Document:

EX-10.1

EXHIBIT 10.1

SEPARATION AGREEMENT AND RELEASE

     AGREEMENT made as of the 23rd day of April 2009, by Robert J. Edmonds (“Executive”) and
Sensient Technologies Corporation (the “Company”).

     WHEREAS Executive’s employment as President and Chief Operating Officer of the Company will
terminate on April 23, 2009 (the “Separation Date”); and

     WHEREAS Executive and the Company desire to resolve all aspects of the employment relationship
between them and to provide in writing for the payment of certain compensation and benefits to
Executive.

     NOW, THEREFORE, IN CONSIDERATION OF the mutual promises hereinafter set forth, the sufficiency
of which is hereby acknowledged, the parties agree as follows:

     1. Effective Date. This Agreement will become effective only upon expiration of the
revocation period described in Section 18 hereof (the “Effective Date”).

     2. Compensation and Benefits. Subject to Executive’s compliance with the terms and
conditions hereof, the Company will provide the following compensation and benefits to Executive:

2.1 Compensation. For the twelve (12) month period beginning on April 24,
2009 (the “Compensation Period”), the Company will make payments to Executive at
the semi-monthly rate of Fifteen Thousand Dollars ($15,000.00). Payments will be
made in accordance with the Company’s standard payroll practices.

2.2 Management Incentive Plan. Executive will not be eligible to
participate in the fiscal 2009 Management Incentive Plan.

2.3 Benefits. During the Compensation Period, Executive and his eligible
dependents may elect to receive medical, dental and vision coverage at the employee
rate, with the balance of the eighteen-month period after the Separation Date at
the non-employee rate, in accordance with the provisions of the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”). Except as otherwise expressly
provided in this Agreement or required by applicable law or regulation, Executive’s
participation in all

 

 

Company sponsored or maintained benefit programs terminated on the Separation Date.

2.4 ESOP/Savings Plan. Executive will not be eligible to participate in
the Company’s contributions to the Sensient Technologies Corporation Retirement
Employee Stock Ownership Plan (“ESOP”) or the Sensient Technologies Corporation
Savings Plan (“Savings Plan”) after the Separation Date.

2.5 Automobile. The Company will transfer to Executive clear title to the
automobile previously leased by the Company and provided to him for his use, if so
requested by Executive and upon payment by Executive to the Company of an amount
equal to the automobile’s fair market value as determined by the Company. If
Executive does not wish to purchase the automobile, he will return it to the
Company on or before April 23, 2009.

2.6 Stock Options and Restricted Stock. Executive will retain his vested
stock options and be eligible to exercise such options in accordance with the
provisions of the applicable stock option plan. Nothing in this Agreement will be
construed to entitle Executive to any further vesting or grants of stock options or
restricted stock after the Separation Date.

2.7 Outplacement. Executive will be eligible to receive outplacement
services provided by Lee Hecht Harrison for a period not to exceed three (3) months
from the Effective Date.

2.8 Vacation. On the Effective Date, the Company will pay the Executive
for five (5) days of vacation pay. Executive will not be eligible for any vacation
benefit after the Separation Date.

     3. Deductions. The Company will deduct from payments made under this Agreement any
federal, state or local withholdings or other taxes or charges which the Company is from time to
time required to deduct under applicable law, and all amounts payable to Executive under this
Agreement are stated herein before any such deduction(s).

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     4. Releases.

     Release by Executive. In consideration of the Company’s agreement to
provide Executive the compensation and benefits described in subsections 2.1
through 2.8 above and the release set forth in section 4 below, Executive, an adult
individual, for himself, his heirs, personal representatives, successors and
assigns, does hereby remise, release and forever discharge the Company and all of
its past, present and future officers, directors, agents, employees, shareholders,
partners, employee benefit plans, insurers, attorneys, divisions, parent
corporations, subsidiary corporations, affiliated corporations, successors, assigns
and all persons acting by, through, under or in concert with any of them (such
entities and individuals are referred to hereinafter collectively as the “Released
Parties”) of and from any and all manner of action or actions, cause or causes of
action, suits, debts, covenants, contracts, agreements, judgments, executions,
claims, demands and expenses (including attorneys’ fees and costs) whatsoever in
law or equity, whether known or unknown, which he has had, now has or may have
against the Released Parties, or any of them, for or by reason of any transaction,
matter, event, cause or thing whatsoever occurring prior to or on the date of this
Agreement, whether based on tort, express or implied contract, or any federal,
state or local law, statute or regulation, specifically including but not limited
to (i) any and all claims arising out of or related to any employment, change in
control or other agreement (whether oral or written) between Executive and the
Company; and (ii) any and all claims arising out of or related to Executive’s
employment with the Company, including but not limited to claims under the
Wisconsin Family and Medical Leave Act, the Federal Family and Medical Leave Act,
the Wisconsin Fair Employment Act, Title VII of the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act of 1967, as amended, the
Americans With Disabilities Act, the Civil Rights Act of 1991, and the Employee
Retirement Income Security Act, as amended. Nothing in the waiver or release set
forth in this

