opportunity to correct or prevent such untrue statement or omission. The
          amount
          paid or payable by an indemnified party as a result of the losses, claims,
          damages, expenses or liabilities (or actions in respect thereof) referred
          to
          above in this **Section
          6.4** shall be
          deemed to include any legal or other expenses reasonably incurred by a
          party
          entitled to contribution in connection with investigating or defending
          such
          action or claim. Any party entitled to contribution will promptly, after
          receipt
          of notice of commencement of any action or proceeding against such party
          in
          respect of which a claim for contribution may be made against another party
          or
          parties under this **Section
          6.4** ,
          notify
          such party or parties from whom contribution may be sought, but the omission
          so
          to notify such party or parties shall not relieve the party or parties
          from whom
          contribution may be sought from any obligation it or they may have hereunder
          or
          otherwise than under this **Section
          6.4** ,
          to the
          extent that such party or parties were not adversely affected by such omission.
          The contribution agreement set forth above shall be in addition to any
          liabilities which any party may have at common law or otherwise. The
          contribution provided for in this **Section
          6.4** shall
          survive the termination of this Agreement and shall remain in full force
          and
          effect regardless of any investigation made by or on behalf of any indemnified
          party.
  7. **Holdback
          Agreement** **.** Unless
          the underwriters in a given public offering (or, in the case of a
          non-underwritten public offering, the Company) otherwise agree, and to
          the
          extent not otherwise inconsistent with applicable law, each Shareholder,
          by
          acquisition of its Shares, agrees not to effect any public sale or distribution
          (including a sale under Rule 144 or Regulation S (or any similar provisions
          then
          in effect)) of such securities, or any securities convertible into or
          exchangeable or exercisable for such securities, (a) during the seven days
          prior
          to the effective date of any registration statement filed by the Company
          in
          connection with a public offering and (b) during the 120 days after the
          effective date of any registration statement filed by the Company in connection
          with a public offering, in either case except as part of such registration
          statement, whether or not such holder participates in such registration;
          provided, however, that the provisions of this **Section
          7** shall
          not apply to Registrable Securities to the extent such Registrable Securities
          are registered in the applicable public offering.
  **8.** **Cessation
          of Sales** **.** Each
          Shareholder agrees that, upon receipt of any notice from the Company of
          the
          happening of a Material Event, such Shareholder will forthwith discontinue
          disposition of Registrable Securities pursuant to the then current prospectus
          until (i) such Shareholder is advised in writing by the Company that a
          new
          registration statement covering the offer of Registrable Securities has
          become
          effective under the Securities Act, (ii) such
   21
   Shareholder
          receives copies of any required supplemented or amended prospectus, or
          (iii)
          such Shareholder is advised in writing by the Company that the use of the
          prospectus may be resumed; provided, however, that the Company shall use
          its
          reasonable best efforts to cure any such misstatement, omission or event
          that is
          applicable to the registration statement as soon as reasonably practicable
          after
          delivery of such notice of the happening of a Material Event. Such periods
          of
          discontinued use of the registration statement shall not exceed 120 days
          in any
          365-day period. If so directed by the Company, on the happening of a Material
          Event, each Shareholder will deliver to the Company (at the Company's expense)
          all copies, other than permanent file copies then in such Shareholder’s
          possession, of the prospectus covering such Registrable Securities current
          at
          the time of receipt of such notice.
  **9.** **Termination;
          Rule 144 Sales** **.** This
          Agreement shall terminate on the date on which there cease to be any Registrable
          Securities outstanding; provided, however, that the provisions of **Section
          6** shall
