Vice President of Sales Employment Agreement

AMENDED EMPLOYMENT AGREEMENT


This Amended Employment Agreement (hereinafter referred to as "Agreement") entered into as of September 16, 2004, by and between National Coal Corporation, a corporation organized and existing under the laws of the State of Tennessee with its principal place of business at 8915 George Williams Road, Knoxville, Tennessee 37923 (hereinafter referred to as "Company"), and Joseph Davis, Jr. residing at ________________ Knoxville, Tennessee 37___ (hereinafter referred to as "Employee").


WITNESSETH:


WHEREAS, the Company desires to hire the Employee to fill the position of Vice President of Sales; and


WHEREAS, the Employee desires to fill the position in the Company as Vice President of Sales; and


WHEREAS, the parties have determined it to be in their respective best interests to enter into this Employment Agreement.


NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter set forth, and of other good and valuable consideration, the receipt of which is hereby acknowledged by each party to the other, the parties hereto agree as follows:


SECTION 1: POSITION AND DUTIES


1.1 EMPLOYMENT. The Company hereby employs Employee and Employee accepts employment as Vice President of Sales of the Company.


1.2 DUTIES.


a. During the term of his employment pursuant to this Agreement, Employee shall serve the Company faithfully and to the best of his ability and shall devote his business and professional time, energy, and diligence to the performance of the duties of such position and he shall perform such services and duties in connection with the business and affairs of the Company (i) as are customarily incident to such position and (ii) subject to Section 1.2(b) hereof, as may reasonably be assigned or delegated to him from time to time by the Board of Directors or President of the Company.


b. Notwithstanding the foregoing, Employee shall be principally responsible for and shall have full power and authority to perform all duties incidental to sales and purchasing of coal for the Company.


1.3 TERM OF EMPLOYMENT. Unless earlier terminated pursuant to the provisions hereof, the initial term of Employee's employment under this Agreement shall be for the period beginning as of the date hereof and ending two (2) years from April 19, 2004. Said term shall be automatically renewed


thereafter for successive two-year terms unless the Board of Directors of the Company or any successor entity provides Employee with written notice that the Agreement will not be renewed (Notice of Non-Renewal) no later than 120 days prior to the expiration of the then-current term. Notwithstanding the foregoing, in the event a Change in Control (as defined below) occurs during the then-current term, the term of this Agreement shall not end prior to the first anniversary of such Change in Control.


SECTION 2: COMPENSATION. BENEFITS AND OTHER ENTITLEMENTS


2.1 BASE SALARY.


a. As compensation for his services hereunder and as consideration for his covenant not to compete provided for in Section 4 hereof, Employee shall be paid a base annual salary at the rate of One Hundred Twenty Thousand and 00/00 Dollars ($120,000.00) per year, which rate of compensation shall be in effect from the Effective Date until two years after the Effective Date of this Agreement. Thereafter, the base annual salary shall be at the rate determined in good faith by the Company's Board of Directors at the Board's regularly scheduled meeting next following the end of each fiscal year or upon any special meeting, based upon the Company's review of Employee's performance during the preceding fiscal year or lesser period, but shall not be reduced below the base annual salary in effect at the end of the immediately preceding fiscal year. The base annual salary shall be payable at such periodic intervals, not less than semi-monthly, as from time to time are applicable with respect to salaried executive personnel of the Company, and shall be inclusive of all applicable income taxes, Social Security, and other taxes and charges that are required by law to be withheld by the Company or that are requested to be withheld by Employee.


b. If Employee's base annual salary is hereafter increased by the Board of Directors, it shall not thereafter be reduced below a figure equal to the amount of base annual salary in effect immediately prior to such increase, together with an amount equal to the product of (x) the amount of base annual salary in effect immediately prior to such increase, multiplied by (y) the percentage increase in the consumer price index in Nashville, Tennessee to the last day of the fiscal year preceding any such reduction.


2.2 BONUS. For each full fiscal year during which Employee is employed as the Company's Vice President of Sales pursuant to this Agreement, commencing with the fiscal year ending on December 31, 2004, Employee shall be eligible, at the discretion of the Board of Directors, to receive a cash bonus in an amount to be determined in good faith by the Board of Directors, which bonus shall be payable in a lump sum on or before December 31 of each year or at quarterly intervals as approved by the Board of Directors of the Company .


