Document:

jrcc_8k-ex1001.htm

     

      
        

      

    

    Exhibit 10.1

    
 

    FIFTH
AMENDMENT TO TERM CREDIT AGREEMENT

    

     

    THIS FIFTH AMENDMENT TO TERM CREDIT AGREEMENT
(this “Agreement”), is made and
entered into as of November 20, 2009 (the “Effective Date”), 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 signature pages hereof, 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 hereto, identified on the signature pages hereof 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 (“MS”), 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,
together with its successors and assigns, if any, 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”).

    

    W I T N E S S E T
H:

     

    WHEREAS, the Borrowers, the
other Credit Parties signatory thereto, the Lenders and L/C Issuers party
thereto, and the Administrative Agent are parties to that certain Term Credit
Agreement, dated as of February 26, 2007 (as amended, restated, supplemented and
revised from time to time, the “Credit Agreement”), pursuant
to which the Lenders have committed to make certain loans and other extensions
of credit to the Borrowers upon the terms and conditions set forth therein;
and

     

    WHEREAS, the Borrowers wish to
terminate the (i) Term Letter of Credit Commitment under the Credit Agreement in
accordance with Section 3.01(b) of
the Credit Agreement other than with respect to each of the existing Term
Letters of Credit listed on Schedule A hereto
(the “Continuing Term Letters
of Credit”) and (ii) Term Letter of Credit Usage under the Credit
Agreement in accordance with Section 3.01(c) of
the Credit Agreement other than with respect to each of the Continuing Term
Letters of Credit;

     

    WHEREAS, in connection with
the termination of the Term Letter of Credit Commitment and the Term Letter of
Credit Usage, in each case other than with respect to each of the Continuing
Term Letters of Credit, the Borrowers have also requested that the
Administrative Agent, under the terms of the Credit Agreement, leave outstanding
each of the Continuing Term Letters of Credit until the earlier of the (i)
expiry date set forth on Schedule A for such
Continuing Term Letter of Credit, and (ii) first date such Continuing Term
Letter of Credit is drawn, terminated, returned, replaced or cancelled, in each
case, in full;

     

    WHEREAS, the Borrowers have
requested that the Lenders and the Administrative Agent make certain changes to
the Credit Agreement and that the Lenders consent to certain actions of the
Borrowers; and

     

    WHEREAS, the Lenders and the
Administrative Agent are willing, upon and subject to certain conditions, to
amend the Credit Agreement in certain respects, all in accordance with and
subject to the terms and conditions set forth herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    NOW, THEREFORE, in
consideration of the premises, the covenants and agreements contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree that capitalized
terms used herein and not otherwise defined herein shall have the meanings given
to such terms in the Credit Agreement and as follows:

     

    
      	
               
      

            	
              1.

            	
              Amendments
      to the Credit Agreement.

            

    

     

    (a)        
   Section 1.01 of the
Credit Agreement, Definitions, is
hereby amended by adding the following definitions in the appropriate
alphabetical order:

    

    
      “Cash Collateral
Agreement” means the Cash Collateral Agreement, in substantially the form
set forth as Exhibit
C-3 hereto, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance therewith.

    

    

    
      “Conversion Stock”
means the shares of common stock of JRCC into which the Convertible Note Debt
will be convertible under the terms of the Convertible Note Debt
Documents.

    

    

    
       “Continuing Term Letter of
Credit” means each of the Term Letters of Credit listed on Schedule A to the
Fifth Amendment to Term Credit Agreement, dated as of November 20,
2009.

    

    

    “Convertible Note
Debt” means unsecured Indebtedness under the Convertible Senior
Notes.

    

    “Convertible Note Debt
Documents” means the Convertible Senior Notes Indenture and all other
agreements, instruments and documents executed in connection with the
Convertible Senior Notes.

    

    “Convertible Senior
Notes” means, collectively, the 4.5% convertible senior notes due 2015
issued by JRCC on the terms set forth in the Convertible Senior Notes Offering
Memorandum.

     

    “Convertible Senior Notes
Indenture” means the indenture dated November 20, 2009 between JRCC and
U.S. Bank National Association, as trustee, pursuant to which the Convertible
Senior Notes are issued.

     

    “Convertible Senior Notes
Offering Memorandum” means the offering memorandum dated November 12,
2009 for the Convertible Senior Notes.

    

    
      “Fifth Amendment Date”
means the effective date of the Fifth Amendment to Term Credit Agreement dated
as of November 20, 2009.

    

    

    
      “Fifth Amendment Date Cash
Collateral Amount” means $62,041,675.50, which amount is inclusive of
$5,222,034.80 of cash collateral for the Term Letters of Credit delivered by
JRCC to the Collateral Agent prior to the Fifth Amendment Date, which amounts
shall be transferred to the Account (as defined in the Cash Collateral
Agreement) and shall constitute Cash Collateral in respect of the Continuing
Term Letters of Credit on and after the Fifth Amendment
Date.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (b)      
     Section 1.01 of the
Credit Agreement, Definitions, is
hereby amended by deleting the definitions of “Availability Period”,
“Commitment
Fee”, “Maturity
Date”, “Permitted
Indebtedness”, “Term Letter of Credit
Commitment” and “Term Letter of Credit
Obligations” in their entirety and substituting in lieu thereof the
following:

    

    “Availability Period”
means the period from the Closing Date to the Fifth Amendment Date.

     

    “Commitment Fee” shall mean a fee on the amount
of the Term Letter of Credit Obligations payable on each Interest Payment Date
or such other applicable date set forth in Section 4.04, in cash
in an amount equal to the Term Letter of Credit Obligations times (a) four percentage
points (4.00%) per annum from the Closing Date through the effective date of the
Second Amendment; (b) four and three fourths percentage points (4.75%) per annum
from the effective date of the Second Amendment through the effective date of
the Third Amendment; (c) five and a half percentage points (5.50%) per annum
from the effective date of the Third Amendment through the effective date of the
Fifth Amendment; (d) one and three fourths percentage points (1.75%) from the
Fifth Amendment Date through December 31, 2009; (e) three percentage points (3%)
from January 1, 2010 through March 31, 2010; and (f) four percentage points (4%)
from April 1, 2010 through the Maturity Date.

     

     “Maturity Date” means
the earlier of (a) October 9, 2010 and (b) the date on which the last
outstanding Continuing Term Letter of Credit expires, or is drawn, returned,
replaced or cancelled, in each case, in full.

     

    “Permitted
Indebtedness” means:

     

    (a)          the
Indebtedness listed on Schedule P-2 and
extensions, renewals and replacements thereof;

     

    (b)          Indebtedness
of the Credit Parties under this Agreement or other Loan Documents;

     

    (c)          purchase
money Indebtedness and Capitalized Lease Obligations incurred after the Closing
Date to acquire equipment or real property in the ordinary course of business;
provided that (i) the
aggregate amount of all such Indebtedness does not exceed five million Dollars
($5,000,000) at any time outstanding, (ii) the Indebtedness when incurred
shall not be more than 90% of the lesser of the cost or fair market value of the
acquired asset as of the time of acquisition of the asset financed,
(iii) such Indebtedness is issued and any Liens securing such Indebtedness
are created prior to or within 60 days after the acquisition of the asset
financed, and (iv) no Lien securing such Indebtedness shall extend to or
cover any property or asset other than the asset so financed;

     

    (d)          intercompany
Indebtedness owed to a Credit Party, which Indebtedness constitutes Pledged
Debt;

     

    
      
         

      

      
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    (e)          Indebtedness
under performance bonds, bid bonds, appeal bonds, surety bonds, completion
guarantees and letter of credit obligations made in the ordinary course of
business (i) in compliance with workers’ compensation, unemployment
insurance and other social security or employment laws or regulations or similar
legislation or to secure public, statutory or regulatory obligations or
(ii) pursuant to any leases specifically permitted by this Agreement
including Mining Leases entered into in the ordinary course of
business;

     

    (f)          Contingent
Obligations with respect to endorsements of checks and other negotiable
instruments for deposit or collection;

     

    (g)          Guarantees
by a Credit Party of Indebtedness of another Credit Party if such Credit Party
could have directly incurred such Indebtedness hereunder;

     

    (h)          to
the extent constituting Contingent Obligations, indemnification obligations and
other similar obligations of the Borrowers and their Subsidiaries in favor of
directors, officers, employees, consultants or agents of the Borrowers or any of
their Subsidiaries extended in the ordinary course of business or to the extent
constituting accruals for payroll, vacation or bonus payments incurred in
the ordinary course of business or pursuant to obligations under employment
agreements;

     

    (i)          unsecured
Indebtedness incurred in the ordinary course of business in an aggregate amount
for all Credit Parties and its Subsidiaries taken as a whole not to exceed an
amount equal to ten million Dollars ($10,000,000);

     

    (j)          any
Operating Lease entered into in the ordinary course of business;

     

    (k)          the
Convertible Note Debt; and

     

    (l)          any
Permitted Refinancing of any of the foregoing.

     

    “Term Letter of Credit
Commitment” means (a) prior to the Fifth Amendment Date, the Maximum Term
Letter of Credit Amount minus the sum of (i) the Term Letter of Credit Usage and
(ii) the aggregate of all Conversion Amounts; and (b) on and after the Fifth
Amendment Date, the face amount of all Continuing Term Letters of Credit minus
the face amount of each Continuing Term Letter of Credit that has expired,
terminated or that has been drawn, returned, replaced or cancelled, in each
case, in full. For the avoidance of doubt, any Term Letter of Credit Commitment
existing prior to the Fifth Amendment Date other than with respect to the
Continuing Term Letters of Credit shall be deemed to have been terminated in
full as of the Fifth Amendment Date.

     

    “Term Letter of Credit
Obligations” means (a) prior to the Fifth Amendment Date, the Term Letter
of Credit Commitment plus the amount of all outstanding Term Letters of Credit;
and (b) on and after the Fifth Amendment Date, the aggregate undrawn amount
available to be drawn under all outstanding Continuing Term Letters of Credit
plus all drawn and unreimbursed amounts, fees and all other obligations and
liabilities under or relating to all Continuing Term Letters of
Credit.

     

    
      
         

      

      
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    (c)           Section
2.01(b) of the Credit Agreement is hereby amended by deleting the final
sentence of such Section in its entirety and inserting the following in lieu
thereof:

     

    “Prior to the Fifth Amendment Date, all
provisions of Annex A shall apply to the Term Letter of Credit Commitment, the
Term Letters of Credit issued thereunder and the Term Letter of Credit
Obligations.  On and after the Fifth Amendment Date, the provisions of
Section 2.10
shall apply to the Term Letter of Credit Commitment, the Continuing Term Letters
of Credit and the Term Letter of Credit Obligations, and the provisions of Annex
A shall cease to have any force or effect.”