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subsection will be construed to constitute any waiver or release by Executive of
any rights or claims under this Agreement.

     Release by the Company. Subject to the limitations stated herein,
the Company does hereby remise, release and forever discharge Executive of and from
any and all manner of action or actions, cause or causes of action, suits, debts,
covenants, contracts, agreements, judgments, executions, claims, demands and
expenses (including attorneys’ fees and costs) whatsoever in law or equity, whether
known or unknown, which it has had, now has or may have against him, for or by
reason of any transaction, matter, event, cause or thing whatsoever occurring prior
to or on the date of this Agreement, whether based on tort, express or implied
contract, or any federal, state or local law, statute or regulation; provided,
however, that this subsection 4.2 will not constitute a release of Executive by the
Company for any liability (as defined in Wis. Stat. § 180.0850 (4)) incurred
because Executive breached or failed to perform a duty he owed to the Company and
the breach or failure constitutes any of the circumstances described in Wis. Stat.
§ 180.0851 (2)(a). Nothing in the waiver or release set forth in this subsection
will be construed to constitute any waiver or release by the Company of any rights
or claims under this Agreement.

     5. Entire Agreement. This Agreement supersedes all other agreements or understandings
(whether oral or written) between Executive and the Company and constitutes the entire agreement of
the parties. Executive acknowledges and agrees that the compensation and benefits stated above
constitute the sole liability of the Company to him and that he will have no right to receive any
other compensation or benefits of any kind except as expressly set forth in this Agreement.

     6. Agreement Not to Sue. Executive agrees not to initiate or cause to be initiated
any federal, state or local lawsuit or to commence any federal, state or local administrative
action, investigation or proceeding of any kind against the Released Parties, or any of them, based
on any transaction, matter, cause or thing occurring prior to or on the date of this Agreement.

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     7. Prohibited Activities. To induce the Company to enter into this Agreement and to
protect the Company from unfair competition, Executive (a) represents and warrants that he did not
engage in any Prohibited Activities prior to the Effective Date, and (b) covenants that he will not
engage in any Prohibited Activities in the future. If Executive engages in Prohibited Activities
at any time, then notwithstanding any other terms of this Agreement, the Company’s duty to provide
the compensation and benefits identified in Section 2 above will automatically terminate and
Executive agrees that he will repay to the Company as liquidated damages an amount equal to all of
the compensation provided to Executive by the Company pursuant to Section 2.1 between the date of
this Agreement and date of such violation, the parties agreeing that such measure of liquidated
damages is reasonable and appropriate and the amount of the damages the Company would experience as
a result of Executive’s breach of such obligations would not otherwise be readily calculable. The
Company will provide written notice to Executive of such violation. Such remedy will be in
addition to any other remedy to which the Company may be entitled. For the purpose hereof,
“Prohibited Activities” means any (i) violation of the provisions of Section 8 hereof; (ii)
inducement or attempted inducement of any employee, officer, director, sales representative,
consultant or other personnel of the Company, to terminate his or her employment or breach his or
her agreements with the Company; (iii) Disparagement, as defined in Section 19 hereof; or (iv)
Litigation Assistance, as defined in Section 22 hereof.

