PETER T. SOCHA
This Employment Agreement made and entered into as of the 7th day of
May, 2004, by and between JAMES RIVER COAL COMPANY, a
corporation (the Virginia
"Company"), and PETER T. SOCHA, an individual resident of the Commonwealth of
Virginia (the "Executive"), the terms and conditions of which are as follows:
SECTION 1. TERM OF EMPLOYMENT
(a) The Company shall employ Executive as President and Chief
Executive Officer during the term of his employment, subject to the terms and
conditions set forth in this Employment Agreement, and Executive hereby accepts
(b) Subject to the terms and conditions set forth in this Employment
Agreement, Executive's employment shall be for a three-year term (the "Term")
May 7, 2004(the "Effective Date") and ending on May 6, 2007.
May 7, 2005and on each May 7 thereafter, the Term may, by mutual
agreement of Executive and the Company, be extended by an additional one-year
period such that the remaining Term will then be three years. If the Term is not
extended on any May 7 renewal date by mutual agreement of the parties, the Term
shall terminate upon the expiration of the remaining Term .
SECTION 2. POSITION AND DUTIES AND RESPONSIBILITIES
(a) POSITION. Executive shall be the President and Chief Executive
Officer of the Company. During the Term, the Company will cause Executive to be
nominated to the Board of Directors of the Company ("Board") and shall recommend
to the shareholders Executive's election to the Board.
(b) DUTIES AND RESPONSIBILITIES. Executive's duties and
responsibilities shall be those normally associated with Executive's position as
President and Chief Executive Officer, plus any additional duties and
responsibilities that the Board from time to time may assign orally or in
writing to Executive. Executive shall report to the Board and shall have such
powers as may be delegated to him by such Board. Executive shall undertake to
perform all Executive's duties and responsibilities for the Company in good
faith and on a full-time basis and shall at all times act in the course of
Executive's employment under this Employment Agreement in the best interest of
the Company, provided that Executive may serve on corporate, civic, educational
or charitable boards or committees.
SECTION 3. COMPENSATION AND BENEFITS
(a) BASE SALARY. Executive's initial base salary shall be Three
Hundred Seventy-Five Thousand Dollars ($375,000) per year ("Base Salary"), which
Base Salary shall be payable in accordance with the Company's standard payroll
practices and policies for executive officers and shall be subject to such
withholdings as required by law or as otherwise permissible under such practices
or policies. The Base Salary shall be subject to periodic increases (but not
decreases) as determined by the Board.
(b) ANNUAL BONUS AND OTHER INCENTIVE COMPENSATION. During the Term,
Executive shall be eligible to receive an annual bonus based upon achieving
targeted financial objectives, in accordance with the annual bonus plan
established by the Board. Executive shall also be eligible to participate in
such other annual bonus and incentive compensation programs as the Board shall
make available to executive officers.
(c) EMPLOYEE BENEFIT PLANS. Executive shall be entitled to
participate in the employee benefit plans, programs and policies (including
health, life, disability, dental and retirement plans) maintained by the Company
that cover executive officers in accordance with the terms and conditions of
such plans, programs and policies as in effect from time to time.
(d) STOCK OPTION AND RESTRICTED STOCK GRANTS. Executive will be
granted (i) on
May 7, 2004, a Stock Option to purchase 75,000 shares of the
Company's Common Stock at $21.60 per share and vesting 20% per year commencing
one year after the grant date; and (ii) on
May 7, 2004, 150,000 shares (103,125
shares Time Vested and 46,875 shares Performance Vested) of Restricted Stock.
Upon a change in control of the Company (as defined in the Company's Equity
Incentive Plan), the Stock Option shall become fully vested and immediately
exercisable and the shares of Restricted Stock shall become fully vested. The
other terms and conditions of the Stock Option and the Restricted Stock shall be
established by the Compensation Committee of the Board consistent with the terms
of the Company's Equity Incentive Plan.
(e) VACATION. Executive shall be entitled to two weeks of vacation
during each successive one year period in the Term (or such greater amount as
may be provided under Company policy), which vacation time shall be taken at
such time or times in each such one year period so as not to materially and
adversely interfere with the business of the Company.