     

    (d)           Article
II of the Credit Agreement is amended to insert a new Section 2.10 as
follows:

     

    “SECTION 2.10  Term Letter of Credit
Commitment Provisions Subsequent to the Fifth Amendment
Date.  Notwithstanding any other provision of this Agreement,
any other Loan Document or any agreement entered into regarding the issuance,
renewal or expiry of the Term Letters of Credit:

     

    (a)          Issuance.  No
Term Letters of Credit shall be, or shall be required to be, issued, extended or
renewed on or after the Fifth Amendment Date.  On or after the Fifth
Amendment Date, the face amount of each Continuing Term Letter of Credit shall
not be increased above the face amount as of the Fifth Amendment
Date.

     

    (b)          Release of Synthetic Term
Sub-Accounts to the Lenders.  Notwithstanding the provisions of
Section 2.09,
on the Fifth Amendment Date, the balance, if any, of amounts on deposit in, or
credited to, the Synthetic Term Account shall be returned to the Lenders in
accordance with the balances in their respective Synthetic Term
Sub-Accounts.  The balance of the Synthetic Term Account shall have
been reduced by all Conversion Amounts and all other amounts utilized or
required to collateralize or pay for such Lender’s Participation prior to the
Fifth Amendment Date.

     

    (c)          Cash Collateralization
Account.  The Borrowers have remitted to the Administrative
Agent the Fifth Amendment Date Cash Collateral Amount on the Fifth Amendment
Date (the “Cash
Collateral”), which amount is equal to 105% of the maximum amount
available to be drawn under each of the Continuing Term Letters of
Credit.  Such Cash Collateral shall be held by the Administrative
Agent or the Collateral Agent in a non-interest bearing cash collateral account
(the “Cash Collateral
Account”) maintained at a bank or financial institution acceptable to the
Collateral Agent pursuant to the Cash Collateral Agreement.  The Cash
Collateral Account shall be in the name of the Administrative Agent or the
Collateral Agent and shall be pledged to, and subject to the control of, the
Administrative Agent and the Collateral Agent, for the benefit of the Secured
Parties (as defined in the Cash Collateral Agreement), in a manner satisfactory
to the Collateral Agent.  Pursuant to the Cash Collateral Agreement,
the Borrowers have pledged and granted to the Administrative Agent and the
Collateral Agent, on behalf of the Secured Parties, a first priority security
interest in all such Cash Collateral and all proceeds thereof, as security for
the payment of all amounts due in respect of the Term Letter of Credit
Obligations and the other Term Loan Obligations, whether or not then
due.

     

    
      
         

      

      
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      (d)         Use of Cash Collateral
Account.  The use of the Cash Collateral in the Cash Collateral
Account shall be governed by the Cash Collateral
Agreement.  Notwithstanding anything to the contrary in this Agreement
or any other Loan Document, in the event that any L/C Issuer or the
Administrative Agent shall make any payment on or pursuant to any Continuing
Term Letter of Credit (including due to a draw on a Continuing Term Letter of
Credit or due to the Borrowers’ failure to pay any amounts due to any L/C
Issuer), the amount of such payment shall then automatically and immediately
become due and payable to the Administrative Agent and shall be deemed a Term
Letter of Credit Obligation.  The Borrowers irrevocably agree to
reimburse the Administrative Agent for all Term Letter of Credit Obligations due
to the L/C Issuer or the Administrative Agent immediately upon such Term Letter
of Credit Obligations becoming due and payable in accordance with the terms of
the Cash Collateral Agreement.  Upon the Borrowers’ failure to
reimburse the Administrative Agent for such amounts in accordance with the Cash
Collateral Agreement, the Administrative Agent and the Collateral Agent agree to
utilize the amounts in the Cash Collateral Account to satisfy the Borrowers’
Term Letter of Credit Obligations and each Borrower irrevocably and
unconditionally authorizes the Administrative Agent and the Collateral Agent to
withdraw from the Cash Collateral Account all amounts due on account of the
Borrowers and to debit the Cash Collateral Account for the benefit of the
Administrative Agent and the L/C Issuer in accordance with the Cash Collateral
Agreement.  No Person other than the Administrative Agent and the
Collateral Agent shall have the right to make any withdrawal of Cash Collateral
from the Cash Collateral Account or to exercise any other right or power with
respect thereto.  Each Borrower agrees that its right, title and
interest in and to the Cash Collateral shall be limited to the right to require
that the Administrative Agent and the Collateral Agent use the Cash Collateral
in the Cash Collateral Account to satisfy the Borrowers’ Term Letter of Credit
Obligations under the Credit Documents and this Section
2.10.  Each Borrower agrees that it has and will have no right
to require the return of any Cash Collateral in the Cash Collateral Account,
other than the release and delivery of the balance of the remaining Cash
Collateral, if any, to the Revolving Loan Agent or the Borrowers, as applicable,
upon the Maturity Date as set forth in Section 2.10(g)
below.  Pursuant to the Cash Collateral Agreement, each Borrower has
granted to the Administrative Agent and the Collateral Agent for the benefit of
the Secured Parties a first priority security interest in its rights and
interests in the Cash Collateral Account to secure the Term Letter of Credit
Obligations of the Borrowers under this Section 2.10 and the
Loan Documents.

    

     

    
      (e)        
Acknowledgements.
Each
party hereto acknowledges and agrees that (i) except as provided in Section 2.10(g), no
Borrower, no Guarantor and no other Person (except the Secured Parties, in each
case solely as expressly set forth herein and in the Cash Collateral Agreement),
shall have any right, title or interest in or to the Cash Collateral in the Cash
Collateral Account and no obligations with respect thereto, (ii) the Cash
Collateral in the Cash Collateral Account are and at all times will continue to
be property of the Borrowers (or the Administrative Agent or the Collateral
Agent to the extent such amounts are required to reimburse the Administrative
Agent or the L/C Issuer for the Term Letter of Credit Obligations), and (iii)
such Cash Collateral on deposit at any time in the Cash Collateral Account shall
constitute “Collateral” under the Credit Documents and are available in any
manner to satisfy any Obligation of any Borrower or Guarantor under the Credit
Documents.

    

     

    

     

    
      
         

      

      
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      (f)         
Fees and Expenses.
The Borrowers agree to pay to the Administrative Agent for the benefit of the
Administrative Agent, as compensation to the Administrative Agent for the
Continuing Term Letters of Credit (i) all costs and expenses incurred by the
Administrative Agent on account of such Continuing Term Letters of Credit and
(ii) the Commitment Fee as set forth in Section
4.04.  All costs and expenses described in clause (i) of the
preceding sentence shall be payable by the Borrowers to the Administrative Agent
for its own account promptly on demand from time to time.  In
addition, the Borrowers shall pay to each L/C Issuer, on demand and for its own
account, such fees (including all per annum fees), charges and expenses of each
L/C Issuer in respect of the issuance, negotiation, acceptance, amendment,
transfer and payment of such Continuing Term Letters of Credit or otherwise
payable pursuant to the application and related documentation under which such
Continuing Term Letter of Credit is issued.

    

     

    
      (g)        
Release of Cash Collateral
to the Borrowers. The Cash
Collateral shall be released at such time and in such manner as set forth in the
Cash Collateral Agreement.

    

     

    
      (h)        
Obligation Absolute.
The obligation of the Borrowers to reimburse the Administrative Agent for
payments made by any L/C Issuer with respect to any Continuing Term Letter of
Credit shall be absolute, unconditional and irrevocable, without necessity of
presentment, demand, protest or other formalities. Such obligations of Borrowers
shall be paid strictly in accordance with the terms hereof under all
circumstances including the following:

    

     

    
      (i) any
lack of validity or enforceability of any Continuing Term Letter of Credit, any
application or agreement with any L/C Issuer, the Agreement or the other Loan
Documents or any other agreement;

    

     

    
      (ii) the
existence of any claim, set-off, defense or other right that any Borrower or any
of their respective Affiliates may at any time have against a beneficiary or any
transferee of any Continuing Term Letter of Credit (or any Persons or entities
for whom any such transferee may be acting), the Administrative Agent, any
Lender, or any other Person, whether in connection with the Agreement, the
Continuing Term Letters of Credit, the transactions contemplated herein or
therein or any unrelated transaction (including any underlying transaction
between any Borrower or any of their respective Affiliates and the beneficiary
for which the Continuing Term Letter of Credit was procured);

    

     

    
      
         

      

      
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      (iii) any
draft, demand, certificate or any other document presented under any Continuing
Term Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;

    

     

    
      (iv)
payment by the Administrative Agent (except as otherwise expressly provided in
paragraph (i)(ii)(C) below) or any L/C Issuer under any Continuing Term Letter
of Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of such
Continuing Term Letter of Credit or such guaranty;

    

     

    
      (v) any
other circumstance or event whatsoever that is similar to any of the foregoing;
or

    

     

    (vi) the
fact that a Default or an Event of Default has occurred and is
continuing.

     

    
      (i)          
Indemnification; Nature of
Lenders’ Duties.

    

     

    
      (i)
In
addition to amounts payable as elsewhere provided in the Agreement, the
Borrowers hereby agree to pay and to protect, indemnify, and save harmless the
Administrative Agent, each L/C Issuer and each Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys’ fees and allocated costs of internal counsel)
that the Administrative Agent or any Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance, continuance or maintenance
of or any draw or attempted draw under any Continuing Term Letter of Credit or
guaranty thereof, or (B) the failure of the Administrative Agent or any Lender
seeking indemnification or of any L/C Issuer to honor a demand for payment under
any Continuing Term Letter of Credit or guaranty thereof as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct of such
indemnified person (as finally determined by a court of competent
jurisdiction).

