Employment Amendment

                                                                    EXHIBIT 10.3

 

                  THIRD AMENDED & RESTATED EMPLOYMENT AGREEMENT

 

     This Third Amended & Restated Employment Agreement ("Agreement"), dated

this 22nd day of March, 2006, is entered into by and between Alpha Natural

Resources Services, LLC, on behalf of itself and its parent entities,

subsidiaries and affiliates as may employ Employee from time to time

(collectively, the "Employer"), and Michael J. Quillen ("Employee") and is

effective as of January 1, 2006 (the "Effective Date").

 

                                   WITNESSETH:

 

     WHEREAS, Employer employs Employee pursuant to the terms and conditions set

forth in that certain Employment Agreement dated as of January 1, 2003 between

Employee and Alpha Natural Resources, LLC, that was assigned to Employer as of

December 31, 2003, amended and restated March 31, 2004, and further amended and

restated as of January 28, 2005 (the "Second Amended and Restated Agreement");

and

 

     WHEREAS, Employer and Employee desire to amend and restate the Second

Amended and Restated Agreement and to continue the employment of Employee by

Employer pursuant to the terms and conditions set forth in this Agreement;

 

     NOW, THEREFORE, for and in consideration of the mutual promises, covenants

and obligations contained herein, Employer and Employee agree as follows:

 

ARTICLE 1: EMPLOYMENT AND DUTIES:

 

     1.1 Employer agrees to employ Employee, and Employee agrees to be employed

by Employer, beginning as of the Effective Date and continuing through December

31, 2006 (the "Term"), subject to the terms and conditions of this Agreement.

The Term shall be automatically extended for successive 12-month periods unless

either party provides written notice to the other at least 120 days prior to the

end of the then current Term of such party's election not to extend the Term

except, in the case of retirement, in which Employee shall provide six (6)

months advance written notice to the Employer.

 

     1.2 Beginning as of the Effective Date, Employee shall continue to be

employed by Employer and be the President and Chief Executive Officer of Alpha

Natural Resources, Inc., the indirect parent of Employer ("Alpha Natural

Resources"), and shall be nominated for re-election to the Board of Directors

(the "Board of Directors") of, Alpha Natural Resources. Employee shall report to

the Board of Directors of Alpha Natural Resources. Employee shall serve in the

assigned positions or in such other executive capacities as may be agreed to,

from time to time, between Employee and Employer, the Board of Directors, and/or

the Employer Entities (as defined below). Employee agrees to perform diligently

and to the best of Employee's abilities, and in a trustworthy, businesslike and

efficient manner, the duties and services pertaining to such positions as

reasonably determined by Employer and the Board of Directors, as well as such

additional or different duties and services appropriate to such positions which

Employee from time to time may be reasonably directed to perform by the Board of

Directors and/or Employer.

 

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     1.3 Employee shall at all times comply with, and be subject to, such

policies and procedures as Employer and/or the Employer Entities may establish

from time to time, including, without limitation, Alpha Natural Resources' Code

of Business Conduct (the "Code of Business Conduct").

 

     1.4 Except as expressly approved by the Board of Directors, Employee shall,

during the period of Employee's employment by Employer, devote Employee's full

business time, energy, and best efforts to the business and affairs of Employer

and the Employer Entities. Employee may not engage, directly or indirectly, in

any other business, investment, or activity that interferes with Employee's

performance of Employee's duties hereunder, is contrary to the interest of

Employer or any of its parent entities, affiliated subsidiaries and divisions

(each an "Employer Entity," or collectively, the "Employer Entities") or

requires any significant portion of Employee's business time. The foregoing

notwithstanding, the parties recognize and agree that Employee may engage in

passive personal investments and other business activities which do not conflict

with the business and affairs of the Employer Entities or interfere with

Employee's performance of his duties hereunder. Employee may not serve on the

board of directors of any entity other than an Employer Entity, related industry

trade association, public institution, or government appointed public or

quasi-public body during the Term without prior approval therefor by the Board

of Directors in accordance with Employer's and/or Employer Entities' policies

and procedures regarding such service. Employee shall be permitted to retain any

compensation received for approved service on any unaffiliated corporation's

board of directors.

 

     1.5 Employee acknowledges and agrees that Employee owes a fiduciary duty of

loyalty, fidelity, and allegiance to act at all times in the best interests of

the Employer and the other Employer Entities and to do no act which would,

directly or indirectly, injure any such entity's business, interests, or

reputation. It is agreed that any direct or indirect interest in, connection

with, or benefit from any outside activities, particularly commercial

activities, which interest might in any way adversely affect Employer, or any

Employer Entity, involves a possible conflict of interest. In keeping with

Employee's fiduciary duties to Employer and the Employer Entities, Employee

agrees that Employee shall not knowingly become involved in a conflict of

interest with Employer or any Employer Entity, or upon discovery thereof, allow

such a conflict to continue. Moreover, Employee shall not engage in any activity

that might involve a possible conflict of interest without first obtaining

approval in accordance with Employer's and Employer Entities' policies and

procedures.

 

     1.6 Nothing contained in this Agreement shall be construed to preclude the

transfer of Employee's employment to another Employer Entity ("Subsequent

Employer") as of, or at any time after, the Effective Date and no such transfer

shall be deemed to be a termination of employment for purposes of Article 3

hereof; provided, however, that, effective with such transfer, all of Employer's

obligations hereunder shall be assumed by and be binding upon, and all of

Employer's rights hereunder shall be assigned to, such Subsequent Employer and

the defined term "Employer" as used herein and any other terms referring and/or

relating to Employer shall thereafter be deemed amended to mean and refer to

such Subsequent Employer. Except as otherwise provided above, all of the terms

and conditions of this Agreement, including without limitation, Employee's

rights, compensation, benefits and obligations, shall remain in all

 

 

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material respects and taken as a whole, no less favorable to Employee following

such transfer of employment.

 

ARTICLE 2: COMPENSATION AND BENEFITS:

 

     2.1 Employee's base salary during the Term shall be $650,000 (Six Hundred,

Fifty Thousand Dollars) per annum which shall be paid in accordance with the

Employer's standard payroll practice. Employee's base salary shall be reviewed

annually by the Compensation Committee of the Board of Directors (the

"Compensation Committee") or the Board of Directors and may be increased, in the

Compensation Committee's or Board of Directors' sole discretion, from time to

time. Such increased base salary shall become the minimum base salary under this

Agreement and may not be decreased thereafter without the written consent of

Employee unless otherwise permitted by this Agreement.

 

     2.2 During the Term, Employee shall participate in a bonus plan pursuant to

which an annual bonus shall be paid to Employee in an amount to be determined by

the Compensation Committee or the Board of Directors, which annual bonus shall

be targeted at 100% of Employee's then current base salary (the "Target Bonus"),

with a maximum target bonus opportunity of 200% of Employee's then current base

salary. Payment of the bonus shall be made at the same time as bonuses are paid

to other senior executive officers and shall be based on parameters, including,

without limitation, performance goals applicable to Employee, and such

parameters shall be approved by the Compensation Committee or Board of

Directors.

 

     2.3 During the Term, the Employee shall participate in Alpha Natural

Resources' long-term incentive plans, including its equity incentive plans, on

the terms established from time to time by the Compensation Committee or the

Board; provided that, to the extent the Compensation Committee or Board of

Directors makes any grants of equity securities under such plans to senior

executive officers which report directly to the Employee (collectively, "Direct

Reports"), Employee shall receive an equity grant of the same type of security

to be granted to such Direct Reports which shall be targeted at 150% of the

highest number of such security granted to any Direct Report on a particular

grant date and under the same terms and conditions of such award.

Notwithstanding the foregoing, this Section 2.3 shall not apply to any

inducement award which the Compensation Committee or Board of Directors

determines to make to any potential new employee of Employer.

 

     2.4 The Employee shall participate in Alpha Natural Resources' Retention

Compensation Plan, dated November 10, 2005 (the "Retention Compensation Plan")

on the same basis, and under the same terms and conditions, as his Direct

Reports.

 

     2.5 During the Term, in the event of a Change in Control (as defined

below), Employee shall be entitled to receive a minimum lump sum cash payment

equal to a pro rata Target Bonus for the year in which the Change in Control

occurs, which shall be based on the portion of such year that Employee was

employed by Employer prior to the effective date of the Change in Control. Such

payment, if any, shall be made no later than 60 days after the effective date of

the Change in Control.

 

 

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     2.6 The Executive shall be entitled to at least four (4) weeks paid

vacation in each calendar year, or such greater amount of vacation as may be

determined in accordance with Employer's vacation policy as in effect from time

to time. The Executive shall also be entitled to all paid holidays given by

Employer to its executives.

 

     2.7 During the Term, Employer shall pay or reimburse Employee for all

actual, reasonable and customary expenses incurred by Employee in the course of

his employment; provided that such expenses are incurred and accounted for in

accordance with Employer's applicable policies and procedures.

