EXHIBIT 4.2

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                               NATIONAL COAL CORP.

                     AND EACH OF THE GUARANTORS NAMED HEREIN

                       10.5% SENIOR SECURED NOTES DUE 2010




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                                    INDENTURE

                          DATED AS OF DECEMBER 29, 2005

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                     WELLS FARGO BANK, NATIONAL ASSOCIATION

                                     TRUSTEE

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                                TABLE OF CONTENTS

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                                                                            ----


ARTICLE 1.       DEFINITIONS AND INCORPORATION BY REFERENCE....................1

    Section 1.01       Definitions.............................................1

    Section 1.02       Other Definitions......................................25

    Section 1.03       Incorporation by Reference of Trust Indenture Act......25

    Section 1.04       Rules of Construction..................................26

ARTICLE 2.       THE NOTES....................................................27

    Section 2.01       Form and Dating........................................27

    Section 2.02       Execution and Authentication...........................28

    Section 2.03       Registrar and Paying Agent.............................28

    Section 2.04       Paying Agent to Hold Money in Trust....................29

    Section 2.05       Holder Lists...........................................29

    Section 2.06       Transfer and Exchange..................................29

    Section 2.07       Replacement Notes......................................45

    Section 2.08       Outstanding Notes......................................45

    Section 2.09       Treasury Notes.........................................46

    Section 2.10       Temporary Notes........................................46

    Section 2.11       Cancellation...........................................46

    Section 2.12       Defaulted Interest.....................................46

ARTICLE 3.       REDEMPTION AND PREPAYMENT....................................47

    Section 3.01       Notices to Trustee.....................................47

    Section 3.02       Selection and Notice...................................47

    Section 3.03       Notice of Redemption...................................48

    Section 3.04       Effect of Notice of Redemption.........................48

    Section 3.05       Deposit of Redemption or Purchase Price................49

    Section 3.06       Notes Redeemed or Purchased in Part....................49

    Section 3.07       Optional Redemption....................................49

    Section 3.08       Mandatory Redemption...................................50

    Section 3.09       Offer to Purchase by Application of Excess Proceeds....50

ARTICLE 4.       COVENANTS....................................................52

    Section 4.01       Payment of Notes.......................................52


                                      -i-
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                                TABLE OF CONTENTS
                                   (continued)

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                                                                            ----

    Section 4.02       Maintenance of Office or Agency........................52

    Section 4.03       Reports................................................53

    Section 4.04       Compliance Certificate.................................54

    Section 4.05       Taxes..................................................54

    Section 4.06       Stay, Extension and Usury Laws.........................55

    Section 4.07       Restricted Payments....................................55

    Section 4.08       Dividend and Other Payment Restrictions
                       Affecting Subsidiaries.................................58

    Section 4.09       Incurrence of Indebtedness and Issuance of
                       Preferred Stock........................................59

    Section 4.10       Asset Sales............................................63

    Section 4.11       Transactions with Affiliates...........................65

    Section 4.12       Liens..................................................66

    Section 4.13       Business Activities....................................67

    Section 4.14       Corporate Existence....................................67

    Section 4.15       Offer to Repurchase Upon Change of Control.............67

    Section 4.16       Payments for Consent...................................69

    Section 4.17       Additional Note Guarantees and Security................69

    Section 4.18       Designation of Restricted and Unrestricted
                       Subsidiaries...........................................70

    Section 4.19       Issuances and Sales of Capital Stock of
                       Restricted Subsidiaries................................71

    Section 4.20       Impairment of Security Interest........................71

    Section 4.21       Real Estate Mortgages and Filings......................71

    Section 4.22       Landlord, Bailee and Consignee Waivers.................75

    Section 4.23       Title Insurance........................................76

    Section 4.24       Memoranda of Leases....................................76

ARTICLE 5.       SUCCESSORS...................................................76

    Section 5.01       Merger, Consolidation, or Sale of Assets...............76

    Section 5.02       Successor Corporation Substituted......................77

ARTICLE 6.       DEFAULTS AND REMEDIES........................................77

    Section 6.01       Events of Default......................................77

    Section 6.02       Acceleration...........................................79

    Section 6.03       Other Remedies.........................................80


                                      -ii-
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                                TABLE OF CONTENTS
                                   (continued)

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                                                                            ----

    Section 6.04       Waiver of Past Defaults................................80

    Section 6.05       Control by Majority....................................81

    Section 6.06       Limitation on Suits....................................81

    Section 6.07       Rights of Holders of Notes to Receive Payment..........81

    Section 6.08       Collection Suit by Trustee.............................81

    Section 6.09       Trustee May File Proofs of Claim.......................82

    Section 6.10       Priorities.............................................82

    Section 6.11       Undertaking for Costs..................................83

ARTICLE 7.       TRUSTEE......................................................83

    Section 7.01       Duties of Trustee......................................83

    Section 7.02       Rights of Trustee......................................84

    Section 7.03       Individual Rights of Trustee...........................85

    Section 7.04       Trustee's Disclaimer...................................85

    Section 7.05       Notice of Defaults.....................................86

    Section 7.06       Reports by Trustee to Holders of the Notes.............86

    Section 7.07       Compensation and Indemnity.............................86

    Section 7.08       Replacement of Trustee.................................87

    Section 7.09       Successor Trustee by Merger, etc.......................88

    Section 7.10       Eligibility; Disqualification..........................88

    Section 7.11       Preferential Collection of Claims Against Company......88

ARTICLE 8.       LEGAL DEFEASANCE AND COVENANT DEFEASANCE.....................89

    Section 8.01       Option to Effect Legal Defeasance or Covenant
                       Defeasance.............................................89

    Section 8.02       Legal Defeasance and Discharge.........................89

    Section 8.03       Covenant Defeasance....................................89

    Section 8.04       Conditions to Legal or Covenant Defeasance.............90

    Section 8.05       Deposited Money and Government Securities to be
                       Held in Trust; Other Miscellaneous Provisions..........91

    Section 8.06       Repayment to Company...................................92

    Section 8.07       Reinstatement..........................................92

ARTICLE 9.       AMENDMENT, SUPPLEMENT AND WAIVER.............................93


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                                TABLE OF CONTENTS
                                   (continued)

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                                                                            ----

    Section 9.01       Without Consent of Holders of Notes....................93

    Section 9.02       With Consent of Holders of Notes.......................94

    Section 9.03       Compliance with Trust Indenture Act....................95

    Section 9.04       Revocation and Effect of Consents......................95

    Section 9.05       Notation on or Exchange of Notes.......................96

    Section 9.06       Trustee to Sign Amendments, etc........................96

ARTICLE 10.      COLLATERAL AND SECURITY......................................96

    Section 10.01      Security Documents.....................................96

    Section 10.02      Recording and Opinions.................................97

    Section 10.03      Release of Collateral/Additional Liens.................97

    Section 10.04      Certificates and Opinions of Counsel...................99

    Section 10.05      Certificates of the Trustee............................99

    Section 10.06      Authorization of Actions to be Taken by the
                       Trustee Under the Security Documents..................100

    Section 10.07      Authorization of Receipt of Funds by the
                       Trustee Under the Security Documents..................100

    Section 10.08      Termination of Security Interest......................100

    Section 10.09      Collateral Agent......................................101

    Section 10.10      Designations..........................................101

ARTICLE 11.      NOTE GUARANTEES.............................................102

    Section 11.01      Guarantee.............................................102

    Section 11.02      Limitation on Guarantor Liability.....................103

    Section 11.03      Execution and Delivery of Subsidiary Guarantee........103

    Section 11.04      Guarantors May Consolidate, etc., on Certain Terms....104

    Section 11.05      Releases Following Sale of Assets.....................105

    Section 11.06      Release Following Designation as an Unrestricted
                       Subsidiary............................................105

ARTICLE 12.      SATISFACTION AND DISCHARGE..................................105

    Section 12.01      Satisfaction and Discharge............................105

    Section 12.02      Application of Trust Money............................106

ARTICLE 13.      MISCELLANEOUS...............................................107

    Section 13.01      Trust Indenture Act Controls..........................107


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                                TABLE OF CONTENTS
                                   (continued)

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    Section 13.02      Notices...............................................107

    Section 13.03      Communication by Holders of Notes with Other
                       Holders of Notes........................108

    Section 13.04      Certificate and Opinion as to Conditions Precedent....108

    Section 13.05      Statements Required in Certificate or Opinion.........108

    Section 13.06      Rules by Trustee and Agents...........................109

    Section 13.07      No Personal Liability of Directors, Officers,
                       Employees and Stockholders............................109

    Section 13.08      Governing Law.........................................109

    Section 13.09      No Adverse Interpretation of Other Agreements.........109

    Section 13.10      Successors............................................109

    Section 13.11      Severability..........................................110

    Section 13.12      Counterpart Originals.................................110

    Section 13.13      Table of Contents, Headings, etc......................110


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EXHIBITS

Exhibit A    -    [Face of Note]
Exhibit B    -    Form of Certificate of Transfer
Exhibit C    -    Form of Certificate of Exchange
Exhibit D    -    Form of Certificate from Acquiring Institutional Accredited
                  Investor
Exhibit E    -    Form of Notation of Guarantee
Exhibit F    -    Form of Supplemental Indenture to be Delivered by Subsequent
                  Guarantors
Exhibit G    -    Landlord's Waiver and Consent
Exhibit H    -    Intercreditor Agreement
Exhibit I    -    Security Agreement
Exhibit J    -    Form of Notice and Consent

SCHEDULES

Schedule I


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         INDENTURE  dated as of December 29, 2005 among  National Coal Corp.,  a
Florida corporation (the "Company"), the Guarantors (as defined) and Wells Fargo
Bank,  National  Association,  a national banking  association,  as trustee (the
"Trustee").

         The Company,  the  Guarantors  and the Trustee agree as follows for the
benefit of each other and for the equal and  ratable  benefit of the Holders (as
defined) of the 10.5% Senior Secured Notes due 2010 (the "Notes"):

                                   ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01      DEFINITIONS.

         "144A  GLOBAL  NOTE" means a Global Note  substantially  in the form of
Exhibit A hereto  bearing  the  Global  Note  Legend and the  Private  Placement
Legend,  and deposited  with or on behalf of, and registered in the name of, the
Depositary  or its nominee  that will be issued in a  denomination  equal to the
outstanding principal amount of the Notes sold in reliance on Rule 144A.

         "ACQUIRED DEBT" means, with respect to any specified Person:

         (1)      Indebtedness  of any other  Person  existing  at the time such
                  other Person is merged with or into or became a Subsidiary  of
                  such specified  Person,  whether or not such  Indebtedness  is
                  incurred in  connection  with,  or in  contemplation  of, such
                  other Person  merging  with or into,  or becoming a Restricted
                  Subsidiary of, such specified Person; and

         (2)      Indebtedness  secured by a Lien encumbering any asset acquired
                  by such specified Person.

         "AFFILIATE" of any specified Person means any other Person, directly or
indirectly,  controlling  or  controlled  by or under direct or indirect  common
control  with  such  specified  Person.  For the  purposes  of this  definition,
"control" when used with respect to any Person means the possession, directly or
indirectly,  of the power to direct or cause the  direction  of  management  and
policies of such Person, whether through the ownership of voting securities,  by
agreement or otherwise; PROVIDED that beneficial ownership of 10% or more of the
Voting  Stock of a Person will be presumed to be control.  For  purposes of this
definition,  the terms "controlling,"  "controlled by" and "under common control
with" have correlative meanings.

         "AGENT" means any Registrar,  co-registrar,  Paying Agent or additional
paying agent.

         "APPLICABLE PROCEDURES" means, with respect to any transfer or exchange
of or for  beneficial  interests in any Global Note, the rules and procedures of
the  Depositary,  Euroclear  and  Clearstream  that  apply to such  transfer  or
exchange.

         "ASSET SALE" means:

         (1)      the  sale,  lease,  conveyance  or  other  disposition  of any
                  property or assets or rights;  PROVIDED that the sale,  lease,
                  conveyance or other disposition of all or substantially


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                  all of the  assets  owned by the  Company  and its  Restricted
                  Subsidiaries taken as a whole will be governed by Section 4.15
                  and/or Section 5.01 hereof and not by Section 4.10 hereof; and

         (2)      the issuance of Equity Interests by any Restricted  Subsidiary
                  or the sale of Equity Interests in any Restricted Subsidiary.

         Notwithstanding  the  preceding,  none of the  following  items will be
deemed to be an Asset Sale:

         (1)      any single transaction or series of related  transactions that
                  involves  property  or assets or rights  having a Fair  Market
                  Value of less than $1.0 million;

         (2)      a transfer of  property  or assets or rights  between or among
                  the Company and its Restricted Subsidiaries;

         (3)      an issuance of Equity Interests by a Restricted  Subsidiary of
                  the Company to the Company or to a  Restricted  Subsidiary  of
                  the Company;

         (4)      the sale or lease of products, services or accounts receivable
                  in the  ordinary  course  of  business  and any  sale or other
                  disposition of damaged, worn-out, surplus or obsolete property
                  or assets in the ordinary course of business;

         (5)      the sale or other  disposition of cash or Cash  Equivalents or
                  the sale,  factoring or discount of accounts receivable or the
                  accounts   receivable   determined   by  the   Company  to  be
                  uncollectible in whole or in part; or

         (6)      a Restricted  Payment that does not violate  Section 4.07 or a
                  Permitted Investment.

         "BANKRUPTCY  LAW" means Title 11, U.S.  Code or any similar  federal or
state law for the relief of debtors.

         "BENEFICIAL  OWNER" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular  "person" (as that term is used in Section  13(d)(3)
of the Exchange Act), such "person" will be deemed to have beneficial  ownership
of all  securities  that such "person" has the right to acquire by conversion or
exercise of other securities,  whether such right is currently exercisable or is
exercisable  only after the passage of time. The Terms  "Beneficially  Owns" and
"Beneficially Owned" have a corresponding meaning.

         "BOARD OF DIRECTORS" means:

         (1)      with respect to a  corporation,  the Board of Directors of the
                  corporation or any committee thereof duly authorized to act on
                  behalf of such board;

         (2)      with respect to a  partnership,  the Board of Directors of the
                  general partner of the partnership;


                                       2
<PAGE>


         (3)      with  respect to a limited  liability  company,  the  managing
                  member or members or any  controlling  committee  of  managing
                  members thereof; and

         (4)      with  respect to any other  Person,  the board or committee of
                  such Person serving a similar function.

         "BROKER-DEALER"  has the meaning set forth in the  Registration  Rights
Agreement.

         "BUSINESS  DAY" means any day other than a Saturday,  Sunday or any day
on which banks in New York are closed.

         "CAPITAL LEASE  OBLIGATION"  means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that  time  be  required  to be  capitalized  on a  balance  sheet  prepared  in
accordance with GAAP, and the Stated  Maturity  thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such  lease may be  prepaid by the lessee  without  payment of a
penalty.

         "CAPITAL STOCK" means:

         (1)      in the case of a corporation, corporate stock;

         (2)      in the case of an association or business entity,  any and all
                  shares, interests, participations, rights or other equivalents
                  (however designated) of corporate stock;

         (3)      in the case of a  partnership  or limited  liability  company,
                  partnership   interests   (whether   general  or  limited)  or
                  membership interests; and

         (4)      any other interest or  participation  that confers on a Person
                  the right to receive a share of the  profits and losses of, or
                  distributions  of property and assets of, the issuing  Person,
                  but excluding  from all of the  foregoing any debt  securities
                  convertible  into  Capital  Stock,  whether  or not such  debt
                  securities  include any right of  participation  with  Capital
                  Stock.

         "CASH EQUIVALENTS" means:

         (1)      United States dollars;

         (2)      securities  issued or directly and fully guaranteed or insured
                  by  the   United   States   government   or  any   agency   or
                  instrumentality of the United States government (PROVIDED that
                  the full faith and  credit of the United  States is pledged in
                  support of those  securities)  having  maturities  of not more
                  than six months from the date of acquisition;

         (3)      certificates  of deposit and  eurodollar  time  deposits  with
                  maturities of six months or less from the date of acquisition,
                  bankers'  acceptances with maturities not exceeding six months
                  and overnight  bank  deposits,  in each case,  with any lender
                  party to


                                       3
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                  a First Lien Credit  Facility or with any domestic  commercial
                  bank having  capital  and surplus in excess of $500.0  million
                  and a Thomson Bank Watch Rating of "B" or better;

         (4)      repurchase obligations with a term of not more than seven days
                  for  underlying  securities of the types  described in clauses
                  (2) and (3) above entered into with any financial  institution
                  meeting the qualifications specified in clause (3) above;

         (5)      commercial  paper  having  one  of  the  two  highest  ratings
                  obtainable  from  Moody's or S&P and,  in each case,  maturing
                  within six months after the date of acquisition; and

         (6)      money  market funds at least 95% of the property and assets of
                  which  constitute  Cash  Equivalents of the kinds described in
                  clauses (1) through (5) of this definition.

         "CHANGE OF CONTROL" means the occurrence of any of the following:

         (1)      the direct or indirect sale,  lease,  transfer,  conveyance or
                  other   disposition   (other   than  by  way  of   merger   or
                  consolidation), in one or a series of related transactions, of
                  all or  substantially  all of the  properties or assets of the
                  Company and its Subsidiaries  taken as a whole to any "person"
                  (as that term is used in Section  13(d) of the  Exchange  Act)
                  other than a Permitted Holder;

         (2)      the  adoption  of  a  plan  relating  to  the  liquidation  or
                  dissolution of the Company;

         (3)      (A) the  consummation of any transaction  (including,  without
                  limitation, any merger or consolidation),  the result of which
                  is that  any  "person"  (as  defined  above),  other  than the
                  Permitted Holder,  becomes the Beneficial  Owner,  directly or
                  indirectly,  of  more  than  35% of the  Voting  Stock  of the
                  Company,  measured  by  voting  power  rather  than  number of
                  shares,  and  (B)  the  Permitted  Holder  Beneficially  Owns,
                  directly or indirectly,  in the aggregate a lesser  percentage
                  of the total  voting  power of the Voting Stock of the Company
                  than such  person  and does not have the right or  ability  by
                  voting power, contract or otherwise, to elect or designate for
                  election a majority of the Board of Directors; or

         (4)      during any period of two consecutive years, individuals who at
                  the  beginning  of  such  period   constituted  the  Board  of
                  Directors  (together with any new directors  whose election by
                  such Board of  Directors or whose  nomination  for election by
                  the  shareholders  of the Company was  approved by a vote of a
                  majority of the  directors of the Company then still in office
                  who were either  directors at the  beginning of such period or
                  whose  election or nomination  for election was  previously so
                  approved),  cease for any reason to  constitute  a majority of
                  the Board of Directors then in office.

         "CLEARSTREAM" means Clearstream Banking, S.A.


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         "COLLATERAL"  means  all  property  and  assets of the  Company  or any
Guarantor  with respect to which from time to time a Lien is granted as security
for the Notes pursuant to the applicable Security Documents.

         "COLLATERAL AGENT" means the Trustee in its capacity as the "Collateral
Agent" under and as defined in the Security  Documents and any successor thereto
in such capacity.

         "COMMISSION" means the Securities and Exchange Commission.

         "COMPANY" means National Coal Corp., a Florida corporation, and any and
all successors thereto.

         "CONSOLIDATED  CASH FLOW" means,  with respect to any specified  Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:

         (1)      an amount  equal to any  extraordinary  loss plus any net loss
                  realized by such Person or any of its Restricted  Subsidiaries
                  in  connection  with an Asset Sale,  to the extent such losses
                  were deducted in computing such Consolidated Net Income; plus

         (2)      provision  for income taxes of such Person and its  Restricted
                  Subsidiaries  for  such  period,   to  the  extent  that  such
                  provision  for income  taxes was  deducted in  computing  such
                  Consolidated Net Income; plus

         (3)      the  Fixed   Charges  of  such   Person  and  its   Restricted
                  Subsidiaries  for such  period,  to the extent that such Fixed
                  Charges  were  deducted in  computing  such  Consolidated  Net
                  Income; plus

         (4)      depreciation,    amortization   (including   amortization   of
                  intangibles   but  excluding   amortization  of  prepaid  cash
                  expenses that were paid in a prior period) and other  non-cash
                  expenses  (excluding  any such non-cash  expense to the extent
                  that it  represents an accrual of or reserve for cash expenses
                  in any future period or amortization of a prepaid cash expense
                  that  was  paid in a prior  period)  of  such  Person  and its
                  Restricted  Subsidiaries  for such  period to the extent  that
                  such  depreciation,  amortization and other non-cash  expenses
                  were deducted in computing such Consolidated Net Income; minus

         (5)      non-cash items  increasing  such  Consolidated  Net Income for
                  such period, other than the accrual of revenue in the ordinary
                  course of business,  in each case, on a consolidated basis and
                  determined in accordance with GAAP.

         Notwithstanding  the  preceding,  the  provision for taxes based on the
income or profits of, and the  depreciation  and amortization and other non-cash
expenses  of,  a  Restricted   Subsidiary  of  the  Company  will  be  added  to
Consolidated Net Income to compute Consolidated Cash Flow of the Company only to
the  extent  that a  corresponding  amount  would  be  permitted  at the date of
determination  to be  dividended  to the Company by such  Restricted  Subsidiary
without prior  governmental  approval (that has not been obtained),  and without
direct or  indirect  restriction  pursuant  to the terms of its  charter and all
agreements, instruments, judgments, decrees, orders,


                                       5
<PAGE>


statutes,  rules and  governmental  regulations  applicable  to that  Restricted
Subsidiary or its stockholders.

         "CONSOLIDATED  NET INCOME" means,  with respect to any specified Person
for  any  period,  the  aggregate  of the Net  Income  of  such  Person  and its
Restricted  Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; PROVIDED that:

         (1)      the Net  Income  (but not  loss) of any  Person  that is not a
                  Restricted  Subsidiary  or that is accounted for by the equity
                  method of  accounting  will be included  only to the extent of
                  the amount of dividends or similar  distributions paid in cash
                  to the  specified  Person or a  Restricted  Subsidiary  of the
                  Person;

         (2)      the Net Income of any Restricted  Subsidiary  will be excluded
                  to the extent that the  declaration or payment of dividends or
                  similar  distributions  by that Restricted  Subsidiary of that
                  Net  Income  is not at the  date  of  determination  permitted
                  without  any prior  governmental  approval  (that has not been
                  obtained)  or,  directly or  indirectly,  by  operation of the
                  terms of its charter or any agreement,  instrument,  judgment,
                  decree,  order,  statute,  rule  or  governmental   regulation
                  applicable to that Restricted Subsidiary or its stockholders;

         (3)      the  cumulative  effect of a change in  accounting  principles
                  will be excluded; and

         (4)      notwithstanding  clause  (1)  above,  the  Net  Income  of any
                  Unrestricted  Subsidiary  will  be  excluded,  whether  or not
                  distributed   to   the   specified   Person   or  one  of  its
                  Subsidiaries.

         "CONSOLIDATED NET TANGIBLE ASSETS" of any Person means, as of the date,
the amount which, in accordance with GAAP,  would be set forth under the caption
"total  assets" (or any like  caption) on a  consolidated  balance sheet of such
Person and its Restricted  Subsidiaries as of the end of the most recently ended
fiscal  quarter  of such  Person for which  internal  financial  statements  are
available,  giving  effect to purchase  accounting,  less the  following  to the
extent they would be included in such Person's  consolidated balance sheet as of
such date: (1) all intangible assets, including, without limitation, unamortized
debt discount and expenses and other  unamortized  deferred  charges,  goodwill,
organization or developmental costs, patents,  trademarks,  service marks, trade
names, copyrights, licenses, franchises, and research and development costs; (2)
minority  interests in consolidated  Subsidiaries held by Persons other than the
Company or a Restricted  Subsidiary;  (3) any  revaluation  or other write-up in
book  value of  property  or  assets  subsequent  to the last day of the  fiscal
quarter of the Company  immediately  preceding the date of original  issuance of
the Notes as a result of a change in the method of valuation in accordance  with
GAAP; (4)  certificates of deposits and similar  instruments used to purchase or
post reclamation  surety or similar bonds that do not constitute  Collateral and
cash set apart and held in a sinking or other analogous fund established for the
purpose of redemption or other  retirement of Equity  Interests (in each case to
the extent such obligation is not reflected in consolidated  current liabilities
pursuant to clause (5));  and (5) the amount  which,  in  accordance  with GAAP,
would be set forth under the caption "current liabilities" (or any like caption)


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<PAGE>


on a consolidated balance sheet of such Person and its Restricted  Subsidiaries,
as of the end of such period.

         "CONSOLIDATED   SUBSIDIARIES"   means  the   Restricted   Subsidiaries;
PROVIDED, HOWEVER, that the interest of the Company or any Restricted Subsidiary
in an Unrestricted Subsidiary will be accounted for as an Investment.

         "CORPORATE  TRUST OFFICE OF THE TRUSTEE"  will be at the address of the
Trustee  specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.

         "CREDIT  AGENT" means,  at any time, the Person serving at such time as
the sole  lender or as the  "Agent,"  "Administrative  Agent"  or in some  other
similar capacity under a First Lien Credit Facility.

         "CREDIT  FACILITY LIENS" means the Liens  permitted  pursuant to clause
(1) of the definition of "Permitted Liens."

         "CUSTODIAN"  means the Trustee,  as custodian with respect to the Notes
in global form, or any successor entity thereto.

         "DEFAULT"  means any event that is, or with the  passage of time or the
giving of notice or both would be, an Event of Default.

         "DEFINITIVE  NOTE" means a certificated  Note registered in the name of
the  Holder  thereof  and  issued  in  accordance   with  Section  2.06  hereof,
substantially  in the form of Exhibit A hereto  except  that such Note shall not
bear the Global Note Legend and shall not have the  "Schedule  of  Exchanges  of
Interests in the Global Note" attached thereto.

         "DEPOSITARY"  means,  with  respect to the Notes  issuable or issued in
whole or in part in global form, the Person  specified in Section 2.03 hereof as
the Depositary  with respect to the Notes,  and any and all  successors  thereto
appointed  as  depositary  hereunder  and having  become  such  pursuant  to the
applicable provision of this Indenture.

         "DISCHARGE OF FIRST LIEN OBLIGATIONS"  means payment in full in cash of
the  principal  of and  interest  and  premium,  if  any,  on  all  Indebtedness
outstanding  under a First Lien Credit Facility  incurred pursuant to clause (1)
of Section  4.09 or, with  respect to Hedging  Obligations  or letters of credit
outstanding  thereunder,  delivery of cash  collateral  or  backstop  letters of
credit in respect thereof in compliance with such First Lien Credit Facility, in
each case after or  concurrently  with  termination of all commitments to extend
credit  thereunder,  and  payment  in  full  in cash  of any  other  First  Lien
Obligations that are due and payable or otherwise  accrued and owing at or prior
to the time such principal, interest and premium, if any, are paid.

         "DISQUALIFIED  STOCK" means any Capital Stock that, by its terms (or by
the  terms of any  security  into  which it is  convertible,  or for which it is
exchangeable,  in each case at the option of the holder of such Capital  Stock),
or upon the  happening  of any  event,  matures  or is  mandatorily  redeemable,
pursuant to a sinking fund obligation or otherwise,  or redeemable at the option
of the holder of such  Capital  Stock,  in whole or in part,  on or prior to the
date that is 91 days after


                                       7
<PAGE>


the date on which the Notes mature.  Notwithstanding the preceding sentence, any
Capital  Stock that would  constitute  Disqualified  Stock  solely  because  the
holders  of such  Capital  Stock  have  the  right to  require  the  Company  to
repurchase  such Capital Stock upon the  occurrence of a Change of Control or an
Asset Sale will not constitute  Disqualified  Stock if the terms of such Capital
Stock  provide  that the Company may not  repurchase  or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption  complies
with  Section  4.07  hereof.  The  amount  of  Disqualified  Stock  deemed to be
outstanding  at any time for  purposes  of this  Indenture  will be the  maximum
amount that the Company and its Restricted  Subsidiaries may become obligated to
pay upon the maturity of, or pursuant to any mandatory redemption provisions of,
such Disqualified Stock, exclusive of accrued dividends.

         "DOMESTIC  SUBSIDIARY"  means any Restricted  Subsidiary of the Company
that was formed  under the laws of the United  States or any state of the United
States or the  District of Columbia or that  guarantees  or  otherwise  provides
direct credit support for any Indebtedness of the Company.

         "EQUITY  INTERESTS"  means Capital  Stock and all warrants,  options or
other rights to acquire  Capital Stock (but  excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).

         "EUROCLEAR"  means  Euroclear  Bank  S.A./N.V.,   as  operator  of  the
Euroclear system.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCHANGE  NOTES" means the 10.5% Senior Secured Notes due 2010, of the
same  series  under  this  Indenture  as the  Notes,  to be issued to Holders in
exchange for Transfer Restricted  Securities pursuant to the Registration Rights
Agreement.

         "EXCHANGE  OFFER"  means  the  registration  by  the  Company  and  the
Guarantors  under  the  Securities  Act  of the  Exchange  Notes  pursuant  to a
Registration  Statement  pursuant to which the Company and the Guarantors  offer
the Holders of all outstanding Transfer Restricted Securities the opportunity to
exchange  all  such  outstanding  Transfer  Restricted  Securities  held by such
Holders for Exchange  Notes and Exchange  Guarantees  in an aggregate  principal
amount  equal to the  aggregate  principal  amount  of the  Transfer  Restricted
Securities tendered in such exchange offer by such Holders.

         "EXCHANGE  OFFER   REGISTRATION   STATEMENT"   means  the  Registration
Statement relating to the Exchange Offer, including the related Prospectus.

         "EXISTING CREDIT AGREEMENT" means that certain Credit Agreement,  dated
as of November 26, 2004,  among the Company,  D.B.  Zwirn Special  Opportunities
Fund, L.P., as administrative  agent, and the lenders party thereto,  as amended
effective December 31, 2004 and January 11, 2005.

         "FAIR  MARKET  VALUE"  means the value  that would be paid by a willing
buyer to an unaffiliated  willing seller in a transaction not involving distress
or necessity of either party, determined in good faith by the Board of Directors
of the Company (unless otherwise  provided in this Indenture).  For avoidance of
doubt, in determining Fair Market Value, the Board of


                                       8
<PAGE>


Directors  of the  Company  may  take  into  account  the cost of  removing  the
applicable  equipment  or other  property  and assets  from  their  then-current
locations and transporting such equipment or other property and assets, PROVIDED
that such cost may not exceed  10.0% of the Fair Market  Value  (without  giving
effect to such costs).

         "FIRST LIEN CREDIT FACILITY" means one or more debt facilities or other
agreements  with banks or other  lenders  providing  for up to $10.0  million in
aggregate  principal amount  outstanding at any time (including,  in the case of
any such indebtedness issued at a discount, at maturity of such indebtedness) or
revolving  credit or other  borrowings  or terms  loans of the  Company  and its
Subsidiaries,  including any related notes,  guarantees,  collateral  documents,
instruments and agreements executed in connection therewith,  and, in each case,
as amended, restated,  modified,  renewed,  refunded,  replaced (whether upon or
after  termination  or otherwise) or refinanced  (including by means of sales of
debt  securities  to  institutional  investors) in whole or in part from time to
time.

         "FIRST LIEN OBLIGATIONS" means (i) any and all amounts payable under or
in respect of a First Lien Credit  Facility  incurred  pursuant to clause (1) of
Section 4.09,  as amended from time to time,  including  principal,  premium (if
any),  interest  (including  interest  accruing  on or after  the  filing of any
petition  in  bankruptcy  or for  reorganization  relating to the Company or any
Guarantor  whether or not a claim for  post-filing  interest  is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other  amounts  payable  thereunder  or in respect  thereof,  (ii) all other
obligations  (not  constituting  Indebtedness)  of the Company or any  Guarantor
under the such First Lien Credit Facility and (iii) all other obligations of the
Company or any Guarantor in respect of Hedging Obligations under such First Lien
Credit Facility.

         "FIXED  CHARGE  COVERAGE  RATIO"  means with  respect to any  specified
Person for any period,  the ratio of the  Consolidated  Cash Flow of such Person
for such  period to the Fixed  Charges of such  Person for such  period.  In the
event that the specified  Person or any of its Restricted  Subsidiaries  incurs,
assumes,  guarantees,  repays,  repurchases,   redeems,  defeases  or  otherwise
discharges any Indebtedness  (other than ordinary working capital borrowings) or
issues, repurchases or redeems Preferred Stock subsequent to the commencement of
the period for which the Fixed Charge Coverage Ratio is being  calculated and on
or prior to the date on which the event for which the  calculation  of the Fixed
Charge  Coverage  Ratio is made (as used in this  definition,  the  "Calculation
Date"), then the Fixed Charge Coverage Ratio will be calculated giving pro forma
effect  to  such  incurrence,   assumption,  Guarantee,  repayment,  repurchase,
redemption,  defeasance or other  discharge of  Indebtedness,  or such issuance,
repurchase  or  redemption  of  Preferred  Stock,  and the  use of the  proceeds
therefrom,  as if the same  had  occurred  at the  beginning  of the  applicable
four-quarter reference period.

         In addition,  for  purposes of  calculating  the Fixed Charge  Coverage
Ratio:

         (1)      acquisitions  that have been made by the  specified  Person or
                  any of its Restricted Subsidiaries,  including through mergers
                  or  consolidations,  or any  Person  or any of its  Restricted
                  Subsidiaries  acquired by the  specified  Person or any of its
                  Restricted  Subsidiaries,  and including any related financing
                  transactions   and   including   increases   in  ownership  of
                  Restricted  Subsidiaries,  during the  four-quarter  reference
                  period or


                                       9
<PAGE>


                  subsequent  to such  reference  period  and on or prior to the
                  Calculation Date will be given pro forma effect (in accordance
                  with  Regulation S-X under the Securities  Act) as if they had
                  occurred  on  the  first  day of  the  four-quarter  reference
                  period;

         (2)      the  Consolidated   Cash  Flow  attributable  to  discontinued
                  operations,   as  determined  in  accordance  with  GAAP,  and
                  operations or businesses  (and  ownership  interests  therein)
                  disposed of prior to the Calculation Date, will be excluded;

         (3)      the Fixed Charges attributable to discontinued operations,  as
                  determined  in  accordance   with  GAAP,   and  operations  or
                  businesses (and ownership interests therein) disposed of prior
                  to the  Calculation  Date,  will be excluded,  but only to the
                  extent that the obligations  giving rise to such Fixed Charges
                  will not be obligations of the specified  Person or any of its
                  Restricted Subsidiaries following the Calculation Date;

         (4)      any Person that is a Restricted  Subsidiary on the Calculation
                  Date will be deemed to have been a  Restricted  Subsidiary  at
                  all times during such four-quarter period;

         (5)      any  Person  that  is  not  a  Restricted  Subsidiary  on  the
                  Calculation  Date will be deemed not to have been a Restricted
                  Subsidiary at any time during such four-quarter period; and

         (6)      if any  Indebtedness  bears a floating  rate of interest,  the
                  interest expense on such Indebtedness will be calculated as if
                  the  rate in  effect  on the  Calculation  Date  had  been the
                  applicable rate for the entire period (taking into account any
                  Hedging  Obligation  applicable to such  Indebtedness  if such
                  Hedging  Obligation has a remaining term as at the Calculation
                  Date in excess of 12 months).

         "FIXED  CHARGES"  means,  with respect to any specified  Person for any
period, the sum, without duplication, of:

         (1)      the  consolidated  interest  expense  of such  Person  and its
                  Restricted  Subsidiaries  for  such  period,  whether  paid or
                  accrued, but excluding amortization of debt issuance costs and
                  original  issue  discount,  non-cash  interest  payments  (but
                  including,  without limitation,  the interest component of any
                  deferred payment  obligations,  the interest  component of all
                  payments    associated   with   Capital   Lease   Obligations,
                  commissions,  discounts and other fees and charges incurred in
                  respect   of  letter  of   credit   or   bankers'   acceptance
                  financings),  and net of the  effect of all  payments  made or
                  received  pursuant  to  Hedging   Obligations  in  respect  of
                  interest rates; plus

         (2)      the  consolidated  interest  expense  of such  Person  and its
                  Restricted  Subsidiaries  that  was  capitalized  during  such
                  period; plus

         (3)      any  interest  on  Indebtedness  of  another  Person  that  is
                  guaranteed   by  such   Person   or  one  of  its   Restricted
                  Subsidiaries  or secured by a Lien on  property  and assets of
                  such Person or one of its Restricted Subsidiaries,  whether or
                  not such Guarantee or Lien is called upon; plus


                                       10
<PAGE>


         (4)      the product of (a) all dividends,  whether paid or accrued and
                  whether or not in cash,  on any series of  Preferred  Stock of
                  such Person or any of its Restricted Subsidiaries,  other than
                  dividends  on  Equity  Interests   payable  solely  in  Equity
                  Interests of the Company (other than Disqualified Stock) or to
                  the Company or a Restricted  Subsidiary of the Company,  times
                  (b) a  fraction,  the  numerator  of  which  is  one  and  the
                  denominator  of which is one minus the then  current  combined
                  federal,  state and local  statutory  tax rate of such Person,
                  expressed  as  a  decimal,  in  each  case,  determined  on  a
                  consolidated basis in accordance with GAAP; plus

         (5)      cash income taxes paid or payable; plus

         (6)      scheduled amortization of Indebtedness; plus

         (7)      25%  of  capital  expenditures  made  by  the  Company  or its
                  Subsidiaries.

         "GAAP" means generally accepted accounting  principles set forth in the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other entity as have been  approved by a significant  segment of the  accounting
profession, which are in effect on the date of this Indenture.

         "GLOBAL  NOTES"  means,  individually  and  collectively,  each  of the
Restricted Global Notes and the Unrestricted Global Notes,  substantially in the
form of Exhibit A hereto,  issued in accordance  with Section 2.01,  2.06(b)(3),
2.06(b)(4), 2.06(d)(2) or 2.06(f) hereof.

         "GLOBAL NOTE LEGEND" means the legend set forth in Section  2.06(g)(2),
which is required to be placed on all Global Notes issued under this Indenture.

         "GOVERNMENT  SECURITIES"  means direct  obligations  of, or obligations
guaranteed  by, the United  States of  America,  and the  payment  for which the
United States pledges its full faith and credit.

         "GUARANTEE"  means a guarantee  other than by endorsement of negotiable
instruments  for  collection  in the  ordinary  course  of  business,  direct or
indirect,  in any manner including,  without  limitation,  by way of a pledge of
property or assets or through letters of credit or  reimbursement  agreements in
respect  thereof,  of all or any part of any  Indebtedness  (whether  arising by
virtue of partnership  arrangements,  or by agreements to keep-well, to purchase
property,  assets, goods,  securities or services, to take or pay or to maintain
financial statement conditions or otherwise).

         "GUARANTORS"  means all Domestic  Subsidiaries of the Company as of the
date of this  Indenture  and any  Subsidiary of the Company that executes a Note
Guarantee  in  accordance  with the  provisions  of this  Indenture,  and  their
respective  successors  and assigns,  in each case,  until the Note Guarantee of
such  Person  has  been  released  in  accordance  with the  provisions  of this
Indenture.

         "HEDGING  OBLIGATIONS" means, with respect to any specified Person, the
obligations of such Person under:


                                       11
<PAGE>


         (1)      interest rate swap agreements  (whether from fixed to floating
                  or from floating to fixed),  interest rate cap  agreements and
                  interest rate collar agreements;

         (2)      other  agreements or  arrangements  designed  manage  interest
                  rates or interest rate risk; and

         (3)      other  agreements  or  arrangements  designed to protect  such
                  Person  against  fluctuations  in currency  exchange  rates or
                  commodity prices,

in each  case,  entered  into in the  ordinary  course of  business  and not for
speculative purposes.

         "HOLDER" means a Person in whose name a Note is registered.

         "IAI  GLOBAL  NOTE" means a Global  Note  substantially  in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited  with or on behalf of and registered in the name of the Depositary
or its nominee that will be issued in a  denomination  equal to the  outstanding
principal amount of the Notes sold to Institutional Accredited Investors.

         "INDEBTEDNESS"  means,  with  respect  to  any  specified  Person,  any
indebtedness of such Person  (excluding  accrued  expenses and Trade  Payables),
whether or not contingent:

         (1)      in respect of borrowed money;

         (2)      evidenced by bonds,  notes,  debentures or similar instruments
                  or letters of credit (or  reimbursement  agreements in respect
                  thereof);

         (3)      in respect of banker's acceptances;

         (4)      representing Capital Lease Obligations;

         (5)      representing  the balance  deferred and unpaid of the purchase
                  price of any  property  or  services  due more than six months
                  after  such   property  is  acquired  or  such   services  are
                  completed; or

         (6)      representing any Hedging Obligations,

if and to the extent any of the  preceding  items  (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified  Person  prepared  in  accordance  with GAAP.  In  addition,  the term
"Indebtedness"  includes  all  Indebtedness  of others  secured by a Lien on any
asset of the specified  Person  (whether or not such  Indebtedness is assumed by
the specified Person) and, to the extent not otherwise  included,  the Guarantee
by the specified Person of any Indebtedness of any other Person.

         "INDENTURE" means this indenture,  as amended or supplemented from time
to time.

         "INDIRECT  PARTICIPANT" means a Person who holds a beneficial  interest
in a Global Note through a Participant.


                                       12
<PAGE>


         "INITIAL PURCHASER" means Jefferies & Company, Inc.

         "INSTITUTIONAL  ACCREDITED  INVESTOR"  means an institution  that is an
"accredited  investor" as defined in Rule  501(a)(l),  (2), (3) or (7) under the
Securities Act, who are not also QIBs.

         "INDIRECT  PARTICIPANT"  means the period from (and including) the date
of issuance of the Notes to but excluding the first Interest  Payment Date after
issuance,  and each successive six-month period from and including each Interest
Payment Date to but excluding the following Interest Payment Date.

         "INTERCREDITOR AGREEMENT" means an agreement, substantially in the form
attached  hereto as Exhibit H, setting forth the relative rights of the Holders,
on the one hand, and the Credit Agent and one or more Lenders under a First Lien
Credit  Facility,  on the other hand, with respect to the security  interests in
the Collateral,  which agreement shall provide,  among other things, that, prior
to the Discharge of First Lien Obligations,  and subject to certain  exceptions,
(i) the Credit  Agent will  determine  the time and method by which the security
interests  in the  Collateral  will be  enforced,  (ii) the Trustee  will not be
permitted to enforce the security  interests securing the Notes even if an Event
of Default has  occurred  and the Notes have been  accelerated  except (x) in an
insolvency or liquidation proceeding,  as necessary to file a claim or statement
of interest with respect to the Notes or (y) as necessary to take any action not
adverse to the  first-priority  liens in order to preserve or protect its rights
in the second-priority  liens, (iii) no cash proceeds of the Collateral shall be
paid to the Holders.

         "INTEREST  PAYMENT DATE" means June 15 and December 15 of each year, or
if any such day is not a Business Day, the next succeeding Business Day.

         "INVESTMENTS" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including  Affiliates) in the forms
of loans  (including  Guarantees  or other  obligations),  advances  or  capital
contributions (excluding commission, travel and similar advances to officers and
employees  made  in  the  ordinary  course  of  business),  purchases  or  other
acquisitions  for  consideration  of  Indebtedness,  Equity  Interests  or other
securities,  together  with  all  items  that  are or  would  be  classified  as
investments on a balance sheet prepared in accordance  with GAAP. If the Company
or any  Subsidiary  of the  Company  sells or  otherwise  disposes of any Equity
Interests of any direct or indirect  Subsidiary of the Company such that,  after
giving  effect  to any such  sale or  disposition,  such  Person  is no longer a
Subsidiary of the Company, the Company will be deemed to have made an Investment
on the date of any such sale or  disposition  equal to the Fair Market  Value of
the Company's  Investments in such  Subsidiary that were not sold or disposed of
in an amount  determined  as provided  in the final  paragraph  of Section  4.07
hereof.  The  acquisition  by the Company or any  Subsidiary of the Company of a
Person  that  holds an  Investment  in a third  Person  will be  deemed to be an
Investment  by the Company or such  Subsidiary in such third Person in an amount
equal to the Fair Market Value of the Investments held by the acquired Person in
such third Person in an amount  determined as provided in the final paragraph of
Section 4.07 hereof. Except as otherwise provided in this Indenture,  the amount
of an  Investment  will be  determined  at the time the  Investment  is made and
without giving effect to subsequent changes in value.

         "ISSUE DATE" means December 29, 2005.


                                       13
<PAGE>


         "KENTUCKY CORE  PROPERTIES"  means the Premises  represented by (i) the
Begley  Tracts -- coal  mineral and some surface  rights  leased by the Company,
which includes the sites of Viall Preparation  Plant and load-out tipple,  mines
#1,#2, #3, & #4, and future mine #5 (9,300 acres of reserves),  (ii) the Charles
Short heirs Tract -- coal  mineral  rights  leased by the Company  (120  acres),
(iii) the Rachel Helton heirs Tract -- coal mineral rights leased by the Company
(204 acres),  and (iv) the NRP (WPP) Tracts -- coal mineral rights leased by the
Company (279 acres).

         "LETTER OF TRANSMITTAL"  means the letter of transmittal to be prepared
by the Company  and sent to all Holders of the Notes for use by such  Holders in
connection with the Exchange Offer.

         "LIEN" means,  with respect to any asset, any Mortgage,  lien,  pledge,
charge,  security  interest or encumbrance of any kind in respect of such asset,
whether or not filed,  recorded or otherwise  perfected  under  applicable  law,
including any conditional sale or other title retention agreement,  any lease in
the nature  thereof,  any option or other  agreement  to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

         "LIQUIDATED  DAMAGES"  means the  liquidated  damages to be paid by the
Company and the Guarantors in the event of a Registration Default (as defined in
the Registration Rights Agreement).

         "MAJORITY  NOTEHOLDERS"  means Holders  constituting  a majority of the
then outstanding  aggregate principal amount of Notes,  excluding any Notes held
by the Company or any of its Subsidiaries or Affiliates.

         "MORTGAGE"  means a mortgage,  deed of trust,  assignment of leases and
rents,  leasehold  mortgage or other  security  document  granting a Lien on any
parcel of real property to secure the Obligations under the Notes.

         "MOODY'S" means Moody's Investors Service, Inc.

         "NET INCOME"  means,  with  respect to any  specified  Person,  the net
income (loss) of such Person,  determined in accordance with GAAP and before any
reduction in respect of Preferred Stock dividends, excluding, however:

         (1)      any gain (but not loss),  together with any related  provision
                  for taxes on such gain (but not loss),  realized in connection
                  with:  (a)  any  Asset  Sale;  or (b) the  disposition  of any
                  securities   by  such   Person   or  any  of  its   Restricted
                  Subsidiaries or the extinguishment of any Indebtedness of such
                  Person or any of its Restricted Subsidiaries; and

         (2)      any  extraordinary  gain  (but not  loss),  together  with any
                  related  provision for taxes on such  extraordinary  gain (but
                  not loss).

         "NET  PROCEEDS"  means the  aggregate  cash  proceeds  received  by the
Company  or any of its  Restricted  Subsidiaries  in  respect  of any Asset Sale
(including,  without  limitation,  any  cash  received  upon  the  sale or other
disposition of any non-cash  consideration  received in any Asset Sale),  net of
the direct costs  relating to such Asset Sale,  including,  without  limitation,
legal,


                                       14
<PAGE>


accounting  and  investment  banking  fees,  and  sales  commissions,   and  any
relocation  expenses  incurred  as a result of the  Asset  Sale,  taxes  paid or
payable as a result of the Asset Sale,  in each case,  after taking into account
any available tax credits or deductions  and any tax sharing  arrangements,  and
amounts  required to be applied to the  repayment  of  Indebtedness,  other than
Indebtedness under a First Lien Credit Facility,  secured by a Lien on the asset
or assets  that  were the  subject  of such  Asset  Sale,  and any  reserve  for
adjustment in respect of the sale price of such asset or assets  established  in
accordance with GAAP.