2.3 INSURANCE. The Company shall provide to Employee the standard package of family insurance benefits which are from time to time provided to other executive employees, including medical, dental and major medical insurance coverage.


2.4 OTHER BENEFITS. The Company shall provide Employee the following additional benefits:


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a. Reimbursement of all reasonable expenses incurred for Company
business, provided the same are of a type which are allowable for
deductions under applicable federal tax law.


b. Paid vacation of two (2) weeks per year, or such greater
amount as may be permitted from time to time by the Company's vacation
policy, to be taken at such time as selected by Employee. If Employee
does not use at least one (1) week's vacation in any fiscal year of the
Company, Employee shall be entitled, at her option by notice to the
Company no later than (10) days after the end of such fiscal year, to
add any and all unused vacation days to the paid vacation permitted
under this Agreement for the following fiscal year.


c. Employee shall be entitled to short-term medical leave
benefits for up to three months for time out of work due to a
psychological or physical illness, injury, or condition. Such benefits
shall include full pay to Employee for any leave which is due to
medical or psychological conditions as supported by appropriate written
verification from Employee's treating medical or
psychological/psychiatric professional.


d. A Company owned and maintained automobile suitable to
Employee's position and appropriate for the performance of his duties,
such automobile to be replaced at appropriate intervals.


e The use of a Company owned cellular phone, which cellular
phone shall remain the personal property of the Company and shall be
returned to the Company by the Employee promptly upon his leaving
employment with the Company or upon his employment being terminated by
the Company as herein provided. The Company reserves the right to
discontinue this benefit for excessive misuse of the cellular phone in
the Company's own discretion, and the Employee shall have the same
obligation to promptly return said cellular phone into the possession
of the Company.


f. A moving expense allowance in the amount of Ten Thousand and
00/00 Dollars ($10,000.00), which amount was paid upon execution of
this Employment Agreement on April 19, 2004 (before amended).


g. As a signing bonus, an award of an option to purchase Fifty
Thousand (50,000) shares of common stock of National Coal Corp. under
the terms and conditions set forth in the 2004 National Coal Corp.
Option Plan.


h. In addition to the benefits bestowed upon Employee in this
Agreement, Employee shall be entitled to participate in and enjoy
benefits as are generally extended to employees serving in an executive
capacity, including any capacity similar to that of Employee, in
accordance with the Company's customary practices and policies.


SECTION 3: TERMINATION OF EMPLOYMENT


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3.1 DEATH. Employee's employment hereunder shall be terminated upon his death.


3.2 DISABILITY. If due to physical or mental disability, Employee is not able to perform his material duties hereunder on a full-time basis for a period of four (4) months (whether consecutive or not" within any twelve (12)-month period, the Company may terminate his employment hereunder for "Disability." The determination of "disability" shall be based upon a certificate as to such physical or mental disability issued by a licensed physician and/or psychiatrist (as the case may be) mutually agreed upon by the Employee and the Company.


3.3. BY THE COMPANY FOR "CAUSE". The Company, upon a majority vote of the Board of Directors after notice to Employee (as described below) and advice of independent legal counsel, may terminate Employee's employment immediately for "Cause," which shall mean and be limited to the following:


i. Habitual and continued unavailability to act or respond on
behalf of the Company;


ii. Willful misconduct or fraud;


iii. Conviction, by a court of competent jurisdiction, of a felony
(whether or not committed during the term hereof or in the course of
employment hereunder);


iv. Willful, continued, and material failure to observe or perform
the duties of his employment hereunder; and


v. Willfully acting in a manner materially adverse to the best
interests of the Company.


With regard to Section 3.3, Company shall first provide Employee with 45 days written notice of such alleged misconduct, including a specific description of such breach, failure, or neglect of duty or obligation sufficient to allow Employee an opportunity to correct such noted problems. Employee shall not be terminated under paragraph 3.3 unless, after the notice period expires, Employee continues to fail to satisfactorily perform his duties. Prior to any vote regarding misconduct, Employee will be given the opportunity to appear before the Board, with his legal counsel, to present any relevant information he believes the Board should consider in making such a decision.


3.4 CHANGE IN CONTROL. Employee's employment may be terminated by either the Company or Employee in the event of a Change in Control, which shall, for purposes of this Agreement, be defined as set forth in the attached Exhibit A, which is incorporated herein by reference; provided, however, that in the case ...