 

     2.8 While employed by Employer, Employee shall be allowed to participate,

on the same basis generally as other employees of Employer, in all general

employee benefit plans and programs, including improvements or modifications of

the same, which on the Effective Date or thereafter are made available by

Employer and/or the Employer Entities to all or substantially all of Employer's

similarly situated employees. Such benefits, plans, and programs may include,

without limitation, medical, health, and dental care, life insurance, disability

protection, qualified and non-qualified retirement plans, retiree medical plans

and stock option and stock grant programs, if any. Except as specifically

provided in this Agreement, nothing in this Agreement is to be construed or

interpreted to increase or alter in any way the rights, participation, coverage,

or benefits under such benefit plans or programs than provided to similarly

situated employees pursuant to the terms and conditions of such benefit plans

and programs.

 

     2.9 Notwithstanding anything to the contrary in this Agreement, it is

specifically understood and agreed that Employer and the Employer Entities shall

not be obligated to institute, maintain, or refrain from changing, amending, or

discontinuing any incentive, employee benefit or stock or stock option program

or plan, so long as such actions are similarly applicable to covered employees

generally.

 

     2.10 Employer shall withhold from any compensation, benefits, or amounts

payable under this Agreement all federal, state, city, or other taxes as may be

required pursuant to any law or governmental regulation or ruling.

 

ARTICLE 3: TERMINATION OF EMPLOYMENT AND EFFECTS OF SUCH TERMINATION

 

     3.1 Employee's employment with Employer shall be terminated prior to the

end of the Term: (i) upon the death of Employee, (ii) upon Employee's Retirement

(as defined below), (iii) upon Employee's Permanent Disability (as defined

below), (iv) at any time by Employer upon written notice to Employee, or (v) by

Employee upon 60 days written notice to Employer.

 

     3.2 If Employee's employment is terminated by reason of any of the

following circumstances (i), (ii), (iii), or (iv), Employee shall be entitled to

receive only the benefits set forth in Section 3.3 below:

 

     (i)  Termination due to Employee's Retirement. "Retirement" shall mean

          Employee's retirement at or after normal retirement age (either

          voluntarily or pursuant to Employer's retirement policy).

 

 

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     (ii) Termination by Employer for Employer Cause. Termination of Employee's

          employment for "Employer Cause" shall mean termination of Employee's

          employment by Employer for any of the following: (a) Employee's gross

          negligence or willful misconduct in the performance of the duties and

          services required of Employee pursuant to this Agreement, (b)

          Employee's final conviction of, or plea of guilty or nolo contendere

          to, a felony or Employee engaging in fraudulent or criminal activity

          relating to the scope of Employee's employment (whether or not

          prosecuted), (c) a material violation of Alpha Natural Resources' Code

          of Business Conduct, (d) Employee's material breach of any material

          provision of this Agreement, provided that Employee has received

          written notice from the Employer and been afforded a reasonable

          opportunity (not to exceed 30 days) to cure such breach, (e) any

          continuing or repeated failure to perform the duties as requested in

          writing by the Employee's supervisor(s) or the Board of Directors

          after Employee has been afforded a reasonable opportunity (not to

          exceed 30 days) to cure such breach, (f) the commission of a felony or

          crime involving moral turpitude, or (g) conduct which brings Employer

          and/or the Employer Entities into public disgrace or disrepute in any

          material respect. Determination as to whether or not Employer Cause

          exists for termination of Employee's employment will be made by the

          Board of Directors.

 

     (iii) Termination by Employee by Resignation (Other Than for Good Reason).

          Employee's resignation, other than for Good Reason (as defined below),

          shall mean termination of Employee's employment by Employee's

          resignation of employment with Employer and any Employer Entity, but

          not including any termination of employment by Employee for Good

          Reason as described in Section 3.4(i) or a Termination In Connection

          With A Change in Control (as defined below) by Employee described in

          Section 3.7.

 

     (iv) Election Not to Renew Term by Employee. Employee elects not to renew

          the Term pursuant to Section 1.1 of this Agreement.

 

     3.3 If Employee's employment is terminated by reason of Section 3.2 (i),

(ii), (iii), or (iv), Employee shall be entitled to each of the following:

 

     (i)  Employee shall be entitled to: (a) any base salary earned, accrued or

          owing to Employee through the effective date of termination of

          employment, (b) reimbursement for all reasonable and customary

          expenses incurred by Employee in performing services for the Employer

          and/or the Employer Entities prior to the effective date of

          termination of employment, (c) payment equal to the amount of any

          accrued, but unused, vacation time, and (d) any individual bonuses or

          individual incentive compensation not yet paid, but due and payable

          under Employer's and/or Employer Entities' plans for years prior to

          the year of Employee's termination of employment; and, provided

          further that, Employee shall not be entitled to: (1) any bonus or

          incentive compensation for the year in which he terminates employment

          unless specifically granted by the Compensation Committee or Board of

          Directors, or (2) any other payments or benefits by or on behalf of

          Employer and/or the Employer Entities except for those which may be

 

 

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          payable pursuant to the terms of Employer's and/or Employer Entities'

          employee benefit plans, stock, option, or other equity plans or the

          applicable agreements underlying such plans.

 

     (ii) Except for (i) above, it is specifically understood that all future

          compensation to which Employee is entitled and all future benefits for

          which Employee is eligible, shall cease and terminate as of the

          effective date of termination of employment except, if applicable,

          retiree medical benefits under the Alpha Natural Resources, LLC and

          Subsidiaries Retiree Medical Benefit Plan (including any successors

          thereto, the "Retiree Medical Benefit Plan").

 

     3.4 If Employee's employment is terminated by reason of (i), (ii), (iii),

or (iv) below, and, in the case of (i) and (ii), other than a Termination In

Connection With A Change in Control, as otherwise provided in Section 3.7,

Employee shall be entitled to receive the benefits set forth in Section 3.5 or

Section 3.6, as applicable.

 

     (i)  Termination by Employee for Good Reason (Other Than A Termination In

          Connection With A Change in Control). "Good Reason" shall mean a

          termination of employment by Employee because of: (a) the assignment

          to Employee of any significant duties materially inconsistent with

          Employee's status as an officer of Alpha Natural Resources or a

          substantial diminution in the nature of Employee's responsibilities or

          Employee's status (including, without limitation, Employee being

          required to report to any person other than the Board of Directors)

          (without his prior written consent), (b) a material breach by Employer

          of any material provision of this Agreement, (c) a relocation of

          Employer's principal place of business or of Employee's own office

          assigned to Employee by Employer to a location that increases

          Employee's normal work commute by more than 50 miles, or (d) any

          illegal activity or material violation of governmental laws, rules or

          regulations by Employer or the Board of Directors in connection with

          the Employer Entities; provided, that such illegal activity or

          material violation could reasonably be expected to have a material

          adverse effect on Employer and the Employer Entities, taken as a

          whole. In order for Employee to terminate for Good Reason, (a)

          Employer must be notified by Employee in writing within 90 days of the

          event constituting Good Reason, (b) the event must remain uncorrected

          by Employer for 30 days following such notice (the "Notice Period"),

          and (c) such termination must occur within 60 days after the

          expiration of the Notice Period. An across-the-board base salary

          and/or Target Bonus opportunity reduction and, in the case of base

          salary, not below the initial base salary set forth in Section 2.1,

          similarly affecting Employee and all other executives of Employer

          shall not constitute a material breach of this Agreement by Employer.

 

     (ii) Employer Termination Without Employer Cause (Other Than A Termination

          In Connection With A Change in Control). Termination of Employee's

          employment by Employer for any reason other than for Employer Cause

          including, without limitation, termination due to Employer's election

          not to renew the Term pursuant to Section 1.1, but not including a

          Termination In Connection With A Change in Control by Employer

          described in Section 3.7.

 

 

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     (iii) Death. Termination due to the death of Employee.

 

     (iv) Termination due to Employee's Permanent Disability. "Permanent

          Disability" shall mean Employee's physical or mental incapacity to

          perform his usual duties with such condition likely to remain

          continuously and permanently as determined by Employer.