    

     

    
      
         

      

      
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      (ii)
As
between the Administrative Agent and any Lender on the one hand and, on the
other hand, the Borrowers, the Borrowers assume all risks of the acts and
omissions of, or misuse of any Continuing Term Letter of Credit by,
beneficiaries of any Continuing Term Letter of Credit. In furtherance and not in
limitation of the foregoing, to the fullest extent permitted by law, neither the
Administrative Agent nor any Lender shall be responsible for: (A) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
issued by any party in connection with the application for and issuance of any
Continuing Term Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged, (B) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Continuing Term Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, that may
prove to be invalid or ineffective for any reason, (C) failure of the
beneficiary of any Continuing Term Letter of Credit to comply fully with
conditions required in order to demand payment under such Continuing Term Letter
of Credit; provided, that in the case of any payment by the Administrative Agent
under any Continuing Term Letter of Credit or guaranty thereof, the
Administrative Agent shall be liable to the extent such payment was made solely
as a result of its gross negligence or willful misconduct (as finally determined
by a court of competent jurisdiction) in determining that the demand for payment
under such Continuing Term Letter of Credit or guaranty thereof complies on its
face with any applicable requirements for a demand for payment under such
Continuing Term Letter of Credit or guaranty thereof, (D) errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they may be in cipher, (E)
errors in interpretation of technical terms, (F) any loss or delay in the
transmission or otherwise of any document required in order to make a payment
under any Continuing Term Letter of Credit or guaranty thereof or of the
proceeds thereof, (G) the credit of the proceeds of any drawing under any
Continuing Term Letter of Credit or guaranty thereof, and (H) any consequences
arising from causes beyond the control of the Administrative Agent or any
Lender. None of the above shall affect, impair, or prevent the vesting of any of
the Administrative Agent’s or any Lender’s rights or powers hereunder or under
the Agreement.

    

     

    
      (iii)
Nothing
contained herein shall be deemed to limit or to expand any waivers, covenants or
indemnities made by Borrowers in favor of any L/C Issuer in any letter of credit
application, reimbursement agreement or similar document, instrument or
agreement between or among Borrowers and any L/C Issuer.

    

     

    
      (j)          
Letter of Credit
Amounts. Unless otherwise specified herein, the amount of a Continuing
Term Letter of Credit at any time shall be deemed to be the stated amount of
such Continuing Term Letter of Credit as in effect at such time; provided,
however, that with respect to any Continuing Term Letter of Credit that, by its
terms or the terms of any document issued in connection with such Continuing
Term Letter of Credit, provides for one or more automatic increases in the
stated amount thereof, the amount of such Continuing Term Letter of Credit shall
be deemed to be the maximum stated amount of such Continuing Term Letter of
Credit after giving effect to all such increases, whether or not such maximum
stated amount is in effect at such time.”

    

     

    
      
         

      

      
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    (e)           Section 3.02(b) of
the Credit Agreement is hereby amended by inserting the following new sentence
at the end of such Section:

     

    “Notwithstanding anything in this
Agreement to the contrary, this Section 3.02(b) shall not apply to the incurrence of the Convertible Note
Debt or the conversion of the Convertible Note Debt into the Conversion Stock,
all in accordance with the terms and conditions of the Convertible Note Debt
Documents.”

     

    (f)          Section
4.04 of the Credit
Agreement is hereby amended and replaced in its entirety as
follows:

     

    “SECTION
4.04  Fees.   The
Borrowers hereby agree to pay to the Administrative Agent, for the account of
the Lenders in accordance with their Pro Rata Shares, the following amounts: (a)
prior to the Fifth Amendment Date, the Commitment Fee, payable in Dollars on
each Interest Payment Date and on the date upon which any Term Letter of Credit
or Continuing Term Letter of Credit expires, terminates, is drawn or is renewed
or replaced, and upon the date of any reduction in the Term Letter of Credit
Commitment, (b) the fees and expenses, if any, set forth in the Agent’s Fee
Letter and, prior to the Fifth Amendment Date, in Annex A hereto, (c)
substantially contemporaneously with the effectiveness of the Third Amendment,
the Borrowers hereby agree to pay the Third Amendment Fee to each Lender that,
on or before May 12, 2008, executes and delivers its consent to the Third
Amendment, (d) substantially contemporaneously with the effectiveness of the
Fourth Amendment, the Borrowers hereby agree to pay the Fourth Amendment Fee to
each Lender that, on or before November 12, 2008, executes and delivers its
consent to the Fourth Amendment, (e) on the earlier of February 28, 2009 and the
date of repayment of the Term Loan Obligations, the Borrowers hereby agree to
pay the Supplemental Fourth Amendment Fee to each Lender that delivered its
consent to the Fourth Amendment on or before November 12, 2008, and (f)
substantially contemporaneously with the effectiveness of the Fifth Amendment,
the Borrowers hereby agree to pay all fees (including the Applicable Reduction
Fee and Commitment Fee with respect to the total Term Letter of Commitment as of
the Fifth Amendment Date) accrued through the Fifth Amendment
Date.  Notwithstanding the foregoing, from and after the Fifth
Amendment Date the Borrowers shall pay the Commitment Fee with respect to the
Term Letter of Credit Obligations outstanding at such time, in Dollars in
arrears on the last Business Day of each calendar month and on the date upon
which any Continuing Term Letter of Credit expires, terminates, is drawn or is
renewed or replaced, and such Commitment Fee, together with any fees and
expenses set forth in the Agent’s Fee Letter referenced in clause (b) of the
preceding sentence shall be paid to the Administrative Agent for its own account
and not for the account of the Lenders.”

     

    (g)           Section 7.01(a) of
the Credit Agreement is hereby amended by inserting the following new sentence
at the end of such Section:

    

    Notwithstanding
anything to the contrary in this Agreement, on and after the Fifth Amendment
Date, this Section 7.01(a) shall have no force and effect.

    

    (h)           Section 7.01(e) of
the Credit Agreement is hereby amended by inserting the following new sentence
at the end of such Section:

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    Notwithstanding
anything to the contrary in this Agreement, on and after the Fifth Amendment
Date, this Section 7.01(e) shall have no force and effect.

    

     

    (i)           Section 9.05 of the
Credit Agreement is hereby amended by inserting the following new sentence at
the end of such Section:

     

    “Nothing
in this Section 9.05 shall prohibit the incurrence of the Convertible Note Debt
or the conversion of the Convertible Note Debt into the Conversion Stock, all in
accordance with the terms and conditions of the Convertible Note Debt
Documents.”

     

    (j)           Section 9.17 of the
Credit Agreement is hereby amended by inserting the following new sentence at
the end of such Section:

     

    “Nothing
in this Section 9.17 shall prohibit the incurrence of the Convertible Note Debt,
the payment of principal and interest on the Convertible Note Debt, or the
conversion of the Convertible Note Debt into the Conversion Stock and/or cash,
all in accordance with the terms and conditions of the Convertible Note Debt
Documents.”

     

    (k)           Section 13.11(a) of
the Credit Agreement is hereby amended by adding a sentence to the end of the
paragraph as follows:

     

    “Notwithstanding
anything to the contrary in this Agreement or any of the Loan Documents, the
Collateral Agent shall not be required to release any Lien on any Collateral
unless and until (I) all Commitments have been terminated and all Obligations
owed to the Lenders, the Administrative Agent or the L/C Issuer (other than
Hedging Obligations and those contingent Obligations for reimbursement and
indemnity that expressly survive the termination of this Agreement) have been
paid in cash and satisfied in full and (II) the Credit Parties have delivered to
the Administrative Agent a general release for the benefit of each Lender, the
Administrative Agent, the Collateral Agent and the L/C Issuer in form and
substance reasonably acceptable to the Administrative Agent, and upon the
occurrence of the foregoing, the Collateral Agent shall, at the request and
expense of the Credit Parties, release such Liens, authorize the Credit Parties
to file termination statements with respect to such Liens and deliver to the
Credit Parties documentation in form and substance reasonably satisfactory to
the Credit Parties evidencing such release.”

     

    (l)           Section 14.01 of the
Credit Agreement is hereby amended by deleting the current notice information
for the Administrative Agent and the Collateral Agent and inserting the
following in lieu thereof:

     

    
      	
              “if to
      the Administrative Agent, at the following
      address:

            
	
               

              Morgan
      Stanley Senior Funding, Inc.

            
	
              1585
      Broadway

            
	
              New
      York, NY 10036

            
	
              Telephone:  (212)
      761-3915

            
	
              Facsimile:  (212)
      507-4687

            
	
              Email:  Stephen.B.King@morganstanley.com

            
	
              Attn:  Stephen
      B. King

            

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    
      	
              with a copy
      to:

               

            
	
              Sullivan
      & Cromwell LLP

            
	
              1888
      Century Park East, 21st
      Floor

            
	
              Los
      Angeles, CA 90067

            
	
              Telephone: 
      (310) 712-6600

            
	
              Facsimile: 
       (310) 407-2684

            
	
              Email:  feldsteinh@sullcrom.com

            
	
              Attn:  Hydee
      R. Feldstein

            
	
               

              and a copy
      to:

            
	 
      
	
              Morgan
      Stanley Senior Funding, Inc.

            
	
              One
      Pierrepont Plaza, 7th Floor

            
	
              300
      Cadman Plaza West

            
	
              Brooklyn,
      NY 11201

            
	
              Telephone: 
      (718) 754-4454

            
	
              Facsimile:  
      (212) 507-6680

            
	
              Email:
      Dana.Weisberg@morganstanley.com

            
	
              Attn:
      Dana Weisberg

            
	 
      
	
              if to the Collateral
      Agent, at the following address:

            
	
               

              Morgan
      Stanley & Co. Incorporated

            
	
              1585
      Broadway

            
	
              New
      York, NY 10036

            
	
              Telephone: 
      (212) 761-3915

            
	
              Facsimile:  (212)
      507-4687

            
	
              Email:  Stephen.B.King@morganstanley.com

            
	
              Attn:  Stephen
      B. King

            
	 
      
	
              with a
      copy to:

               

            
	
              Sullivan
      & Cromwell LLP

            
	
              1888
      Century Park East, 21st
      Floor

            
	
              Los
      Angeles, CA 90067

            
	
              Telephone: 
      (310) 712-6600

            
	
              Facsimile: 
      (310) 407-2684

            
	
              Email:  feldsteinh@sullcrom.com

            
	
              Attn:  Hydee
      R. Feldstein

            

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    
      	
              and a
      copy to:

            
	 
      
	
              Morgan
      Stanley & Co. Incorporated

            
	
              One
      Pierrepont Plaza, 7th Floor

            
	
              300
      Cadman Plaza West

            
	
              Brooklyn,
      NY 11201

            
	
              Telephone: 
      (718) 754-4454

            
	
              Facsimile:  
      (212) 507-6680

            
	
              Email:
      Dana.Weisberg@morganstanley.com

            
	
              Attn:
      Dana Weisberg”

            

    2.           Affirmation and
Acknowledgment.

     

    (a)           Borrowers.  The
Borrowers hereby ratify and confirm all of their Obligations to the Lenders, the
Administrative Agent and each L/C Issuer, including, without limitation, the
Term Letter of Credit Obligations, and the Borrowers hereby affirm their
absolute and unconditional promise to pay to the Lenders, the Administrative
Agent and each L/C Issuer, as applicable, all indebtedness, obligations and
liabilities in respect of the Letters of Credit, and all other amounts due under
the Credit Agreement and the other Loan Documents as amended
hereby.  The Borrowers hereby confirm that the Obligations are and
remain secured pursuant to the Loan Documents and pursuant to all other
instruments and documents executed and delivered by the Borrowers as security
for the Obligations.

