Exhibit 10.1

 



 

May 29, 2012

 

Mr. William G. Harvey

One Rugosa Way

Greer, South Carolina 29650

 

Dear Bill,

 

We are pleased that you have accepted the position of Senior Vice President — Chief Financial Officer of Walter Energy, Inc. (“Walter” or the “Company”), effective as of July 9, 2012.  The attached schedules outline the compensation and benefits and terms and conditions of your employment.

 

As the Senior Vice President — Chief Financial Officer of Walter Energy, you will have such duties, responsibilities and authorities as the Chief Executive Officer of Walter (the “CEO”) determines are appropriate for your position.  You will report to the CEO.

 

It is agreed and understood that this letter agreement (including the schedules and exhibits attached hereto) (collectively, the “Agreement”) and the other agreements referred to in this Agreement shall constitute our entire agreement with respect to the subject matter hereof and shall supersede all prior agreements, discussions, understandings and proposals (written or oral) relating to your employment with the Company and its affiliates.  This Agreement may only be amended or modified by a written agreement executed by you and Walter (or any of its respective successors) and will be interpreted under and in accordance with the laws of the State of Delaware without regard to conflicts of laws.

 

This Agreement may be executed by fax or pdf and in any number of counterparts, all of which, when taken together, will constitute one and the same instrument.

 

Bill, we are delighted that you are joining Walter and we look forward to working with you.  If the terms contained within this Agreement are acceptable, please sign and return a copy to me.

 

Best regards,

 

 

	
    /s/   Walter J. Scheller, III
    	
 
    	
                  5/29/12
    
	
Walter   J. Scheller, III
    	
 
    	
Date
    
	
Chief   Executive Officer
    	
 
    	
 
    
	
Walter   Energy, Inc.
    	
 
    	
 
    


 











 

ACCEPTANCE

 

I have read the Agreement, have been advised to consult with counsel of my choice concerning the same, and I fully understand the same.  I approve and accept the terms set forth in the Agreement as governing my employment relationship with Walter and acknowledge and agree that this offer of employment is subject to me passing the Company’s mandatory drug screening and background check.

 

 

	
/s/   William G. Harvey
    	
 
    	
5/29/12
    
	
William   G. Harvey
    	
 
    	
Date
    


 

Enclosures:

 

Schedule A                                  Compensation & Benefits

Schedule B                                    Terms and Conditions

 











 

SCHEDULE A

 

COMPENSATION & BENEFITS

 

	
Name:
    	
William   G. Harvey
    
	
 
    	
 
    
	
Title:
    	
Senior   Vice President — Chief Financial Officer
    
	
 
    	
 
    
	
Employer:
    	
Walter   Energy, Inc.
    
	
 
    	
 
    
	
Date   of Appointment:
    	
July 9,   2012, subject to the satisfaction of the conditions set forth in this   Agreement
    


 

This schedule should be read in conjunction with the remainder of the Agreement.  The policies covering these benefits and their terms and conditions may be changed from time to time.

 

	
Base   Salary:
    	
 
    	
The   compensation for this position is an annual base salary of $435,000  which, commencing in 2013, will be subject to review and   adjustment by the Compensation and Human Resources Committee of the Board of   Directors (the “Compensation Committee”) and paid in accordance with   Walter’s payroll practices, as they may change from time to time. Your annual   base salary, as in effect from time to time, is hereinafter referred to as   the “Base Salary.”
    
	
 
    	
 
    	
 
    
	
Annual   Bonus (EIP):
    	
 
    	
You   will be eligible to participate in Walter’s Executive Incentive Plan, as it   may be amended from time to time (the “EIP”) and will be eligible to   earn an annual target bonus of 80% of your Base Salary (the “Target Bonus”),   with an upside potential of 2 times your Target Bonus for top performance.   The actual amount of your bonus, if any, will fluctuate based upon actual   performance under the performance metrics associated with the EIP.   Participation in the bonus pool is dependent upon the achievement of Walter’s   annual performance goals, as well as the accomplishment of individual   objectives and/or departmental goals, in each case, as determined and   recommended by the management of Walter and subsequently approved by the   Compensation Committee. In order to receive a bonus under the EIP, you must   be employed at the time the bonus is paid. Notwithstanding anything in this   Agreement to the contrary, with respect to any bonus to be paid hereunder,   such bonus will be paid in accordance with the EIP and, to the extent   possible, will be structured to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), as   performance based compensation thereunder;
    