(f) BUSINESS EXPENSES. Executive shall have the right to be promptly
reimbursed for Executive's reasonable and appropriate business expenses which
Executive incurs in connection with the performance of Executive's duties and
responsibilities under this Employment Agreement in accordance with the
Company's expense reimbursement policies and procedures for its executive
(g) DIRECTORS' AND OFFICERS' INSURANCE. Effective as of the
Effective Date, the Company shall take all reasonable steps to ensure that
Executive has been provided with adequate coverage under a directors' and
officers' liability insurance policy.
(h) CONFIRMATION BONUS. On or about the Effective Date, Executive
will be paid a bonus in the amount of Six Hundred Thousand Dollars ($600,000),
subject to withholding of all applicable taxes, relating to the successful
emergence of the Company from bankruptcy.
SECTION 4. TERMINATION OF EMPLOYMENT
(a) TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR DISABILITY OR
BY EXECUTIVE FOR GOOD REASON.
(1) The Company shall have the right to terminate
Executive's employment at any time, and Executive shall have the right
to resign at any time.
(2) If the Company terminates Executive's employment other
than for Cause, death or Disability or if Executive resigns for Good
Reason, the Company shall (in lieu of any severance benefits under any
Company severance program) pay or provide to Executive the following:
(i) Executive will continue to receive his Base
Salary as then in effect through his Date of Termination and
shall also receive a lump sum payment equal to the greater of:
(a) Base Salary for the remaining Term of the Employment
Agreement, or (b) Base Salary for twelve (12) months, to be paid
not later than 10 days after Executive's Date of Termination.
The lump sum payment under this subsection (i) shall not alter
the amounts Executive is entitled to receive under the benefit
plans described in subsection (iii) below. Benefits under such
plans shall be determined as if Executive had continued to
receive his Base Salary over the applicable severance period.
(ii) Executive shall be entitled to a prorata bonus
payment from the Company for the year of termination equal to
Executive's bonus for such year (assuming Executive earned a
bonus at the Target Award level) multiplied by a fraction, the
numerator of which is the number of days Executive was employed
during the year and the denominator of which is 365.
(iii) The group health care (including any executive
medical plan) and group term life insurance benefits coverages
provided to Executive at his Date of Termination shall be
continued at the same level as for active executives and in the
same manner as if his employment under this Agreement had not
terminated, beginning on the Date of Termination and continuing
for the greater of the period in subsection (i)(a) or (i)(b)
above. Any additional coverages Executive had at termination,
including dependent coverage, will also be continued for such
period on the same terms, to the extent permitted by the
applicable policies or contracts. Any costs Executive was paying
for such coverages at the time of termination shall be paid by
Executive by separate check payable to the Company each month in
advance. If the terms of any benefit plan referred to in this
subsection (iii), or the laws applicable to such plan do not
permit continued participation by Executive, then the Company
will arrange for other coverage(s) satisfactory to Executive at
the Company's expense which provides substantially similar
benefits or, at Executive's election, will pay Executive a lump
sum amount equal to the costs of such coverage(s) for the
applicable severance period.
For purposes of any individual executive life insurance
policy (or policies) maintained by the Company for Executive,
the Company shall
continue to pay the premiums for such policy or policies during
such severance period.
(iv) Executive will become fully vested in any
amounts credited under a deferred compensation plan in which
Executive participates and Executive's benefits under such plan
will be paid within ten (10) days of his Date of Termination.
Executive will be entitled to receive his accrued vacation pay.
(v) Except as expressly provided herein, all other
fringe benefits provided to Executive as an active employee of
the Company (e.g., long-term disability, AD&D, etc.), shall
cease on his Date of Termination (except to the extent Executive
has already qualified for benefits under any such program),
provided that any conversion or extension rights applicable to
such benefits shall be made available to Executive at his Date
of Termination or when such coverages otherwise cease.
(3) If the Company terminates Executive's employment other
than for Cause, death or Disability or if Executive resigns for Good
Reason, Executive shall become immediately fully vested in (i) all
Restricted Stock previously granted to Executive, (ii) all Stock Options
previously granted to Executive, in which event all such Stock Options
shall become immediately fully exercisable by Executive and shall remain
exercisable for 12 months after Executive's date of termination or such
longer exercise period as specified in such options, and (iii) any other
equity awards received by Executive.
(b) TERMINATION BY THE COMPANY FOR CAUSE OF BY EXECUTIVE OTHER THAN
FOR GOOD REASON.