         "NON-RECOURSE DEBT" means Indebtedness:

         (1)      as to which  neither the  Company,  nor any of its  Restricted
                  Subsidiaries   (a)  provides   credit   support  of  any  kind
                  (including any undertaking, agreement or instrument that would
                  constitute Indebtedness), (b) is directly or indirectly liable
                  as a guarantor or otherwise, or (c) constitutes the lender;

         (2)      no default  with respect to which  (including  any rights that
                  the holders of the  Indebtedness  may have to take enforcement
                  action against an Unrestricted  Subsidiary)  would permit upon
                  notice,  lapse  of  time  or  both  any  holder  of any  other
                  Indebtedness   of  the  Company  or  any  of  its   Restricted
                  Subsidiaries  to declare a default on such other  Indebtedness
                  or cause the payment the  Indebtedness  to be  accelerated  or
                  payable prior to its Stated Maturity; and

         (3)      as to which the lenders  have been  notified  in writing  that
                  they will not have any  recourse  to the stock or  property or
                  assets of the Company or any of its Restricted Subsidiaries.

         "NON-US. PERSON" means a Person who is not a U.S. Person.

         "NOTE GUARANTEE" means the Guarantee by each Guarantor of the Company's
obligations  under  this  Indenture  and the  Notes,  executed  pursuant  to the
provisions of this Indenture.

         "NOTES"  has  the  meaning  assigned  to it in  the  preamble  to  this
Indenture.

         "OBLIGATIONS"   means  all  principal,   interest,   penalties,   fees,
indemnifications,  reimbursements,  damages and other liabilities  payable under
the documentation governing any Indebtedness.

         "OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer,  the President,  the Chief Operating  Officer,  the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary,  any Assistant Secretary,  any Senior Vice President, or any Vice
President of such Person.

         "OFFICER'S  CERTIFICATE"  means a  certificate  signed on behalf of the
Company by an Officer of the Company, who must be the Chairman of the Board, the
President,  the Chief  Executive  Officer,  the  Chief  Financial  Officer,  the
Treasurer or the principal accounting officer or a Senior Vice President or Vice
President of the Company, that meets the requirements of Section 13.05 hereof.


                                       15
<PAGE>


         "OPINION  OF  COUNSEL"  means an  opinion  from  legal  counsel  who is
reasonably  acceptable to the Trustee,  that meets the  requirements  of Section
13.05 hereof.  The counsel may be an employee of or counsel to the Company,  any
Subsidiary of the Company or the Trustee.

         "PARTICIPANT"  means,  with  respect to the  Depositary,  Euroclear  or
Clearstream,  a Person  who has an account  with the  Depositary,  Euroclear  or
Clearstream, respectively (and, with respect to DTC, shall include Euroclear and
Clearstream).

         "PERMITTED BUSINESS" means businesses engaged in by the Company and its
Subsidiaries  on the date of this Indenture and  businesses  that are reasonably
related,  complementary or incidental thereto and reasonable  extensions thereof
including,  without  limitation,  the  acquisition  and  operation  of  railroad
facilities  primarily to support other  businesses  engaged in by the Company on
the date of this Indenture.

         "PERMITTED  HOLDERS"  means (i) Jon E. Nix,  (ii) the spouse,  parents,
siblings,  descendants  (including children or grandchildren by adoption) of Jon
E. Nix or such spouse or  siblings,  (iii) in the event of the  incompetence  or
death of any of the Persons  referred to in clauses (i) or (ii),  such  Person's
estate, executor, administrator,  committee or other personal representative, in
each case who at any  particular  date shall  "beneficially  own" (as defined in
Rules 13d-s and 13d-5 of the Exchange Act) or have the right to acquire directly
or  indirectly,  Voting  Stock of the  Company,  (iv) any trusts or  foundations
created for the sole  benefit of any of the  Persons  referred to in clauses (i)
through (iii) above or any rust or  foundation  for the benefit of such trust or
foundation,  (v) any Person of which one or more of the  Persons  referred to in
clauses (i) through  (iv) above  "beneficially  owns" (as defined in Rules 13d-3
and 13-d5 of the Exchange  Act) on a fully diluted basis all of the Voting Stock
of such Person or is the sole trustee or general  partner,  or otherwise has the
sole  power to  manage  the  business  and  affairs  of such  Person or (vi) any
Affiliate  of any of the  Persons  referred to in clauses (i) through (v) above,
provided  that in the  cause  of this  clause  (vi),  Jon E. Nix  shall,  in the
aggregate with any such Affiliate, continue to "beneficially own" (as defined in
Rules 13d-3 and 13d-5 of the Exchange  Act) on a fully diluted basis at leas the
same  percentage  of the Voting  Stock of the Company as are owned by him on the
date of this Indenture.

         "PERMITTED INVESTMENTS" means

         (1)      any Investment in the Company or in a Restricted Subsidiary of
                  the Company that is a Guarantor;

         (2)      any Investment in Cash Equivalents;

         (3)      any Investment by the Company or any Restricted  Subsidiary of
                  the Company in a Person if as a result of such Investment:

                  (A)      such Person  becomes a Restricted  Subsidiary  of the
                           Company and a Guarantor; or

                  (B)      such Person is merged,  consolidated  or  amalgamated
                           with or into,  or transfers or conveys  substantially
                           all of its property and assets


                                       16
<PAGE>


                           to,  or  is  liquidated   into,   the  Company  or  a
                           Restricted  Subsidiary  of  the  Company  that  is  a
                           Guarantor;

         (4)      any  Investment  made as a result of the  receipt of  non-cash
                  consideration from an Asset Sale that was made pursuant to and
                  in compliance with the Section 4.10 hereto;

         (5)      any  Investments  received in  compromise or resolution of (A)
                  obligations of trade creditors or customers that were incurred
                  in the  ordinary  course of  business of the Company or any of
                  its Restricted Subsidiaries, including pursuant to any plan of
                  reorganization  or similar  arrangement upon the bankruptcy or
                  insolvency  of  any  trade   creditor  or  customer;   or  (B)
                  litigation, arbitration or other disputes with Persons who are
                  not Affiliates;

         (6)      Investments represented by Hedging Obligations;

         (7)      loans or advances to employees made in the ordinary  course of
                  business of the Company or any  Restricted  Subsidiary  of the
                  Company in an  aggregate  principal  amount not to exceed $1.0
                  million at any one time outstanding;

         (8)      certificates  of deposit  and  similar  instruments  of Sevier
                  County  Bank held on the date of this  Indenture,  or acquired
                  after the date of this  Indenture  with the net proceeds  from
                  the sale of the Notes in an amount not to exceed $7.8 million,
                  and  used,  in  each  case,  by  the  Company  or  any  of its
                  Subsidiaries  for the sole  purpose of enabling the Company or
                  any of its  Subsidiaries  to  purchase  or  post  reclamation,
                  surety,  or similar  bonds,  and any  extensions  or  renewals
                  thereof,  provided  that  the  aggregate  amount  of all  such
                  certificates  of  deposit  or  similar  instruments  shall not
                  exceed the aggregate  amount  outstanding  on the date of this
                  Indenture or so acquired  with the net proceeds  from the sale
                  of the Notes;

         (9)      certificates   of  deposit   and  similar   instruments   with
                  maturities  of  thirty-six  months  or less  from  the date of
                  acquisition  with  any  lender  party to a First  Lien  Credit
                  Facility or with any domestic  commercial  bank having capital
                  and  surplus in excess of $500.0  million  and a Thomson  Bank
                  Watch Rating of "B" or better which are used, in each case, by
                  the Company or any of its Subsidiaries for the sole purpose of
                  enabling the Company or any of its Subsidiaries to purchase or
                  post reclamation, surety, or similar bonds, and any extensions
                  or renewals thereof; and

         (10)     other Investments in any Person other than an Affiliate of the
                  Company having an aggregate Fair Market Value (measured on the
                  date each such  Investment  was made and without giving effect
                  to subsequent changes in value),  when taken together with all
                  other  Investments  made pursuant to this clause (10) that are
                  at the time outstanding, not to exceed $2.5 million.

         "PERMITTED LIENS" means:

         (1)      Liens on property  or assets of the  Company or any  Guarantor
                  securing Indebtedness and other Obligations under a First Lien
                  Credit  Facility  that was incurred


                                       17
<PAGE>


                  pursuant to clause (1) of the  definition  of  Permitted  Debt
                  and/or securing Hedging Obligations related thereto;

         (2)      Liens in favor of the Company or the Guarantors;

         (3)      Liens on property  or assets of a Person  existing at the time
                  such  Person (x) is merged with or into or  consolidated  with
                  the Company or any  Subsidiary of the Company or (y) becomes a
                  Subsidiary  of the  Company;  PROVIDED  that such Liens do not
                  extend to any  property  or  assets  other  than  those of the
                  Person that is merged into or consolidated with the Company or
                  the Subsidiary or which becomes a Subsidiary of the Company;

         (4)      Liens  on  property  or  assets  (including   Capital  Stock),
                  existing  at the time of  acquisition  of the  property by the
                  Company or any  Subsidiary  of the Company;  PROVIDED that (i)
                  such Liens were in existence prior to, such  acquisition,  and
                  not incurred in  contemplation  of, such  acquisition and (ii)
                  the Fair  Market  Value of such  property  or assets  that are
                  subject to such Liens does not to exceed  $5.0  million in the
                  aggregate.

         (5)      Liens to secure the  performance  of  tenders,  bids,  leases,
                  statutory  or  regulatory  obligations,  reclamation,  surety,
                  appeal or similar bonds, government contracts, performance and
                  return of money  bonds or other  obligations  of a like nature
                  incurred in the ordinary course of business;

         (6)      Liens  to  secure   Indebtedness   (including   Capital  Lease
                  Obligations)  permitted by clause (4) of the second  paragraph
                  of Section 4.09 covering only the property or assets  acquired
                  with or financed by such Indebtedness;

         (7)      Liens existing on the date of this  Indenture  (other than any
                  Liens  (i) the  Indebtedness  with  respect  to which  will be
                  repaid  with the net  proceeds  from  the  sale of the  Notes,
                  including Liens pursuant to the Existing Credit Agreement,  or
                  (ii) expressly required to be waived, released or subordinated
                  pursuant  to  the  Security  Documents)  which  Liens  do  not
                  materially  affect the Fair  Market  Value of the  property or
                  assets  that are  subject to such Liens and do not  materially
                  interfere with the intended use to be made of such property or
                  assets  by the  Company  or any  of its  Subsidiaries,  in the
                  reasonable determination of the Majority Noteholders;

         (8)      Liens for taxes,  assessments or other governmental charges or
                  claims that are not yet delinquent or that are being contested
                  in good faith by appropriate  proceedings  promptly instituted
                  and diligently  concluded;  PROVIDED that any reserve or other
                  appropriate  provision as is required in conformity  with GAAP
                  has been made therefor;

         (9)      Liens  imposed by statute,  regulation  or common law, such as
                  carriers', warehousemen's, landlord's, mechanics', suppliers',
                  materialmens' and repairmens' Liens, in each case, incurred in
                  the ordinary course of business;

         (10)     survey exceptions,  easements or reservations of, or rights of
                  others for, licenses,  rights-of-way,  sewers, electric lines,
                  telegraph and telephone lines and other similar  purposes,  or
                  zoning or other  restrictions  as to the use of real  property
                  that were


                                       18
<PAGE>


                  not incurred in connection with  Indebtedness  and that do not
                  in the aggregate materially adversely affect the value of said
                  real property or materially impair its use in the operation of
                  the business of such Person;

         (11)     Liens  created for the benefit of (or to secure) the Notes (or
                  the Note Guarantees); and

         (12)     Liens  to  secure  any  Permitted   Refinancing   Indebtedness
                  permitted  to be  incurred  under  this  Indenture;  PROVIDED,
                  HOWEVER, that:

                  (A)      the new Lien  shall be  limited to all or part of the
                           same  property  and assets that secured or, under the
                           written  agreements  pursuant  to which the  original
                           Lien  arose,  could  secure the  original  Lien (plus
                           improvements  and  accessions  to, such  property and
                           assets  thereof  or  proceeds  or   distributions  in
                           respect thereof);

                  (B)      the  Indebtedness  secured  by the  new  Lien  is not
                           increased  to any amount  greater than the sum of (x)
                           the  outstanding  principal  amount,  or, if greater,
                           committed  amount,   of  the  Permitted   Refinancing
                           Indebtedness  and (y) an amount  necessary to pay any
                           fees and  expenses,  including  premiums,  related to
                           such renewal,  refunding,  refinancing,  replacement,
                           defeasance or discharge;

         (13)     Liens   incurred  in  the  ordinary   course  of  business  in
                  connection with workers' compensation,  unemployment insurance
                  and other types of social security;

         (14)     Liens  arising out of judgments or awards not  resulting in an
                  Event of  Default  and in  respect  to which the  Company or a
                  Restricted  Subsidiary  shall in good faith be  prosecuting an
                  appeal or proceedings for review and in respect of which there
                  shall be secured a subsisting  stay of execution  pending such
                  appeal or proceedings;  provided, that the aggregate amount of
                  all such judgments or awards (and any cash and the Fair Market
                  Value  of any  property  encumbered  by such  Liens)  does not
                  exceed $5.0 million at any time outstanding;

         (15)     Liens  securing  reimbursement  obligations  with  respect  to
                  letters of credit that  encumber  documents or other  property
                  relating  to such  letters  of credit  (and the  products  and
                  proceeds thereof;

         (16)     Liens  encumbering   customary  initial  deposits  and  margin
                  deposits,  and other Liens that are within general  parameters
                  customary in the industry and incurred in the ordinary  course
                  of business, in each case relating to Hedging Obligations with
                  respect to coal inventory and interest rates;

         (17)     Liens  arising  out  of  conditional  sale,  title  retention,
                  consignment or similar arrangements for the sale of goods; and

         (18)     Liens on Capital Stock of any Unrestricted Subsidiary.


                                       19
<PAGE>


         "PERMITTED  REFINANCING  INDEBTEDNESS"  means any  Indebtedness  of the
Company or any of its  Restricted  Subsidiaries  incurred  or issued in exchange
for, or the net proceeds of which are used to renew, refund, refinance, replace,
defease or discharge other  Indebtedness of the Company or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); PROVIDED that:

         (1)      the principal  amount (or accreted  value,  if  applicable) of
                  such Permitted  Refinancing  Indebtedness  does not exceed the
                  principal  amount (or accreted  value,  if  applicable) of the
                  Indebtedness renewed, refunded, refinanced, replaced, defeased
                  or discharged  (plus all accrued  interest on the Indebtedness
                  and the amount of all fees and  expenses,  including  premiums
                  incurred in connection therewith);

         (2)      such Permitted  Refinancing  Indebtedness has a final maturity
                  date later than the final maturity date of, and has a Weighted
                  Average Life to Maturity equal to or greater than the Weighted
                  Average Life to Maturity of, the  Indebtedness  being renewed,
                  refunded, refinanced, replaced, defeased or discharged;

         (3)      if  the  Indebtedness  being  renewed,   refunded  refinanced,
                  replaced,  defeased or discharged is  subordinated in right of
                  payment to the Notes, such Permitted Refinancing  Indebtedness
                  has a final  maturity date later than the final  maturity date
                  of, and is  subordinated  in right of payment to, the Notes on
                  terms at least as  favorable  to the Holders of Notes as those
                  contained  in the  documentation  governing  the  Indebtedness
                  being renewed,  refunded,  refinanced,  replaced,  defeased or
                  discharged; and

         (4)      such  Indebtedness is incurred either by the Company or by the
                  Restricted  Subsidiary who is the obligor on the  Indebtedness
                  being renewed,  refunded,  refinanced,  replaced,  defeased or
                  discharged.

         "PERSON" means any individual, corporation, partnership, joint venture,
association,  joint-stock company, trust, unincorporated  organization,  limited
liability company or government or other entity.

         "PREFERRED STOCK" as applied to the Capital Stock of any Person,  means
Capital Stock of any class or classes (however  designated) that is preferred as
to the payment of  dividends,  or as to the  distribution  of property or assets
upon any voluntary or  involuntary  liquidation  or  dissolution of such Person,
over shares of Capital Stock of any other class of such Person.

         "PRIVATE  PLACEMENT  LEGEND"  means the  legend  set  forth in  Section
2.06(g)(l)  to be placed on all Notes issued under this  Indenture  except where
otherwise permitted by the provisions of this Indenture.

         "PROSPECTUS" means the prospectus included in a Registration Statement,
as  amended  or  supplemented  by any  prospectus  supplement  and by all  other
amendments  thereto,  including  post-effective  amendments,  and  all  material
incorporated by reference into such Prospectus.

         "QIB" means a "qualified institutional buyer" as defined in Rule 144A.


                                       20
<PAGE>


         "REGISTRATION   RIGHTS   AGREEMENT"  means  the   Registration   Rights
Agreement,  dated as of the  date of this  Indenture,  among  the  Company,  the
Guarantors and the Initial Purchaser,  relating to registration of the Notes and
the Note Guarantees  under the Securities Act, as such agreement may be amended,
modified or supplemented from time to time.

         "REGISTRATION  STATEMENT"  means  any  registration  statement  of  the
Company  relating to (a) an offering of Exchange  Notes  pursuant to an Exchange
Offer or (b) the  registration  for  resale of  Transfer  Restricted  Securities
pursuant to the Shelf  Registration  Statement,  which is filed  pursuant to the
provisions of the Registration  Rights  Agreement,  in each case,  including the
Prospectus  included therein,  all amendments and supplements thereto (including
post-effective  amendments)  and  all  exhibits  and  material  incorporated  by
reference therein.

         "REGULATION S" means Regulation S promulgated under the Securities Act.

         "REGULATION  S GLOBAL NOTE" means a Regulation S Temporary  Global Note
or Regulation S Permanent Global Note, as appropriate.

         "REGULATION S PERMANENT  GLOBAL NOTE" means a permanent  Global Note in
the form of Exhibit A hereto  bearing  the Global  Note  Legend and the  Private
Placement  Legend and deposited  with or on behalf of and registered in the name
of  the  Depositary  or its  nominee,  issued  in a  denomination  equal  to the
outstanding  principal  amount of the  Regulation  S Temporary  Global Note upon
expiration of the Restricted Period.

         "REGULATION S TEMPORARY  GLOBAL NOTE" means a temporary  Global Note in
the form of  Exhibit A hereto  bearing  the  Private  Placement  Legend  and the
Regulation S Temporary Global Note Legend and deposited with or on behalf of and
registered  in  the  name  of  the  Depositary  or  its  nominee,  issued  in  a
denomination  equal to the outstanding  principal  amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.

         "REGULATION S TEMPORARY  GLOBAL NOTE LEGEND" means the legend set forth
in  Section  2.06(g)(3),  which is  required  to be placed on all  Regulation  S
Temporary Global Notes issued under this Indenture.

         "RESPONSIBLE OFFICER" when used with respect to the Trustee,  means any
officer within the Corporate Trust Office of the Trustee (or any successor group
of the  Trustee)  or any other  officer of the  Trustee  customarily  performing
functions similar to those performed by any of the above designated officers and
also means,  with  respect to a particular  corporate  trust  matter,  any other
officer  to whom  such  matter  is  referred  because  of his  knowledge  of and
familiarity with the particular subject.

         "RESTRICTED  DEFINITIVE  NOTE"  means a  Definitive  Note  bearing  the
Private Placement Legend.

         "RESTRICTED  GLOBAL  NOTE"  means a Global  Note  bearing  the  Private
Placement Legend.

         "RESTRICTED  INVESTMENT"  means an  Investment  other than a  Permitted
Investment.

         "RESTRICTED  PERIOD" means the 40-day  restricted  period as defined in
Regulation S.


                                       21
<PAGE>


         "RESTRICTED  SUBSIDIARY"  of a  Person  means  any  Subsidiary  of  the
referent Person that is not an Unrestricted Subsidiary.

         "RULE 144" means Rule 144 promulgated under the Securities Act.

         "RULE 144A" means Rule 144A promulgated under the Securities Act.

         "RULE 903" means Rule 903 promulgated under the Securities Act.

         "RULE 904" means Rule 904 promulgated under the Securities Act.

         "S&P" means Standard & Poor's Ratings Group.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SECURITY  AGREEMENT"  means the  Security  Agreement,  dated as of the
Issue Date,  made by the Company and the  Guarantors in favor of the  Collateral
Agent,  as  amended or  supplemented  from time to time in  accordance  with its
terms.

         "SECURITY  DOCUMENTS" means the Security  Agreement,  the Intercreditor
Agreement and such other security agreements, pledges, mortgages, deeds of trust
and other  instruments  or documents  pursuant to which a Lien is granted by the
Company  or any  Guarantor  to secure any  Obligations  under the Notes and this
Indenture,  or under  which  rights or remedies  with  respect to such Liens are
governed, as such agreements may be amended,  modified or supplemented from time
to time in accordance  with the terms of the Indenture,  the Notes, a First Lien
Credit Facility and the Intercreditor Agreement.

         "SHELF REGISTRATION  STATEMENT" means the Shelf Registration  Statement
as defined in the Registration Rights Agreement.

         "SIGNIFICANT   SUBSIDIARY"   means  any  Subsidiary  that  would  be  a
"significant  subsidiary" as defined in Article 1, Rule 1-02 of Regulation  S-X,
promulgated  pursuant to the Securities  Act, as such Regulation is in effect on
the date hereof.

         "STATED MATURITY" means, with respect to any installment of interest or
principal  on any  series  of  Indebtedness,  the date on which the  payment  of
interest or principal  was scheduled to be paid in the  documentation  governing
such  Indebtedness  as of the date of this  Indenture,  and will not include any
contingent  obligations  to repay,  redeem or  repurchase  any such  interest or
principal prior to the date originally scheduled for the payment thereof.

         "SUBSIDIARY" means, with respect to any specified Person:

         (1)      any corporation, association or other business entity of which
                  more than 50% of the total  voting  power of shares of Capital
                  Stock  entitled  (without  regard  to  the  occurrence  of any
                  contingency and after giving effect to any voting agreement or
                  stockholders'  agreement  that  effectively  transfers  voting
                  power)  to vote in the  election  of  directors,  managers  or
                  trustees of the  corporation,  association  or other  business
                  entity is


                                       22
<PAGE>


                  at the time owned or controlled,  directly or  indirectly,  by
                  that Person or one or more of the other  Subsidiaries  of that
                  Person (or a combination thereof); and

         (2)      any  partnership  (a) the sole general partner or the managing
                  general  partner of which is such  Person or a  Subsidiary  of
                  such Person or (b) the only general partners of which are that
                  Person  or one or more  Subsidiaries  of that  Person  (or any
                  combination thereof).

         "SUBSIDIARY  GUARANTEE"  means,  the Guarantee by each Guarantor of the
Company's  payment  obligations  under this  Indenture  and the Notes,  executed
pursuant to the terms of this Indenture.

         "SUPERMAJORITY  NOTEHOLDERS" means holders of Notes constituting 66 2/3
% of the then outstanding  aggregate  principal  amount of Notes,  excluding any
Notes held by National Coal or any of its Subsidiaries or Affiliates.

         "TENNESSEE CORE PROPERTIES"  means the Premises  represented by (i) the
New River Tract -- coal mineral  rights owned by the Company  (65,000 acres with
reserves of 17.1  million  tons) and certain  surface  rights  where the Baldwin
Preparation Plant and load-out facilities are located, (ii) the Ketchen Tract --
coal mineral and surface rights leased by the Company (7,000 acres with reserves
of 4.5 million  tons),  (iii) the TVA Tract -- coal mineral rights leased by the
Company (4,400 acres with reserves of 3.4 million tons), (iv) the Anderson Tract
-- surface  leased by the Company  for Smoky  Junction  Preparation  Plant (11.6
acres),  and (v) the Turley Tract -- surface rights owned by the Company for the
Turley load-out facilities (265 acres).

         "TIA"  means  the  Trust  Indenture  Act  of  1939  (15  U.S.C.  ss.ss.
77aaa-77bbbb)  as in effect on the date on which  this  Indenture  is  qualified
under the TIA.

         "TRADE  PAYABLES"  means,  with  respect to any  Person,  any  accounts
payable or any indebtedness or monetary  obligation to trade creditors  created,
assumed or Guaranteed by such Person arising in the ordinary  course of business
in connection with the acquisition of goods or services.

         "TRANSFER   RESTRICTED   SECURITIES"  means  the  Transfer   Restricted
Securities as defined in the Registration Rights Agreement.

         "TRUSTEE"  means  the  party  named  as  such in the  preamble  to this
Indenture  until a  successor  replaces  it in  accordance  with the  applicable
provisions  of  this  Indenture  and  thereafter  means  the  successor  serving
hereunder.

         "UNRESTRICTED  GLOBAL NOTE" means a permanent global Note substantially
in the form of Exhibit A attached  hereto  that bears the Global Note Legend and
that has the  "Schedule of  Exchanges of Interests in the Global Note"  attached
thereto,  and that is deposited  with or on behalf of and registered in the name
of the  Depositary,  representing a series of Notes that do not bear the Private
Placement Legend.

         "UNRESTRICTED  DEFINITIVE NOTE" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.


                                       23
<PAGE>


         "UNRESTRICTED  SUBSIDIARY"  means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution  of the  Board  of  Directors,  but  only  to the  extent  that  such
Subsidiary:

         (1)      has no Indebtedness other than Non-Recourse Debt;

         (2)      except  as  permitted  by  Section  4.11 is not  party  to any
                  agreement,  contract,  arrangement or  understanding  with the
                  Company or any Restricted Subsidiary of the Company unless the
                  terms  of  any  such  agreement,   contract,   arrangement  or
                  understanding  are no less  favorable  to the  Company or such
                  Restricted Subsidiary than those that might be obtained at the
                  time from Persons who are not Affiliates of the Company;

         (3)      is a Person with respect to which  neither the Company nor any
                  of its  Restricted  Subsidiaries  has any  direct or  indirect
                  obligation (a) to subscribe for additional Equity Interests or
                  (b) to maintain or preserve such Person's financial  condition
                  or to cause such  Person to achieve  any  specified  levels of
                  operating results; and

         (4)      has  not  guaranteed  or  otherwise   directly  or  indirectly
                  provided credit support for any Indebtedness of the Company or
                  any of its Restricted Subsidiaries.

         Any  designation  of a  Subsidiary  of the  Company as an  Unrestricted
Subsidiary  will be evidenced by filing with the Trustee a certified copy of the
resolution of the Board of Directors  giving effect to such  designation  and an
Officer's  Certificate  certifying  that  such  designation  complied  with  the
preceding  conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted  Subsidiary would fail to meet the preceding requirements to be
an  Unrestricted  Subsidiary,  it will  thereafter  cease to be an  Unrestricted
Subsidiary  for  purposes  of  this  Indenture  and  any  Indebtedness  of  such
Subsidiary  will be deemed to be  incurred  by a  Restricted  Subsidiary  of the
Company  as of such  date  and,  if such  Indebtedness  is not  permitted  to be
incurred as of such date under  Section  4.09  hereof,  the  Company  will be in
default of such  covenant.  The Board of Directors may at any time designate any
Unrestricted  Subsidiary  to be a  Restricted  Subsidiary;  PROVIDED  that  such
designation  will be deemed to be an incurrence of  Indebtedness by a Restricted
Subsidiary of the Company of any outstanding  Indebtedness of such  Unrestricted
Subsidiary and such designation will only be permitted if (1) such  Indebtedness
is permitted  under  Section 4.09 hereof,  calculated on a pro forma basis as if
such  designation  had occurred at the beginning of the  four-quarter  reference
period;  and (2) no Default or Event of Default would be in existence  following
such designation.

         "U.S.  PERSON" means a U.S.  Person as defined in Rule 902(o) under the
Securities Act.

         "VOTING  STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors or comparable governing body of such Person.

         "WEIGHTED  AVERAGE  LIFE  TO  MATURITY"  means,  when  applied  to  any
Indebtedness at any date, the number of years obtained by dividing:


                                       24
<PAGE>


         (1)      the sum of the products obtained by multiplying (a) the amount
                  of each  then  remaining  installment,  sinking  fund,  serial
                  maturity or other  required  payments of principal,  including
                  payment at final maturity, in respect of the Indebtedness,  by
                  (b)  the   number  of  years   (calculated   to  the   nearest
                  one-twelfth) that will elapse between such date and the making
                  of such payment; by

         (2)      the then outstanding principal amount of such Indebtedness.

         "WHOLLY-OWNED  RESTRICTED  SUBSIDIARY" means a Restricted Subsidiary of
the Company all of the outstanding Capital Stock or other ownership interests of
which  (other than  directors'  qualifying  shares) will at the time be owned by
such  Person  or by one or more  Wholly-Owned  Restricted  Subsidiaries  of such
Person.

Section 1.02      OTHER DEFINITIONS.

                                                                      DEFINED IN
         TERM                                                           SECTION
         ----                                                           -------
         "AFFILIATE TRANSACTION"...................................      4.11
         "ASSET SALE OFFER"........................................      3.09
         "AUTHENTICATION ORDER"....................................      2.02
         "CHANGE OF CONTROL OFFER".................................      4.15
         "CHANGE OF CONTROL PAYMENT"...............................      4.15
         "CHANGE OF CONTROL PAYMENT DATE"..........................      4.15
         "COVENANT DEFEASANCE".....................................      8.03
         "DTC".....................................................      2.03
         "EVENT OF DEFAULT"........................................      6.01
         "EXCESS PROCEEDS".........................................      4.10
         "FOREIGN PLEDGE AGREEMENT"................................      10.06
         "INCUR"...................................................      4.09
         "LEGAL DEFEASANCE"........................................      8.02
         "OFFER AMOUNT"............................................      3.09
         "OFFER PERIOD"............................................      3.09
         "PARALLEL DEBT"...........................................      10.07
         "PAYING AGENT"............................................      2.03
         "PERMITTED DEBT"..........................................      4.09
         "PURCHASE DATE"...........................................      3.09
         "REGISTRAR"...............................................      2.03
         "RELEVANT LIABILITIES"....................................      10.07
         "RESTRICTED PAYMENTS".....................................      4.07
         "TENNESSEE REQUIRED INSURANCE"............................      4.21
         "TRIGGER DATE"............................................      4.21

Section 1.03      INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

         Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.


                                       25
<PAGE>


         The  following  TIA terms  used in this  Indenture  have the  following
meanings:

         "INDENTURE SECURITIES" means the Notes;

         "INDENTURE SECURITY HOLDER" means a Holder of a Note;

         "INDENTURE TO BE QUALIFIED" means this Indenture;

         "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and

         "OBLIGOR" on the Notes and the Subsidiary  Guarantees means the Company
and the Guarantors,  respectively,  and any successor obligor upon the Notes and
the Subsidiary Guarantees, respectively.

         All other  terms used in this  Indenture  that are  defined by the TIA,
defined by TIA reference to another  statute or defined by Commission rule under
the TIA have the meanings so assigned to them.

Section 1.04      RULES OF CONSTRUCTION.

         Unless the context otherwise requires:

         (1)      a term has the meaning assigned to it;

         (2)      an  accounting  term not  otherwise  defined  has the  meaning
                  assigned to it in accordance with GAAP;

         (3)      "or" is not exclusive;

         (4)      words in the  singular  include the plural,  and in the plural
                  include the singular;

         (5)      "will" shall be interpreted to express a command;

         (6)      the words  "property"  and "asset"  shall be construed to have
                  the same meaning and may be used  interchangeably  or together
                  with no difference in meaning.

         (7)      provisions apply to successive events and transactions; and

         (8)      references  to sections of or rules under the  Securities  Act
                  will be deemed to include substitute, replacement of successor
                  sections or rules adopted by the Commission from time to time.


                                       26
<PAGE>


                                   ARTICLE 2.
                                   THE NOTES

Section 2.01      FORM AND DATING.

         (a)      GENERAL.   The  Notes  and  the   Trustee's   certificate   of
authentication  will be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage.  Each Note  will be dated  the date of its  authentication.  The Notes
shall be in denominations of $1,000 and integral multiples thereof.

         The terms and provisions  contained in the Notes will  constitute,  and
are  hereby  expressly  made,  a part of this  Indenture  and the  Company,  the
Guarantors and the Trustee,  by their  execution and delivery of this Indenture,
expressly  agree to such terms and provisions and to be bound thereby.  However,
to the extent any provision of any Note conflicts with the express provisions of
this   Indenture,   the  provisions  of  this  Indenture  shall  govern  and  be
controlling.

         (b)      GLOBAL   NOTES.   Notes   issued  in   global   form  will  be
substantially  in the form of Exhibit A attached  hereto  (including  the Global
Note Legend  thereon and the  "Schedule  of Exchanges of Interests in the Global
Note" attached  thereto).  Notes issued in definitive form will be substantially
in the form of Exhibit A attached  hereto  (but  without  the Global Note Legend
thereon and without the  "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note will represent such of the outstanding Notes
as will be  specified  therein and each shall  provide  that it  represents  the
aggregate  principal  amount of  outstanding  Notes  from time to time  endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby  may from time to time be  reduced  or  increased,  as  appropriate,  to
reflect  exchanges and redemptions.  Any endorsement of a Global Note to reflect
the amount of any  increase  or decrease in the  aggregate  principal  amount of
outstanding  Notes  represented  thereby  will  be made  by the  Trustee  or the
Custodian,  at the  direction of the Trustee,  in accordance  with  instructions
given by the Holder thereof as required by Section 2.06 hereof.

         (c)      TEMPORARY GLOBAL NOTES.  Notes offered and sold in reliance on
Regulation S will be issued  initially in the form of the Regulation S Temporary
Global Note,  which will be deposited on behalf of the  purchasers  of the Notes
represented  thereby with the  Trustee,  as custodian  for the  Depositary,  and
registered in the name of the  Depositary or the nominee of the  Depositary  for
the accounts of designated agents holding on behalf of Euroclear or Clearstream,
duly  executed by the Company and  authenticated  by the Trustee as  hereinafter
provided.  The  Restricted  Period  will be  terminated  upon the receipt by the
Trustee of:

                  (1)      an Officer's  Certificate from the Company specifying
         that the Restricted Period has terminated.

                  Following the termination of the Restricted Period, beneficial
interests  in the  Regulation  S  Temporary  Global Note will be  exchanged  for
beneficial  interests  in  Regulation S Permanent  Global Notes  pursuant to the
Applicable  Procedures.  Simultaneously  with the authentication of Regulation S
Permanent  Global  Notes,  the Trustee  will cancel the  Regulation  S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary Global
Note and the  Regulation  S  Permanent  Global  Notes  may from  time to time be
increased or decreased by


                                       27
<PAGE>


adjustments  made  on the  records  of the  Trustee  and the  Depositary  or its
nominee,  as the case may be,  in  connection  with  transfers  of  interest  as
hereinafter provided.

         (d)      EUROCLEAR   AND   CLEARSTREAM   PROCEDURES   APPLICABLE.   The
provisions of the "Operating  Procedures of the Euroclear System" and "Terms and
Conditions  Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream"  and  "Customer  Handbook" of  Clearstream  will be  applicable  to
transfers of beneficial  interests in the Regulation S Temporary Global Note and
the Regulation S Permanent  Global Notes that are held by  Participants  through
Euroclear or Clearstream.

Section 2.02      EXECUTION AND AUTHENTICATION.

         An  Officer  must sign the  Notes for the  Company  and an  Officer  or
director of each Guarantor must sign such Guarantor's  Guarantee,  in each case,
by manual or facsimile signature.

         If an Officer or director whose  signature is on a Note or Guarantee no
longer holds that office at the time a Note or Guarantee is  authenticated,  the
Note or Guarantee will nevertheless be valid.

         A Note will not be valid until authenticated by the manual signature of
the Trustee.  The signature  will be conclusive  evidence that the Note has been
authenticated under this Indenture.

         On the date of this  Indenture,  the Trustee  will,  upon  receipt of a
written order of the Company signed by two Officers (an "AUTHENTICATION ORDER"),
authenticate  the Notes for $55.0  million in aggregate  principal  amount.  The
Company may issue  additional  Notes under the Indenture from time to time after
such offering;  PROVIDED,  HOWEVER, such Notes are assigned a rating of at least
B3 from Moody's and at least B- from  Standard & Poor's at the time of issuance.
The Authentication  Order or the Officer's  Certificate  delivered in connection
with any such issuance of additional Notes shall state that such Notes have been
assigned a rating that  satisfies this  requirement.  Any issuance of additional
Notes is subject to all of the terms and provisions set forth in this Indenture.
All Notes issued under the  Indenture  will be treated as a single class for all
purposes  under  the  Indenture,   including,   without   limitation,   waivers,
amendments, redemptions and offers to purchase.

         The Trustee  may  appoint an  authenticating  agent  acceptable  to the
Company to authenticate  the Notes.  An  authenticating  agent may  authenticate
Notes  whenever  the Trustee  may do so. Each  reference  in this  Indenture  to
authentication  by  the  Trustee  includes  authentication  by  such  agent.  An
authenticating  agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

Section 2.03      REGISTRAR AND PAYING AGENT.

         The  Company  will  maintain  an office or  agency  where  Notes may be
presented  for  registration  of transfer or for exchange  ("REGISTRAR")  and an
office or agency where Notes may be presented for payment ("PAYING AGENT").  The
Registrar  will keep a register of the Notes and of their transfer and exchange.
The Company may appoint  one or more  co-registrars  and one or more  additional
paying  agents.  The term  "Registrar"  includes any  co-registrar  and the term
"Paying Agent" includes any additional  paying agent. The Company may change any
Paying


                                       28
<PAGE>


Agent or  Registrar  without  notice to any Holder.  The Company will notify the
Trustee  in  writing  of the name and  address  of any Agent not a party to this
Indenture.  If the  Company  fails to  appoint  or  maintain  another  entity as
Registrar or Paying Agent,  the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.

         The Company initially  appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

         The Company initially  appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04      PAYING AGENT TO HOLD MONEY IN TRUST.

         The Company  will  require  each Paying Agent other than the Trustee to
agree in  writing  that the Paying  Agent will hold in trust for the  benefit of
Holders or the  Trustee  all money held by the Paying  Agent for the  payment of
principal,  premium or Liquidated Damages, if any, or interest on the Notes, and
will  notify  the  Trustee  of any  default  by the  Company  in making any such
payment.  While any such  default  continues,  the  Trustee may require a Paying
Agent to pay all money held by it to the  Trustee.  The  Company at any time may
require a Paying Agent to pay all money held by it to the Trustee.  Upon payment
over  to the  Trustee,  the  Paying  Agent  (if  other  than  the  Company  or a
Subsidiary)  will have no further  liability for the money.  If the Company or a
Subsidiary  acts as Paying Agent, it will segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying  Agent.  Upon
any  bankruptcy  or  reorganization  proceedings  relating to the  Company,  the
Trustee will serve as Paying Agent for the Notes.

Section 2.05      HOLDER LISTS.

         The  Trustee  will  preserve  in as  current  a form  as is  reasonably
practicable  the most recent list  available to it of the names and addresses of
all Holders and shall  otherwise  comply with TIA ss. 312(a).  If the Trustee is
not the  Registrar,  the  Company  will  furnish to the  Trustee at least  seven
Business Days before each  Interest  Payment Date and at such other times as the
Trustee may  request in writing,  a list in such form and as of such date as the
Trustee  may  reasonably  require of the names and  addresses  of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).

Section 2.06      TRANSFER AND EXCHANGE.

         (a)      TRANSFER AND EXCHANGE OF GLOBAL  NOTES.  A Global Note may not
be  transferred  as a  whole  except  by  the  Depositary  to a  nominee  of the
Depositary,  by a nominee  of the  Depositary  to the  Depositary  or to another
nominee  of the  Depositary,  or by the  Depositary  or any  such  nominee  to a
successor  Depositary or a nominee of such  successor  Depositary.  Global Notes
will be exchanged by the Company for Definitive Notes only if:

                  (1)      the Company  delivers to the Trustee  notice from the
         Depositary  that  it is  unwilling  or  unable  to  continue  to act as
         Depositary or that it is no longer a clearing agency  registered  under
         the Exchange Act and, in either case, a successor Depositary is


                                       29
<PAGE>


not appointed by the Company  within 120 days after the date of such notice from
the Depositary; or

                  (2)      the Company in its sole  discretion  determines  that
         the Global  Notes (in whole but not in part)  should be  exchanged  for
         Definitive  Notes and  delivers a written  notice to such effect to the
         Trustee;  PROVIDED  that in no event shall the  Regulation  S Temporary
         Global Note be exchanged by the Company for  Definitive  Notes prior to
         (x) the expiration of the Restricted  Period and (y) the receipt by the
         Registrar   of   any   certificates    required    pursuant   to   Rule
         903(b)(3)(ii)(B) under the Securities Act.

         Upon the  occurrence  of either of the  preceding  events in (1) or (2)
above,  Definitive  Notes shall be issued in such names as the Depositary  shall
instruct the Trustee.  Global Notes also may be exchanged or replaced,  in whole
or  in  part,  as  provided  in  Sections  2.07  and  2.10  hereof.  Every  Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion  thereof,  pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be  authenticated  and  delivered  in the form of,  and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a),  however,  beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.

         (b)      TRANSFER  AND EXCHANGE OF  BENEFICIAL  INTERESTS IN THE GLOBAL
NOTES.  The transfer and  exchange of  beneficial  interests in the Global Notes
will be effected  through the  Depositary,  in accordance with the provisions of
this  Indenture  and the  Applicable  Procedures.  Beneficial  interests  in the
Restricted  Global Notes will be subject to restrictions on transfer  comparable
to those  set  forth  herein  to the  extent  required  by the  Securities  Act.
Transfers  of  beneficial  interests  in the  Global  Notes  also  will  require
compliance with either subparagraph (1) or (2) below, as applicable,  as well as
one or more of the other following subparagraphs, as applicable:

                  (1)      TRANSFER OF  BENEFICIAL  INTERESTS IN THE SAME GLOBAL
         NOTE.  Beneficial  interests  in  any  Restricted  Global  Note  may be
         transferred  to  Persons  who take  delivery  thereof  in the form of a
         beneficial  interest in the same  Restricted  Global Note in accordance
         with the  transfer  restrictions  set  forth in the  Private  Placement
         Legend;  PROVIDED,  HOWEVER,  that  prior  to  the  expiration  of  the
         Restricted Period,  transfers of beneficial interests in the Regulation
         S  Temporary  Global  Note may not be made to a U.S.  Person or for the
         account or benefit of a U.S. Person (other than the Initial Purchaser).
         Beneficial interests in any Unrestricted Global Note may be transferred
         to  Persons  who take  delivery  thereof  in the  form of a  beneficial
         interest  in  an  Unrestricted   Global  Note.  No  written  orders  or
         instructions  shall be required to be  delivered  to the  Registrar  to
         effect the transfers described in this Section 2.06(b)(l).

                  (2)      ALL  OTHER  TRANSFERS  AND  EXCHANGES  OF  BENEFICIAL
         INTERESTS  IN  GLOBAL  NOTES.  In  connection  with all  transfers  and
         exchanges  of  beneficial  interests  that are not  subject  to Section
         2.06(b)(l)  above,  the  transferor  of such  beneficial  interest must
         deliver to the Registrar either:

                           (A)      both:


                                       30
<PAGE>


                                    (i)      a written  order from a Participant
                           or an Indirect Participant given to the Depositary in
                           accordance with the Applicable  Procedures  directing
                           the  Depositary  to credit or cause to be  credited a
                           beneficial  interest  in  another  Global  Note in an
                           amount  equal  to  the  beneficial   interest  to  be
                           transferred or exchanged; and

                                    (ii)     instructions  given  in  accordance
                           with the Applicable Procedures containing information
                           regarding the Participant account to be credited with
                           such increase; or

                           (B)      both:

                                    (i)      a written  order from a Participant
                           or an Indirect Participant given to the Depositary in
                           accordance with the Applicable  Procedures  directing
                           the  Depositary  to cause to be  issued a  Definitive
                           Note in an amount equal to the beneficial interest to
                           be transferred or exchanged; and

                                    (ii)     instructions     given    by    the
                           Depositary  to the Registrar  containing  information
                           regarding  the Person in whose  name such  Definitive
                           Note shall be  registered  to effect the  transfer or
                           exchange referred to in (1) above;

PROVIDED that in no event shall  Definitive Notes be issued upon the transfer or
exchange of beneficial interests in the Regulation S Temporary Global Note prior
to (x) the  expiration  of the  Restricted  Period  and (y) the  receipt  by the
Registrar of any certificates required pursuant to Rule 903 under the Securities
Act.

         Upon  consummation  of an Exchange  Offer by the Company in  accordance
with Section 2.06(f) hereof,  the requirements of this Section  2.06(b)(2) shall
be  deemed  to  have  been  satisfied  upon  receipt  by  the  Registrar  of the
instructions  contained in the Letter of Transmittal  delivered by the Holder of
such beneficial  interests in the Restricted  Global Notes. Upon satisfaction of
all of the  requirements  for  transfer or exchange of  beneficial  interests in
Global Notes  contained in this Indenture and the Notes or otherwise  applicable
under the Securities  Act, the Trustee shall adjust the principal  amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.

         (3)      TRANSFER OF BENEFICIAL  INTERESTS TO ANOTHER RESTRICTED GLOBAL
NOTE. A beneficial  interest in any Restricted Global Note may be transferred to
a Person who takes  delivery  thereof in the form of a  beneficial  interest  in
another Restricted Global Note if the transfer complies with the requirements of
Section 2.06(b)(2) above and the Registrar receives the following:

                  (A)      if the transferee will take delivery in the form of a
                           beneficial interest in the 144A Global Note, then the
                           transferor  must deliver a certificate in the form of
                           Exhibit B hereto,  including  the  certifications  in
                           item (1) thereof;

                  (B)      if the transferee will take delivery in the form of a
                           beneficial  interest  in the  Regulation  S Temporary
                           Global Note or the


                                       31
<PAGE>


                           Regulation  S  Permanent   Global   Note,   then  the
                           transferor  must deliver a certificate in the form of
                           Exhibit B hereto,  including  the  certifications  in
                           item (2) thereof; and

                  (C)      if the transferee will take delivery in the form of a
                           beneficial  interest in the IAI Global Note, then the
                           transferor  must deliver a certificate in the form of
                           Exhibit  B  hereto,   including  the  certifications,
                           certificates  and Opinion of Counsel required by item
                           (3) thereof, if applicable.