 

     3.5 Subject to the provisions of Section 3.7, Section 3.8, and Section 3.9,

if Employee's employment is terminated by Employee under Section 3.4(i) or by

Employer under Section 3.4(ii), Employee shall be entitled to each of the

following:

 

     (i)  Employer shall pay to Employee an amount equal to the sum of: (a) two

          (2) times Employee's base salary in effect as of the effective date of

          termination of employment plus (b) two (2) times Employee's Target

          Bonus for the year in which the effective date of termination of

          employment occurs. Except as otherwise provided herein, such

          compensation shall be paid to Employee in equal installments in

          accordance with Employer's customary payroll practices during the

          period commencing on the effective date of termination of employment

          and ending on the earlier to occur of (a) the second anniversary of

          the effective date of termination of employment or (b) the date

          Employee violates any of the covenants set forth in Article 4 or

          Article 5 hereof; provided, however, that if Employer determines that

          such compensation is subject to Section 409A of the Internal Revenue

          Code of 1986, as amended (the "Code"), such compensation shall be paid

          to Employee in accordance with the following payment schedule: (1)

          one-fourth of such compensation shall be paid to Employee on the six

          (6) month anniversary ("Six Month Payment Date") of the effective date

          of termination of employment and (2) the remaining balance of such

          compensation shall be paid to Employee in equal installments in

          accordance with Employer's customary payroll practices commencing the

          first pay period after the Six Month Payment Date and ending on the

          earlier to occur of (A) the second anniversary of the effective date

          of such termination of employment, or (B) the date Employee violates

          any of the covenants set forth in Article 4 or Article 5 hereof.

 

     (ii) Employee shall be entitled to a pro rata share of any individual

          bonuses or individual incentive compensation, based on the target

          levels set for such bonuses, under Employer's and/or Employer

          Entities' plans for the year of Employee's termination of employment

          based on the portion of such year that Employee was employed by

          Employer; provided, however, that there shall not be any pro-ration of

          any amounts payable under the Retention Compensation Plan. Payment

          shall be made, in lump sum, no later than 60 days after the effective

          date of termination of employment unless Employer determines that such

          compensation is subject to Section 409A of the Code in which case it

          shall be paid to Employee on the Six Month Payment Date.

 

     (iii) Employee shall be entitled to: (a) any base salary earned, accrued or

          owing to him under this Agreement through the effective date of

          termination of employment, (b) any individual bonuses or individual

          incentive compensation not yet paid, but

 

 

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          due and payable under Employer's and/or Employer Entities' plans for

          years prior to the year of Employee's termination of employment, (c)

          reimbursement for all reasonable and customary expenses incurred by

          Employee in performing services for the Employer and/or the Employer

          Entities prior to the effective date of termination of employment, and

          (d) payment equal to the amount of accrued, but unused, vacation time.

          Such payments, if any, shall be made to Employee no later than 60 days

          after the effective date of termination of employment.

 

     (iv) To the extent permitted by applicable law and the insurance and

          benefits policies to which Employee is entitled to participate

          (collectively, "Benefit Plans"), Employer shall maintain Employee's

          paid coverage for health insurance (through the payment of Employee's

          COBRA premiums) and other dental and life insurance benefits for the

          earlier to occur of: (a) Employee obtaining the age of 65, (b) the

          date Employee is provided by another employer benefits substantially

          comparable to the benefits provided by the above-referenced Benefit

          Plans, or (c) the 24-month anniversary of the effective date of

          Employee's termination of employment. During the applicable period of

          coverage described in the foregoing sentence, Employee shall be

          entitled to benefits on substantially the same basis as would have

          otherwise been provided had Employee not been terminated and Employer

          will have no obligation to pay any benefits to, or premiums on behalf

          of, Employee after such period ends. To the extent that such benefits

          are available under the above-referenced Benefit Plans and Employee

          had such coverage immediately prior to termination of employment, such

          continuation of benefits for Employee shall also cover Employee's

          dependents for so long as Employee is receiving benefits under this

          paragraph (iv).

 

     3.6 If Employee's employment is terminated by reason of Section 3.4(iii) or

(iv), Employee's estate, in the case of death, or Employee (or his legal

guardian), in the case of Permanent Disability, shall be entitled to payment of:

(a) any base salary earned, accrued or owing to Employee's estate or Employee

(or his legal guardian), as applicable, through the effective date of

termination of employment, (b) any individual bonuses or individual incentive

compensation not yet paid but due and payable under Employer's and/or Employer

Entities' plans for years prior to the year of Employee's termination of

employment, (c) a pro rata share of any individual bonuses or individual

incentive compensation, based on the target levels set for such bonuses, under

Employer's and/or Employer Entities' plans for the year of Employee's

termination of employment based on the portion of such year that Employee was

employed by Employer; provided, however, that there shall not be any pro-ration

of any amounts payable under the Retention Compensation Plan, (d) all reasonable

and customary expenses incurred by Employee in performing services for the

Employer and/or the Employer Entities prior to the effective date of termination

of employment, (e) the amount of accrued, but unused, vacation time, and (f)

participation in the Retiree Medical Benefit Plan, if applicable, and in the

event of Employee's death, Employee's spouse shall be entitled to any benefits

which she is eligible to receive under such plan. All payments shall be paid no

later than 60 days after the effective date of termination of employment;

provided, however, that all payments under clause (c) shall be paid at the time

that such amounts are paid to similarly situated employees.

 

 

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     3.7 Involuntary Termination In Connection with a Change in Control. In the

event the Employee's employment is terminated during the 90-day period

immediately preceding a Change in Control, or on or within the one-year period

immediately following a Change in Control (a "Termination In Connection With A

Change In Control") by: (i) the Employee for Good Reason or (ii) the Employer

other than (a) for Employer Cause, (b) due to the Employee's death or (c) due to

Permanent Disability, the Employee shall be entitled to receive the benefits set

forth in Section 3.8. For purposes of this Agreement, "Change in Control" shall

mean the occurrence of any of the following after the date of this Agreement:

(a) any merger, consolidation or business combination in which the stockholders

of Alpha Natural Resources immediately prior to the merger, consolidation or

business combination do not own at least a majority of the outstanding equity

interests of the surviving parent entity, (b) the sale of all or substantially

all of Alpha Natural Resources' assets in a single transaction or a series of

related transactions, (c) the acquisition of beneficial ownership or control of

(including, without limitation, power to vote) a majority of the outstanding

common stock of Alpha Natural Resources by any person or entity (including a

"group" as defined by or under Section 13(d)(3) of the Securities Exchange Act

of 1934, as amended), (d) the stockholders of Alpha Natural Resources approve

any plan for the dissolution or liquidation of Alpha Natural Resources, or (e) a

contested election of directors, as a result of which or in connection with

which the persons who were directors of Alpha Natural Resources before such

election or their nominees cease to constitute a majority of Alpha Natural

Resources' Board of Directors.

 

     3.8 Subject to the provisions of Section 3.9, if Employee's employment is

terminated pursuant to Section 3.7, Employee shall be entitled to each of the

following:

 

          (i) Employer shall pay to Employee a lump sum cash payment equal to

(a) three (3) times Employee's base salary in effect as of the effective date of

termination, plus (b) three (3) times Employee's Target Bonus for the year in

which the effective date of the termination occurs. Payment shall be made, in

lump sum, no later than 60 days after the effective date of termination of

employment unless Employer determines that such compensation is subject to

Section 409A of the Code in which case it shall be paid to Employee on the Six

Month Payment Date.

 

          (ii) Employee shall be entitled to a pro rata share of any individual

bonuses or individual incentive compensation, based on the target levels set for

such bonuses, under Employer's and/or Employer Entities' plans for the year of

Employee's termination of employment based on the portion of such year that

Employee was employed by Employer; provided, however, that there shall not be

any pro-ration of any amounts payable under the Retention Compensation Plan.

Payment shall be made, in lump sum, no later than 60 days after the effective

date of termination of employment unless Employer determines that such

compensation is subject to Section 409A of the Code in which case it shall be

paid to Employee on the Six Month Payment Date.

 

          (iii) Employee shall be entitled to: (a) any base salary earned,

accrued or owing to him under this Agreement through the effective date of

termination of employment, (b) any individual bonuses or individual incentive

compensation not yet paid, but due and payable under Employer's and/or Employer

Entities' plans for years prior to the year of Employee's termination of

employment, (c) reimbursement for all reasonable and customary expenses

 

 

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incurred by Employee in performing services for the Employer and/or the Employer

Entities prior to the effective date of termination of employment, and (d)

payment equal to the amount of accrued, but unused, vacation time. Such

payments, if any, shall be made to Employee no later than 60 days after the

effective date of termination of employment.

 

          (iv) To the extent permitted by applicable law and the Benefit Plans,

Employer shall maintain Employee's paid coverage for health insurance (through

the payment of Employee's COBRA premiums) and other dental and life insurance

benefits until the earlier to occur of: (a) Employee obtaining the age of 65,

(b) the date Employee is provided by another employer benefits substantially

comparable to the benefits provided by the above-referenced Benefit Plans, or

(c) the 36-month anniversary of the effective date of Employee's termination of

employment. During the applicable period of coverage described in the foregoing

sentence, Employee shall be entitled to benefits, on substantially the same

basis as would have otherwise been provided had Employee not been terminated and

Employer will have no obligation to pay any benefits to, or premiums on behalf

of, Employee after such period ends. To the extent that such benefits are

available under the above-referenced Benefit Plans and Employee had such

coverage immediately prior to termination of employment, such continuation of

benefits for Employee shall also cover Employee's dependents for so long as

Employee is receiving such benefits under paragraph (iv).

