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General Counsel Employment Agreement

This is an actual contract by National Coal.

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Sectors: Metals and Mining
Governing Law: Tennessee, View Tennessee State Laws
Effective Date: May 03, 2004
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This Employment Agreement, as amended, (hereinafter referred to as "Agreement") entered into as of May 3, 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 319 Ebenezer Road, Knoxville, Tennessee (hereinafter referred to as "Company"), and Charles W. Kite residing at 9925 Tierra Verde Drive, Knoxville, Tennessee 37922 (Employee).


WHEREAS, the Company desires to hire the Employee to fill the position of General Counsel; and

WHEREAS, the Employee desires to fill the position in the Company as General Counsel; 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:


1.1 EMPLOYMENT. The Company hereby employs Employee and Employee accepts employment as General Counsel 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 the legal representation of the Company.

c. Notwithstanding the foregoing, it is understood that Employee shall continue to provide services to the law firm of Kite, Bowen & Associates, P. A., and that the performance of such services shall not be used as a basis for termination under Section 3.1 and shall not constitute a breach of the Employee's representations or obligations under Section 6.9.

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 of two (2) years commencing with the date of this Agreement. 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.


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 the end of the initial term set forth in Section 1.3 hereof. 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 General Counsel pursuant to this Agreement, commencing with the fiscal year ending on December 31, 2004, Employee shall be paid an annual cash bonus in an amount to be determined in good faith by the Board of Directors but not more than an amount equal to fifty percent (50%) of the base amount of Employee's salary, which bonus shall be payable in a lump sum on or before December 30 of each year.

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 and major medical insurance coverage.

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


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 four (4) 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 two (2) weeks' 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. The payment of the Employee's annual professional privilege taxes to the State of Tennessee, the payment on behalf of the Employee of the costs of all continuing legal education courses necessary to keep the Employee's law license in good standing or other continuing education courses deemed desirable by the Employee to aid in her work (exclusive of travel expenses) all of which, combined, shall not to exceed $1,500.00 per year, and the payment of all professional liability insurance.

e. 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.

f. 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.

g. As a signing bonus, an award of an option to purchase Four Hundred Thousand (400,000) 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.

i. In addition to the other benefits provided to the Employee in this Agreement, the Company agrees that the Company paid "key man life insurance" shall upon the Employee's


death be distributable fifty percent (50%) to the Company and fifty (50%) to the Employee's heirs as he may direct in writing to the Company.


3.1 TERMINATION BY COMPANY. The Company shall have the right to terminate Employee's employment at any time upon the occurrence of any one of the following events:

a. Employee's death or the inability of Employee to adequately perform his duties as General Counsel, as determined in good faith by the Company's Board of Directors, for more than ninety (90) consecutive days as a result of the mental or physical illness or condition of Employee; or

b. Conduct of Employee in connection with his employment hereunder involving any of the following, other than by reason of mental or physical illness or condition and as determined by a majority vote of the Board of Directors after notice to Employee (as described below) and advice of independent legal counsel:

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;

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

vi. Habitual neglect of the faithful performance of the duties of his employment hereunder.

c. With regard to Section 3.1(b), 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 3.1(b) unless, after the notice period expires, Employee continues to fail to satisfactorily perform her 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.

d. 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 of termination pursuant to this Section 3.1(d), the Board of Directors of the Company shall make a determination either to terminate Employee's


employment hereunder or continue such employment within six (6) months after the effective date of the Change in Control and shall give Employee ninety (90) days' notice of any such determination to terminate Employee's employment hereunder, and the failure to make such determination within such six-month period will be deemed an election by the Company to continue Employee's employment hereunder.


a. If substantial differences of opinion between Employee and the Board and/or the ownership of the Company should develop, or other circumstances should arise such that Employee, in good faith, no longer feels that she can function effectively as General Counsel of the Company, then Employee may elect to resign from his employment hereunder by giving thirty (30) days' written notice to the Company.

b. Employee may elect to resign from employment with the Company, upon thirty (30) days written notice, if, in Employee's reasonable judgment, one or more of the following events has occurred:

i. A material change in Employee's duties
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