 











 

	
 
    	
 
    	
provided   however, to the extent not deductible by Walter, such payment will be   deferred until it can be paid by Walter on a tax deductible basis.   Notwithstanding anything in this Agreement to the contrary, your bonus, if   any, under the EIP, earned in respect of the 2012 fiscal year (ending   December 31, 2012), will be pro-rated based upon the percentage of such   fiscal year that will have elapsed from the Date of Appointment through the   last day of such fiscal year and based solely on the Base Salary actually   earned in such fiscal year from the Date of Appointment through the last day   of such fiscal year.

 

Please   note that participation in Walter’s Employee Stock Purchase Plan is a   condition to participation in the bonus pool under the EIP.
    
	
 
    	
 
    	
 
    
	
Long   Term Incentive:
    	
 
    	
Subject   to your continued employment with Walter, you will be eligible to participate   in Walter’s Amended and Restated 2002 Long-Term Incentive Award Plan, as it   may be amended and restated from time to time (and any successor long term   incentive award plan) (collectively, the “LTIP”).

 

In   connection with the commencement of your employment with Walter, on the Date   of Appointment, you will receive a one-time equity grant valued at $225,000.   Based on the Black-Scholes value on the Date of Appointment, fifty percent   (50%) of such grant will be in the form of non-qualified stock options and   fifty percent (50%) will be in the form of restricted stock units. The terms   and conditions of such options and restricted stock units will generally be   consistent with prior annual equity grants made by Walter.

 

Commencing   in 2013, you will be eligible to receive an annual equity grant, which will   have a target value of 90% of Base Salary, based on the Black-Scholes value   at the date of grant.

 

All   such equity grants described above will be awarded under and subject to the   terms and conditions of the LTIP.
    
	
 
    	
 
    	
 
    
	
Expenses:
    	
 
    	
You   will be entitled to reimbursement for all reasonable and customary   out-of-pocket business expenses incurred by you in the performance of your   duties hereunder, in accordance with the policies, practices and procedures   of Walter relating to reimbursement of business expenses incurred by Walter   employees in effect at any time during the 12 month period preceding the date   you incur the expenses; provided, however, that any such expense   reimbursement will be made no later than the last day of the calendar year   following the calendar year in which you incur the expense,
    


 











 

	
 
    	
 
    	
will   not affect the expenses eligible for reimbursement in any other calendar   year, and cannot be liquidated or exchanged for any other benefit.
    
	
 
    	
 
    	
 
    
	
Health   and Welfare Plans:
    	
 
    	
Commencing   on the Date of Appointment, you will be entitled to participate in Walter’s   health and welfare benefit plans, in accordance with their terms, as they may   change from time to time. Additional benefit plan information will be   available for your review upon request.
    
	
 
    	
 
    	
 
    
	
Retirement   Plan(s):
    	
 
    	
You   will be entitled to participate in Walter’s retirement plan(s) in   accordance with their terms, as they may change from time to time. Information   on the retirement plan(s) will be available for your review upon   request. Your eligibility to participate will be consistent with the   requirements of the Employee Retirement Income Security Act of 1974, as   amended.
    
	
 
    	
 
    	
 
    
	
Paid   Time Off:
    	
 
    	
You   will be eligible for 20 business days of vacation and 10 company paid   holidays to be used each year in accordance with Walter’s policy, as it may   change from time to time.
    
	
 
    	
 
    	
 
    
	
Change   in Control:
    	
 
    	
You   will enter into an Executive Change-in-Control Severance Agreement in a form   substantially similar to the form attached hereto (the “CIC Agreement”).
    