    

    (b)           Guarantors. 
Each Guarantor hereby ratifies and confirms its Guaranty of the Guaranteed
Obligations set forth in Article XII of the Credit Agreement, including, without
limitation, its Guaranty of the Obligations of the Credit Parties set forth in
the Credit Agreement as amended by this Agreement, the Cash Collateral Agreement
and any other Loan Document, and each Guarantor hereby ratifies and confirms all
of its obligations and liabilities under each of the Loan
Documents.  Each Guarantor hereby confirms that its Guaranty and all
other obligations and liabilities under each of the Loan Documents are and
remain secured pursuant to the Loan Documents and pursuant to all other
instruments and documents executed and delivered by the Guarantors as security
for its Guaranty and all other obligations and liabilities.

    

    3.           Grant
of Security Interest. 
 In
addition to the security interests in favor of the Collateral Agent for the
benefit of each Lender, the Administrative Agent, the Collateral Agent and the
L/C Issuer, each Borrower and each Guarantor hereby assigns and transfers to
the
Administrative Agent, and hereby grants to the
Administrative Agent, for the benefit of each Lender, itself, the
Collateral Agent and the L/C Issuer, as security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) and observance of all Obligations under the Loan
Documents a first priority Lien and security interest and a right of setoff
against the Cash Collateral Account and all amounts contained therein or
credited thereto, including the Fifth Amendment Date Cash Collateral Amount, and
all products, proceeds and profits in or from such Cash Collateral Account or
the amounts therein or credited thereto, and each Borrower and each Guarantor
agrees that the Cash Collateral Account shall be in the name of and under the
sole and exclusive dominion and control of the
Administrative Agent or the Collateral Agent until released in accordance
with the terms of this Agreement and the Cash Collateral
Agreement.

    

    4.           No Other
Amendments.  Except for the
amendments expressly set forth and referred to in Section 1 hereof, the
Credit Agreement shall remain unchanged and in full force and
effect.  Nothing in this Agreement is intended or shall be construed
to be a novation of any Obligations or any part of the Credit Agreement or any
of the other Loan Documents or to affect, modify or impair the continuity or
perfection of the Administrative Agent’s Liens under the Credit Agreement and
Loan Documents.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

    5.           Waivers
and Consents.  Neither this Agreement nor any term hereof may
be changed, waived, discharged or terminated orally, or by any action or
inaction, but only by an instrument in writing signed by each of the parties
hereto.

     

     

    6.           Representations,
Warranties and Covenants.  To induce the undersigned Lenders
and Administrative Agent to enter into this Agreement, the Credit Parties hereby
warrant, represent and covenant to and with the Lenders and the Administrative
Agent that: (a)
this Agreement has been duly authorized, executed and delivered by the Credit
Parties; (b) this Agreement and the Credit Agreement as amended hereby
constitute legal, valid and binding obligations of the Credit Parties,
enforceable in accordance with their respective terms; (c) after giving effect
to this Agreement, no Default or Event of Default has occurred and is continuing
as of this date; (d) no approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally binding the execution,
delivery or performance by the Credit Parties of this Agreement or the Credit
Agreement as amended hereby; and (e) after giving effect to this Agreement, all
of the representations and warranties made by the Credit Parties in the Credit
Agreement are true and correct in all material respects on and as of the date of
this Agreement (except to the extent that any such representations or warranties
expressly referred to a specific prior date and except for changes therein
expressly permitted or expressly contemplated by the Credit Agreement or the
other Loan Documents).  Any breach by the Credit Parties of any of its
representations, warranties and covenants contained in this Section 6 shall be an
Event of Default under the Credit Agreement.

     

     

    7.           
Conditions
to Effectiveness.  This Agreement shall not become effective
unless and until the Administrative Agent has received (a) $2,654,109.25 in
immediately available funds, representing payment by the Borrowers of all fees
(including the Applicable Reduction Fee and Commitment Fee with respect to the
total Term Letter of Commitment as of the Fifth Amendment Date) accrued through
the Fifth Amendment Date for the account of the Lenders (which amount the
Administrative Agent acknowledges it received from JRCC on November 13, 2009);
(b) the Fifth Amendment Date Cash Collateral Amount in immediately available
funds, representing the cash collateralization of the Continuing Term Letters of
Credit, such amount to be held pursuant to this Agreement and the Cash
Collateral Agreement; (c) confirmation from Sullivan & Cromwell LLP that
$75,000 in immediately available funds in payment of the fees, expenses and
disbursements of Sullivan & Cromwell LLP now due and payable have been wired
to Sullivan & Cromwell LLP; (d) duly executed, completed and delivered
counterparts of the Cash Collateral Agreement; (e) one or more counterparts of
this Agreement, duly executed, completed and delivered by the Borrowers, the
other Credit Parties and the Required Lenders; (f) duly executed and delivered
counterparts of the acknowledgment and consent to this Agreement of General
Electric Capital Corporation, as administrative agent and collateral agent under
the Revolving Credit Agreement, in substantially the form attached as Schedule B hereto;
and (g) copies of notices delivered by the L/C Issuer by registered mail to the
beneficiary of each Continuing Term Letter of Credit that it elects not to renew
such Continuing Term Letter of Credit after the current expiry date applicable
to such Continuing Term Letter of Credit; provided, however, that the
fulfillment of the conditions specified in clauses (a), (b), (c), (d), (f) and
(g) above shall not be a condition to the effectiveness of the amendments of the
Credit Agreement provided in Sections 1(a), 1(e), 1(i) and 1(j) of this
Agreement or to the effectiveness of the amendment of the definition of the term
“Permitted Indebtedness” provided in Section 1(b) of this
Agreement, which amendments shall be effective immediately upon the fulfillment
of the condition specified in clause (e) above.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    8.           Reimbursement
of Expenses.  The Borrowers hereby agree to reimburse the
Administrative Agent on demand for all reasonable fees and reasonable
out-of-pocket costs and expenses (including without limitation the reasonable
and actual fees and expenses of its counsel) incurred by the Administrative
Agent in connection with the negotiation, documentation and consummation of this
Agreement and the other documents executed in connection herewith and the
transactions contemplated hereby.

     

    9.           Governing
Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SAID STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

     

    10.        Severability
of Provisions.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  To the
extent permitted by applicable law, the Borrowers hereby waive any provision of
law that renders any provision hereof prohibited or unenforceable in any
respect.

     

    11.        Counterparts.  This
Agreement may be executed in any number of several counterparts, all of which
shall be deemed to constitute but one original and shall be binding upon all
parties, their successors and permitted assigns.  Delivery of an
executed signature page of this Agreement by facsimile transmission or
electronic transmission shall be as effective as delivery of a manually executed
counterpart hereof.

     

    12.        Entire
Agreement.  The Credit Agreement as amended through this
Agreement embodies the entire agreement between the parties hereto relating to
the subject matter thereof and supersedes all prior agreements, representations
and understandings, if any, relating to the subject matter thereof.

     

    13.        No Strict
Construction.  The parties hereto have participated jointly in
the negotiation and drafting of this Agreement.  In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

     

    14.        No Third
Party Reliance.  This Agreement is solely for the benefit of
the parties signatory hereto, their successors and permitted
assigns.  No waiver, consent or amendment pursuant to this Agreement
may be relied upon by any third parties.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    15.        Release. The Credit Parties
hereby remise, release, acquit, satisfy and forever discharge the Lenders, the
Administrative Agent, the Collateral Agent, and the L/C Issuer and their
respective agents, employees, officers, directors, predecessors, attorneys and
all others acting or purporting to act on behalf of or at the direction of the
Lenders, the Administrative Agent, the Collateral Agent, or the L/C Issuer of
and from any and all manner of actions, causes of action, suit, debts, accounts,
covenants, contracts, controversies, agreements, variances, damages, judgments,
claims and demands whatsoever, in law or in equity, which any of such parties
ever had or now has against the Lenders, the Administrative Agent, the
Collateral Agent, and the L/C Issuer their respective agents, employees,
officers, directors, attorneys and all persons acting or purporting to act on
behalf of or at the direction of the Lenders or the Administrative Agent (“Releasees”), for, upon or by
reason of any matter, cause or thing whatsoever arising from, in connection with
or in relation to the Credit Agreement or any of the other Loan Documents
(including this Agreement and the Cash Collateral Agreement) through the date
hereof.  Without limiting the generality of the foregoing, the Credit
Parties waive and affirmatively agree not to allege or otherwise pursue any
defenses, affirmative defenses, counterclaims, claims, causes of action, setoffs
or other rights they do, shall or may have as of the date hereof, including, but
not limited to, the rights to contest any conduct of the Lenders, Administrative
Agent or other Releasees on or prior to the date hereof.

     

    16.        Loan
Documents.  The Cash Collateral Agreement, this Agreement and
all other documents executed in connection herewith shall be deemed to be Loan
Documents for all purposes under the Credit Agreement.

     

    

    

    [Remainder
of page intentionally blank; next page is signature page]

    

     

    \

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    IN WITNESS WHEREOF, the
parties have caused this Fifth Amendment to Term Credit Agreement to be duly
executed by their respective officers or representatives thereunto duly
authorized, as of the date first above written.

     

    

     

    
      	
              BORROWERS:

               

            
	
              JAMES
      RIVER COAL COMPANY

               

            
	
              By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              JAMES
      RIVER COAL SERVICE COMPANY

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              LEECO,
      INC.

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              TRIAD
      MINING, INC.

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

            

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    
      	
               

               

              TRIAD
      UNDERGROUND MINING, LLC

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              BLEDSOE
      COAL CORPORATION

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              JOHNS
      CREEK ELKHORN COAL CORPORATION

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              JAMES
      RIVER COAL SALES, INC.

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              BLEDSOE
      COAL LEASING COMPANY

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

            

    

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    

    
      	
              BLUE
      DIAMOND COAL COMPANY

               

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              MCCOY
      ELKHORN COAL CORPORATION

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              GUARANTORS:

               

            
	
              BDCC
      HOLDING COMPANY, INC.

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              EOLIA
      RESOURCES, INC.

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

            

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    

    
      	
              SHAMROCK
      COAL COMPANY, INCORPORATED

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              JOHNS
      CREEK COAL COMPANY

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

               

               

            
	
              JOHNS
      CREEK PROCESSING COMPANY

               

            
	
                    
                By:
      /s/ Samuel M.
      Hopkins,
      II                                           
      

              

            
	
              Name:
      Samuel M. Hopkins, II

            
	
              Title:   Vice
      President

            

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    
      	
              LENDER:

               

              MORGAN
      STANLEY SENIOR FUNDING, INC.