     8. Confidential Information. The parties agree that the Company’s customer lists,
long-range plans, budgets, acquisition strategies, procedures, operations, methods of operation,
pricing, financial performance, techniques, formulas, marketing plans, contemplated product
improvements or new product developments, computer software and programs, proprietary information
and other data relating to aspects of its business (collectively, “Confidential Information”) are
established and protected at great expense and provide the Company with substantial competitive
advantage in conducting its business. The parties further agree that by virtue of Executive’s
employment with the Company, he has had and has access to, and is entrusted with Confidential
Information, and that the Company would suffer great loss and injury if he would disclose this
information or use it to compete with the Company. Therefore, Executive agrees that he

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will not, directly or indirectly, either individually or as an employee, officer, agent,
partner, shareholder, owner, trustee, beneficiary, co-venturer, distributor, consultant or in any
other capacity, use or disclose, or cause to be used or disclosed, any Confidential Information,
without the Company’s consent. The restrictions set forth in this Section will apply so long as
the Confidential Information has not by legitimate means become generally known and in the public
domain.

     9. Company Property. Executive warrants that on or before the Separation Date, he
returned to the Company all property of the Company then in his possession, including without
limitation Company credit cards, keys, security access cards, and all records, drawings, manuals,
reports, files, memoranda, correspondence, financial data, vendor and customer lists, papers and
documents kept or made by Executive in connection with his employment as an employee or officer of
the Company, as well as any copies thereof, in whatsoever form they may.

     10. No Admission of Liability. It is understood and agreed that this Agreement is
intended to provide for the amicable separation of Executive from employment with the Company and
that neither this Agreement nor the furnishing of the consideration provided for in this Agreement
will be deemed or construed at any time or for any purpose as an admission of liability by the
Released Parties. Liability for any and all claims for relief is expressly denied by the Released
Parties.

     11. Nondisclosure. Executive agrees not to disclose the terms of this Agreement to
any person or entity, other than his spouse, attorney or accountant, without the written consent of
the Company.

     12. Acknowledgment. Executive hereby acknowledges and agrees that the compensation
and benefits provided for in this Agreement, including but not limited to the compensation and
benefits described in subsections 2.1 through 2.8 above, are greater than those to which he is
entitled by any contract, employment policy or otherwise. Executive further acknowledges that he
was advised by the Company to consult with an attorney prior to executing this Agreement, and he
was also advised by the Company that he had at least twenty-one (21) days within which to consider
this Agreement.

     13. Governing Law and Forum. This Agreement will be governed by and construed under
the laws of the State of Wisconsin without regard to its conflict-of-laws

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principles. Executive submits to the exclusive jurisdiction and venue of the state courts located
in Milwaukee County, Wisconsin and waives any objection to such jurisdiction or venue, including
any objection that Milwaukee County is an inconvenient forum.

     14. Notices. Any notice or other communication under this Agreement will be given in
writing and sent by certified or registered mail, postage prepaid, or by FedEx or other overnight
delivery service for next-day delivery, to the following addresses, or such other addresses as the
parties shall provide in accordance with this Section 14:

	 	(a)	 	If to Executive, then to:
	 
	 	 	 	Robert J. Edmonds

1740 W. Green Brook Road

River Hills, WI 53217
	 
	 	(b)	 	If to the Company, then to:
	 
	 	 	 	Mr. Douglas S. Pepper

Vice President – Administration

Sensient Technologies Corporation

777 East Wisconsin Avenue

Milwaukee, WI 53202-5304

     15. Severability. The provisions of this Agreement are severable. If any provision
is adjudged void, unenforceable or contrary to law, it is the intention of the parties that such
provision shall not thereby be terminated, but shall be deemed amended to the extent required to
render it valid and enforceable, such amendment to apply only in the jurisdiction of the court
which has made such adjudication. The balance of the Agreement nonetheless will remain in full
force and effect; provided, however, that if Section 7 of this Agreement is
adjudged void, unenforceable or contrary to law as a result of any action initiated by or on behalf
of Executive, the Company will have the option either to terminate the Agreement in its entirety,
in which case the Company will be entitled to the return of all payments and benefits previously
paid or provided hereunder, or to require that the balance of the Agreement remain in full force
and effect.

     16. Voluntary Agreement. Executive acknowledges that he has read this Agreement, that
he is fully aware of its contents and its legal effect, that he understands all of its terms
including the release contained in Section 4, that the preceding paragraphs recite the sole
consideration for this Agreement, that all agreements and understandings between the parties are
embodied and expressed herein, and that he has been afforded

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ample opportunity to consider this Agreement and enters into this Agreement freely, knowingly and
without coercion and not in reliance upon any representations or promises made by the Company or
its counsel or the Released Parties, other than those contained herein.

