Document:

Exhibit 10.1

 

March 1, 2011

 

Mr. Keith Calder

c/o Western Coal Corp.

1000 — 885 Dunsmuir Street

Vancouver, BC

Canada V6C 1N5

 

Dear Keith,

 

We are pleased that you have accepted the position of Chief Executive Officer 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”).  The attached schedules outline the remuneration and benefits and terms and conditions of your employment.

 

As the Chief Executive Officer of Walter, you will be responsible for all aspects of the corporation and will report to the Board of Directors, acting in accordance with the Company’s articles, bylaws and resolutions enacted by or policies established by the Board of Directors.  You will be required to provide regular reports to the Board of Directors on financial performance, strategic direction, management development, business plans, and such other matters as are customarily reviewed by or as may be required by the Board of Directors.

 

In addition to serving as the Chief Executive Officer of Walter, you will also serve as a member of the Board of Directors, without additional compensation.

 

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, including, for the avoidance of doubt, Western.  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.

 

 

Keith, 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 one of the enclosed copies and return it to me in the envelope provided.

 

Best regards,

 

 

	
/s/ Micahel T. Tokarz
    	
 
    	
March 1, 2011
    
	
Michael T. Tokarz
    	
 
    	
Date
    
	
Chairman of the Board of Directors
    	
 
    	
 
    
	
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/ Keith Calder
    	
 
    	
March 2, 2011
    
	
Keith Calder
    	
 
    	
Date
    

 

 

Enclosures:

 

Schedule A                                  Remuneration & Benefits

Schedule B                                    Terms and Conditions

 

	
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SCHEDULE A

 

REMUNERATION & BENEFITS

 

	
Name:
    	
 
    	
Keith Calder
    
	
 
    	
 
    	
 
    
	
Role Title:
    	
 
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
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.
    
	
 
    	
 
    	
 
    
	
Continuous Employment Date:
    	
 
    	
December 1, 2009
    

 

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 is a base   salary of USD$900,000 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.
    

 

	
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Annual Bonus (EIP):
    	
 
    	
You will 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 110% 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 mutually agreed upon in writing each   year. 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 pro-rated based upon the percentage of such fiscal year   that will have elapsed from your commencement date through the last day of such   fiscal year and based solely on the Base Salary actually earned in such   fiscal year from your commencement date 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”), and will be eligible to receive annual   equity grants from Walter valued at 285% 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.

 

Your annual equity grant in respect of the   2011 fiscal year will be made on your commencement date, consistent with
    

 

	
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the terms set forth above, except that it   will be based on the Black-Scholes value on the date of the Agreement and   will be subject to adjustment as mutually agreed upon by you and Walter.
    
	
 
    	
 
    	
 
    
	
Expenses:
    	
 
    	
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:
    	
 
    	
Participation in Walter’s life and health   insurance benefit programs beginning the first day of the month following   your commencement date and 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. After you are enrolled in the U.S. benefit plans,   you and all eligible family members will be covered.
    
	
 
    	
 
    	
 
    
	
Retirement Plan:
    	
 
    	
Participation in Walter’s retirement plan   according to its terms as they may change from time to time. Information on   the retirement plan 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.
    
	
 
    	
 
    	
 
    
	
Leave:
    	
 
    	
Eligibility 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:
    	
 
    	
An Executive Change-in-Control Severance   Agreement in a form substantially similar to the form attached hereto as   Exhibit A (the “CIC Agreement”).
    

 

	
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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 B (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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
· For the period commencing on the first anniversary of the Severance   Date and ending on the second anniversary of the Severance Date, monthly pay   continuation with each monthly payment equal to one-twelfth (1/12) times your   Base Salary 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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
· A pro-rata bonus under the EIP (or successor annual bonus plan)   based on the portion of the year actually worked up to the Severance Date and   computed based on actual annual performance. Such pro-rata bonus shall be   paid during the year following the year that includes the
    

 

	
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Severance Date in accordance with the terms   of the EIP (or successor annual bonus plan).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
· 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 second 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 Internal Revenue Code of 1986, as amended (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;
    

 

	
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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 (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
    

 

	
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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.
    
	
 
    	
 
    	
 
    
	
Location:
    	
 
    	
The location of the Walter Corporate Office   is presently under review and the final location in the U.S. will be   recommended shortly by you for approval by the Board of Directors.
    

 

	
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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 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; provided that nothing in this Agreement shall preclude you from retaining your current directorship positions, if any, or accepting appointment to no more than two other boards of directors and outside roles, in each case, as pre-approved by the Chairman of the Board of Directors; provided in each case, and in the aggregate, that such activities do not conflict or interfere with the performance of your duties hereunder or conflict with Section 5 or Section 7 below.