 

          (v) If applicable, Employer shall pay to Employee a lump sum cash

payment equal to the difference between the present value of the Employee's

accrued pension benefits on the effective date of Employee's termination under

any qualified defined benefit plan and (if eligible) supplemental retirement

plan (together, the "pension plans") sponsored by Employer or any Employer

Entity and the present value of the accrued pension benefits to which the

Employee would have been entitled under the pension plans if Employee had

continued participation in those plans for the 36-month period after the

effective date of Employee's termination. Such amount shall be determined based

on an average of the amount contributed by Employee in the two (2) years prior

to the effective date of Employee's termination. Payment shall be made, in lump

sum, no later than 60 days after the effective date of termination of employment

unless Employer determines that such compensation is subject to Section 409A of

the Code in which case it shall be paid to Employee on the Six Month Payment

Date.

 

          (vi) Employer shall pay to Employee a lump sum cash payment of $15,000

in order to cover the cost of outplacement assistance services for Employee and

other expenses associated with seeking another employment position. Payment

shall me made, in lump sum, no later than 60 days after the effective date of

termination of employment unless Employer determines that such compensation is

subject to Section 409A of the Code in which case it shall be paid to Employee

on the Six Month Payment Date.

 

     3.9 The severance benefit paid and provided to Employee pursuant to Section

3.3, Section 3.5, 3.8 and/or Section 3.10 shall be in consideration of

Employee's continuing obligations hereunder after such termination of

employment, including, without limitation, Employee's obligations under Article

4 and Article 5. Further, as a condition to the receipt of such severance

benefit, Employer shall require Employee to first execute a release, in

substantially the form attached hereto as Annex A, releasing Employer and all

other Employer Entities, and their respective officers, directors, employees,

and agents, from any and all claims

 

 

                                       10

 

<PAGE>

 

and from any and all causes of action of any kind or character, including, but

not limited to, all claims and causes of action arising out of Employee's

employment with Employer and any other Employer Entities or the termination of

such employment. The performance of Employer's obligations under Section 3.3,

Section 3.5, Section 3.8 and/or Section 3.10 and the receipt of the severance

benefit provided thereunder by Employee shall constitute full settlement of all

such claims and causes of action. Employee shall not be under any duty or

obligation to seek or accept other employment following a termination of

employment pursuant to which a severance benefit payment or benefit under

Section 3.3, Section 3.5, Section 3.8 and/or Section 3.10 is owing and the

amounts and benefits due Employee pursuant to Section 3.3, Section 3.5, Section

3.8 and/or Section 3.10 shall not be reduced or suspended, except as otherwise

provided, if Employee accepts subsequent employment or earns any amounts as a

self-employed individual, provided, however that in the event Employee breaches

any of Employee's obligations under Articles 4 or 5 of this Agreement, then, in

addition to Employer's right to specific performance pursuant to Section 5.5 or

any other rights that Employer or each Employer Entity may have under this

Agreement or otherwise, Employer and each Employer Entity shall have the right

to terminate payment of any amounts or benefits to which Employee would

otherwise be entitled pursuant to this Article 3. Employee's rights under

Section 3.3, Section 3.5, Section 3.8 and/or Section 3.10 are Employee's sole

and exclusive rights against the Employer, or any affiliate of Employer, and the

Employer's and the Employer Entities' sole and exclusive liability to Employee

under this Agreement, whether such claim is based in contract, tort or

otherwise, for the termination of his employment relationship with Employer.

Employee agrees that all disputes relating to Employee's employment or

termination of employment shall be resolved through Employer's Dispute

Resolution Plan as provided in Section 7.7 hereof; provided, however, that

decisions as to whether there is "Employer Cause" for termination of the

employment relationship with Employee and whether and as of what date Employee

has become Permanently Disabled shall be limited to whether such decision was

reached in good faith. Nothing contained in this Article 3 shall be construed to

be a waiver by Employee of any benefits accrued for or due Employee under any

employee benefit plan (as such term is defined in the Employees' Retirement

Income Security Act of 1974, as amended) maintained by Employer except that

Employee shall not be entitled to any severance benefits pursuant to any

severance plan or program of the Employer and/or the Employer Entities except as

outlined in this Agreement.

 

     3.10 Vesting of Equity. With respect to any equity awards or grants made by

Employer and/or any Employer Entity after the date of this Agreement and

notwithstanding any provision to the contrary in any applicable plan, program or

agreement, upon a termination of Employee's employment with Employer pursuant to

any of the subparagraphs of Section 3.4 or Section 3.7, all stock options,

restricted stock and other equity rights held by the Employee will become fully

vested and/or exercisable, as the case may be, on the date on which such

termination of employment occurs, and all stock options held by the Employee

shall remain exercisable until the earlier to occur of: (i) the expiration date

of the applicable option term or (ii) the three (3) year anniversary of

Employee's termination date; provided, however, that the payment of

performance-based awards will continue to be subject to the attainment of the

performance goals as specified in the applicable plan or award agreement.

 

 

                                       11

 

<PAGE>

 

     3.11 Termination of the employment relationship does not terminate those

obligations imposed by this Agreement, which are continuing obligations,

including, without limitation, Employee's obligations under Article 4 and

Article 5.

 

     3.12 The payment of any monies to Employee under this Agreement after the

date of termination of employment does not constitute an offer or a continuation

of employment of the Employee. In no event shall Employee represent or hold

himself out to be an employee of Employer or any Employer Entity after the

effective date of termination of employment. Except where Employer is lawfully

required to withhold any federal, state, or local taxes, Employee shall be

responsible for any and all federal, state, or local taxes that arise out of any

payments to Employee hereunder.

 

     3.13 During any period during which any monies are being paid to Employee

under this Agreement after the effective date of termination of employment,

Employee shall provide to Employer and any Employer Entity reasonable levels of

assistance in answering questions concerning the business of Employer and any

Employer Entity, transition of responsibility, or litigation, provided that all

out of pocket expenses of Employee reasonably incurred in connection with such

assistance are fully and promptly reimbursed and that any such assistance after

the Non-Compete Period (as defined below) shall not interfere or conflict with

the obligations which Employee may owe to any other employer.

 

ARTICLE 4: OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY AND CONFIDENTIAL

     INFORMATION:

 

     4.1 All information, ideas, concepts, improvements, innovations,

developments, methods, processes, designs, analyses, drawings, reports,

discoveries, and inventions, whether patentable or not or reduced to practice,

which are conceived, made, developed or acquired by Employee, individually or in

conjunction with others, during Employee's employment by Employer or any of the

Employer Entities, both before and after the date hereof (whether during

business hours or otherwise and whether on Employer's premises or otherwise)

which relate to the business, products or services of Employer or the Employer

Entities (including, without limitation, all such information relating to

corporate opportunities, research, financial and sales data, pricing and trading

terms, evaluations, opinions, interpretations, acquisition prospects, the

identity of customers or their requirements, the identity of key contacts within

the customer's organizations or within the organization of acquisition

prospects, or marketing and merchandising techniques, prospective names, marks,

and any copyrightable work, trade mark, trade secret or other intellectual

property rights (whether or not composing confidential information, and all

writings or materials of any type embodying any of such items (collectively,

"Work Product"), shall be the sole and exclusive property of Employer or an

Employer Entity, as the case may be, and shall be treated as "work for hire." It

is recognized that Employee is an experienced executive in the business of the

Employer Entities and through several decades of prior work in the industry

acquired and retains knowledge, contacts, and information which are not bound by

this Article 4.

 

     4.2 Employee shall promptly and fully disclose all Work Product to Employer

and shall cooperate and perform all actions reasonably requested by Employer

(whether during or after the Term of employment) to establish, confirm and

protect Employer's and/or Employer

 

 

                                       12

 

<PAGE>

 

Entities' right, title and interest in such Work Product. Without limiting the

generality of the foregoing, Employee agrees to assist Employer, at Employer's

expense, to secure Employer's and Employer Entities' rights in the Work Product

in any and all countries, including the execution by Employee of all

applications and all other instruments and documents which Employer and/or the

Employer Entities shall deem necessary in order to apply for and obtain rights

in such Work Product and in order to assign and convey to Employer and/or the

Employer Entities the sole and exclusive right, title and interest in and to

such Work Product. If Employer is unable because of Employee's mental or

physical incapacity or for any other reason (including Employee's refusal to do

so after request therefor is made by Employer) to secure Employee's signature to

apply for or to pursue any application for any United States or foreign patents

or copyright registrations covering Work Product belonging to or assigned to

Employer and/or the Employer Entities pursuant to Section 4.1 above, then

Employee by this Agreement irrevocably designates and appoints Employer and its

duly authorized officers and agents as Employee's agent and attorney-in-fact to

act for and in Employee's behalf and stead to execute and file any such

applications and to do all other lawfully permitted acts to further the

prosecution and issuance of patents or copyright registrations thereon with the

same legal force and effect as if executed by Employee. Employee agrees not to

apply for or pursue any application for any United States or foreign patents or

copyright registrations covering any Work Product other than pursuant to this

Section in circumstances where such patents or copyright registrations are or

have been or are required to be assigned to Employer or any Employer Entity.