          survive any termination of this Agreement. In addition, notwithstanding
          anything
          contained in Sections 2 or 3 to the contrary, a holder of Registrable Securities
          shall not have any registration rights pursuant to Sections 2 or 3 herein
          if
          such holder of Registrable Securities can sell all of its Registrable Securities
          pursuant to Rule 144(k) of the Securities Act within a ninety (90) day
          period.
  **10.** **Sales
          Limitations** **.** Notwithstanding anything in this Agreement to the contrary, the Shareholder
          agree that the Shareholders collectively shall not effect the sale or
          distribution of greater than 33.33% of the Registrable Securities registered
          pursuant to this Agreement during any ninety (90) day period beginning
          on the
          Lockup Date; provided, however, that if the Shareholders collectively effect
          the
          sale or distribution of less than such percentage in any such 90-day period,
          then the Shareholders may collectively sell up to an additional amount
          of
          Registrable Securities equal to the amount by which the percentage sold
          in such
          earlier 90-day period was less than such percentage, such that the Shareholders
          will be permitted to sell 100% of such securities (to the extent registered)
          within 270 days from the Lockup Date. By way of example, if the Shareholders
          collectively sell an aggregate of 20% of such securities during the initial
          90-day period, they shall be permitted to collectively sell an aggregate
          of
          46.66% (33.33% + 13.33%) of such securities during the following 90-day
          period.
          The Shareholders understand and agree that the Registrable Securities will
          contain a legend reflecting such restrictions.
  **11.** **Obligations
          of Sellers** **.** In
          connection with each registration hereunder, and as a condition to the
          Company's
          obligations hereunder to any selling Shareholder, each seller of Registrable
          Securities will furnish to the Company in writing such information with
          respect
          to such seller and its proposed disposition as shall be reasonably necessary
          in
          order to insure compliance with the Securities Act and with all other federal
          and applicable state securities laws. Without limiting the generality of
          the
          foregoing, in connection with each registration covering an underwritten
          public
          offering, each seller of Registrable Securities agrees to enter into the
          underwriting agreement between the Company and such underwriters and to
          complete
          and execute all questionnaires, powers of attorney, and other documents
          or
          instruments reasonably requested under the terms of the underwriting
          agreement.
  **12.** **Amendments
          and Waivers** **.** This
          Agreement may be amended and the Company may take any action herein prohibited
          or omit to perform any act required herein to be
   22
   performed
          by it, if the Company has obtained the written consent of the holders of
          greater
          than fifty percent (50%) of the Registrable Securities (by number of
          shares). Each holder of any Registrable Securities at the time or thereafter
          outstanding shall be bound by any consent authorized by this **Section
          12** ,
          whether
          such Registrable Securities shall have been marked to indicate such
          consent.
  **13.** **Inconsistent
          Agreements** **.** Nothing
          contained herein shall limit or restrict the Company’s right to grant
          registration rights to other Persons.
   23
   **14.** **Notices** **.** Except
          as otherwise provided in this Agreement, all notices and other communications
          hereunder shall be in writing and delivered personally, sent by pre-paid,
          first
          class, certified or registered airmail, return receipt requested or by
          an
          express courier service to the intended recipient thereof at its address
          set
          forth below. Any such notice shall be deemed to have been duly given immediately
          upon delivery in person, or five days after mailing (or the second day
          after
          delivery to an express courier service), and in proving the same it shall
          be
          sufficient to show that the envelope containing the notice was duly addressed,
          stamped and posted or that the envelope was delivered to an express courier
          service, as the case may be. The addresses of the parties for the purposes
          of
          this Agreement are as follows:
  If
          to
          Company:   James
          River Coal Company
 901
          E.
          Byrd Street
 Suite
          1600
 Richmond,
          Virginia 23219
 Attention:
          President
 