         (4)      TRANSFER AND EXCHANGE OF BENEFICIAL  INTERESTS IN A RESTRICTED
GLOBAL  NOTE  FOR  BENEFICIAL  INTERESTS  IN  AN  UNRESTRICTED  GLOBAL  NOTE.  A
beneficial interest in any Restricted Global Note may be exchanged by any holder
thereof for a beneficial  interest in an Unrestricted Global Note or transferred
to a Person who takes delivery  thereof in the form of a beneficial  interest in
an  Unrestricted  Global  Note if the  exchange or  transfer  complies  with the
requirements of Section 2.06(b)(2) above and:

                  (A)      such exchange or transfer is effected pursuant to the
                           Exchange  Offer in accordance  with the  Registration
                           Rights  Agreement  and the  holder of the  beneficial
                           interest  to  be  transferred,  in  the  case  of  an
                           exchange,  or  the  transferee,  in  the  case  of  a
                           transfer,  certifies  in  the  applicable  Letter  of
                           Transmittal  that (i) any Exchange  Notes received by
                           such Holder will be acquired in the  ordinary  course
                           of   business,   (ii)  such   Holder   will  have  no
                           arrangements  or  understanding  with any  Person  to
                           participate in the  distribution  of the Notes within
                           the meaning of the Securities  Act, (iii) such Holder
                           is not an  "affiliate," as defined in Rule 405 of the
                           Securities  Act  of  the  Company  or  if  it  is  an
                           affiliate,   such   Holder   will   comply  with  the
                           registration and prospectus delivery  requirements of
                           the Securities Act to the extent applicable,  (iv) it
                           is not  engaged in, and does not intend to engage in,
                           the  distribution of the Exchange Notes,  (v) if such
                           Holder  is a  Broker-Dealer,  that  it  will  receive
                           Exchange  Notes for its own account in  exchange  for
                           Notes that were acquired as a result of market-making
                           activities  or other trading  activities  and that it
                           will be required to acknowledge  that it will deliver
                           a prospectus  in  connection  with any resale of such
                           Exchange  Notes and (vi) such  Holder  has full power
                           and  authority  to transfer the Notes in exchange for
                           the  Exchange  Notes,  free and  clear of any and all
                           Liens.

                  (B)      such  transfer  is  effected  pursuant  to the  Shelf
                           Registration   Statement  in   accordance   with  the
                           Registration Rights Agreement;

                  (C)      such transfer is effected by a Broker-Dealer pursuant
                           to  the  Exchange  Offer  Registration  Statement  in
                           accordance with the Registration Rights Agreement; or


                                       32
<PAGE>


                  (D)      the Registrar receives the following:

                           (i)      if the holder of such beneficial interest in
                           a Restricted  Global Note  proposes to exchange  such
                           beneficial  interest for a beneficial  interest in an
                           Unrestricted  Global  Note, a  certificate  from such
                           holder in the form of Exhibit C hereto, including the
                           certifications in item (l)(a) thereof; or

                           (ii)     if the holder of such beneficial interest in
                           a Restricted  Global Note  proposes to transfer  such
                           beneficial  interest  to  a  Person  who  shall  take
                           delivery thereof in the form of a beneficial interest
                           in an  Unrestricted  Global Note, a certificate  from
                           such   holder  in  the  form  of  Exhibit  B  hereto,
                           including the certifications in item (4) thereof;

                  and, in each such case set forth in this  subparagraph (D), if
                  the Registrar so requests or if the  Applicable  Procedures so
                  require,  an Opinion of Counsel in form reasonably  acceptable
                  to the  Registrar to the effect that such exchange or transfer
                  is  in  compliance  with  the  Securities  Act  and  that  the
                  restrictions on transfer  contained  herein and in the Private
                  Placement  Legend are no longer  required in order to maintain
                  compliance with the Securities Act.

         If any such transfer is effected  pursuant to  subparagraph  (B) or (D)
above at a time when an  Unrestricted  Global Note has not yet been issued,  the
Company shall issue and, upon receipt of an  Authentication  Order in accordance
with  Section  2.02  hereof,   the  Trustee  shall   authenticate  one  or  more
Unrestricted  Global  Notes  in an  aggregate  principal  amount  equal  to  the
aggregate  principal  amount of  beneficial  interests  transferred  pursuant to
subparagraph (B) or (D) above.

         Beneficial interests in an Unrestricted Global Note cannot be exchanged
for,  or  transferred  to Persons  who take  delivery  thereof in the form of, a
beneficial interest in a Restricted Global Note.

         (c)      TRANSFER OR EXCHANGE OF BENEFICIAL  INTERESTS  FOR  DEFINITIVE
NOTES.

                  (1)      BENEFICIAL  INTERESTS IN  RESTRICTED  GLOBAL NOTES TO
         RESTRICTED  DEFINITIVE NOTES. Subject to Section 2.06(a) hereof, if any
         holder of a beneficial interest in a Restricted Global Note proposes to
         exchange such beneficial  interest for a Restricted  Definitive Note or
         to transfer  such  beneficial  interest to a Person who takes  delivery
         thereof in the form of a Restricted Definitive Note, then, upon receipt
         by the Registrar of the following documentation:

                           (A)      if the holder of such beneficial interest in
                                    a   Restricted   Global  Note   proposes  to
                                    exchange  such  beneficial  interest  for  a
                                    Restricted  Definitive  Note, a  certificate
                                    from such  holder  in the form of  Exhibit C
                                    hereto, including the certifications in item
                                    (2)(a) thereof;

                           (B)      if  such   beneficial   interest   is  being
                                    transferred to a QIB in accordance with Rule
                                    144A, a certificate  to the effect set forth
                                    in   Exhibit   B   hereto,   including   the
                                    certifications in item (1) thereof;


                                       33
<PAGE>


                           (C)      if  such   beneficial   interest   is  being
                                    transferred  to  a  Non-U.S.  Person  in  an
                                    offshore transaction in accordance with Rule
                                    903 or Rule 904, a certificate to the effect
                                    set forth in Exhibit B hereto, including the
                                    certifications in item (2) thereof;

                           (D)      if  such   beneficial   interest   is  being
                                    transferred  pursuant to an  exemption  from
                                    the   registration   requirements   of   the
                                    Securities Act in accordance  with Rule 144,
                                    a  certificate  to the  effect  set forth in
                                    Exhibit    B    hereto,     including    the
                                    certifications in item (3)(a) thereof;

                           (E)      if  such   beneficial   interest   is  being
                                    transferred to an  Institutional  Accredited
                                    Investor in reliance  on an  exemption  from
                                    the   registration   requirements   of   the
                                    Securities  Act other than  those  listed in
                                    subparagraphs   (B)   and   (C)   above,   a
                                    certificate  to  the  effect  set  forth  in
                                    Exhibit    B    hereto,     including    the
                                    certifications,  certificates and Opinion of
                                    Counsel  required  by item (3)  thereof,  if
                                    applicable;

                           (F)      if  such   beneficial   interest   is  being
                                    transferred  to  the  Company  or any of its
                                    Subsidiaries,  a  certificate  to the effect
                                    set forth in Exhibit B hereto, including the
                                    certifications in item (3)(b) thereof; or

                           (G)      if  such   beneficial   interest   is  being
                                    transferred   pursuant   to   an   effective
                                    registration  statement under the Securities
                                    Act, a  certificate  to the effect set forth
                                    in   Exhibit   B   hereto,   including   the
                                    certifications in item (3)(c) thereof.

                  The Trustee shall cause the aggregate  principal amount of the
         applicable  Global Note to be reduced  accordingly  pursuant to Section
         2.06(h)  hereof,  and the Company  shall  execute and the Trustee shall
         authenticate and deliver to the Person designated in the instructions a
         Definitive Note in the  appropriate  principal  amount.  Any Restricted
         Definitive  Note  issued in  exchange  for a  beneficial  interest in a
         Restricted  Global Note  pursuant to this Section  2.06(c)(l)  shall be
         registered in such name or names and in such authorized denomination or
         denominations as the holder of such beneficial  interest shall instruct
         the  Registrar  through   instructions  from  the  Depositary  and  the
         Participant  or Indirect  Participant.  The Trustee  shall deliver such
         Restricted  Definitive  Notes to the  Persons in whose names such Notes
         are so registered.  Any Restricted  Definitive  Note issued in exchange
         for a beneficial  interest in a Restricted Global Note pursuant to this
         Section 2.06(c)(l) shall bear the Private Placement Legend and shall be
         subject to all restrictions on transfer contained therein.

                  (2)      BENEFICIAL INTERESTS IN REGULATION S TEMPORARY GLOBAL
         NOTE TO DEFINITIVE NOTES.  Notwithstanding  Sections  2.06(c)(i)(A) and
         (C) hereof, a beneficial  interest in the Regulation S Temporary Global
         Note may not be exchanged  for a Definitive  Note or  transferred  to a
         Person  who takes  delivery  thereof in the form of a  Definitive  Note
         prior  to (x)  the  expiration  of the  Restricted  Period  and (y) the
         receipt by the Registrar of any certificates  required pursuant to Rule
         903(b)(3)(ii)(B)  under  the  Securities  Act,  except in


                                       34
<PAGE>


         the case of a transfer  pursuant to an exemption from the  registration
         requirements of the Securities Act other than Rule 903 or Rule 904.

                  (3)      BENEFICIAL  INTERESTS IN  RESTRICTED  GLOBAL NOTES TO
         UNRESTRICTED  DEFINITIVE  NOTES.  Subject to Section 2.06(a) hereof,  a
         holder  of a  beneficial  interest  in a  Restricted  Global  Note  may
         exchange such beneficial  interest for an Unrestricted  Definitive Note
         or may transfer such beneficial interest to a Person who takes delivery
         thereof in the form of an Unrestricted Definitive Note only if:

                           (A)      such   exchange   or  transfer  is  effected
                                    pursuant to the Exchange Offer in accordance
                                    with the  Registration  Rights Agreement and
                                    the holder of such beneficial  interest,  in
                                    the case of an exchange,  or the transferee,
                                    in the case of a transfer,  certifies in the
                                    applicable  Letter of  Transmittal  that (i)
                                    any Exchange  Notes  received by such Holder
                                    will be acquired in the  ordinary  course of
                                    business,  (ii)  such  Holder  will  have no
                                    arrangements  or   understanding   with  any
                                    Person to participate in the distribution of
                                    the  Notes   within   the   meaning  of  the
                                    Securities  Act, (iii) such Holder is not an
                                    "affiliate,"  as  defined in Rule 405 of the
                                    Securities Act of the Company or if it is an
                                    affiliate,  such Holder will comply with the
                                    registration    and   prospectus    delivery
                                    requirements  of the  Securities  Act to the
                                    extent  applicable,  (iv) it is not  engaged
                                    in,  and does not  intend to engage  in, the
                                    distribution of the Exchange  Notes,  (v) if
                                    such Holder is a Broker-Dealer, that it will
                                    receive  Exchange  Notes for its own account
                                    in exchange for Notes that were  acquired as
                                    a  result  of  market-making  activities  or
                                    other trading activities and that it will be
                                    required to acknowledge that it will deliver
                                    a prospectus in  connection  with any resale
                                    of such Exchange  Notes and (vi) such Holder
                                    has full power and authority to transfer the
                                    Notes in exchange  for the  Exchange  Notes,
                                    free and clear of any and all Liens.

                           (B)      such  transfer is  effected  pursuant to the
                                    Shelf  Registration  Statement in accordance
                                    with the Registration Rights Agreement;

                           (C)      such transfer is effected by a Broker-Dealer
                                    pursuant to the Exchange Offer  Registration
                                    Statement    in    accordance    with    the
                                    Registration Rights Agreement; or

                           (D)      the Registrar receives the following:

                                    (i)      if the  holder  of such  beneficial
                           interest  in a  Restricted  Global  Note  proposes to
                           exchange  such  beneficial  interest for a Definitive
                           Note that does not bear the Private Placement Legend,
                           a certificate from such holder in the form of Exhibit
                           C hereto, including the certifications in item (l)(b)
                           thereof; or


                                       35
<PAGE>


                                    (ii)     if the  holder  of such  beneficial
                           interest  in a  Restricted  Global  Note  proposes to
                           transfer  such  beneficial  interest  to a Person who
                           shall  take  delivery   thereof  in  the  form  of  a
                           Definitive  Note  that  does  not  bear  the  Private
                           Placement  Legend,  a certificate from such holder in
                           the  form  of   Exhibit  B  hereto,   including   the
                           certifications in item (4) thereof;

                  and, in each such case set forth in this  subparagraph (D), if
                  the Registrar so requests or if the  Applicable  Procedures so
                  require,  an Opinion of Counsel in form reasonably  acceptable
                  to the  Registrar to the effect that such exchange or transfer
                  is  in  compliance  with  the  Securities  Act  and  that  the
                  restrictions on transfer  contained  herein and in the Private
                  Placement  Legend are no longer  required in order to maintain
                  compliance with the Securities Act.

                  (4)      BENEFICIAL  INTERESTS IN UNRESTRICTED GLOBAL NOTES TO
         UNRESTRICTED  DEFINITIVE  NOTES.  Subject to Section 2.06(a) hereof, if
         any holder of a  beneficial  interest  in an  Unrestricted  Global Note
         proposes to exchange such beneficial  interest for a Definitive Note or
         to transfer  such  beneficial  interest to a Person who takes  delivery
         thereof in the form of a Definitive  Note,  then, upon  satisfaction of
         the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will
         cause the aggregate  principal amount of the applicable  Global Note to
         be reduced  accordingly  pursuant to Section  2.06(h)  hereof,  and the
         Company will execute and the Trustee will  authenticate  and deliver to
         the Person  designated  in the  instructions  a Definitive  Note in the
         appropriate  principal  amount.  Any Definitive Note issued in exchange
         for a beneficial  interest pursuant to this Section  2.06(c)(4) will be
         registered in such name or names and in such authorized denomination or
         denominations  as the  holder  of  such  beneficial  interest  requests
         through  instructions  to the Registrar  from or through the Depositary
         and the Participant or Indirect  Participant.  The Trustee will deliver
         such  Definitive  Notes to the Persons in whose names such Notes are so
         registered.  Any  Definitive  Note issued in exchange  for a beneficial
         interest pursuant to this Section  2.06(c)(4) will not bear the Private
         Placement Legend.

         (d)      TRANSFER  AND  EXCHANGE  OF  DEFINITIVE  NOTES FOR  BENEFICIAL
INTERESTS.

                  (1)      RESTRICTED  DEFINITIVE NOTES TO BENEFICIAL  INTERESTS
         IN RESTRICTED  GLOBAL NOTES.  If any Holder of a Restricted  Definitive
         Note  proposes to  exchange  such Note for a  beneficial  interest in a
         Restricted Global Note or to transfer such Restricted  Definitive Notes
         to a Person  who takes  delivery  thereof  in the form of a  beneficial
         interest  in a  Restricted  Global  Note,  then,  upon  receipt  by the
         Registrar of the following documentation:

                           (A)      if the Holder of such Restricted  Definitive
                                    Note  proposes to  exchange  such Note for a
                                    beneficial  interest in a Restricted  Global
                                    Note, a certificate  from such Holder in the
                                    form of  Exhibit  C  hereto,  including  the
                                    certifications in item (2)(b) thereof;

                           (B)      if such Restricted  Definitive Note is being
                                    transferred to a QIB in accordance with Rule
                                    144A, a certificate  to the effect set forth
                                    in   Exhibit   B   hereto,   including   the
                                    certifications in item (1) thereof;


                                       36
<PAGE>


                           (C)      if such Restricted  Definitive Note is being
                                    transferred  to  a  Non-U.S.  Person  in  an
                                    offshore transaction in accordance with Rule
                                    903 or Rule 904, a certificate to the effect
                                    set forth in Exhibit B hereto, including the
                                    certifications in item (2) thereof;

                           (D)      if such Restricted  Definitive Note is being
                                    transferred  pursuant to an  exemption  from
                                    the   registration   requirements   of   the
                                    Securities Act in accordance  with Rule 144,
                                    a  certificate  to the  effect  set forth in
                                    Exhibit    B    hereto,     including    the
                                    certifications in item (3)(a) thereof;

                           (E)      if such Restricted  Definitive Note is being
                                    transferred to an  Institutional  Accredited
                                    Investor in reliance  on an  exemption  from
                                    the   registration   requirements   of   the
                                    Securities  Act other than  those  listed in
                                    subparagraphs   (B)   and   (C)   above,   a
                                    certificate  to  the  effect  set  forth  in
                                    Exhibit    B    hereto,     including    the
                                    certifications,  certificates and Opinion of
                                    Counsel  required  by item (3)  thereof,  if
                                    applicable;

                           (F)      if such Restricted  Definitive Note is being
                                    transferred  to  the  Company  or any of its
                                    Subsidiaries,  a  certificate  to the effect
                                    set forth in Exhibit B hereto, including the
                                    certifications in item (3)(b) thereof; or

                           (G)      if such Restricted  Definitive Note is being
                                    transferred   pursuant   to   an   effective
                                    registration  statement under the Securities
                                    Act, a  certificate  to the effect set forth
                                    in   Exhibit   B   hereto,   including   the
                                    certifications in item (3)(c) thereof.

         Upon satisfaction of the conditions of any of the subparagraphs in this
Section  2.06(d)(1),  the Trustee will cancel the  Restricted  Definitive  Note,
increase or cause to be increased the aggregate principal amount of, in the case
of clause (A) above,  the  appropriate  Restricted  Global Note,  in the case of
clause (B) above,  the 144A Global  Note,  in the case of clause (C) above,  the
Regulation S Global Note, and in all other cases, the IAI Global Note.

                  (2)      RESTRICTED  DEFINITIVE NOTES TO BENEFICIAL  INTERESTS
         IN UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted  Definitive Note
         may  exchange  such Note for a beneficial  interest in an  Unrestricted
         Global Note or transfer such Restricted Definitive Note to a Person who
         takes  delivery  thereof  in the form of a  beneficial  interest  in an
         Unrestricted Global Note only if:

                           (A)      such   exchange   or  transfer  is  effected
                                    pursuant to the Exchange Offer in accordance
                                    with the  Registration  Rights Agreement and
                                    the Holder,  in the case of an exchange,  or
                                    the  transferee,  in the case of a transfer,
                                    certifies  in  the   applicable   Letter  of
                                    Transmittal  that  (i)  any  Exchange  Notes
                                    received  by such Holder will be acquired in
                                    the ordinary  course of business,  (ii) such
                                    Holder will have no


                                       37
<PAGE>


                                    arrangements  or   understanding   with  any
                                    Person to participate in the distribution of
                                    the  Notes   within   the   meaning  of  the
                                    Securities  Act, (iii) such Holder is not an
                                    "affiliate,"  as  defined in Rule 405 of the
                                    Securities Act of the Company or if it is an
                                    affiliate,  such Holder will comply with the
                                    registration    and   prospectus    delivery
                                    requirements  of the  Securities  Act to the
                                    extent  applicable,  (iv) it is not  engaged
                                    in,  and does not  intend to engage  in, the
                                    distribution of the Exchange  Notes,  (v) if
                                    such Holder is a Broker-Dealer, that it will
                                    receive  Exchange  Notes for its own account
                                    in exchange for Notes that were  acquired as
                                    a  result  of  market-making  activities  or
                                    other trading activities and that it will be
                                    required to acknowledge that it will deliver
                                    a prospectus in  connection  with any resale
                                    of such Exchange  Notes and (vi) such Holder
                                    has full power and authority to transfer the
                                    Notes in exchange  for the  Exchange  Notes,
                                    free and clear of any and all Liens;

                           (B)      such  transfer is  effected  pursuant to the
                                    Shelf  Registration  Statement in accordance
                                    with the Registration Rights Agreement;

                           (C)      such transfer is effected by a Broker-Dealer
                                    pursuant to the Exchange Offer  Registration
                                    Statement    in    accordance    with    the
                                    Registration Rights Agreement; or

                           (D)      the Registrar receives the following:

                                    (i)      if the  Holder  of such  Definitive
                           Notes   proposes  to   exchange   such  Notes  for  a
                           beneficial  interest in the Unrestricted Global Note,
                           a certificate from such Holder in the form of Exhibit
                           C hereto, including the certifications in item (l)(c)
                           thereof; or

                                    (ii)     if the  Holder  of such  Definitive
                           Notes proposes to transfer such Notes to a Person who
                           shall  take  delivery   thereof  in  the  form  of  a
                           beneficial  interest in the Unrestricted Global Note,
                           a certificate from such Holder in the form of Exhibit
                           B hereto,  including the  certifications  in item (4)
                           thereof;

                  and, in each such case set forth in this  subparagraph (D), if
                  the Registrar so requests or if the  Applicable  Procedures so
                  require,  an Opinion of Counsel in form reasonably  acceptable
                  to the  Registrar to the effect that such exchange or transfer
                  is  in  compliance  with  the  Securities  Act  and  that  the
                  restrictions on transfer  contained  herein and in the Private
                  Placement  Legend are no longer  required in order to maintain
                  compliance with the Securities Act.

         Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or
cause to be increased the aggregate  principal amount of the Unrestricted Global
Note.


                                       38
<PAGE>


                  (3)      UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS
         IN UNRESTRICTED  GLOBAL NOTES. A Holder of an  Unrestricted  Definitive
         Note  may  exchange   such  Note  for  a  beneficial   interest  in  an
         Unrestricted  Global Note or transfer such Definitive Notes to a Person
         who takes delivery  thereof in the form of a beneficial  interest in an
         Unrestricted  Global  Note at any time.  Upon  receipt of a request for
         such an exchange or transfer,  the Trustee  will cancel the  applicable
         Unrestricted  Definitive Note and increase or cause to be increased the
         aggregate principal amount of one of the Unrestricted Global Notes.

                  If any such exchange or transfer  from a Definitive  Note to a
         beneficial  interest is  effected  pursuant  to  subparagraphs  (2)(B),
         (2)(D) or (3) above at a time when an Unrestricted  Global Note has not
         yet been  issued,  the  Company  will  issue  and,  upon  receipt of an
         Authentication  Order in  accordance  with  Section  2.02  hereof,  the
         Trustee will authenticate one or more  Unrestricted  Global Notes in an
         aggregate  principal amount equal to the principal amount of Definitive
         Notes so transferred.

         (e)      TRANSFER  AND  EXCHANGE  OF  DEFINITIVE  NOTES FOR  DEFINITIVE
NOTES. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the  provisions of this Section  2.06(e),  the Registrar  will register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange,  the  requesting  Holder must present or surrender to the Registrar
the Definitive  Notes duly endorsed or  accompanied by a written  instruction of
transfer in form  satisfactory  to the Registrar duly executed by such Holder or
by its attorney,  duly authorized in writing. In addition, the requesting Holder
must  provide any  additional  certifications,  documents  and  information,  as
applicable,  required  pursuant  to the  following  provisions  of this  Section
2.06(e).

                  (1)      RESTRICTED  DEFINITIVE NOTES TO RESTRICTED DEFINITIVE
         NOTES.  Any  Restricted  Definitive  Note  may  be  transferred  to and
         registered in the name of Persons who take delivery thereof in the form
         of  a  Restricted   Definitive  Note  if  the  Registrar  receives  the
         following:

                           (A)      if such Restricted  Definitive Note is being
                                    transferred to a QIB in accordance with Rule
                                    144A  under  the  Securities  Act,  then the
                                    transferor must deliver a certificate in the
                                    form of  Exhibit  B  hereto,  including  the
                                    certifications in item (1) thereof;

                           (B)      if the  transfer  will be made  pursuant  to
                                    Rule 903 or Rule  904,  then the  transferor
                                    must  deliver a  certificate  in the form of
                                    Exhibit    B    hereto,     including    the
                                    certifications in item (2) thereof; and

                           (C)      if such Restricted  Definitive Note is being
                                    transferred  pursuant to an  exemption  from
                                    the   registration   requirements   of   the
                                    Securities Act in accordance  with Rule 144,
                                    a  certificate  to the  effect  set forth in
                                    Exhibit    B    hereto,     including    the
                                    certifications in item (3)(a) thereof;

                           (D)      if such Restricted  Definitive Note is being
                                    transferred to an  Institutional  Accredited
                                    Investor in reliance  on an  exemption  from


                                       39
<PAGE>


                                    the   registration   requirements   of   the
                                    Securities  Act other than  those  listed in
                                    subparagraphs   (A)   and   (B)   above,   a
                                    certificate  to  the  effect  set  forth  in
                                    Exhibit    B    hereto,     including    the
                                    certifications,  certificates and Opinion of
                                    Counsel  required  by item (3)  thereof,  if
                                    applicable; or

                           (E)      if such Restricted  Definitive Note is being
                                    transferred  to  the  Company  or any of its
                                    Subsidiaries,  a  certificate  to the effect
                                    set forth in Exhibit B hereto, including the
                                    certifications in item (3)(b) thereof.

                  (2)      RESTRICTED    DEFINITIVE    NOTES   TO   UNRESTRICTED
         DEFINITIVE  NOTES.  Any Restricted  Definitive Note may be exchanged by
         the Holder thereof for an  Unrestricted  Definitive Note or transferred
         to a Person or  Persons  who take  delivery  thereof  in the form of an
         Unrestricted Definitive Note if:

                           (A)      such   exchange   or  transfer  is  effected
                                    pursuant to the Exchange Offer in accordance
                                    with the  Registration  Rights Agreement and
                                    the Holder,  in the case of an exchange,  or
                                    the  transferee,  in the case of a transfer,
                                    certifies  in  the   applicable   Letter  of
                                    Transmittal  that  (i)  any  Exchange  Notes
                                    received  by such Holder will be acquired in
                                    the ordinary  course of business,  (ii) such
                                    Holder   will   have  no   arrangements   or
                                    understanding with any Person to participate
                                    in the  distribution of the Notes within the
                                    meaning of the  Securities  Act,  (iii) such
                                    Holder is not an  "affiliate," as defined in
                                    Rule  405  of  the  Securities  Act  of  the
                                    Company  or  if it  is  an  affiliate,  such
                                    Holder will comply with the registration and
                                    prospectus  delivery   requirements  of  the
                                    Securities  Act  to the  extent  applicable,
                                    (iv) it is not  engaged  in,  and  does  not
                                    intend to engage in, the distribution of the
                                    Exchange  Notes,  (v) if  such  Holder  is a
                                    Broker-Dealer, that it will receive Exchange
                                    Notes for its own  account in  exchange  for
                                    Notes  that  were  acquired  as a result  of
                                    market-making  activities  or other  trading
                                    activities  and that it will be  required to
                                    acknowledge   that   it   will   deliver   a
                                    prospectus in connection  with any resale of
                                    such Exchange Notes and (vi) such Holder has
                                    full power and  authority  to  transfer  the
                                    Notes in exchange  for the  Exchange  Notes,
                                    free and clear of any and all Liens;

                           (B)      any such  transfer is  effected  pursuant to
                                    the   Shelf   Registration    Statement   in
                                    accordance  with  the  Registration   Rights
                                    Agreement;

                           (C)      any  such   transfer   is   effected   by  a
                                    Broker-Dealer pursuant to the Exchange Offer
                                    Registration  Statement in  accordance  with
                                    the Registration Rights Agreement; or

                           (D)      the Registrar receives the following:


                                       40
<PAGE>


                                    (i)      if the  Holder  of such  Restricted
                           Definitive  Notes proposes to exchange such Notes for
                           an Unrestricted  Definitive  Note, a certificate from
                           such   Holder  in  the  form  of  Exhibit  C  hereto,
                           including the  certifications in item (l)(d) thereof;
                           or

                                    (ii)     if the  Holder  of such  Restricted
                           Definitive Notes proposes to transfer such Notes to a
                           Person who shall take delivery thereof in the form of
                           an Unrestricted  Definitive  Note, a certificate from
                           such   Holder  in  the  form  of  Exhibit  B  hereto,
                           including the certifications in item (4) thereof;

                  and, in each such case set forth in this  subparagraph (D), if
                  the  Registrar  so  requests,  an  Opinion  of Counsel in form
                  reasonably  acceptable  to the Company to the effect that such
                  exchange or transfer is in compliance  with the Securities Act
                  and that the restrictions on transfer  contained herein and in
                  the Private  Placement  Legend are no longer required in order
                  to maintain compliance with the Securities Act.

                  (3)      UNRESTRICTED   DEFINITIVE   NOTES   TO   UNRESTRICTED
         DEFINITIVE  NOTES.  A  Holder  of  Unrestricted  Definitive  Notes  may
         transfer such Notes to a Person who takes delivery  thereof in the form
         of an  Unrestricted  Definitive  Note.  Upon  receipt  of a request  to
         register such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

         (f)      EXCHANGE  OFFER.  Upon the occurrence of the Exchange Offer in
accordance with the Registration  Rights Agreement,  the Company will issue and,
upon receipt of an Authentication  Order in accordance with Section 2.02 hereof,
the Trustee will authenticate:

                  (1)      one or more Unrestricted Global Notes in an aggregate
         principal  amount  equal  to the  principal  amount  of the  beneficial
         interests in the  Restricted  Global Notes  tendered  into the Exchange
         Offer by Persons that certify in the applicable  Letters of Transmittal
         that (i) any Exchange Notes received by such Holder will be acquired in
         the  ordinary  course  of  business,  (ii)  such  Holder  will  have no
         arrangements  or  understanding  with any Person to  participate in the
         distribution  of the Notes  within the meaning of the  Securities  Act,
         (iii) such Holder is not an  "affiliate," as defined in Rule 405 of the
         Securities  Act of the  Company or if it is an  affiliate,  such Holder
         will comply with the registration and prospectus delivery  requirements
         of the Securities Act to the extent applicable,  (iv) it is not engaged
         in, and does not intend to engage in, the  distribution of the Exchange
         Notes,  (v) if such  Holder is a  Broker-Dealer,  that it will  receive
         Exchange  Notes for its own  account  in  exchange  for Notes that were
         acquired  as a result  of  market-making  activities  or other  trading
         activities  and that it will be  required to  acknowledge  that it will
         deliver a prospectus  in  connection  with any resale of such  Exchange
         Notes and (vi) such Holder has full power and authority to transfer the
         Notes in exchange for the Exchange Notes, free and clear of any and all
         Liens; and


                                       41
<PAGE>


                  (2)      Subject  to  Section  2.06(a)  hereof,   Unrestricted
         Definitive  Notes  in  an  aggregate  principal  amount  equal  to  the
         principal  amount  of the  Restricted  Definitive  Notes  accepted  for
         exchange in the Exchange Offer.

         Concurrently  with the  issuance of such Notes,  the Trustee will cause
the aggregate  principal amount of the applicable  Restricted Global Notes to be
reduced  accordingly,  and  the  Company  will  execute  and  the  Trustee  will
authenticate and deliver to the Persons  designated by the Holders of Definitive
Notes so accepted  Unrestricted  Definitive  Notes in the appropriate  principal
amount.

         (g)      LEGENDS.  The following legends will appear on the face of all
Global  Notes  and  Definitive   Notes  issued  under  this   Indenture   unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (1)      PRIVATE PLACEMENT LEGEND.

                           (A)      Except  as  permitted  by  subparagraph  (B)
                                    below,  each Global Note and each Definitive
                                    Note  (and  all  Notes  issued  in  exchange
                                    therefor or substitution thereof) shall bear
                                    the legend in  substantially  the  following
                                    form:

"THIS NOTE (OR ITS  PREDECESSOR) WAS ORIGINALLY  ISSUED IN A TRANSACTION  EXEMPT
FROM  REGISTRATION   UNDER  THE  UNITED  STATES  SECURITIES  ACT  OF  1933  (THE
"SECURITIES  ACT"),  AND  THIS  NOTE MAY NOT BE  OFFERED,  RESOLD  OR  OTHERWISE
TRANSFERRED  IN THE  ABSENCE OF SUCH  REGISTRATION  OR AN  APPLICABLE  EXEMPTION
THEREFROM.  EACH PURCHASER OF THIS NOTE IS NOTIFIED THAT THE SELLER OF THIS NOTE
MAY BE  RELYING  ON THE  EXEMPTION  FROM  THE  PROVISIONS  OF  SECTION  5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE
MAY BE OFFERED,  RESOLD, PLEDGED OR OTHERWISE  TRANSFERRED,  ONLY (1) INSIDE THE
UNITED  STATES TO A PERSON  WHOM THE SELLER  REASONABLY  BELIEVES IS A QUALIFIED
INSTITUTIONAL  BUYER (AS  DEFINED  IN RULE 144A UNDER THE  SECURITIES  ACT) IN A
TRANSACTION  MEETING  THE  REQUIREMENTS  OF RULE 144A,  (II)  OUTSIDE THE UNITED
STATES IN AN OFFSHORE  TRANSACTION  COMPLYING  WITH THE  PROVISIONS  OF RULE 904
UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE  SECURITIES  ACT PROVIDED BY RULE 144 (IF  AVAILABLE),  (IV)  PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (V) TO THE ISSUER,
ITS SUBSIDIARIES OR ITS DIRECT OR INDIRECT PARENT,  IN EACH OF CASES (I) THROUGH
(V)IN ACCORDANCE WITH ANY APPLICABLE  SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES,  AND (B) THE HOLDER  WILL,  AND EACH  SUBSEQUENT  HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE."


                                       42
<PAGE>


                           (B)      Notwithstanding  the  foregoing,  any Global
                                    Note or Definitive  Note issued  pursuant to
                                    subparagraphs   (b)(4),    (c)(3),   (c)(4),
                                    (d)(2),  (d)(3),  (e)(2),  (e)(3)  or (f) of
                                    this  Section  2.06 (and all Notes issued in
                                    exchange  therefor or substitution  thereof)
                                    will not bear the Private Placement Legend.

                  (2)      GLOBAL  NOTE  LEGEND.  Each  Global  Note will bear a
         legend in substantially the following form:

"THIS  GLOBAL  NOTE IS HELD  BY THE  DEPOSITARY  (AS  DEFINED  IN THE  INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF,  AND IS NOT  TRANSFERABLE  TO ANY PERSON UNDER ANY  CIRCUMSTANCES
EXCEPT THAT (1) THE TRUSTEE  MAY MAKE SUCH  NOTATIONS  HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,  (3) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE  INDENTURE  AND  (IV)  THIS  GLOBAL  NOTE  MAY BE  TRANSFERRED  TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS  AND UNTIL IT IS  EXCHANGED  IN WHOLE OR IN PART FOR NOTES IN  DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED  EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER  NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR  DEPOSITARY  OR A NOMINEE OF SUCH  SUCCESSOR  DEPOSITARY.  UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET,  NEW YORK,  NEW YORK)  ("DTC"),  TO THE COMPANY OR ITS
AGENT FOR  REGISTRATION  OF TRANSFER,  EXCHANGE OR PAYMENT,  AND ANY CERTIFICATE
ISSUED  IS  REGISTERED  IN THE NAME OF CEDE & CO. OR SUCH  OTHER  NAME AS MAY BE
REQUESTED  BY AN  AUTHORIZED  REPRESENTATIVE  OF DTC (AND ANY PAYMENT IS MADE TO
CEDE  & CO.  OR  SUCH  OTHER  ENTITY  AS  MAY  BE  REQUESTED  BY  AN  AUTHORIZED
REPRESENTATIVE  OF DTC),  ANY TRANSFER,  PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE  BY OR TO ANY PERSON IS  WRONGFUL  INASMUCH  AS THE  REGISTERED  OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."

                  (3)      REGULATION  S  TEMPORARY  GLOBAL  NOTE  LEGEND.   The
         Regulation S Temporary  Global Note will bear a legend in substantially
         the following form:

"THE RIGHTS  ATTACHING  TO THIS  REGULATION  S TEMPORARY  GLOBAL  NOTE,  AND THE
CONDITIONS AND PROCEDURES  GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED  IN THE  INDENTURE  (AS  DEFINED  HEREIN).  NEITHER THE HOLDER NOR THE
BENEFICIAL  OWNERS OF THIS REGULATION S TEMPORARY  GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."


                                       43
<PAGE>


         (h)      CANCELLATION  AND/OR  ADJUSTMENT OF GLOBAL NOTES. At such time
as all beneficial  interests in a particular Global Note have been exchanged for
Definitive Notes or a particular  Global Note has been redeemed,  repurchased or
canceled in whole and not in part,  each such Global Note will be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof.  At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or  transferred  to a Person who will take delivery  thereof in
the form of a  beneficial  interest  in another  Global  Note or for  Definitive
Notes,  the principal  amount of Notes  represented  by such Global Note will be
reduced  accordingly and an endorsement  will be made on such Global Note by the
Trustee or by the  Depositary  at the  direction  of the Trustee to reflect such
reduction;  and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial  interest
in another Global Note, such other Global Note will be increased accordingly and
an  endorsement  will  be  made on such  Global  Note by the  Trustee  or by the
Depositary at the direction of the Trustee to reflect such increase.

         (i)      GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.

                  (1)      To permit  registrations  of transfers and exchanges,
         at the  Registrar's  request the Company will execute  Global Notes and
         Definitive   Notes,   and  the  Trustee   will,   upon  receipt  of  an
         Authentication Order in accordance with Section 2.02, authenticate such
         Notes.

                  (2)      No  service  charge  will be made  to a  Holder  of a
         Global Note or to a Holder of a Definitive Note for any registration of
         transfer or exchange,  but the Company may require  Holder to pay a sum
         sufficient  to pay all  transfer  tax or similar  governmental  charges
         payable in connection  therewith (other than any such transfer taxes or
         similar  governmental charge payable upon exchange or transfer pursuant
         to  Sections  2.10,  3.06,  3.09,  4.10,  4.15  and 9.05  hereof).  The
         Registrar  will not be required to register the transfer of or exchange
         any Note  selected  for  redemption  in whole  or in part,  except  the
         unredeemed portion of any Note being redeemed in part.

                  (3)      All Global Notes and Definitive Notes issued upon any
         registration  of transfer or  exchange  of Global  Notes or  Definitive
         Notes will be the valid obligations of the Company, evidencing the same
         debt,  and entitled to the same benefits under this  Indenture,  as the
         Global Notes or Definitive Notes  surrendered upon such registration of
         transfer or exchange.

                  (4)      The Company will not be required:

                           (A)      to issue,  to register the transfer of or to
                                    exchange  any  Notes  (i)  during  a  period
                                    beginning at the opening of business 15 days
                                    before the day of any selection of Notes for
                                    redemption  under  Section  3.02  hereof and
                                    ending at the close of  business  on the day
                                    of  selection,   or  (ii)  during  a  period
                                    beginning at the opening of business 15 days
                                    before any Interest  Payment Date and ending
                                    at the closing of business on such  Interest
                                    Payment Date;


                                       44
<PAGE>


                           (B)      to register  the  transfer of or to exchange
                                    any Note selected for redemption in whole or
                                    in part,  except the  unredeemed  portion of
                                    any Note being redeemed in part; or

                           (C)      to register the transfer of or to exchange a
                                    Note  between  a  record  date  and the next
                                    succeeding Interest Payment Date.

                  (5)      Prior to due  presentment  for the  registration of a
         transfer of any Note,  the Trustee,  any Agent and the Company may deem
         and  treat  the  Person  in whose  name any Note is  registered  as the
         absolute  owner of such Note for the  purpose of  receiving  payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the  Trustee,  any Agent or the  Company  shall be  affected by
         notice to the contrary.

                  (6)      The  Trustee  will  authenticate   Global  Notes  and
         Definitive  Notes in  accordance  with the  provisions  of Section 2.02
         hereof.

                  (7)      All  certifications,  certificates  and  Opinions  of
         Counsel  required to be  submitted  to the  Registrar  pursuant to this
         Section  2.06 to effect a  registration  of transfer or exchange may be
         submitted  by  facsimile,  so  long  as an  executed  original  will be
         delivered if requested by the Trustee.

Section 2.07      REPLACEMENT NOTES.

         If any mutilated  Note is surrendered to the Trustee or the Company and
the Trustee receives  evidence to its  satisfaction of the destruction,  loss or
theft of any Note,  the Company will issue and the  Trustee,  upon receipt of an
Authentication  Order,  will  authenticate  a replacement  Note if the Trustee's
requirements  are met. If required by the Trustee or the  Company,  an indemnity
bond must be supplied by the Holder that is  sufficient  in the  judgment of the
Trustee and the Company to protect the Company,  the Trustee,  any Agent and any
authenticating  agent  from any loss  that any of them may  suffer  if a Note is
replaced. The Company may charge for its expenses in replacing a Note.

         Every  replacement Note is an additional  obligation of the Company and
will  be  entitled  to  all  of the  benefits  of  this  Indenture  equally  and
proportionately  with all  other  Notes  duly  issued  hereunder.

Section 2.08      OUTSTANDING NOTES.

         The Notes  outstanding at any time are all the Notes  authenticated  by
the  Trustee  except  for  those  canceled  by  it,  those  delivered  to it for
cancellation,  those reductions in the interest in a Global Note effected by the
Trustee in accordance  with the provisions  hereof,  and those described in this
Section as not  outstanding.  Except as set forth in Section 2.09 hereof, a Note
does not cease to be  outstanding  because  the Company or an  Affiliate  of the
Company holds the Note; however, Notes held by the Company or by an Affiliate of
the  Company  shall not be deemed to be  outstanding  for  purposes  of  Section
3.07(a)  or  Article 9 hereof or for  purposes  of the  definition  of  Majority
Noteholders  and  Supermajority  Noteholders  (provided,  that for  purposes  of
determining  whether the Trustee will be protected in relying on any  direction,


                                       45
<PAGE>


waiver, determination or consent, only Notes that the Trustee knows are so owned
will be disregarded).

         If a Note is replaced  pursuant to Section 2.07 hereof, it ceases to be
outstanding  unless  the  Trustee  receives  proof  satisfactory  to it that the
replaced Note is held by a bona fide purchaser.

         If the principal  amount of any Note is  considered  paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

         If the  Paying  Agent  (other  than the  Company,  a  Subsidiary  or an
Affiliate of any thereof) holds,  on a redemption  date or maturity date,  money
sufficient to pay Notes  payable on that date,  then on and after that date such
Notes  will be  deemed  to be no  longer  outstanding  and will  cease to accrue
interest.

Section 2.09      TREASURY NOTES.

         In determining  whether the Holders of the required principal amount of
Notes have  concurred in any direction,  waiver or consent,  and for purposes of
Section  3.07(a),  Notes  owned by the  Company,  or by any Person  directly  or
indirectly  controlling  or  controlled  by or under  direct or indirect  common
control with the Company,  will be considered as though not outstanding,  except
that for the  purposes of  determining  whether the Trustee will be protected in
relying on any such  direction,  waiver or consent,  only Notes that the Trustee
knows are so owned will be so disregarded.

Section 2.10      TEMPORARY NOTES.

         Until  certificates  representing  Notes are ready  for  delivery,  the
Company may prepare and the Trustee,  upon receipt of an  Authentication  Order,
will authenticate  temporary Notes. Temporary Notes will be substantially in the
form of certificated  Notes but may have  variations that the Company  considers
appropriate  for  temporary  Notes and as may be  reasonably  acceptable  to the
Trustee.  Without  unreasonable  delay, the Company will prepare and the Trustee
will authenticate definitive Notes in exchange for temporary Notes.

         Holders of  temporary  Notes will be entitled to all of the benefits of
this Indenture.

Section 2.11      CANCELLATION.

         The  Company  at  any  time  may  deliver  Notes  to  the  Trustee  for
cancellation.  The  Registrar  and Paying  Agent will forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else will cancel all Notes  surrendered  for  registration of
transfer,  exchange,  payment,  replacement  or  cancellation  and will  destroy
canceled  Notes  (subject to the record  retention  requirement  of the Exchange
Act).  Certification  of the destruction of all canceled Notes will be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.


                                       46
<PAGE>


Section 2.12      DEFAULTED INTEREST.

         If the Company  defaults in a payment of interest on the Notes, it will
pay the  defaulted  interest in any lawful  manner plus,  to the extent  lawful,
interest payable on the defaulted interest,  to the Persons who are Holders on a
subsequent  special  record date, in each case at the rate provided in the Notes
and in Section  4.01  hereof.  The Company will notify the Trustee in writing of
the amount of defaulted  interest  proposed to be paid on each Note and the date
of the  proposed  payment.  The Company  will fix or cause to be fixed each such
special record date and payment date,  PROVIDED that no such special record date
may be less than 10 days prior to the related  payment  date for such  defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written  request of the Company,  the Trustee in the name and at the expense
of the Company)  will mail or cause to be mailed to Holders a notice that states
the  special  record  date,  the  related  payment  date and the  amount of such
interest to be paid.

                                   ARTICLE 3.
                            REDEMPTION AND PREPAYMENT

Section 3.01      NOTICES TO TRUSTEE.

         If the  Company  elects  to  redeem  Notes  pursuant  to  the  optional
redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption  date,  an Officer's
Certificate setting forth:

                  (1)      the clause of this  Indenture  pursuant  to which the
         redemption shall occur;

                  (2)      the redemption date;

                  (3)      the principal amount of Notes to be redeemed; and

                  (4)      the redemption price.

Section 3.02      SELECTION AND NOTICE

         If less  than all of the  Notes are to be  redeemed  at any  time,  the
Trustee will select  Notes for  redemption  on a pro rata basis,  by lot or such
other methods as the Trustee shall deem fair and  appropriate,  unless otherwise
required by law or applicable stock exchange or depository requirements.

         No Notes  of  $1,000  or less  can be  redeemed  in  part.  Notices  of
redemption  will be mailed by first  class mail at least 30 but not more than 60
days  before the  redemption  date to each Holder of Notes to be redeemed at its
registered  address,  except that redemption  notices may be mailed more than 60
days prior to a  redemption  date if the notice is issued in  connection  with a
defeasance  of the Notes or a  satisfaction  and  discharge  of this  Indenture.
Notices of redemption may not be conditional.

         If any Note is to be  redeemed in part only,  the notice of  redemption
that relates to that Note will state the portion of the principal amount of that
Note  that is to be  redeemed.  A new  Note in  principal  amount  equal  to the
unredeemed portion of the original Note will be issued in


                                       47
<PAGE>


the name of the Holder upon  cancellation of the original Note. Notes called for
redemption  become  due on the date  fixed  for  redemption.  On and  after  the
redemption date,  interest ceases to accrue on Notes or portions of Notes called
for redemption.

Section 3.03      NOTICE OF REDEMPTION.

         Subject to the provisions of Section 3.09 hereof,  at least 30 days but
not more than 60 days before a redemption  date,  the Company will mail or cause
to be mailed,  by first class mail, a notice of  redemption to each Holder whose
Notes are to be  redeemed at its  registered  address,  except  that  redemption
notices may be mailed more than 60 days prior to a redemption date if the notice
is issued in  connection  with a defeasance of the Notes or a  satisfaction  and
discharge of this Indenture pursuant to Articles 8 or 12 of this Indenture.

         The notice will identify the Notes to be redeemed and will state:

                  (1)      the redemption date;

                  (2)      the redemption price;

                  (3)      if any Note is being redeemed in part, the portion of
         the  principal  amount of such Note to be redeemed and that,  after the
         redemption  date upon  surrender  of such Note,  a new Note or Notes in
         principal  amount equal to the  unredeemed  portion will be issued upon
         cancellation of the original Note;

                  (4)      the name and address of the Paying Agent;

                  (5)      that Notes called for redemption  must be surrendered
         to the Paying Agent to collect the redemption price;

                  (6)      that,  unless the  Company  defaults  in making  such
         redemption  payment,  interest on Notes called for redemption ceases to
         accrue on and after the redemption date;

                  (7)      the  paragraph  of the Notes  and/or  Section of this
         Indenture  pursuant to which the Notes called for  redemption are being
         redeemed; and

                  (8)      that no  representation is made as to the correctness
         or  accuracy  of the CUSIP  number,  if any,  listed in such  notice or
         printed on the Notes.

         At  the  Company's  request,  the  Trustee  will  give  the  notice  of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company has delivered to the Trustee,  at least 45 days prior to the  redemption
date, an Officer's Certificate  requesting that the Trustee give such notice and
setting  forth the  information  to be stated in such  notice as provided in the
preceding paragraph.

Section 3.04      EFFECT OF NOTICE OF REDEMPTION.