	
 
    	
 
    	
 
    
	
Severance:
    	
 
    	
Subject   to (a) your compliance with the restrictive covenants set forth in   Sections 5 through 7 of Schedule B  and   (b) your execution, delivery and non-revocation of a waiver and release   of claims in a form substantially similar to the form attached hereto (the “Release”)   on or prior to the 21st day following the date on which your   employment with Walter terminates due to (x) the termination of your   employment by Walter, other than for “Cause” (as defined below) or   (y) the termination of your employment by you for “Good Reason” (as   defined below), but in each case, excluding any separation from service by   reason of your death or Disability (as defined below) (such date, the “Severance   Date”), you will be entitled to receive the following severance payments   and benefits:

 

·                  For the   period commencing on the day immediately following the Severance Date and   ending on the first anniversary of the Severance Date, monthly pay   continuation with each monthly payment equal to one-twelfth (1/12) times the   sum of your Base Salary and Target Bonus, in each case, as in effect on the   Severance Date. Monthly payments will occur in accordance with the payroll   dates in effect on the Severance Date, and such payment dates will not be   affected by any subsequent change in payroll practices.
    


 











 

	
 
    	
 
    	
·                  Except as provided below,   continuation of group medical, dental, vision, group basic term life   insurance, accidental death and dismemberment insurance, voluntary term life   insurance, voluntary accidental death and dismemberment insurance, dependent   life insurance and employee assistance program benefits, provided, to the   extent applicable, regular contributions are made, at the level in effect on   the Severance Date, in each case, for a period (such period, the “Continuation   Coverage Period”) beginning immediately upon the Severance Date and   continuing until the earliest to occur of (A) the first anniversary of   the Severance Date, (B) the last date you are eligible to participate in   the benefit under applicable law, or (C) the date you are eligible to   receive comparable benefits from a subsequent employer, as determined solely   by Walter in good faith; provided, however, that if you fail to execute and   deliver the Release or revoke the Release, in either case, the Continuation   Coverage Period shall cease immediately upon such date. Such benefits shall   be provided to you at the same coverage and cost to you as in effect on the   Severance Date. To the   extent permitted by law, you shall be eligible to qualify for COBRA health   care continuation coverage under Section 4980B of the Code, or any   replacement or successor provision of United States tax law, beginning   following the expiration of the period described above. Notwithstanding   the foregoing, your participation in the Employee Stock Purchase Plan and   long-term disability insurance plan, and your ability to make deferrals under   the 401(k) plan, will cease effective on the Severance Date. For   purposes of this subsection, you shall send written notice of the terms and   conditions of any subsequent employment and the corresponding benefits earned   from such employment and shall provide, or cause to be provided, to Walter,   in writing, correct, complete and timely information concerning the same to   the extent requested by Walter; provided, however, that Walter shall have the   right to cease making such payments and you shall be obligated to repay any   such amounts to Walter already paid if you fail to execute and deliver the   Release within the time period provided for above or, after timely delivery,   revoke it within the time period specified in such Release.

 

Notwithstanding   anything in this Agreement to the contrary and for the avoidance of doubt,   you shall not be entitled to severance payments or benefits under this   Agreement in the event you experience a separation from service within
    


 











 

	
 
    	
 
    	
twenty-four   (24) months following a Change in Control of the Company (as defined in the   CIC Agreement). Severance payments and benefits payable upon a separation   from service in connection with such a termination of employment, if any,   shall be determined and paid under the CIC Agreement.

 

For purposes of this Agreement, the term   “Cause” shall mean: (i) your willful and continued refusal to perform   the duties of your position (other than any such failure resulting from your   incapacity due to physical or mental illness); (ii) your conviction or   guilty plea of a felony involving fraud or dishonesty; (iii) theft or   embezzlement by you of property from Walter or any subsidiary or affiliate;   or (iv) fraudulent preparation by you of financial information of Walter   or any subsidiary or affiliate.