(1) The Company shall have the right to terminate
Executive's employment at any time for Cause, and Executive shall have
the right to resign at any time other than for Good Reason.
(2) If the Company terminates Executive's employment for
Cause or Executive resigns other than for Good Reason, the Company's
only obligation to Executive under this Employment Agreement shall be to
pay Executive's earned but unpaid Base Salary then in effect under
Section 3(a), if any, up to Executive's Date of Termination and unpaid
accrued vacation pay.
(c) CAUSE. The term "Cause as used in this Employment Agreement
shall mean a termination of Executive for any of the following reasons:
(1) Executive's willful and continued breach of his duties
after written demand for performance has been made (other than any such
failure resulting from incapacity due to physical or mental illness, and
specifically excluding any failure by Executive, after reasonable
efforts, to meet performance expectations),
(2) Executive's willfully engaging in illegal conduct or
gross misconduct that is demonstrably injurious to the Company, or
(3) Executive's conviction of a felony or other crime
involving moral turpitude.
With respect to clauses (1) and (2) above, Executive shall not be deemed
to have been involuntarily terminated for Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board (after reasonable notice to Executive and an
opportunity for him, together with his counsel, to be heard before the Board),
finding that, in the good faith opinion of the Board, Executive was guilty of
conduct set forth above in clauses (1) or (2) and specifying the particulars
thereof in detail. For purposes of this Agreement, no act or failure to act by
Executive shall be deemed to be "willful" unless done or omitted to be done by
Executive not in good faith and without reasonable belief that Executive's
action or omission was in the best interests of the Company.
(d) GOOD REASON. The term "Good Reason" means the occurrence
(without Executive's express written consent) of any one of the following acts
by the Company, or failures by the Company to act, unless, in the case of any
act or failure to act described below, such act or failure to act is corrected
prior to the Date of Termination specified in the notice of termination given in
(1) a material reduction in Executive's position, authority,
duties or responsibilities,
(2) a reduction in Executive's Base Salary or target bonus,
(3) the failure by the Company to maintain a benefit program
(or to provide a substitute benefit program) that is material to
Executive's overall compensation,
(4) the relocation of Executive's office or the Company's
headquarters from the
(5) the failure to require a successor to honor this
(6) the Company's material breach of any other provision of
Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness, except for a Disability as defined in
subsection (e) below.
(e) TERMINATION FOR DISABILITY OR DEATH.
(1) The Company shall have the right to terminate
Executive's employment on or after the date Executive incurs a
Disability, and Executive's employment shall terminate at Executive's
(2) If Executive's employment terminates under this Section
4(e), the Company's only obligation under this Employment Agreement
shall be to pay Executive, or, if Executive dies, Executive's estate,
any earned but unpaid Base Salary then in effect under Section 3(a),
through Executive's Date of Termination, provided that Executive shall
have such rights under the Company's benefit plans as are provided in
The term "Disability" as used in this Employment Agreement shall have
the meaning ascribed to such term in the Company's long-term disability
plan covering the Executive, or in the absence of such plan, a meaning
consistent with Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"). The existence of a Disability shall be
determined by the Board in good faith.
(f) BENEFITS AT TERMINATION OF EMPLOYMENT. Upon Executive's
termination of employment, Executive shall have the right to receive any
benefits payable under the Company's employee benefit plans, programs and
policies which Executive otherwise has a nonforfeitable right to receive under
the terms of such plans, programs and policies (other than severance benefits)
independent of Executive's rights under this Employment Agreement, without
regard to the reason for such termination of employment.
(g) DATE OF TERMINATION. Executive's Date of Termination shall be
the date specified in the notice of termination (which, unless otherwise
required by this Agreement, may be immediate) as the date upon which Executive's
employment with the Company is to cease. In the case of termination by Executive
for Good Reason, the Date of Termination shall not be less than thirty (30) days
nor more than sixty (60) days from the date the notice of termination is given.
SECTION 5. COVENANTS BY EXECUTIVE.
(a) THE COMPANY'S PROPERTY.
(1) Upon the termination of Executive's employment for any
reason or, if earlier, upon the Company's request, Executive shall
promptly return all "Property" which had been entrusted or made
available to Executive by the Company.