 

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 Western, or to any inventions that you develop entirely on your own time without using any of Walter’s or Western’s equipment, supplies or facilities, or Walter’s or Western’s or their respective subsidiaries’, affiliates’, or customers’ confidential information which do not relate to Walter’s, Western’s, their respective subsidiaries’ or its affiliates’ business, anticipated research and development, or the work you have performed for Walter, Western and their respective subsidiaries and affiliates.

 

	
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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 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 Walter 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.

 

	
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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, 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

 

	
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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.

 

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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EXHIBIT B

 

WAIVER AND GENERAL RELEASE OF CLAIMS

 

This Waiver and General Release of Claims (“Waiver”) is entered into with respect to the mutual promises and the payments, rights and benefits provided under that certain letter agreement, entered into on March 2, 2011, by and between Walter Energy, Inc. (“Employer”) and Keith Calder (“Employee”) (the “Letter Agreement”).

 

1.             Employee separated his employment with Employer on                                   .

 

2.             In consideration for the payments, rights and benefits provided under the Letter Agreement, on behalf of himself, his heirs, executors, administrators, and assigns, Employee, to the fullest extent permitted by law, forever releases and discharges Employer and all of its affiliated or related entities, their parent, successors, assigns, officers, directors, agents, and employees from all claims, known or unknown, of any kind which Employee may have relating to Employer (in its capacities as Employee’s former employer or otherwise), and the other released parties referred to above and which exist or are based on occurrences which have occurred on or prior to the date of execution by Employee of this Waiver.  This release includes, but is not limited to, all liabilities relating to employment and separation from employment, and for the payment of earnings, bonuses, severance pay, salary, relocation benefits, accruals under any vacation, sick leave, or holiday plans, any employee benefits, any charge, claim or lawsuit under any federal, state, or local law, including but not limited to, claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000(e) et  seq., as amended, (specifically, but without limitation, by the Pregnancy Discrimination Act), the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §621 et  seq., the Americans with Disabilities Act, 42 U.S.C. §12101 et  seq., the Fair Labor Standards Act, 29 U.S.C. §201 et  seq., the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et  seq., the Employee Retirement Income Security Act, 29 U.S.C. §1001 et  seq., the Occupational Safety and Health Act, as amended, 29 U.S.C. §651, et  seq., the National Labor Relations Act, as amended, 29 U.S.C. §141, et  seq., the Immigration Reform Control Act, as amended, 29 U.S.C. §1801, et  seq., and any tort, contract, and quasi-contract or other common law claims, including, but not limited to, claims for wrongful termination, discrimination, harassment, retaliation, negligent or intentional infliction of emotional distress, negligent hiring, negligent supervision, negligence, invasion of privacy, defamation, slander, assault, battery, misrepresentation, or conspiracy.

 

3.             Employee represents that he has not filed any charges, including, but not limited to, charges against Employer with the Equal Employment Opportunity Commission (“EEOC”), suits, claims or complaints against Employer or the other released parties referred to above.  This Waiver forever bars all actions, claims and suits which arose or might arise in the future from any occurrences arising prior to the date of this Waiver and authorizes any court or administrative agency to dismiss any claim filed by Employee with prejudice.  If any administrative agency files any charge, claim or suit on Employee’s behalf, Employee agrees to waive all rights to recovery of any equitable or monetary relief and attorneys’ fees.

 

4.             Except as required by law, and unless and until this Waiver is disclosed by Employer or any of its affiliates as may be required by law, the parties to this Waiver agree that

 

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the existence and terms of this Waiver will remain confidential; provided that Employee may reveal the terms of the Waiver to his legal, tax and financial advisors, and immediate family, in deciding whether to execute this Waiver, so long as Employee advises each such person that they must keep its terms confidential on the same basis as is required of Employee.

 

5.             Employee acknowledges that during the course of his employment, he has had access to Employer’s confidential information.  Employee agrees not to use or disclose to any person or entity, at any time, any confidential information of Employer without first obtaining Employer’s written consent.  The term “confidential information” means any information not generally known which concerns Employer’s business or proposed future business and which gives or is intended to give Employer an advantage over its competitors who do not have the information.  Employee agrees that he is required to return all severance payments provided under the Letter Agreement if he fails to maintain the confidentiality of the proprietary information of Employer.  This amount shall serve as liquidated damages for the failure to maintain the confidentiality of the proprietary information and not as a penalty, and has been agreed to as a fair approximation of the damages likely to result from Employee’s failure to act properly with respect to the confidential information, and shall not release Employee from the effect of this Waiver.

 

6.             This Waiver shall not in any way be construed as an admission by Employer that it has acted wrongfully with respect to Employee or that Employee has any rights whatsoever against Employer or the other released parties set forth in paragraph 2 above.

 

7.             Employee specifically acknowledges the following:

 

a.             That Employee does not release or waive any right or claim that he may have which arises after the date of this Waiver.