     17. Binding Agreement. This Agreement will be binding upon and inure to the benefit
of Executive’s personal or legal representatives and heirs and will be binding upon and insure to
the benefit of the Company’s successors and assigns.

     18. Right to Revoke. For a period of seven (7) days following the execution of this
Agreement, Executive may revoke this Agreement, and the Agreement will not become effective or
enforceable until this seven (7) day revocation period has expired.

     19. No Disparagement. Executive represents and warrants that he has not heretofore
made any comments to the media or to others in any form, including all internet message postings
and all other written and oral media, that are disparaging, derogatory or detrimental to the good
name or business reputation of any of the Released Parties (“Disparagement”).

     20. Post-Employment References. Executive will direct prospective employers seeking
information concerning his employment with the Company to send their inquiries, in writing, to the
attention of Mr. Douglas S. Pepper, Vice President — Administration. The Company will respond only
to written inquiries and, in accordance with its policy, will limit its response to Executive’s
dates of employment, last position held and final rate of pay. If the Company’s response to any
such inquiry is in writing, a copy of such response will be provided to Executive.

     21. No Reemployment or Reinstatement. Executive waives any right to reinstatement to
employment or re-employment with the Company. Executive acknowledges and agrees that neither the
Company nor any of the Released Parties has any contractual or other obligation to rehire, reemploy
or recall him to employment or to otherwise accept application from or consider him for employment
in the future and Executive agrees that he will not apply for employment with the Company or any
division, subsidiary and affiliated corporations of the Company.

     22. No Litigation Assistance. Executive represents and warrants that he has not
provided assistance to any person in connection with any claim, lawsuit, administrative

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charge or other proceeding brought against any of the Released Parties (“Litigation
Assistance”) and that he will not do so, unless compelled by court process. Executive represents
and warrants that he is not aware of any such claim or action that has been filed or is going to be
filed against the Company by any present or former employee of the Company or any other party.
Executive further agrees that in the event he is served with any subpoena or other legal process
that may require him to take any action prohibited by Sections 7, 8 or 11 or this Section 22,
Executive will within forty-eight (48) hours give written notice of said fact to the Company, with
a copy of the subpoena or other legal process, and will cooperate with the Company in any lawful
effort it makes to block or limit the enforceability or scope of such subpoena or other process;
provided, that notice under this Section 22 may be given by facsimile with a confirming copy by
overnight mail.

     23. Headings. The headings herein are for reference purposes only and will not affect
in any way the meaning and interpretation of this Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth
above.

Sensient Technologies Corporation

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 

	 	 

	 	 
	 

	 	Douglas S. Pepper 

Vice President – Administration
	 	Robert J. Edmonds	 	 

9exv10w2

Exhibit 10.2

PERFORMANCE UNITS AGREEMENT

     THIS AGREEMENT, effective January 5, 2009 (the “Grant Date”), is made by and between
PEABODY ENERGY CORPORATION, a Delaware corporation (the “Company”), and the undersigned
employee of the Company or a Subsidiary (as defined below) or an Affiliate (as defined below) of
the Company (the “Grantee”).

     WHEREAS, the Company wishes to afford the Grantee the opportunity to participate in future
increases in Company value;

     WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and

     WHEREAS, the Committee (as hereinafter defined) appointed to administer the Plan has
determined that it would be to the advantage and best interest of the Company and its stockholders
to grant the Performance Units provided for herein to the Grantee as an incentive for increased
efforts during his or her term of office with the Company or its Subsidiaries or Affiliates, and
has advised the Company thereof and instructed the undersigned officer to issue said Performance
Units;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as
follows:

ARTICLE I

DEFINITIONS

     Whenever the following terms are used in this Agreement, they shall have the meanings
specified below. Capitalized terms not otherwise defined in this Agreement shall have the meanings
specified in the Plan.

     Section 1.1 — “Affiliate” shall mean any other Person directly or indirectly
controlling, controlled by, or under common control with the Company. For the purposes of this
definition, the term “control” (including, with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”), as applied
to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.

     Section 1.2 — “Board of Directors” or “Board” shall mean the Board of
Directors of the Company.

     Section 1.3 — “Cause” shall mean “Cause” as defined in the Grantee’s employment
agreement with the Company.