 with
          copy
          to:    Kilpatrick
          Stockton LLP
 1100
          Peachtree Street
 Atlanta,
          Georgia 30309
 Attention:
          David A. Stockton, Esq.
 
 If
          to
          holders of the
 Registrable
          Securities:   At
          their
          respective addresses of
 record
          as
          maintained on the stock
 records
          of the Company
 
 **15.** **Headings** **.** The
          headings of the several articles and sections of this Agreement are inserted
          for
          convenience of reference only. They do not constitute a part of this Agreement
          and shall not limit or otherwise affect the meaning or interpretation of
          any
          provision hereof.
  **16.** **Governing
          Law** **.** This
          Agreement has been executed and delivered in the State of New York and
          shall be
          construed and enforced in accordance with, and the rights of the parties
          shall
          be governed by, the laws of the State of New York.
  **17.** **Counterparts** **.** This
          Agreement may be executed in any number of counterparts, each of which
          shall be
          deemed an original, and all such counterparts shall together constitute
          one and
          the same instrument.
  **18.** **Severability** **.** Whenever
          possible, each provision of this Agreement shall be interpreted in such
          a manner
          as to be effective and valid under applicable law, but if any provision
          of this
          Agreement is held to be invalid, illegal or unenforceable under any applicable
          law or rule in any jurisdiction, such provision will be ineffective only
          to the
          extent of such invalidity, illegality or unenforceability in such jurisdiction,
          without invalidating the remainder of this Agreement in such jurisdiction
          or any
          other provision hereof in any other jurisdiction.
   24
   **19.** **Entire
          Agreement** **.** This
          Agreement supersedes all prior discussions and agreements between the parties
          with respect to the subject matter hereof, and this Agreement contains
          the sole
          and entire agreement of the parties with respect to the matters covered
          hereby.
          This Agreement shall not be altered or amended except by an instrument
          in
          writing signed by or on behalf of the party entitled to the benefit of
          the
          provision against whom enforcement is sought.
  **20.** **Waiver** **.** Any term
          or condition of this Agreement may be waived at any time by the party which
          is
          entitled to the benefit thereof, but only if such waiver is evidenced by
          a
          writing signed by such party. No failure on the part of any party hereto
          to
          exercise, and no delay in exercising any right, power or remedy created
          hereunder, shall operate as a waiver thereof, nor shall any single or partial
          exercise of any right, power or remedy by any such party preclude any other
          or
          further exercise thereof or the exercise of any other right, power or remedy.
          No
          waiver by any party hereto of any breach of or default in any term or condition
          of this Agreement shall constitute a waiver of or assent to any succeeding
          breach of or default in the same or any other term or condition
          hereof.
  **21.** **Number
          and Gender** **.** Where
          the context requires, the use of the singular form herein shall include
          the
          plural, the use of the plural shall include the singular, and the use of
          any
          gender shall include any and all genders.
   ***[Signatures
          Appear on Following Page]***
   25
   **IN
          WITNESS WHEREOF** ,
          the
          parties have executed this Agreement as of the date first above
          written.
  
 **JAMES
                    RIVER COAL COMPANY**
                  
                  
                  
                  By:/s/
                    Peter T.
                    Socha
                  Name:
                    Peter T. Socha
                  Title:
                    President and Chief Executive
                    Officer
 
 
 **SELLERS:**/s/
                    Timothy R. AullTimothy
                    R. Aull/s/
                    Joseph A. AullJoseph
                    A. Aull/s/
                    Lena R. AullLena
                    R. Aull/s/
                    John W. WorthJohn
                    W. Worth/s/
                    Michael W. HowardMichael
                    W. Howard/s/
                    Jeffrey R. SermersheimJeffrey
                    R. SermersheimHarold
                    Hurt
  26
  
 
 The
                    Lisa Ann Huffman Trust #1By:/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeThe
                    Jacqueline Marie Mize Trust #2By:/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeThe
                    Vickie Lynn Insko Trust #3By:/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeThe
                    Timothy R. Aull Trust #4By:/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeThe
                    Mary Teresita Aull Trust #5By:/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeThe
                    Wesley Morgan Aull Trust #6By:/s/
                    Alan R. HowardName:
                    Alan R. HowardTitle:
                    Trustee
  27
  
 
 The
                    Matthew Robert Aull Trust #7/s/
                    Alan R.
                    HowardName:
                    Alan R. HowardTitle:
                    TrusteeTerra
                    Firma Consulting Company/s/
                    Harold
                    HurtBy:
                    Harold Hurt**TRUST
                    BENEFICIARIES:**The
                    Lisa Ann Huffman Trust #1_______________________________________Lisa
                    Ann Huffman, BeneficiaryThe
                    Jacqueline Marie Mize Trust #2_______________________________________Jacqueline
                    Marie Mize, BeneficiaryThe
                    Vickie Lynn Insko Trust #3_______________________________________Vickie
                    Lynn Insko, BeneficiaryThe
                    Mary Teresita Aull Trust #5_______________________________________Mary
                    Teresita Aull, Beneficiary
  28
  
 The
                    Wesley Morgan Aull Trust #6_______________________________________Wesley
                    Morgan Aull, BeneficiaryThe
                    Matthew Robert Aull Trust #7____________________________________Matthew
                    Robert Aull, Beneficiary