            
	 
      
	
              By:
      /s/ Stephen B.
      King                                                          

            
	
              Name:
      Stephen B. King

            
	
              Title:
      Vice President

               

               

            
	
              ADMINISTRATIVE AGENT

               

            
	
              MORGAN
      STANLEY SENIOR FUNDING, INC.

               

            
	
                    
                By:
      /s/ Stephen B.
      King                                                          

              

            
	
              Name:
      Stephen B. King

            
	
              Title:
      Vice President

               

               

            
	
              COLLATERAL AGENT

               

            
	
              MORGAN
      STANLEY & CO. INCORPORATED

               

            
	
                    
                By:
      /s/ Stephen B.
      King                                                          

              

            
	
              Name:
      Stephen B. King

            
	
              Title:
      Executive Director

            

    

     

     

     

     

     

     

    
 

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    

    
      	
              LENDER:

               

              Restoration
      Holdings Ltd.

               

            
	
              By:
      /s/ Pamela M.
      Lawrence                      
                                 
      

            
	
              Name:
      Pamela M. Lawrence

            
	
              Title:
      Director

            

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    
      	
              LENDER:

               

              Libertyview
      Special Opportunities Fund, L.P.

              Libertyview
      Loan Fund, LLC

              Trust
      D (Kodak)

              Libertyview
      Credit Opportunities Fund, L.P.

              Libertyview
      Credit Select Fund, L.P.

              Libertyview
      Funds, L.P.

               

            
	
              By:
      /s/ Richard
      Meckler                                                         
      

            
	
              Name:
      Richard Meckler

            
	
              Title:
      Chief Investment Officer

            

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    Schedule
A

     

    Continuing Term Letters Of
Credit

     

    
      	
              
                Letter
      of Credit No.

              

            	 	
              
                Beneficiary

              

            	 	
              
                Maximum
      Face Amount

              

            	 	
              
                Issuance
      Date

              

            	 	
              
                Expiry
      Date

              

            
	
              S00054990

            	 	
              National
      Union Fire Insurance Co (AIG)

            	 	
              $10,480,000

            	 	
              June
      7, 2009

            	 	
              June
      7, 2010

            
	
              S00055004

            	 	
              Travelers
      Casualty and Surety

            	 	
              $19,000,000

            	 	
              June
      6, 2009

            	 	
              June
      6, 2010

            
	
              S00054992

            	 	
              Old
      Republic Insurance

            	 	
              $920,000

            	 	
              July
      5, 2009

            	 	
              July
      5, 2010

            
	
              S00057989

            	 	
              Western
      Indiana Energy Rural

            	 	
              $205,000

            	 	
              July
      23, 2009

            	 	
              July
      23, 2010

            
	
              S00054991

            	 	
              Commonwealth
      of Kentucky

            	 	
              $19,982,310

            	 	
              August
      22, 2007

            	 	
              August
      22, 2010

            
	
              S00055561

            	 	
              Indemnity
      National Insurance Company

            	 	
              $8,500,000

            	 	
              October
      9, 2007

            	 	
              October
      9, 2010

            
	 
      	 	
              Total:

            	 	
              $59,087,310

            	 	 
      	 	 
      

    

     

    

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    Schedule
B

     

    Form of Acknowledgment,
Consent and Agreement

     

    

    This Acknowledgement, Consent and
Agreement is executed and delivered by (a) General Electric Capital Corporation,
a Delaware corporation, in its capacity as Revolver Agent under that certain
Intercreditor Agreement, dated as of February 26, 2007 (as amended, supplemented
or otherwise modified from time to time in accordance therewith, the “Intercreditor
Agreement”) by and among the Revolver Agent, the Term Agent and the Term
Loan Collateral Agent, (b) Morgan Stanley Senior Funding, Inc., a Delaware
corporation, in its capacity as Term Agent under the Intercreditor Agreement,
and (c) Morgan Stanley & Co. Incorporated, a Delaware corporation, in its
capacity as Term Loan Collateral Agent under the Intercreditor
Agreement.  Capitalized terms used herein but not defined shall have
the meanings set forth in the Intercreditor Agreement.

    

    1.           The
Revolver Agent, for and on behalf of itself and the Revolver Lenders, hereby
acknowledges receipt of the Fifth Amendment to Term Credit Agreement, dated as
of November 20, 2009, a copy of which is attached hereto as Annex A (the “Amendment”), together
with the Cash Collateral Agreement, dated as of November 20, 2009, a copy of
which is attached hereto as Annex B (the “Cash Collateral
Agreement”).  The Revolver Agent, for and on behalf of itself
and the Revolver Lenders, hereby consents to the:

    

    (i)
execution and delivery by the Borrowers and other Obligors of the Amendment, the
Cash Collateral Agreement and any other documents contemplated
thereby;

     

    (ii)
deposit of the Cash Collateral (as defined in the Cash Collateral Agreement) in
the Account (as defined in the Cash Collateral Agreement) as Term Loan Priority
Collateral under the Intercreditor Agreement;

     

    (iii) the
cash collateralization of the Continuing Term Letters of Credit (as defined in
the Amendment) pursuant to, and in accordance with, the Amendment and the Cash
Collateral Agreement, in each case, as in effect on the date
hereof;

     

    (iv)
termination of the Term Letter of Credit Commitment (as defined in the Term
Credit Agreement) and the Term Letter of Credit Usage (as defined in the Term
Credit Agreement) in each case other than with respect to each of the Continuing
Term Letters of Credit as set forth in the Amendment; and

     

    (v) other
amendments to the Credit Agreement as set forth in the Amendment, as in effect
on the date hereof.

     

    2.           The
Revolver Agent, for and on behalf of itself and the Revolver Lenders, hereby
acknowledges and agrees that the Cash Collateral, the interests of the Borrowers
and other Obligors in the Account, and all proceeds thereof (the “Term Loan Cash
Collateral”) are, and shall constitute, Term Loan Priority Collateral
under the Intercreditor Agreement.

    

    3.           The
Obligors hereby acknowledge that they have granted a security interest to the
Revolver Agent, for the benefit of the Revolver Parties, in all of the assets
and all real and personal property of such Obligor (subject to the Liens granted
to the Term Collateral Agent with respect to the Term Loan Priority Collateral),
which assets include the Obligors’ right, title and interest in the Account and
the Cash Collateral and all proceeds thereof and, for the avoidance of doubt, as
security for the payment and performance of all the Revolver Debt, each Obligor
hereby pledges, transfers and assigns to the Revolving Agent, for the benefit of
the Revolver Parties, a continuing lien and security interest in all right,
title and interest of the Obligors in and to the Account, the Cash Collateral
and all proceeds thereof, from the date of the establishment of the Account
until the termination thereof pursuant to the terms of the Cash Collateral
Agreement as in effect on the date hereof (subject to the first priority
security interest granted to the Term Collateral Agent).

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    

    4.           Each
of the Term Agent and the Term Loan Collateral Agent hereby acknowledge that,
pursuant to and in accordance with Section 2.15 of the Intercreditor Agreement,
the Revolver Agent has appointed it as its agent for the purposes of perfecting
its Lien in and on the Term Loan Cash Collateral for so long as the Term Loan
Cash Collateral is in the possession of or under control of the Term Agent or
the Term Loan Collateral Agent.  The Revolver Agent hereby
acknowledges that, pursuant to and in accordance with Section 2.15 of the
Intercreditor Agreement, neither the Term Agent nor the Term Loan Collateral
Agent shall have any duty or liability to protect or preserve any rights of the
Revolver Agent or any Lender pertaining to the Term Loan Cash Collateral while
the Term Loan Cash Collateral is in the possession of or under the control of
the Term Agent or the Term Loan Collateral Agent and, except for gross
negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction, the Revolver Agent,
for and on behalf of itself and the Revolver Lenders, hereby waives and releases
each of the Term Agent and Term Loan Collateral Agent and other Lenders from,
all claims and liabilities arising pursuant to the Term Agent’s and Term Loan
Collateral Agent’s role as agent or bailee with respect to the Term Loan Cash
Collateral, so long as Term Agent and Term Loan Collateral Agent shall use the
same degree of care with respect thereto as the Term Agent and Term Loan
Collateral Agent use for similar property pledged to the Term Agent and Term
Loan Collateral Agent as collateral for indebtedness of others to the Term Agent
and Term Loan Collateral Agent.

    

    5.           Upon
the termination and release of the Term Loan Cash Collateral pursuant to the
terms of the Cash Collateral Agreement, the Term Agent and Term Loan Collateral
Agent shall, upon the prior written request of the Revolver Agent, deliver the
remainder of the Term Loan Cash Collateral, if any, in their possession to an
account or accounts designated by the Revolver Agent (provided the Revolver
Agent’s respective Termination Date shall not already have occurred), except as
may otherwise be required by applicable law or court order.  The
Revolver Agent and the Obligors agree that any such Term Loan Cash Collateral so
delivered to the Revolver Agent shall be applied in accordance with the terms
and conditions of the Revolver Loan Documents.

     

     

    *           *           *

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        B-2

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, each of the undersigned has caused this Acknowledgment, Consent
and Agreement to be duly executed by an officer or representative thereunto duly
authorized, as of the date of the Amendment.

     

    
      	
              REVOLVER
      AGENT:

               

            
	
              GENERAL
      ELECTRIC CAPITAL CORPORATION

               

               

            
	
              By:
      ______________________________________

              Name:

              Title:

               

            

    

     

     

     

    
      	
              TERM
      AGENT:

               

              MORGAN
      STANLEY SENIOR FUNDING, INC.

               

              By:
      ______________________________________

              Name:

              Title:

               

               

              TERM LOAN COLLATERAL
      AGENT:

               

              MORGAN
      STANLEY & CO. INCORPORATED

               

              By:
      ______________________________________

              Name:

              Title:

            

    

    
      
         

      

      
        B-3

        
          

        

      

      
         

      

    

     

    
      
        	
                 

                ACKNOWLEDGED, AGREED AND
      ACCEPTED:

                 

                OBLIGORS:

                 

              
	
                JAMES
      RIVER COAL COMPANY

                 

              
	
                By:
      ______________________________________

              
	
                Name:

              
	
                Title:

                 

                 

              
	
                JAMES
      RIVER COAL SERVICE COMPANY

                 

              
	
                By:
      ______________________________________

              
	
                Name:

              
	
                Title:

                 

                 

              
	
                LEECO,
      INC.