         Once notice of  redemption  is mailed in  accordance  with Section 3.03
hereof,  Notes called for redemption  become  irrevocably due and payable on the
redemption date at the redemption


                                       48
<PAGE>


price. A notice of redemption may not be  conditional.  If the Company  complies
with the provisions of this  paragraph,  on and after the redemption or purchase
date, interest will cease to accrue on the Notes or the portions of Notes called
for redemption or purchase.

Section 3.05      DEPOSIT OF REDEMPTION OR PURCHASE PRICE.

         One Business Day prior to the  redemption or purchase  price date,  the
Company will deposit with the Trustee or with the Paying Agent money  sufficient
to pay the redemption or purchase  price of and accrued  interest and Liquidated
Damages,  if any,  on all Notes to be redeemed or  purchased  on that date.  The
Trustee  or the Paying  Agent  will  promptly  return to the  Company,  upon the
Company's  written  request,  any money deposited with the Trustee or the Paying
Agent by the Company in excess of the amounts necessary to pay the redemption or
purchase price of, and accrued interest and Liquidated  Damages,  if any, on all
Notes to be redeemed or purchased.

         If a Note is redeemed or purchased on or after an interest  record date
but on or prior to the  related  Interest  Payment  Date,  then any  accrued and
unpaid  interest  shall  be paid to the  Person  in  whose  name  such  Note was
registered  at the close of business on such record date. If any Note called for
redemption or purchase is not so paid upon  surrender for redemption or purchase
because of the failure of the Company to comply  with the  preceding  paragraph,
interest shall be paid on the unpaid principal,  from the redemption or purchase
date until such  principal is paid, and to the extent lawful on any interest not
paid on such unpaid  principal,  in each case at the rate  provided in the Notes
and in Section 4.01 hereof.

Section 3.06      NOTES REDEEMED OR PURCHASED IN PART.

         Upon  surrender of a Note that is redeemed or  purchased  in part,  the
Company will issue and,  upon receipt of an  Authentication  Order,  the Trustee
will  authenticate for the Holder at the expense of the Company a new Note equal
in  principal  amount  to the  unredeemed  or  unpurchased  portion  of the Note
surrendered.

Section 3.07      OPTIONAL REDEMPTION.

         At any time prior to December 15,  2008,  the Company may on any one or
more  occasions  redeem  up to 35% of the  aggregate  principal  amount of Notes
issued under this  Indenture at a redemption  price of 110.500% of the principal
amount,  plus accrued and unpaid interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of a sale of Equity Interests (other
than  Disqualified  Stock) of the Company or a cash  contribution  to the common
equity capital of the Company; PROVIDED that:

                  (1)      at least  65% of the  aggregate  principal  amount of
         Notes originally  issued under this Indenture  (excluding Notes held by
         the Company and its Subsidiaries) remains outstanding immediately after
         the occurrence of such redemption; and

                  (2)      the  redemption  occurs within 90 days of the date of
         the closing of such sale of Equity Interests or contribution.


                                       49
<PAGE>


         On the dates specified  below, the Company,  at its option,  may redeem
all or a part of the Notes upon not less than 30 nor more than 60 days'  notice,
at the redemption  prices  (expressed as  percentages  of principal  amount) set
forth below plus accrued and unpaid interest and Liquidated  Damages, if any, on
the Notes redeemed,  to the applicable  redemption  date, if redeemed during the
applicable period set forth below,  subject to the rights of holders of Notes on
the relevant record date to receive  interest on the relevant  interest  payment
date:

         PERIOD                                           PERCENTAGE
         ------                                           ----------
         December 15, 2008 to December 14, 2009           105.250%
         December 15, 2009 to June 14, 2010               102.625%
         June 15, 2010 and thereafter                     100.000%


         Unless the Company  defaults in the  payment of the  redemption  price,
interest  will  cease to accrue  on the Notes or  portions  thereof  called  for
redemption on the applicable redemption date.

Section 3.08      MANDATORY REDEMPTION.

         The Company is not  required to make  mandatory  redemption  or sinking
fund payments with respect to the Notes.

Section 3.09      OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.

         In the event that,  pursuant  to Section  4.10  hereof,  the Company is
required to  commence an offer to all Holders to purchase  Notes (an "ASSET SALE
OFFER"), it will follow the procedures specified below.

         The Asset Sale Offer  shall be made to all  Holders  and all holders of
other  Indebtedness  that is PARI  PASSU  with the Notes  containing  provisions
similar to those set forth in this  Indenture with respect to offers to purchase
or redeem  with the  proceeds  of sales and  assets.  The Asset  Sale Offer will
remain open for a period of at least 20 Business Days following its commencement
and not more than 30 Business Days, except to the extent that a longer period is
required by applicable  law (the "OFFER  PERIOD").  No later than three Business
Days after the  termination  of the Offer  Period  (the  "PURCHASE  DATE"),  the
Company will apply all Excess  Proceeds (the "OFFER  AMOUNT") to the purchase of
Notes and such other PARI PASSU  Indebtedness  containing  provisions similar to
this Section 3.09 (on a PRO RATA basis, if applicable,  with such adjustments as
may be deemed  appropriate by the Company so that only Notes in denominations of
$1,000, or integral multiples  thereof,  will be purchased) or, if less than the
Offer Amount has been  tendered,  all Notes and other  Indebtedness  tendered in
response to the Asset Sale Offer.  Payment  for any Notes so  purchased  will be
made in the same manner as interest payments are made.

         If the Purchase  Date is on or after an interest  record date and on or
before the related Interest  Payment Date, any accrued and unpaid interest,  and
Liquidated  Damages,  if any, will be paid to the Person in whose name a Note is
registered at the close of business on such record


                                       50
<PAGE>


date,  and no  additional  interest  will be payable to Holders who tender Notes
pursuant to the Asset Sale Offer.

         Upon the commencement of an Asset Sale Offer, the Company will send, by
first class mail or electronic  notice,  a notice to the Trustee and each of the
Holders,  with a copy to the Trustee.  The notice will contain all  instructions
and materials  necessary to enable such Holders to tender Notes  pursuant to the
Asset Sale  Offer.  The  notice,  which will  govern the terms of the Asset Sale
Offer, will state:

                  (1)      that the Asset Sale Offer is being made  pursuant  to
         this  Section  3.09 and Section  4.10 hereof and the length of time the
         Asset Sale Offer will remain open;

                  (2)      the Offer Amount, the purchase price and the Purchase
         Date;

                  (3)      that any Note not  tendered or  accepted  for payment
         will continue to accrue interest;

                  (4)      that,  unless the  Company  defaults  in making  such
         payment, any Note accepted for payment pursuant to the Asset Sale Offer
         will cease to accrue interest after the Purchase Date;

                  (5)      that  Holders  electing  to  have  a  Note  purchased
         pursuant  to an Asset Sale Offer may elect to have Notes  purchased  in
         integral multiples of $1,000 only;

                  (6)      that  Holders  electing  to  have  a  Note  purchased
         pursuant  to any Asset Sale Offer will be  required  to  surrender  the
         Note,  with the form entitled  "Option of Holder to Elect  Purchase" on
         the reverse of the Note completed,  or transfer by book-entry transfer,
         to the Company, a Depositary,  if appointed by the Company, or a Paying
         Agent at the address specified in the notice at least three days before
         the Purchase Date;

                  (7)      that  Holders  will be  entitled  to  withdraw  their
         election if the Company,  the  Depositary or the Paying  Agent,  as the
         case may be,  receives,  not  later  than the  expiration  of the Offer
         Period,  a telegram,  telex,  facsimile  transmission or letter setting
         forth  the name of the  Holder,  the  principal  amount of the Note the
         Holder  delivered  for  purchase  and a  statement  that such Holder is
         withdrawing his election to have such Note purchased;

                  (8)      that, if the aggregate  principal amount of Notes and
         other PARI PASSU Indebtedness  surrendered by Holders exceeds the Offer
         Amount,  the  Company  will  select  the  Notes and  other  PARI  PASSU
         Indebtedness to be purchased on a PRO RATA basis based on the principal
         amount of Notes and such  other  PARI  PASSU  Indebtedness  surrendered
         (with such  adjustments as may be deemed  appropriate by the Company so
         that only Notes in  denominations  of  $1,000,  or  integral  multiples
         thereof, will be purchased); and

                  (9)      that Holders whose Notes were  purchased only in part
         will be issued new Notes equal in principal  amount to the  unpurchased
         portion  of  the  Notes   surrendered  (or  transferred  by  book-entry
         transfer).


                                       51
<PAGE>


         On or before the Purchase Date, the Company will, to the extent lawful,
accept  for  payment,  on a PRO rata basis to the  extent  necessary,  the Offer
Amount of Notes or portions thereof  tendered  pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and will
deliver  to the  Trustee an  Officer's  Certificate  stating  that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company,  the Depositary or the Paying Agent, as
the case may be, will  promptly  (but in any case not later than five days after
the Purchase Date) mail or deliver to each  tendering  Holder an amount equal to
the  purchase  price of the Notes  tendered by such  Holder and  accepted by the
Company for purchase,  and the Company will promptly  issue a new Note,  and the
Trustee,  upon  receipt  of  an  Authentication  Order  from  the  Company  will
authenticate  and mail or deliver such new Note to such  Holder,  in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not so
accepted  shall be  promptly  mailed or  delivered  by the Company to the Holder
thereof.  The Company will publicly announce the results of the Asset Sale Offer
on the Purchase Date.

         Other than as specifically  provided in this Section 3.09, any purchase
pursuant  to this  Section  3.09 shall be made  pursuant  to the  provisions  of
Sections 3.01 through 3.06 hereof.

                                    ARTICLE 4.
                                    COVENANTS

Section 4.01      PAYMENT OF NOTES.

         The Company shall pay or cause to be paid the  principal,  premium,  if
any, and interest and Liquidated  Damages, if any, on the Notes on the dates and
in the manner provided in the Notes.  Principal,  premium,  if any, and interest
and Liquidated  Damages,  if any will be considered  paid on the date due if the
Paying  Agent,  if other than the Company or a Subsidiary  thereof,  holds as of
10:00  a.m.  Eastern  Time on the due date  money  deposited  by the  Company in
immediately  available  funds  and  designated  for  and  sufficient  to pay all
principal,  premium,  if any, and interest  then due. The Company  shall pay all
Liquidated  Damages,  if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.

Section 4.02      MAINTENANCE OF OFFICE OR AGENCY.

         The Company shall  maintain an office or agency (which may be an office
of the Trustee or an affiliate of the Trustee,  Registrar or co-registrar) where
Notes may be surrendered for  registration of transfer or for exchange and where
notices  and  demands  to or upon the  Company  in respect of the Notes and this
Indenture  may be served.  The Company shall give prompt  written  notice to the
Trustee of the  location,  and any  change in the  location,  of such  office or
agency. If at any time the Company fails to maintain any such required office or
agency  or  fails  to  furnish  the  Trustee  with  the  address  thereof,  such
presentations,  surrenders,  notices  and  demands  may be made or served at the
Corporate Trust Office of the Trustee.

         The  Company  may also from time to time  designate  one or more  other
offices or agencies where the Notes may be presented or  surrendered  for any or
all such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER,  that no such  designation or rescission will in any manner relieve the
Company of its obligation to maintain an office or agency for such


                                       52
<PAGE>


purposes.  The Company  shall give prompt  written  notice to the Trustee of any
such  designation  or  rescission  and of any change in the location of any such
other office or agency.

         The Company hereby designates the Corporate Trust Office of the Trustee
as an agency of the Company in accordance with Section 2.03 hereof.

Section 4.03      REPORTS.

         Whether or not required by the rules and regulations of the Commission,
so long as any Notes are  outstanding,  the Company will furnish to the Trustee,
within the time periods specified in the Commission's rules and regulations:

                  (1)      all  quarterly  and  annual  reports  that  would  be
required to be filed with the  Commission  on Forms 10-Q and 10-K in the Company
were required to file such reports; and

                  (2)      all  current  reports  that would be  required  to be
filed with the  Commission on Form 8-K if the Company were required to file such
reports.

         All  such  reports  will  be  prepared  in  all  material  respects  in
accordance  with all of the rules and  regulations  applicable  to such reports.
Each  annual  report  on Form  10-K  will  include  a  report  on the  Company's
consolidated   financial  statements  by  the  Company's  certified  independent
accountants.  In addition,  following  the  consummation  of the exchange  offer
contemplated by the Registration Rights Agreement,  the Company will file a copy
of each of the  reports  referred  to in  clauses  (1) and (2)  above  with  the
Commission  for public  availability  within the time  periods  specified in the
rules and regulations applicable to such reports (unless the Commission will not
accept such a filing).

         If, at any time after  consummation of the exchange offer  contemplated
by the Registration  Rights  Agreement,  the Company is no longer subject to the
periodic reporting  requirements of the Exchange Act for any reason, the Company
will  nevertheless  continue  filing  the  reports  specified  in the  preceding
paragraphs  of this  covenant  with  the  Commission  within  the  time  periods
specified above unless the Commission will not accept such a filing. The Company
will not take any action for the purpose of causing the Commission not to accept
any such filings.  If,  notwithstanding  the foregoing,  the Commission will not
accept the Company's  filings for any reason,  the Company will post the reports
referred to in the preceding  paragraphs on its website  within the time periods
that would apply if the Company  were  required to file those  reports  with the
Commission.

         If the Company has designated any of its  Subsidiaries  as Unrestricted
Subsidiaries,  then the quarterly and annual financial  information  required by
the preceding paragraphs will include a reasonably detailed presentation, either
on the face of the  financial  statements or in the  footnotes  thereto,  and in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  of the financial condition and results of operations of the Company
and its  Restricted  Subsidiaries  separate  from the  financial  condition  and
results of operations of the Unrestricted Subsidiaries of the Company.


                                       53
<PAGE>


         In addition,  the Company and the Guarantors agree that, for so long as
any Notes remain outstanding,  if at any time they are not required to file with
the  Commission  the reports  required by the  preceding  paragraphs,  they will
furnish to the holders of Notes and prospective  investors,  upon their request,
the information  required to be delivered  pursuant to Rule 144A(d)(4) under the
Securities Act.

Section 4.04      COMPLIANCE CERTIFICATE.

         (a)      The  Company  and each  Guarantor  (to the  extent  that  such
Guarantor is so required under the TIA) shall deliver to the Trustee,  within 90
days after the end of each fiscal year, an Officer's  Certificate  stating that,
in the course of  performing  their  duties as  Officers  of the  Company or the
Guarantors,  as  applicable,  a review of the  activities of the Company and its
Subsidiaries   during  the  preceding  fiscal  year  has  been  made  under  the
supervision  of the  signing  Officers  with a view to  determining  whether the
Company has kept,  observed,  performed and fulfilled its obligations under this
Indenture,   and  further  stating,   as  to  each  such  Officer  signing  such
certificate,  that to the best of his or her  knowledge  the  Company  has kept,
observed,  performed and  fulfilled  each and every  covenant  contained in this
Indenture and is not in default in the  performance  or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of which
he or she may have  knowledge  and what action the Company is taking or proposes
to take with respect  thereto)  and that to the best of his or her  knowledge no
event has  occurred  and  remains in  existence  by reason of which  payments on
account of the  principal of or interest,  if any, on the Notes is prohibited or
if such  event has  occurred,  a  description  of the event and what  action the
Company is taking or proposes to take with respect thereto.

         (b)      So long as not contrary to the then current recommendations of
the American Institute of Certified Public  Accountants,  the year-end financial
statements delivered pursuant to Section 4.04(a) above shall be accompanied by a
written statement of the Company's  independent public accountants (who shall be
registered  and in good standing with the Public  Company  Accounting  Oversight
Board)  that in making  the  examination  necessary  for  certification  of such
financial  statements,  nothing has come to their attention that would lead them
to believe that the Company has violated any  provisions of Article 4 or Article
5 hereof  or, if any such  violation  has  occurred,  specifying  the nature and
period of existence thereof, it being understood that such accountants shall not
be liable  directly  or  indirectly  to any  Person  for any  failure  to obtain
knowledge of any such violation.

         (c)      So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee,  promptly upon any Officer becoming aware of any Default
or Event of Default, an Officer's  Certificate  specifying such Default or Event
of Default  and what  action  the  Company  is taking or  proposes  to take with
respect thereto.

Section 4.05      TAXES.

         The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency,  all material taxes, assessments,  and governmental levies
except such as are  contested in good faith and by  appropriate  proceedings  or
where the failure to effect such payment is not adverse in any material  respect
to the Holders of the Notes.


                                       54
<PAGE>


Section 4.06      STAY, EXTENSION AND USURY LAWS.

         The Company and each of the Guarantors  covenant (to the extent that it
may  lawfully do so) that they shall not at any time insist upon,  plead,  or in
any  manner  whatsoever  claim or take the  benefit or  advantage  of, any stay,
extension or usury law wherever enacted,  now or at any time hereafter in force,
that may  affect the  covenants  or the  performance  of this  Indenture  or the
Security  Documents;  and the Company and each of the  Guarantors (to the extent
that it may lawfully do so) hereby  expressly waives all benefit or advantage of
any such law,  and  covenant  that they  shall  not,  by resort to any such law,
hinder,  delay or impede  the  execution  of any  power  herein  granted  to the
Trustee,  but will suffer and permit the execution of every such power as though
no such law has been enacted.

Section 4.07      RESTRICTED PAYMENTS.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries to, directly or indirectly:

                  (1)      declare or pay any dividend or make any other payment
         or  distribution  on account of the Company's or any of its  Restricted
         Subsidiaries'  Equity Interests  (including,  without  limitation,  any
         payment in connection  with any merger or  consolidation  involving the
         Company  or any of its  Restricted  Subsidiaries)  or to the  direct or
         indirect   holders  of  the   Company's   or  any  of  its   Restricted
         Subsidiaries'  Equity  Interests in their  capacity as such (other than
         dividends  or  distributions  payable in Equity  Interests  (other than
         Disqualified  Stock)  of  the  Company  and  other  than  dividends  or
         distributions  payable to the Company or a Restricted Subsidiary of the
         Company);

                  (2)      purchase,  redeem or otherwise  acquire or retire for
         value (including,  without limitation, in connection with any merger or
         consolidation  involving  the  Company)  any  Equity  Interests  of the
         Company or any direct or indirect parent of the Company;

                  (3)      make any payment on or with  respect to, or purchase,
         redeem,   defease  or  otherwise   acquire  or  retire  for  value  any
         Indebtedness  of the  Company or any  Guarantor  that is  contractually
         subordinated  to the  Notes or to any  Note  Guarantee  (excluding  any
         intercompany  Indebtedness  between or among the Company and any of its
         Restricted Subsidiaries),  except (y) the purchase, repurchase or other
         acquisition  of  any  subordinated   Indebtedness  in  anticipation  of
         satisfying a scheduled maturity,  sinking fund or amortization or other
         installment  obligation,  in each case  within  one year of the date of
         acquisition,  and (z) a payment of interest or  principal at the Stated
         Maturity thereof; or

                  (4)      make any Restricted Investment (all such payments and
         other  actions  set  forth in  these  clauses  (1)  through  (4)  being
         collectively referred to as "RESTRICTED PAYMENTS"),

unless, at the time of and after giving effect to such Restricted Payment:

                  (1)      no Default or Event of Default  has  occurred  and is
         continuing;


                                       55
<PAGE>


                  (2)      the  Company  would,  at the time of such  Restricted
         Payment and after giving pro forma effect thereto as if such Restricted
         Payment had been made at the beginning of the  applicable  four-quarter
         period,  have  been  permitted  to incur at least  $1.00 of  additional
         Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
         in the first paragraph of Section 4.09 hereof; and

                  (3)      such Restricted Payment,  together with the aggregate
         amount of all other  Restricted  Payments  made by the  Company and its
         Restricted  Subsidiaries  after the date of this  Indenture  (excluding
         Restricted Payments permitted by clauses (2), (3), (4), (6), and (7) of
         the  next  succeeding  paragraph),   is  less  than  the  sum,  without
         duplication, of:

                           (A)      100% of the  aggregate  net  cash  proceeds,
                                    including   cash   and   Cash   Equivalents,
                                    received  by the  Company  since the date of
                                    this  Indenture  as a  contribution  to  its
                                    common  equity  capital or from the issue or
                                    sale  of  Equity  Interests  of the  Company
                                    (other than Disqualified  Stock) or from the
                                    issue or sale of convertible or exchangeable
                                    Disqualified   Stock   or   convertible   or
                                    exchangeable  debt securities of the Company
                                    that have been  converted  into or exchanged
                                    for such Equity Interests (other than Equity
                                    Interests  (or  Disqualified  Stock  or debt
                                    securities)  sold  to a  Subsidiary  of  the
                                    Company); PLUS

                           (B)      to the extent that any Restricted Investment
                                    that  was  made   after  the  date  of  this
                                    Indenture  is sold  for  cash  or  otherwise
                                    liquidated or repaid for cash, the lesser of
                                    (i) the cash return of capital  with respect
                                    to such Restricted Investment (less the cost
                                    of disposition, if any) and (ii) the initial
                                    amount of such Restricted Investment; PLUS

                           (C)      to  the   extent   that   any   Unrestricted
                                    Subsidiary of the Company designated as such
                                    after   the  date  of  this   Indenture   is
                                    redesignated  as  a  Restricted   Subsidiary
                                    after the date of this Indenture or has been
                                    merged into,  consolidated with or transfers
                                    or  otherwise  conveys  its  assets  to  the
                                    Company    or   any   of   its    Restricted
                                    Subsidiaries,  the  lesser  of (i) the  Fair
                                    Market Value of the Company's  Investment in
                                    such  Subsidiary  as of  the  date  of  such
                                    redesignation,     merger,    consolidation,
                                    transfer  or  conveyance  or (ii)  such Fair
                                    Market  Value as of the  date on which  such
                                    Subsidiary was  originally  designated as an
                                    Unrestricted  Subsidiary  after  the date of
                                    this Indenture; PLUS

                           (D)      50% of any dividends received by the Company
                                    or a  Restricted  Subsidiary  of the Company
                                    after  the  date of this  Indenture  from an
                                    Unrestricted  Subsidiary of the Company,  to
                                    the  extent  that  such  dividends  were not
                                    otherwise  included in the  Consolidated Net
                                    Income of the Company for such period.


                                       56
<PAGE>


         In addition, the preceding provisions will not prohibit:

                  (1)      the payment of any  dividend or  distribution  or the
         consummation  of any  redemption  within  60  days  after  the  date of
         declaration of the dividend or distribution or giving of the redemption
         notice,  as the case may be, if at the date of  declaration  or notice,
         the dividend,  distribution  or redemption  payment would have complied
         with the provisions of this Indenture;

                  (2)      the making of any Restricted Payment in exchange for,
         or out of the net cash proceeds of the  substantially  concurrent  sale
         (other than to a Subsidiary of the Company) of, Equity Interests of the
         Company  (other  than  Disqualified  Stock)  or from the  substantially
         concurrent  contribution  of  common  equity  capital  to the  Company;
         PROVIDED  that  the  amount  of any such  net  cash  proceeds  that are
         utilized for any such  Restricted  Payment will be excluded from clause
         (3)(A) of the preceding paragraph;

                  (3)      the  repurchase,   redemption,  defeasance  or  other
         acquisition or retirement for value of  Indebtedness  of the Company or
         any Guarantor that is contractually subordinated to the Notes or to any
         Note  Guarantee,  as  applicable,  with  the net cash  proceeds  from a
         substantially    concurrent   incurrence   of   Permitted   Refinancing
         Indebtedness;

                  (4)      so  long  as no  Default  or  Event  of  Default  has
         occurred and is continuing or would be caused  thereby,  the payment of
         any dividend or  distribution  (or, in the case of any  partnership  or
         limited liability  company,  any similar  distribution) by a Restricted
         Subsidiary  of the Company to the holders of its Equity  Interests on a
         pro rata basis;

                  (5)      the  repurchase of Equity  Interests  deemed to occur
         upon the exercise of stock options to the extent such Equity  Interests
         represent a portion of the exercise price of those stock options; and

                  (6)      so  long  as no  Default  or  Event  of  Default  has
         occurred and is continuing or would be caused  thereby,  the payment of
         regularly  scheduled  dividends with respect to the Series A Cumulative
         Convertible  Series A Preferred Stock of the Company in accordance with
         the terms thereof in effect on the date of this Indenture;

                  (7)      so  long  as no  Default  or  Event  of  Default  has
         occurred  and is  continuing  or would be caused  thereby,  payments or
         distributions   to  dissenting   shareholders   in  connection  with  a
         consolidation,  merger or  transfer of assets  that  complies  with the
         provisions described under Section 5.01;

                  (8)      so  long  as no  Default  or  Event  of  Default  has
         occurred and is continuing or would be caused thereby, other Restricted
         Payments not to exceed $2.0 million  since the date of this  Indenture;
         and

                  (9)      payments  of  $16.4  million  to  repay   obligations
         outstanding  under the  Existing  Credit  Agreement;  payments  of $6.4
         million to repay other short term notes  outstanding  as of the date of
         this Indenture;  payments of $7.8 million to  collateralize  letters of
         credit with respect to obligations to reclaim lands used for mining, to
         pay


                                       57
<PAGE>


         federal  and  state  workers'   compensation,   to  secure  coal  lease
         obligations and to satisfy other miscellaneous obligations; payments of
         $4.0 million to purchase and upgrade existing railroad facilities;  and
         payments  of $3.0  million to open an  existing  preparation  plant and
         loadout facility.

         For purposes of  determining  compliance  with this  covenant,  (i) the
amount of all  Restricted  Payments  (other  than cash) will be the Fair  Market
Value  on the  date of the  Restricted  Payment  of the  asset(s),  property  or
securities proposed to be transferred or issued by the Company or any Restricted
Subsidiary,  as the case may be, pursuant to the Restricted Payment, and (ii) in
the event that a Restricted  Payment  meets the criteria of more than one of the
types of Restricted Payments described in the above clauses, including the first
paragraph of this Section 4.07, the Company may, in its sole  discretion,  order
and classify,  and from time to time may reclassify,  such Restricted Payment if
it would have been permitted at the time such Restricted Payment was made and at
the time of such  reclassification.  The Fair  Market  Value of any  property or
assets or  securities  that are required to be valued by this  covenant  will be
determined by the Board of Directors. The Board of Directors' determination must
be based upon an opinion or  appraisal  issued by an  accounting,  appraisal  or
investment  banking firm of national  standing if the Fair Market Value  exceeds
$5.0 million.

Section 4.08     DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries  to,  directly or  indirectly,  create or permit to exist or become
effective  any  consensual  encumbrance  or  restriction  on the  ability of any
Restricted Subsidiary to:

                  (1)      pay dividends or make any other  distributions on its
         Capital Stock to the Company or any of its Restricted Subsidiaries,  or
         with respect to any other interest or participation in, or measured by,
         its profits,  or pay any Indebtedness owed to the Company or any of its
         Restricted Subsidiaries;

                  (2)      make loans or  advances  to the Company or any of its
         Restricted Subsidiaries; or

                  (3)      sell,  lease or  transfer  any of its  properties  or
         assets to the Company or any of its Restricted Subsidiaries.

         However,  the preceding  restrictions will not apply to encumbrances or
restrictions existing under or by reason of:

                  (1)      the  Existing  Credit  Agreement  (until  obligations
         owing under such agreement are repaid);

                  (2)      a First Lien Credit  Facility or and any agreement or
         instrument in effect on the date of this Indenture;

                  (3)      this Indenture, the Notes and the Note Guarantees;

                  (4)      any applicable law, rule, regulation or order;


                                       58
<PAGE>


                  (5)      any  instrument  governing  Indebtedness  or  Capital
         Stock of a Person  acquired  by the  Company  or any of its  Restricted
         Subsidiaries  as in effect at the time of such  acquisition  (except to
         the  extent  such   Indebtedness  or  Capital  Stock  was  incurred  in
         connection  with  or  in  contemplation  of  such  acquisition),  which
         encumbrance  or  restriction  is not  applicable to any Person,  or the
         properties  or assets of any  Person,  other  than the  Person,  or the
         property or assets of the Person,  so acquired;  PROVIDED  that, in the
         case of Indebtedness,  such  Indebtedness was permitted by the terms of
         this Indenture to be incurred;

                  (6)      encumbrances or  restrictions  (A) that restrict in a
         customary manner the subletting, assignment or transfer of any property
         or asset that is a lease,  license,  conveyance  or contract or similar
         property  or asset,  or (B)  existing  by virtue  of any  transfer  of,
         agreement to transfer, option or right with respect to, or Lien on, any
         property  or asset of the  Company  or any  Restricted  Subsidiary  not
         otherwise prohibited by this Indenture;

                  (7)      purchase money  obligations for property  acquired in
         the ordinary  course of business  and Capital  Lease  Obligations  that
         impose  restrictions on the property  purchased or leased of the nature
         described in clause (3) of the preceding paragraph;

                  (8)      any  agreement for the sale or other  disposition  of
         all or substantially all of the Capital Stock of, or property or assets
         of,  a  Restricted  Subsidiary  that  restricts  distributions  by that
         Restricted Subsidiary pending the sale or other disposition;

                  (9)      Permitted Refinancing Indebtedness and any amendment,
         extension,  refinancing  or  renewal  of any  instrument  or  agreement
         permitted by this covenant; PROVIDED that the restrictions contained in
         the agreements governing such Permitted Refinancing Indebtedness or any
         such  amendment,  extension,  refinancing or renewal are not materially
         more  restrictive,  taken  as a  whole,  than  those  contained  in the
         agreements   governing  the   Indebtedness   being  refinanced  or  the
         instrument or agreement being amended, extended, refinanced or renewed;

                  (10)     Liens  permitted  to be incurred  under  Section 4.12
         hereof that limit the right of the debtor to dispose of the  properties
         or assets subject to such Liens; and

                  (11)     provisions  limiting the  disposition or distribution
         of  assets  or  property  in  joint  venture  agreements,   asset  sale
         agreements,  sale-leaseback agreements, stock sale agreements and other
         similar  agreements  entered  into with the  approval of the  Company's
         Board  of  Directors,  which  limitation  is  applicable  only  to  the
         properties or assets that are the subject of such agreements.

Section 4.09      INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise  become directly or indirectly  liable,  contingently or otherwise,
with respect to  (collectively,  "INCUR") any Indebtedness  (including  Acquired
Debt), and the Company will not issue any Disqualified Stock; PROVIDED, HOWEVER,
that the  Company  may incur  Indebtedness  (including  Acquired  Debt) or issue


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<PAGE>


Disqualified  Stock, and a Guarantor may incur Indebtedness  (including Acquired
Debt) if the Fixed Charge  Coverage  Ratio for the Company's most recently ended
four full fiscal quarters for which internal financial  statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such  Disqualified  Stock or such Preferred Stock is issued,  as the case may
be,  would have been at least 2.0 to 1 on or prior to the first  anniversary  of
the date hereof,  2.25 to 1 after the first  anniversary  of the date hereof but
before the second anniversary of the date hereof, and 2.50 to 1 after the second
anniversary of the date hereof, determined on a pro forma basis (including a pro
forma  application  of  the  net  proceeds  therefrom),  as  if  the  additional
Indebtedness had been incurred or the Disqualified  Stock or the Preferred Stock
had been  issued,  as the case may be,  at the  beginning  of such  four-quarter
period.

         The first  paragraph of this covenant will not prohibit the  incurrence
of any of the following items of Indebtedness (collectively, "PERMITTED DEBT"):

                  (1)      the  incurrence  by the Company and any  Guarantor of
         Indebtedness  and letters of credit under a First Lien Credit  Facility
         in an aggregate principal amount at any one time outstanding under this
         clause (1) (with  letters of credit  being  deemed to have a  principal
         amount equal to the maximum potential  liability of the Company and its
         Restricted  Subsidiaries  thereunder) not to exceed $10.0 million, less
         the aggregate amount of all repayments of term Indebtedness  under such
         First Lien Credit  Facility  and all  repayments  of  revolving  credit
         Indebtedness  under such First Lien  Credit  Facility  effected  with a
         corresponding   commitment  reduction  under  such  First  Lien  Credit
         Facility  pursuant to clause (1) of the second  paragraph under Section
         4.10;

                  (2)      Indebtedness  existing on the date of this  Indenture
         (other than any Indebtedness  repaid on the date of this Indenture with
         the net  proceeds  from the sale of the Notes,  including  Indebtedness
         under the Existing Credit Agreement);

                  (3)      the  incurrence by the Company and the  Guarantors of
         Indebtedness  represented by the Notes and the related Note  Guarantees
         to be issued on the date of this  Indenture and the exchange  Notes and
         the related Note Guarantees to be issued  pursuant to the  Registration
         Rights Agreement;

                  (4)      the   incurrence   by  the  Company  or  any  of  its
         Restricted  Subsidiaries of  Indebtedness  represented by Capital Lease
         Obligations,  mortgage financings,  industrial revenue bonds,  purchase
         money obligations or other Indebtedness, in each case, incurred for the
         purpose of financing  all or any part of the purchase  price or cost of
         design, construction,  installation or improvement of property (real or
         personal),  plant or equipment  used in the  Permitted  Business of the
         Company  or  any  of  its  Restricted  Subsidiaries,  in  an  aggregate
         principal  amount,  including  all Permitted  Refinancing  Indebtedness
         incurred to renew, refund, refinance, replace, defease or discharge any
         Indebtedness  incurred  pursuant to this clause (4), not to exceed $8.0
         million at any time  outstanding,  provided  that in no event shall the
         Indebtedness incurred pursuant to clause (2) and this clause (4) exceed
         an aggregate of $14.0 million;


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<PAGE>


                  (5)      the   incurrence   by  the  Company  or  any  of  its
         Restricted  Subsidiaries  of  Permitted  Refinancing   Indebtedness  or
         issuance by the Company of  Disqualified  Stock in exchange for, or the
         net proceeds of which are used to renew,  refund,  refinance,  replace,
         defease  or  discharge  any  Indebtedness   (other  than   intercompany
         Indebtedness)  or  Disqualified  Stock  issued by the Company  that was
         permitted by this Indenture to be incurred under the first paragraph of
         this covenant or clauses (2) (other than any Indebtedness  under clause
         (2) repaid after the date of this  Indenture with the net proceeds from
         the sale of the Notes), (3) or (5) of this paragraph;

                  (6)      the   incurrence   by  the  Company  or  any  of  its
         Restricted  Subsidiaries of intercompany  Indebtedness between or among
         the Company and any of its Restricted Subsidiaries;  PROVIDED, HOWEVER,
         that:

                           (A)      if  the  Company  or  any  Guarantor  is the
                                    obligor on such  Indebtedness  and the payee
                                    is not  the  Company  or a  Guarantor,  such
                                    Indebtedness must be expressly  subordinated
                                    to the prior  payment in full in cash of all
                                    Obligations  then  due with  respect  to the
                                    Notes,  in the case of the  Company,  or the
                                    Note Guarantee,  in the case of a Guarantor;
                                    and

                           (B)      (i) any  subsequent  issuance or transfer of
                                    Equity  Interests  that  results in any such
                                    Indebtedness  being  held by a Person  other
                                    than the Company or a Restricted  Subsidiary
                                    of the  Company  and  (ii) any sale or other
                                    transfer  of  any  such  Indebtedness  to  a
                                    Person  that is not either the  Company or a
                                    Restricted Subsidiary of the Company,

                  will be deemed,  in each case,  to constitute an incurrence of
                  such  Indebtedness,  in an amount equal to the portion of such
                  Indebtedness  held  by such  Person,  by the  Company  or such
                  Restricted  Subsidiary,  as the  case  may  be,  that  was not
                  permitted by this clause (6);

                  (7)      the  issuance  by  any of  the  Company's  Restricted
         Subsidiaries to the Company or to any of its Restricted Subsidiaries of
         shares of Preferred Stock; PROVIDED, HOWEVER, that:

                           (A)      any  subsequent   issuance  or  transfer  of
                                    Equity  Interests  that  results in any such
                                    Preferred Stock being held by a Person other
                                    than the Company or a Restricted  Subsidiary
                                    of the Company; and

                           (B)      any  sale  or  other  transfer  of any  such
                                    Preferred  Stock  to a  Person  that  is not
                                    either   the   Company   or   a   Restricted
                                    Subsidiary of the Company,

                  will be deemed,  in each case,  to  constitute  an issuance of
                  such Preferred  Stock by such  Restricted  Subsidiary that was
                  not permitted by this clause (7);


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<PAGE>


                  (8)      the   incurrence   by  the  Company  or  any  of  its
         Restricted  Subsidiaries of Hedging  Obligations in the ordinary course
         of business;

                  (9)      the guarantee by the Company or any of the Guarantors
         of  Indebtedness  of the  Company  or a  Restricted  Subsidiary  of the
         Company that was permitted to be incurred by another  provision of this
         covenant;  PROVIDED  that  if  the  Indebtedness  being  guaranteed  is
         subordinated to or PARI PASSU with the Notes,  then the Guarantee shall
         be subordinated or PARI PASSU, as applicable, to the same extent as the
         Indebtedness guaranteed;

                  (10)     the   incurrence   by  the  Company  or  any  of  the
         Guarantors of Indebtedness in respect of workers'  compensation claims,
         payment  obligations in connection with health or other types of social
         security  benefits,  unemployment or other insurance or  self-insurance
         obligations, statutory obligations, bankers' acceptances,  performance,
         reclamation,  surety  or  similar  bonds  and  letters  of  credit  and
         completion or performance  guarantees  (including,  without limitation,
         performance  guarantees pursuant to coal supply agreements or equipment
         leases)  in  the  ordinary  course  of  business,  including  any  such
         Indebtedness  incurred in connection with the acquisition of additional
         mining assets;

                  (11)     the   incurrence   by  the  Company  or  any  of  its
         Restricted Subsidiaries the Guarantors of Indebtedness arising from the
         honoring by a bank or other financial  institution of a check, draft or
         similar instrument  inadvertently drawn against  insufficient funds, so
         long as such Indebtedness is covered within five Business Days;

                  (12)     the   incurrence   of   Indebtedness   arising   from
         agreements  of  the  Company  or any  of  its  Restricted  Subsidiaries
         providing for indemnification,  adjustment of purchase price or similar
         obligations,  in each case incurred in connection  with the disposition
         of any  business,  assets  or  Subsidiary,  other  than  guarantees  of
         Indebtedness incurred by an Person acquiring all or any portion of such
         business,  assets or  Subsidiary  for the  purpose  of  financing  such
         acquisition; or

                  (13)     the   incurrence   by  the  Company  or  any  of  the
         Guarantors of additional  Indebtedness in an aggregate principal amount
         (or accreted value, as applicable) at any time  outstanding,  including
         all  Permitted  Refinancing  Indebtedness  incurred  to renew,  refund,
         refinance,  replace,  defease or discharge  any  Indebtedness  incurred
         pursuant to this clause (13), not to exceed $5.0 million.

         The Company will not incur, and will not permit any Guarantor to incur,
any Indebtedness  (including Permitted Debt) that is contractually  subordinated
in right of payment to any other  Indebtedness  of the Company or such Guarantor
unless such Indebtedness is also contractually  subordinated in right of payment
to the Notes and the applicable Note Guarantee on substantially identical terms;
PROVIDED,  HOWEVER,  that no  Indebtedness  will be deemed  to be  contractually
subordinated in right of payment to any other Indebtedness of the Company solely
by virtue of being  unsecured or by virtue of being secured on a first or junior
Lien basis.

         For purposes of determining  compliance with this Section  4.09(a),  in
the event that an item of proposed  Indebtedness meets the criteria of more than
one of the categories of Permitted


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<PAGE>


Debt described in clauses (1) through (13) above,  or is entitled to be incurred
pursuant to the first paragraph of this covenant,  the Company will be permitted
to classify such item of Indebtedness  on the date of its  incurrence,  or later
reclassify  all or a portion of such item of  Indebtedness,  in any manner  that
complies with this  covenant.  Indebtedness  under a First Lien Credit  Facility
will be deemed to have been  incurred on such date in reliance on the  exception
provided  by clause (1) of the  definition  of  Permitted  Debt.  The accrual of
interest,  the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional  Indebtedness with the
same terms,  the  reclassification  of Preferred Stock as Indebtedness  due to a
change in accounting  principles,  and the payment of dividends on  Disqualified
Stock in the form of additional  shares of the same class of Disqualified  Stock
will not be  deemed  to be an  incurrence  of  Indebtedness  or an  issuance  of
Disqualified Stock for purposes of this covenant;  provided,  in each such case,
that the amount of any such  accrual,  accretion or payment is included in Fixed
Charges of the Company as accrued.  Notwithstanding  any other provision of this
covenant,  the maximum amount of Indebtedness that the Company or any Restricted
Subsidiary  may  incur  pursuant  to this  covenant  shall  not be  deemed to be
exceeded  solely as a result  of  fluctuations  in  exchange  rates or  currency
values.

         The amount of any Indebtedness outstanding as of any date will be:

                  (1)      the accreted value of the  Indebtedness,  in the case
         of any Indebtedness issued with original issue discount;

                  (2)      the principal amount of the Indebtedness, in the case
         of any other Indebtedness; and

                  (3)      in respect of  Indebtedness of another Person secured
         by a Lien on the  property  and  assets of the  specified  Person,  the
         lesser of:

                           (A)      the Fair Market  Value of such  property and
                                    assets at the date of determination; and

                           (B)      the amount of the  Indebtedness of the other
                                    Person.

Section 4.10      ASSET SALES.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries to, consummate an Asset Sale unless:

                  (1)      the Company  (or the  Restricted  Subsidiary,  as the
         case may be)  receives  consideration  at the time of the Asset Sale at
         least  equal to the Fair  Market  Value of the  property  and assets or
         Equity Interests issued or sold or otherwise disposed of;

                  (2)      at least  75% of the  consideration  received  in the
         Asset Sale by the Company or such Restricted  Subsidiary is in the form
         of cash or Cash  Equivalents.  For purposes of this provision,  each of
         the following will be deemed to be cash:

                           (A)      any  liabilities,  as shown on the Company's
                                    most recent  consolidated  balance sheet, of
                                    the Company or any Restricted


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<PAGE>


                                    Subsidiary     (other    than     contingent
                                    liabilities  and  liabilities  that  are  by
                                    their terms subordinated to the Notes or any
                                    Subsidiary  Guarantee)  that are  assumed by
                                    the  transferee  of any such assets and as a
                                    result   of  which  the   Company   or  such
                                    Restricted   Subsidiary   is  released  from
                                    further liability;

                           (B)      any securities,  notes, other obligations or
                                    assets  received  by the Company or any such
                                    Restricted  Subsidiary  from such transferee
                                    converted by the Company or such  Restricted
                                    Subsidiary within 15 days of receipt thereof
                                    into cash or Cash Equivalents, to the extent
                                    of the cash or Cash Equivalents  received in
                                    that conversion; and

                           (C)      property  or assets  that are used or useful
                                    in a Permitted Business.

         Within 360 days after the  receipt  of any Net  Proceeds  from an Asset
Sale, the Company (or the applicable Restricted Subsidiary,  as the case may be)
may apply such Net Proceeds:

                  (1)      to  repay   Indebtedness   and   other   First   Lien
         Obligations  and,  if  the  Indebtedness  repaid  is  revolving  credit
         Indebtedness,  to  correspondingly  permanently reduce commitments with
         respect thereto;

                  (2)      to acquire all or substantially all of the assets of,
         or any Capital Stock of,  another  Permitted  Business (or enter into a
         definitive  agreement  committing to make such an acquisition within 60
         days  after  the later of (i) the date of such  agreement  and (ii) 360
         days  after  the  receipt  of the  Net  Proceeds  to be used  for  such
         purpose),  if, after giving effect to any such  acquisition  of Capital
         Stock, the Permitted Business is or becomes a Restricted  Subsidiary of
         the Company or another Restricted Subsidiary;

                  (3)      to  make  a  capital  expenditure  (or  enter  into a
         definitive  agreement  committing  to make such a  capital  expenditure
         within 60 days  after the later of (i) the date of such  agreement  and
         (ii) 360 days after the receipt of the Net Proceeds to be used for such
         purpose);

                  (4)      to acquire  other assets that are not  classified  as
         current  assets  under GAAP and that are used or useful in a  Permitted
         Business; or

                  (5)      a combination of the foregoing  clauses (1), (2), (3)
         and (4).

         Pending  the final  application  of any Net  Proceeds,  the Company may
temporarily  reduce  revolving  credit  borrowings  or otherwise  invest the Net
Proceeds in any manner that is not prohibited by this Indenture.

         Any Net  Proceeds  from Asset Sales that are not applied or invested as
provided in the preceding paragraphs will constitute "Excess Proceeds." When the
aggregate  amount of Excess Proceeds  exceeds $5.0 million,  within ten Business
Days thereof, the Company will make an Asset Sale Offer to all Holders of Notes,
and to all  holders  of other  Indebtedness  that is PARI  PASSU  with the Notes
containing  provisions similar to those set forth in this Indenture with respect
to offers to purchase or


                                       64
<PAGE>


redeem with the  proceeds of sales of assets,  to purchase or redeem the maximum
principal  amount of Notes and such other PARI  PASSU  Indebtedness  that may be
purchased or redeemed out of the Excess  Proceeds.  The offer price in any Asset
Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid
interest and Liquidated  Damages,  if any, to the date of purchase,  and will be
payable in cash. If any Excess  Proceeds  remain after  consummation of an Asset
Sale  Offer,  the  Company  may use those  Excess  Proceeds  for any purpose not
otherwise  prohibited by this Indenture.  If the aggregate  principal  amount of
Notes and other  PARI  PASSU  Indebtedness  tendered  into such Asset Sale Offer
exceeds the amount of Excess  Proceeds,  the  Trustee  will select the Notes and
such other PARI PASSU  Indebtedness  to be purchased  on a PRO RATA basis.  Upon
completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset
at zero.

         The Company will comply with the  requirements  of Rule 14e-l under the
Exchange Act and any other  securities  laws and  regulations  thereunder to the
extent  those  laws and  regulations  are  applicable  in  connection  with each
repurchase  of Notes  pursuant  to an Asset Sale  Offer.  To the extent that the
provisions  of any  securities  laws or  regulations  conflict with this Section
4.10,  the  Company  will  comply  with  the  applicable   securities  laws  and
regulations and will not be deemed to have breached its  obligations  under this
Section 4.10 by virtue of such compliance.

Section 4.11      TRANSACTIONS WITH AFFILIATES.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries  to,  make any payment to, or sell,  lease,  transfer or  otherwise
dispose of any of its  properties  or assets to, or  purchase  any  property  or
assets  from,  or  enter  into or  make  or  amend  any  transaction,  contract,
agreement,  understanding,  loan,  advance or guarantee with, or for the benefit
of, any Affiliate of the Company (each, an "AFFILIATE TRANSACTION"), unless:

                  (1)      the  Affiliate  Transaction  is on terms  that are no
         less  favorable  to the Company or the relevant  Restricted  Subsidiary
         than those that would have been obtained in a comparable transaction by
         the Company or such Restricted Subsidiary with an unrelated Person; and

                  (2)      the Company delivers to the Trustee:

                           (A)      with respect to any Affiliate Transaction or
                                    series  of  related  Affiliate  Transactions
                                    involving aggregate  consideration in excess
                                    of $2.5  million,  a resolution of the Board
                                    of  Directors  set  forth  in  an  Officer's
                                    Certificate  certifying  that such Affiliate
                                    Transaction  complies with this covenant and
                                    that  such  Affiliate  Transaction  has been
                                    approved by a majority of the  disinterested
                                    members  of the  Board of  Directors  of the
                                    Company; and

                           (B)      with respect to any Affiliate Transaction or
                                    series  of  related  Affiliate  Transactions
                                    involving aggregate  consideration in excess
                                    of  $5.0  million,  an  opinion  as  to  the
                                    fairness to the  Company or such  Subsidiary
                                    of  such   Affiliate   Transaction   from  a
                                    financial   point  of  view   issued  by  an
                                    accounting,  appraisal or investment banking
                                    firm of national standing.


