EXHIBIT 10.1


                           AMENDMENT NO. 1 AND WAIVER

         This  AMENDMENT NO. 1 AND WAIVER  ("Amendment")  dated as of August 13,
2008 (the "Effective Date"), is among National Coal of Alabama, Inc., an Alabama
corporation  (the  "Company"),  the Holders (as  defined  below),  and TCW Asset
Management Company,  as administrative  agent for the Holders (in such capacity,
the "Administrative Agent").

                                    RECITALS

         A.       The Company is party to that certain Note  Purchase  Agreement
dated as of October 19, 2007 (as amended,  restated or otherwise  modified  from
time to time, the "Note Purchase Agreement") among the Company,  certain holders
party thereto from time to time (the "Holders"), and the Administrative Agent.

         B.       The Company, the Holders and the Administrative Agent wish to,
subject to the terms and conditions of this Amendment,  (1) provide for a waiver
of certain  Events of Default  arising as a result of the  Company's  failure to
comply with certain financial covenants set forth in the Note Purchase Agreement
and (2) make certain amendments to the Note Purchase Agreement.

         THEREFORE, the Company, the Holders and the Administrative Agent hereby
agree as follows:

         SECTION 1. DEFINED TERMS. As used in this Amendment,  each of the terms
defined in the opening  paragraph and the Recitals above shall have the meanings
assigned to such terms therein. Each term defined in the Note Purchase Agreement
and used herein without  definition shall have the meaning assigned to such term
in the Note Purchase Agreement, unless expressly provided to the contrary.

         SECTION 2. OTHER DEFINITIONAL PROVISIONS.  Article, Section,  Schedule,
and  Exhibit  references  are to Articles  and  Sections  of and  Schedules  and
Exhibits to this  Amendment,  unless  otherwise  specified.  All  references  to
instruments,  documents,  contracts,  and  agreements  are  references  to  such
instruments,  documents,  contracts,  and agreements as the same may be amended,
supplemented,  and  otherwise  modified  from  time to  time,  unless  otherwise
specified.  The words "hereof",  "herein",  and "hereunder" and words of similar
import when used in this Amendment  shall refer to this Amendment as a whole and
not to any particular  provision of this Amendment.  The term "including"  means
"including, without limitation,".  Paragraph headings have been inserted in this
Amendment as a matter of  convenience  for reference  only and it is agreed that
such  paragraph  headings are not a part of this Amendment and shall not be used
in the interpretation of any provision of this Amendment.

         SECTION 3. WAIVER OF EXISTING DEFAULTS. The Company hereby acknowledges
the existence of the Events of Default  arising as a result of (a) the Company's
failure  to comply  with the Fixed  Charge  Coverage  Ratio  covenant  set forth
Section 8.11 of the Note Purchase  Agreement  for the fiscal  quarter ended June
30, 2008,  (b) the Company's  failure to comply with the Current Ratio  covenant
set forth  Section 8.12 of the Note Purchase  Agreement  for the fiscal  quarter
ended June 30, 2008,  and (c) the  Company's  failure to comply with the Debt to
EBITDA Ratio covenant set forth


<PAGE>


Section 8.13 of the Note Purchase  Agreement  for the fiscal  quarter ended June
30, 2008  (collectively,  the "Existing  Defaults").  The Holders  hereby agree,
subject to the terms and  conditions  of this  Amendment,  to waive the Existing
Defaults.  The waiver by the Holders  described in this Section 3 is  contingent
upon the satisfaction of the conditions precedent set forth below and is limited
to the Existing Defaults.  Such waiver is limited to the extent described herein
and shall not be construed  to be a consent to or a permanent  waiver of Section
8.11,  Section  8.12,  Section 8.13 or any other terms,  provisions,  covenants,
warranties or agreements  contained in the Note Purchase  Agreement or in any of
the other Note  Documents.  The Holders reserve the right to exercise any rights
and remedies  available to them in  connection  with any other present or future
defaults with respect to the Note Purchase  Agreement or any other  provision of
any Note Document. The description herein of the Existing Defaults is based upon
the information provided to the Holders on or prior to the date hereof and shall
not be  deemed to  exclude  the  existence  of any  other  Defaults  or Event of
Default.  The failure of the Holders to give notice to the Company or any of the
other Guarantors of any such other Defaults or Events of Default is not intended
to be nor shall be a waiver thereof.  The Company hereby agrees and acknowledges
that the Holders  require and will require strict  performance by the Company of
all of its obligations,  agreements and covenants contained in the Note Purchase
Agreement and the other Note Documents,  and no inaction or action regarding any
Default or Event of Default is intended to be or shall be a waiver thereof.