 

     4.3 Employee acknowledges that the businesses of Employer and the Employer

Entities are highly competitive and that their strategies, methods, books,

records, and documents, their technical information concerning their products,

equipment, services, and processes, procurement procedures and pricing

techniques, the names of and other information (such as credit and financial

data) concerning their former, present or prospective customers and business

affiliates, all comprise confidential business information and trade secrets

which are valuable, special, and unique assets which Employer and/or the

Employer Entities use in their business to obtain a competitive advantage over

their competitors. Employee further acknowledges that protection of such

confidential business information and trade secrets against unauthorized

disclosure and use is of critical importance to Employer and the Employer

Entities in maintaining their competitive position. Employee acknowledges that

by reason of Employee's duties to, and association with, Employer and the

Employer Entities, Employee has had and will have access to, and has and will

become informed of, confidential business information which is a competitive

asset of Employer and the Employer Entities. Employee hereby agrees that

Employee will not, at any time during or after his employment by Employer, make

any unauthorized disclosure of any confidential business information or trade

secrets of Employer or the Employer Entities, or make any use thereof, except in

the carrying out of his employment responsibilities hereunder. Employee shall

take all necessary and appropriate steps to safeguard confidential business

information and protect it against disclosure, misappropriation, misuse, loss

and theft. Confidential business information shall not include information in

the public domain (but only if the same becomes part of the public domain

through a means other than a disclosure prohibited hereunder). The above

notwithstanding, a disclosure shall not be unauthorized if (i) it is required by

law or by a court of competent jurisdiction or (ii) it is in connection with any

judicial, arbitration, dispute resolution or other legal proceeding in which

Employee's legal rights and obligations as an employee or under this Agreement

are at issue; provided, however, that Employee shall, to the extent practicable

and lawful in any such events, give prior notice to

 

 

                                       13

 

<PAGE>

 

Employer of his intent to disclose any such confidential business information in

such context so as to allow Employer or an Employer Entity an opportunity (which

Employee will not oppose) to obtain such protective orders or similar relief

with respect thereto as may be deemed appropriate. Any information not

specifically related to the Employer Entities would not be considered

confidential to the Employer.

 

     4.4 All written materials, records, and other documents made by, or coming

into the possession of, Employee during the period of Employee's employment by

Employer which contain or disclose confidential business information or trade

secrets of Employer or the Employer Entities, or which relate to Employee's Work

Product described in Section 4.1 above, shall be and remain the property of

Employer, or the Employer Entities, as the case may be. Upon termination of

Employee's employment, for any reason, Employee promptly shall deliver the same,

and all copies thereof, to Employer.

 

ARTICLE 5: COVENANT NOT TO COMPETE:

 

     5.1 In consideration of the compensation to be paid to Employee under this

Agreement, Employee acknowledges that in the course of Employee's employment

with certain Employer Entities, he has prior to the date of this Agreement, and

will during the Term of employment, become familiar with Employer's and the

Employer Entities' trade secrets, business plans and business strategies and

with other confidential business information concerning Employer and the

Employer Entities and that Employee's services have been and shall be of

special, unique and extraordinary value to Employer and the Employer Entities.

Employee also acknowledges that in the course of his employment he will have

access to Employer's and the Employer Entities' relationships and goodwill with

their customers, distributors, suppliers and employees. In light of Employee's

value to, and knowledge of, Employer, the Employer Entities, and the Business

(as defined below) and Employee's compensation pursuant to this Agreement,

Employee agrees that, during the Term and for a period of one (1) year

thereafter (the "Non-Compete Period"), he will not, in association with or as an

officer, principal, manager, member, advisor, agent, partner, director, material

stockholder, employee or consultant of any corporation (or sub-unit, in the case

of a diversified business) or other enterprise, entity or association, work on

the acquisition or development of, or engage in any line of business, property

or project which is, directly or indirectly, competitive with any business that

Employer or any Employer Entity engages in or is planning to engage in during

the Term of employment, including but not limited to, the mining, processing,

transportation, distribution, trading and sale of synfuel, coal and coal

byproducts (the "Business"). Such restriction shall cover Employee's activities

anywhere in the contiguous United States.

 

     5.2 During the applicable Non-Compete Period, Employee will not solicit or

induce any person who is or was employed by any of the Employer Entities at any

time during such term or period (i) to interfere with the activities or

businesses of Employer or any Employer Entity or (ii) to discontinue his or her

employment with any of the Employer Entities.

 

     5.3 During the applicable Non-Compete Period, Employee will not, directly

or indirectly, influence or attempt to influence any customers, distributors or

suppliers of any of the Employer Entities to divert their business to any

competitor of Employer or any Employer Entity or in any way interfere with the

relationship between any such customer, distributor or supplier

 

 

                                       14

 

<PAGE>

 

and Employer and/or any Employer Entity (including, without limitation, making

any negative statements or communications about Employer and the Employer

Entities). During the applicable Non-Compete Period, Employee will not, directly

or indirectly, acquire or attempt to acquire any business in the contiguous

United States to which Employer or any Employer Entity, prior to the termination

of the Term of employment, has made an acquisition proposal relating to the

possible acquisition of such business by Employer or any Employer Entity, or has

planned, discussed or contemplated making such an acquisition proposal (such

business, an "Acquisition Target"), or take any action to induce or attempt to

induce any Acquisition Target to consummate any acquisition, investment or other

similar transaction with any person other than Employer or any Employer Entity.

 

     5.4 Employee understands that the provisions of Sections 5.1, 5.2 and 5.3

hereof may limit his ability to earn a livelihood in a business in which he is

involved, but as a member of the management group of Employer and the Employer

Entities he nevertheless agrees and hereby acknowledges that: (i) such

provisions do not impose a greater restraint than is necessary to protect the

goodwill or other business interests of Employer and any of the Employer

Entities; (ii) such provisions contain reasonable limitations as to time, scope

of activity, and geographical area to be restrained; and (iii) the consideration

provided hereunder, including without limitation, any amounts or benefits

provided under Article 3 hereof, is sufficient to compensate Employee for the

restrictions contained in Sections 5.1, 5.2 and 5.3 hereof. In consideration of

the foregoing and in light of Employee's education, skills and abilities,

Employee agrees that he will not assert that, and it should not be considered

that, any provisions of Sections 5.1, 5.2 or 5.3 otherwise are void, voidable or

unenforceable or should be voided or held unenforceable.

 

     5.5 If, at the time of enforcement of Articles 4 or 5 of this Agreement, a

court shall hold that the duration, scope, or area restrictions stated herein

are unreasonable under circumstances then existing, the parties hereto agree

that the maximum period, scope or geographical area reasonable under such

circumstances shall be substituted for the stated period, scope or area and that

the court shall be allowed and directed to revise the restrictions contained

herein to cover the maximum period, scope and area permitted by law. Employee

acknowledges that he is a member of Employer's and the Employer Entities'

management group with access to Employer's and Employer Entities' confidential

business information and his services are unique to Employer and the Employer

Entities. Employee therefore agrees that the remedy at law for any breach by him

of any of the covenants and agreements set forth in Articles 4 and 5 will be

inadequate and that in the event of any such breach, Employer and the Employer

Entities may, in addition to the other remedies which may be available to them

at law, apply to any court of competent jurisdiction to obtain specific

performance and/or injunctive relief prohibiting Employee (together with all

those persons associated with him) from the breach of such covenants and

agreements and to enforce, or prevent any violations of, the provisions of this

Agreement. In addition, in the event of a breach or violation by Employee of

this Article 5, the applicable Non-Compete Period set forth in this Article

shall be tolled until such breach or violation has been cured.

 

     5.6 Each of the covenants of this Article 5 are given by Employee as part

of the consideration for this Agreement and as an inducement to Employer to

enter into this Agreement and accept the obligations hereunder.

 

 

                                       15

 

<PAGE>

 

     5.7 Provisions of Article 5 shall not be binding on Employee if Employer

fails to perform any material obligation under this Agreement, including,

without limitation, the failure of Employer to make timely payments of monies

due to Employee under Article 3 of this Agreement; provided, that (a) Employee

has notified Employer in writing within 30 days of the date of the failure of

Employer to perform such material obligation and (b) such failure remains

uncorrected and/or uncontested by Employer for 15 days following the date of

such notice.