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<PAGE>


         The  following   transactions  will  not  be  deemed  to  be  Affiliate
Transactions and, therefore,  will not be subject to the provisions of the prior
paragraph:

                  (1)      any compensation  arrangement,  employment agreement,
         employee benefit plan, equity-based incentive plan, bonus plan, expense
         reimbursement  plan,   severance   arrangement,   officer  or  director
         indemnification  agreement or any similar  arrangement  entered into by
         the  Company  or any of its  Restricted  Subsidiaries  in the  ordinary
         course of business and payments pursuant thereto;

                  (2)      transactions between or among the Company and/or its
         Restricted Subsidiaries;

                  (3)      payment of reasonable directors' fees;

                  (4)      Restricted   Payments   that  do  not   violate   the
         provisions of this Indenture described above under Section 4.07;

                  (5)      payments and  transactions  pursuant to any agreement
         or  arrangement  in  effect  on the  date  of  this  Indenture  and any
         amendment  thereto  or  renewal  thereof  to the  extent  that any such
         amendment or renewal is not more  disadvantageous to the Holders of the
         Notes than the original  agreement or arrangement in effect on the date
         of this Indenture;

                  (6)      any  payments or other  transactions  pursuant to any
         tax-sharing  agreement  between the  Company and any other  Person with
         which the  Company  files a  consolidated  tax return or with which the
         Company is part of a consolidated group for tax purposes;

                  (7)      any  issuance  or sale of  shares  of  Capital  Stock
         (other than Disqualified Stock) for cash at Fair Market Value; and

                  (8)      transactions with customers,  suppliers or purchasers
         or sellers of goods or services, in each case in the ordinary course of
         business and otherwise in compliance  with the terms of this  Indenture
         and which are fair to the Company in the  reasonable  determination  of
         the Board of Directors or are on terms no less  favorable than would be
         available in a comparable transaction with an unrelated third party.

Section 4.12      LIENS.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries  to,  directly or indirectly,  create,  incur,  assume or suffer to
exist  any Lien of any kind on any  property  or asset  now  owned or  hereafter
acquired, except Permitted Liens.

         If the Company or any Guarantor  creates any  additional  Lien upon any
property  or asset not then part of the  Collateral  to  secure  any First  Lien
Obligations  (other than security  interests  granted  solely to secure  Hedging
Obligations), it must concurrently grant a second-priority Lien (subject only to
Permitted  Liens) upon such  property as security  for the Notes as set forth in
Article 10.


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<PAGE>


Section 4.13      BUSINESS ACTIVITIES.

         The  Company  will not,  and the  Company  will not  permit  any of its
Restricted  Subsidiaries  to,  engage  in  any  business  other  than  Permitted
Businesses,  except to such  extent as would not be  material to the Company and
its Restricted Subsidiaries taken as a whole.

Section 4.14      CORPORATE EXISTENCE.

         Subject to Article 5 hereof,  the Company  shall do or cause to be done
all things necessary to preserve and keep in full force and effect:

                  (1)      its   corporate   existence,   and   the   corporate,
         partnership  or  other  existence  of  each  of  its  Subsidiaries,  in
         accordance with the respective or organizational documents (as the same
         may be  amended  from  time  to  time)  of  the  Company  or  any  such
         Subsidiary; and

                  (2)      the  rights  (charter  and  statutory),  license  and
         franchises of the Company and its Subsidiaries; PROVIDED, HOWEVER, that
         the Company  shall not be required to preserve any such right,  license
         or franchise,  or the corporate,  partnership or other existence of any
         of its Subsidiaries, if the Board of Directors shall determine that the
         preservation  thereof  is no longer  desirable  in the  conduct  of the
         business  of the Company and its  Subsidiaries,  taken as a whole,  and
         that the loss  thereof is not  adverse in any  material  respect to the
         Holders  of the Notes or such  action as  otherwise  permitted  by this
         Indenture.

Section 4.15      OFFER TO REPURCHASE UPON CHANGE OF CONTROL.

         (a)      Upon the  occurrence of a Change of Control,  the Company will
make an offer (a "CHANGE OF CONTROL  OFFER") to each Holder to repurchase all or
any part (in a minimum  aggregate  principal  amount  of  $1,000 or an  integral
multiple of $1,000) of each Holder's  Notes at a purchase price in cash equal to
101% of the aggregate principal amount of the Notes repurchased plus accrued and
unpaid interest and Liquidated  Damages, if any, on the Notes repurchased to the
date of  purchase  subject to the  rights of  holders  of Notes on the  relevant
record date to receive  interest due on the relevant  interest payment date (the
"CHANGE OF CONTROL  PAYMENT").  Within 15 days  following any Change of Control,
the  Company  will mail a notice  to each  Holder,  with a copy to the  Trustee,
describing the transaction or transactions that constitute the Change of Control
and stating:

                  (1)      that the  Change  of  Control  Offer  is  being  made
         pursuant  to this  Section  4.15 and that all  Notes  tendered  will be
         accepted for payment;

                  (2)      the purchase price and the purchase date,  which date
         shall be no  earlier  than 30 days and no later  than 60 days  from the
         date such notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE");

                  (3)      that any Note not  tendered  will  continue to accrue
         interest;


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<PAGE>


                  (4)      that,  unless the Company  defaults in the payment of
         the Change of Control Payment,  all Notes accepted for payment pursuant
         to the Change of Control Offer will cease to accrue  interest after the
         Change of Control Payment Date;

                  (5)      that  Holders  electing  to have any Notes  purchased
         pursuant to a Change of Control Offer will be required to surrender the
         Notes,  with the form entitled  "Option of Holder to Elect Purchase" on
         the reverse of the Notes completed,  to the Paying Agent at the address
         specified  in the notice  prior to the close of  business  on the third
         Business Day preceding the Change of Control Payment Date;

                  (6)      that  Holders  will be  entitled  to  withdraw  their
         election  if the  Paying  Agent  receives,  not later than the close of
         business on the second  Business  Day  preceding  the Change of Control
         Payment  Date,  a telegram,  telex,  facsimile  transmission  or letter
         setting  forth the name of the Holder;  the  principal  amount of Notes
         delivered for purchase, and a statement that such Holder is withdrawing
         his election to have the Notes purchased; and

                  (7)      that Holders whose Notes are being  purchased only in
         part  will be  issued  new  Notes  equal  in  principal  amount  to the
         unpurchased portion of the Notes surrendered, which unpurchased portion
         must be equal to $1,000 in  principal  amount or an  integral  multiple
         thereof.

         The Company will comply with the  requirements  of Rule 14e-l under the
Exchange Act and any other  securities  laws and  regulations  thereunder to the
extent  those  laws  and  regulations  are  applicable  in  connection  with the
repurchase  of the Notes as a result of a Change in Control.  To the extent that
the  provisions  of  any  securities  laws  or  regulations  conflict  with  the
provisions of Sections 3.09 or 4.15 of this  Indenture,  the Company will comply
with the applicable  securities  laws and  regulations and will not be deemed to
have breached its obligations  under Section 3.09 or this Section 4.15 by virtue
of such conflict.

         (b)      On the Change of Control  Payment Date, the Company shall,  to
the extent lawful:

                  (1)      accept  for  payment  all Notes or  portions  thereof
         properly tendered pursuant to the Change of Control Offer;

                  (2)      deposit  with the Paying Agent an amount equal to the
         Change of Control  Payment in respect of all Notes or portions of Notes
         properly tendered; and

                  (3)      deliver or cause to be  delivered  to the Trustee the
         Notes properly accepted together with an Officer's  Certificate stating
         the  aggregate  principal  amount of Notes or  portions  of Notes being
         purchased by the Company.

         The Paying Agent will  promptly  mail to each Holder of Notes  properly
tendered  the Change of Control  Payment  for such Notes,  and the Trustee  will
promptly  authenticate  and mail (or cause to be  transferred  by book entry) to
each Holder a new Note equal in principal  amount to any unpurchased  portion of
the Notes surrendered,  if any; PROVIDED that each new Note will be in a minimum
aggregate  principal amount of $1,000 or an integral  multiple  thereof.  If the
Change of Control  Payment Date is on or after an interest record date and on or
before the


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<PAGE>


related Interest Payment Date, accrued and unpaid interest, if any, will be paid
to the Holder in whose name a note is  registered  at the close of  business  on
such record date, and no additional  interest will be payable to the holders who
tender  pursuant  to the Change of Control  Offer.  The Company  shall  publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.

         (c)      Notwithstanding anything to the contrary in this Section 4.15,
the Company will not be required to make a Change of Control Offer upon a Change
of Control if (1) a third party makes the Change of Control Offer in the manner,
at the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and purchases all Notes  validly  tendered and not withdrawn  under
the Change of Control Offer, or (2) notice of redemption has been given pursuant
to  Section  3.07,  unless  and  until  there is a  default  in  payment  of the
applicable redemption price.

Section 4.16      PAYMENTS FOR CONSENT.

         The  Company  will  not,  and will  not  permit  any of its  Restricted
Subsidiaries  to,  directly  or  indirectly,   pay  or  cause  to  be  paid  any
consideration  to or  for  the  benefit  of any  Holder  of  Notes  for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture the Notes unless such  consideration is offered to be paid and
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the  solicitation  documents  relating to such  consent,
waiver or agreement.

Section 4.17      ADDITIONAL NOTE GUARANTEES AND SECURITY.

         If  the  Company  or any of its  Restricted  Subsidiaries  acquires  or
creates another Domestic  Subsidiary after the date of this Indenture,  then the
Company shall cause such Restricted Subsidiary to:

                  (1)      execute  and  deliver to the  Trustee a  supplemental
         indenture in a form reasonably  satisfactory to the Trustee pursuant to
         which such Domestic  Subsidiary  shall  unconditionally  guarantee on a
         senior secured basis all of the Company's  obligations  under the Notes
         and this Indenture on the terms set forth in this Indenture;

                  (2)      execute and deliver to the Trustee such amendments or
         additions to the Security  Documents and other documents as the Trustee
         deems necessary or advisable in order to grant to the Trustee,  for the
         benefit of the holders of Notes, a perfected  security  interest (which
         will be a second priority  security interest (subject only to Permitted
         Liens) if a First Lien Credit  Facility is in place) in (i) the Capital
         Stock of such new Domestic Subsidiary and (ii) substantially all of the
         property and assets of such new Domestic Subsidiary,  all of which will
         constitute  Collateral in accordance  with the terms of this  Indenture
         and the  Security  Documents,  and if so  required  by the terms of any
         First Lien Credit Facility execute and deliver to the Credit Agent such
         amendments  or additions to the security  documents  securing the First
         Lien  Obligations  as the Credit Agent deems  necessary or advisable in
         order to grant to the Credit  Agent,  for the  benefit  of the  lenders
         under such First Lien  Credit  Facility,  a  perfected  first  priority
         security  interest  in the assets  referred  to in clauses (i) and (ii)
         above;


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<PAGE>


                  (3)      take such further action and execute and deliver such
         other  documents  specified in this  Indenture or otherwise  reasonably
         requested by the Trustee to effectuate the foregoing; and

                  (4)      deliver to the  Trustee  an  Opinion of Counsel  that
         such  supplemental  indenture  and any other  documents  required to be
         delivered  have been duly  authorized,  executed and  delivered by such
         Domestic  Subsidiary and  constitutes a valid,  binding and enforceable
         obligation of such Domestic  Subsidiary  and such other opinions as the
         Trustee may request regarding the grant and perfection of such Liens in
         the property and assets of such Domestic  Subsidiary as provided for in
         this Indenture.

         Thereafter,  such  Domestic  Subsidiary  shall be a  Guarantor  for all
purposes of this Indenture.

Section 4.18      DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES.

         The Board of  Directors  of the Company may  designate  any  Restricted
Subsidiary to be an Unrestricted  Subsidiary if that designation would not cause
a  Default.  If  a  Restricted  Subsidiary  is  designated  as  an  Unrestricted
Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned
by the Company and its Restricted  Subsidiaries in the Subsidiary  designated as
Unrestricted  will be  deemed  to be an  Investment  made as of the  time of the
designation and will reduce the amount  available for Restricted  Payments under
the first  paragraph  of Section 4.07 hereof or under one or more clauses of the
definition  of  Permitted  Investments,   as  determined  by  the  Company.  The
designation  will only be permitted if the Investment would be permitted at that
time and if the  Restricted  Subsidiary  otherwise  meets the  definition  of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted  Subsidiary if the redesignation would not cause a
Default.

         Any  designation  of a  Subsidiary  of the  Company as an  Unrestricted
Subsidiary  will be  evidenced  to the  Trustee  by  filing  with the  Trustee a
certified  copy of a resolution of the Board of Directors  giving effect to such
designation  and an  Officer's  Certificate  certifying  that  such  designation
complied  with  the  preceding  conditions  and was  permitted  by the  covenant
described above under Section 4.07. If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary,  it
will  thereafter  cease to be an  Unrestricted  Subsidiary  for purposes of this
Indenture and any  Indebtedness of such Subsidiary will be deemed to be incurred
by a  Restricted  Subsidiary  of the  Company  as of  such  date  and,  if  such
Indebtedness  is not permitted to be incurred as of such date under the covenant
described  under Section 4.09,  the Company will be in default of such covenant.
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary  to be a Restricted  Subsidiary  of the Company;  provided  that such
designation  will be deemed to be an incurrence of  Indebtedness by a Restricted
Subsidiary of the Company of any outstanding  Indebtedness of such  Unrestricted
Subsidiary, and such designation will only be permitted if (1) such Indebtedness
is permitted under the covenant  described  under Section 4.09,  calculated on a
pro forma basis as if such  designation  had  occurred at the  beginning  of the
four-quarter  reference period;  and (2) no Default or Event of Default would be
in existence following such designation. Upon the designation of an Unrestricted
Subsidiary of the Company as a Restricted  Subsidiary,  the Company will provide
written notice of such designation to the Trustee.


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<PAGE>


Section 4.19      ISSUANCES   AND   SALES  OF   CAPITAL   STOCK  OF   RESTRICTED
                  SUBSIDIARIES.

         The Company will not permit or cause any of its Restricted Subsidiaries
to  issue  or  sell  any  Capital  Stock  (other  than  to the  Company  or to a
Wholly-Owned  Restricted  Subsidiary of the Company) or permit any Person (other
than the Company or a Wholly-Owned  Restricted Subsidiary of the Company) to own
or hold any Capital  Stock of any  Restricted  Subsidiary  of the Company or any
Lien or security  interest  therein (other than as required by applicable law or
any Permitted Lien);  PROVIDED,  HOWEVER, that this provision shall not prohibit
(1) any issuance or sale if,  immediately  after  giving  effect  thereto,  such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect to such issuance or sale
would have been  permitted to be made under  Section 4.07 if made on the date of
such  issuance  or  sale  or (2)  the  sale  of all of the  Capital  Stock  of a
Restricted Subsidiary in compliance with the provisions of Section 4.10.

Section 4.20      IMPAIRMENT OF SECURITY INTEREST.

         Subject to the Security  Documents,  neither the Company nor any of its
Restricted  Subsidiaries  will take any  action,  or omit to take any action the
omission to take which would, adversely affect or impair in any material respect
the Liens in favor of the Trustee  with respect to the  Collateral.  Neither the
Company nor any of its Domestic  Subsidiaries  shall grant to any Person  (other
than the  Credit  Agent or the  Trustee  or the  Holders),  or permit any Person
(other than the Credit Agent or the Trustee or the Holders) to retain,  any Lien
on the Collateral other than Permitted Liens. Neither the Company nor any of its
Restricted Subsidiaries will enter into any agreement that requires the proceeds
received from any sale of Collateral to be applied to repay, redeem,  defease or
otherwise  acquire  or retire  any  Indebtedness  of any  Person,  other than as
expressly  permitted by this Indenture,  the Notes, and the Security  Documents.
The Company  shall,  and shall cause each  Guarantor  to, at their sole cost and
expense,  execute and deliver all such agreements and instruments as the Trustee
shall reasonably  request to more fully or accurately  describe the property and
assets  intended to be Collateral or the  obligations  intended to be secured by
the Security  Documents or to effect or preserve the grant of the Liens intended
to be created by the Security Documents. The Company shall, and shall cause each
Guarantor  to, at their sole cost and expense,  file any such notice  filings or
other  agreements or  instruments,  and take all such other  actions,  as may be
reasonably  necessary or desirable  under  applicable law, or as the Trustee may
request,  to perfect the Liens  created by the Security  Documents at such times
and at such places as the Trustee may reasonably request.

Section 4.21      REAL ESTATE MORTGAGES AND FILINGS.

         With respect to any  interest in any real  property  (individually  and
collectively,  the "Premises") (a) owned by the Company or a Domestic Subsidiary
on the Issue Date or (b) acquired by the Company or a Domestic Subsidiary:

                  (1)      The Company will use its best  efforts to obtain,  by
         June  30,  2006  (the  "TRIGGER  DATE"),  fee  and/or  leasehold  title
         insurance   policies  (written  by  a  nationally   recognized  insurer
         reasonably   acceptable   to   the   Majority   Noteholders)   covering
         substantially  all of the Tennessee  Core  Properties  (the  "TENNESSEE
         REQUIRED  INSURANCE"),  subject only to Permitted  Liens and such other
         exceptions thereto as shall not materially


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<PAGE>


         affect the Fair Market Value of the Tennessee Core  Properties,  and as
         shall not materially  interfere with the intended use to be made of the
         Tennessee Core Properties by the Company,  as reasonably  determined by
         the Majority Noteholders;  provided that in the case of leasehold title
         insurance, such leasehold title insurance shall be required only if the
         lessor is not a  governmental  entity.  For  purposes of the  covenants
         described  in this  clause  (1) and  clauses  (2),  (3) and (5),  "best
         efforts"  shall not require the Company or any  Subsidiary  to commence
         litigation  or  conduct  new  surveys  or  expend  cash to  remove  any
         exceptions and  encumbrances on the Premises.  All such title insurance
         policies  shall be in an amount  equal to 100% of the Fair Market Value
         of the  Premises  purported  to be  covered  by the  related  Mortgage,
         insuring that the interest created by the Mortgage thereon  constitutes
         a valid Lien  thereon,  and such policies  shall also  include,  to the
         extent available at commercially reasonable rates, such endorsements as
         the Majority Noteholders reasonably request and shall be accompanied by
         evidence of the payment in full of all premiums thereon;

                  (2)      The Company will use its best  efforts to obtain,  by
         the  Trigger  Date,  fee  and/or  leasehold  title  insurance  policies
         (written by a nationally  recognized insurer  reasonably  acceptable to
         the Majority  Noteholders  covering  substantially  all of the Kentucky
         Core Properties (the "Kentucky  Required  Insurance"),  subject only to
         Permitted  Liens  and  such  other  exceptions  thereto  as  shall  not
         materially affect the Fair Market Value of the Kentucky Core Properties
         (which  shall not include any  exceptions  with respect to the terms of
         the lease that  require the consent of the  landlord to the  execution,
         delivery  and  recording  of the  insured  mortgage),  and as shall not
         materially  interfere  with the intended use to be made of the Kentucky
         Core  Properties  by  the  Company,  as  reasonably  determined  by the
         Majority Noteholders.  All such title insurance policies shall be in an
         amount equal to 100% of the Fair Market Value of the Premises purported
         to be  covered  by the  related  Mortgage  insuring  that the  interest
         created by the Mortgage thereon  constitutes a valid Lien thereon,  and
         such  policies  shall  also  include,   to  the  extent   available  at
         commercially  reasonable  rates,  such  endorsements  as  the  Majority
         Noteholders  shall  reasonably  request  and  shall be  accompanied  by
         evidence of the payment in full of all premiums thereon;

                  (3)      Within 90 days after the  acquisition  by the Company
         or any of its  Subsidiaries  of any  interest in real  property if such
         acquisition  occurs  after the Trigger  Date and if in the case of real
         property  purchased  by the  Company  or any of its  Subsidiaries,  the
         purchase  price for such real  property  exceeds  two  million  dollars
         ($2,000,000)  and if in the case of real property leased by the Company
         or any of its  Subsidiaries,  (x) the recoverable coal reserves on such
         leased property exceed five hundred thousand (500,000) tons and (y) the
         lessor of such real  property  is not a  governmental  entity (any such
         owned or leased after acquired real property, "Later Properties"), then
         the Company will use its best  efforts to  similarly  obtain fee and/or
         leasehold title insurance policies (written by a nationally  recognized
         insurer  reasonably  acceptable to the Majority  Noteholders)  covering
         such  additional   properties  (the  "Later  Required  Insurance"  and,
         together  with  the  Tennessee  Required  Insurance  and  the  Kentucky
         Required  Insurance,  the  "Required  Insurance")  subject  to the same
         conditions as are  applicable to the  Tennessee  Required  Insurance or
         Kentucky Required Insurance, as applicable;


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<PAGE>


                  (4)      Notwithstanding  anything  to  the  contrary  herein,
         neither the Company  nor any of its  Subsidiaries  shall be required to
         obtain title insurance on any applicable owned or leased  property,  if
         the Fair Market Value of, and aggregate  amount of title insurance then
         outstanding with respect to, properties pledged to the collateral agent
         is equal to or greater than ninety million dollars  ($90,000,000),  and
         the delivery to the collateral agent of title insurance in such amount,
         and such insurance shall not be cancelled  thereafter by the Company or
         any of its  Subsidiaries,  shall  satisfy  the  requirement  to deliver
         Required Insurance under clause (6) hereof;

                  (5)      The Company will use its best  efforts to obtain,  by
         the  Trigger  Date or in the  case of any  leasehold  interest  in real
         property   obtained  after  the  date  of  this   Indenture,   by  such
         acquisition,  for  substantially all of the real property leased by the
         Company or its  Subsidiaries  that is  included in the  Tennessee  Core
         Properties,  the  Kentucky  Core  Properties  or the Later  Properties,
         consents  from the  lessors  of such  properties  with  respect  to the
         execution,  delivery and  recording of a leasehold  mortgage or deed of
         trust (the "Landlord Consents"), but only if such consents are required
         by the terms of such leases,  such consents to be in form and substance
         reasonably acceptable to the Majority Noteholders;

                  (6)      If either  the  Required  Insurance  or the  Landlord
         Consents (the  "Collateral  Items") are not delivered to the collateral
         agent by the Trigger  Date  (regardless  whether best efforts have been
         employed  by the  Company)  (including  if the  exceptions  taken  with
         respect to the Required  Insurance  are not  acceptable to the Majority
         Noteholders   (acting   reasonably)  unless  (a)  such  exceptions  are
         Permitted  Liens or such  exceptions do not materially  affect the Fair
         Market Value of the applicable property or do not materially  interfere
         with the  intended  use to be made of the  applicable  property  by the
         Company and its  Subsidiaries as reasonably  determined by the Majority
         Noteholders  or (b) the  applicable  insurance  company  has  issued an
         endorsement  to the  applicable  policy  in  customary  form to  insure
         against loss in respect of such  exception)  or if,  subsequent  to the
         Trigger Date,  the Company  cancels the Required  Insurance or Landlord
         Consents (the date of any such occurrence, a "Later Trigger Date"): (x)
         a one time fee (the  "Collateral  Fee") shall be payable on the Trigger
         Date (or,  solely  if the  Collateral  Fee was not paid on the  Trigger
         Date,  on a Later  Trigger  Date) to the Holders in an amount  equal to
         1.00% of the then  outstanding  principal  amount of the Notes, and (y)
         the interest  rate on the Notes will increase by 0.50% per annum on the
         Trigger Date (or any Later  Trigger  Date) until the  Collateral  Items
         have been  delivered in  accordance  with the  foregoing  requirements;
         provided that on each three month  anniversary  of the Trigger Date (or
         Later Trigger Date, as applicable)  the interest rate on the Notes will
         increase by an additional  0.50% per annum until the  Collateral  Items
         have been  delivered  and the  Company  will notify the Trustee of such
         increase in interest rate; provided further that the aggregate interest
         rate increase under this  subparagraph  (6) shall not exceed 2.50%. The
         Collateral  Fee  shall  be  fully  earned  and   nonrefundable  if  the
         Collateral  Items are not delivered  prior to the Trigger Date (or fail
         to be in effect on any Later  Trigger Date to the extent no  Collateral
         Fee was  previously  payable).  To the extent the Collateral Fee is not
         timely  paid when due,  in  addition  to such  failure  constituting  a
         Default, the Collateral Fee shall bear interest at the rate accruing on
         the Notes; and


                                       73
<PAGE>


                  (7)      Notwithstanding  the foregoing  clause (6), if all of
         the Required  Insurance and the Landlord  Consents are delivered to the
         Collateral  Agent by the  Trigger  Date (or are in  effect on any Later
         Trigger Date) except for the Kentucky Required  Insurance,  then (a) no
         Collateral  Fee  shall be due,  and (b)  during  any  period  where the
         Required  Insurance and the Landlord Consents have been delivered other
         than the Kentucky  Required  Insurance,  the interest rate on the Notes
         shall not increase.

         In addition,  with respect to any interest in any Premises (a) owned by
National  Coal or a  Domestic  Subsidiary  on the date of the  indenture  or (b)
acquired  by  National  Coal or a  Domestic  Subsidiary,  within  90 days of the
acquisition thereof:

                  (1)      the  Company  shall use its  commercially  reasonable
         efforts to deliver, as soon as reasonably practicable after the date of
         this  Indenture,   to  the  Trustee,   as  mortgagee,   fully  executed
         counterparts of one or more Mortgages, in form and substance reasonably
         acceptable  to the Trustee,  dated as of the date of this  Indenture or
         the date of  acquisition  of such  property,  as the case may be,  duly
         executed by the Company or the applicable Domestic Subsidiary, together
         with   evidence  of  the   completion   (or   reasonably   satisfactory
         arrangements for the completion), of all recordings and filings of each
         such  Mortgage as may be necessary to create a valid,  perfected  Lien,
         subject to  Permitted  Liens in favor of the Trustee for the benefit of
         the holders of Notes,  against the  properties  purported to be covered
         thereby; and

                  (2)      the Company shall deliver to the Trustee with respect
         to each of the covered  Premises,  the most recent  survey,  if any, of
         such Premises, together with either (i) an updated survey certification
         in favor of the Trustee  from the  applicable  surveyor  stating  that,
         based on a visual inspection of the property,  there has been no change
         in the  facts  depicted  in the  survey  or  (ii) an  affidavit  and/or
         indemnity from the Company stating that to its knowledge there has been
         no change in facts  depicted in the survey,  other than,  in each case,
         changes that do not materially  adversely affect the use by the Company
         or Guarantor,  as applicable,  of such Premises for the Company or such
         Guarantor's business as so conducted,  or intended to be conducted,  at
         such Premises.

         In the event any  determination  or consent is required of the Majority
Noteholders  pursuant to this Section  4.21,  the Company  shall send,  by first
class mail, a notice to the Trustee and each of the Holders,  with a copy to the
Trustee (with the record date for Holders entitled to such notice being the date
that is two days prior to the date of such notice), substantially in the form of
EXHIBIT J. The notice will contain all instructions  and materials  necessary to
enable such Holders to make such  determination  or give informed consent and to
provide notice to the Trustee of such Holder's decision with respect thereto.

         The notice will state:

                  (a)      the record date;

                  (b)      the mechanism  for providing the required  consent or
         determination,  and will further provide that failure to respond within
         45 days will be deemed as affirmative consent to the request;


                                       74
<PAGE>


                  (c)      the  subject  matter  of the  notice,  with  specific
         reference  to the  provision  of Section  4.21 for which such  Holder's
         determination or consent is sought;

                  (d)      the period  during  which such  Holder  shall have to
         respond,  which may be extended by the Company (provided that notice of
         any  extension is given to the Holders and the Trustee) and a statement
         that failure to respond within the period will be deemed as affirmative
         consent to the request;

                  (e)      any information necessary or desirable for the Holder
         to make a decision with respect to the requested action; and

                  (f)      that   Holders  will  be  entitled  to  change  their
         decision with respect to the requested action only until the end of the
         period during which Holders may respond.

         The Trustee  shall,  at the end of the period  during which Holders may
respond  to the  notice,  send  notice  to the  Company  stating  the  aggregate
principal amount of Notes as to which the Trustee has received determinations or
consents.  Within 30 days of the end of the  period  during  which  Holders  may
respond to the notice,  the  Company  shall (so long as the Trustee has sent the
notice required by the preceding sentence) provide the Trustee with an Officers'
Certificate  specifying  the  determination  or consent to which it relates  and
certifying whether or not such determination or consent has become effective

Section 4.22      LANDLORD, BAILEE AND CONSIGNEE WAIVERS.

         Each of the Company  and each of its  Domestic  Subsidiaries  that is a
lessee  of,  or  becomes  a  lessee  of,  real  property  on or in which it will
maintain,  store,  hold or locate  property and assets having an aggregate  fair
market value of at least $500,000, is, and will be, required to use commercially
reasonable efforts (which shall not require the expenditure of cash with respect
to obtaining a landlord  waiver from the lessor of any real property) to deliver
to the  Trustee a  landlord  waiver,  substantially  in the form of  EXHIBIT  G,
executed by the lessor of such real  property;  PROVIDED  that in the case where
such lease is a lease in existence  on the date of this  Indenture or the lessee
thereof  that  is a  Domestic  Subsidiary  of the  Company  was  not a  Domestic
Subsidiary  of the  Company on the date of this  Indenture,  the Company or such
Domestic  Subsidiary  that is the lessee  thereunder (i) shall have 90 days from
the date of this Indenture or the later date it became a Domestic Subsidiary, as
the case may be, to  satisfy  such  requirement  or, in the  event  there  exist
waivers  with respect to leases on the date of this  Indenture  obtained for the
benefit of other current or former  lenders,  to deliver such waivers amended to
add the Trustee as a party thereto and (ii) shall be relieved of such obligation
with respect to any landlord waiver to the extent the related lessor has refused
to  deliver  such  a  landlord  waiver  following  such  Person's  use  of  such
commercially  reasonable  efforts.  Each of the Company and each of its Domestic
Subsidiaries  that  provides any of its  property or assets  having an aggregate
Fair Market  Value of at least  $500,000 to a bailee or  consignee  agrees to be
bound by the terms of the immediately preceding sentence (other than the proviso
thereto), in respect to such bailee or consignor, MUTATIS MUTANDIS, and to cause
to be filed all financing  statements  and other  documents as shall be required
under  applicable  law to protect its interest in such assets from the claims of
creditors or such bailee or consignee;  PROVIDED, that (x) the terms "landlord",
"lessee" and "lease" shall be replaced, respectively, with the terms "bailee" or
"consignee", as applicable,


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"bailor" or "consignor",  as applicable,  and the "applicable agreement" and (y)
the condition that the lessee maintain,  store, hold or locate all or any of its
assets having an aggregate  fair market value of at least $500,000 shall instead
be replaced with the condition  that the Fair Market Value of the assets subject
to the applicable  bailment or consignment  have a fair market value of at least
$500,000.

Section 4.23      TITLE INSURANCE.

         The  Company  shall use  commercially  reasonable  efforts to obtain no
later than March 31, 2006, and maintain at all times thereafter during which the
Notes are outstanding,  a lender's policy of title insurance with respect to the
Company's  executive  offices located at 8915 George  Williams Road,  Knoxville,
Tennessee 37923.

Section 4.24      MEMORANDA OF LEASES.

         No later  than  March  31,  2006,  the  Company,  at its sole  cost and
expense,  shall  record or cause to be  recorded  a  Memorandum  of Lease or the
assignment  of leasehold to the Company  with respect each  leasehold  currently
being mined by the Company or on which surface improvements are located or which
the  Company  has a permit to mine or intends to apply for a permit  within five
years.


                                   ARTICLE 5.
                                   SUCCESSORS

Section 5.01      MERGER, CONSOLIDATION, OR SALE OF ASSETS.

         The Company shall not, directly or indirectly: (1) consolidate or merge
with  or into  another  Person  (whether  or not the  Company  is the  surviving
corporation);  or (2) sell, assign, transfer, convey or otherwise dispose of all
or  substantially  all of the  properties  or  assets  of the  Company  and  its
Restricted  Subsidiaries taken as a whole, in one or more related  transactions,
to another Person; unless:

                  (1)      either: (a) the Company is the surviving corporation;
         or (b) the Person  formed by or  surviving  any such  consolidation  or
         merger (if other than the  Company) or to which such sale,  assignment,
         transfer,   conveyance  or  other   disposition  has  been  made  is  a
         corporation  organized or existing under the laws of the United States,
         any state of the United States or the District of Columbia;

                  (2)      the   Person   formed  by  or   surviving   any  such
         consolidation  or merger (if other than the  Company)  or the Person to
         which such sale, assignment,  transfer, conveyance or other disposition
         has been made  assumes all the  obligations  of the  Company  under the
         Notes,  this Indenture and the Security  Documents and the Registration
         Rights Agreement pursuant to agreements reasonably  satisfactory to the
         Trustee;


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                  (3)      immediately  after  such  transaction  no  Default or
         Event of Default exists; and

                  (4)      the Company or the Person  formed by or surviving any
         such  consolidation or merger (if other than the Company),  or to which
         such sale,  assignment,  transfer,  conveyance or other disposition has
         been made would, on the date of such transaction after giving pro forma
         effect thereto and any related  financing  transactions  as if the same
         had occurred at the beginning of the applicable four-quarter period, be
         permitted to incur at least $1.00 of additional  Indebtedness  pursuant
         to the  Fixed  Charge  Coverage  Ratio  test  set  forth  in the  first
         paragraph of Section 4.09(a).

         In addition,  the Company shall not, directly or indirectly,  lease all
or  substantially  all of the  properties  and  assets of it and its  Restricted
Subsidiaries taken as a whole, in one or more related transactions, to any other
Person.

         This Section 5.01 will not apply to:

                  (1)      a merger of the Company with an Affiliate  solely for
         the purpose of reincorporating the Company in another jurisdiction; or

                  (2)      any consolidation or merger, or any sale, assignment,
         transfer,  conveyance, lease or other disposition of property or assets
         between or among the Company and the Guarantors.

Section 5.02      SUCCESSOR CORPORATION SUBSTITUTED.

         Upon any  consolidation or merger, or any sale,  assignment,  transfer,
lease,  conveyance  or  other  disposition  of all or  substantially  all of the
property and assets of the Company in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof, the successor  corporation
formed by such  consolidation  or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be  substituted  for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture  referring to the "Company"  shall refer instead to
the successor corporation and not to the Company),  and may exercise every right
and power of the Company  under this  Indenture  with the same effect as if such
successor Person had been named as the Company herein;  PROVIDED,  HOWEVER, that
the  predecessor  Company shall not be relieved  from the  obligation to pay the
principal  of and  interest on the Notes  except in the case of a sale of all of
the Company's  property and assets in a transaction that is subject to, and that
complies with the provisions of, Section 5.01 hereof.

                                    ARTICLE 6.
                              DEFAULTS AND REMEDIES

Section 6.01      EVENTS OF DEFAULT.

         Each of the following is an "Event of Default":


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                  (1)      default in the payment  when due of  interest  on, or
         Liquidated Damages, if any, with respect to, the Notes and such default
         continues for 30 days;

                  (2)      default in the payment  when due (at  maturity,  upon
         redemption or  otherwise) of the principal of, or premium,  if any, on,
         the Notes;

                  (3)      failure  by the  Company  or  any  of its  Restricted
         Subsidiaries  to comply with the  provisions  described  under Sections
         4.10, 4.15 or 5.01;

                  (4)      failure  by the  Company  or  any  of its  Restricted
         Subsidiaries  to  comply  with any of the  provisions  described  under
         Sections 4.07 and 4.09 and such failure continues for 30 days;

                  (5)      failure  by the  Company  or  any  of its  Restricted
         Subsidiaries  for 60 days after  notice to the Company from the Trustee
         or the  Holders of at least 25% in  aggregate  principal  amount of the
         Notes then  outstanding  voting as a single class to comply with any of
         the other  agreements in this  Indenture or the Security  Documents and
         such failure continues for 60 days;

                  (6)      default under any  Mortgage,  indenture or instrument
         under  which  there may be issued or by which  there may be  secured or
         evidenced any  Indebtedness for money borrowed by the Company or any of
         its Restricted  Subsidiaries  (or the payment of which is guaranteed by
         the  Company  or any  of its  Restricted  Subsidiaries),  whether  such
         Indebtedness  or Guarantee now exists,  or is created after the date of
         this Indenture, if that default:

                           (A)      is caused by a failure to pay  principal of,
                                    or  interest or  premium,  if any,  on, such
                                    Indebtedness,  after expiration of any grace
                                    period  provided  in  such  Indebtedness  (a
                                    "Payment Default"); or

                           (B)      results   in  the   acceleration   of   such
                                    Indebtedness prior to its express maturity,

                           and, in each case,  the principal  amount of any such
                           Indebtedness,  together with the principal  amount of
                           any other such  Indebtedness  under  which  there has
                           been a Payment  Default or the  maturity of which has
                           been so accelerated, aggregates $5.0 million or more;

                  (7)      failure  by the  Company  or  any  of its  Restricted
         Subsidiaries to pay final judgments (to the extent not fully covered by
         insurance)  or the  payment  of money  entered  by a court or courts of
         competent  jurisdiction  aggregating  in excess of $5.0 million,  which
         judgments are not paid, discharged or stayed within 60 days;

                  (8)      except  as  permitted  by this  Indenture,  any  Note
         Guarantee is held in any judicial  proceeding  to be  unenforceable  or
         invalid or ceases for any reason to be in full force and effect, or any
         Guarantor,  or any Person acting on behalf of any Guarantor,  denies or
         disaffirms its obligations under its Note Guarantee;


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<PAGE>


                  (9)      the  Company  or any of its  Restricted  Subsidiaries
         that  is  a   Significant   Subsidiary   or  any  group  of  Restricted
         Subsidiaries of the Company that,  taken together,  would  constitute a
         Significant  Subsidiary pursuant to or within the meaning of Bankruptcy
         Law:

                           (A)      commences a voluntary case,

                           (B)      consents to the entry of an order for relief
                                    against it in an involuntary case,

                           (C)      consents to the  appointment  of a custodian
                                    of it or for all or substantially all of its
                                    property,

                           (D)      makes a general  assignment  for the benefit
                                    of its creditors, or

                           (E)      generally  is not  paying  its debts as they
                                    become due; and

                  (10)     a court of competent  jurisdiction enters an order or
         decree under any Bankruptcy Law that:

                           (A)      is for relief  against the Company or any of
                                    its  Restricted   Subsidiaries   that  is  a
                                    Significant   Subsidiary  or  any  group  of
                                    Restricted Subsidiaries of the Company that,
                                    taken   together,    would    constitute   a
                                    Significant  Subsidiary  in  an  involuntary
                                    case;

                           (B)      appoints a  custodian  of the Company or any
                                    of its  Restricted  Subsidiaries  that  is a
                                    Significant   Subsidiary  or  any  group  of
                                    Restricted Subsidiaries of the Company that,
                                    taken   together,    would    constitute   a
                                    Significant   Subsidiary   or  for   all  or
                                    substantially  all  of the  property  of the
                                    Company    or   any   of   its    Restricted
                                    Subsidiaries    that   is   a    Significant
                                    Subsidiary   or  any  group  of   Restricted
                                    Subsidiaries  of  the  Company  that,  taken
                                    together,  would  constitute  a  Significant
                                    Subsidiary; or

                           (C)      orders the liquidation of the Company or any
                                    of its  Restricted  Subsidiaries  that  is a
                                    Significant   Subsidiary  or  any  group  of
                                    Restricted Subsidiaries of the Company that,
                                    taken   together,    would    constitute   a
                                    Significant Subsidiary;

         and  the  order  or  decree  remains  unstayed  and  in  effect  for 60
consecutive days.

Section 6.02      ACCELERATION.

         In the case of an Event of Default  specified  in clause (9) or (10) of
Section 6.01 hereof, with respect to the Company,  any Restricted  Subsidiary of
the  Company  that  is a  Significant  Subsidiary  or any  group  of  Restricted
Subsidiaries of the Company that, taken together, would constitute a Significant
Subsidiary,  all  outstanding  Notes  will  become due and  payable  immediately
without  further  action or notice.  If any other Event of Default occurs and is


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continuing,  the Trustee or the Holders of at least 25% in  aggregate  principal
amount of the Notes then  outstanding  may  declare  all the Notes to be due and
payable immediately.  In the event that a declaration of acceleration because of
an Event of Default set forth in clause (6) of Section  6.01 above has  occurred
and is continuing,  such  declaration  of  acceleration  shall be  automatically
rescinded and annulled if the default  triggering such Event of Default shall be
remedied or cured by the Company or any of its Restricted Subsidiaries or waived
by the  applicable  holder or  holders  of  Indebtedness  (or an agent on behalf
thereof) within 60 days after such declaration of acceleration.

         Upon any such  declaration,  the Notes  shall  become  due and  payable
immediately.

         In the case of any Event of Default  occurring by reason of any willful
action (or  inaction)  taken (or not taken) by or on behalf of the Company  with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company  then had elected to redeem the Notes  pursuant to Section
3.07 hereof, then an equivalent premium shall also become and be immediately due
and payable  upon  acceleration  of the Notes,  to the extent  permitted by law,
anything in this Indenture or in the Notes to the contrary notwithstanding.

Section 6.03      OTHER REMEDIES.

         If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium and Liquidated
Damages,  if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.

         The Trustee may maintain a  proceeding  even if it does not possess any
of the  Notes  or does not  produce  any of them in the  proceeding.  A delay or
omission  by the  Trustee  or any  Holder of a Note in  exercising  any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

Section 6.04      WAIVER OF PAST DEFAULTS.

         Holders of not less than a majority in  aggregate  principal  amount of
the then  outstanding  Notes,  by  notice to the  Trustee,  may on behalf of the
Holders of all of the Notes  waive an  existing  Default or Event of Default and
its consequences  hereunder,  except a continuing Default or Event of Default in
the payment of the  principal of,  premium and  Liquidated  Damages,  if any, or
interest on, the Notes  (including  in  connection  with an offer to  purchase);
PROVIDED,  HOWEVER, that the Holders of a majority in aggregate principal amount
of the then outstanding  Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration. Upon
any such  waiver,  such Default  shall cease to exist,  and any Event of Default
arising  therefrom  shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.


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Section 6.05      CONTROL BY MAJORITY.

         Holders  of a  majority  in  aggregate  principal  amount  of the  then
outstanding  Notes may  direct  the time,  method  and place of  conducting  any
proceeding for exercising any remedy  available to the Trustee or exercising any
trust or power  conferred on it.  However,  the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee  determines
may be unduly  prejudicial  to the rights of other  Holders of Notes or that may
involve the Trustee in personal liability.

Section 6.06      LIMITATION ON SUITS.

         Except to enforce the right to receive  payment of principal,  premium,
if any, or interest or Liquidated  Damages, if any, when due, a Holder of a Note
may pursue a remedy with respect to this Indenture or the Notes only if:

                  (1)      the  Holder of a Note  gives to the  Trustee  written
         notice of a continuing Event of Default;

                  (2)      the  Holders of at least 25% in  aggregate  principal
         amount of the then  outstanding  Notes  make a written  request  to the
         Trustee to pursue the remedy;

                  (3)      such  Holder of a Note or Holders of Notes offer and,
         if  requested,  provide to the Trustee  indemnity  satisfactory  to the
         Trustee against any loss, liability or expense;

                  (4)      the Trustee  does not comply with the request  within
         60 days after  receipt of the request and the offer and, if  requested,
         the provision of indemnity; and

                  (5)      during such  60-day  period the Holders of a majority
         in  principal  amount  of the  then  outstanding  Notes do not give the
         Trustee a direction inconsistent with the request.

         A Holder of a Note may not use this  Indenture to prejudice  the rights
of another  Holder of a Note or to obtain a preference  or priority over another
Holder of a Note.

Section 6.07      RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.

         Notwithstanding any other provision of this Indenture, the right of any
Holder  of a Note to  receive  payment  of  principal,  premium  and  Liquidated
Damages,  if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the  enforcement of any such payment on or after such  respective
dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08      COLLECTION SUIT BY TRUSTEE.

         If an Event of Default  specified in Section  6.01(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express  trust  against  the  Company  for the whole  amount of
principal of, premium and  Liquidated  Damages,  if any, and interest  remaining
unpaid on the Notes and interest on overdue principal and, to the


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extent lawful,  interest and such further amount as shall be sufficient to cover
the costs and expenses of  collection,  including the  reasonable  compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09      TRUSTEE MAY FILE PROOFS OF CLAIM.

         The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee  (including  any  claim  for  the  reasonable  compensation,   expenses,
disbursements  and  advances of the  Trustee,  its agents and  counsel)  and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other  obligor upon the Notes),  its creditors or its property and shall
be entitled and empowered to collect,  receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee,  and in the event that the Trustee  shall  consent to the making of
such payments  directly to the Holders,  to pay to the Trustee any amount due to
it for the reasonable compensation,  expenses, disbursements and advances of the
Trustee,  its agents and counsel,  and any other  amounts due the Trustee  under
Section  7.07 hereof.  To the extent that the payment of any such  compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding,  shall be denied for any reason,  payment of the same shall
be secured  by a Lien on,  and shall be paid out of, any and all  distributions,
dividends,  money,  securities  and other  properties  that the  Holders  may be
entitled to receive in such proceeding  whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any  Holder any plan of  reorganization,  arrangement,  adjustment  or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10      PRIORITIES.

         If the Trustee collects any money or property  pursuant to this Article
6, it shall pay out the money in the following order:

         FIRST:  to  the  Trustee,  its  agents  and  attorneys  (including  any
Collateral  Agent) for amounts due under Section 7.07 hereof,  including payment
of all compensation, expense and liabilities incurred, and all advances made, by
the Trustee and the costs and expenses of collection;

         SECOND: to Holders of Notes for amounts due and unpaid on the Notes for
principal,  premium and  Liquidated  Damages,  if any,  and  interest,  ratably,
without  preference  or priority of any kind,  according  to the amounts due and
payable on the Notes for principal,  premium and Liquidated  Damages, if any and
interest, respectively; and

         THIRD:  to the  Company  or to  such  party  as a  court  of  competent
jurisdiction shall direct.

         The Trustee may, upon prior written notice to the Company, fix a record
date and  payment  date for any  payment to Holders  of Notes  pursuant  to this
Section 6.10.


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Section 6.11      UNDERTAKING FOR COSTS.

         In any suit for the  enforcement  of any  right or  remedy  under  this
Indenture  or in any suit  against the Trustee or any  Collateral  Agent for any
action taken or omitted by it as Trustee or as Collateral  Agent, a court in its
discretion  may  require  the  filing  by any party  litigant  in the suit of an
undertaking  to pay the costs of the suit,  and the court in its  discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant  in the suit,  having  due  regard to the  merits and good faith of the
claims or defenses made by the party litigant.  This Section 6.11 does not apply
to a suit by the  Trustee or by any  Collateral  Agent,  a suit by a Holder of a
Note  pursuant to Section 6.07 hereof,  or a suit by Holders of more than 25% in
principal amount of the then outstanding Notes.