 

b.             That he is releasing, among other rights, all claims and rights under the Age Discrimination in Employment Act (“ADEA”) and the Older Workers’ Benefit Protection Act (“OWBPA”), 29 U.S.C. §621, et  seq.

 

c.             That he possesses sufficient education and experience to fully understand the terms of this Waiver as it had been written, the legal and binding effect of the Waiver, and the exchange of benefits and promises herein.

 

d.             That he understands and agrees that Employer’s obligations to perform under the Letter Agreement is conditioned upon Employee’s performance of all agreements, releases and covenants to Employer.

 

e.             That he has twenty-one (21) days to consider this Waiver.

 

f.              That he has seven (7) days to revoke this Waiver after acceptance.  A revocation must be in writing stating: “I hereby revoke the Waiver and General Release of Claims I executed on [insert date]” and postmarked via certified mail within such seven (7) day period to Walter Energy, Inc. attention Jim Skomp c/o Human

 

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Resources, Post Office Box 361370, Birmingham, Alabama 35236-1370.  This Waiver shall not become enforceable until the revocation period has expired.  If the last day of the revocation period is a Saturday, Sunday or legal holiday in Alabama, then the revocation period (and the deadline for the postmarking of the revocation letter) shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

 

g.             That he has read this Waiver fully and completely and he understands its significance.

 

h.             That he enters into this Waiver knowingly and voluntarily and on his own free will and choice.

 

i.              That he has been encouraged and given significant opportunity to consult with an attorney of his choice.

 

8.             Employer and Employee agree that in the event it becomes necessary to enforce any provision of this Waiver, the prevailing party to such action, including appeals, shall be entitled to all their costs and attorneys’ fees.

 

9.             This Waiver shall be binding upon Employee and upon Employee’s heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of Employer and the other released parties and their successors and assigns.

 

10.           Employee represents that no inducements, statements or representations have been made that are not set out in this Waiver or the Letter Agreement and that Employee does not rely on any inducements, statements or representations not set forth herein or therein.

 

11.           Employee acknowledges that any and all prior understandings and agreements between the parties to this Waiver with respect to the subject matter of this Waiver are merged into this Waiver, which fully and completely expresses the entire Waiver and understanding of the parties to this Waiver with respect to the subject matter hereof.  This Waiver may not be orally amended, modified or changed and may be amended, modified or changed only by written instrument or instruments executed by duly authorized officers or other representatives of the parties to this Waiver.

 

12.           This Waiver shall in all respects be interpreted, enforced and governed under the laws of the State of Delaware.  The language of all parts of this Waiver shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties to this Waiver.

 

13.           Should any provision of this Waiver be declared or be determined by any Court to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Waiver.

 

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PLEASE READ CAREFULLY.  THIS WAIVER INCLUDES

A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name Printed:
    
	
 
    	
 
    
	
 
    	
Date:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Date hand delivered to Employee:                                 .
    
	
 
    	
 
    
	
21-day period to consider this Waiver ends:                                       .
    

 

4Exhibit 10.2

 

Executive Change-in-Control Severance
 Agreement for Keith Calder

 

Walter Energy, Inc.

 

Adopted:  March 2, 2011

 

 

	
Contents
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Article 1.   Definitions
    	
 
    	
1
    
	
 
    	
 
    	
 
    
	
Article 2.   Severance Benefits
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
Article 3.   Form and Timing of Severance Benefits
    	
 
    	
9
    
	
 
    	
 
    	
 
    
	
Article 4.   Noncompetition and Confidentiality
    	
 
    	
10
    
	
 
    	
 
    	
 
    
	
Article 5.   Claw-Back
    	
 
    	
11
    
	
 
    	
 
    	
 
    
	
Article 6.   The Company’s Payment Obligation
    	
 
    	
12
    
	
 
    	
 
    	
 
    
	
Article 7.   Legal Remedies
    	
 
    	
12
    
	
 
    	
 
    	
 
    
	
Article 8.   Successors
    	
 
    	
13
    
	
 
    	
 
    	
 
    
	
Article 9.   Miscellaneous
    	
 
    	
13
    

 

 

Walter Energy, Inc. 
 Executive Change-in-Control Severance Agreement

 

THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made and entered into this 2nd day of March, 2011, by and between Walter Energy, Inc. (the “Company”), a Delaware corporation, and Keith Calder (the “Executive”), and will be effective as of the date the Executive’s employment with the Company commences.