 

For   purposes of this Agreement, the term “Good Reason” shall mean the occurrence   of any of the following conditions (in each case arising without your   consent): (A) a material breach of this Agreement by Walter or   (B) a material diminution in your authority, duties or responsibilities.   Notwithstanding the foregoing, your voluntary separation from service shall   be for “Good Reason” only if you provide written notice of the facts or   circumstances constituting a “Good Reason” condition to Walter within 30 days   after the initial existence of the Good Reason condition, the Company does   not remedy the Good Reason condition within 30 days after it receives such   notice and the voluntary separation from service occurs within 90 days after   the initial existence of the Good Reason condition. For purposes of this   Agreement, the parties agree that “Good Reason” will not exist solely because   the amount of your bonus fluctuates due to performance considerations under the   EIP or other Walter incentive plan applicable to you and in effect from time   to time.

 

For   purposes of this Agreement, the term “Disability” shall mean any medical   condition whatsoever which leads to your absence from your job function for a   continuous period of six months without you being able to resume such   functions on a full time basis at the expiration of such period, it being   understood that unsuccessful attempts to return to work for periods under   thirty days shall not be deemed to have interrupted said continuity.
    
	
 
    	
 
    	
 
    
	
Relocation:
    	
 
    	
You   will be provided with relocation assistance in connection with your move to   Birmingham, Alabama in accordance with the Walter policy, a copy of which   will be provided under separate cover.
    


 











 

SCHEDULE B

 

TERMS AND CONDITIONS

 

1.                                       It is agreed and understood that your employment with Walter is to be at will, and either you or Walter may terminate the employment relationship at any time for any reason, with or without cause, and with or without notice to the other; nothing in this Agreement or elsewhere constitutes or shall be construed as a commitment to employ you or pay you severance, other than as stated in Schedule A or in the CIC Agreement, for any period of time.

 

2.                                       Outside Interests: While employed by Walter, you agree to devote your full business time and best efforts to the performance of your duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services either directly or indirectly without the prior written consent of the CEO.

 

3.                                       You agree that all inventions, improvements, trade secrets, reports, manuals, computer programs, systems, tapes and other ideas and materials developed or invented by you during the period of your employment with Walter, either solely or in collaboration with others, which relate to the actual or anticipated business or research of Walter or any of its subsidiaries or affiliates, which result from or are suggested by any work you may do for Walter or any of its subsidiaries or affiliates, or which result from use of Walter’s or any of its subsidiaries’ or affiliates’ premises or Walter’s, its subsidiaries’, its affiliates’, or its customers’ property (collectively, the “Developments”) shall be the sole and exclusive property of Walter.  You hereby assign to Walter your entire right and interest in any such Developments, and will hereafter execute any documents in connection therewith that Walter may reasonably request.  This section does not apply to any inventions that you made prior to your employment by Walter, or to any inventions that you develop entirely on your own time without using any of Walter’s equipment, supplies or facilities, or Walter’s or its subsidiaries’, affiliates’, or customers’ confidential information which do not relate to Walter’s or its subsidiaries’ or its affiliates’ business, anticipated research and development, or the work you have performed for Walter and its subsidiaries and affiliates.

 

4.                                       As an inducement of Walter to make this offer to you, you represent and warrant that there exists no impediment or restraint, contractual or otherwise on your power, right or ability to accept this offer and to perform the duties and obligations specified in this Agreement.

 

5.                                       Non-Compete/Non-Solicit:  It is understood and agreed that you will have substantial relationships with specific businesses and personnel, prospective and existing, vendors, contractors, customers, and employees of Walter and its subsidiaries that result in the creation of customer goodwill.  Therefore, while you are employed by Walter and following the termination of your employment for any reason and continuing for a period of 12 months from the date of your termination, so long as Walter or any affiliate, successor or assigns thereof is in the coal mining business or like business within the Restricted Area (defined as the geographical area in which Walter or any of its subsidiaries competes at the time of your termination), unless the Board of Directors approves an exception, you shall

 











 

not, directly or indirectly, for yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation, business entity or otherwise:

 

(a)          Call upon, solicit, write, direct, divert, influence, or accept business (either directly or indirectly) with respect to any account or customer or prospective customer of the Company or any corporation controlling, controlled by, under common control with, or otherwise related to Walter or any affiliated company; or

 

(b)         Hire away any independent contractors or personnel of Walter and/or entice any such persons to leave the employ of Walter or its affiliated entities without the prior written consent of Walter.