                                   ARTICLE 7.
                                    TRUSTEE

Section 7.01      DUTIES OF TRUSTEE.

         (a)      If an Event of Default has  occurred  and is  continuing,  the
Trustee  will  exercise  such of the  rights  and  powers  vested  in it by this
Indenture,  and use the same  degree  of care and  skill in its  exercise,  as a
prudent person would exercise or use under the  circumstances  in the conduct of
such person's own affairs.

         (b)      Except during the continuance of an Event of Default:

                  (1)      the duties of the Trustee will be  determined  solely
         by the  express  provisions  of this  Indenture  and the  Trustee  need
         perform  only  those  duties  that are  specifically  set forth in this
         Indenture and no others,  and no implied covenants or obligations shall
         be read into this Indenture against the Trustee; and

                  (2)      in the absence of bad faith on its part,  the Trustee
         may  conclusively  rely,  as to the  truth  of the  statements  and the
         correctness of the opinions  expressed  therein,  upon  certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture.  However, the Trustee will examine the certificates and
         opinions to determine  whether or not they conform to the  requirements
         of this Indenture.

         (c)      The Trustee may not be relieved from  liabilities  for its own
negligent  action,  its  own  negligent  failure  to  act,  or its  own  willful
misconduct, except that:

                  (1)      this paragraph does not limit the effect of paragraph
         (b) of this Section 7.01;

                  (2)      the  Trustee  will  not be  liable  for any  error of
         judgment  made in good  faith by a  Responsible  Officer,  unless it is
         proved that the Trustee was  negligent in  ascertaining  the  pertinent
         facts; and

                  (3)      the Trustee  will not be liable  with  respect to any
         action  it takes or omits to take in good  faith in  accordance  with a
         direction received by it pursuant to Section 6.05 hereof.


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         (d)      Whether or not therein expressly so provided,  every provision
of this  Indenture  and the  Security  Documents  that in any way relates to the
Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.

         (e)      No  provision  of  this  Indenture  or  any  of  the  Security
Documents  will require the Trustee to expend or risk its own funds or incur any
liability. The Trustee will be under no obligation to exercise any of its rights
and powers under this Indenture or any of the Security  Documents at the request
of any  Holder,  unless such  Holder has  offered to the  Trustee  security  and
indemnity satisfactory to it against any loss, liability or expense.

         (f)      The  Trustee  will not be  liable  for  interest  on any money
received  by it except as the  Trustee  may agree in writing  with the  Company.
Money held in trust by the  Trustee  need not be  segregated  from  other  funds
except to the extent required by law.

Section 7.02      RIGHTS OF TRUSTEE.

         (a)      The Trustee may conclusively rely upon any document reasonably
believed by it to be genuine and to have been signed or  presented by the proper
Person.  The  Trustee  need not  investigate  any fact or  matter  stated in the
document;  PROVIDED  HOWEVER,  the  Trustee,  in its  discretion,  may make such
further  inquiry or  investigation  into such facts or matters as it may see fit
and,  if  the  Trustee  shall   determine  to  make  such  further   inquiry  or
investigation,  it shall be entitled,  upon reasonable notice to the Company, to
examine the books, records, and premises of the Company,  personally or by agent
or attorney.

         (b)      Before  the  Trustee  acts or  refrains  from  acting,  it may
require an Officer's  Certificate  or an Opinion of Counsel or both. The Trustee
will not be liable  for any  action  it takes or omits to take in good  faith in
reliance on such Officer's  Certificate  or Opinion of Counsel.  The Trustee may
consult  with  counsel and the written  advice of such counsel or any Opinion of
Counsel will be full and complete authorization and protection from liability in
respect of any action  taken,  suffered or omitted by it hereunder in good faith
and in reliance thereon.

         (c)      The Trustee may act through its  attorneys and agents and will
not be responsible  for the misconduct or negligence of any agent appointed with
due care.

         (d)      The  Trustee  will not be  liable  for any  action it takes or
omits to take in good faith that it  reasonably  believes  to be  authorized  or
within  the  rights or powers  conferred  upon it by this  Indenture,  provided,
however,  that the Trustee's conduct does not constitute  willful  misconduct or
negligence.

         (e)      Unless otherwise specifically provided in this Indenture,  any
demand,  request,  direction  or notice from the Company will be  sufficient  if
signed by an Officer of the Company.

         (f)      The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or the Security Documents at the
request or direction  of any of the Holders  unless such Holders have offered to
the Trustee  reasonable  security or indemnity  against the costs,  expenses and
liabilities  that might be incurred  by it in  compliance  with such  request or
direction.


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         (g)      The  Trustee  shall not be required to give any bond or surety
in respect to the performance of its powers and duties hereunder.

         (h)      The permissive  rights of the Trustee to do things  enumerated
in this Indenture and the Security Documents shall not be construed as duties.

         (i)      The Trustee shall not be charged with knowledge of any Default
or event  of  Default,  of the  identity  of any  Restricted  Subsidiary  or the
existence  of any Change of  Control,  Asset Sale or other fact or event  unless
either (i) a Responsible Officer shall have actual knowledge thereof or (ii) the
Trustee shall have received written notice thereof from either of the Company or
any Holder.

         (j)      Delivery of reports,  information and documents to the Trustee
under Section 4.03 is for information purposes only and the Trustee's receipt of
the  foregoing  shall not  constitute  constructive  notice  of any  information
contained therein or determinable from information contained therein,  including
the Company's compliance with any of the covenants hereunder.

         (k)      The Trustee shall not be  responsible  for the  computation of
any interest payments,  redemption amounts or other sums payable with respect to
the Notes.

         (l)      The  Trustee  shall  not be  responsible  for  the  filing  of
original or continuation financing statements or the recordation,  amendment, or
other filing of any security interests,  liens,  financing statements,  or other
similar documents, nor of the contents thereof.

         (m)      In no event  shall the  Trustee be liable  for any  failure or
delay in the performance of its obligations  hereunder  because of circumstances
beyond the Trustee's control, including, but not limited to, acts of God, flood,
war  (whether  declared  or  undeclared),  terrorism,  fire,  riot,  embargo  or
government action, including any laws, ordinances, regulations or the like which
delay,  restrict or prohibit the providing of the services  contemplated by this
Indenture.

Section 7.03      INDIVIDUAL RIGHTS OF TRUSTEE.

         The  Trustee in its  individual  or any other  capacity  may become the
owner or  pledgee  of Notes  and may  otherwise  deal  with the  Company  or any
Affiliate  of the  Company  with the same  rights  it would  have if it were not
Trustee.  However,  in the  event  that the  Trustee  acquires  any  conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as Trustee or resign.  Any Agent may do the same with
like rights and duties.  The Trustee is also  subject to Sections  7.10 and 7.11
hereof.

Section 7.04      TRUSTEE'S DISCLAIMER.

         The Trustee will not be responsible for and makes no  representation as
to the  validity  or adequacy of this  Indenture  or the Notes,  it shall not be
accountable  for the  Company's  use of the proceeds from the Notes or any money
paid to the Company or upon the Company's  direction under any provision of this
Indenture,  it will not be  responsible  for the use or application of any money
received  by any  Paying  Agent  other  than  the  Trustee,  and it will  not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection  with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.


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Section 7.05      NOTICE OF DEFAULTS.

         If a Default or Event of Default  occurs and is continuing and if it is
known to the Trustee,  the Trustee will mail to Holders of Notes a notice of the
Default  or Event of  Default  within  90 days  after  it  occurs  or as soon as
practical after it becomes known to the Trustee. Except in the case of a Default
or Event of Default in payment of principal of,  premium or Liquidated  Damages,
if any, or interest on any Note,  the Trustee may  withhold the notice if and so
long as a committee of its  Responsible  Officers in good faith  determines that
withholding the notice is in the interests of the Holders of the Notes.

Section 7.06      REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.

         (a)      Within 60 days after each July 1, beginning with July 1, 2006,
and for so long as  Notes  remain  outstanding,  the  Trustee  will  mail to the
Holders  of the  Notes a brief  report  dated  as of such  reporting  date  that
complies  with TIA ss.  313(a) (but if no event  described in TIA ss. 313(a) has
occurred  within the twelve months  preceding the reporting date, no report need
be  transmitted).  The  Trustee  also will comply  with TIA ss.  313(b)(2).  The
Trustee will also transmit by mail all reports as required by TIA ss. 313(c).

         (b)      A copy of  each  report  at the  time  of its  mailing  to the
Holders of Notes will be mailed by the  Trustee to the  Company and filed by the
Trustee  with the  Commission  and each  stock  exchange  on which the Notes are
listed in accordance  with TIA ss. 313(d).  The Company will promptly notify the
Trustee when the Notes are listed on any stock exchange.

Section 7.07      COMPENSATION AND INDEMNITY.

         (a)      The Company will pay to the Trustee such  compensation for its
acceptance of this Indenture and services  hereunder as agreed from time to time
by the Company and the Trustee.  The Trustee's  compensation will not be limited
by any law on  compensation  of a trustee of an express trust.  The Company will
reimburse the Trustee  promptly upon request for all  reasonable  disbursements,
advances and expenses incurred or made by it in addition to the compensation for
its  services.   Such  expenses  will  include  the   reasonable   compensation,
disbursements and expenses of the Trustee's agents and counsel.

         (b)      The Company and the Guarantor  will  indemnify the Trustee and
any  Collateral  Agent  against  any and all  losses,  liabilities  or  expenses
incurred  by  them  arising  out of or in  connection  with  the  acceptance  or
administration  of their duties under this  Indenture,  including the reasonable
costs and  expenses  of  enforcing  this  Indenture  against the Company and the
Guarantors  (including this Section 7.07) and defending  themselves  against any
claim  (whether  asserted by the Company,  the  Guarantors  or any Holder or any
other Person) or liability in connection with the exercise or performance of any
of their  powers  or  duties  hereunder,  except to the  extent  any such  loss,
liability or expense may be attributable to their  negligence or bad faith.  The
Trustee  (or,  if the  claim is  against  a  Collateral  Agent,  the  applicable
Collateral Agent) will notify the Company promptly of any claim for which it may
seek  indemnity.  Failure by the Trustee or a Collateral  Agent to so notify the
Company  will  not  relieve  the  Company  or  any of the  Guarantors  of  their
obligations  hereunder.  The Company or such Guarantor will defend the claim and
the Trustee (or the  Collateral  Agent,  as  applicable)  will  cooperate in the
defense. The


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Trustee may have separate  counsel and the Company will pay the reasonable  fees
and expenses of such counsel. Neither the Company nor any Guarantor need pay for
any settlement made without its consent,  which consent will not be unreasonably
withheld, delayed or conditioned.

         (c)      The  obligations of the Company and the Guarantors  under this
Section 7.07 will survive the satisfaction and discharge of this Indenture.

         (d)      To secure the Company's  payment  obligations  in this Section
7.07,  the Trustee  will have a Lien prior to the Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal and
interest  on  particular  Notes.  Such Lien will  survive the  satisfaction  and
discharge of this Indenture.

         (e)      When the Trustee incurs expenses or renders  services after an
Event of Default specified in Section 6.01(7) or (8) hereof occurs, the expenses
and the  compensation  for the services  (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration  under
any Bankruptcy Law.

         (f)      The  Trustee  will  comply  with  the  provisions  of TIA  ss.
313(b)(2) to the extent applicable.

Section 7.08      REPLACEMENT OF TRUSTEE.

         (a)      A resignation  or removal of the Trustee and  appointment of a
successor  Trustee  will  become  effective  only upon the  successor  Trustee's
acceptance of appointment as provided in this Section 7.08.

         (b)      The  Trustee may resign,  upon 30 days  written  notice to the
Company,  in writing at any time and be discharged from the trust hereby created
by so notifying  the Company.  The Holders of a majority in principal  amount of
the then  outstanding  Notes may remove the Trustee by so notifying  the Trustee
and the Company in writing. The Company may remove the Trustee if:

                  (1)      the Trustee fails to comply with Section 7.10 hereof;

                  (2)      the Trustee is adjudged a bankrupt or an insolvent or
         an order for relief is entered  with  respect to the Trustee  under any
         Bankruptcy Law;

                  (3)      a custodian  or public  officer  takes  charge of the
         Trustee or its property; or

                  (4)      the Trustee becomes incapable of acting.

         (c)      If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee  for any  reason,  the  Company  will  promptly  appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority  in  principal  amount of the then  outstanding  Notes may
appoint a successor  Trustee to replace the successor  Trustee  appointed by the
Company.


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         (d)      If a successor  Trustee  does not take  office  within 60 days
after the retiring  Trustee  resigns or is removed,  the retiring  Trustee,  the
Company,  or the  Holders  of at  least  25% in  principal  amount  of the  then
outstanding  Notes may  petition  any court of  competent  jurisdiction  for the
appointment of a successor Trustee.

         (e)      If the Trustee,  after  written  request by any Holder who has
been a Holder for at least six months,  fails to comply with Section 7.10,  such
Holder may petition any court of competent  jurisdiction  for the removal of the
Trustee and the appointment of a successor Trustee.

         (f)      A successor  Trustee will deliver a written  acceptance of its
appointment  to  the  retiring  Trustee  and  to  the  Company.  Thereupon,  the
resignation or removal of the retiring  Trustee will become  effective,  and the
successor  Trustee  will have all the  rights,  powers and duties of the Trustee
under this Indenture. The successor Trustee will mail a notice of its succession
to Holders.  The retiring Trustee will promptly transfer all property held by it
as Trustee to the  successor  Trustee,  PROVIDED  all sums owing to the  Trustee
hereunder  have been paid and subject to the Lien  provided  for in Section 7.07
hereof.  Notwithstanding  replacement  of the Trustee  pursuant to this  Section
7.08, the Company's  obligations under Section 7.07 hereof will continue for the
benefit of the retiring Trustee.

Section 7.09      SUCCESSOR TRUSTEE BY MERGER, ETC.

         If the Trustee consolidates,  merges or converts into, or transfers all
or  substantially  all of its corporate trust business to, another  corporation,
the successor corporation without any further act will be the successor Trustee.

Section 7.10      ELIGIBILITY; DISQUALIFICATION.

         There will at all times be a Trustee  hereunder  that is a  corporation
organized and doing  business  under the laws of the United States of America or
of any state  thereof that is authorized  under such laws to exercise  corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.

         This   Indenture   will  always  have  a  Trustee  who   satisfies  the
requirements  of TIA ss.  310(a)(l),  (2) and (5). The Trustee is subject to TIA
ss. 310(b).

Section 7.11      PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

         The  Trustee  is  subject to TIA ss. 31 l(a),  excluding  any  creditor
relationship  listed in TIA ss.  311(b).  A  Trustee  who has  resigned  or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.


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                                   ARTICLE 8.
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01      OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.

         The  Company may at any time,  at the option of its Board of  Directors
evidenced by a resolution set forth in an Officer's  Certificate,  elect to have
either  Section  8.02 or 8.03  hereof be applied to all  outstanding  Notes upon
compliance with the conditions set forth below in this Article 8.

Section 8.02      LEGAL DEFEASANCE AND DISCHARGE.

         Upon the  Company's  exercise  under  Section 8.01 hereof of the option
applicable to this Section 8.02,  the Company and each of the  Guarantors  will,
subject to the  satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been  discharged  from their  obligations  with respect to all
outstanding  Notes  (including  the  Subsidiary  Guarantees)  on  the  date  the
conditions set forth below are satisfied (hereinafter,  "LEGAL DEFEASANCE"). For
this purpose, Legal Defeasance means that the Company and the Guarantors will be
deemed to have paid and  discharged the entire  Indebtedness  represented by the
outstanding Notes (including the Subsidiary  Guarantees),  which will thereafter
be deemed to be  "outstanding"  only for the purposes of Section 8.05 hereof and
the other Sections of this  Indenture  referred to in clauses (1) and (2) below,
and to have  satisfied  all  their  other  obligations  under  such  Notes,  the
Subsidiary  Guarantees and this Indenture (and the Trustee,  on demand of and at
the expense of the Company,  shall execute proper instruments  acknowledging the
same),  except for the following  provisions  which will survive until otherwise
terminated or discharged hereunder:

                  (1)      the rights of Holders of outstanding Notes to receive
         payments  in respect of the  principal  of, or  interest or premium and
         Liquidated  Damages,  if any, on such Notes when such, payments are due
         from the trust referred to in Section 8.04 hereof;

                  (2)      the Company's  obligations with respect to such Notes
         under Article 2 and Section 4.02 hereof;

                  (3)      the rights,  powers, trusts, duties and immunities of
         the Trustee hereunder and the Company's and the Guarantors' obligations
         in connection therewith; and

                  (4)      the  provisions  of this  Article 8 relating to Legal
         Defeasance.

         Subject to compliance with this Article 8, the Company may exercise its
option under this Section 8.02  notwithstanding the prior exercise of its option
under Section 8.03 hereof.

Section 8.03      COVENANT DEFEASANCE.

         Upon the  Company's  exercise  under  Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors will, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, be released
from each of their obligations  under the covenants  contained in Sections 4.07,
4.08,  4.09,  4.10, 4.11, 4.12, 4.13, 4.15, 4.18, and 4.19 hereof and clause (4)
of the  first  paragraph  of  Section  5.01  hereof  on and  after  the date the
conditions set


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<PAGE>


forth in Section 8.04 hereof are satisfied (hereinafter, "COVENANT Defeasance"),
and the Notes will  thereafter be deemed not  "outstanding"  for the purposes of
any  direction,  waiver,  consent  or  declaration  or act of  Holders  (and the
consequences  of any  thereof)  in  connection  with  such  covenants,  but will
continue to be deemed  "outstanding" for all other purposes  hereunder (it being
understood  that  such  Notes  will not be  deemed  outstanding  for  accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes and Subsidiary Guarantees,  the Company and the Guarantors may
omit to comply with and will have no liability in respect of any term, condition
or limitation set forth in any such covenant, whether directly or indirectly, by
reason of any  reference  elsewhere  herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such  omission to comply will not  constitute a Default or an Event
of Default  under  Section 6.01 hereof,  but,  except as  specified  above,  the
remainder of this  Indenture and such Notes and  Subsidiary  Guarantees  will be
unaffected thereby,  and in addition,  upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the
satisfaction  of the  conditions  set forth in  Section  8.04  hereof,  Sections
6.01(3) through 6.01(5) hereof will not constitute Events of Default.

Section 8.04      CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

         In order to exercise  either Legal  Defeasance  or Covenant  Defeasance
under either Section 8.02 or 8.03 hereof:

                  (1)      the  Company  must   irrevocably   deposit  with  the
         Trustee,  in trust,  for the  benefit  of the  Holders,  cash in United
         States dollars,  non-callable  Government Securities,  or a combination
         thereof,  in such  amounts as will be  sufficient,  in the opinion of a
         nationally  recognized firm of independent public  accountants,  to pay
         the principal of, premium and Liquidated  Damages, if any, and interest
         on the  outstanding  Notes on the stated date for payment thereof or on
         the  applicable  redemption  date, as the case may be, the Company must
         provide the Trustee with a copy of such  opinion,  and the Company must
         specify  whether  the Notes  are being  defeased  to  maturity  or to a
         particular redemption date;

                  (2)      in the case of an election under Section 8.02 hereof,
         the Company has  delivered  to the Trustee an Opinion of Counsel in the
         United States reasonably acceptable to the Trustee confirming that:

                           (A)      the Company has received  from, or there has
                                    been  published  by,  the  Internal  Revenue
                                    Service a ruling; or

                           (B)      since the date of this Indenture,  there has
                                    been  a  change  in the  applicable  federal
                                    income tax law,

                  in either  case to the effect  that,  and based  thereon  such
                  Opinion of Counsel  shall  confirm  that,  the  Holders of the
                  outstanding Notes will not recognize income,  gain or loss for
                  federal  income  tax  purposes  as  a  result  of  such  Legal
                  Defeasance  and will be subject  to federal  income tax on the
                  same amounts, in the same manner


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<PAGE>


                  and at the  same  times as  would  have  been the case if such
                  Legal Defeasance had not occurred;

                  (3)      in the case of an election under Section 8.03 hereof,
         the  Company  must  deliver to the Trustee an Opinion of Counsel in the
         United States reasonably  acceptable to the Trustee confirming that the
         Holders of the  outstanding  Notes will not recognize  income,  gain or
         loss for  federal  income  tax  purposes  as a result of such  Covenant
         Defeasance  and  will be  subject  to  federal  income  tax on the same
         amounts,  in the same  manner  and at the same times as would have been
         the case if such Covenant Defeasance had not occurred;

                  (4)      no Default or Event of  Default  shall have  occurred
         and be continuing on the date of such deposit  (other than a Default or
         Event of Default resulting from the borrowing of funds to be applied to
         such  deposit) and the deposit will not result in a breach or violation
         of, or constitute a default  under,  any other  instrument to which the
         Company  or any  Guarantor  is a party or by which the  Company  or any
         Guarantor is bound;

                  (5)      such Legal Defeasance or Covenant Defeasance will not
         result in a breach or violation of, or constitute a default under,  any
         material  agreement or instrument  (other than this Indenture) to which
         the  Company  or any of its  Subsidiaries  is a party or by  which  the
         Company or any of its Subsidiaries is bound;

                  (6)      the Company  must deliver to the Trustee an Officer's
         Certificate  stating  that the deposit was not made by the Company with
         the intent of preferring the Holders of Notes over the other  creditors
         of the Company  with the intent of  defeating,  hindering,  delaying or
         defrauding any other creditors of the Company or others; and

                  (7)      the Company  must deliver to the Trustee an Officer's
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent  provided  for or  relating  to the Legal  Defeasance  or the
         Covenant Defeasance have been complied with.

         Notwithstanding  the  foregoing,  the  Opinion of Counsel  required  by
clause (7) above need not be delivered if all Notes not  therefore  delivered to
the Trustee for cancellation (i) have become due and payable or (ii) will become
due and  payable on their  maturity  date  within  one year  under  arrangements
satisfactory  to the  Trustee  for the  giving of notice  of  redemption  by the
Trustee in the name, and at the expense, of the Company.

Section 8.05      DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
                  OTHER MISCELLANEOUS PROVISIONS.

         Subject to Section 8.06 hereof,  all money and  noncallable  Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying  trustee,  collectively  for  purposes  of  this  Section  8.05,  the
"TRUSTEE")  pursuant to Section 8.04 hereof in respect of the outstanding  Notes
will be held in  trust  and  applied  by the  Trustee,  in  accordance  with the
provisions of such Notes and this Indenture,  to the payment, either directly or
through any Paying Agent  (including  the Company acting as Paying Agent) as the
Trustee  may  determine,  to the  Holders  of such  Notes of all sums due and to
become due thereon in respect of


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principal,  premium and Liquidated Damages, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.

         The Company will pay and indemnify the Trustee  against any tax, fee or
other charge imposed on or assessed against the cash or non-callable  Government
Securities  deposited  pursuant  to Section  8.04  hereof or the  principal  and
interest  received  in respect  thereof  other  than any such tax,  fee or other
charge which by law is for the account of the Holders of the outstanding Notes.

         Notwithstanding anything in this Article 8 to the contrary, the Trustee
will deliver or pay to the Company from time to time upon the written request of
the  Company  any  money or  non-callable  Government  Securities  held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of  independent  public  accountants  expressed in a written  certification
thereof  delivered  to the  Trustee  (which may be the opinion  delivered  under
Section 8.04(1) hereof),  are in excess of the amount thereof that would then be
required to be deposited to effect an  equivalent  Legal  Defeasance or Covenant
Defeasance.

Section 8.06      REPAYMENT TO COMPANY.

         Any money  deposited with the Trustee or any Paying Agent, or then held
by the  Company,  in trust for the  payment  of the  principal  of,  premium  or
Liquidated  Damages, if any, or interest on any Note and remaining unclaimed for
two years  after such  principal,  premium or  Liquidated  Damages,  if any,  or
interest has become due and payable  shall be paid to the Company on its written
request or (if then held by the Company) will be discharged from such trust; and
the Holder of such Note will thereafter be permitted to look only to the Company
for payment thereof,  and all liability of the Trustee or such Paying Agent with
respect  to such  trust  money,  and all  liability  of the  Company  as trustee
thereof,  will  thereupon  cease;  PROVIDED,  HOWEVER,  that the Trustee or such
Paying  Agent,  before  being  required to make any such  repayment,  may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that,  after a date specified  therein,  which will not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.

Section 8.07      REINSTATEMENT.

         If the  Trustee or Paying  Agent is unable to apply any  United  States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental  authority enjoining,  restraining or otherwise prohibiting such
application,  then the  Company's  and the  Guarantor's  obligations  under this
Indenture  and the Notes  and the  Subsidiary  Guarantees  will be  revived  and
reinstated  as though no deposit had  occurred  pursuant to Section 8.02 or 8.03
hereof  until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance  with Section 8.02 or 8.03 hereof,  as the case may be;
PROVIDED,  HOWEVER,  that,  if the Company  makes any payment of  principal  of,
premium or  Liquidated  Damages,  if any, or interest on any Note  following the
reinstatement of its  obligations,  the Company will be subrogated to the rights
of


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<PAGE>


the  Holders of such Notes to receive  such  payment  from the money held by the
Trustee or Paying Agent.

                                   ARTICLE 9.
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01      WITHOUT CONSENT OF HOLDERS OF NOTES.

         Notwithstanding  Section  9.02  of this  Indenture,  the  Company,  the
Guarantors and the Trustee may amend or supplement  this  Indenture,  the Notes,
the Note Guarantees,  the Security Documents,  or release any Collateral held as
security without the consent of any Holder of a Note:

                  (1)      to cure any ambiguity, defect or inconsistency;

                  (2)      to provide for uncertificated Notes in addition to or
         in place of certificated Notes;

                  (3)      to provide for the  assumption  of the Company's or a
         Guarantor's  obligations to Holders of Notes and Note Guarantees in the
         case of a merger or consolidation  or sale of all or substantially  all
         of  the  Company's  or  such  Guarantor's   property  and  assets,   as
         applicable;

                  (4)      to make any change that would provide any  additional
         rights or benefits to the Holders of Notes or that would not  adversely
         affect the legal rights under this Indenture of any such Holder;

                  (5)      to comply  with  requirements  of the  Commission  in
         order to effect or maintain the  qualification  of this Indenture under
         the TIA;

                  (6)      to allow any  Guarantor  to  execute  a  supplemental
         indenture and/or a Note Guarantee with respect to the Notes; or

                  (7)      if  necessary,  in  connection  with any  addition or
         release of Collateral  permitted  under the terms of this  Indenture or
         Security Documents.

         Upon the  request of the Company  accompanied  by a  resolution  of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof,  the Trustee will join with the Company and the  Guarantors  in the
execution of any amended or  supplemental  Indenture  authorized or permitted by
the terms of this Indenture and to make any further  appropriate  agreements and
stipulations  that  may be  therein  contained,  but  the  Trustee  will  not be
obligated to enter into such amended or supplemental  Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.

         The Company  shall be entitled  to  releases of the  Collateral  or the
Guarantees  as  described  in Sections  10.03,  11.05 and 11.06  hereof.  If the
Company  wishes  under other  circumstances  to obtain an amendment or waiver or
seek a consent under any Security Document or Guarantee,


                                       93
<PAGE>


the  Company  may mail  written  notice of its  request to the  Trustee  and the
Holders,  specifying the amendment, waiver or consent and the reason it is being
sought and noting the  provisions  contained in the following  sentence.  If the
Company  does not receive  written  objections  from  Holders of at least 25% in
aggregate  principal  amount of the Notes  within 20  Business  Days  after such
mailing,  such  amendment,  waiver or consent  shall be deemed  granted.  If the
Company receives such  objections,  then it shall not be entitled to effect such
amendment or waiver, and such consent shall not be effective, unless the Company
obtains the consent of the Holders of a majority in outstanding principal amount
of the Notes  then  outstanding  voting as a single  class  (including  consents
obtained in  connection  with a tender offer or exchange  offer for, or purchase
of, the Notes).

Section 9.02      WITH CONSENT OF HOLDERS OF NOTES.

         Except as  provided  below in this  Section  9.02,  the Company and the
Trustee may amend or supplement this Indenture  (including,  without limitation,
Section 3.09, 4.10 and 4.15 hereof), the Subsidiary Guarantees, the Notes or the
Security  Documents  with the consent of the  Majority  Noteholders  (including,
without  limitation,  consents  obtained in  connection  with a purchase of or a
tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and
6.07  hereof,  any existing  Default or  compliance  with any  provision of this
Indenture, the Notes or the Security Documents may be waived with the consent of
the  Holders of a majority in  principal  amount of the then  outstanding  Notes
voting as a single  class  (including  consents  obtained in  connection  with a
tender  offer or  exchange  offer for, or  purchase  of, the  Notes);  PROVIDED,
HOWEVER,  that  any  amendments  to  or  releases  of  the  Security  Documents,
Collateral or the Note Guarantees will require the consent of the  Supermajority
Noteholders.  Section 2.08 hereof shall  determine which Notes are considered to
be "outstanding" for purposes of this Section 9.02.

         Upon the  request of the Company  accompanied  by a  resolution  of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture or other  amendment,  and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon  receipt by the  Trustee of the  documents  described  in Section  7.02
hereof,  the Trustee will join with the Company in the execution of such amended
or supplemental Indenture or other amendment unless such amended or supplemental
Indenture or other amendment  directly affects the Trustee's own rights,  duties
or immunities  under this Indenture or otherwise,  in which case the Trustee may
in its  discretion,  but will not be  obligated  to,  enter into such amended or
supplemental Indenture or other amendment.

         It is not  necessary for the consent of the Holders of Notes under this
Section 9.02 to approve the particular form of any proposed amendment or waiver,
but it is sufficient if such consent approves the substance thereof.

         After an  amendment,  supplement  or waiver  under  this  Section  9.02
becomes  effective,  the  Company  will mail to the  Holders  of Notes  affected
thereby a notice briefly  describing the  amendment,  supplement or waiver.  Any
failure of the Company to mail such  notice,  or any defect  therein,  will not,
however,  in any way  impair or  affect  the  validity  of any such  amended  or
supplemental  Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders  of  a  majority  in  aggregate  principal  amount  of  the  Notes  then
outstanding  voting  as a single  class  may waive  compliance  in a  particular
instance by the Company with any provision of this


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Indenture, the Notes or the Security Documents.  However, without the consent of
each Holder  affected,  an  amendment  or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):

                  (1)      reduce the  principal  amount of Notes whose  Holders
         must consent to an amendment, supplement or waiver;

                  (2)      reduce the principal of or change the stated maturity
         of any Note or alter or waive any of the provisions with respect to the
         stated redemption of the Notes;

                  (3)      reduce the rate of or change the time for  payment of
         interest, including default interest, on any Note;

                  (4)      waive a Default or Event of Default in the payment of
         principal of or premium or Liquidated  Damages,  if any, or interest on
         the Notes  (except a  rescission  of  acceleration  of the Notes by the
         Majority  Noteholders and a waiver of the payment default that resulted
         from such acceleration);

                  (5)      make any Note payable in money other than that stated
         in the Indenture;

                  (6)      make any change in the  provisions of this  Indenture
         relating to waivers of past  Defaults or the rights of Holders of Notes
         to  receive  payments  of  principal  of, or  interest  or  premium  or
         Liquidated Damages, if any, on the Notes;

                  (7)      waive a  redemption  payment with respect to any Note
         other than a payment required by Sections 3.09, 4.10 and 4.15 hereof;

                  (8)      release  any  Guarantor  from any of its  obligations
         under its Note Guarantee or this  Indenture,  except in accordance with
         the terms of this Indenture; or

                  (9)      make any change in the preceding amendment and waiver
         provisions;

Section 9.03      COMPLIANCE WITH TRUST INDENTURE ACT.

         Every  amendment or supplement  to this  Indenture or the Notes will be
set forth in a amended or  supplemental  Indenture that complies with the TIA as
then in effect.

Section 9.04      REVOCATION AND EFFECT OF CONSENTS.

         Until an amendment,  supplement or waiver becomes effective,  a consent
to it by a Holder of a Note is a continuing  consent by the Holder of a Note and
every  subsequent  Holder of a Note or portion of a Note that evidences the same
debt as the  consenting  Holder's  Note,  even if notation of the consent is not
made on any Note.  However,  any such Holder of a Note or subsequent Holder of a
Note may  revoke  the  consent as to its Note if the  Trustee  receives  written
notice of revocation before the date the waiver, supplement or amendment becomes
effective.  An amendment,  supplement or waiver becomes  effective in accordance
with its terms and thereafter binds every Holder.


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Section 9.05      NOTATION ON OR EXCHANGE OF NOTES.

         The  Trustee  may place an  appropriate  notation  about an  amendment,
supplement  or waiver  on any Note  thereafter  authenticated.  The  Company  in
exchange  for all Notes may issue and the  Trustee  shall,  upon  receipt  of an
Authentication  Order,  authenticate  new  Notes  that  reflect  the  amendment,
supplement or waiver.

         Failure to make the  appropriate  notation or issue a new Note will not
affect the validity and effect of such amendment, supplement or waiver.

Section 9.06      TRUSTEE TO SIGN AMENDMENTS, ETC.

         The Trustee  will sign any amended or  supplemental  Indenture or other
amendment  authorized  pursuant to this Article 9 if the amendment or supplement
does not adversely affect the rights,  duties,  liabilities or immunities of the
Trustee. The Company may not sign an amended or supplemental  Indenture or other
amendment until the Board of Directors  approves it. In executing any amended or
supplemental  indenture  or other  amendment,  the  Trustee  will be entitled to
receive and (subject to Section 7.01 hereof) will be fully  protected in relying
upon,  in  addition  to the  documents  required  by Section  13.04  hereof,  an
Officer's  Certificate  and an Opinion of Counsel  stating that the execution of
such amended or  supplemental  Indenture or other  amendment  is  authorized  or
permitted by this Indenture.

                                   ARTICLE 10.
                             COLLATERAL AND SECURITY

Section 10.01     SECURITY DOCUMENTS.

         The due and  punctual  payment of the  principal  of and  interest  and
Liquidated  Damages,  if any, on the Notes when and as the same shall be due and
payable,  whether on an Interest  Payment  Date, at maturity,  by  acceleration,
repurchase,  redemption or otherwise,  and interest on the overdue  principal of
and interest and Liquidated Damages, if any, on the Notes and performance of all
other  obligations  of the  Company  to the  Holders or the  Trustee  under this
Indenture and the Notes,  according to the terms  hereunder or  thereunder,  are
secured  as  provided  in the  Security  Documents  which  the  Company  and the
Guarantors  have  entered  into   simultaneously  with  the  execution  of  this
Indenture,  subject to the terms of any Intercreditor Agreement. Each Holder, by
its  acceptance  thereof,  consents  and  agrees  to the  terms of the  Security
Documents  (including the provisions of an Intercreditor  Agreement entered into
with respect to a First Lien Credit Facility, including provisions providing for
foreclosure  and release of  Collateral)  as the same may be in effect or may be
amended from time to time in  accordance  with its terms or the terms hereof and
authorizes and directs the Collateral Agent to enter into the Security Documents
and to perform its obligations and exercise its rights  thereunder in accordance
therewith.  The Company  shall  deliver to the Trustee (if it is not itself then
the Collateral Agent) copies of all documents  delivered to the Collateral Agent
pursuant  to the  Security  Documents,  and will do or cause to be done all such
acts and things as may be required by the next  sentence of this Section  10.01,
to assure and  confirm to the  Trustee  and the  Collateral  Agent the  security
interest in the Collateral contemplated hereby, by the Security Documents or any
part  thereof,  as from  time to time  constituted,  so as to  render  the  same
available for the


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<PAGE>


security  and  benefit  of  this  Indenture  and of the  Notes  secured  hereby,
according to the intent and purposes herein  expressed.  The Company shall take,
and  shall  cause  its  Restricted  Subsidiaries  to take,  any and all  actions
reasonably  required to cause the Security Documents to create and maintain,  as
security for the  Obligations  of the Company and the  Guarantors  hereunder,  a
valid and enforceable  perfected Lien and security interest in substantially all
of the property and assets of the Company and the Guarantors, including a pledge
of  Capital  Stock of each  Subsidiary  owned  directly  by the  Company  or any
Guarantor,  in favor of the  Collateral  Agent for the  benefit of the  Holders,
second in priority (subject to Permitted Liens) to Credit Facility Liens.

Section 10.02     RECORDING AND OPINIONS.

         (a)      The  Company  will  furnish  to the  Collateral  Agent and the
Trustee on March 1st in each year  beginning  with the March 1st  following  the
date of this Indenture, an Opinion of Counsel, which may be rendered by internal
counsel to the Company, dated as of such date, either:

                  (1)      (A) stating  that,  in the  opinion of such  counsel,
         action  has been  taken with  respect  to the  recording,  registering,
         filing, re-recording,  re-registering and re-filing of all supplemental
         indentures,  financing  statements,  continuation  statements  or other
         instruments  of further  assurance  as is  necessary  to  maintain  and
         perfect the Lien of the Security Documents and reciting with respect to
         the security  interests in the Collateral the details of such action or
         referring to prior Opinions of Counsel in which such details are given,
         and (B) stating that, in the opinion of such counsel, based on relevant
         laws as in effect on the date of such Opinion of Counsel, all financing
         statements  and  continuation  statements  have been executed and filed
         that are necessary as of such date and during the  succeeding 12 months
         fully to preserve,  perfect and protect,  to the extent such protection
         and preservation are possible by filing,  the rights of the Holders and
         the Collateral  Agent and the Trustee  hereunder and under the Security
         Documents with respect to the security interests in the Collateral; or

                  (2)      stating that, in the opinion of such counsel, no such
         action is necessary to maintain and perfect such Lien and assignment.

         (b)      The Company will  otherwise  comply with the provisions of TIA
Section 314(b).

Section 10.03     RELEASE OF COLLATERAL/ADDITIONAL LIENS.

         (a)      Subject to subsections (b), (c) and (d) of this Section 10.03,
Collateral  may be released from the Lien and security  interest  created by the
Security  Documents  at any  time or from  time to time in  accordance  with the
provisions of the Security Documents, an Intercreditor Agreement, or as provided
hereby. Whether prior to or after the Discharge of First Lien Obligations,  upon
the request of the Company pursuant to an Officer's Certificate  certifying that
all conditions  precedent hereunder have been met and without the consent of any
Holder,  the Company and the Guarantors will be entitled to a release (or in the
case of clause (2) below, a subordination) of the security interests on property
and assets  included in the  Collateral  from the Liens securing the Notes under
any one or more of the following circumstances:


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<PAGE>


                  (1)      to enable the Company or any  Guarantor to consummate
         any sale,  lease,  conveyance or other  disposition  of any property or
         assets or rights permitted or not prohibited under Section 4.10 hereof;

                  (2)      in  respect  of  property  and  assets  subject  to a
         permitted purchase money lien;

                  (3)      if any  Subsidiary  that is a  Guarantor  is released
         from its Guarantee,  such Subsidiary's property and assets will also be
         released;

                  (4)      cash  designated for the purchase of  certificates of
         deposits  and  similar  instruments  used by the  Company or any of its
         Subsidiaries for the sole purpose of enabling the Company or any of its
         Subsidiaries to purchase or post reclamation, surety, or similar bonds,
         which shall be  deposited in a specially  designated  account and shall
         constitute  Collateral  while it is held in such an  account,  shall be
         released from the Collateral  automatically  upon its  withdrawal  from
         such  account for the purpose of the purchase of such  certificates  of
         deposits and similar  instruments  for so long as such  certificates of
         deposits  and  similar  instruments  are issued in the name of National
         Coal  or  such  Subsidiary;  PROVIDED  that  upon  the  termination  or
         expiration,  and release of such  certificates  of deposits and similar
         instruments, such cash shall once again constitute Collateral;

                  (5)      if the Company  exercises its legal defeasance option
         or covenant  defeasance  option as described  under  Sections  8.02 and
         8.03;

                  (6)      upon  satisfaction and discharge of this Indenture or
         payment  in full  in  cash of the  principal  of,  accrued  and  unpaid
         interest  and  Liquidated  Damages,  if any on the  Notes and all other
         obligations under this Indenture,  the Note Guarantees and the Security
         Documents  that  are due and  payable  at or  prior  to the  time  such
         principal accrued and unpaid interest, including Liquidated Damages, if
         any, are paid; or

                  (7)      pursuant to an  amendment,  waiver or  supplement  in
         accordance with Article 9 hereof;

PROVIDED that, in the case of a release requested under clauses (1), (3) or (4),
above, or a subordination  under clause (2) above, the Credit Agent concurrently
releases  (or in the case of a requested  subordination  under clause (2) above,
subordinates)  the Credit  Facility Liens with respect to the affected  property
and assets and,  provided further,  that if there are any subordinated  Liens on
such property and assets,  such  subordinated  Liens are  similarly  released or
subordinated.

         Upon receipt of such Officer's Certificate,  the Collateral Agent shall
execute,   deliver  or  acknowledge  any  necessary  or  proper  instruments  of
termination,  satisfaction or release to evidence the release (or in the case of
clause (2) above, the subordination) of any Collateral  permitted to be released
(or in the case of clause (2) above, subordinated) pursuant to this Indenture or
the Security Documents as the Company requests in writing.


                                       98
<PAGE>


         (b)      Except as may be otherwise provided in the Security Documents,
no Collateral may be released from the Lien and security interest created by the
Security  Documents  pursuant to the provisions of the Security Documents unless
the Officer's  Certificate  required by this Section 10.03 has been delivered to
the Collateral Agent.

         (c)      At any time when a Default  or Event of Default  has  occurred
and is continuing and the maturity of the Notes has been accelerated (whether by
declaration or otherwise) and the Trustee has delivered a notice of acceleration
to the Collateral Agent, no release of Collateral  pursuant to the provisions of
the Security  Documents  will be  effective  as against the  Holders,  except as
otherwise provided in the Security Documents.

         (d)      The release of any Collateral from the terms of this Indenture
and the Security Documents shall not be deemed to impair the security under this
Indenture in  contravention  of the  provisions  hereof if and to the extent the
Collateral is released pursuant to the terms of the Security  Documents and this
Indenture. To the extent applicable,  the Company will cause TIA Section 313(b),
relating to reports, and TIA Section 314(d), relating to the release of property
or securities from the Lien and security interest of the Security  Documents and
relating to the  substitution  therefor  of any  property  or  securities  to be
subjected to the Lien and security  interest of the  Security  Documents,  to be
complied with. Any certificate or opinion  required by TIA Section 314(d) may be
made by an Officer  of the  Company  except in cases  where TIA  Section  314(d)
requires  that such  certificate  or opinion be made by an  independent  Person,
which Person will be an independent engineer, appraiser or other expert selected
or  approved  by the  Trustee  and  the  Collateral  Agent  in the  exercise  of
reasonable care, and in accordance with TIA.

Section 10.04     CERTIFICATES AND OPINIONS OF COUNSEL.

         To the extent  applicable,  the Company will furnish to the Trustee and
the Collateral Agent,  prior to each proposed release of Collateral  pursuant to
the Security Documents:

         (a)      all documents required by TIA Section 314(d); and

         (b)      an Opinion  of  Counsel,  which may be  rendered  by  internal
counsel  to  the  Company,  to  the  effect  that  such  accompanying  documents
constitute all documents required by TIA Section 314(d).

         The Trustee  may,  to the extent  permitted  by Sections  7.01 and 7.02
hereof,   accept  as  conclusive  evidence  of  compliance  with  the  foregoing
provisions  the  appropriate  statements  contained in such  documents  and such
Opinion of Counsel.

Section 10.05     CERTIFICATES OF THE TRUSTEE.

         In  the  event  that  the  Company  wishes  to  release  Collateral  in
accordance with the Security  Documents at a time when the Trustee is not itself
also the  Collateral  Agent and has  delivered  the  certificates  and documents
required by the Security  Documents  and Sections  10.03 and 10.04  hereof,  the
Trustee will determine whether it has received all documentation required by TIA
Section 314(d) in connection with such release and, based on such  determination
and the Opinion of Counsel delivered pursuant to Section 10.04(b),  will deliver
a certificate to the Collateral Agent setting forth such determination.


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Section 10.06     AUTHORIZATION  OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
                  SECURITY DOCUMENTS.

         Subject  to the  provisions  of  Section  7.01 and 7.02  hereof  and an
Intercreditor Agreement, the Trustee may, in its sole discretion and without the
consent of the Holders,  direct, on behalf of the Holders,  the Collateral Agent
to, take all actions it deems necessary or appropriate in order to:

                  (1)      enforce any of the terms of the  Security  Documents;
         and

                  (2)      collect and  receive  any and all amounts  payable in
         respect of the Obligations of the Company hereunder.

         Subject to the terms of an  Intercreditor  Agreement,  the Trustee will
have power to institute and maintain such suits and  proceedings  as it may deem
expedient to prevent any  impairment  of the  Collateral by any acts that may be
unlawful or in violation of the Security  Documents or this Indenture,  and such
suits and  proceedings  as the Trustee may deem expedient to preserve or protect
its  interests  and the  interests of the Holders in the  Collateral  (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental  enactment,  rule or
order that may be  unconstitutional  or otherwise invalid if the enforcement of,
or  compliance  with,  such  enactment,  rule or order would impair the security
interest  hereunder or be  prejudicial to the interests of the Holders or of the
Trustee).

Section 10.07     AUTHORIZATION  OF  RECEIPT OF FUNDS BY THE  TRUSTEE  UNDER THE
                  SECURITY DOCUMENTS.

         The Trustee is  authorized  to receive any funds for the benefit of the
Holders  distributed  under  the  Security   Documents,   and  to  make  further
distributions  of such funds to the Holders  according to the provisions of this
Indenture.

Section 10.08     TERMINATION OF SECURITY INTEREST.

         The Trustee  will,  at the written  request of the  Company,  deliver a
certificate  to the  Collateral  Agent  stating that all  Obligations  under the
Notes, the Guarantees,  this Indenture and the Security Documents have been paid
in full, and instruct the Collateral  Agent to take the actions set forth in the
next sentence  pursuant to this  Indenture and the Security  Documents  upon (1)
payment in full of the principal of, and accrued and unpaid interest,  including
Liquidated  Damages,  if any, on the Notes and all other  Obligations under this
Indenture,  the Note  Guarantees  and the  Security  Documents  that are due and
payable at or prior to the time such principal,  accrued and unpaid interest and
Liquidated  Damages,  if any, are paid, (2) a satisfaction and discharge of this
Indenture  as  described  in Article 12 or (3) a legal  defeasance  or  covenant
defeasance  as  described in Article 8. Upon  receipt of such  instruction,  the
Collateral  Agent shall execute,  deliver or acknowledge any necessary or proper
instruments of  termination,  satisfaction or release to evidence the release of
all such Liens.


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Section 10.09     COLLATERAL AGENT.

         (a)      The  Trustee  shall  act as  Collateral  Agent  and  shall  be
authorized to appoint  co-Collateral Agents as necessary in its sole discretion.
Except as otherwise  explicitly  provided  herein or in the Security  Documents,
neither the  Collateral  Agent nor any of its  respective  officers,  directors,
employees  or agents  shall be liable for failure to demand,  collect or realize
upon any of the  Collateral  or for any  delay in doing so or shall be under any
obligation to sell or otherwise  dispose of any  Collateral  upon the request of
any other  Person  or to take any other  action  whatsoever  with  regard to the
Collateral or any part thereof.  The Collateral  Agent shall be accountable only
for  amounts  that it  actually  receives  as a result of the  exercise  of such
powers,  and neither the  Collateral  Agent nor any of its officers,  directors,
employees  or  agents  shall  be  responsible  for  any  act or  failure  to act
hereunder, except for its own willful misconduct, negligence or bad faith.