 

WHEREAS, effective as of the date of the consummation of the transactions contemplated by the Arrangement Agreement, dated December 2, 2010 between the Company and Western Coal Corp., the Executive will commence employment with the Company and will possess considerable experience and knowledge of the business and affairs of the Company concerning its policies, methods, personnel and operations; and

 

WHEREAS, the Company is desirous of assuring, insofar as possible, that it will have the benefit of the Executive’s services; and the Executive is desirous of having such assurances; and

 

WHEREAS, the Company recognizes that circumstances may arise in which a Change in Control of the Company occurs, through acquisition or otherwise, thereby causing uncertainty of employment without regard to the Executive’s competence or past contributions. Such uncertainty may result in the loss of the valuable services of the Executive to the detriment of the Company and its shareholders; and

 

WHEREAS, both the Company and the Executive are desirous that any proposal for a Change in Control will be considered by the Executive objectively and with reference only to the business interests of the Company and its shareholders; and

 

WHEREAS, the Executive will be in a better position to consider the Company’s best interests if the Executive is afforded reasonable assurances, as provided in this Agreement, against altered conditions of employment which could result from any such Change in Control.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements of the parties set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

Article 1. Definitions

Wherever used in this Agreement, the following terms shall have the meanings set forth below and, when the meaning is intended, the initial letter of the word is capitalized:

 

(a)                           “Agreement” means this Executive Change-in-Control Severance Agreement, as it may be amended from time to time.

 

(b)                          “Base Salary” means “Base Salary” as defined in the Employment Letter Agreement.

 

(c)                            “Board” means the Board of Directors of the Company.

 

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(d)                           “Cause” shall be determined solely by the Committee in the exercise of good faith and reasonable judgment, and shall mean the occurrence of any one or more of the following:

 

(i)                           willful and continued refusal to perform the duties of the Executive’s position (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness);

 

(ii)                        the Executive’s conviction or guilty plea of a felony involving fraud or dishonesty;

 

(iii)                     theft or embezzlement by the Executive of property from the Company; or

 

(iv)                    fraudulent preparation by the Executive of financial information of the Company or any subsidiary or affiliate.

 

(e)                            “Change in Control” of the Company shall mean the occurrence of any one or more of the following events:

 

(i)                           A change in the effective control of the Company, which occurs only on either of the following dates:

 

(A)                  The date any Person or Group (other than the Company, any Subsidiary of the Company or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, such Subsidiary or such proportionately owned corporation), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by any such Person or Group) ownership of stock of the Company representing more than thirty percent (30%) of the total voting power of the stock of the Company; or

 

(B)                   The date a majority of the members of the Board is replaced during any 12-month period 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;

 

provided that, in any event, the transaction must constitute a “change in the effective control” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulation Section 1.409A-3(i)(5)(vi).

 

(ii)                        The date any Person or Group (other than the Company, any Subsidiary of the Company or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company, such Subsidiary or such

 

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proportionately owned corporation) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Group) all or substantially all of the Company’s assets; provided that the transaction must constitute a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulation Section 1.409A-3(i)(5)(vii).

 

(f)                              “Code” means the Internal Revenue Code of 1986, as amended.

 

(g)                           “Committee” means the Compensation and Human Resources Committee of the Board, or, if no Compensation and Human Resources Committee exists, then the full Board, or a committee of Board members, as appointed by the full Board to administer this Agreement.

 

(h)                           “Company” means Walter Energy, Inc., a Delaware corporation, or any successor thereto as provided in Article 8 herein.

 

(i)                               “Constructive Termination” means the Executive’s voluntary Separation from Service for Good Reason; provided that a voluntary Separation from Service shall be a Constructive Termination only if (x) Executive provides written notice of the facts or circumstances constituting a Good Reason condition to the Company 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. The foregoing definition of Constructive Termination is intended to qualify for the safe harbor under Treasury Regulation Section 1.409A-1(n)(2)(ii) for treating a voluntary separation from service as an involuntary separation from service.

 

(j)                               “Disability” or “Disabled” means “Disability” as defined in the Employment Letter Agreement.

 

(k)                            “Effective Date of Termination” means the date on which a Qualifying Termination occurs, as provided in Section 2.2 herein, which triggers the payment of Severance Benefits hereunder.

 

(l)                               “Employment Letter Agreement” means that certain letter agreement, entered into on March 2, 2011, by and between the Executive and the Company, as it may be amended from time to time.

 

(m)                         “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(n)                           “Good Reason” means the occurrence of any of the following conditions after a Change in Control of the Company (in each case arising without the Executive’s consent):

 

(i)                           A material diminution of the Executive’s authority, duties or responsibilities from those in effect as of ninety (90) calendar days prior to the Change in Control;

 

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(ii)                        Any material adverse change in the Executive’s title or to whom he reports, in each case from that in effect as of ninety (90) calendar days prior to the Change in Control;

 

(iii)                     The Company requiring the Executive to be based at a location in excess of fifty (50) miles from the location of the Executive’s principal job location or office immediately prior to the Change in Control; except for required travel on the Company’s business to an extent substantially consistent with the Executive’s then present business travel obligations;

 

(iv)                    A material reduction by the Company of the Executive’s Base Salary; or

 

(v)                       A material breach of this Agreement by the Company, including Section 8.1.

 

Unless the Executive becomes Disabled, the Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness. The Executive’s continued employment shall not, by itself, constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason herein.