     Section 1.4 — “Change of Control” shall mean, for purposes of this Agreement and
notwithstanding the definition set forth in the Plan:

 

 

     (a) any Person (other than a Person holding securities representing ten percent (10%)
or more of the combined voting power of the Company’s outstanding securities as of May 22,
2001, the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their ownership of
stock of the Company), becomes the beneficial owner, directly or indirectly, of securities
of the Company representing more than fifty percent (50%) of the combined voting power of
the Company’s then-outstanding securities (provided, however, that if any Person is
considered to own more than fifty percent (50%) of the total voting power of the stock of
the Company, the acquisition of additional stock by the same Person is not considered to
cause a change in the control of the Company);

     (b) during any period of twelve (12) consecutive months, a majority of the members of
the Company’s Board is replaced by directors whose appointment or election is not endorsed
by a majority of the members of the Board before the date of the appointment or election;

     (c) consummation of any merger, consolidation, plan of arrangement, reorganization or
similar transaction or series of transactions in which the Company is involved, other than
such a transaction or series of transactions which would result in the shareholders of the
Company immediately prior thereto continuing to own (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than fifty percent
(50%) of the combined voting power of the securities of the Company or such surviving entity
(or the parent, if any) outstanding immediately after such transaction(s) in substantially
the same proportions as their ownership immediately prior to such transaction(s); or

     (d) the consummation of a sale or disposition by the Company of Company assets that
have a Total Gross FMV (as defined below) equal to or greater than eighty-five percent (85%)
of the Total Gross FMV of all of the assets of the Company immediately before such sale or
disposition (provided, however, that a transfer of assets by the Company is not treated as a
change in the ownership of such assets if the assets are transferred to: (A) a shareholder
of the Company (immediately before the asset transfer) in exchange for or with respect to
its stock; (B) an entity of which the Company owns, directly or indirectly, 50% or more of
the total value or voting power; (C) a Person, or more than one Person acting as a group,
that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting
power of all the outstanding stock of the Company; or (D) an entity of which a Person or
group described in clause (C) above owns, directly or indirectly, at least fifty percent
(50%) of the total value or voting power).

     As used in this Section, the term “Person” (including a “group”) has the meaning provided
under Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (or any successor
section thereto).

     As used in this Section, the term “Total Gross FMV” means the value of the assets of the
Company, or the value of the assets being disposed of, determined by the Committee without regard
to any liabilities associated with such assets.

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     Section 1.5 — “Committee” shall mean the Compensation Committee of the Company, duly
appointed by the Board as the Administrator under Section 2 of the Plan.

     Section 1.6 — “Common Stock” shall mean the common stock of the Company, par value
$0.01.

     Section 1.7 — “Determination Date” shall mean the earliest to occur of the following
events: (i) December 31, 2011; (ii) a Termination of Employment on account of death or Disability;
or (iii) a Change of Control.

     Section 1.8 — “FMV per Share” shall mean the average of the closing prices of the
shares of Common Stock for the four (4) weeks immediately preceding the Determination Date;
notwithstanding the foregoing, in the event of a Change of Control, “FMV per Share” shall mean the
per share value of equity based on amounts paid in the Change of Control.

     Section 1.9 — “Good Reason” shall mean “Good Reason” as defined in the Grantee’s
employment agreement with the Company.

     Section 1.10 — “Incentive Amount” shall mean the amount payable to the Grantee
hereunder with respect to the Performance Units, if any, as calculated under Article IV.

     Section 1.11 — “Performance Units” shall mean the units granted on a performance basis
under this Agreement. The value of each Performance Unit shall be equal to the FMV per Share as of
the relevant Determination Date (as defined below).

     Section 1.12 — “Person” shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.

     Section 1.13 — “Plan” shall mean the Peabody Energy Corporation 2004 Long-Term Equity
Incentive Plan, as amended from time to time.

     Section 1.14 — Pronouns - The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.

     Section 1.15 — “Retirement” shall mean the Grantee’s retirement from the Company on or
after age fifty-five (55) with at least ten (10) years of service with the Company.

     Section 1.16 — “Subsidiary” shall mean any corporation in an unbroken chain of
corporations beginning with the Company, if each of the corporations, or group of commonly
controlled corporations, other than the last corporation in the unbroken chain then owns stock
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations below it in such chain.