         (b)      The Trustee,  as Collateral  Agent, is authorized and directed
to (i) enter into the Security Documents,  (ii) bind the Holders on the terms as
set  forth  in  the  Security  Documents  and  (iii)  perform  and  observe  its
obligations under the Security Documents.

         (c)      If the Company (i) incurs Indebtedness constituting First Lien
Obligations at any time when no  Intercreditor  Agreement is in effect or at any
time when  Indebtedness  constituting  First Lien  Obligations  entitled  to the
benefit of an existing Intercreditor Agreement is concurrently retired, and (ii)
delivers  to the  Collateral  Agent an  Officer's  Certificate  so  stating  and
requesting  the  Collateral  Agent to enter into an  intercreditor  agreement in
favor  of  a  designated  agent  or  representative   for  the  holders  of  the
Indebtedness so incurred,  the Collateral Agent shall (and is hereby  authorized
and  directed  to) (A)  enter  into such  documents  and  agreements  (including
amendments or supplements to the Intercreditor  Agreement) as the Company or the
new Credit  Agent shall  request in order to provide to the new Credit Agent the
rights of the Credit Agent contemplated by the Intercreditor  Agreement and (ii)
deliver to the Credit Agent the Collateral perfected by possession together with
any  necessary  endorsements  (or  otherwise  allow such Credit  Agent to obtain
control of such Collateral).

Section 10.10     DESIGNATIONS.

         For purposes of the provisions hereof and the  Intercreditor  Agreement
requiring  the Company to  designate  Indebtedness  for the purposes of the term
"Credit  Agreement,"  "First Lien  Obligations"  or any other such  designations
hereunder or under the  Intercreditor  Agreement,  any such designation shall be
sufficient if the relevant designation is set forth in writing, signed on behalf
of the Company by an Officer and delivered to the Trustee,  the Collateral Agent
and the Credit Agent. For all purposes hereof and the  Intercreditor  Agreement,
the Company hereby  designates the Credit  Facilities  provided  pursuant to the
Credit  Agreement as the  "First-Lien  Credit  Facility" and any  Obligations in
respect of the Credit Agreement as "First Lien Obligations".


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                                    ARTICLE 11.
                                 NOTE GUARANTEES

Section 11.01     GUARANTEE.

         (a)      Subject to this  Article  11, each of the  Guarantors  hereby,
jointly  and  severally,  unconditionally  guarantees  to each  Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns,  irrespective of the validity and enforceability of this Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that:

                  (1)      the principal of, premium and Liquidated  Damages, if
         any, and interest on the Notes will be promptly  paid in full when due,
         whether at maturity,  by  acceleration,  redemption or  otherwise,  and
         interest on the overdue principal of and interest on the Notes, if any,
         if lawful,  and all other  obligations of the Company to the Holders or
         the Trustee  hereunder or  thereunder  will be promptly paid in full or
         performed, all in accordance with the terms hereof and thereof; and

                  (2)      in  case of any  extension  of  time  of  payment  or
         renewal of any Notes or any of such other  obligations,  that same will
         be promptly paid in full when due or performed in  accordance  with the
         terms of the  extension  or  renewal,  whether at stated  maturity,  by
         acceleration or otherwise.

         Failing payment when due of any amount so guaranteed or any performance
so guaranteed for whatever reason,  the Guarantors will be jointly and severally
obligated  to pay the same  immediately.  Each  Guarantor  agrees that this is a
guarantee of payment and not a guarantee of collection.

         (b)      Subject to Section  11.02,  the  Guarantors  hereby agree that
their  obligations  hereunder are full and  unconditional,  irrespective  of the
validity,  regularity  or  enforceability  of the Notes or this  Indenture,  the
absence of any action to enforce  the same,  any waiver or consent by any Holder
of the Notes with respect to any provisions  hereof or thereof,  the recovery of
any judgment  against the  Company,  any action to enforce the same or any other
circumstance which might otherwise  constitute a legal or equitable discharge or
defense of a guarantor.  Each Guarantor  hereby waives  diligence,  presentment,
demand of payment,  filing of claims with a court in the event of  insolvency or
bankruptcy of the Company,  any right to require a proceeding  first against the
Company,  protest,  notice and all demands  whatsoever  and  covenant  that this
Subsidiary  Guarantee will not be discharged  except by complete  performance of
the obligations contained in the Notes and this Indenture.

         (c)      If any  Holder  or the  Trustee  is  required  by any court or
otherwise to return to the Company,  the Guarantors or any  custodian,  trustee,
liquidator or other similar official acting in relation to either the Company or
the  Guarantors,  any amount paid by either to the Trustee or such Holder,  this
Subsidiary Guarantee, to the extent theretofore  discharged,  will be reinstated
in full force and effect.

         (d)      Each  Guarantor  agrees  that it will not be  entitled  to any
right of  subrogation  in relation to the Holders in respect of any  obligations
guaranteed  hereby until payment in full of all obligations  guaranteed  hereby.
Each Guarantor further agrees that, as between the Guarantors,


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on the one hand,  and the Holders and the  Trustee,  on the other hand,  (1) the
maturity of the obligations  guaranteed hereby may be accelerated as provided in
Article 6 hereof for the purposes of this Subsidiary Guarantee,  notwithstanding
any stay,  injunction  or other  prohibition  preventing  such  acceleration  in
respect  of the  obligations  guaranteed  hereby,  and (2) in the  event  of any
declaration of acceleration of such obligations as provided in Article 6 hereof,
such obligations  (whether or not due and payable) will forthwith become due and
payable by the  Guarantors  for the purpose of this  Subsidiary  Guarantee.  The
Guarantors  will  have  the  right  to seek  contribution  from  any  non-paying
Guarantor  so long as the  exercise  of such right does not impair the rights of
the Holders or the Trustee under this Subsidiary Guarantee.

Section 11.02     LIMITATION ON GUARANTOR LIABILITY.

         Each  Guarantor,  and by its acceptance of Notes,  each Holder,  hereby
confirms  that it is the  intention  of all such  parties  that  the  Subsidiary
Guarantee of such Guarantor not  constitute a fraudulent  transfer or conveyance
for purposes of  Bankruptcy  Law,  the Uniform  Fraudulent  Conveyance  Act, the
Uniform  Fraudulent  Transfer  Act or any  similar  federal  or state law to the
extent  applicable to any  Subsidiary  Guarantee.  To  effectuate  the foregoing
intention,  the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of such Guarantor that are
relevant  under such laws,  and after  giving  effect to any  collections  from,
rights to  receive  contribution  from or  payments  made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the  obligations  of such  Guarantor  under its Subsidiary
Guarantee not constituting a fraudulent transfer or conveyance.

Section 11.03     EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.

         To evidence its Subsidiary  Guarantee set forth in Section 11.01,  each
Guarantor   hereby  agrees  that  a  notation  of  such   Subsidiary   Guarantee
substantially  in the form  attached  as Exhibit E hereto will be endorsed by an
Officer  of such  Guarantor  on each Note  authenticated  and  delivered  by the
Trustee and that this  Indenture will be executed on behalf of such Guarantor by
one of its Officers.

         Each Guarantor hereby agrees that its Subsidiary Guarantee set forth in
Section 11.01 will remain in full force and effect  notwithstanding  any failure
to endorse on each Note a notation of such Subsidiary Guarantee.

         If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee  authenticates the
Note on which a Subsidiary Guarantee is endorsed,  the Subsidiary Guarantee will
be valid nevertheless.

         The  delivery  of any Note by the  Trustee,  after  the  authentication
thereof hereunder,  will constitute due delivery of the Subsidiary Guarantee set
forth in this Indenture on behalf of the Guarantors.

         In the  event  that  the  Company  creates  or  acquires  any  Domestic
Subsidiary after the date of this Indenture, if required by Section 4.17 hereof,
the Company will cause such Domestic


                                      103
<PAGE>


Subsidiary to comply with the provisions of Section 4.17 hereof and this Article
11, to the extent applicable.

Section 11.04     GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.

         Except as otherwise provided in Section 11.05, no Guarantor may sell or
otherwise  dispose of all or substantially all of its property and assets to, or
consolidate  with or merge with or into  (whether or not such  Guarantor  is the
surviving Person) another Person,  other than the Company or another  Guarantor,
unless:

                  (1)      immediately  after giving effect to such transaction,
         no Default or Event of Default exists; and

                  (2)      either:

                           (A)      the Person  acquiring  the  property  in any
                                    such  sale  or  disposition  or  the  Person
                                    formed    by   or    surviving    any   such
                                    consolidation  or  merger  is  a  Restricted
                                    Subsidiary    immediately   following   such
                                    transaction,  such  Person  assumes  all the
                                    obligations  of such  Guarantor  under  this
                                    Indenture,  its Note Guarantee, the Security
                                    Documents   and  the   Registration   Rights
                                    Agreement   pursuant   to   a   supplemental
                                    indenture satisfactory to the Trustee; or

                           (B)      the  Net  Proceeds  of such  sale  or  other
                                    disposition  are applied in accordance  with
                                    the applicable provisions of this Indenture.

         In case of any such consolidation,  merger, sale or conveyance and upon
the assumption by the successor Person, by supplemental indenture,  executed and
delivered  to the  Trustee  and  satisfactory  in  form to the  Trustee,  of the
Subsidiary   Guarantee  endorsed  upon  the  Notes  and  the  due  and  punctual
performance  of all of the  covenants  and  conditions  of this  Indenture to be
performed  by the  Guarantor,  such  successor  Person  will  succeed  to and be
substituted  for the  Guarantor  with the same  effect  as if it had been  named
herein as a Guarantor.  Such successor  Person  thereupon may cause to be signed
any or all of the  Subsidiary  Guarantees  to be endorsed  upon all of the Notes
issuable  hereunder which  theretofore shall not have been signed by the Company
and delivered to the Trustee.  All the  Subsidiary  Guarantees so issued will in
all respects  have the same legal rank and benefit  under this  Indenture as the
Subsidiary  Guarantees  theretofore and thereafter issued in accordance with the
terms of this  Indenture as though all of such  Subsidiary  Guarantees  had been
issued at the date of the execution hereof.

         Except as set forth in  Articles  4 and 5 hereof,  and  notwithstanding
clauses (a) and (b) above,  nothing contained in this Indenture or in any of the
Notes will prevent any  consolidation  or merger of a Guarantor with or into the
Company or another  Guarantor,  or will  prevent any sale or  conveyance  of the
property of a Guarantor  as an entirety or  substantially  as an entirety to the
Company or another  Guarantor;  provided that the Company provides notice to the
Trustee of such  consolidation or merger of a Guarantor with or into the Company
or another  Guarantor  or sale or  conveyance  of property of a Guarantor  as an
entirety or substantially as an entirety to the Company or another Guarantor.


                                      104
<PAGE>


Section 11.05     RELEASES FOLLOWING SALE OF ASSETS.

         In the  event of any sale,  disposition,  or other  transfer  of all or
substantially all of the property and assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale, disposition,  or other transfer of all of
the Capital Stock of any Guarantor, in each case to a Person that is not (either
before or after giving effect to such  transactions) the Company or a Restricted
Subsidiary  of the  Company,  then  such  Guarantor  (in  the  event  of a sale,
disposition, or other transfer, by way of merger, consolidation or otherwise, of
all of the capital  stock of such  Guarantor) or the  corporation  acquiring the
property  (in the  event  of a sale,  disposition  or other  transfer  of all or
substantially all of the property and assets of such Guarantor) will be released
and relieved of any obligations  under its Subsidiary  Guarantee;  PROVIDED that
the Net  Proceeds of such sale,  disposition  or other  transfer  are applied in
accordance with the applicable  provisions of this Indenture,  including without
limitation  Section 4.10 hereof.  Upon delivery by the Company to the Trustee of
an Officer's  Certificate and an Opinion of Counsel to the effect that such sale
or  other  disposition,  merger  or  consolidation  was made by the  Company  in
accordance with the provisions of this Indenture,  including without  limitation
Section 4.10 hereof, the Trustee will execute any documents  reasonably required
in order to evidence the release of any Guarantor from its obligations under its
Subsidiary Guarantee.

         Any Guarantor not released from its  obligations  under its  Subsidiary
Guarantee will remain liable for the full amount of principal of and interest on
the Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 11.

Section 11.06     RELEASE FOLLOWING DESIGNATION AS AN UNRESTRICTED SUBSIDIARY.

         In the event the Company  designates  any Guarantor as an  Unrestricted
Subsidiary in accordance  with Section 4.18,  the  Obligations of such Guarantor
under its Subsidiary Guarantee pursuant to this Article 11 shall be released.

                                  ARTICLE 12.
                           SATISFACTION AND DISCHARGE

Section 12.01     SATISFACTION AND DISCHARGE.

         This  Indenture  will be  discharged  and will  cease to be of  further
effect as to all Notes issued hereunder, when:

                  (1)      either:

                           (A)      all  Notes  that  have  been   authenticated
                                    except lost,  stolen or destroyed Notes that
                                    have  been  replaced  or paid and  Notes for
                                    whose  payment  money has been  deposited in
                                    trust and thereafter  repaid to the Company,
                                    have  been  delivered  to  the  Trustee  for
                                    cancellation; or

                           (B)      all Notes  that have not been  delivered  to
                                    the Trustee for cancellation have become due
                                    and  payable  by reason of the  mailing of a
                                    notice of  redemption  or  otherwise or will
                                    become due


                                      105
<PAGE>


                                    and payable  within one year and the Company
                                    or any Guarantor has  irrevocably  deposited
                                    or caused to be  deposited  with the Trustee
                                    as  trust  funds  in  trust  solely  for the
                                    benefit  of the  Holders  of Notes,  cash in
                                    U.S.   dollars,    non-callable   Government
                                    Securities, or a combination of cash in U.S.
                                    dollars    and    non-callable    Government
                                    Securities,    in   amounts   as   will   be
                                    sufficient,  without  consideration  of  any
                                    reinvestment   of   interest,   to  pay  and
                                    discharge  the  entire  Indebtedness  on the
                                    Notes  not  delivered  to  the  Trustee  for
                                    cancellation    for   principal,    premium,
                                    Liquidated  Damages,  if  any,  and  accrued
                                    interest   to  the  date  of   maturity   or
                                    redemption;

         (2)      no Default or Event of Default has occurred and is  continuing
on the date of such deposit (other than a Default or Event of Default  resulting
from the borrowing of funds to be applied to such deposit) and such deposit will
not result in a breach or violation of, or constitute a default under, any other
instrument  to which the  Company  or any  Guarantor  is a party or by which the
Company or any Guarantor is bound;

         (3)      the Company or any Guarantor has paid or caused to be paid all
sums payable by it under this Indenture; and

         (4)      the  Company has  delivered  irrevocable  instructions  to the
Trustee under this Indenture to apply the deposited  money toward the payment of
the Notes at maturity or on the redemption date, as the case may be.

         In addition,  the Company must deliver an Officer's  Certificate and an
Opinion of Counsel to the  Trustee  stating  that all  conditions  precedent  to
satisfaction and discharge have been satisfied.

         Notwithstanding  the satisfaction  and discharge of this Indenture,  if
money has been  deposited  with the Trustee  pursuant to subclause (B) of clause
(1) of this  Section,  the  provisions  of Section  12.02 and Section  8.06 will
survive. In addition,  nothing in this Section 12.01 will be deemed to discharge
those  provisions  of Section 7.07  hereof,  that,  by their terms,  survive the
satisfaction and discharge of this Indenture.

Section 12.02     APPLICATION OF TRUST MONEY.

         Subject to the provisions of Section 8.06, all money deposited with the
Trustee  pursuant to Section  12.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture,  to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee;  but such money need not be segregated from
other funds except to the extent required by law.

         If the  Trustee  or  Paying  Agent  is  unable  to apply  any  money or
Government  Securities in  accordance  with Section 12.01 by reason of any legal
proceeding  or by reason of any order or judgment  of any court or  governmental
authority enjoining,  restraining or otherwise prohibiting such application, the
Company's and any Guarantor's obligations under this Indenture and the


                                      106
<PAGE>


Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 12.01; PROVIDED that if the Company has made any payment of principal
of, premium,  if any, or interest on any Notes because of the  reinstatement  of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government  Securities held
by the Trustee or Paying Agent.

                                   ARTICLE 13.
                                  MISCELLANEOUS

Section 13.01     TRUST INDENTURE ACT CONTROLS.

         If any provision of this Indenture limits,  qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties will control.

Section 13.02     NOTICES.

         Any  notice or  communication  by the  Company,  any  Guarantor  or the
Trustee to the others is duly given if in  writing  and  delivered  in Person or
mailed by first class mail (registered or certified,  return receipt requested),
telex,  telecopier or overnight air courier  guaranteeing next day delivery,  to
the others' address:

         If to the Company and/or any Guarantor:

         National Coal Corp.
         8915 George Williams Road
         Knoxville, TN 37923
         Telecopier No.: (865) 691-9982
         Attention:  General Counsel

         With a copy to:

         Mayer, Brown, Rowe & Maw LLP
         71 S. Wacker Drive
         Chicago, IL 60606
         Telecopier No.: (312) 701-7711
         Attention:  James Junewicz

         If to the Trustee:

         Wells Fargo Bank, National Association
         213 Court Street
         Suite 703
         Middletown, CT 06457
         Telecopier No.: (860) 704-6219
         Attention: Joseph O'Donnell

         The Company,  any Guarantor or the Trustee, by notice to the others may
designate   additional  or  different   addresses  for  subsequent   notices  or
communications.


                                      107
<PAGE>


         All notices and communications  (other than those sent to Holders) will
be deemed to have been duly given:  at the time delivered by hand, if personally
delivered;  five  Business  Days  after  being  deposited  in the mail,  postage
prepaid, if mailed; when answered back, if telexed;  when receipt  acknowledged,
if telecopied;  and the next Business Day after timely  delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

         Any notice or  communication  to a Holder will be mailed by first class
mail,  certified or registered,  return receipt  requested,  or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the  Registrar.  Any  notice or  communication  will also be so mailed to any
Person  described in TIA ss. 313(c),  to the extent required by the TIA. Failure
to mail a notice  or  communication  to a Holder  or any  defect  in it will not
affect its sufficiency with respect to other Holders.

         If a notice or  communication  is mailed in the manner  provided  above
within the time  prescribed,  it is duly  given,  whether  or not the  addressee
receives it.

         If the Company mails a notice or communication to Holders, it will mail
a copy to the Trustee and each Agent at the same time.

Section 13.03     COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.

         Holders may  communicate  pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee,  the  Registrar  and anyone else shall have the  protection  of TIA ss.
312(c).

Section 13.04     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

         Upon any request or  application  by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:

                  (1)      an  Officer's   Certificate  in  form  and  substance
         reasonably   satisfactory  to  the  Trustee  (which  must  include  the
         statements  set forth in Section  13.05  hereof)  stating  that, in the
         opinion of the signers, all conditions precedent and covenants, if any,
         provided for in this  Indenture  relating to the  proposed  action have
         been satisfied; and

                  (2)      an  Opinion   of   Counsel  in  form  and   substance
         reasonably   satisfactory  to  the  Trustee  (which  must  include  the
         statements  set forth in Section  13.05  hereof)  stating  that, in the
         opinion of such counsel,  all such  conditions  precedent and covenants
         have been satisfied.

Section 13.05     STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

         Each certificate or opinion with respect to compliance with a condition
or covenant  provided for in this Indenture  (other than a certificate  provided
pursuant to TIA ss. 314(a)(4)) must comply with the provisions of TIA ss. 314(e)
and must include:

                  (1)      a statement  that the Person making such  certificate
         or opinion has read such covenant or condition;


                                      108
<PAGE>


                  (2)      a brief  statement  as to the nature and scope of the
         examination  or  investigation  upon which the  statements  or opinions
         contained in such certificate or opinion are based;

                  (3)      a statement  that, in the opinion of such Person,  he
         or she has made such  examination or  investigation  as is necessary to
         enable him or her to express an  informed  opinion as to whether or not
         such covenant or condition has been satisfied; and

                  (4)      a  statement  as to whether or not, in the opinion of
         such Person,  such condition or covenant has been  satisfied;  PROVIDED
         that  an  Opinion  of  Counsel  can  rely as to  matters  of fact on an
         Officer's Certificate or a certificate of a public official.

Section 13.06     RULES BY TRUSTEE AND AGENTS.

         The Trustee may make reasonable  rules for action by or at a meeting of
Holders.  The  Registrar  or  Paying  Agent  may make  reasonable  rules and set
reasonable requirements for its functions.

Section 13.07     NO PERSONAL  LIABILITY OF DIRECTORS,  OFFICERS,  EMPLOYEES AND
                  STOCKHOLDERS.

         No director,  officer,  employee,  incorporator  or  stockholder of the
Company or any Guarantor,  as such,  will have any liability for any obligations
of the Company or the  Guarantors  under the Notes,  this  Indenture or the Note
Guarantees  or for any claim  based on, in  respect  of, or by reason  of,  such
obligations or their  creation.  Each Holder of Notes by accepting a Note waives
and  releases  all  such  liability.  The  waiver  and  release  are part of the
consideration for issuance of the Notes.

Section 13.08     GOVERNING LAW.

         THE  INTERNAL  LAW OF THE STATE OF NEW YORK WILL  GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE,  THE NOTES AND THE SUBSIDIARY GUARANTEES WITHOUT GIVING
EFFECT TO  APPLICABLE  PRINCIPLES  OF  CONFLICTS  OF LAW TO THE EXTENT  THAT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 13.09     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

         This Indenture may not be used to interpret any other  indenture,  loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such  indenture,  loan or debt  agreement  may  not be  used to  interpret  this
Indenture.

Section 13.10     SUCCESSORS.

         All agreements of the Company in this Indenture and the Notes will bind
its  successors.  All  agreements of the Trustee in this Indenture will bind its
successors.  All  agreements of each  Guarantor in this  Indenture will bind its
successors, except as otherwise provided in Section 11.05.


                                      109
<PAGE>


Section 13.11     SEVERABILITY.

         In case any  provision  in this  Indenture  or in the Notes is invalid,
illegal or  unenforceable,  the  validity,  legality and  enforceability  of the
remaining provisions will not in any way be affected or impaired thereby.

Section 13.12     COUNTERPART ORIGINALS.

         The  parties  may sign any  number of copies  or  counterparts  of this
Indenture.  Each signed copy or counterpart will be an original, but all of them
together represent the same agreement.

Section 13.13     TABLE OF CONTENTS, HEADINGS, ETC.

         The  Table of  Contents,  Cross-Reference  Table  and  Headings  of the
Articles and Sections of this  Indenture  have been inserted for  convenience of
reference only, are not to be considered a part of this Indenture and will in no
way modify or restrict any of the terms or provisions hereof.


                                      110
<PAGE>


                                   SIGNATURES

Dated as of December 29, 2005

                             NATIONAL COAL CORP., a Florida Corporation

                             By:   /s/ Jon Nix
                                   ---------------------------------------------
                             Name:  Jon Nix
                             Title: CEO

                             NATIONAL COAL CORPORATION, a Tennessee Corporation

                             By:   /s/ Jon Nix
                                   ---------------------------------------------
                             Name:  Jon Nix
                             Title: CEO

                             NC TRANSPORTATION INC., a Tennessee corporation

                             By:   /s/ Jon Nix
                                   ---------------------------------------------
                             Name:  Jon Nix
                             Title: CEO

                             NC RAILROAD, INC., a Tennessee corporation

                             By:   /s/ Robert S. Pardue
                                   ---------------------------------------------
                             Name:  Robert S. Pardue
                             Title: President

                             Wells Fargo Bank, National Association,
                             as Trustee

                             By:   /s/ Jane Y. Schweiger
                                   ---------------------------------------------
                             Name:  Jane Y. Schweiger
                             Title: Vice President


                                      S-1
<PAGE>


                                   SCHEDULE I

                             SCHEDULE OF GUARANTORS

         The following  schedule lists each Guarantor under this Indenture as of
the date of this Indenture:

         (1)      National Coal Corporation

         (2)      NC Transportation Inc.

         (3)      NC Railroad, Inc.


                                      I-1
<PAGE>


                                                                       EXHIBIT A

                                 [Face of Note]

--------------------------------------------------------------------------------

                                                          CUSIP/CINS ___________

                       10.5% Senior Secured Notes due 2010

No. _______________                                                  $__________

                               NATIONAL COAL CORP.

promises to pay to _____________________________________________

or registered assigns,

the principal sum of ________________________________________________

Dollars on December 15, 2010.

Interest Payment Dates: June 15 and December 15

Record Dates: June 1 and December 1

Dated:

                                        NATIONAL COAL CORP.


                                        By:.____________________________________
                                               Name:
                                               Title:

This is one of the Notes referred to in the within-mentioned Indenture:

Wells Fargo Bank, National Association, as Trustee


By:___________________________
     Authorized Signatory


                                      A-1
<PAGE>


                                 [Back of Note]
                       10.5% Senior Secured Notes due 2010

[INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE  PURSUANT TO THE PROVISIONS OF THE
INDENTURE]

[INSERT THE PRIVATE PLACEMENT  LEGEND, IF APPLICABLE  PURSUANT TO THE PROVISIONS
OF THE INDENTURE]

[INSERT THE REGULATION S TEMPORARY GLOBAL NOTE LEGEND, IF APPLICABLE PURSUANT TO
THE PROVISIONS OF THE INDENTURE]

         Capitalized terms used herein have the meanings assigned to them in the
Indenture referred to below unless otherwise indicated.

                  (1) INTEREST.  National Coal Corp., a Florida corporation (the
         "COMPANY"),  promises to pay interest on the  principal  amount of this
         Note at a rate of 10.5 % per annum and will be payable semi-annually in
         arrears  on June 15 and  December  15,  commencing  on June  15,  2006.
         Interest on overdue principal and interest and Liquidated  Damages,  if
         any,  will accrue at a rate that is 1% higher than the then  applicable
         interest rate on the Notes. The Company will make each interest payment
         to the Holders of record at the close of  business  on the  immediately
         preceding June 1 and December 1. Interest on the Notes will accrue from
         the date of original  issuance  or, if interest  has already been paid,
         from the date it was most recently  paid.  Interest will be computed on
         the basis of a 360-day year comprised of twelve 30-day  months.  On any
         Interest  Payment Date,  the Company shall also pay in cash such amount
         of accrued  original  issue discount on the Notes (as determined by the
         Company),  if any, as shall be necessary to ensure that the Notes shall
         not be considered an "applicable high yield discount obligation" within
         the meaning of Section 163(i) of the Internal  Revenue Code of 1986, as
         amended (the "Code"), or any successor  provision.  If the Company must
         make a payment in accordance with the preceding  sentence,  the Company
         shall  notify the  Trustee in writing of the amount of such  payment at
         least five Business Days before the applicable  Interest  Payment Date.
         The preceding two sentences shall apply only to the extent necessary to
         achieve the objective therein described and shall apply only to amounts
         treated as original issue discount under the Code.

                  (2) METHOD OF PAYMENT.  The Company  will pay  interest on the
         Notes (except defaulted  interest) and Liquidated  Damages,  if any, to
         the  Persons  who are  registered  Holders  of  Notes  at the  close of
         business  on the June 1 and  December  1 next  preceding  the  Interest
         Payment  Date,  even if such Notes are canceled  after such record date
         and on or before  such  Interest  Payment  Date,  except as provided in
         Section 2.12 of the Indenture with respect to defaulted  interest.  The
         Notes will be payable as to principal,  premium and Liquidated Damages,
         if any, and interest at the office or agency of the Company  maintained
         for such purpose, or, at the option of the Company, payment of interest
         and  Liquidated  Damages,  if any,  may be made by check  mailed to the
         Holders  at their  addresses  set  forth in the  register  of  Holders;
         provided that payment by wire transfer of immediately  available  funds
         will be required with respect to principal of and interest, premium and
         Liquidated  Damages,  if any,  on, all Global Notes and all other Notes
         the Holders of which will have provided wire transfer  instructions  to
         the Company


                                      A-2
<PAGE>

         or the Paying  Agent.  Such payment will be in such coin or currency of
         the United  States of America as at the time of payment is legal tender
         for payment of public and private debt.

                  (3) PAYING AGENT AND REGISTRAR.  Initially,  Wells Fargo Bank,
         National  Association,  the Trustee  under the  Indenture,  will act as
         Paying Agent and Registrar.  The Company may change any Paying Agent or
         Registrar  without  notice to any  Holder.  The  Company  or any of its
         Subsidiaries may act in any such capacity.

                  (4) INDENTURE. The Company issued the Notes under an Indenture
         dated as of December 29, 2005 (the "INDENTURE") among the Company,  the
         Guarantors and the Trustee. The terms of the Notes include those stated
         in this  Indenture and those made part of the Indenture by reference to
         the Trust  Indenture  Act of 1939,  as  amended  (15 U.S.  Code  ss.ss.
         77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
         referred to the  Indenture  and such Act for a statement of such terms.
         To the extent any  provision  of this Note  conflicts  with the express
         provisions of the  Indenture,  the  provisions  of the Indenture  shall
         govern and be controlling.  The Notes are secured on a  second-priority
         basis by the Lien  created by the Security  Documents  pursuant to, and
         subject to the terms of, the Indenture and the Intercreditor Agreement.

                  (5) OPTIONAL REDEMPTION.

         (a)      At any time prior to December 15, 2008, the Company may on any
one or more  occasions  redeem up to 35% of the  aggregate  principal  amount of
Notes  issued  under the  Indenture  at a  redemption  price of  110.500% of the
principal amount,  plus accrued and unpaid interest and Liquidated  Damages,  if
any,  to the  redemption  date,  with the net cash  proceeds of a sale of Equity
Interests (other than Disqualified Stock) of the Company; PROVIDED that:

                  (1) at least 65% of the  aggregate  principal  amount of Notes
         originally  issued  under the  Indenture  (excluding  Notes held by the
         Company and its Subsidiaries) remains outstanding immediately after the
         occurrence of such redemption; and

                  (2) the  redemption  occurs  within 90 days of the date of the
         closing of such sale of Equity Interests or contribution.

                           On the dates  specified  below,  the Company,  at its
         option, may redeem all or a part of the Notes upon not less than 30 nor
         more than 60 days'  notice,  at the  redemption  prices  (expressed  as
         percentages  of  principal  amount)  set forth  below plus  accrued and
         unpaid interest and Liquidated  Damages, if any, on the Notes redeemed,
         to the applicable  redemption  date, if redeemed  during the applicable
         period  set forth  below,  subject to the rights of holders of Notes on
         the relevant record date to receive  interest on the relevant  interest
         payment date:

         PERIOD                                                       PERCENTAGE
         ------                                                       ----------
         December 15, 2008 to December 14, 2009.....................   105.250%
         December 15, 2009 to June 14, 2010.........................   102.625%
         June 15, 2010 and thereafter...............................   100.000%


                                      A-3
<PAGE>


         (b)      Unless  the Company  defaults in the payment of the redemption
price, interest will cease to accrue on the Notes or portions thereof called for
redemption on the applicable redemption date.

         (c)      Any redemption pursuant to Section 3.07 of the Indenture shall
be made in accordance  with the  provisions of Sections 3.01 through 3.06 of the
Indenture.

                  (6)      MANDATORY REDEMPTION.

         The Company is not  required to make  mandatory  redemption  or sinking
fund payments with respect to the Notes.

                  (7)      REPURCHASE AT OPTION OF HOLDER.

         (a)      Upon  the occurrence of a Change of Control,  the Company will
be required to make an offer (a "CHANGE OF CONTROL  OFFER") to repurchase all or
any part (in a minimum  aggregate  principal  amount  of  $1,000 or an  integral
multiple  thereof) of each Holder's  Notes at a purchase  price in cash equal to
101% of the aggregate principal amount of the Notes repurchased plus accrued and
unpaid interest and Liquidated  Damages, if any, on the Notes repurchased to the
date of purchase (the "CHANGE OF CONTROL PAYMENT"). Within 15 days following any
Change of Control, the Company will mail a notice to each Holder and the Trustee
setting forth the  procedures  governing the Change of Control Offer as required
by the Indenture.

         (b)      If  the Company or a  Subsidiary  consummates  any Asset Sale,
promptly  following  the date on which the aggregate  amount of Excess  Proceeds
exceeds $5.0  million,  within five days  thereof,  the Company will commence an
offer to all Holders of Notes and all holders of other Indebtedness that is PARI
PASSU  with the Notes  containing  provisions  similar to those set forth in the
Indenture  with  respect to offers to purchase  or redeem  with the  proceeds of
sales of property or assets (an "ASSET SALE OFFER")  pursuant to Section 3.09 of
the  Indenture to purchase or redeem the maximum  principal  amount of Notes and
such other  PARI  PASSU  Indebtedness  that may be  purchased  out of the Excess
Proceeds  at an offer  price  payable in cash in an amount  equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon,  if any, to the date fixed for the closing of such offer in  accordance
with the procedures set forth in the Indenture.  If any Excess  Proceeds  remain
after  consummation  of an Asset Sale Offer,  the  Company may use those  Excess
Proceeds for any purpose not  otherwise  prohibited  by this  Indenture.  If the
aggregate  principal amount of Notes and other PARI PASSU Indebtedness  tendered
into such Asset Sale Offer  exceeds the amount of Excess  Proceeds,  the Trustee
shall  select the Notes and other PARI PASSU  Indebtedness  to be purchased on a
pro rata  basis.  Holders of Notes that are the  subject of an offer to purchase
will receive an Asset Sale Offer from the Company prior to any related  purchase
date and may elect to have such Notes  purchased by completing the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes.

                  (8) NOTICE OF REDEMPTION.  Notice of redemption will be mailed
         at least 30 days but not more than 60 days before the  redemption  date
         and each  Holder  whose  Notes  are to be  redeemed  at its  registered
         address.  Notes in denominations  larger than $1,000 may be redeemed in
         part but only in whole  multiples  of  $1,000,  unless all of the


                                      A-4
<PAGE>


         Notes held by a Holder are to be redeemed.  On and after the redemption
         date interest ceases to accrue on Notes or portions  thereof called for
         redemption.

                  (9)  DENOMINATIONS,  TRANSFER,  EXCHANGE.  The  Notes  are  in
         registered form without coupons in denominations of $1,000 and integral
         multiples of $1,000.  The transfer of Notes may be registered and Notes
         may be exchanged as provided in the  Indenture.  The  Registrar and the
         Trustee  may  require  a  Holder,   among  other  things,   to  furnish
         appropriate  endorsements  and transfer  documents  and the Company may
         require a Holder to pay any taxes and fees required by law or permitted
         by the  Indenture.  The  Company  need not  exchange  or  register  the
         transfer  of any Note or portion  of a Note  selected  for  redemption,
         except for the  unredeemed  portion of any Note being redeemed in part.
         Also,  the Company  need not  exchange or register  the transfer of any
         Notes (i) during a period of 15 days before a selection  of Notes to be
         redeemed   or  during  the  period   between  a  record  date  and  the
         corresponding  Interest Payment Date, or (ii) during a period beginning
         at the opening of business 15 days before any Interest Payment Date and
         ending at the closing of business on such Interest Payment Date.

                  (10) PERSONS  DEEMED OWNERS.  The registered  Holder of a Note
         may be treated as its owner for all purposes.

                  (11)  AMENDMENT,  SUPPLEMENT  AND  WAIVER.  Subject to certain
         exceptions,  the  Indenture,  the  Note  Guarantees,  the  Notes or the
         Security  Documents may be amended or supplemented  with the consent of
         the Holders of at least a majority in aggregate principal amount of the
         then  outstanding  Notes  voting as a single  class,  and any  existing
         default  or  compliance  with  any  provision  of  the  Indenture,  the
         Subsidiary  Guarantees,  the  Notes or the  Security  Documents  may be
         waived  with the  consent of the  Holders of a  majority  in  principal
         amount of the then outstanding Notes, voting as a single class. Without
         the  consent of any Holder of a Note,  the  Indenture,  the  Subsidiary
         Guarantees,  the Notes or the  Security  Documents  may be  amended  or
         supplemented to cure any ambiguity, defect or inconsistency, to provide
         for  uncertificated  Notes in addition  to or in place of  certificated
         Notes,  to provide for the  assumption of the Company's  obligations to
         Holders  of the Notes in case of a merger or  consolidation  or sale of
         all or substantially all of the Company's  property and assets, to make
         any change that would provide any additional  rights or benefits to the
         Holders  of the Notes or that  would  not  adversely  affect  the legal
         rights  under the  Indenture  of any such  Holder,  to comply  with the
         requirements  of the  Commission  in order to  effect or  maintain  the
         qualification  of the Indenture under the Trust Indenture Act, to allow
         any  Guarantor to execute a  supplemental  indenture  to the  Indenture
         and/or  a  Subsidiary  Guarantee  with  respect  to  the  Notes,  or if
         necessary,  in  connection  with any addition or release of  Collateral
         permitted under the terms of this Indenture or Security Documents.

                  (12) DEFAULTS AND REMEDIES. Events of Default include: (i) the
         Company defaults for 30 days in the payment when due of interest on, or
         Liquidated  Damages  with  respect  to,  the  Notes;  (ii) the  Company
         defaults in payment when due of the principal  of, or premium,  if any,
         on the Notes;  (iii)  failure by the  Company or any of its  Restricted
         Subsidiaries  to comply with the  provisions  of Sections  4.07,  4.09,
         4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company or any
         of its Restricted


                                      A-5
<PAGE>


         Subsidiaries for 60 days after notice from the Trustee or Holders of at
         least 25% in aggregate principal amount of the outstanding Notes voting
         as a  single  class  to  comply  with the  provisions  of the  Security
         Documents or the Indenture;  (v) default under any Mortgage,  indenture
         or instrument  under which there may be issued or by which there may be
         secured or  evidenced  any  Indebtedness  of the  Company or any of its
         Restricted  Subsidiaries  (or the payment of which is guaranteed by the
         Company  or  any  of  its   Restricted   Subsidiaries)   whether   such
         Indebtedness  or guarantee now exists,  or is created after the date of
         the  Indenture,  if that  default  (A) is caused  by a  failure  to pay
         principal  of, or  interest or  premium,  if any, on such  Indebtedness
         prior  to  the  expiration  of  the  grace  period   provided  in  such
         indebtedness  on the date of such default (a "PAYMENT  DEFAULT") or (B)
         results in the acceleration of such  Indebtedness  prior to its express
         maturity,  and,  in  each  case,  the  principal  amount  of  any  such
         Indebtedness,  together  with the  principal  amount of any other  such
         Indebtedness  under  which  there  has been a  Payment  Default  or the
         maturity of which has been so  accelerated,  aggregates $5.0 million or
         more; (vi) failure by the Company or any of its Restricted Subsidiaries
         to pay  final  judgments  entered  by a court or  courts  of  competent
         jurisdiction aggregating in excess of $5.0 million, which judgments are
         not  paid,  discharged  or stayed  for a period  of 60 days;  and (vii)
         except as permitted by the Indenture,  an Note Guarantee is held in any
         judicial  proceeding to by  unenforceable  or invalid or ceases for any
         reason to be in full force and effect, or any Guarantor,  or any Person
         acting on behalf of any Guarantor, denies or disaffirms its obligations
         under its Note  Guarantee;  and (viii)  certain events of bankruptcy or
         insolvency  described in the  Indenture  with respect to the Company or
         any of its Restricted  Subsidiaries that is a Significant Subsidiary or
         any  group of  Restricted  Subsidiaries  that,  taken  together,  would
         constitute a Significant Subsidiary. If any Event of Default occurs and
         is continuing,  the Trustee or the Holders of at least 25% in aggregate
         principal  amount of the then  outstanding  Notes may  declare  all the
         Notes to be due and payable immediately. Notwithstanding the foregoing,
         in the case of an Event of  Default  arising  from  certain  events  of
         bankruptcy or insolvency,  with respect to the Company or a Significant
         Subsidiary,  all outstanding  Notes will become due and payable without
         further action or notice. In the case of any Event of Default occurring
         by reason of any willful  action (or inaction)  taken (or not taken) by
         or on behalf of the Company with the  intention of avoiding  payment of
         the premium that the Company  would have had to pay if the Company then
         had  elected  to  redeem  the Notes  pursuant  to  Section  3.07 of the
         Indenture,  then  an  equivalent  premium  shall  also  become  and  be
         immediately  due and payable  upon  acceleration  of the Notes,  to the
         extent permitted by law,  anything in this Indenture or in the Notes to
         the contrary notwithstanding.  Holders may not enforce the Indenture or
         the Notes  except as  provided  in the  Indenture.  Subject  to certain
         limitations, Holders of a majority in aggregate principal amount of the
         then  outstanding  Notes may direct the Trustee in its  exercise of any
         trust or power. The Holders of a majority in aggregate principal amount
         of the Notes then outstanding by notice to the Trustee may on behalf of
         the Holders of all of the Notes waive any existing  Default or Event of
         Default and its  consequences  under the Indenture  except a continuing
         Default  or Event of  Default in the  payment  of  interest  on, or the
         principal  of, the Notes.  The  Company is  required  to deliver to the
         Trustee annually a statement  regarding  compliance with the Indenture,
         and the Company is required upon becoming aware of any Default or Event
         of  Default,  to deliver to the  Trustee a  statement  specifying  such
         Default or Event of Default.


                                      A-6
<PAGE>


                  (13)  TRUSTEE  DEALINGS  WITH  COMPANY.  The  Trustee,  in its
         individual or any other  capacity,  may make loans to, accept  deposits
         from, and perform  services for the Company or its Affiliates,  and may
         otherwise  deal with the Company or its  Affiliates,  as if it were not
         the Trustee.

                  (14)  NO  RECOURSE  AGAINST  OTHERS.   A  director,   officer,
         employee,  incorporator  or  stockholder,  of the Company or any of the
         Guarantors, as such, will not have any liability for any obligations of
         the  Company  or  such  Guarantor  under  the  Notes,   the  Subsidiary
         Guarantees,  the  Indenture or the Security  Documents or for any claim
         based on, in respect  of, or by reason of,  such  obligations  or their
         creation.  Each Holder by accepting a Note waives and releases all such
         liability. The waiver and release are part of the consideration for the
         issuance of the Notes.

                  (15)  AUTHENTICATION.  This  Note  will  not  be  valid  until
         authenticated   by  the  manual   signature   of  the   Trustee  or  an
         authenticating agent.

                  (16) ABBREVIATIONS. Customary abbreviations may be used in the
         name of a  Holder  or an  assignee,  such  as:  TEN COM (=  tenants  in
         common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants
         with  right of  survivorship  and not as tenants  in  common),  CUST (=
         Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

                  (17) ADDITIONAL  RIGHTS OF HOLDERS OF RESTRICTED  GLOBAL NOTES
         AND RESTRICTED  DEFINITIVE NOTES. In addition to the rights provided to
         Holders of Notes  under the  Indenture,  Holders of  Restricted  Global
         Notes and  Restricted  Definitive  Notes  will have all the  rights set
         forth in the  Registration  Rights  Agreement  dated as of December 29,
         2005, among the Company,  the Guarantors and the other parties named on
         the signature pages thereof (the "REGISTRATION RIGHTS AGREEMENT").

                  (18) CUSIP NUMBERS.  Pursuant to a recommendation  promulgated
         by the Committee on Uniform  Security  Identification  Procedures,  the
         Company  has  caused  CUSIP  numbers to be printed on the Notes and the
         Trustee may use CUSIP numbers in notices of redemption as a convenience
         to  Holders.  No  representation  is  made as to the  accuracy  of such
         numbers either as printed on the Notes or as contained in any notice of
         redemption and reliance may be placed only on the other  identification
         numbers placed thereon.


                                      A-7
<PAGE>


         The Company will furnish to any Holder upon written request and without
charge  a copy  of the  Indenture  and/or  the  Registration  Rights  Agreement.
Requests may be made to:

National Coal Corp.
8915 George Williams Road
Knoxville, TN 37923
Attention: General Counsel


                                      A-8
<PAGE>


                                 ASSIGNMENT FORM

         To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:___________________________________
                                               (Insert assignee's legal name)

--------------------------------------------------------------------------------
                 (Insert assignee's soc. sec. or tax I.D. no.)

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)

and  irrevocably  appoint_______________________________________________________

to  transfer  this Note on the books of the  Company.  The agent may  substitute
another to act for him.

Date:_______________________

                  Your Signature:_________________________________________
                    (Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:__________________

*        Participant in a recognized  Signature  Guarantee Medallion Program (or
         other signature guarantor acceptable to the Trustee).


<PAGE>


                       OPTION OF HOLDER TO ELECT PURCHASE

         If you  want to  elect  to have  this  Note  purchased  by the  Company
pursuant to Section 4.10 or 4.15 of the  Indenture,  check the  appropriate  box
below:

         _________         |_| Section 4.10          |_| Section 4.15

         If you want to elect to have  only  part of the Note  purchased  by the
Company  pursuant to Section  4.10 or Section 4.15 of the  Indenture,  state the
amount you elect to have purchased:

                                $
                                 ---------------
Date:______________

             Your Signature:
                            ----------------------------------------------------
                    (Sign exactly as your name appears on the face of this Note)

             Tax Identification No.:
                                    --------------------------------------------

Signature Guarantee*:__________________

         *        Participant  in a  recognized  Signature  Guarantee  Medallion
Program (or other signature guarantor acceptable to the Trustee).


<PAGE>


              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE

         The  following  exchanges of a part of this Global Note for an interest
in another  Global Note or for a  Definitive  Note,  or  exchanges  of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:


              Amount of          Amount of      Principal Amount   Signature of
             decrease in        increase in      of this Global     authorized
           Principal Amount   Principal Amount   Note following     officer of
Date of        of this            of this        such decrease      Trustee or
Exchange     Global Note       Global Note       (or increase)      Custodian
--------   ----------------   ---------------   ----------------   -------------


<PAGE>


                                                                       EXHIBIT B

                        FORM OF CERTIFICATE OF TRANSFER

National Coal Corp.
8915 George Williams Road
Knoxville, TN 37923

[REGISTRAR ADDRESS BLOCK]

         Re:      10.5% Senior Secured Notes due 2010

         Reference  is hereby made to the  Indenture,  dated as of December  29,
2005 (the  "INDENTURE"),  among National Coal Corp., as issuer (the  "COMPANY"),
the  Guarantors  named on the  signature  pages  thereto  and Wells  Fargo Bank,
National Association, as trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

         __________________ (the "TRANSFEROR") owns and proposes to transfer the
Note[s]  or  interest  in such  Note[s]  specified  in  Annex A  hereto,  in the
principal  amount of $______ in such Note[s] or interests (the  "TRANSFER"),  to
___________________________________  (the "TRANSFEREE"), as further specified in
Annex A hereto, in connection with the Transfer, the Transferor hereby certifies
that:

                             [CHECK ALL THAT APPLY]

         1. |_| CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL  INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer
is being  effected  pursuant  to and in  accordance  with  Rule  144A  under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and, accordingly, the
Transferor hereby further  certifies that the beneficial  interest or Definitive
Note is being  transferred to a Person that the Transferor  reasonably  believed
and believes is purchasing  the beneficial  interest or Definitive  Note for its
own  account,  or for one or more  accounts  with  respect to which such  Person
exercises sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A in a transaction
meeting the  requirements  of Rule 144A and such Transfer is in compliance  with
any applicable blue sky securities laws of any state of the United States.  Upon
consummation  of the  proposed  Transfer  in  accordance  with the  terms of the
Indenture,  the  transferred  beneficial  interest  or  Definitive  Note will be
subject to the  restrictions  on transfer  enumerated  in the Private  Placement
Legend  printed on the 144A Global Note  and/or the  Definitive  Note and in the
Indenture and the Securities Act.