 

6.                                       Non-Disparagement:  Following the termination of your employment for any reason and continuing for so long as Walter or any affiliate, successor or assigns thereof carries on the name or like business within the Restricted Area, you shall not, directly or indirectly, for yourself or on behalf of, or in conjunction with, any other person, persons, company, partnership, corporation, business entity or otherwise:

 

(a)          Make any statements or announcements or permit anyone to make any public statements or announcements concerning the termination of your employment with Walter, or

 

(b)         Make any statements that are inflammatory, detrimental, slanderous, or negative in any way to the interests of Walter or its affiliated entities.

 

7.                                       You acknowledge and agree that you will respect and safeguard Walter’s and its subsidiaries’ property, trade secrets and confidential information.  You acknowledge that Walter’s electronic communication systems (such as email and voicemail) are maintained to assist in the conduct of Walter’s and its subsidiaries’ business and that such systems and data exchanged or stored thereon are Walter property.  In the event you leave the employ of Walter, you will not disclose any trade secrets or confidential information you acquired while an employee of Walter to any other person or entity, including without limitation, a subsequent employer, or use such information in any manner.

 

8.                                       The Board believes that the Company’s executive officers should have a meaningful equity interest in the Company. In this regard, under the terms of the Company’s stock ownership policy, and subject to the terms of the policy currently in effect, you are expected to acquire and maintain common stock in the Company having a value equal to three (3) times your Base Salary (the “Ownership Level”).  Prior to attaining the Ownership Level, you must continue to own fifty percent (50%) of any award obtained through Company programs that vests (net of shares surrendered to satisfy tax obligations).  Each share of Company common stock owned by you is deemed to have a value equal to the greater of (1) the trading price of the Company’s common stock as of the date the applicable share was acquired or (2) the trading price of the Company’s common stock as of the measurement date.  Shares of unvested restricted stock units are counted toward meeting these requirements.  You are expected to meet the Ownership Level by the fifth anniversary of the Date of Appointment.

 

9.                                       Compensation Recovery Policy:  You understand and agree that if any of Walter’s financial statements are required to be restated due to errors, omissions, fraud or misconduct, the Compensation Committee may, in its sole discretion but acting in good faith, direct that Walter recover all or a portion of any cash incentive, equity compensation or severance

 











 

disbursements paid to you with respect to any fiscal year of Walter for which the financial results are negatively affected by such restatement.  For purposes of this provision, errors, omissions, fraud or misconduct may include and are not limited to circumstances where Walter has been required to prepare an accounting restatement due to material non-compliance with any financial reporting requirement, as enforced by the Securities and Exchange Commission, and the Compensation Committee has determined in its sole discretion that you had knowledge of the material noncompliance or the circumstances that gave rise to such noncompliance and failed to take reasonable steps to bring it to the attention of the appropriate individuals within Walter, or you personally and knowingly engaged in practices which materially contributed to the circumstances that enabled a material noncompliance to occur.

 

10.                                 This Agreement is intended to comply with Section 409A of the Code and will be interpreted accordingly.  References under this Agreement to the termination of your employment shall be deemed to refer to the date upon which you have experienced a “separation from service” within the meaning of Section 409A of the Code.  Notwithstanding anything in this Agreement to the contrary, (i) if at the time of your separation from service with Walter you are a “specified employee” as defined in Section 409A of the Code (and any related regulations or other pronouncements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder or payable under any other compensatory arrangement between you and Walter as a result of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then Walter will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to you) until the first business day after the date that is six months following your separation from service (or the earliest date as is permitted under Section 409A of the Code), at which point all payments deferred pursuant to this paragraph shall be paid to you in a lump sum and (ii) if any other payments of money or other benefits due to you hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner that does not cause such an accelerated or additional tax.  To the extent any reimbursements or in-kind benefits due to you under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to you in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv).  For purposes of Section 409A of the Code, each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.

 

11.                                 Walter shall withhold from any amounts payable hereunder all Federal, state, city or other taxes as legally shall be required.

 

12.                                 You acknowledge and agree that you have read this Agreement carefully, have been advised by the Company to consult with an attorney regarding its contents, and that you fully understand the same.