                 

              
	
                By:
      ______________________________________

              
	
                Name:

              
	
                Title:

                 

                 

              
	
                TRIAD
      MINING, INC.

                 

              
	
                By:
      ______________________________________

              
	
                Name:

              
	
                Title:

              

      

     

     

     

    
      
         

      

      
        B-4

        
          

        

      

      
         

      

    

    
 

    
      	
              TRIAD
      UNDERGROUND MINING, LLC

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              BLEDSOE
      COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK ELKHORN COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JAMES
      RIVER COAL SALES, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              BLEDSOE
      COAL LEASING COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              BLUE
      DIAMOND COAL COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

    
      
         

      

      
        B-5

        
          

        

      

      
         

      

    

    

    
      	
              MCCOY
      ELKHORN COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

            
	 
      
	
              BDCC
      HOLDING COMPANY, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              EOLIA
      RESOURCES, INC.

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        B-6

        
          

        

      

      
         

      

    

    

    
      	
              SHAMROCK
      COAL COMPANY, INCORPORATED

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK COAL COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK PROCESSING COMPANY

               

            
	
              By:______________________________________

            
	
              Name:

            
	
              Title:

            

    

    

     

    

     

    

     

    
      
         

      

      
        B-7

        
          

        

      

      
         

      

    

    Exhibit
C-3

     

    Form of Cash Collateral
Agreement

     

    THIS CASH
COLLATERAL AGREEMENT (as amended, modified and/or supplemented from time to
time, this “Agreement”), dated as
of November 20, 2009, 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 signature pages hereof, 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 hereto, identified on the signature pages hereof as
Guarantors (together, the Borrowers and Guarantors, are referred to hereinafter
each individually as a “Credit Party” and
collectively, jointly and severally, as the “Credit Parties”),
Morgan Stanley Senior Funding, Inc., a corporation formed under the laws of
Delaware (“MS”), as administrative agent
under the Credit Agreement (as defined below) (in such capacity, together with
its successors and assigns, if any, the “Administrative
Agent”) and Morgan Stanley & Co. Incorporated, as collateral agent
under the Credit Agreement (in such capacity, together with its successors and
assigns, if any, the “Collateral
Agent”).  Capitalized terms used herein and not otherwise
defined herein shall have the meanings given to such terms in the Credit
Agreement.

     

    W I T N E S S E T
H:

     

    WHEREAS, the Borrowers, the
other Credit Parties signatory thereto, the Lenders and L/C Issuers party
thereto, the Administrative Agent and the Collateral Agent are parties to that
certain Term Credit Agreement, dated as of February 26, 2007 (as amended,
restated, supplemented and revised from time to time, the “Credit Agreement”),
pursuant to which the Lenders have committed to make certain loans and other
extensions of credit to the Borrowers upon the terms and conditions set forth
therein;

     

    WHEREAS, the Borrowers have
given notice that they wish to terminate the (i) Term Letter of Credit
Commitment under the Credit Agreement in accordance with Section 3.01(b) of
the Credit Agreement other than with respect to each of the existing Term
Letters of Credit listed on Annex A hereto (the
“Continuing Term
Letters of Credit”) and (ii) Term Letter of Credit Usage under the Credit
Agreement in accordance with Section 3.01(c) of
the Credit Agreement other than with respect to each of the Continuing Term
Letters of Credit in each case on the date hereof and as more specifically
provided in that certain Fifth Amendment to Term Credit Agreement, dated as of
the date hereof, by and among the Borrowers, the other Credit Parties signatory
thereto, the Lenders party thereto and L/C Issuers party thereto, the
Administrative Agent and the Collateral Agent (the “Amendment”);

     

    WHEREAS, on the date hereof,
the Continuing Term Letters of Credit remain outstanding under the Credit
Agreement;

     

    WHEREAS, the Borrowers have
also requested that the Administrative Agent leave outstanding each Continuing
Term Letter of Credit until the earlier of the (i) expiry date set forth on
Annex A for
such Continuing Term Letter of Credit, and (ii) first date such Continuing Term
Letter of Credit is drawn, terminated, returned, replaced or cancelled, in each
case, in full;

     

    
      
         

      

      
        C-3-1

        
          

        

      

      
         

      

    

    WHEREAS, it is a condition to
the effectiveness of the Amendment and to the Administrative Agent’s agreement
to the foregoing that, among other things, the Credit Parties execute and
deliver this Agreement and deposit cash in the Account (as defined below) on the
date hereof in an amount equal to the Fifth Amendment Date Cash Collateral
Amount and otherwise satisfy all the conditions precedent set forth in the
Amendment; and

     

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

     

    ARTICLE
ONE

     

    DEFINITIONS

    Section 1.01  Definitions:  The
following terms shall have the meanings herein specified:

     

    “Account” shall have
the meaning provided in Section 2.01
hereof.

     

    “Cash Collateral”
shall mean the Fifth Amendment Date Cash Collateral Amount, representing an
amount in cash equal to 105% of the maximum amount available to be drawn under
each of the Continuing Term Letters of Credit as of the date hereof, deposited
into the Account pursuant to the terms of the Amendment and this Agreement, plus
any additional amounts deposited in the Account pursuant to Section 2.02, and all
Proceeds (as defined in Section 9-102(a)(64) of the Uniform Commercial Code of
New York as in effect on the date hereof) of any or all of the
foregoing.  The Cash Collateral and the Account shall constitute
Collateral for purposes of the Credit Agreement and all other Loan
Documents.

     

    “Indemnitee” shall
have the meaning provided in Section 7.01
hereof.

     

    “Fifth Amendment
Obligations” shall constitute Obligations (as defined in the Credit
Agreement), and shall mean and include:

     

    (i)           any
and all obligations, liabilities, fees, and indebtedness of the Credit Parties
owing to the Secured Parties (or any Person designated by the Administrative
Agent to issue or honor drawings under the Continuing Term Letters of Credit),
whether now or hereafter existing that are incurred under, arise out of, or
otherwise relate to the Continuing Term Letters of Credit, including, but not
limited to, the Term Letter of Credit Obligations;

     

    (ii)          any
and all sums advanced or incurred by the Secured Parties (or any Person
designated by the Administrative Agent to issue or honor drawings under the
Continuing Term Letters of Credit) in order to maintain the Account, preserve
the Cash Collateral and/or preserve the Secured Parties’ interest in the Cash
Collateral and/or the security interest of the Administrative Agent and the
Collateral Agent in the Account and the Cash Collateral;

     

    
      
         

      

      
        C-3-2

        
          

        

      

      
         

      

    

    

     

    (iii)         in
the event of any proceeding for the collection of any indebtedness, obligations
or liabilities of the Credit Parties referred to in clause (i) above or the
enforcement of this Agreement, the expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the Account and
the Cash Collateral, or of any exercise by the Administrative Agent or the
Collateral Agent of its rights hereunder, together with reasonable attorneys’
fees and court costs; and

     

    (iv)        any
and all amounts paid by any Indemnitee as to which such Indemnitee has the right
to reimbursement under Article Seven of this Agreement.

     

    “Secured Parties”
shall mean each of the Administrative Agent, the Collateral Agent, the L/C
Issuer and the Lenders.

     

    “Termination Date”
shall mean the date upon which the last of the following to occur shall have
occurred: (i) each and every Continuing Term Letter of Credit has expired
according to its terms or has been terminated and returned to the Administrative
Agent or the L/C Issuer for cancellation, (ii) any and all amounts drawn on any
Continuing Term Letter of Credit (if any), together with interest thereon, with
respect to all Continuing Term Letters of Credit shall have been repaid in full
in cash to the Administrative Agent (and any Person designated by the
Administrative Agent to issue or honor drawings under the Continuing Term
Letters of Credit), (iii) all accrued and unpaid fees and costs set forth in the
Credit Agreement and in every other Loan Document have been paid in full in cash
to the Administrative Agent, and (iv) all other Obligations (including the Fifth
Amendment Obligations), other than those arising from indemnities for which no
request has been made then owing, have been paid in full.

     

    ARTICLE
TWO

     

    ESTABLISHMENT
OF ACCOUNT, ETC.

     

    Section 2.01  Establishment
of Account:  The Administrative Agent has established in its
own name and for the benefit of the Secured Parties an account (Account No.
406-99-776, Account Name:  Morgan Stanley Senior Funding, Inc. (the
“Account”) for
purposes of this Agreement, which Account is maintained at Citibank,
N.A.  The Account is maintained by the Administrative Agent, titled in
the name of the Administrative Agent, and is under the sole dominion and control
of the Administrative Agent and the Collateral Agent for the benefit of the
Secured Parties.  The Administrative Agent and the Collateral Agent
shall have the sole right to make and authorize withdrawals of Cash Collateral
from the Account and to exercise all rights with respect to the Cash Collateral
from time to time therein pursuant to, and in accordance with the terms of, this
Agreement.  Unless and until released to JRCC on behalf of the Credit
Parties in accordance with the requirements of Article Four hereof, title to the
Account and the Cash Collateral will remain with the Administrative
Agent.  All Cash Collateral delivered to or held by the Administrative
Agent or the Collateral Agent pursuant hereto shall be held in the Account in
accordance with the provisions hereof.

     

    Section 2.02  Deposits
to the Account; Withdrawals from the
Account:  (a)  On the date hereof, JRCC has
transferred on behalf of the Credit Parties the Fifth Amendment Date Cash
Collateral Amount to the Account.  In addition, on any date on which
the Administrative Agent notifies JRCC in writing that the aggregate amount of
the Cash Collateral is less than 105% of the maximum amount available to be
drawn at such time under each of the Continuing Term Letters of Credit, JRCC, on
behalf of the Credit Parties, shall within one (l) Business Day of receipt of
such notice from the Administrative Agent, deposit additional Dollars into the
Account in an amount equal to such deficiency.