 

(o)                                 “Group” means “group,” as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

 

(p)                           “Involuntary Termination” means the Executive’s involuntary Separation from Service within the meaning of Treasury Regulation Section 1.409A-1(n)(1).

 

(q)                           “Normal Retirement Age” means the earliest normal retirement age available under the established rules of the Company’s tax-qualified retirement plans, as they may be amended from time to time, in which the Executive is eligible to participate.

 

(r)                              “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

 

(s)                            “Person” means “person,” as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

 

(t)                              “Qualifying Termination” means a Separation from Service described in Section 2.2 herein, the occurrence of which triggers the payment of Severance Benefits hereunder.

 

(u)                          “Separation from Service” means the Executive’s “separation from service” from Executive’s employer within the meaning of Section 409A(a)(2)(A)(i) of the Code and the default rules of Treasury Regulation Section 1.409A-1(h). For this purpose, Executive’s “employer” is the Company  and every entity or other person which collectively with the Company  constitutes a single “service recipient” (as that term is defined in Treasury Regulation Section 1.409A-1(g)) as the result of the application of

 

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the rules of Treasury Regulation Section 1.409A-1(h)(3); provided that an 80% standard (in lieu of the default 50% standard) shall be used for purposes of determining the service recipient /employer for this purpose.

 

(v)                          “Specified Employee” means a “specified employee” of the service recipient that includes the Company (as determined under Treasury Regulation Section 1.409A-1(g))  within the meaning of Section 409A(a)(2)(B)(i) of the Code and Treasury Regulation Section 1.409A-1(i), as determined in accordance with the procedures adopted by such service recipient that are then in effect, or, if no such procedures are then in effect, in accordance with the default procedures set forth in Treasury Regulation Section 1.409A-1(i).

 

(w)                         “Severance Benefits” mean the payment of severance compensation as provided in Section 2.3 herein.

 

(x)                             “Subsidiary” means “subsidiary,” as defined in Section 3 of the Exchange Act.

 

(y)                           “Target Bonus” means “Target Bonus” as defined in the Employment Letter Agreement.

 

Article 2. Severance Benefits

2.1        Right to Severance Benefits. The Executive shall be entitled to receive from the Company Severance Benefits, if there has been a Change in Control of the Company and if, within twenty-four (24) calendar months thereafter, the Executive experiences a Qualifying Termination.

 

The Executive shall not be entitled to receive Severance Benefits if he experiences an Involuntary Termination for Cause, a Separation from Service by reason of his death or Disability, a voluntary Separation from Service after attaining his Normal Retirement Age,  or a voluntary Separation from Service that is not a Constructive Termination.

 

2.2        Qualifying Termination. The occurrence of any one of the following events within twenty-four (24) calendar months after a Change in Control of the Company shall trigger the payment of Severance Benefits to the Executive under this Agreement:

 

(a)                            An Involuntary Termination without Cause; or

 

(b)                           A Constructive Termination.

 

For purposes of this Agreement, a Qualifying Termination shall not include a Separation from Service by reason of the Executive’s death or Disability, a voluntary Separation from Service after attaining his Normal Retirement Age, a voluntary Separation from Service that is not a Constructive Termination, or an Involuntary Termination for Cause.

 

2.3         Description of Severance Benefits. In the event the Executive becomes entitled to receive Severance Benefits, as provided in Sections 2.1 and 2.2 herein, subject to the Executive’s 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 on or prior to the 45th day following the Effective

 

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Date of Termination, the Company shall pay or provide, as the case may be, to the Executive the following Severance Benefits:

 

(a)                            A lump-sum amount equal to the Executive’s accrued but unpaid Base Salary, accrued but unused vacation pay and unreimbursed business expenses (in accordance with the standard reimbursement policy applicable to the Executive then in effect) earned by and owed to the Executive through and including the Effective Date of Termination.

 

(b)                           A lump-sum amount equal to one and one-half (1.5) multiplied by the sum of the following: (i) the higher of: (A) the Executive’s Base Salary in effect upon the Effective Date of Termination, or (B) the Executive’s Base Salary in effect on the date of the Change in Control; and (ii) the average of the actual annual bonus earned (whether or not deferred) by the Executive under the Company’s Executive Incentive Plan (or successor annual bonus plan) (“EIP”) (excluding any special bonus payments) in respect of the three (3) years preceding the year in which the Executive’s Effective Date of Termination occurs. If the Executive has less than three (3) years of annual bonus participation preceding the year in which the Executive’s Effective Date of Termination occurs, then the Executive’s Target Bonus for the bonus plan year in which the Executive’s Effective Date of Termination occurs shall be used for each year that the Executive did not participate in the EIP, up to a maximum of three (3) years, to calculate the three (3) year average bonus payment.