(2) The term "Property" means all records, files, memoranda,
reports, price lists, customer lists, drawings, plans, sketches, keys,
codes, computer hardware and software and other property of any kind or
description prepared, used or possessed by Executive during Executive's
employment by the Company and, if applicable, any of its affiliates (and
any duplicates of any such property)
together with any and all information, ideas, concepts, discoveries, and
inventions and the like conceived, made, developed or acquired at any
time by Executive individually or, with others during Executive's
employment which relate to the Company business, products or services.
(b) TRADE SECRETS.
(1) Executive agrees that Executive will hold in a fiduciary
capacity for the benefit of the Company, and any of its affiliates, and
will not directly or indirectly use or disclose, any "Trade Secret" that
Executive may have acquired during the term of Executive's employment by
the Company or any of its affiliates for so long as such information
remains a Trade Secret.
(2) The term "Trade Secret" means information, including,
but not limited to, technical or nontechnical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a
drawing, a process, financial data, financial plans, product plans, or a
list of actual or potential customers or suppliers that (a) derives
economic value, actual or potential, from not being generally know to,
and not being generally readily ascertainable by proper means by other
person who can obtain economic value from its disclosure or use and (b)
is the subject of reasonable efforts by the Company and any of its
affiliates to maintain its secrecy.
(3) This Section 5(b) and Section 5(c) are intended to
provide rights to the Company which are in addition to, and not in lieu
of, those rights the Company has under the common law or applicable
statutes for the protection of Trade Secrets.
(c) CONFIDENTIAL INFORMATION.
(1) Executive, while employed under this Employment
Agreement and thereafter during the "Restricted Period", shall hold in a
fiduciary capacity for the benefit of the Company and any of its
affiliates, and shall not directly or indirectly use or disclose, any
"Confidential Information" that Executive may have acquired (whether or
not developed or compiled by Executive and whether or not Executive is
authorized to have access to such information) during the term of, and
in the course of, or as a result of Executive's employment by the
Company or any of its affiliates.
(2) The term "Confidential Information" means any secret,
confidential or proprietary information possessed by the Company or any
of its affiliates relating to their business, including, without
limitation, trade secrets, customer lists, details of client or
consultant contracts, current and anticipated customer requirements,
pricing policies, price lists, market studies, business plans,
operational methods, marketing plans or strategies, legal advice and
communications with the Company's counsel, product development
techniques or flaws, computer software programs (including object code
and source code), data
and documentation data, base technologies, systems, structures and
architectures, inventions and ideas, past current and planned research
and development, compilations, devices, methods, techniques, processes,
financial information and data, business acquisition plans and new
personal acquisition plans (not otherwise included in the definition of
a Trade Secret under this Employment Agreement) that has not become
generally available to the public by the act of one who has the right to
disclose such information without violating any right of the Company or
any of its affiliates. Confidential Information may include, but not be
limited to, future business plans, licensing strategies, advertising
campaigns, information regarding customers, executives and independent
contractors and the terms and conditions of this Employment Agreement.
(d) RESTRICTED PERIOD. The term "Restricted Period" as used in the
Employment Agreement shall mean the one-year period which starts on the date
Executive's employment terminates with the Company, without regard to whether
such termination comes before or after the end of the Term.
(e) NONSOLICITATION OF EMPLOYEES. Executive (i) while employed under
this Employment Agreement shall not, either directly or indirectly, call on,
solicit or attempt to induce any other officer, employee or independent
contractor of the Company or any of its affiliates to terminate his or her
employment with the Company or any of its affiliates and shall not assist any
other person or entity in such a solicitation (regardless of whether any such
officer, employee or independent contractor would commit a breach of contract by
terminating his employment), and (ii) during the Restricted Period, shall not,
either directly or indirectly, call on, solicit or attempt to induce any other
officer, employee or independent contractor of the Company or any of its
affiliates with whom Executive had contact, knowledge of, or association in the
course of Executive's employment with the Company or any of its affiliates as
the case may be, during the twelve month period immediately preceding the
beginning of the Restricted Period, to terminate his employment with the Company
or any of its affiliates and shall not assist any other person or entity in such
a solicitation (regardless of whether any such officer, employee or independent
contractor would commit a breach of contract by terminating his employment).
(f) REASONABLE AND CONTINUING OBLIGATIONS. Executive agrees that
Executive's obligations under this section 5 are obligations which will continue
beyond the date Executive's employment terminates and that such obligations are
reasonable and necessary to protect the Company's legitimate business interests.