 

     5.8 Notwithstanding anything to the contrary contained in this Article 5,

the provisions of this Article 5 shall not apply in the event that this

Agreement shall be terminated by Employee for Good Reason pursuant to Section

3.4 or Employee or Employer, as the case may be, elects not to renew the Term of

this Agreement pursuant to Section 3.2(iv) or Section 3.4(ii), respectively,

provided that Employee does not receive, or does not elect to receive, any of

the benefits or payments under Sections 3.5, 3.8 and/or 3.10 of this Agreement.

 

ARTICLE 6: CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER:

 

     6.1 The provisions of this Article 6 shall apply notwithstanding anything

in this Agreement to the contrary. Subject to Section 6.2 below, in the event

that it shall be determined that any payment or distribution by Employer to, or

for the benefit of, the Employee, whether paid or payable or distributed or

distributable pursuant to the terms of this Agreement or otherwise (a

"Payment"), would constitute an "excess parachute payment" within the meaning of

Section 280G of the Code, Employer shall pay the Employee an additional amount

(the "Gross-Up Payment") such that the net amount retained by the Employee after

deduction of any excise tax imposed under Section 4999 of the Code, and any

federal, state and local income tax, employment tax, excise tax and other tax

imposed upon the Gross-Up Payment, shall be equal to the Payment.

 

     6.2 Notwithstanding Section 6.1, and notwithstanding any other provisions

of this Agreement to the contrary, if the net after-tax benefit to the Employee

of receiving the Gross-Up Payment does not exceed the Safe Harbor Amount (as

defined below) by more than 10% (as compared to the net-after tax benefit to the

Employee resulting from elimination of the Gross-Up Payment and reduction of the

Payments to the Safe Harbor Amount), then (i) Employer shall not pay the

Employee the Gross-Up Payment, and (ii) the provisions of Section 6.3 below

shall apply. The term "Safe Harbor Amount" means the maximum dollar amount of

parachute payments that may be paid to the Employee under Section 280G of the

Code without imposition of an excise tax under Section 4999 of the Code.

 

     6.3 The provisions of this Section 6.3 shall apply only if Employer is not

required to pay the Employee a Gross-Up Payment as a result of Section 6.2

above. If Employer is not required to pay the Employee a Gross-Up Payment as a

result of the provisions of Section 6.2, Employer will apply a limitation on the

Payment amount as set forth below (a "Parachute Cap") as follows: The aggregate

present value of the Payments under Section 3.8 and Section 3.10 of this

Agreement ("Agreement Payments") shall be reduced (but not below zero) to the

Reduced Amount. The "Reduced Amount" shall be an amount expressed in present

value which maximizes the aggregate present value of Agreement Payments without

causing any Payment to be subject to the limitation of deduction under Section

280G of the Code. For purposes of this

 

 

                                       16

 

<PAGE>

 

Article 6, "present value" shall be determined in accordance with Section

280G(d)(4) of the Code.

 

     6.4 Except as set forth in the next sentence, all determinations to be made

under this Article 6 shall be made by the nationally recognized independent

public accounting firm used by Employer immediately prior to the Change in

Control ("Accounting Firm"), which Accounting Firm shall provide its

determinations and any supporting calculations to Employer and the Employee

within ten (10) days of the Employee's termination date. The value of the

Employee's non-competition covenant under Article 5 of this Agreement shall be

determined by independent appraisal by a nationally-recognized business

valuation firm acceptable to both the Employee and Employer, and a portion of

the Agreement Payments shall, to the extent of that appraised value, be

specifically allocated as reasonable compensation for such non-competition

covenant and shall not be treated as a parachute payment. If any Gross-Up

Payment is required to be made, Employer shall make the Gross-Up Payment within

60 days after receiving the Accounting Firm's calculations unless Employer

determines that such compensation is subject to Section 409A of the Code in

which case it shall be paid to Employee on the Six Month Payment Date. Any such

determination by the Accounting Firm shall be binding upon Employer and the

Employee.

 

     6.5 All of the fees and expenses of the Accounting Firm in performing the

determinations referred to in this Article 6 shall be borne solely by Employer.

 

ARTICLE 7: MISCELLANEOUS:

 

     7.1 For purposes of this Agreement, the terms "affiliate" or "affiliates"

mean an entity or entities in which Employer or any other person has a 20% or

more direct or indirect equity interest or entity or entities that have a 20% or

more direct or indirect equity interest in Employer or such other person.

 

     7.2 Employer shall, to the extent necessary, modify the timing of delivery

of compensation and/or benefits to Employee if it is determined that the timing

would result in the additional tax and/or interest and/or penalties assessed to

Employee under Section 409A of the Code.

 

     7.3 For purposes of this Agreement, notices and all other communications

provided for herein shall be in writing and shall be deemed to have been duly

given when received by or tendered to Employee or Employer, as applicable, by

pre-paid courier or by United States registered or certified mail, return

receipt requested, postage prepaid, addressed as follows:

 

 

                                       17

 

<PAGE>

 

     If to Employer:

 

                     Alpha Natural Resources Services, LLC

                     One Alpha Place

                     P.O. Box 2345 Abingdon, VA 24212

                     Attn: General Counsel of Alpha Natural Resources

 

     If to Employee: To his last known personal residence

 

     7.4 This Agreement shall be governed by and construed and enforced, in all

respects in accordance with; the law of the Commonwealth of Virginia, without

regard to principles of conflicts of law, unless preempted by federal law, in

which case federal law shall govern; provided, however, that Employer's Dispute

Resolution Plan, or if no such plan is in place, then the rules of the American

Arbitration Association shall govern in all respects with regard to the

resolution of disputes hereunder as provided in Section 7.7.

 

     7.5 No failure by either party hereto at any time to give notice of any

breach by the other party of, or to require compliance with, any condition or

provision of this Agreement shall be deemed a waiver of similar or dissimilar

provisions or conditions at the same or at any prior or subsequent time.

 

     7.6 It is a desire and intent of the parties that the term, provisions,

covenants, and remedies contained in this Agreement shall be enforceable to the

fullest extent permitted by law. If any such term, provision, covenant, or

remedy of this Agreement or the application thereof to any person, association,

or entity or circumstances shall, to any extent, be construed to be invalid or

unenforceable in whole or in part, then such term, provision, covenant, or

remedy shall be construed in a manner so as to permit its enforceability under

applicable law to the fullest extent permitted by law. In any case, the

remaining provisions of this Agreement or the application thereof to any person,

association, or entity or circumstances other than those to which they have been

held invalid or unenforceable, shall remain in full force and effect.

 

     7.7 It is the mutual intention of the parties to have any dispute

concerning this Agreement resolved out of court. Accordingly, the parties agree

that any such dispute shall, as the sole and exclusive remedy, be submitted for

resolution through Employer's Dispute Resolution Plan or, if no such plan is in

place, then pursuant to binding arbitration to be held in Abingdon, Virginia, in

accordance with the employment arbitration rules (except as modified below) of

the American Arbitration Association and with the Expedited Procedures thereof

(collectively, the "Rules"); provided, however, that the Employer, on its own

behalf and on behalf of any of the Employer Entities, and the Employers Entities

shall be entitled to seek a restraining order or injunction in any court of

competent jurisdiction to prevent any breach or the continuation of any breach

of the provisions of Articles 4 and 5 and Employee hereby consents that such

restraining order or injunction may be granted without the necessity of the

Employer or any Employer Entity posting any bond. Each of the parties hereto

agrees that such arbitration shall be conducted by a single arbitrator selected

in accordance with the Rules; provided that such arbitrator shall be experienced

in deciding cases concerning the matter which is the subject of the dispute.

Each of the parties agrees that in any such arbitration that pre-arbitration

 

 

                                       18

 

<PAGE>

 

discovery shall be limited to the greatest extent provided by the Rules, that

the award shall be made in writing no more than 30 days following the end of the

proceeding, that the arbitration shall not be conducted as a class action, that

the arbitration award shall not include factual findings or conclusions of law.

Any award rendered by the arbitrator shall be final and binding and judgment may

be entered on it in any court of competent jurisdiction. Each of the parties

hereto agrees to treat as confidential the results of any arbitration

(including, without limitation, any findings of fact and/or law made by the

arbitrator) and not to disclose such results to any unauthorized person.

 

     7.8 This Agreement shall be binding upon and inure to the benefit of

Employer, the Employer Entities, their respective successors in interest, or any

other person, association, or entity which may hereafter acquire or succeed to

all or substantially all of the business assets of Employer and the Employer

Entities by any means, whether indirectly or directly, and whether by purchase,

merger, consolidation, or otherwise. Employee's rights and obligations under

this Agreement are personal and such rights, benefits, and obligations of

Employee shall not be voluntarily or involuntarily assigned, alienated, or

transferred, whether by operation of law or otherwise, without the prior written

consent of Employer, other than in the case of death or Permanent Disability of

Employee.