 

(c)                            A lump-sum amount equal to one-half (.5) multiplied by the sum of the following: (i) the higher of: (A) the Executive’s Base Salary in effect upon the Effective Date of Termination, or (B) the Executive’s Base Salary in effect on the date of the Change in Control; and (ii) the average of the actual annual bonus earned (whether or not deferred) by the Executive under the EIP (excluding any special bonus payments) in respect of the three (3) years preceding the year in which the Executive’s Effective Date of Termination occurs.  If the Executive has less than three (3) years of annual bonus participation preceding the year in which the Executive’s Effective Date of Termination occurs, then the Executive’s Target Bonus for the bonus plan year in which the Executive’s Effective Date of Termination occurs shall be used for each year that the Executive did not participate in the EIP, up to a maximum of three (3) years, to calculate the three (3) year average bonus payment.  Such amount shall be in consideration for the Executive agreeing to the restrictive covenants contained in Article 4.

 

(d)                           The Executive shall continue to be entitled to receive payments or benefits under any annual bonus plan and/or long-term incentive plans, whether cash-based or equity-based, or retirement plans and insurance plans in which Executive is a participant, if any, in each case in accordance with the terms and conditions of such plans.

 

(e)                            A pro-rata bonus under the EIP based on the portion of the year actually worked up to the Effective Date of Termination and computed based on actual annual

 

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performance.  Such pro-rata bonus shall be paid during the year following the year that includes the Effective Date of Termination in accordance with the terms of the EIP.

 

(f)                              Continuation for twenty-four (24) months of the Executive’s medical insurance and life insurance coverage. These benefits shall be provided by the Company to the Executive beginning immediately upon the Effective Date of Termination. Such benefits shall be provided to the Executive at the same coverage level and cost to the Executive as in effect immediately prior to the Executive’s Effective Date of Termination.

 

To the extent permitted by law, the Executive shall 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 upon the expiration of the aforementioned twenty-four (24) month period.

 

Notwithstanding the above, these medical and life insurance benefits shall be discontinued prior to the end of the stated continuation period in the event the Executive receives substantially similar benefits from a subsequent employer, as determined solely by the Committee in good faith. For purposes of enforcing this offset provision, the Executive 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 provide, to the Company, in writing, correct, complete, and timely information concerning the same to the extent requested by the Company.

 

(g)                           For a period of up to twenty-four (24) months following the Effective Date of Termination, the Executive shall be entitled, at the expense of the Company, to receive standard outplacement services from a nationally recognized outplacement firm of the Executive’s selection. However, the Company’s total obligation shall not exceed thirty-five percent (35%) of the Executive’s Base Salary in effect upon the Effective Date of Termination, and such Company obligation shall end prior to the end of the twenty-four (24) month period upon the Executive becoming employed by a subsequent employer.

 

2.4        Termination due to Disability. Following a Change in Control, if the Executive experiences a Separation from Service due to Disability, the Executive’s benefits shall be determined in accordance with the Company’s retirement, insurance, and other applicable plans and programs then in effect.

 

2.5        Termination due to Retirement or Death. Following a Change in Control, if the Executive experiences a Separation from Service by reason of a voluntary Separation from Service after attaining his Normal Retirement Age, or by reason of his death, the Executive’s benefits shall be determined in accordance with the Company’s retirement, survivor’s benefits, insurance, and other applicable plans and programs then in effect.

 

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2.6        Termination for Cause or by the Executive Other Than for Good Reason. Following a Change in Control, if the Executive experiences (i) an Involuntary Termination for Cause, or (ii) a voluntary Separation from Service that is not a Constructive Termination, the Company shall pay the Executive his accrued but unpaid Base Salary at the rate then in effect and accrued but unused vacation pay. Further, the Executive shall continue to be entitled to receive payments or benefits under any annual bonus plan and/or long-term incentive plans, whether cash-based or equity-based, or retirement plans and insurance plans in which Executive is a participant, if any, in each case in accordance with the terms and conditions of such plans.

 

2.7        Notice of Termination. Any Involuntary Termination by the Company for Cause or voluntary Separation from Service by the Executive that is not a Constructive Termination shall be communicated by Notice of Termination to the other party.

 

2.8        Limitation on Severance Benefits.

 

(a)                            Notwithstanding any other provision of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive’s employment with the Company (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change in Control or any person affiliated with the Company or such person) (all such payments and benefits being hereinafter called “Total Payments”) would be an “excess parachute payment” pursuant to Section 280G of the Code or any successor or substitute provision of the Code, with the effect that the Executive would be liable for the payment of the excise tax described in Section 4999 of the Code or any successor or substitute provision of the Code, or any interest or penalties are incurred by the Executive with respect to such Total Payments (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then, after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in such other plan, arrangement or agreement, the cash payments provided in Section 2.3 herein shall first be reduced, and the non-cash payments and benefits shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax.  Notwithstanding the foregoing, no payments or benefits under this Agreement will be reduced unless: (i) the net amount of the Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is greater than (ii) the excess of (A) the net amount of such Total Payments, without reduction (but after subtracting the net amount of federal, state and local income taxes on such Total Payments), over (B) the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments.