The Company in addition shall have the right to take such other action as the
Company deems necessary or appropriate to compel compliance with the provisions
of this Section 5.
(g) REMEDY FOR BREACH. Executive agrees that the remedies at law of
the Company for any actual or threatened breach by Executive of the covenants in
this Section 5 would be inadequate and that the Company shall be entitled to
seek specific performance of the covenants in this Section 5, including entry of
an ex- parte , temporary restraining order in state or federal court,
preliminary and permanent injunctive relief against activities in violation of
this Section 5, or both, or other
appropriate judicial remedy, writ or order, in addition to any damages and legal
expenses which the Company may be legally entitled to recover. Executive
acknowledges and agrees that the covenants in this Section 5 shall be construed
as agreements independent of any other provision of this or any other agreement
between the Company and Executive, and that the existence of any claim or cause
of action by Executive against the Company, whether predicated upon this
Employment Agreement or any other agreement, shall not constitute a defense to
the enforcement by the Company of such covenants.
SECTION 6. MISCELLANEOUS
(a) NOTICES. Notices and all other communications shall be in
writing and shall be deemed to have been duly given when personally delivered or
when mailed by United States registered or certified mail. Notices to the
Company shall be sent to: James River Coal Company,
901 East Byrd Street, Suite
1600, Richmond, Virginia 23219. Attention: Corporate Secretary. Notices and
communications to Executive shall be sent to the address Executive most recently
provided to the Company.
(b) NO WAIVER. Except for the notice described in Section 6(a), no
failure by either the Company or Executive at any time to give notice of any
breach by the other of, or to require compliance with, any condition or
provision of this Employment Agreement shall be deemed a waiver of any
provisions or conditions of this Employment Agreement.
(c) VIRGINIA LAW. This Employment Agreement shall be governed by
law without reference to the choice of law principles thereof. Virginia
(d) ASSIGNMENT. This Employment Agreement shall be binding upon and
inure to the benefit of the Company and any successor to all or substantially
all of the business or assets of the Company. The Company may assign this
Employment Agreement to any affiliate or successor, and no such assignment shall
be treated as a termination of Executive's employment under this Employment
Agreement. Executive's rights and obligations under this Employment Agreement
are personal and shall not be assigned or transferred.
(e) OTHER AGREEMENTS. This Employment Agreement replaces and merges
any and all previous agreements and understandings regarding all the terms and
conditions of Executive's employment relationship with the Company, and this
Employment Agreement constitutes the entire agreement between the Company and
Executive with respect to such terms and conditions, except for rights under
other agreements referred to in this Agreement.
(f) AMENDMENT. No amendment to this Employment Agreement shall be
effective unless it is in writing and signed by the Company and by Executive.
(g) INVALIDITY. If any part of this Employment Agreement is held by
a court of competent jurisdiction to be invalid or otherwise unenforceable, the
remaining part shall be unaffected and shall continue in full force and effect,
and the invalid or
otherwise unenforceable part shall be deemed not to be part of this Employment
(h) DISPUTES; LEGAL FEES; INDEMNIFICATION.
(i) DISPUTES - All claims by Executive for
compensation and benefits under this Agreement shall be in
writing and shall be directed to and be determined by the Board.
Any denial by the Board of a claim for benefits under this
Agreement shall be provided in writing to Executive within 30
days of such decision and shall set forth the specific reasons
for the denial and the specific provisions of this Agreement
relied upon. The Board shall afford a reasonable opportunity to
Executive for a review of its decision denying a claim and shall
further allow Executive to appeal in writing to the Board a
decision of the Board within sixty (60) days after notification
by the Board that Executive's claim has been denied. To the
extent permitted by applicable law, any further dispute or
controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in
, in accordance with the commercial arbitration rules of Virginia
the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having
(ii) LEGAL FEES - If Executive terminates his
employment for Good Reason or if the Company involuntarily
terminates Executive without Cause, then, in the event Executive
incurs legal fees and other expenses in seeking to obtain or to
enforce any rights or benefits provided by this Agreement and is
successful, in whole or in any significant part, in obtaining or
enforcing any such rights or benefits through settlement,
mediation, arbitration or otherwise, the Company shall promptly
pay Executive's reasonable legal fees and expenses and related
costs incurred in enforcing this Agreement including, without
limitation, attorneys fees and expenses, experts fees and
expenses, investigative fees, and travel expenses. Except to the
extent provided in the preceding sentence, each party shall pay
its own legal fees and other expenses associated with any
dispute under this Agreement.
