Exhibit 10.18

 



 

June 10, 2011

 

Mr. Charles C. Stewart

560 Country Road 4238

Arley, AL 35541

 

Dear Chuck,

 

We are pleased that you have decided to continue in the position of President & COO — Walter Coke & Walter Minerals of Walter Energy, Inc. (“Walter” or the “Company”) effective as of the date of the consummation of the transactions contemplated by the Arrangement Agreement, dated December 2, 2010 between Walter and Western Coal Corp. (“Western”) through your anticipated retirement (“Retirement”) on April 1, 2013. The attached schedules outline the remuneration and benefits and terms and conditions of your employment.

 

As the President & COO — Walter Coke & Walter Minerals of Walter, you will have such duties, responsibilities and authorities as the President — US Operations of Walter determines are appropriate for your position. You will report to the President — US Operations of Walter.

 

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, including, without limitation, the Amended and Restated Executive Change-in-Control Severance Agreement by and between you and Walter, effective December 17, 2008, as it may be amended from time to time (the “CIC 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.

 











 

Chuck, we are delighted that you are remaining with Walter and we look forward to continuing to work with you. If the terms contained within this Agreement are acceptable, please sign below and execute as noted above.

 

	
Best regards,
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ P.P. Keith Calder 
    	
 
    	
11TH June 2011.
    
	
P.P. Keith Calder 
    	
 
    	
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.

 

	
/s/ Charles C. Stewart 
    	
 
    	
8/11/11
    
	
Charles C. Stewart 
    	
 
    	
Date
    


 

Enclosures:

 

Schedule A                                   Remuneration & Benefits

Schedule B                                   Terms and Conditions

 

Initials [ILLEGIBLE]

 

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SCHEDULE A

 

REMUNERATION & BENEFITS

 

	
Name: 
    	
 
    	
Charles C. Stewart
    
	
 
    	
 
    	
 
    
	
Role Title: 
    	
 
    	
President & COO — Walter Coke & Walter Minerals
    
	
 
    	
 
    	
 
    
	
Role Band: 
    	
 
    	
n/a
    
	
 
    	
 
    	
 
    
	
Department: 
    	
 
    	
Corporate
    
	
 
    	
 
    	
 
    
	
Employer: 
    	
 
    	
Walter
    
	
 
    	
 
    	
 
    
	
Date of Appointment:  
    	
 
    	
Date of consummation of the transaction contemplated by the   Arrangement Agreement, dated December 2, 2010 between Walter and   Western.
    


 

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 varied from time to time.

 

	
Base Salary and Remuneration:
    	
 
    	
The remuneration for this position, effective as of the Date of   Appointment, is a base salary of $330,000 per annum which 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.”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The remuneration structure is designed to provide competitive levels   of total remuneration for strong individual and corporate performance and   achieve a close alignment between personal and business performance and   remuneration.
    
	
 
    	
 
    	
 
    
	
Annual Bonus (EIP):
    	
 
    	
You will continue to participate in Walter’s Executive Incentive   Plan, as it may be amended from time to time (the “EIP”) and, in this   position, effective as of the Date of Appointment, will be eligible to earn   an annual target bonus of 65% of your Base Salary (the “Target Bonus”),   with an
    


 

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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 (x) individual   objectives and/or (y) 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, your bonus, if any, under the EIP, earned in   respect of the 2011 fiscal year, will be determined as follows: (i) the   portion of your bonus, if any, that relates to your employment with Walter   from January 1, 2011 through the day immediately prior to the Date of   Appointment will be based solely on the base salary earned by you during such   period and your annual target bonus percentage as in effect immediately prior   to the Date of Appointment, and (ii) the portion of your bonus, if any,   that relates to your employment with Walter from the Date of Appointment   through the last day of the 2011 fiscal year will be based solely on the Base   Salary earned during such period and your Target Bonus. 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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
As you are aware, 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 remain a   participant in Walter’s Amended and Restated
    


 

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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”), and will remain eligible to receive annual   equity grants from Walter.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Your annual equity grant in respect of the 2011 fiscal year (which   includes the equity grant made by Walter to you on February 16, 2011)   will be valued at 90% of Base Salary, based on the Black-Scholes value at the   date of grant, fifty percent (50%) of which will be in the form of   non-qualified stock options and fifty percent (50%) of which will be in the   form of restricted stock units. Such equity grants will be awarded under and   subject to the terms and conditions of the LTIP and the terms and conditions   applicable to other awards granted by Walter under the LTIP to employees of   Walter.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Upon your retirement, the vesting provisions on all Restricted Share   Units (“RSUs”) held by you will be accelerated, thus allowing you to   exercise your RSUs without restrictions. Also, the vesting provisions on all   Non-Qualified Stock Options (“NQSOs”) held by you will be accelerated,   thus allowing you to exercise your NQSOs for a period of three (3) years   from your retirement date.
    
	
 
    	
 
    	
 
    
	
Car Allowance:
    	
 
    	
You will continue to be eligible for an annual car allowance of   $18,000.
    
	
 
    	
 
    	
 
    
	
Expenses:
    	
 
    	
Continued 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 Care:
    	
 
    	
Continued participation in Walter’s life and health insurance benefit   programs in accordance with their terms, as they may change from time to   time.
    


 

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Retirement Plan:
    	
 
    	
Continued participation in Walter’s retirement plan according to its   terms as they may change from time to time.
    
	
 
    	
 
    	
 
    
	
Leave:
    	
 
    	
Continued eligibility for 25 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.
    
	
 
    	
 
    	
 
    
	
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 as Exhibit A (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
    


 

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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.
    


 

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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 (x) 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, (y) the   Company does not remedy the Good Reason condition within 30 days after it   receives such notice and (z) 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.
    


 

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SCHEDULE B

 

TERMS AND CONDITIONS

 

1.                                      It is agreed and understood that your employment with Walter continues 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 continue 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 Interest. 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 Chief Executive Officer of Walter or his designee.

 

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 have and will continue to 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,

 

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successor or assigns thereof is in the coal mining business or like business within the Restricted Area (defined as mining industries in the geographical areas 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, including but not limited to Western or any other affiliated companies; 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.                                      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,

 

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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.

 

9.                                      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)(l)(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.

 

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

 

11.                              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.

 

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