     

    
      
         

      

      
        C-3-3

        
          

        

      

      
         

      

    

    (b)         Without
in any manner modifying the Credit Parties’ obligations to pay the Obligations
(including the Fifth Amendment Obligations) in accordance with the terms and
conditions set forth in the Credit Agreement or any other Loan Document and
without in any manner modifying the Collateral Agent’s or the other Secured
Parties’ right of recourse against the Credit Parties in respect of the Fifth
Amendment Obligations, each of the Administrative Agent and the Collateral Agent
agrees that it will only withdraw Cash Collateral from the Account (and each
Credit Party hereby irrevocably authorizes the Administrative Agent and the
Collateral Agent to withdraw Cash Collateral from the Account), (i) to reimburse
(without duplication) the Administrative Agent and the L/C Issuer (or any Person
designated by the Administrative Agent to issue or honor drawings under the
Continuing Term Letters of Credit) for any drawings honored under the Continuing
Term Letters of Credit as would otherwise be required pursuant to the Credit
Agreement or any other Loan Document, (ii) on any day on which the Credit
Parties are obligated to pay any fees or other costs in respect of the
Continuing Term Letters of Credit which are due and owing to the L/C Issuer, to
pay (without duplication) to the Administrative Agent the amount of such fees or
other costs then due and owing, in each case as would otherwise be required
pursuant to the Credit Agreement or any other Loan Document and (iii) to
reimburse the Secured Parties or any Indemnitee for any other Fifth Amendment
Obligations (including pursuant to Article Seven hereof).  The
Administrative Agent shall notify JRCC within 10 Business Days following any
withdrawal pursuant to this Section 2.02(b);
provided that
the failure to give any such notice shall in no way affect, impair or diminish
the rights of the Secured Parties under this Agreement, the Credit Agreement or
any other Loan Document.

     

    Section 2.03   Investment
of Funds Deposited in the Account:  The Account shall be a
non-interest bearing account.  Neither the Administrative Agent nor
the Collateral Agent shall have any responsibility to the Credit Parties for any
decrease in the value of the Cash Collateral in the Account or for any loss
resulting from the investment of the Cash Collateral deposited therein; except
to the extent that such loss is determined by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Administrative Agent or the Collateral
Agent.  The Cash Collateral on deposit in the Account shall be
maintained as cash on deposit or shall only be invested in Cash Equivalents
reasonably acceptable to Borrowers.

     

    ARTICLE
THREE

     

    GRANT
OF SECURITY INTEREST, ETC.

     

    Section 3.01  Grant of
Security Interest, etc.:  As security for the payment and
performance all of the Obligations (including the Fifth Amendment Obligations),
each Credit Party hereby pledges, transfers and assigns to the Administrative
Agent and the Collateral Agent, for the benefit of the Secured Parties, a first
priority Lien and security interest and a right of setoff against the Account
and all amounts contained therein or credited thereto, including the Fifth
Amendment Date Cash Collateral Amount, and all products, proceeds and profits in
or from such Account or the amounts therein or credited thereto and each
Borrower and each Guarantor agrees that the Account shall be in the name of and
under the sole and exclusive dominion and control of the Administrative Agent or
the Collateral Agent until released in accordance with the terms of the
Amendment and this Agreement.

     

    
      
         

      

      
        C-3-4

        
          

        

      

      
         

      

    

    

    Section 3.02  Further
Assurances:  Each Credit Party agrees that it will, at any time
and from time to time, at its expense, promptly execute and deliver all further
agreements, instruments and other documents and take all further action that may
be necessary or that the Administrative Agent or the Collateral Agent may
reasonably request in order to better perfect and protect the first priority
security interest purported to be created hereby or otherwise to enable the
Administrative Agent and the Collateral Agent to exercise and enforce their
rights and remedies hereunder (including, without limitation, any filings of
financing or continuation statements under the Uniform Commercial Code of the
State of New York and any action as may be requested from time to time by the
Collateral Agent so that “control” (as defined in Section 8-106 of the Uniform
Commercial Code as in effect in the State of New York on the date hereof) of the
Account and all the Cash Collateral of the type over which the Collateral Agent
may obtain such “control” is obtained).

     

    Section 3.03  Appointment
as Attorney-In-Fact:  To permit the Administrative Agent and
the Collateral Agent to carry out the terms of this Agreement and to exercise
their rights and remedies under this Agreement, the Credit Parties hereby
irrevocably appoint each of the Administrative Agent and the Collateral Agent as
their attorney-in-fact, with full authority in the place and stead of the Credit
Parties and in the name of the Credit Parties or otherwise, from time to time in
the Collateral Agent’s sole discretion to execute any instrument and to take any
other appropriate action which the Administrative Agent or the Collateral Agent
may deem reasonably necessary or advisable to accomplish the purposes of this
Agreement or to facilitate the assignment or other transfer by the
Administrative Agent or the Collateral Agent of any or all of its rights
hereunder, including, without limitation, (i) to receive, endorse and collect
all instruments made payable to the Credit Parties and representing any interest
payment or other distribution in respect of the Account or the Cash Collateral
and to give full discharge for the same, and (ii) to execute and deliver any and
all instruments and other documents that the Administrative Agent or the
Collateral Agent may reasonably request in connection with the exercise by the
Secured Parties of any or all of their rights hereunder.

     

    ARTICLE
FOUR

     

    TERMINATION;
RELEASE

     

    At the
request of the Credit Parties made on or after the Termination Date and upon
delivery by the Credit Parties of a general release for the benefit of the
Secured Parties in form and substance reasonably acceptable to the
Administrative Agent, the Collateral Agent and the Administrative Agent, at the
expense of the Credit Parties, will (x) execute and deliver to the Credit
Parties a proper instrument or instruments acknowledging the satisfaction and
termination of this Agreement and the security interest created hereby and (y)
except to the extent that Cash Collateral have been applied as provided in Section 2.02(b)
hereof, transfer all remaining Cash Collateral on deposit in the Account (if
any) to an account or accounts designated by the Revolving Loan Agent on behalf
of the Credit Parties, or in the absence of such instructions from the Revolving
Loan Agent, to JRCC on behalf of the Credit Parties.  Any transfer and
release of the Account or the Cash Collateral (or any other Collateral) by the
Secured Parties pursuant to this Article Four shall be made without recourse,
representation or warranty whatsoever.

     

    
      
         

      

      
        C-3-5

        
          

        

      

      
         

      

    

    

     

    ARTICLE
FIVE

     

    REPRESENTATIONS
AND WARRANTIES; COVENANTS

     

    Each
Credit Party represents and warrants to the Secured Parties that:  (a)
this Agreement has been duly authorized, executed and delivered by each Credit
Party and constitutes a legal, valid and binding obligation of each Credit Party
enforceable in accordance with its terms; (b) the pledge, assignment and
granting of a security interest in the Account and the Cash Collateral pursuant
to this Agreement creates, and upon the deposit in the Account of any other Cash
Collateral pursuant to this Agreement will create, a valid and perfected first
priority security interest in all of each Credit Party’s right, title and
interest (if any) in and to the Account and the Cash Collateral so deposited, as
the case may be, and the proceeds thereof subject to no other lien or
encumbrance or to any other agreement purporting to grant any party other than
the Secured Parties any lien or encumbrance on property or assets of the Credit
Parties which would include the Account or the Cash Collateral, in each case
which would be senior in right or preference to the security interests granted
hereby, and no financing statements under the Uniform Commercial Code or other
filings are required to be made in connection with the foregoing or to perfect
the security interests created hereby; (c) no consent of any other party
(including, without limitation, any stockholder or creditor of any of the Credit
Parties) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with
(except, in each case, as have been obtained or made on or prior to the date
hereof), any governmental authority is required to be obtained in connection
with the execution, delivery or performance of this Agreement; and (d) the
execution, delivery and performance of this Agreement will not violate any
provision of any applicable law or regulation or of any order, judgment, writ,
award or decree of any court, arbitrator or governmental authority, domestic or
foreign, or of the organizational documents of any of the Credit Parties or of
any securities issued by any of the Credit Parties, or of any material
agreement, contract or other instrument to which any Credit Party is a party or
which purports to be binding upon any Credit Party or upon any Credit Party’s
assets and will not result in the creation or imposition of (or the obligation
to create or impose) any lien or encumbrance on any of the assets of any Credit
Party except as contemplated by this Agreement.  Each Credit Party
covenants and agrees that (a) it will not (i) sell, assign (by operation of law
or otherwise) or otherwise dispose of any interest hereunder or that any Credit
Party may purport to have in respect of the Account or the Cash Collateral or
(ii) create or suffer to exist any Lien upon or with respect to any interest
hereunder or that any Credit Party may purport to have in respect of the Account
other than a Permitted Encumbrance that is junior in right or preference to the
security interests granted hereby and (b) it will defend the Administrative
Agent’s and the Collateral Agent’s right, title and interest in and to the
Account and the Cash Collateral for the benefit of the Secured Parties (or the
Administrative Agent’s and the Collateral Agent’s right, title and security
interest in and to the Account and the Cash Collateral and the proceeds thereof)
against the claims and demands of all Persons whomsoever.

     

    
      
         

      

      
        C-3-6

        
          

        

      

      
         

      

    

    ARTICLE
SIX

     

    RESPONSIBILITIES
OF THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

     

    Neither
the Administrative Agent, the Collateral Agent nor any of their respective
directors, officers, agents, employees, affiliates, representatives or agents
shall be liable (i) for any failure to invest or reinvest the Cash Collateral in
the Account in any manner whatsoever, (ii) for any loss of any or all of the
Cash Collateral in the Account or (iii) for any action taken or omitted to be
taken by any Secured Party (x) in accordance with the advice of counsel with
respect to any question as to the construction of any provision hereof or any
action to be taken by the Administrative Agent or the Collateral Agent
hereunder, (y) in accordance with any instructions or other notice which the
Administrative Agent or the Collateral Agent believes in good faith to be
properly given by the Credit Parties hereunder or (z) in the absence of gross
negligence or willful misconduct of the Administrative Agent and the Collateral
Agent (as determined by a court of competent jurisdiction in a final and
non-appealable decision).

     

    ARTICLE
SEVEN

     

    INDEMNITY

     

    Section 7.01 Indemnity:  (a)  Each
Credit Party agrees to indemnify, reimburse and hold each Secured Party and
their respective successors, permitted assigns, employees, agents and servants
(hereinafter in this Section 7.01 referred
to individually as “Indemnitee” and,
collectively as “Indemnitees”)
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including reasonable attorneys’ fees and expenses)
(for the purposes of this Section 7.01 the
foregoing are collectively called “expenses”) of whatsoever kind and nature
imposed on, asserted against or incurred by any of the Indemnitees in any way
relating to or arising out of this Agreement or any other document executed in
connection herewith or in any other way connected with the establishment,
maintenance and administration of the Account or the transactions contemplated
hereby or thereby or the enforcement of any of the terms of, or the preservation
of any rights under any thereof, or in any way relating to or arising out of the
control, possession, disposition, or use of the Account or the Cash Collateral;
provided that
no Indemnitee shall be indemnified pursuant to this Section 7.01(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee (as determined by a final and
non-appealable judgment of a court of competent jurisdiction).  The
provisions of this Article Seven shall in no way limit the indemnification
obligations under the Credit Agreement or any other Loan Document, or the right
of the Secured Parties to such indemnification under the Credit Agreement or any
other Loan Document.