     Section 1.17 — “Termination of Employment” shall mean a termination of the Grantee’s
employment with the Company, a Subsidiary or an Affiliate (regardless of the reason therefor) that
constitutes a “separation from service” as defined in Section 409A of the Internal Revenue Code of
1986, as amended, or applicable regulations or other guidance issued thereunder (“Section 409A”).

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ARTICLE II

GRANT OF PERFORMANCE UNITS

     Section 2.1 — Grant of Performance Units. For good and valuable consideration, the
Company hereby grants to the Grantee the number of Performance Units set forth on the signature
page hereof upon the terms and subject to the conditions set forth in this Agreement.

     Section 2.2 — No Obligation of Employment. Nothing in this Agreement or in the Plan
shall confer upon the Grantee any right to continue in the employ of the Company or any Subsidiary
or Affiliate or interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate the employment of the
Grantee at any time for any reason whatsoever, with or without Cause.

     Section 2.3 — Adjustments in Performance Units. In the event that shares of Common
Stock are, from time to time, changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of a merger, consolidation,
recapitalization event, reclassification, stock split, stock dividend, combination of shares, or
otherwise, the Committee shall make an appropriate and equitable adjustment in the number and kind
of Performance Units, or other consideration payable hereunder, and the applicable FMV per Share.
Any such adjustment made by the Committee shall be final and binding upon the Grantee, the Company
and all other interested persons.

ARTICLE III

VESTING AND FORFEITURE OF PERFORMANCE UNITS

     Section 3.1 — Performance Units. Unless otherwise provided in this Article III, the
Performance Units shall vest on the fifteenth (15th) day of each calendar month, in
equal monthly increments, during the period beginning on the Grant Date and ending on the
Determination Date (the “Performance Cycle”).

     Section 3.2 — Effect of Certain Events. Notwithstanding the foregoing Section 3.1,
during the Performance Cycle:

     (a) upon a Termination of Employment on account of the Grantee’s death or Disability,
all of the Performance Units shall become immediately vested and the Grantee shall become
entitled to the Incentive Amount calculated and payable pursuant to Article IV hereof with
respect to the Performance Units that are vested as of the date of Termination of
Employment;

     (b) upon the earliest of (i) a Termination of Employment on account of Retirement,
(ii) a Termination of Employment by the Company without Cause, or by the Grantee for Good
Reason, or (iii) a Change of Control, the Performance Units shall cease to vest, any and all
Performance Units that remain unvested on the date of such Termination of Employment or
Change of Control shall terminate immediately, and the Grantee shall become entitled to the
Incentive Amount calculated and payable pursuant to Article IV hereof with respect to the
Performance Units that are vested as of the date of such Termination of Employment or Change
of Control, as applicable; and

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     (c) upon the earlier of (i) a Termination of Employment by the Company for Cause, and
(ii) a Termination of Employment by the Grantee without Good Reason, all Performance Units
(whether or not they are vested) shall terminate and the Grantee shall not be entitled to
any Incentive Amount hereunder.

ARTICLE IV

CALCULATION AND PAYMENT OF INCENTIVE AMOUNT

     Section 4.1 — Calculation of Incentive Amount. The Incentive Amount, if any, payable
to the Grantee hereunder shall be calculated as of the Determination Date. The Incentive Amount
shall equal the number of Performance Units that are vested as of the Determination Date pursuant
to Article III hereof, multiplied by the FMV per Share as of the Determination Date, and further
multiplied by the applicable percentage determined as of the Determination Date based on the matrix
below (the “Applicable Percentage”):