         SECTION 4. AMENDMENTS TO NOTE PURCHASE AGREEMENT.

         (a)      Section 8.11 of the Note Purchase  Agreement is hereby deleted
in its entirety and replaced with the following:

                  Section 8.11. Fixed Charge Coverage Ratio. At the end
         of each  Fiscal  Quarter,  beginning  with the Fiscal  Quarter
         ending  December 31, 2008, the Company's Fixed Charge Coverage
         Ratio for the Fiscal Quarter then ended shall not be less than
         (a) for Fiscal  Quarter  ending on December 31, 2008,  1.00 to
         1.00, and (b) for each Fiscal Quarter ending thereafter,  1.20
         to 1.00.

         (b)      Section 8.12 of the Note Purchase  Agreement is hereby deleted
in its entirety and replaced with the following:

                  Section 8.12.  Current  Ratio.  (a) At the end of the
         Fiscal Quarter ending  September 30, 2008,  Company's  Current
         Ratio  will not be less than 0.75 to 1.00,  and (b) at the end
         of each Fiscal  Quarter  ending on or after December 31, 2008,
         Company's Current Ratio will not be less than 1.00 to 1.00.

         (c)      Section 8.13 of the Note Purchase  Agreement is hereby deleted
in its entirety and replaced with the following:


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<PAGE>


                  Section 8.13. Debt to EBITDA Ratio. At the end of any
         Fiscal Quarter listed in the following table, the ratio of (a)
         Company's Consolidated  Indebtedness at the end of such Fiscal
         Quarter,  to (b) Company's EBITDA for the four-Fiscal  Quarter
         period  ending with such Fiscal  Quarter,  will be equal to or
         less than the ratio set out in such table opposite such Fiscal
         Quarter:

=================================================== ============================
                  FISCAL QUARTER                           MAXIMUM RATIO
--------------------------------------------------- ----------------------------
For the Fiscal  Quarters ending December 31, 2008         4.50 to 1.00
and March 31, 2009
--------------------------------------------------- ----------------------------
For the Fiscal  Quarters ending June 30, 2009 and          4.25 to 1.00
September 30, 2009
--------------------------------------------------- ----------------------------
For the Fiscal  Quarters ending December 31, 2009          4.00 to 1.00
and March 31, 2010
--------------------------------------------------- ----------------------------
For the Fiscal  Quarters ending June 30, 2010 and          3.75 to 1.00
September 30, 2010
--------------------------------------------------- ----------------------------
For each Fiscal Quarter ending thereafter                  3.50 to 1.00
=================================================== ============================

         provided  that (i) with respect to the Fiscal  Quarter  ending
         December 31, 2008,  Company's  EBITDA shall be  calculated  by
         multiplying  EBITDA  of  Company  for the two  Fiscal  Quarter
         period then ended by two,  and (ii) with respect to the Fiscal
         Quarter  ending  March 31,  2009,  Company's  EBITDA  shall be
         calculated  by  multiplying  EBITDA of  Company  for the three
         Fiscal Quarter period then ended by 4/3.

         (d)      Article VIII of the Note Purchase  Agreement is hereby amended
by adding a new Section 8.18 to the end thereof as follows:

                  Section  8.18.  Minimum  EBITDA.  At  the  end of the
         Fiscal Quarter ending September 30, 2008, Company's EBITDA for
         the Fiscal  Quarter  period then ended will be greater than or
         equal to $1,000,000.

         (e)      Schedule 6 to the Note  Purchase  Agreement is hereby  deleted
and replaced with Schedule 6 attached hereto.