 

     7.9 This Agreement replaces and merges any previous agreements and

discussions pertaining to the subject matter covered herein including, without

limitation, the Second Amended and Restated Agreement. This Agreement

constitutes the entire agreement of the parties with regard to the terms of

Employee's employment, termination of employment and severance benefits, and

contains all of the covenants, promises, representations, warranties, and

agreements between the parties with respect to such matters. Each party to this

Agreement acknowledges that no representation, inducement, promise, or

agreement, oral or written, has been made by either party with respect to the

foregoing matters which is not embodied herein, and that no agreement,

statement, or promise relating to the employment of Employee by Employer that is

not contained in this Agreement shall be valid or binding. Any modification of

this Agreement will be effective only if it is in writing and signed by each

party whose rights hereunder are affected thereby.

 

     7.10 Notwithstanding any provision of this Agreement to the contrary, the

parties' respective rights and obligations under Articles 3, 4, 5, 6, and this

Article 7 will survive any termination or expiration of this Agreement or the

termination of Employee's employment for any reason whatsoever.

 

     7.11 The invalidity or unenforceability of any provision or provisions of

this Agreement shall not affect the validity or enforceability of any other

provision of this Agreement, which shall remain in full force and effect.

 

     7.12 This Agreement may be executed in one or more counterparts, each of

which shall deemed to be in an original but all of which together will

constitute one and the same instrument.

 

                            [SIGNATURE PAGE FOLLOWS]

 

 

                                       19

 

<PAGE>

 

     IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement

in multiple originals to be effective as of the Effective Date.

 

                                        EMPLOYER

 

                                        ALPHA NATURAL RESOURCES SERVICES, LLC

 

 

                                        By: /s/ Vaughn R. Groves

                                            ------------------------------------

                                        Name: Vaughn R. Groves

                                        Title: Vice President

 

 

                                        EMPLOYEE

 

 

                                        /s/ Michael J. Quillen

                                        ----------------------------------------

                                        Michael J. Quillen

 

 

                                       20

 

<PAGE>

 

                                                                         ANNEX A

 

             SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

 

     THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the

"Agreement") is made as of this _____ day of ___________, _____, by and between

Alpha Natural Resources Services, LLC (the "Company") and Michael J. Quillen

("Executive").

 

     WHEREAS, the Executive formerly was employed by the Company as

____________; and

 

     WHEREAS, the Company employs Executive pursuant to the terms and conditions

set forth in that certain Employment Agreement dated as of January 1, 2003

between Executive and Alpha Natural Resources, LLC, that was assigned to the

Company as of December 31, 2003, amended and restated March 31, 2004, further

amended and restated as of January 28, 2005, and further amended and restated

effective as of January 1, 2006 (as amended from time to time, the "Employment

Agreement") which provides for certain payments and benefits in the event that

the Executive's employment is terminated under certain circumstances; and

 

     WHEREAS, an express condition of the Executive's entitlement to the

payments and benefits under the Employment Agreement is the execution of a

general release in the form set forth below; and

 

     WHEREAS, the Executive and the Company mutually desire to terminate the

Executive's employment effective _____________ ____, ____ ("Date of

Termination").

 

     NOW, THEREFORE, IT IS HEREBY AGREED by and between the Executive and the

Company as follows:

 

     1. (a) The Executive, for and in consideration of the commitments of the

Company as set forth in paragraph 5 of this Agreement, and intending to be

legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company,

its affiliates, predecessors, subsidiaries and parents, and their present or

former officers, directors, shareholders, employees, and agents, and its and

their respective successors, assigns, heirs, executors, and administrators and

the current and former trustees or administrators of any pension or other

benefit plan applicable to the employees or former employees of the Company

(collectively, "Releasees") from all causes of action, suits, debts, claims and

demands whatsoever in law or in equity, which the Executive ever had, now has,

or hereafter may have, whether known or unknown, or which the Executive's heirs,

executors, or administrators may have, by reason of any matter, cause or thing

whatsoever, from any time prior to the date of this Agreement, and particularly,

but without limitation of the foregoing general terms, any claims arising from

or relating in any way to the Executive's employment relationship with the

Company, the terms and conditions of that employment relationship, and the

termination of that employment relationship, including, but not limited to, any

claims arising under the Age Discrimination in Employment Act, the Older Workers

Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans

with Disabilities Act, the Family and Medical Leave Act of 1993, the Employee

Retirement Income Security Act of 1974, and any other claims under any federal,

state or local common law, statutory, or regulatory provision, now or hereafter

 

<PAGE>

 

recognized, and any claims for attorneys' fees and costs. This Agreement is

effective without regard to the legal nature of the claims raised and without

regard to whether any such claims are based upon tort, equity, implied or

express contract or discrimination of any sort.

 

          (b) To the fullest extent permitted by law, and subject to the

provisions of paragraph 10 and paragraph 12 below, the Executive represents and

affirms that the Executive has not filed or caused to be filed on the

Executive's behalf any charge, complaint or claim for relief against the Company

or any Releasee and, to the best of the Executive's knowledge and belief, no

outstanding charges, complaints or claims for relief have been filed or asserted

against the Company or any Releasee on the Executive's behalf; and the Executive

has not reported any improper, unethical or illegal conduct or activities to any

supervisor, manager, department head, human resources representative, agent or

other representative of the Company or any Releasee, to any member of the

Company's or any Releasee's legal or compliance departments, or to the ethics

hotline, and has no knowledge of any such improper, unethical or illegal conduct

or activities. In the event that there is outstanding any such charge, complaint

or claim for relief, Executive agrees to seek its immediate withdrawal and

dismissal with prejudice. In the event that for any reason said charge,

complaint or claim for relief cannot be withdrawn, Executive shall not

voluntarily testify, provide documents or otherwise participate in any

investigation or litigation arising therefrom or associated therewith and shall

execute such other papers or documents as the Company's counsel determines may

be necessary to have said charge, complaint or claim for relief dismissed with

prejudice. Nothing herein shall prevent Executive from testifying in any cause

of action when required to do so by process of law. Executive shall promptly

inform the Company if called upon to testify.

 

          (c) Executive does not waive any right to file a charge with the Equal

Employment Opportunity Commission ("EEOC") or participate in an investigation or

proceeding conducted by the EEOC, but explicitly waives any right to file a

personal lawsuit or receive monetary damages that the EEOC might recover if said

charge results in an EEOC lawsuit against the Company or Releasees.

 

     2. In consideration of the Company's agreements as set forth in paragraph 5

herein, the Executive agrees to comply with the limitations described in Article

5 of the Employment Agreement.

 

     3. The Executive further agrees and recognizes that the Executive has

permanently and irrevocably severed the Executive's employment relationship with

the Company, that the Executive shall not seek employment with the Company or

any affiliated entity at any time in the future, and that the Company has no

obligation to employ him in the future.

 

     4. The Executive further agrees that the Executive will not disparage or

subvert the Company or any Releasee, or make any statement reflecting negatively

on the Company, its affiliated corporations or entities, or any of their

officers, directors, employees, agents or representatives, including, but not

limited to, any matters relating to the operation or management of the Company

or any Releasee, the Executive's employment and the termination of the

Executive's employment, irrespective of the truthfulness or falsity of such

statement.

 

 

                                      A-2

 

<PAGE>

 

     5. In consideration for the Executive's promises, as set forth herein, the

Company agrees to pay or provide to or for the Executive the payments and

benefits described in the Employment Agreement, the provisions of which are

incorporated herein by reference. Except as set forth in this Agreement, it is

expressly agreed and understood that Releasees do not have, and will not have,

any obligations to provide the Executive at any time in the future with any

payments, benefits or considerations other than those recited in this paragraph,

or those required by law, other than under the terms of any benefit plans which

provide benefits or payments to former employees according to their terms.

 

     6. The Executive understands and agrees that the payments, benefits and

agreements provided in this Agreement are being provided to him in consideration

for the Executive's acceptance and execution of, and in reliance upon the

Executive's representations in, this Agreement. The Executive acknowledges that

if the Executive had not executed this Agreement containing a release of all

claims against the Releasees, the Executive would not have been entitled to the

payments and benefits set forth in the Employment Agreement.

 

     7. The Executive acknowledges and agrees that this Agreement and the

Employment Agreement supersede any employment agreement or offer letter the

Executive has with the Company or any Releasee. To the extent Executive has

entered into any other enforceable written agreement with the Company or any

Releasee that contains provisions that are outside the scope of this Agreement

and the Employment Agreement and are not in direct conflict with the provisions

in this Agreement or the Employment Agreement, the terms in this Agreement and

the Employment Agreement shall not supercede, but shall be in addition to, any

other such agreement. Except as set forth expressly herein, no promises or

representations have been made to Executive in connection with the termination

of the Executive's Employment Agreement, if any, or offer letter, if any, with

the Company, or the terms of this Agreement.