Applicable Percentage

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	75%ile
	 	 	100	%	 	 	110	%	 	 	130	%	 	 	140	%	 	 	152	%	 	 	176	%	 	 	188	%	 	 	200	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	70%ile
	 	 	92	%	 	 	102	%	 	 	122	%	 	 	132	%	 	 	144	%	 	 	168	%	 	 	180	%	 	 	192	%
	65%ile
	 	 	84	%	 	 	94	%	 	 	114	%	 	 	124	%	 	 	136	%	 	 	160	%	 	 	172	%	 	 	184	%
	60%ile
	 	 	76	%	 	 	86	%	 	 	106	%	 	 	116	%	 	 	128	%	 	 	152	%	 	 	164	%	 	 	176	%
	55%ile
	 	 	68	%	 	 	78	%	 	 	98	%	 	 	108	%	 	 	120	%	 	 	144	%	 	 	156	%	 	 	168	%
	50%ile
	 	 	60	%	 	 	70	%	 	 	90	%	 	 	100	%	 	 	112	%	 	 	136	%	 	 	148	%	 	 	160	%
	45%ile
	 	 	53	%	 	 	63	%	 	 	83	%	 	 	93	%	 	 	105	%	 	 	129	%	 	 	141	%	 	 	153	%
	40%ile
	 	 	47	%	 	 	57	%	 	 	77	%	 	 	87	%	 	 	99	%	 	 	123	%	 	 	135	%	 	 	147	%
	35%ile
	 	 	40	%	 	 	50	%	 	 	70	%	 	 	80	%	 	 	92	%	 	 	116	%	 	 	128	%	 	 	140	%
	 	 	35%ile	 	 	40%ile	 	 	50%ile	 	 	55%ile	 	 	60%ile	 	 	70%ile	 	 	75%ile	 	 	80%ile

3 Year Cumulative TSR – Peer Group

where:

“3 Year Cumulative TSR – Peer Group” represents the Company’s average total
shareholder return (based on the average of the closing prices of the shares of Common Stock
for the four (4) weeks immediately preceding the Determination Date compared to the average
of the closing prices of the shares of Common Stock for the four (4) weeks immediately
following the Grant Date) expressed as a percentage of an industry peer group index, which
peer group shall include such companies as shall be selected by the Committee in its sole
discretion before the awards to which the 3 Year Cumulative TSR – Peer Group applies are
granted; and

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“3 Year Cumulative TSR – S&P 500” represents the Company’s average total shareholder
return (based on the average of the closing prices of the shares of Common Stock for the
four (4) weeks immediately preceding the Determination Date compared to the average of the
closing prices of the shares of Common Stock for the four (4) weeks immediately following
the Grant Date) expressed as a percentage of the Standard & Poor’s 500 Index.

     Notwithstanding the foregoing, in the event that the Company’s average total shareholder
return as of the Determination Date (based on the average of the closing prices of the shares of
Common Stock for the four (4) weeks immediately preceding the Determination Date compared to the
average of the closing prices of the shares of Common Stock for the four (4) weeks immediately
following the Grant Date) is negative, (i) no Incentive Amount shall be paid hereunder if the 3
Year Cumulative TSR – Peer Group (as defined above) is less than fifty percent (50%) as of the
Determination Date, and (ii) the Applicable Percentage shall not exceed one hundred fifty percent
(150%) if the 3 Year Cumulative TSR – Peer Group (as defined above) equals or exceeds fifty percent
(50%) as of the Determination Date.

     Section 4.2 — Form and Time of Payment.

     (a) General. Subject to Section 4.3, the Incentive Amount shall be paid to the
Grantee in Common Stock (except as otherwise provided below in this Section 4.2) as soon as
administratively feasible but not later than the ninetieth (90th) day following the
Determination Date. The number of shares of Common Stock to be distributed to the Grantee
shall equal the quotient of (i) the Incentive Amount, divided by (ii) the Fair Market Value
of one share of Common Stock on the payment date. Notwithstanding the foregoing, if the
Determination Date is triggered by a Change of Control, the Incentive Amount (calculated in
accordance with Section 4.1 using the per share value of equity based on amounts paid in the
Change of Control) shall be paid to the Grantee in cash as soon as administratively feasible
but not later than the ninetieth (90th) day following the Determination Date.

     (b) Specified Employee. If the Determination Date is triggered by a
Termination of Employment other than due to death and the Grantee is a “specified employee”
(as such term is defined in Section 409A, but generally meaning one of the Company’s key
employees within the meaning of Code Section 416(i)), the Incentive Amount shall be paid to
the Grantee six (6) months after the Determination Date.

     Section 4.3 — Conditions to Issuance of Stock Certificates. If the Incentive Amount
is to be distributed in shares of Common Stock as provided in Section 4.2 and the Committee
reasonably anticipates, in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)), that
issuing Common Stock within the 90-day period following the Determination Date will violate federal
securities laws or other applicable laws, the Company may delay issuing such Common Stock, provided
that the Company issues such Common Stock on the earliest date on which the Committee reasonably
anticipates that such issuance will not violate federal securities laws or other applicable laws.

