jrcc_10q-ex1021.htm


    Exhibit
10.21

     

    Morgan
Stanley Senior Funding, Inc.

    1585
Broadway

    New York,
New York 10036

    


    July 8,
2008

    


    


    James
River Coal Company

    901 E.
Byrd Street, Suite 1600

    Richmond,
Virginia  23219

    Attention:
Samuel M. Hopkins II

    


    Re:
Consent

    


    Ladies
and Gentlemen:

    


    Reference is hereby made to that
certain Term Credit Agreement, dated as of February 26, 2007 (as it may be
amended, restated, modified, supplemented or extended from time to time,
including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”),
by and among JAMES RIVER COAL COMPANY, a corporation organized under the laws of
Virginia (“JRCC”), and certain
of JRCC’s Subsidiaries identified on the title and signature pages thereof, as
borrowers (such Subsidiaries, together with JRCC, are referred to hereinafter
each individually as a “Borrower”, and
collectively, jointly and severally, as the “Borrowers”), and the
other credit parties thereto from time to time, as Guarantors (together, the
Borrowers and Guarantors, the “Credit Parties”), the
lenders party hereto from time to time (the “Lenders”), MORGAN
STANLEY SENIOR FUNDING, INC., a corporation formed under the laws of
Delaware, as
administrative agent for the Lenders (in such capacity, together with its
successors and assigns, if any, the “Administrative
Agent”) and as sole-bookrunner and lead arranger (in such capacity, the
“Lead
Arranger”), and MORGAN STANLEY & CO. INCORPORATED, as collateral
agent for the Lenders (in such capacity, together with its successors and
assigns, if any, the “Collateral
Agent”).

    


    The Borrowers have requested that the
Administrative Agent and the undersigned Lenders consent to JRCC’s acquisition
of certain assets pursuant to the Cheyenne Asset Purchase Agreement (as defined
below) (the “Cheyenne
Acquisition”) and the issuance and/or sale of shares of JRCC common stock
(the “Cheyenne Equity
Issuance”), as part of the purchase price under that certain Asset
Purchase Agreement, dated as of the date thereof, by and among JRCC, Leeco,
Inc., a Kentucky corporation, as buyer, Cheyenne Resources, Inc., a Kentucky
corporation, as seller, and the stockholders signatory thereto (the “Cheyenne Asset Purchase
Agreement”).

    


    Subject to the terms and conditions set
forth below, notwithstanding the restrictions contained in Section 9.05 of the
Credit Agreement, the Administrative Agent and the undersigned Lenders hereby
consent to the Cheyenne Equity Issuance and to JRCC’s issuance and/or sale of
shares of common stock in JRCC, in an amount up to $150,000,000 following the
date of this consent letter, under JRCC’s Shelf Registration (as defined in the
Credit Agreement) and any amendment, increase and/or replacement to such Shelf
Registration.  For the avoidance of doubt, the Cheyenne Acquisition
shall be deemed to be a Permitted Acquisition under Section 9.07 of the Credit
Agreement and the Lenders and the Administrative Agent hereby consent thereto
and agree that the Cheyenne Acquisition shall be deemed not to use any of the
$25,000,000 limit in clause (a) of the definition of “Permitted Acquisitions” in
Section 1.01 of the Credit Agreement, and further, for the avoidance of doubt,
not to constitute a Capital Expenditure under the Credit Agreement solely for
the purpose of calculating compliance under Section 10.03 of the Credit
Agreement.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    The
Lenders and the Administrative Agent hereby agree to eliminate the last sentence
of Section 3.01(d) of the Credit Agreement preventing the voluntary prepayment
of the Obligations and the voluntary reduction of the Term Letter of Credit
Commitments by the Borrowers.

    


    The effectiveness of this consent
letter is subject to the following conditions: (i) that it shall be executed and
delivered by the Administrative Agent, the Required Lenders, the Borrowers and
the Guarantors, and (ii) that the Administrative Agent shall have received
payment from the Borrowers of a consent fee equal to 1% times the Commitments
of consenting Lenders (the “Initial Consent Fee”), provided that, upon a
prepayment of the Obligations and/or a reduction of the Term Letter of Credit
Commitments on or before September 30, 2008 (together, a “Q3 2008 Prepayment”),
the Initial Consent Fee with respect to the amount so repaid or reduced shall be
creditable against the Applicable Payment Fee and Applicable Reduction Fee that
would be payable to the consenting Lenders in connection with such Q3 2008
Prepayment; provided
further, that the Borrowers shall pay an additional consent fee equal to
2% times the
remaining Commitments (if any are outstanding) of consenting Lenders as of
September 30, 2008 (such fee to be paid within 10 days thereafter).

    


    None of the Administrative Agent or the
Lenders shall have any obligation to issue any further consent, waiver or
release with respect to the subject matter of this consent letter or any other
matter.  Except as specifically provided above, nothing contained in
this consent letter shall be deemed to be a waiver of, or shall in any way
impair or prejudice, any rights of the Agent or the Lenders under the Credit
Agreement or any other Loan Document.