(iii) INDEMNIFICATION. During the Term of this
Agreement and after Executive's termination, the Company shall
indemnify Executive and hold Executive harmless from and against
any claim, loss or cause of action arising from or out of
Executive's performance as an officer, director or employee of
the Company or any of its subsidiaries or other affiliates or in
any other capacity, including any fiduciary capacity, in which
Executive serves at the Company's request, in each case to the
maximum extent permitted by law and under the Company's Articles
of Incorporation and By-Laws (the "Governing Documents"),
provided that in no event shall the protection afforded to
Executive hereunder be less
than that afforded under the Governing Documents as in effect on
the date of this Agreement except for changes mandated by law.
IN WITNESS WHEREOF, the Company and Executive have executed this
Employment Agreement as of the date first above written to be effective on the
JAMES RIVER COAL COMPANY
By: /s/ Paul H. Vining
Name: Paul H. Vining
Title: Chairman of the
/s/ Peter T. Socha
PETER T. SOCHA
THIS AMENDMENT is made and entered into as of this 31st day of December, 2008, by and between James River Coal Company, a Virginia corporation (the “Company”) and Peter T. Socha (“Executive”);
W I T N E S S E T H:
WHEREAS, the Company and Executive entered into an Employment Agreement, dated as of May 7, 2004 (the “Employment Agreement”), providing for the terms and conditions of Executive’s employment by the Company; and
WHEREAS, the parties now desire to amend the Employment Agreement in the manner hereinafter provided to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein and in the Employment Agreement, the parties hereby agree as follows:
1. Sections 4(a)(2)(iii) and (iv) are hereby amended by deleting those sections in their entirety and substituting the following:
“(iii) Health and Life Insurance Coverage. To the extent permitted by the applicable plans, the Company shall provide Executive (and any spouse or dependents covered at the time of the Executive’s termination) with medical, dental, and group term life insurance (pursuant to the same Company plans that are medical, dental, and group term life insurance that are in effect for active employees of the Company), for the remaining Term of the Employment Agreement or for twelve months after the Date of Termination, whichever is greater (the “Insured Period”). The coverages provided for in this section shall be applied against and reduce the period for which COBRA will be provided.
(1) To the extent that such medical or dental plan coverage is provided under a self-insured plan maintained by the Company (within the meaning of Section 105(h) of the Code):
(X) the charge to Executive for each month of coverage will equal the monthly COBRA charge established by the Company for such coverage in which the Executive or the Executive’s spouse or dependents (as applicable) are enrolled from time to time, based on the coverage generally provided to salaried employees, and Executive will be required to pay such monthly charge in accordance with the Company’s standard COBRA premium payment requirements; and
(Y) not later than 10 days after Executive’s Date of Termination (subject to delay under Section 7 below), the Company will pay Executive a lump sum in cash equal, in the aggregate, to the monthly COBRA charge established by the Company for the coverage being provided on Executive’s Date of Termination to the Executive and any covered dependents, less the amount Executive was paying for such coverage on the Date of Termination, for each month of coverage in the Insured Period. In calculating the total lump sum amount payable for the Insured Period, the Company’s monthly COBRA charge will be increased by 10% on each January in the projected payment period and such increased amount shall apply to each successive month in the calendar year in which the increase became applicable.
(2) To the extent that such medical or dental plan coverage is provided under a fully-insured medical reimbursement plan (within the meaning of Section 105(h) of the Code), there will be no charge to Executive for such coverage.
(3) For purposes of any individual executive life insurance policy (or policies) maintained by the Company for Executive, the Company shall pay the Executive a lump sum payment in cash equal to the monthly premium charges as of the Date of Termination for such policy (or policies) multiplied by the number of months in the Insured Period. Such payment will be made within ten days of the Date of Termination.
(iv) Executive will become fully vested in any amounts credited under a deferred compensation plan in which Executive participates and Executive’s benefits under such plan will be paid in accordance with the terms of such plan, including, as applicable, the six-month delay referenced in Section 7 below.”