 

     8. The Executive agrees not to disclose the terms of this Agreement or the

Employment Agreement to anyone, except the Executive's spouse, attorney and, as

necessary, tax/financial advisor. It is expressly understood that any violation

of the confidentiality obligation imposed hereunder constitutes a material

breach of this Agreement.

 

     9. The Executive represents that the Executive does not, without the

Company's prior written consent, presently have in the Executive's possession

any records and business documents, whether on computer or hard copy, and other

materials (including but not limited to computer disks and tapes, computer

programs and software, office keys, correspondence, files, customer lists,

technical information, customer information, pricing information, business

strategies and plans, sales records and all copies thereof) (collectively, the

"Corporate Records") provided by the Company and/or its predecessors,

subsidiaries or affiliates or obtained as a result of the Executive's prior

employment with the Company and/or its predecessors, subsidiaries or affiliates,

or created by the Executive while employed by or rendering services to the

Company and/or its predecessors, subsidiaries or affiliates. The Executive

acknowledges that all such Corporate Records are the property of the Company. In

addition, the Executive shall promptly return in good condition any and all

Company owned equipment or property, including, but not limited to, automobiles,

personal data assistants, facsimile machines, copy machines, pagers, credit

cards, cellular telephone equipment, business cards, laptops, computers, and any

other items requested by the Company. As of the Date of Termination, the Company

will make

 

 

                                       A-3

 

<PAGE>

 

arrangements to remove, terminate or transfer any and all business communication

lines including network access, cellular phone, fax line and other business

numbers.

 

     10. Nothing in this Agreement shall prohibit or restrict the Executive

from: (i) making any disclosure of information required by law; (ii) providing

information to, or testifying or otherwise assisting in any investigation or

proceeding brought by, any federal regulatory or law enforcement agency or

legislative body, any self-regulatory organization, or the Company's designated

legal, compliance or human resources officers; or (iii) filing, testifying,

participating in or otherwise assisting in a proceeding relating to an alleged

violation of any federal, state or municipal law relating to fraud, or any rule

or regulation of the Securities and Exchange Commission or any self-regulatory

organization.

 

     11. The parties agree and acknowledge that the agreement by the Company

described herein, and the settlement and termination of any asserted or

unasserted claims against the Releasees, are not and shall not be construed to

be an admission of any violation of any federal, state or local statute or

regulation, or of any duty owed by any of the Releasees to the Executive.

 

     12. The Executive agrees and recognizes that should the Executive breach

any of the obligations or covenants set forth in this Agreement, the Company

will have no further obligation to provide the Executive with the consideration

set forth herein, and will have the right to seek repayment of all consideration

paid up to the time of any such breach. Further, the Executive acknowledges in

the event of a breach of this Agreement, Releasees may seek any and all

appropriate relief for any such breach, including equitable relief and/or money

damages, attorneys' fees and costs. Notwithstanding the foregoing, in the event

the Company fails to perform any material obligation under the Employment

Agreement, including, without limitation, the failure of the Company to make

timely payments of monies due to Executive under Article 3 of the Employment

Agreement, this Release shall be null and void and Executive shall have the

right to pursue any and all appropriate relief for any such failure, including

monetary damages, attorneys' fees and costs; provided, that (i) Executive has

notified the Company in writing within 30 days of the date of the failure of the

Company to perform such material obligation and (ii) such failure remains

uncorrected and/or uncontested by the Company for 15 days following the date of

such notice.

 

     13. The Executive further agrees that the Company shall be entitled to

preliminary and permanent injunctive relief, without the necessity of proving

actual damages, as well as to an equitable accounting of all earnings, profits

and other benefits arising from any violations of this Agreement, which rights

shall be cumulative and in addition to any other rights or remedies to which the

Company may be entitled.

 

     14. This Agreement and the obligations of the parties hereunder shall be

construed, interpreted and enforced in accordance with the laws of the

Commonwealth of Virginia.

 

     15. The parties agree that this Agreement shall be deemed to have been made

and entered into in Abingdon, Virginia. Jurisdiction and venue in any proceeding

by the Company or Executive to enforce their rights hereunder is specifically

limited to any court geographically located in Virginia.

 

 

                                      A-4

 

<PAGE>

 

     16. The Executive certifies and acknowledges as follows:

 

          (a) That the Executive has read the terms of this Agreement, and that

the Executive understands its terms and effects, including the fact that the

Executive has agreed to RELEASE AND FOREVER DISCHARGE the Releasees from any

legal action arising out of the Executive's employment relationship with the

Company and the termination of that employment relationship; and

 

          (b) That the Executive has signed this Agreement voluntarily and

knowingly in exchange for the consideration described herein, which the

Executive acknowledges is adequate and satisfactory to him and which the

Executive acknowledges is in addition to any other benefits to which the

Executive is otherwise entitled; and

 

          (c) That the Executive has been and is hereby advised in writing to

consult with an attorney prior to signing this Agreement; and

 

          (d) That the Executive does not waive rights or claims that may arise

after the date this Agreement is executed; and

 

          (e) That the Company has provided Executive with a period of

[twenty-one (21)] or [forty-five (45)] days within which to consider this

Agreement, and that the Executive has signed on the date indicated below after

concluding that this Separation of Employment Agreement and General Release is

satisfactory to Executive; and

 

          (f) The Executive acknowledges that this Agreement may be revoked by

him within seven (7) days after execution, and it shall not become effective

until the expiration of such seven (7) day revocation period. In the event of a

timely revocation by the Executive, this Agreement will be deemed null and void

and the Company will have no obligations hereunder.

 

                            [SIGNATURE PAGE FOLLOWS]

 

 

                                      A-5

 

<PAGE>

 

     Intending to be legally bound hereby, the Executive and the Company

executed the foregoing Separation of Employment Agreement and General Release

this ______ day of ______________, _____.

 

 

                                        Witness:

-------------------------------------            -------------------------------

MICHAEL J. QUILLEN

 

 

ALPHA NATURAL RESOURCES SERVICES, LLC

 

 

By:                                     Witness:

    ---------------------------------            -------------------------------

Name:

      -------------------------------

Title:

       ------------------------------

 

 

 

 

 

 

 

FIRST AMENDMENT

TO THE

THIRD AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

 

 

 

THIS FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Amendment") is made and entered into as of February 26, 2007, by and among Alpha Natural Resources Services, LLC, on behalf of itself and its parent entities, subsidiaries and affiliates as may employ the Employee from time to time (collectively, the "Employer"), and Michael J. Quillen (the "Employee").

 

 

WHEREAS, the Employee and Employer entered into that certain Third Amended and Restated Employment Agreement effective as of January 1, 2006 (the "Employment Agreement"), and the Employee and Employer wish to amend the Employment Agreement in this Amendment;

 

 

NOW THEREFORE, in consideration of the mutual promises contained herein, the Employee and Employer hereby agree as follows:

 

 

  1. Section 1.2 of the Employment Agreement is deleted in its entirety and replaced with the following:

 

 

 

Beginning as of the Effective Date, Employee shall continue to be employed by Employer and be the Chief Executive Officer of Alpha Natural Resources, Inc., the indirect parent of Employer ("Alpha Natural Resources"), and shall be nominated for re-election to the Board of Directors (the "Board of Directors") of, Alpha Natural Resources. Employee shall report to the Board of Directors of Alpha Natural Resources. Employee shall serve in the assigned position or in such other executive capacities as may be agreed to, from time to time, between Employee and Employer, the Board of Directors, and/or the Employer Entities (as defined below). Employee agrees to perform diligently and to the best of Employee's abilities, and in a trustworthy, businesslike and efficient manner, the duties and services pertaining to such position as reasonably determined by Employer and the Board of Directors, as well as such additional or different duties and services appropriate to such position which Employee from time to time may be reasonably directed to perform by the Board of Directors and/or Employer.

 

  2. By executing this Amendment, the Employee hereby acknowledges, confirms and consents to the subject matter of this Amendment.

 

 

 

  3. Any capitalized term contained herein that is not defined in this Amendment shall have the meaning as set forth in the Employment Agreement.

 

 

 

  4. Except as amended hereby, the Employment Agreement shall remain in full force and effect.

 

 

 

  5. This Amendment may be executed in counterparts, each of which shall be deemed to be an original but all of which taken together will constitute one and the same instrument. 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Signature Page to Quillen First Amendment to the Third Amended and Restated Employment Agreement

 

IN WITNESS WHEREOF, this Amendment is executed as of the date set forth above.

 

 

EMPLOYEE   ALPHA NATURAL RESOURCES SERVICES, LLC  

         

/s/ Michael J. Quillen   By: /s/ Vaughn R. Groves  

Name: Michael J. Quillen   Name: Vaughn R. Groves  

    Title:  Vice President