    


    This consent letter may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.

    


    THIS CONSENT LETTER SHALL FOR ALL
PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

    


    [remainder
of page intentionally left blank]

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    Kindly acknowledge your agreement with
the terms of this consent letter by signing where indicated below and returning
it to the Administrative Agent.

    


    
      	
              LENDER, ADMINISTRATIVE
      AGENT AND COLLATERAL AGENT:

            
	 
	 
	
              MORGAN
      STANLEY SENIOR FUNDING, INC.

            
	 
	 
	
              By:
      /S/ Stephen
      King

            
	
              Name:Stephen
      B. King

            
	
              Title:
      VP

            


    

    


    
      	
              OTHER
      LENDERS:

            
	 
	 
	
              Deutsche
      Bank AG New York  - By D.B Services New Jersey
    Inc.

            
	 
	 
	
              By:
      /S/ Jonathan
      Shin

            
	
              Name:Jonathan
      Shin

            
	
              Title:
      Assistant Vice President

            
	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Sandelman
      Finance 2006-1, Ltd. – By Sandelman Partners, LP as Investment
      Advisor

            
	 
	 
	
              By:
      /S/ Peter A.
      Bio

            
	
              Name:Peter
      Bio

            
	
              Title:
      Head of Capital Structure

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Trilogy
      Portfolio Company LLC

            
	 
	 
	
              By:
      /S/ Paul S.
      Greenberg

            
	
              Name:Paul
      S. Greenberg

            
	
              Title:
      Principal

            


    

    


    
      	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Trust
      D (for a portion of the assets of the Kodak Retirement Income
      Plan)

            
	 
	 
	
              By: /S/ Steven S.
      Rogers

            
	
              Name:Steven
      S. Rogers

            
	
              Title:
      Authorized Signatory

            
	 
      
	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Liberty
      View Loan Fund LLC

            
	 
	 
	
              By:
      /S/ Steven S.
      Rogers

            
	
              Name:Steven
      S. Rogers

            
	
              Title:
      Authorized Signatory

            
	 
      


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              OTHER
      LENDERS:

            
	 
	 
	
              Xerion
      (Perella Weinberg)

            
	 
	 
	
              By:
      /S/ Peter
      Epstein

            
	
              Name:
      Peter Epstein

            
	
              Title:
      Analyst

            
	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Restoration
      Holdings Ltd.

            
	 
	 
	
              By:
      /S/ Pamela M.
      Lawrence

            
	
              Name:
      Pamela M. Lawrence

            
	
              Title:
      Director

            
	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              TRS
      Venor LLC – By Deutcshe Bank, AG Cayman Island Branch, Its Sole Member; DB
      Services New Jersey, Inc.

            
	 
	 
	
              By:
      /S/ Alice L
      Wagner

            
	
              Name:
      Alice L Wagner

            
	
              Title:
      Vice Presiden

            
	 
	 
	
              By:
      /S/ Edward
      Schaffer

            
	
              Name:
      Edward Schaffer

            
	
              Title:
      Vice Presiden

            
	 
      
	
              OTHER
      LENDERS:

            
	 
	 
	
              Mariner
      LDC – By:  Mariner Investment Group, LLC as Investment
      Manager

            
	 
	 
	
              By:
      /S/ Charles R.
      Howe

            
	
              Name:
      Charles R. Howe

            
	
              Title:
      President

            
	 
      


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              BORROWERS:

            
	 
	 
	
              JAMES
      RIVER COAL COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              JAMES
      RIVER COAL SERVICE COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              LEECO,
      INC.

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              TRIAD
      MINING, INC.

            
	 
	 
	
              By: /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              TRIAD
      UNDERGROUND MINING, LLC

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  Member

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              BLEDSOE
      COAL CORPORATION

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              JOHNS
      CREEK ELKHORN COAL CORPORATION

            
	 
	 
	
              By: /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              JAMES
      RIVER COAL SALES, INC.

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              BLEDSOE
      COAL LEASING COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            


    

    


    
      	
              BLUE
      DIAMOND COAL COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              MCCOY
      ELKHORN COAL CORPORATION

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              GUARANTORS:

            
	 
	 
	
              BDCC
      HOLDING COMPANY, INC.

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              EOLIA
      RESOURCES, INC.

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            
	 
	 
	
              SHAMROCK
      COAL COMPANY, INCORPORATED

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins III

            
	
              Title:  V.P

            
	 
	 
	
              JOHNS
      CREEK COAL COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    
      	
              JOHNS
      CREEK PROCESSING COMPANY

            
	 
	 
	
              By:
      /S/ Samuel M. Hopkins
      II

            
	
              Name:
      Samuel M. Hopkins II

            
	
              Title:  V.P