 

(b)                           Subject to the provisions of Section 2.8(c) below, all determinations required to be made under this Section 2.8, and the assumptions to be utilized in arriving at such determinations shall be made by the public accounting firm that serves the Company’s auditors (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business

 

8

 

days of the receipt of notice from the Company or the Executive that there have been Total Payments, or such earlier time as is requested by the Company.  In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive shall designate another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder).  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  If the Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion that failure to report the Excise Tax on the Executive’s applicable federal income tax return would not result in the imposition of a negligence or similar penalty.  Any determination by the Accounting Firm shall be binding upon the Company and the Executive, except as provided in Section 2.8(c) below.

 

(c)                            As a result of an uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that the Internal Revenue Service (“IRS”) or other agency may claim that an Excise Tax, or a greater Excise Tax, is due, and thus the Company should have made a lesser amount of Total Payments than that determined pursuant to Section 2.8(a) above.  The Executive shall notify the Company in writing of any claim by the IRS or other agency that, if successful, would require the Executive to pay an Excise Tax or an additional Excise Tax.  If the IRS or other agency makes a claim that, if successful, could require the Executive to pay an Excise Tax or an additional Excise Tax, the Company shall reduce or further reduce the Executive’s payments and benefits in accordance with this Section 2.8 to the amount necessary to eliminate such Excise Tax or additional Excise Tax.  Any reduction will be made by the end of the second calendar year following the Change in Control.

 

Article 3. Form and Timing of Severance Benefits

 

3.1        Form and Timing of Severance Benefits.

 

(a)                            The amount described in Section 2.3(a) herein and, except as provided in Section 3.1(b) herein, the amounts described in Sections 2.3(b) and 2.3(c) herein shall be paid in cash to the Executive in a single lump sum on the 60th day following the Effective Date of Termination.

 

(b)                           Notwithstanding anything to the contrary in this Agreement, if the Executive is a Specified Employee on the Effective Date of Termination, to the extent that the Executive is entitled to receive any benefit or payment under this Agreement that constitutes deferred compensation within the meaning of Section 409A of the Code before the date that is six (6) months after the Effective Date of Termination, such benefits or payments shall not be provided or paid to the Executive on the date otherwise required to be provided or paid. Instead, all such amounts shall be accumulated and paid in a single lump sum to the Executive on the first business day after the date that is six (6) months after the Effective Date of Termination (or, if earlier, within fifteen (15) days following the Executive’s date of death). If the Executive is required to pay for a benefit that is otherwise required to be provided

 

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by the Company under this Agreement by reason of this Section 3.1(b), the Executive shall be entitled to reimbursement for such payments on the first business day after the date that is six (6) months after the Effective Date of Termination (or, if earlier, within fifteen (15) days following the Executive’s date of death). All benefits or payments otherwise required to be provided or paid on or after the date that is six (6) months after the Effective Date of Termination shall not be affected by this Section 3.1(b) and shall be provided or paid in accordance with the payment schedule applicable to such benefit or payment under this Agreement.  Prior to the imposition of the six month delay as set forth in this Section 3.1(b), it is intended that (i) each installment under this Agreement be regarded as a separate “payment” for purposes of Section 409A of the Code, and (ii) all benefits or payments provided under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code provided under Treasury Regulation Section 1.409A-1(b)(4) (short-term deferral) or 1.409A-1(b)(9) (certain separation pay plans). This Section 3.1(b) is intended to comply with the requirements of Section 409A(a)(2)(B)(i) of the Code.

 

3.2        Withholding of Taxes. The Company shall withhold from any amounts payable under this Agreement all federal, state, city, or other taxes as legally shall be required.

 

3.3        Reimbursement and In-Kind Benefits. Notwithstanding anything to the contrary in this Agreement, to the extent this Agreement provides for reimbursements of expenses incurred by the Executive or in-kind benefits the provision of which are not exempt from the requirements of Section 409A of the Code, the following terms apply with respect to such reimbursements or benefits: (1) the reimbursement of expenses or provision of in-kind benefits will be made or provided only during the period of time specifically provided herein; (2) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year will not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (3) all reimbursements will be made upon the Executive’s request in accordance with the Company’s normal policies but no later than the last day of the calendar year immediately following the calendar year in which the expense was incurred; and (4) the right to the reimbursement or the in-kind benefit will not be subject to liquidation or exchange for another benefit.

