AMENDMENT NO. 3 AND WAIVER

Exhibit 10.13

AMENDMENT NO. 3 AND WAIVER

AMENDMENT No. 3 AND WAIVER (this "Amendment and Waiver") dated as of November 7, 2006, to the CREDIT AGREEMENT dated as of May 3l, 2005, as amended by that certain Amendment No. 1 and Waiver dated February 22, 2006, as further amended by that certain Amendment No. 2 and Waiver dated May 30, 2006 (as may be further amended, restated, modified or replaced, the "Credit Agreement"), among JAMES RIVER COAL COMPANY (the "Borrower"), the LENDERS from time to time party thereto, PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent.

A. Pursuant to the Credit Agreement, the Lenders have extended credit to the Borrower, and have agreed to extend credit to the Borrower, in each case pursuant to the terms and subject to the conditions set forth therein.

B. The Borrower has requested that the Lenders agree to waive and amend certain provisions of the Credit Agreement, in each case pursuant to the terms and subject to the applicable conditions set forth herein.

C. The undersigned Lenders are willing, pursuant to the terms and subject to the applicable conditions set forth herein, to grant such waivers and approve such amendments.

D. Capitalized terms used but not defined herein shall have the respective meanings assigned to them in the Credit Agreement (as amended hereby).

Accordingly, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the applicable conditions set forth herein, the parties hereto hereby agree as follows:

SECTION 1. Waivers . Subject to the applicable conditions set forth herein, the undersigned Lenders hereby waive compliance with Sections 6.12 [Fixed Charge Covenant Ratio], Section 6.13 [Leverage Ratio] and Section 6.14 [Senior Secured Leverage Ratio] for the period from September 30, 2006, to and including December 30, 2006.

SECTION 2. Amendment of the Definition of Applicable Rate . The defined term "Applicable Rate" contained in Section 1.01 [Defined Terms] of the Credit Agreement is amended by adding the following sentence at the end of the definition thereto:

"Notwithstanding anything herein to the contrary, from October 1, 2006 and thereafter, the Applicable Rate with respect to the Loan ABR Spread shall be 2.50% and the Applicable Rate with respect to the Loan Eurodollar Spread shall be 3.50%."

SECTION 3. Amendment of the Definition of Pro Forma Basis . The defined term "Pro Forma Basis" contained in Section 1.01 [Defined Terms] of the Credit Agreement is amended by replacing the phrase "Sections 6.12, 6.13, 6.14 and 6.15" with the phrase "Sections 6.12, 6.13, 6.14, 6.15, 6.18 and 6.19."

SECTION 4. Amendment of Section 1.01[Defined Terms] . Section 1.01 [Defined Terms] of the Credit Agreement is amended by inserting the following new definition into Section 1.01 in alphabetical order thereto:

"" Liquidity " means the sum of the Borrower’s liquid assets at any time in the form of (a) cash on hand, (b) cash equivalents, (c) marketable securities traded on a national exchange or on NASDAQ and (d) the difference between the Revolving Commitment and the Revolving Exposure."

SECTION 5. Amendment of Section 2.12(c) . Section 2.12(c) is amended by adding the following sentence at the end of the paragraph:

"Notwithstanding anything contrary contained in the Credit Agreement, the interest rate referenced in Section 2.12(c)(i)(a) shall increase to 3.50% for the period commencing on October 1, 2006 and thereafter."

SECTION 6. Amendment of Article VI [Negative Covenants] . Article VI [Negative Covenants] of the Credit Agreement is hereby amended by adding the following Section 6.18 thereto:

"SECTION 6.18. Minimum Consolidated EBITDA . The Borrower shall generate Consolidated EBITDA in an amount greater than or equal to $8,000,000 for the fiscal quarter ending September 30, 2006."

SECTION 7. Amendment of Article VI [Negative Covenants] . Article VI [Negative Covenants] of the Credit Agreement is hereby amended by adding the following Section 6.19 thereto:

"SECTION 6.19. Minimum Liquidity . The Borrower shall not permit Liquidity to be less than $7,500,000.00 at any time, including on a Pro Forma Basis prior to the Borrower making the December 1, 2006 interest payment on the Senior Notes."

SECTION 8. Representations and Warranties . The Borrower represents and warrants to the Administrative Agent and the Lenders that:

(a) This Amendment and Waiver has been duly authorized, executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ fights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

(b) None of the execution, delivery or performance by the Borrower of this Amendment and Waiver or the compliance by the Borrower with the terms and provisions hereof (i) will contravene any material provision of any applicable law, statute, rule or regulation, or any order, writ, injunction or decree of any Governmental Authority, (ii) will conflict or be inconsistent with, or result in any breach of, any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of Borrower or any of its respective Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, credit agreement or any other material agreement or instrument to which Borrower or any of its respective Subsidiaries is a party or by which Borrower or any of its respective Subsidiaries or any of the property or assets of Borrower or any of its respective Subsidiaries are bound or to which Borrower or any of its respective Subsidiaries may be subject or (iii) will violate any provision of the certificate or articles of incorporation, by-laws, certificate of partnership, par