6

 

     Section 4.4 — Stockholder Rights. The Grantee shall not be, or have any of the rights
or privileges of, a stockholder of the Company in respect of any shares of Common Stock deliverable
hereunder unless and until certificates representing such shares shall have been issued by the
Company to the Grantee.

ARTICLE V

MISCELLANEOUS

     Section 5.1 — Administration. The Committee has the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken
and all interpretations and determinations made by the Committee shall be final and binding upon
the Grantee, the Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good faith with respect
to the Plan or the Performance Units. In its absolute discretion, the Board of Directors may at
any time and from time to time exercise any and all rights and duties of the Committee under the
Plan and this Agreement.

     Section 5.2 — Performance Units Not Transferable. Neither the Performance Units nor
any interest or right therein or part thereof shall be liable for the debts, contracts or
engagements of the Grantee or his or her successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether
such disposition is voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect; provided, however,
that this Section 5.2 shall not prevent transfers by will or by the applicable laws of descent and
distribution.

     Section 5.3 — Withholding. No later than the date as of which an amount payable
hereunder first becomes includible in the Grantee’s gross income for tax purposes, the Grantee
shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment
of, any applicable withholding taxes. Any payment under Section 4.2 shall be conditioned upon the
Grantee’s compliance with this Section 5.3.

     Section 5.4 — Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of its Secretary, and any notice to be given
to the Grantee shall be addressed to him or her at the address given beneath his or her signature
hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a
different address for notices to be given to him, her or it. Any notice which is required to be
given to the Grantee shall, if the Grantee is then deceased, be given to the Grantee’s personal
representative if such representative has previously informed the Company of his, her or its status
and address by written notice under this Section 5.4. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the United States Postal
Service.

     Section 5.5 — Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

7

 

     Section 5.6 — Applicability of Plan. The Performance Units and the shares of Common
Stock issued to the Grantee, if any, shall be subject to all of the terms and provisions of the
Plan, to the extent applicable to the Performance Units and such shares. In the event of any
conflict between this Agreement and the Plan, the terms of the Plan shall control.

     Section 5.7 — Amendment.

     (a) This Agreement may be amended only by a writing executed by the parties hereto that
specifically states that it is amending this Agreement.

     (b) This Agreement is intended to comply with Section 409A and shall, to the extent
practicable, be construed in accordance therewith. If either party to this Agreement
reasonably determines that any amount payable pursuant to this Agreement would result in
adverse tax consequences under Section 409A, then such party shall deliver written notice of
such determination to the other party, and the parties hereby agree to work in good faith to
amend this Agreement so it complies with the requirements of Section 409A and preserves as
nearly as possible the original intent and economic effect of the affected provisions.

     Section 5.8 — Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by arbitration in St. Louis, Missouri.
Arbitrators shall be selected, and arbitration shall be conducted, in accordance with the rules of
the American Arbitration Association. The Company shall pay or reimburse any legal fees in
connection with such arbitration in the event that the Grantee prevails on a material element of
his or her claim or defense. Payments or reimbursements of legal fees made under this Section 5.8
that are provided during one calendar year shall not affect the amount of such payments or
reimbursements provided during a subsequent calendar year, payments or reimbursements under this
Section 5.8 may not be exchanged or substituted for another form of compensation to the Grantee,
and any such reimbursement or payment will be paid within sixty (60) days after the Grantee
prevails, but in no event later than the last day of the Grantee’s taxable year following the
taxable year in which he incurred the expense giving rise to such reimbursement or payment. This
Section 5.8 shall remain in effect throughout the Grantee’s employment with the Company and for a
period of five (5) years following the Grantee’s Termination of Employment.

     Section 5.9 — Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement regardless of the law that
might be applied under principles of conflicts of laws.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.

	 	 	 	 	 	 	 
	GRANTEE	 	PEABODY ENERGY CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	 
 

	 	 
	 

[Grantee]

	 	 
	 	 
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Address
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Grantee’s Taxpayer Identification	 	Aggregate number of Performance	 	 
	Number:	 	Units granted hereunder:                     	 	 
	                    -                    -                    
	 	 	 	 	 	 

9

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