     

    
      
         

      

      
        C-3-7

        
          

        

      

      
         

      

    

    (b)            Without
limiting the application of Section 7.01(a)
hereof, the Credit Parties agree to pay, or reimburse the Administrative Agent
and the Collateral Agent for any and all reasonable fees, costs and expenses of
whatever kind or nature incurred (including the fees and expenses of its
counsel) in connection with the establishment, maintenance and operation of the
Account and the creation, preservation or protection of the Administrative
Agent’s and the Collateral Agent’s Liens on, and security interest in, the
Account and the Cash Collateral for the benefit of the Secured Parties,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Account and the Cash
Collateral and all other fees, costs and expenses in connection with protecting
or maintaining the Account, the Cash Collateral and the Secured Parties’
interest therein and protecting, maintaining or preserving the Account and the
Cash Collateral and the Secured Parties’ interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Account and the Cash
Collateral.

     

    (c)            Without
limiting the application of Section 7.01(a) or
(b) hereof, the
Credit Parties agree to pay, indemnify and hold each Indemnitee harmless from
and against any loss, costs, damages and expenses which such Indemnitee may
suffer, expend or incur in consequence of or growing out of any
misrepresentation by the Credit Parties in this Agreement or in any writing
contemplated by, made or delivered by the Credit Parties pursuant to or in
connection with, this Agreement.

     

    (d)            If
and to the extent that the obligations of the Credit Parties under this Section 7.01 are
unenforceable for any reason, the Credit Parties hereby agree to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.

     

    Section 7.02  Indemnity
Obligations Secured by the Account and Cash Collateral;
Survival:  Any amounts paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Fifth Amendment
Obligations secured by the Account and the Cash Collateral.  The
indemnity obligations of the Credit Parties contained in this Article Seven
shall continue in full force and effect notwithstanding the occurrence of the
Termination Date.

     

    ARTICLE
VIII

     

    GENERAL

     

    Section 8.01  Headings:  The
headings in the Articles and Sections of this Agreement are inserted for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.

     

    Section 8.02  
 Successors
and Assigns:  All of the covenants, warranties, undertakings
and agreements of any Credit Party hereunder shall bind all Credit Parties and
their respective successors or assigns and shall inure to the benefit of the
Secured Parties and their respective successors and assigns; provided that the
Credit Parties may not assign or transfer any of their respective rights or
obligations hereunder without the prior written consent of the Collateral Agent
and the Administrative Agent; provided, however
that no such assignment shall relieve the Credit Parties of their obligations
hereunder if such assignee does not perform such obligations.

     

    
      
         

      

      
        C-3-8

        
          

        

      

      
         

      

    

    Section 8.03   Governing
Law:  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SAID STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.  In addition, and notwithstanding any agreement among the
parties to the contrary, the Credit Parties’ jurisdiction for purposes of
Article 9 of the Uniform Commercial Code as in effect in the State of New York
is the State of New York.

     

    Section 8.04  Counterpart
and Facsimile:  This Agreement may be executed in any number of
several counterparts, all of which shall be deemed to constitute but one
original and shall be binding upon all parties, their successors and permitted
assigns.  Delivery of an executed signature page of this Agreement by
facsimile transmission or electronic transmission shall be as effective as
delivery of a manually executed counterpart hereof.

     

    Section 8.05  No Third
Party Beneficiaries:  This Agreement is solely for the benefit
of the parties signatory hereto, their successors and permitted
assigns.  No waiver, consent or amendment pursuant to this Agreement
may be relied upon by any third parties.

     

    Section 8.06  Notices:  Any
notice or other communication to be given or made to a party hereto shall be
made or given as set forth in the Credit Agreement.

     

    Section 8.07  No
Waiver, etc.:  No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege hereunder preclude or require any other or future exercise thereof or
the exercise of any other right, power or privilege.  All rights,
powers and remedies granted to the Secured Parties hereunder and under all other
agreements, instruments and documents executed in connection with this
Agreement, the Credit Agreement or any other Loan Document shall be cumulative,
may be exercised singly or concurrently and shall not be exclusive of any rights
or remedies provided by law.  Time is of the essence of this
Agreement.

     

    Section 8.08   Severability
of Provisions:  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.  To the
extent permitted by applicable law, each Credit Party hereby waives any
provision of law that renders any provision hereof prohibited or unenforceable
in any respect.

     

    Section 8.09  Amendment
and Waiver:  None of the terms and conditions of this Agreement
may be waived, changed, modified or varied in any manner whatsoever unless in
writing duly signed by each party hereto.

     

    
      
         

      

      
        C-3-9

        
          

        

      

      
         

      

    

    Section
8.10                      Survival:  For
the avoidance of doubt and notwithstanding anything to the contrary set forth
herein or in the Credit Agreement, the parties hereto acknowledge that so long
as the Continuing Term Letters of Credit and any Obligations relating thereto
(including, without limitation, any unpaid drawings thereunder) shall remain
outstanding, all obligations of the Credit Parties under the Credit Agreement
relating to the payment of any amounts owing with respect to the Continuing Term
Letters of Credit and any Obligations relating thereto shall remain in full
force and effect, together with all indemnity, expense and similar provisions
contained therein.

     

    Section
8.11                      Loan
Document: This Agreement and all other documents executed in connection
herewith shall be deemed to be Loan Documents for all purposes under the Credit
Agreement.

     

    *    *    *

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        C-3-10

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed by their respective
officers or representatives thereunto duly authorized, as of the date first
above written.

     

    

     

    
      	
              BORROWERS:

               

            
	
              JAMES
      RIVER COAL COMPANY

               

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JAMES
      RIVER COAL SERVICE COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              LEECO,
      INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              TRIAD
      MINING, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

    
      
         

      

      
        C-3-11

        
          

        

      

      
         

      

    

    

    
      	
              TRIAD
      UNDERGROUND MINING, LLC

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              BLEDSOE
      COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK ELKHORN COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JAMES
      RIVER COAL SALES, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              BLEDSOE
      COAL LEASING COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

    

    

    
      
         

      

      
        C-3-12

        
          

        

      

      
         

      

    

    

    
      	
              BLUE
      DIAMOND COAL COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              MCCOY
      ELKHORN COAL CORPORATION

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              GUARANTORS:

               

            
	
              BDCC
      HOLDING COMPANY, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              EOLIA
      RESOURCES, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

    
      
         

      

      
        C-3-13

        
          

        

      

      
         

      

    

    

     

     

    
      	
              SHAMROCK
      COAL COMPANY, INCORPORATED

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK COAL COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              JOHNS
      CREEK PROCESSING COMPANY

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        C-3-14

        
          

        

      

      
         

      

    

    

    
      	
              ADMINISTRATIVE AGENT

               

            
	
              MORGAN
      STANLEY SENIOR FUNDING, INC.

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

               

               

            
	
              COLLATERAL AGENT

               

            
	
              MORGAN
      STANLEY & CO. INCORPORATED

               

            
	
              By:
      ______________________________________

            
	
              Name:

            
	
              Title:

            

    

    

     

     

     

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        C-3-15viaspace_s1a6-ex1011.htm

 

    
      

    

    Exhibit
10.11

    

    AMENDMENT
NO. 4 TO SECURITIES PURCHASE FAGREEMENT

    

    This
AMENDMENT NO. 4 TO THE SECURITIES PURCHASE AGREEMENT (this “Amendment”) is made
as of November 21, 2009 (the “Effective Date”), by and among VIASPACE Inc., a
Nevada corporation (“Parent”), VIASPACE Green Energy Inc., a British Virgin
Islands international business company and a wholly-owned subsidiary of Parent
(“Acquirer”), Sung Hsien Chang, an individual (“Shareholder”), and China Gate
Technology Co., Ltd., a Brunei Darussalam company  (“Licensor”), with
respect to the following facts:

     

    A. The
parties entered into that certain Securities Purchase Agreement, dated as of
October 21, 2008 (as amended by that Amendment No. 1 to Securities Purchase
Agreement dated on or about June 17, 2009, that Amendment No. 2 to Securities
Purchase Agreement dated on or about August 21, 2009, and that Amendment No. 3
to Securities Purchase Agreement dated on or about October 13, 2009 the
“Agreement”), pursuant to which, among other things, Acquirer acquired from
Shareholder a controlling interest in Inter-Pacific Arts Corp., a British Virgin
Islands international business company (“IPA BVI”) in exchange for its shares
and shares of the Parent.  Capitalized terms not defined herein shall
have the meanings given such terms in the Agreement.

     

    B. The
parties desire to amend the Agreement to extend certain deadlines.

     

    NOW,
THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to amend the Agreement as follows:

     

    1. Amendment.

     

    1.1           Section
2.3 of the Agreement is hereby amended to read in full as follows:

     

    “2.3                 Second
Closing.  The Second Closing shall be held at the RP Office on
the date at or before November 26, 2009 (the “Second Closing Deadline”) or at
such date that Parent, Acquirer, Shareholder and Licensor may agree in writing
(the “Second Closing Date”).  If Acquirer’s Registration Statement is
declared effective by the SEC on or before November 26, 2009, the Second Closing
Deadline will be extended until December 26, 2009.”

     

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    2. Miscellaneous.

     

    2.1           Effect of
Amendment.  Except to the extent the Agreement is modified by
this Amendment, the remaining terms and conditions of the Agreement shall remain
unmodified and be in full force and effect.  In the event of conflict
between the terms and conditions of the Agreement and the terms and conditions
of this Amendment, the terms and conditions of this Amendment shall
prevail.

     

    2.2           Counterparts.  This
Amendment may be executed in one or more counterparts, including facsimile
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute the same Amendment.

     

    2.3           Applicable
Law.  This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of California without regard
to conflicts of law principles.

     

    [signature
page follows]

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    IN
WITNESS WHEREOF, the parties have executed this Amendment No. 4 to the
Securities Purchase Agreement as of the date first above written.

     

     

     

    VIASPACE,
INC.

     

    By: /s/
Carl Kukkonen

     

    Carl
Kukkonen

    Chief
Executive Officer

     

     

    VIASPACE
GREEN ENERGY, INC.

     

    By: /s/
Carl Kukkonen

     

    Carl
Kukkonen

    Chief
Executive Officer

     

     

    SUNG
HSIEN CHANG

     

    /s/ Sung Hsien
Chang

     

     

    CHINA
GATE TECHNOLOGY CO., LTD.

     

    By:
________________________________

    Maclean
Wang

    Chief
Executive Officer

     

     

     

    
      
         

      

      
        3

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