         SECTION  5.  COMPANY   REPRESENTATIONS  AND  WARRANTIES.   The  Company
represents and warrants that: (a) the representations  and warranties  contained
in the Note Purchase Agreement, and the representations and warranties contained
in the other Note  Documents,  are true and correct in all material  respects on
and as of the Effective  Date as if made on as and as of such date except to the
extent that any such  representation or warranty  expressly relates solely to an
earlier date, in which case such  representation or warranty is true and correct
in all material  respects as of such earlier  date;  (b) after giving  effect to
this  Amendment,  no Default has occurred and is continuing;  (c) the execution,
delivery and  performance of this  Amendment are within the corporate  power and
authority of the Company and have been duly authorized by appropriate  corporate
and governing


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<PAGE>


action and  proceedings;  (d) this Amendment  constitutes the legal,  valid, and
binding  obligation of the Company  enforceable  in  accordance  with its terms,
except  as  limited  by  applicable  bankruptcy,   insolvency,   reorganization,
moratorium,  or similar laws  affecting  the rights of creditors  generally  and
general principles of equity; (e) there are no governmental or other third party
consents,  licenses and  approvals  required in connection  with the  execution,
delivery,  performance,  validity and enforceability of this Amendment;  and (f)
the Liens under the Security  Documents are valid and  subsisting and secure the
Company's obligations under the Note Documents.

         SECTION 6.  CONDITIONS TO  EFFECTIVENESS.  This Amendment  shall become
effective  and  enforceable  against the parties  hereto,  and the Note Purchase
Agreement  shall be amended  as  provided  herein,  upon the  occurrence  of the
following conditions precedent

         (a)      The Administrative Agent shall have received multiple original
counterparts,  as requested by the Administrative  Agent, of this Amendment duly
and validly  executed and delivered by duly authorized  officers of the Company,
the Administrative Agent, and the Required Holders.

         (b)      No Default  shall have  occurred and be  continuing  as of the
Effective Date.

         (c)      The  representations and warranties in this Amendment shall be
true and correct in all material respects.

         (d)      The  Company  shall  have  paid  (i) a fee  in the  amount  of
$300,000 to the Administrative  Agent for the ratable account of the Holders and
(ii) all costs and expenses which have been invoiced and are payable pursuant to
Section 12.4 of the Note Purchase Agreement.

         SECTION 7. ONSITE CONSULTANT. The Company, the Administrative Agent and
the Holders hereby agree that (i) the Administrative Agent shall be permitted to
engage an onsite consultant (the "Consultant")  acceptable to the Administrative
Agent in its sole  discretion,  (ii) the  Company  shall  pay or  reimburse  the
Administrative   Agent  for  all  costs,  fees  and  expenses  incurred  by  the
Administrative  Agent in connection therewith to the extent such costs, fees and
expenses do not exceed $10,000 in the aggregate, and (iii)the Company shall give
the  Consultant  (A) full rights of access to its books and  records,  including
without limitation,  its financial statements,  engineering reports,  production
reports,  litigation files,  lease files and other business  information and (B)
complete  access to its executives and other  personnel and allow the Consultant
to discuss the business  affairs of the Company with such  executives  and other
personnel.

         SECTION 8. ACKNOWLEDGMENTS AND AGREEMENTS.

         (a)      The  Company   acknowledges   that  on  the  date  hereof  all
Obligations are payable without defense, offset, counterclaim or recoupment.

         (b)      The  Administrative  Agent and the  Holders  hereby  expressly
reserve all of their  rights,  remedies,  and claims  under the Note  Documents.
Other than as expressly set forth in Section 3 above,  nothing in this Amendment
shall  constitute  a waiver or  relinquishment  of (i) any  Default  or Event of
Default under any of the Note Documents,  (ii) any of the  agreements,  terms or
conditions contained in any of the Note Documents,  (iii) any rights or remedies
of the Administrative Agent or


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<PAGE>


any  Holder  with  respect  to the Note  Documents,  or (iv) the  rights  of the
Administrative  Agent or any Holder to collect  the full  amounts  owing to them
under the Note Documents.

         (c)      Each of the Company,  the Administrative Agent and the Holders
does hereby adopt,  ratify, and confirm the Note Purchase Agreement,  as amended
hereby, and acknowledges and agrees that the Note Purchase Agreement, as amended
hereby,  is and remains in full force and effect,  and the Company  acknowledges
and  agrees  that its  liabilities  and  obligations  under  the  Note  Purchase
Agreement, as amended hereby, are not impaired in any respect by this Amendment.

         (d)      From and after the Effective  Date, all references to the Note
Purchase  Agreement  and the  Note  Documents  shall  mean  such  Note  Purchase
Agreement and such Note Documents as amended by this Amendment.