2. Section 4(d) is hereby amended by deleting that section in its entirety and substituting the following:
“(d) GOOD REASON. The term “Good Reason” means the occurrence (without Executive’s express written consent) of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described below, such act or failure to act is corrected within thirty (30) days after written notice thereof by the Executive to the Company:
(1) a material reduction in Executive’s authority, duties or responsibilities,
(2) a material reduction in Executive’s Base Salary,
(3) the relocation of Executive’s office from its location on the Effective Date to a location more than 35 miles away, or
(4) the Company’s material breach of any other provision of this agreement, which shall include the failure to require a successor to honor this Agreement.
Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness, except for a Disability as defined in subsection (e) below.”
3. Section 4(g) is hereby amended by deleting that section in its entirety and substituting the following:
“(g) DATE OF TERMINATION. Executive’s Date of Termination shall be the date specified in the notice of termination (which, unless otherwise required by this Agreement, may be immediate) as the date upon which Executive’s employment with the Company is to cease. In the case of termination by Executive for Good Reason, the Date of Termination shall not be less than thirty (30) days nor more than sixty (60) days from the date the notice of termination is given, and the notice of termination shall clearly specify the act or failure to act that constitutes “Good Reason” and shall be given no more than ninety (90) days after the date of such act or failure to act.”
4. Section 6(d) is hereby amended by adding the following sentence to the beginning of such section:
“The Company agrees that it will require any successor to the Company to honor this Agreement.”
5. The Original Agreement is amended by adding the following new Section 7 at the end thereof:
“SECTION 7. SECTION 409A
(a) EXPENSE REIMBURSEMENTS. To the extent that any expense reimbursement provided for by this Agreement does not qualify for exclusion from Federal income taxation, the Company will make the reimbursement only if: (i) Executive incurs the corresponding expense during the term of this Agreement or the period of two years thereafter and submits the request for reimbursement no later than two months prior to the last day of the calendar year following the calendar year in which the expense was incurred so that the Company can make the reimbursement on or before the last day of the calendar year following the calendar year in which the expense was incurred; (ii) the amount of expenses eligible for such reimbursement during a calendar year will not affect the amount of expenses eligible for such reimbursement in another calendar year; and (iii) the right to such reimbursement is not subject to liquidation or exchange for another benefit from the Company.
(b) MEANING OF TERMINATION OF EMPLOYMENT. Solely as necessary to comply with Section 409A, for purposes of Section 4 and this Section 7, “termination of employment” or “employment termination” or similar terms shall have the same meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the Code.
(c) TAX TREATMENT. This Agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for the two-times compensation exemption of Treas. Reg. §1.409A-1(b)(9)(iii). Executive acknowledges and agrees that the Company has made no representation to Executive as to the tax treatment of the compensation and benefits provided pursuant to this Agreement and that Executive is solely responsible for all taxes due with respect to such compensation and benefits.
(d) SIX MONTH DELAY. This Agreement will be construed and administered to preserve the exemption from Section 409A of payments that qualify as a short-term deferral or that qualify for the two-times separation pay exception. With respect to other amounts that are subject to Section 409A, it is intended, and this Agreement will be so construed, that any such amounts payable under this Agreement and the Company’s and Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A and the treasury regulations relating thereto so as not to subject Executive to the payment of interest and additional tax that may be imposed under Section 409A. As a result, in the event Executive is a “specified employee” on the date of Executive’s termination of employment (with such status determined by the Company in accordance with rules established by the Company in writing in advance of the “specified employee identification date” that relates to the date of Executive’s termination of employment, or in the absence of such rules established by the Company, under the default rules for identifying specified employees under Section 409A), any payment that is subject to Section 409A, that is payable to Executive in connection with Executive’s termination of employment, shall not be paid earlier than six months after such termination of employment (if Executive dies after the date of Executive’s termination of employment but before any payment has been made, such remaining payments that were or could have been delayed will be paid to Executive’s estate without regard to such six-month delay).”
6. Except as provided herein, the Original Agreement shall be unchanged.
The Employment Agreement in effect between the Company and Executive and this Amendment embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.
JAMES RIVER COAL COMPANY
By: /s/ Samuel M. Hopkins II
Name: Samuel M. Hopkins II
Title: Vice President
/s/ Peter T. Socha
Name: Peter T. Socha