         2. |_| CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL  INTEREST
IN THE  TEMPORARY  REGULATION S GLOBAL NOTE,  THE  REGULATION S GLOBAL NOTE OR A
DEFINITIVE  NOTE  PURSUANT  TO  REGULATION  S. The  Transfer  is being  effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly,  the Transferor hereby further certifies that (i) the Transfer
is not being made to a Person in the  United  States and (x) at the time the buy
order was  originated,  the  Transferee  was outside  the United  States or such
Transferor and any Person acting on its behalf reasonably  believed and believes
that the  Transferee  was outside the United States or (y) the  transaction  was
executed in, on or through the  facilities of a


                                      B-1
<PAGE>


designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged  with a buyer in
the  United  States,  (ii)  no  directed  selling  efforts  have  been  made  in
contravention of the requirements of Rule 903 (b) or Rule 904(b) of Regulation S
under the Securities  Act, (iii) the transaction is not part of a plan or scheme
to evade the  registration  requirements  of the  Securities Act and (iv) if the
proposed  transfer  is being  made  prior to the  expiration  of the  Restricted
Period,  the  transfer is not being made to a U.S.  Person or for the account or
benefit of a U.S. Person (other than the Initial  Purchaser).  Upon consummation
of the proposed  transfer in  accordance  with the terms of the  Indenture,  the
transferred  beneficial  interest  or  Definitive  Note will be  subject  to the
restrictions on Transfer  enumerated in the Private  Placement Legend printed on
the Regulation S Global Note, the Temporary  Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.

         3. |_|  CHECK AND  COMPLETE  IF  TRANSFEREE  WILL  TAKE  DELIVERY  OF A
BENEFICIAL  INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION  OF THE  SECURITIES  ACT OTHER  THAN RULE  144A OR  REGULATION  S. The
Transfer  is  being  effected  in  compliance  with  the  transfer  restrictions
applicable to beneficial  interests in  Restricted  Global Notes and  Restricted
Definitive  Notes and pursuant to and in accordance  with the Securities Act and
any applicable blue sky securities  laws of any state of the United States,  and
accordingly the Transferor hereby further certifies that (check one):

                  (a) |_| such  Transfer  is being  effected  pursuant to and in
         accordance with Rule 144 under the Securities Act;

                                       or

                  (b) |_| such  Transfer  is being  effected to the Company or a
subsidiary thereof; or

                                       or

                  (c)  |_|  such  Transfer  is  being  effected  pursuant  to an
         effective  registration  statement  under  the  Securities  Act  and in
         compliance with the prospectus delivery  requirements of the Securities
         Act;

                                       or

                  (d) |_| such  Transfer is being  effected to an  Institutional
         Accredited  Investor and pursuant to an exemption from the registration
         requirements  of the Securities  Act other than Rule 144A,  Rule 144 or
         Rule 904, and the Transferor  hereby further  certifies that it has not
         engaged in any general  solicitation within the meaning of Regulation D
         under the  Securities  Act and the Transfer  complies with the transfer
         restrictions  applicable to beneficial interests in a Restricted Global
         Note  or  Restricted  Definitive  Notes  and  the  requirements  of the
         exemption   claimed,   which   certification  is  supported  by  (1)  a
         certificate  executed by the Transferee in the form of Exhibit D to the
         Indenture and (2) an Opinion of Counsel  provided by the  Transferor or
         the  Transferee  (a copy of which the  Transferor  has attached to this
         certification),  to the effect that such Transfer is in compliance with
         the  Securities  Act.  Upon  consummation  of the proposed


                                      B-2
<PAGE>


         transfer in accordance with the terms of the Indenture, the transferred
         beneficial   interest  or  Definitive  Note  will  be  subject  to  the
         restrictions  on transfer  enumerated in the Private  Placement  Legend
         printed on the IAI Global Note and/or the  Definitive  Notes and in the
         Indenture and the Securities Act.

         4. |_| CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL  INTEREST
IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

                  (a) |_| CHECK IF TRANSFER  IS  PURSUANT  TO RULE 144.  (i) The
         Transfer is being effected  pursuant to and in accordance with Rule 144
         under  the  Securities   Act  and  in  compliance   with  the  transfer
         restrictions  contained in the  Indenture and any  applicable  blue sky
         securities  laws  of any  state  of the  United  States  and  (ii)  the
         restrictions  on transfer  contained in the  Indenture  and the Private
         Placement Legend are not required in order to maintain  compliance with
         the  Securities  Act.  Upon  consummation  of the proposed  Transfer in
         accordance with the terms of the Indenture,  the transferred beneficial
         interest  or  Definitive   Note  will  no  longer  be  subject  to  the
         restrictions  on transfer  enumerated in the Private  Placement  Legend
         printed on the Restricted Global Notes, on Restricted  Definitive Notes
         and in the Indenture.

                  (b) |_| CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION.  (i)
         The Transfer is being  effected  pursuant to and in compliance  with an
         exemption  from the  registration  requirements  of the  Securities Act
         other than Rule 144,  Rule 903 or Rule 904 and in  compliance  with the
         transfer  restrictions  contained in the Indenture  and any  applicable
         blue sky securities laws of any State of the United States and (ii) the
         restrictions  on transfer  contained in the  Indenture  and the Private
         Placement Legend are not required in order to maintain  compliance with
         the  Securities  Act.  Upon  consummation  of the proposed  Transfer in
         accordance with the terms of the Indenture,  the transferred beneficial
         interest or Definitive Note will not be subject to the  restrictions on
         transfer  enumerated  in the Private  Placement  Legend  printed on the
         Restricted  Global  Notes or  Restricted  Definitive  Notes  and in the
         Indenture.

         This certificate and the statements  contained herein are made for your
benefit and the benefit of the Company.


                                    --------------------------------------------
                                             [Insert Name of Transferor]

                                    By:_________________________________________
                                       Name:
                                       Title:

Dated:   ___________________


                                      B-3
<PAGE>

                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

                            [CHECK ONE OF (a) OR (b)]

          (a) |_| a beneficial interest in the:

                  (i)    |_|    144A Global Note (CUSIP [_______________]), or

                  (ii)   |_|    Regulation S Global Note (CUSIP [_________]), or

                  (iii)  |_|    IAI Global Note (CUSIP [_______________]); or

          (b) |_| a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:

                                   [CHECK ONE]

         (a) |_| a beneficial interest in the:

                  (i)    |_|    144A Global Note (CUSIP [_______________]), or

                  (ii)   |_|    Regulation S Global Note (CUSIP [_________]), or

                  (iii)  |_|    IAI Global Note (CUSIP [_______________]), or

                  (iv)   |_|    Unrestricted Global Note (CUSIP [_________]); or

         (b) |_| a Restricted Definitive Note; or

         (c) |_| an Unrestricted Definitive Note,

         in accordance with the terms of the Indenture.


<PAGE>


                                                                       EXHIBIT C

                         FORM OF CERTIFICATE OF EXCHANGE

National Coal Corp.
8915 George Williams Road
Knoxville, TN 37923

[REGISTRAR ADDRESS BLOCK]

         Re:      10.5% Senior Secured Notes due 2010

                                (CUSIP__________)

         Reference  is hereby made to the  Indenture,  dated as of December  29,
2005 (the  "INDENTURE"),  among National Coal Corp., as issuer (the  "COMPANY"),
the  Guarantors  named on the  signature  pages  thereto  and Wells  Fargo Bank,
National Association, as trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

         ___________________  (the  "OWNER")  owns and  proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$__________in such Note[s] or interests (the "EXCHANGE"). In connection with the
Exchange, the Owner hereby certifies that:

         1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE

         (a) |_| CHECK IF EXCHANGE IS FROM  BENEFICIAL  INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial  interest in an Unrestricted  Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the  Owner's own  account  without  transfer,  (ii) such  Exchange  has been
effected in compliance with the transfer  restrictions  applicable to the Global
Notes and pursuant to and in  accordance  with the  Securities  Act of 1933,  as
amended (the "SECURITIES  ACT"), (iii) the restrictions on transfer contained in
the  Indenture  and the Private  Placement  Legend are not  required in order to
maintain  compliance with the Securities Act and (iv) the beneficial interest in
an Unrestricted  Global Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

         (b) |_| CHECK IF EXCHANGE IS FROM  BENEFICIAL  INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED  DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial  interest in a Restricted Global Note for an Unrestricted
Definitive  Note, the Owner hereby  certifies (i) the  Definitive  Note is being
acquired for the Owner's own account  without  transfer,  (ii) such Exchange has
been effected in  compliance  with the transfer  restrictions  applicable to the
Restricted  Global Notes and pursuant to and in accordance  with the  Securities
Act,  (iii) the  restrictions  on transfer  contained in the  Indenture  and the
Private  Placement Legend are not required in order to maintain  compliance with
the Securities Act and (iv) the Definitive


                                      C-1
<PAGE>


Note is being  acquired in compliance  with any  applicable  blue sky securities
laws of any state of the United States.

         (c) |_|  CHECK  IF  EXCHANGE  IS  FROM  RESTRICTED  DEFINITIVE  NOTE TO
BENEFICIAL  INTEREST IN AN  UNRESTRICTED  GLOBAL NOTE.  In  connection  with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being  acquired  for the  Owner's  own account  without  transfer,  (ii) such
Exchange  has  been  effected  in  compliance  with  the  transfer  restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the  Securities  Act,  (iii)  the  restrictions  on  transfer  contained  in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance  with the Securities  Act and (iv) the  beneficial  interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.

         (d) |_|  CHECK  IF  EXCHANGE  IS  FROM  RESTRICTED  DEFINITIVE  NOTE TO
UNRESTRICTED  DEFINITIVE  NOTE.  In  connection  with the Owner's  Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer  restrictions  applicable to Restricted  Definitive  Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer  contained in the  Indenture and the Private  Placement  Legend are not
required in order to maintain  compliance  with the  Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.

         2. EXCHANGE OF RESTRICTED  DEFINITIVE NOTES OR BENEFICIAL  INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED  DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES

         (a) |_| CHECK IF EXCHANGE IS FROM  BENEFICIAL  INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED  DEFINITIVE  NOTE. In connection  with the Exchange of
the Owner's  beneficial  interest in a  Restricted  Global Note for a Restricted
Definitive Note with an equal principal amount,  the Owner hereby certifies that
the  Restricted  Definitive  Note is being  acquired for the Owner's own account
without transfer.  Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture,  the Restricted Definitive Note issued will continue
to be  subject  to the  restrictions  on  transfer  enumerated  in  the  Private
Placement Legend printed on the Restricted  Definitive Note and in the Indenture
and the Securities Act.

         (b) |_|  CHECK  IF  EXCHANGE  IS  FROM  RESTRICTED  DEFINITIVE  NOTE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange
of the  Owner's  Restricted  Definitive  Note for a  beneficial  interest in the
[CHECK ONE] |_| 144A Global Note,  |_|  Regulation S Global Note, |_| IAI Global
Note  with an  equal  principal  amount,  the  Owner  hereby  certifies  (i) the
beneficial  interest is being  acquired  for the  Owner's  own  account  without
transfer  and (ii)  such  Exchange  has been  effected  in  compliance  with the
transfer restrictions  applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the  proposed  Exchange  in  accordance  with the  terms of the  Indenture,  the
beneficial  interest  issued  will be subject to the  restrictions  on  transfer
enumerated


                                      C-2
<PAGE>


in the Private  Placement Legend printed on the relevant  Restricted Global Note
and in the Indenture and the Securities Act.

         This certificate and the statements  contained herein are made for your
benefit and the benefit of the Company.


                                    --------------------------------------------
                                             [Insert Name of Transferor]

                                    By:_________________________________________
                                       Name:
                                       Title:

Dated:   ___________________


                                      C-3
<PAGE>


                                                                       EXHIBIT D

                            FORM OF CERTIFICATE FROM
                   ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

National Coal Corp.
8915 George Williams Road
Knoxville, TN 37923

[REGISTRAR ADDRESS BLOCK]

         Re:      10.5% Senior Secured Notes due 2010

         Reference  is hereby made to the  Indenture,  dated as of December  29,
2005 (the  "INDENTURE"),  among National Coal Corp., as issuer (the  "COMPANY"),
the  guarantors  named on the  signature  pages  thereto  and Wells  Fargo Bank,
National Association, as trustee.  Capitalized terms used but not defined herein
shall have the meanings given to them in the Indenture.

         In connection with our proposed  purchase of  $_____________  aggregate
principal amount of:

         (a)      |_| a beneficial interest in a Global Note, or

         (b)      |_| a Definitive Note,

         we confirm that:

         1.       We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain  restrictions and conditions set forth in
the  Indenture  and the  undersigned  agrees to be bound by,  and not to resell,
pledge  or  otherwise  transfer  the  Notes or any  interest  therein  except in
compliance  with,  such  restrictions  and  conditions and the Securities Act of
1933, as amended (the "SECURITIES ACT").

         2.       We  understand  that the offer and sale of the Notes  have not
been  registered  under the Securities  Act, and that the Notes and any interest
therein  may not be  offered  or  sold  except  as  permitted  in the  following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are  acting  as  hereinafter  stated,  that if we  should  sell the Notes or any
interest  therein,  we will  do so only  (A) to the  Company  or any  subsidiary
thereof,  (B) in  accordance  with  Rule  144A  under  the  Securities  Act to a
"qualified  institutional  buyer" (as defined therein),  (C) to an institutional
"accredited investor" (as defined below) that, prior to such transfer, furnishes
(or has  furnished  on its  behalf  by a U.S.  broker-dealer)  to you and to the
Company a signed letter  substantially in the form of this letter and an Opinion
of Counsel in form reasonably  acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act, (D) outside the United States
in  accordance  with Rule 904 of  Regulation  S under the  Securities  Act,  (E)
pursuant  to the  provisions  of Rule  144(k)  under the  Securities  Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further  agree to  provide  to any  Person  purchasing  the  Definitive  Note or
beneficial interest in a Global


                                      D-1
<PAGE>


Note from us in a transaction  meeting the  requirements  of clauses (A) through
(E) of this paragraph a notice  advising such purchaser that resales thereof are
restricted as stated herein.

         3.       We  understand  that,  on any proposed  resale of the Notes or
beneficial  interest  therein,  we will be  required  to  furnish to you and the
Company such certifications, legal opinions and other information as you and the
Company may  reasonably  require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by us
will bear a legend to the foregoing effect.

         4.       We are an institutional  "accredited  investor" (as defined in
Rule  501(a)(l),  (2), (3) or (7) of Regulation D under the Securities  Act) and
have such  knowledge and  experience in financial and business  matters as to be
capable of evaluating the merits and risks of our  investment in the Notes,  and
we and any  accounts  for which we are acting are each able to bear the economic
risk of our or its investment.

         5.       We are  acquiring  the Notes or  beneficial  interest  therein
purchased by us for our own account or for one or more  accounts  (each of which
is an institutional  "accredited investor") as to each of which we exercise sole
investment discretion.

         You and the  Company  are  entitled  to rely upon this  letter  and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any  administrative  or legal  proceedings  or  official  inquiry  with
respect to the matters covered hereby.


                                    --------------------------------------------
                                         [Insert Name of Accredited Investor)

                                    By:_________________________________________
                                       Name:
                                       Title:

Dated:   ___________________


<PAGE>


                                                                       EXHIBIT E

                          FORM OF NOTATION OF GUARANTEE

         For value received,  each Guarantor  (which term includes any successor
Person  under  the  Indenture)  has,  jointly  and  severally,   unconditionally
guaranteed,  to the  extent  set  forth  in the  Indenture  and  subject  to the
provisions  in the  Indenture  dated as of December  29, 2005 (the  "INDENTURE")
among National Coal Corp.,  (the "COMPANY",  the Guarantors listed on Schedule I
thereto and Wells Fargo Bank, National Association,  as trustee (the "TRUSTEE"),
(a) the due and punctual  payment of the  principal of,  premium and  Liquidated
Damages,  if any,  and  interest  on the Notes (as  defined  in the  Indenture),
whether at maturity,  by  acceleration,  redemption  or  otherwise,  the due and
punctual payment of interest on overdue  principal of and interest on the Notes,
if any, if lawful, and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee all in accordance with the terms of
the  Indenture and (b) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations,  that the same will be promptly paid
in full when due or performed in  accordance  with the terms of the extension or
renewal,   whether  at  stated  maturity,  by  acceleration  or  otherwise.  The
obligations  of the  Guarantors  to the  Holders  of  Notes  and to the  Trustee
pursuant to the  Subsidiary  Guarantee and the Indenture are expressly set forth
in Article 11 of the Indenture and reference is hereby made to the Indenture for
the  precise  terms of the  Subsidiary  Guarantee.  Each  Holder  of a Note,  by
accepting  the same,  (a) agrees to and shall be bound by such  provisions,  (b)
authorizes  and  directs the  Trustee,  on behalf of such  Holder,  to take such
action as may be necessary or  appropriate to effectuate  the  subordination  as
provided in the Indenture and (c) appoints the Trustee  attorney-in-fact of such
Holder for such purpose;  PROVIDED,  HOWEVER, that the Indebtedness evidenced by
this Subsidiary Guarantee shall cease to be so subordinated and subject in right
of payment upon any defeasance of this Note in accordance with the provisions of
the Indenture.

                                 NATIONAL COAL CORPORATION


                                 By:____________________________________________
                                        Name:
                                        Title:

                                 NC TRANSPORTATION INC.


                                 By:____________________________________________
                                        Name:
                                        Title:

                                 NC RAILROAD, INC.


                                 By:____________________________________________
                                        Name:
                                        Title:


                                      E-1
<PAGE>


                                                                       EXHIBIT F

                         FORM OF SUPPLEMENTAL INDENTURE
                    TO BE DELIVERED BY SUBSEQUENT GUARANTORS

         SUPPLEMENTAL  INDENTURE (this  "SUPPLEMENTAL  INDENTURE"),  dated as of
___________,   200_,  among   ___________________________   (the   "GUARANTEEING
SUBSIDIARY"),  a subsidiary of National Coal Corp. (or its permitted successor),
a Florida  corporation  (the "COMPANY"),  the Company,  the other Guarantors (as
defined in the  Indenture  referred to herein)  and Wells  Fargo Bank,  National
Association, as trustee under the indenture referred to below (the "TRUSTEE").

                                   WITNESSETH

         WHEREAS,  the Company has  heretofore  executed  and  delivered  to the
Trustee an indenture (the "Indenture"),  dated as of December 29, 2005 providing
for the  issuance of an  aggregate  principal  amount of up to $55.0  million of
10.5% Senior Secured Notes due 2010 (the "NOTES");

         WHEREAS,  the Indenture  provides that under certain  circumstances the
Guaranteeing  Subsidiary shall execute and deliver to the Trustee a supplemental
indenture  pursuant to which the Guaranteeing  Subsidiary shall  unconditionally
guarantee all of the Company's  Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "SUBSIDIARY GUARANTEE"); and

         WHEREAS,  pursuant  to Section  9.01 of the  Indenture,  the Trustee is
authorized to execute and deliver this Supplemental Indenture.

         NOW THEREFORE, in consideration of the foregoing and for other good and
valuable  consideration,  the  receipt  of which  is  hereby  acknowledged,  the
Guaranteeing  Subsidiary  and the Trustee  mutually  covenant  and agree for the
equal and ratable benefit of the Holders of the Notes as follows:

         1.       CAPITALIZED  TERMS.  Capitalized  terms  used  herein  without
definition shall have the meanings assigned to them in the Indenture.

         2.       AGREEMENT TO GUARANTEE.  The  Guaranteeing  Subsidiary  hereby
agrees as follows:

                  (a)      Along with all Guarantors named in the Indenture,  to
         jointly and severally  Guarantee to each Holder of a Note authenticated
         and delivered by the Trustee and to the Trustee and its  successors and
         assigns,  the Notes or the  obligations  of the  Company  hereunder  or
         thereunder, that:

                           (i)      the principal of, and premium and Liquidated
                  Damages,  if any,  and  interest on the Notes will be promptly
                  paid in full when due,  whether at maturity,  by acceleration,
                  redemption or otherwise, and interest on the overdue principal
                  of and interest on the Notes, if any, if lawful, and all other
                  obligations  of the


                                      F-1
<PAGE>


                  Company to the Holders or the Trustee  hereunder or thereunder
                  will be promptly paid in full or performed,  all in accordance
                  with the terms hereof and thereof; and

                           (ii)     in case of any  extension of time of payment
                  or renewal of any Notes or any of such other obligations, that
                  same will be promptly  paid in full when due or  performed  in
                  accordance with the terms of the extension or renewal, whether
                  at stated  maturity,  by  acceleration  or otherwise.  Failing
                  payment  when  due  of  any  amount  so   guaranteed   or  any
                  performance so guaranteed for whatever reason,  the Guarantors
                  shall  be  jointly  and  severally  obligated  to pay the same
                  immediately.

                  (b)      The  obligations  hereunder  shall be  unconditional,
         irrespective of the validity, regularity or enforceability of the Notes
         or the  Indenture,  the absence of any action to enforce the same,  any
         waiver  or  consent  by any  Holder of the Notes  with  respect  to any
         provisions hereof or thereof,  the recovery of any judgment against the
         Company, any action to enforce the same or any other circumstance which
         might otherwise constitute a legal or equitable discharge or defense of
         a Guarantor.

                  (c)      The   following   is   hereby   waived:    diligence,
         presentment,  demand of  payment,  filing of claims with a court in the
         event of insolvency or bankruptcy of the Company,  any right to require
         a proceeding first against the Company, protest, notice and all demands
         whatsoever.

                  (d)      This  Subsidiary  Guarantee  shall not be  discharged
         except by complete  performance  of the  obligations  contained  in the
         Notes and the Indenture,  and the Guaranteeing  Subsidiary  accepts all
         obligations of a Guarantor under the Indenture.

                  (e)      If any Holder or the Trustee is required by any court
         or  otherwise  to  return  to  the  Company,  the  Guarantors,  or  any
         custodian,  trustee,  liquidator  or other similar  official  acting in
         relation  to either the Company or the  Guarantors,  any amount paid by
         either to the Trustee or such Holder, this Subsidiary Guarantee, to the
         extent  theretofore  discharged,  shall be reinstated in full force and
         effect.

                  (f)      The Guaranteeing  Subsidiary shall not be entitled to
         any right of  subrogation  in relation to the Holders in respect of any
         obligations  guaranteed hereby until payment in full of all obligations
         guaranteed hereby.

                  (g)      As between the  Guarantors,  on the one hand, and the
         Holders and the  Trustee,  on the other hand,  (x) the  maturity of the
         obligations guaranteed hereby may be accelerated as provided in Article
         6 of the  Indenture  for the  purposes  of this  Subsidiary  Guarantee,
         notwithstanding  any stay,  injunction or other prohibition  preventing
         such acceleration in respect of the obligations  guaranteed hereby, and
         (y) in the event of any declaration of acceleration of such obligations
         as provided in Article 6 of the Indenture, such obligations (whether or
         not due and  payable)  shall  forthwith  become due and  payable by the
         Guarantors for the purpose of this Subsidiary Guarantee.


                                      F-2
<PAGE>


                  (h)      The   Guarantors   shall   have  the  right  to  seek
         contribution  from any  nonpaying  Guarantor so long as the exercise of
         such  right  does not  impair  the  rights  of the  Holders  under  the
         Subsidiary Guarantee.

                  (i)      Pursuant  to Section  11.02 of the  Indenture,  after
         giving effect to any maximum amount and all other  contingent and fixed
         liabilities  that are  relevant  under  any  applicable  Bankruptcy  or
         fraudulent  conveyance laws, and after giving effect to any collections
         from,  rights to receive  contribution  from or payments  made by or on
         behalf of any other  Guarantor  in respect of the  obligations  of such
         other Guarantor under Article 11 of the Indenture,  this new Subsidiary
         Guarantee shall be limited to the maximum amount  permissible such that
         the obligations of such Guarantor under this Subsidiary  Guarantee will
         not constitute a fraudulent transfer or conveyance.

         3.       EXECUTION AND DELIVERY.  Each  Guaranteeing  Subsidiary agrees
that  the  Subsidiary   Guarantees   shall  remain  in  full  force  and  effect
notwithstanding  any  failure  to  endorse  on  each  Note a  notation  of  such
Subsidiary Guarantee.

         4.       GUARANTEEING  SUBSIDIARY  MAY  CONSOLIDATE,  ETC.  ON  CERTAIN
                  TERMS.

                  (a)      The Guaranteeing Subsidiary may not sell or otherwise
         dispose of all or  substantially  all of its property and assets to, or
         consolidate  with or merge with or into (whether or not such  Guarantor
         is the  surviving  Person)  another  Person,  other than the Company or
         another Guarantor unless:

                           (i)      immediately  after  giving  effect  to  such
                  transaction, no Default or Event of Default exists; and

                           (ii)     if the Person  acquiring the property in any
                  such sale or  disposition or the Person formed by or surviving
                  any such  consolidation  or merger is a Restricted  Subsidiary
                  immediately  following such  transaction,  such Person assumes
                  all the obligations of that Guaranteeing Subsidiary under this
                  Supplemental  Indenture,  its  Subsidiary  Guarantee  and  the
                  Registration  Rights  Agreement  pursuant  to  a  supplemental
                  indenture satisfactory to the Trustee.

                  (b)      In case of any such  consolidation,  merger,  sale or
         conveyance  and  upon  the  assumption  by  the  successor  Person,  by
         supplemental  indenture,  executed  and  delivered  to the  Trustee and
         satisfactory  in  form  to the  Trustee,  of the  Subsidiary  Guarantee
         endorsed upon the Notes and the due and punctual  performance of all of
         the  covenants  and  conditions of the Indenture to be performed by the
         Guarantor,  such  successor  Person shall succeed to and be substituted
         for the  Guarantor  with the same effect as if it had been named herein
         as a Guarantor.  Such successor Person thereupon may cause to be signed
         any or all of the Subsidiary  Guarantees to be endorsed upon all of the
         Notes issuable under the Indenture,  which  theretofore  shall not have
         been  signed by the  Company  and  delivered  to the  Trustee.  All the
         Subsidiary  Guarantees  so issued shall in all  respects  have the same
         legal rank and benefit under the Indenture as the Subsidiary Guarantees
         theretofore  and thereafter  issued in accordance with the terms of the


                                      F-3
<PAGE>


         Indenture as though all of such  Subsidiary  Guarantees had been issued
         at the date of the execution hereof.

                  (c)      Except  as  set  forth  in  Articles  4 and 5 of  the
         Indenture,  and  notwithstanding  clauses  (a) and (b)  above,  nothing
         contained  in the  Indenture  or in any of the Notes shall  prevent any
         consolidation  or merger of a  Guarantor  with or into the  Company  or
         another  Guarantor,  or shall  prevent  any sale or  conveyance  of the
         property of a Guarantor as an entirety or  substantially as an entirety
         to the Company or another Guarantor.

         5.       RELEASES.

                  (a)      In the event of any sale or other  disposition of all
         or  substantially  all of the property and assets of any Guarantor,  by
         way  of  merger,  consolidation  or  otherwise,  or  a  sale  or  other
         disposition of all of the capital stock of any Guarantor,  in each case
         to a Person that is not (either  before or after giving  effect to such
         transaction)  a  Restricted   Subsidiary  of  the  Company,  then  such
         Guarantor  (in the  event  of a sale or  other  disposition,  by way of
         merger, consolidation or otherwise, of all of the capital stock of such
         Guarantor) or the corporation acquiring the property (in the event of a
         sale or other  disposition of all or substantially  all of the property
         and assets of such  Guarantor)  will be  released  and  relieved of any
         obligations  under  its  Subsidiary  Guarantee;  PROVIDED  that the Net
         Proceeds of such sale or other  disposition  are applied in  accordance
         with the  applicable  provisions of the  Indenture,  including  without
         limitation Section 4.10 of the Indenture.  Upon delivery by the Company
         to the Trustee of an Officer's Certificate and an Opinion of Counsel to
         the effect that such sale or other  disposition was made by the Company
         in accordance with the provisions of the Indenture,  including  without
         limitation Section 4.10 of the Indenture, the Trustee shall execute any
         documents  reasonably  required in order to evidence the release of any
         Guarantor from its obligations under its Subsidiary Guarantee.

                  (b)      Any Guarantor not released from its obligations under
         its  Subsidiary  Guarantee  shall remain  liable for the full amount of
         principal of and interest on the Notes and for the other obligations of
         any  Guarantor  under the  Indenture  as  provided in Article 11 of the
         Indenture.

         6.       NO RECOURSE AGAINST OTHERS.  No director,  officer,  employee,
incorporator,  stockholder  or agent of the  Guaranteeing  Subsidiary,  as such,
shall have any liability for any obligations of the Company or any  Guaranteeing
Subsidiary  under the Notes,  any Subsidiary  Guarantees,  the Indenture or this
Supplemental  Indenture  or for any claim  based on, in respect of, or by reason
of, such obligations or their creation.  Each Holder of the Notes by accepting a
Note waives and releases all such liability.  The waiver and release are part of
the consideration for issuance of the Notes. Such waiver may not be effective to
waive  liabilities  under the federal  securities laws and it is the view of the
Commission that such a waiver is against public policy.

         7.       NEW YORK LAW TO GOVERN.  THE  INTERNAL LAW OF THE STATE OF NEW
YORK SHALL  GOVERN  AND BE USED TO  CONSTRUE  THIS  SUPPLEMENTAL


                                      F-4
<PAGE>


INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER  JURISDICTION WOULD BE
REQUIRED THEREBY.

         8.       COUNTERPARTS.  The  parties  may sign any  number of copies of
this Supplemental  Indenture.  Each signed copy shall be an original, but all of
them together represent the same agreement.

         9.       EFFECT  OF  HEADINGS.  The  Section  headings  herein  are for
convenience only and shall not affect the construction hereof.

         10.      THE  TRUSTEE.  The  Trustee  shall not be  responsible  in any
manner  whatsoever  for or in respect of the  validity  or  sufficiency  of this
Supplemental  Indenture or for or in respect of the recitals  contained  herein,
all of which  recitals are made solely by the  Guaranteeing  Subsidiary  and the
Company.

         IN WITNESS  WHEREOF,  the parties hereto have caused this  Supplemental
Indenture  to be duly  executed  and  attested,  all as of the date first  above
written.

         Dated:  _________________, 20_

                                       [GUARANTEEING SUBSIDIARY]


                                       By:______________________________________
                                       Name:
                                       Title:


                                       NATIONAL COAL CORP.


                                       By:______________________________________
                                       Name:
                                       Title:


                                       NATIONAL COAL CORPORATION


                                       By:______________________________________
                                              Name:
                                              Title:


                                      F-5
<PAGE>


                                       NC TRANSPORTATION INC.


                                       By:______________________________________
                                              Name:
                                              Title:


                                       NC RAILROAD, INC.


                                       By:______________________________________
                                              Name:
                                              Title:

                                       Wells Fargo Bank, National Association,
                                       as Trustee


                                       By:______________________________________
                                              Authorized Signatory


                                      F-6
<PAGE>


                                                                       EXHIBIT G

                          LANDLORD'S WAIVER AND CONSENT

         AGREEMENT,  dated  as  of  the  ____  day  of  _________,  20__,  among
_______________________________________,  a  ________________  corporation  (the
"LANDLORD"),  and Wells Fargo Bank,  National  Association,  in its  capacity as
trustee and collateral  agent  (including  any successor or replacement  trustee
agent or similar  contractual  representative  for the  holders of the Notes (as
defined  below) issued under the Indenture (as defined  below) from time to time
(the "COLLATERAL AGENT")).

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

         WHEREAS,  National Coal Corp., a Florida  corporation  (the "COMPANY"),
National  Coal  Corporation,  a Tennessee  corporation  and a subsidiary  of the
Company (the "TENANT"),  and the other  subsidiaries of the Company have entered
into an Indenture  (as amended,  restated,  replaced,  refinanced,  substituted,
refunded,  supplemented  renewed or otherwise  modified  from time to time,  the
"INDENTURE")  pursuant to which the Tenant has guaranteed the obligations of the
Company  under  certain  notes (the  "NOTES")  issued by the  Company  under the
Indenture; and

         WHEREAS,   to  secure  payment  and  performance  of  all  of  Tenant's
obligations and liabilities to the Collateral Agent and the holders of the Notes
(the  "NOTEHOLDERS")  under the Notes and the Indenture,  the Tenant has pledged
and granted to Collateral  Agent (i) a continuing  second priority deed of trust
lien  encumbering  Tenant's  leasehold  interest in that certain  real  property
located at ___________________,  __________,  ______________, which premises are
owned by the Landlord  (hereinafter  the  "PREMISES") and leased or subleased by
the Landlord to the Tenant by the ________  Lease,  dated as of  __________  __,
20__ (such Lease, together with any and all supplements,  renewals,  extensions,
amendments,  modifications,   substitutions,  and  replacements  thereof,  being
hereinafter  referred to  collectively  as the  "LEASE"),  and (ii) a continuing
second  priority  security  interest  in all  personal  property  of the Tenant,
wherever located and whether now or hereafter  existing and whether now owned or
hereafter  acquired,  of every kind and  description,  tangible  or  intangible,
including,  without limitation, all of the Tenant's accounts, books and records,
inventory, machinery, equipment, furniture,  as-extracted minerals, fixtures and
all proceeds thereof (collectively,  the "COLLATERAL"),  which security interest
covers the  Collateral  now or hereafter  located on the Premises  (such deed of
trust,  together  with  all  supplements,   renewals,  extensions,   amendments,
modifications,   substitutions,  and  replacements  thereof,  being  hereinafter
referred to collectively as the "DEED OF TRUST");

         NOW,  THEREFORE,  it is hereby agreed between the Collateral  Agent, on
behalf of the Noteholders, on the one hand, and the Landlord, on the other hand,
as follows:

ARTICLE  1. The  Landlord  consents to Tenant's  grant of the Deed of Trust lien
         encumbering  Tenant's  leasehold  interest in the  Premises  (including
         Tenant's  grant of a  security  interest  in  fixtures  affixed  to and
         minerals  extracted  from the  Premises),  and waives any  prohibitions
         against  encumbrances  contained  in the  Leases.  The  parties  hereto
         understand  and agree  that the  consent  granted by  Landlord  in this
         Article 1 is specifically  limited to the Deed of Trust lien granted to
         Collateral  Agent,  and  shall  not  be  deemed  a  blanket  waiver  or
         termination of any anti-encumbrance provisions contained in the Lease.


                                      G-1
<PAGE>


ARTICLE  2. The Landlord consents to the presence of the Collateral in or on the
         Premises,  and subject to the terms of this Agreement,  (a) agrees that
         the Collateral shall be and remain personal  property,  (b) waives each
         and every right that Landlord now has or hereafter may have,  under the
         laws of the State or Commonwealth in which the Premises are located, or
         by virtue of the  Lease,  or by virtue of  Tenant's  occupation  of the
         Premises,  to levy  against  or  distrain  upon  for rent  (whether  in
         arrears,  in advance or both) or for any monetary obligation arising by
         reason of  default  under  the  Lease,  or to claim or assert  any lien
         (including,  without limitation, any statutory landlord's lien), right,
         claim,  interest  or title to, or to take any action or  institute  any
         proceedings  with  respect  to,  any of the  Collateral,  which  now or
         hereafter may be on the Premises,  excluding any  non-movable  fixtures
         which  have  been  permanently  affixed  to the  Premises  and are part
         thereof,  and (c) will not hinder or delay the Collateral  Agent or the
         Noteholders in enforcing  their rights under the Indenture or any other
         document or instrument executed in connection therewith. The Collateral
         Agent and the Landlord hereby agree that the provisions of this Article
         2 are  made in  favor,  and  shall  inure to the  benefit,  of only the
         Collateral  Agent and the Noteholders and their  respective  successors
         and assigns, and to no other persons.

ARTICLE  3. The Landlord hereby grants the Noteholders and the Collateral Agent,
         and their employees,  agents and  representatives  the right, upon five
         (5) business days' prior written  notice to the Landlord,  to (a) enter
         the Premises to inspect or remove or take  possession of the Collateral
         and, (b) provided it is permitted under the Lease,  and any restriction
         or agreement  affecting  the  Premises,  to conduct a public or private
         sale of the  Collateral  from the Premises at any time,  in  accordance
         with this Agreement so long as the Collateral Agent and the Noteholders
         and their  employees,  agents  and  representatives  do not  damage the
         Premises or  materially  disrupt or interfere  with any other  Tenant's
         business.  The  Collateral  Agent and the  Noteholders  shall  promptly
         repair,  without any cost to the Landlord,  any physical  damage to the
         Premises that is caused by the Collateral Agent or the Noteholders. The
         Landlord  further agrees that,  during the foregoing  period,  Landlord
         will not (i) remove or consent to the removal of any of the  Collateral
         from the  Premises or (ii)  hinder the  Collateral  Agent's  actions in
         removing Collateral from the Premises or the Collateral Agent's actions
         in otherwise enforcing its security interest in the Collateral. Subject
         to the provisions of this Article 3, the Collateral  Agent shall not be
         liable  for any  diminution  in value  of the  Premises  caused  by the
         absence of  Collateral  actually  removed or by the need to replace the
         Collateral  after such  removal.  The  Landlord  acknowledges  that the
         Collateral Agent shall have no obligation to remove the Collateral from
         the Premises.

ARTICLE  4. Landlord acknowledges and agrees that neither Tenant's granting of a
         security  interest in the Collateral in favor of the  Collateral  Agent
         for its benefit and the benefit of the Noteholders, nor the exercise by
         Collateral Agent of its rights and remedies hereunder or under the Deed
         of  Trust,  shall  constitute  a default  under  the  Lease nor  permit
         Landlord to terminate the Lease or re-enter or repossesses the Premises
         or otherwise be the basis for the exercise of any remedy by Landlord.

ARTICLE  5. The Landlord hereby represents to the Noteholders and the Collateral
         Agent that (i) Landlord is the landlord under the Lease, (ii) the Lease
         is in full  force and  effect  and has not been  amended,  modified  or
         supplemented  except [ ],  (iii) to the best


                                      G-2
<PAGE>


         of  Landlord's  knowledge,  there  is  no  defense,  offset,  claim  or
         counterclaim by or in favor of Landlord  against Tenant under the Lease
         or against the  obligations of Landlord under the Lease,  (iv) Landlord
         has not given  Tenant a notice of default  under the Lease that remains
         uncured  and,  to the best  knowledge  of the  Landlord,  there  are no
         existing defaults under the Lease on the part of the Tenant.

ARTICLE  6.  Landlord  agrees that it shall not cancel or terminate the Lease by
         reason of Tenant's default thereunder unless and until (i) notice shall
         first have been given to the  Collateral  Agent as provided  herein and
         (ii) the Collateral Agent shall have failed to remedy such default with
         thirty (30) days after its receipt of said notice, provided that in the
         event the  Collateral  Agent  cannot  commence  or  complete  such cure
         without  possession of the Premises,  no cancellation or termination of
         the Lease shall be effective if the Collateral Agent commences judicial
         or non-judicial proceedings to obtain possession within such period and
         thereafter  diligently  prosecutes such efforts and cure to completion.
         Landlord  further agrees that within a thirty (30) day period after the
         Collateral  Agent's receipt of such notice,  the Collateral Agent shall
         have the right to enter the  Premises to inspect,  remove and  exercise
         the rights  granted to the  Collateral  Agent  under  Article 2 hereof,
         provided the Landlord is paid for use and  occupancy,  and not as rent,
         an amount equal to the regular installments of rent due under the Lease
         for the  Premises  (on a per diem basis  based  upon a thirty  (30) day
         month)) for the number of days the Collateral  Agent actually  occupies
         the Premises.  The Collateral Agent's payment of rent to Landlord shall
         not result in the Collateral  Agent incurring any other  obligations of
         Tenant under the Lease,  nor shall the Collateral Agent be obligated to
         cure any Tenant default or, except as expressly  stated herein,  assume
         the  obligations  for any remaining term of the Lease.  Notwithstanding
         the  foregoing,  in the event of a default under the Lease which is not
         capable of or  susceptible  to cure, or in the event of  termination of
         the Lease for any reason except the failure of the Collateral  Agent to
         cure such defaults which the Collateral Agent is capable of curing, the
         Collateral  Agent  shall have the option to enter into a new Lease with
         Landlord  upon  termination  of the  Lease  (whether  by  rejection  in
         bankruptcy proceedings or otherwise), which new Lease shall be directly
         between Landlord and the Collateral Agent, shall be for a term equal to
         the term of the Lease which would have remained absent such termination
         or rejection,  and shall otherwise be on terms substantially  identical
         to the terms of the Lease.

ARTICLE  7. In the event  Collateral  Agent  shall ever  become the owner of the
         rights and interests of Tenant in and to the Premises and Lease for any
         reason  in  connection  with  the  Obligations,  Landlord  agrees  that
         Collateral Agent shall be deemed to be Tenant's  successor and assignee
         under the  Lease and shall be  entitled  to all  rights,  benefits  and
         privileges  of the Tenant  under the Lease for the  balance of the term
         and any renewal or extension  period thereof duly exercised as required
         by the Lease,  all without the need to execute any further  instruments
         to make such succession and assignment effective. In furtherance of the
         foregoing,  Landlord agrees that Collateral  Agent shall have the right
         to assign its interest in and to the Lease  without the consent of (but
         with notice to) Landlord,  to any person which assumes the  obligations
         of the  lessee  under  the  Lease  (an  "Assignee")  and  that  neither
         Collateral  Agent,  Assignee,  nor any subsequent owner of the lessee's
         interest  under the Lease shall be bound by any provisions of the Lease
         which are inconsistent  with the provisions of this Article 7, and this
         Agreement, for such purposes,


                                      G-3
<PAGE>


         shall run with the land and survive foreclosure or exercise of power of
         sale under the security  instrument  encumbering the leasehold interest
         and repayment or discharge of the obligations in full.

ARTICLE  8. The  provisions  hereof  shall remain in full force and effect until
         the earlier of: (i) Tenant's full payment and performance of all of its
         present  and  future  obligations  to  the  Collateral  Agent  and  the
         Noteholders, or (ii) the expiration or sooner termination of the Lease.
         The Collateral  Agent and the Noteholders (as applicable)  may, without
         affecting the validity of this Agreement,  extend,  amend or in any way
         modify the terms of the Notes, the Indenture or Deed of Trust.

ARTICLE  9. This Agreement  shall be governed and controlled by and  interpreted
         under the laws of the State of New York and shall be  binding  upon and
         inure to the benefit of the parties  herein named and their  respective
         assigns and  successors in interest.  This Agreement may be executed in
         counterparts,  each of which when so executed  and  delivered  shall be
         deemed an original, but all such counterparts together shall constitute
         but one and the same instrument.  All notices to any party hereto under
         this  Agreement  shall  be in  writing  and  sent to such  party at its
         respective  address set forth below (or at such other  address as shall
         be  designated  by such  party in a written  notice to the other  party
         complying as to delivery  with the terms of this  Article) by overnight
         delivery service for next business day delivery.

ARTICLE  10. Each of the Landlord and the Collateral  Agent  represents  that it
         has reviewed this Agreement and each knowingly and  voluntarily  waives
         its  respective  rights to a jury trial of any claim or cause of action
         based upon or arising out of this Agreement following consultation with
         legal counsel. In the event of litigation, a copy of this Agreement may
         be filed as a written consent to a trial by the court.

ARTICLE  11. Landlord  acknowledges  and agrees that the Collateral  Agent shall
         not be personally liable for debts or other  obligations,  liability or
         damages.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  duly  executed  this
Agreement as of the day and year first above written.

                                       -----------------------------------------
                                       By:  ____________________________________
                                            Name:
                                            Title:

                                       ADDRESS FOR NOTICES:
                                       -------------------
                                       c/o



                                       and


                                      G-4
<PAGE>


                                       [TRUSTEE], as Collateral Agent


                                       By:  ____________________________________
                                            Name:
                                            Title:

                                       ADDRESS FOR NOTICES:
                                       -------------------



                                       Phone:
                                       Fax:


ACKNOWLEDGED AND AGREED:

[SUBSIDIARY]



By:  __________________________________
     Name:
     Title:

Address for Notices:

If to Tenant, to:          National Coal Corp.
                           8915 George Williams Road
                           Knoxville, TN 37923

With copies to:            Mayer, Brown, Rowe & Maw
                           71 S. Wacker Drive
                           Chicago, IL 60606
                           Telecopier No.: (312) 701-7711
                           Attention:  James Junewicz


                                      G-5
<PAGE>


                                                                       EXHIBIT H

                             INTERCREDITOR AGREEMENT


                                      H-1
<PAGE>


                                                                       EXHIBIT I

                               SECURITY AGREEMENT


                                      I-1
<PAGE>


                                                                       EXHIBIT J

                               NOTICE AND CONSENT
                      TO THE HOLDERS OF NATIONAL COAL CORP.
                       10.5% SENIOR SECURED NOTES DUE 2010
                    AS OF THE RECORD DATE OF [_____], 200[_]

This  Notice  and  Consent  is being  delivered  by  National  Coal  Corp.  (the
"Company")  to the  holders  of its  10.5%  Senior  Secured  Notes due 2010 (the
"Notes") pursuant to Section 4.21 of the Indenture (the  "Indenture"),  dated as
of December 29, 2005, among the Company, the Subsidiary Guarantors party thereto
and Wells Fargo Bank,  National  Association,  as trustee (the  "Trustee").  All
capitalized  terms used but not defined  herein shall have the meanings given to
such terms set forth in the Indenture.

The Company  hereby gives you notice  [that it has  obtained a  [fee][leasehold]
title insurance policy in the form of ANNEX A attached hereto, covering the real
property  described  therein.] [Or describe other action requested under Section
4.21.]

[DESCRIBE MATERIAL TERMS OR OTHER PROPOSED ACTION.]

You must return this Notice and Consent to the Trustee  [describe  mechanism for
giving consent] by [____],  200[_] [45 days]  indicating your action as a Holder
of Notes with respect to the actions identified herein. If you do not respond to
this  request  within the  specified  time  period,  you will lose your right to
object  to  the  requested   action  and  will  be  deemed  to  have  consented.
Additionally,  pursuant to the Indenture,  failure to act,  constituting  deemed
consent,  could limit the  applicability of certain penalty interest  provisions
that would otherwise  apply and increase the aggregate  interest rate applicable
to the  Notes up to an  additional  2.5% if the  Company  does not  receive  the
requisite number of consents from Holders.

The  consent of the  Holders  (as of the close of  business  on the record  date
specified  above) of a majority of the aggregate  principal amount of Notes then
outstanding,  excluding any Notes held by the Company or any of its Subsidiaries
or Affiliates, is required for this action to be effective.

Holders will be entitled to change their  decision with respect to the requested
action only until the date specified.

NOTICE:  FAILURE  TO RESPOND TO OR RETURN  THIS  NOTICE AND  CONSENT BY THE DATE
SPECIFIED WILL BE DEEMED TO BE AN AFFIRMATIVE CONSENT TO THIS REQUEST.

-------------------------------------------------- -----------------------------
Name of Holder                                               Consent
-------------------------------------------------- -----------------------------
                                                        Yes            No

-------------------------------------------------- -------------- --------------


Signature:    _________________________
Date:         _________________________

                                        NATIONAL COAL CORP.


                                        By:  ___________________________________
                                             Name:
                                             Title:
Dated: [_____________], 200[_]


                                      J-1