         (e)      This  Amendment  is a Note  Document  for the  purposes of the
provisions of the other Note  Documents.  Without  limiting the  foregoing,  any
breach of representations,  warranties, and covenants under this Amendment shall
be a  Default  or Event of  Default,  as  applicable,  under  the Note  Purchase
Agreement.

         SECTION 9. COUNTERPARTS.  This Amendment may be signed in any number of
counterparts,  each of  which  shall  be an  original  and all of  which,  taken
together,  constitute a single  instrument.  This  Amendment  may be executed by
facsimile signature and all such signatures shall be effective as originals.

         SECTION 10.  SUCCESSORS AND ASSIGNS.  This  Amendment  shall be binding
upon and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns permitted pursuant to the Note Purchase Agreement.

         SECTION  11.  INVALIDITY.  In the  event  that  any  one or more of the
provisions  contained in this  Amendment  shall for any reason be held  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability shall not affect any other provision of this Amendment.

         SECTION  12.  GOVERNING  LAW.  This  Amendment  shall be deemed to be a
contract made under and shall be governed by and  construed in  accordance  with
the laws of the State of New York.

                            [Signature pages follow.]


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<PAGE>


         EXECUTED effective as of the date first above written.


COMPANY:               NATIONAL COAL OF ALABAMA, INC.,
                       an Alabama corporation

                       By:    /s/ Michael R. Castle
                              --------------------------------------------------
                       Name:  Michael R. Castle
                              --------------------------------------------------
                       Title: Sr. Vice President and Chief Financial Officer
                              --------------------------------------------------


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<PAGE>


ADMINISTRATIVE AGENT:

                       TCW ASSET MANAGEMENT COMPANY,
                       as Administrative Agent


                       By:    /s/ Curt S. Taylor
                              --------------------------------------------------
                       Name:  Curt S. Taylor
                              --------------------------------------------------
                       Title: Senior Vice President
                              --------------------------------------------------


                       By:    /s/ Richard Punches
                              --------------------------------------------------
                       Name:  Richard Punches
                              --------------------------------------------------
                       Title: Vice President
                              --------------------------------------------------


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<PAGE>


HOLDERS:               TCW ENERGY FUND XIV, L.P.,
                       a Delaware limited partnership

                       By:    TCW Asset Management Company, its general partner

                       By:    /s/ Curt S. Taylor
                              --------------------------------------------------
                       Name:  Curt S. Taylor
                              --------------------------------------------------
                       Title: Senior Vice President
                              --------------------------------------------------

                       By:    /s/ Richard Punches
                              --------------------------------------------------
                       Name:  ichard Punches
                              --------------------------------------------------
                       Title: Vice President
                              --------------------------------------------------


                       TCW ENERGY FUND XIV-A, L.P.,
                       a Delaware limited partnership

                       By:    TCW Asset Management Company, its general partner

                       By:    /s/ Curt S. Taylor
                              --------------------------------------------------
                       Name:  Curt S. Taylor
                              --------------------------------------------------
                       Title: Senior Vice President
                              --------------------------------------------------

                       By:    /s/ Richard Punches
                              --------------------------------------------------
                       Name:  Richard Punches
                              --------------------------------------------------
                       Title: Vice President
                              --------------------------------------------------


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<PAGE>


                       TCW ENERGY FUND XIV-B, L.P.,
                       a Delaware limited partnership

                       By:    TCW Asset Management Company, its general partner

                       By:    /s/ Curt S. Taylor
                              --------------------------------------------------
                       Name:  Curt S. Taylor
                              --------------------------------------------------
                       Title: Senior Vice President
                              --------------------------------------------------

                       By:    /s/ Richard Punches
                              --------------------------------------------------
                       Name:  Richard Punches
                              --------------------------------------------------
                       Title: Vice President
                              --------------------------------------------------


                       TCW ENERGY FUND XIV (CAYMAN), L.P.,
                       a Delaware limited partnership

                       By:    TCW Asset Management Company International
                              Limited, its general partner

                       By:    /s/ Curt S. Taylor
                              --------------------------------------------------
                       Name:  Curt S. Taylor
                              --------------------------------------------------
                       Title: Senior Vice President
                              --------------------------------------------------

                       By:    /s/ Richard Punches
                              --------------------------------------------------
                       Name:  Richard Punches
                              --------------------------------------------------
                       Title: Vice President
                              --------------------------------------------------


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