 

Article 4. Restrictive Covenants

 

In consideration of the Severance Benefits, the following shall apply:

 

(a)                            Noncompetition. During the term of employment and for a period of twelve (12) months after the Executive’s employment terminates for any reason, the Executive shall not: (i) directly or indirectly act in concert or conspire with any person employed by the Company or any of its subsidiaries in order to engage in or prepare to engage in or to have a financial or other interest in any business or any activity which he knows (or reasonably should have known) to be directly competitive with the business of the Company and its subsidiaries as then being carried on; or (ii) serve as an employee, agent, partner, shareholder, director or consultant for, or in any other capacity participate, engage, or have a financial or other interest in, any business or any activity which he knows (or reasonably should have known) to be directly competitive with the business of the Company and its subsidiaries as then being carried on (provided, however, that

 

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notwithstanding anything to the contrary contained in this Agreement, the Executive may own up to two percent (2%) of the outstanding shares of the capital stock of a company whose securities are registered under Section 12 of the Exchange Act).

 

(b)                           Confidentiality. The Company has advised the Executive and the Executive acknowledges that it is the policy of the Company to maintain as secret and confidential all Protected Information (as defined below), and that Protected Information has been and will be developed at substantial cost and effort to the Company. All Protected Information shall remain confidential permanently and the Executive shall not at any time, directly or indirectly, divulge, furnish, or make accessible to any person, firm, corporation, association, or other entity (otherwise than as may be required in the regular course of the Executive’s employment with the Company), nor use in any manner, either during the term of employment or after termination, at any time, for any reason, any Protected Information, or cause any such information of the Company or any of its subsidiaries to enter the public domain.

 

For purposes of this Agreement, “Protected Information” means trade secrets, confidential and proprietary business information of the Company and its subsidiaries, and any other information of the Company, including, but not limited to, customer lists (including potential customers), sources of supply, processes, plans, materials, pricing information, internal memoranda, marketing plans, internal policies, and products and services which may be developed from time to time by the Company and its subsidiaries and their respective agents or employees, including the Executive; provided, however, that information that is in the public domain (other than as a result of a breach of this Agreement), approved for release by the Company or lawfully obtained from third parties who are not bound by a confidentiality agreement with the Company, is not Protected Information.

 

(c)                            Nonsolicitation. During the term of employment and for a period of twelve (12) months after the Executive’s employment terminates for any reason, the Executive shall not employ or retain or solicit for employment or arrange to have any other person, firm, or other entity employ or retain or solicit for employment or otherwise participate in the employment or retention of any person who is an employee or consultant of the Company or any of its subsidiaries.

 

(d)                           Cooperation. The Executive agrees to cooperate with the Company and its attorneys in connection with any and all lawsuits, claims, investigations, or similar proceedings that have been or could be asserted at any time arising out of or related in any way to the Executive’s employment by the Company or any of its subsidiaries.

 

(e)                            Nondisparagement. At all times, the Executive agrees not to disparage the Company or any of its subsidiaries or otherwise make comments harmful to the Company’s reputation.

 

Article 5. Claw-Back

 

5.1        Claw-Backs.  If any of the Company’s financial statements are required to be restated due to errors, omissions, fraud, or misconduct, the Committee may, in its sole discretion but acting in

 

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good faith, direct that the Company recover all or a portion of the Severance Benefits under this Agreement from the Executive with respect to any fiscal year in which the Company’s financial statements are restated to reflect adverse results from those previously released financial statements, as a consequence of errors, omissions, fraud, or misconduct.  For purposes of this Section 5.1, errors, omissions, fraud, or misconduct may include and is not limited to circumstances where the Company has been required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement, as enforced by the Securities and Exchange Commission, and the Committee has determined in its sole discretion that the Executive 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 the Company, or the Executive personally and knowingly engaged in practices which materially contributed to the circumstances that enabled a material noncompliance to occur.

 

Article 6. The Company’s Payment Obligation

 

6.1        Payment Obligations Absolute. The Company’s obligation to make the payments and the arrangements provided for herein shall be absolute and unconditional, and shall not be affected by any circumstances including, without limitation, any offset, counterclaim, recoupment, defense, or other right which the Company may have against the Executive or anyone else. All amounts payable by the Company hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Company shall be final, and, except as expressly provided for in Section 5.1, the Company shall not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any reasons whatsoever.

 

The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make the payments and arrangements required to be made under this Agreement, except to the extent provided in Sections 2.3(f) and 2.3(g) herein.

 

6.2        Contractual Rights to Benefits. This Agreement establishes and vests in the Executive a contractual right to the benefits to which he is entitled hereunder. However, nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.

 

Article 7. Legal Remedies

 

7.1          Dispute Resolution. The Executive shall have the right and option to elect to have any good faith dispute or controversy arising under or in connection with this Agreement settled by litigation or arbitration. If arbitration is selected, such proceeding shall be conducted by final and binding arbitration before a panel of three (3) arbitrators in accordance with the laws then in effect and under the administration of the American Arbitration Association.  The Executive shall be entitled to reimbursement by the Company of all reasonable legal fees incurred by the Executive in connection with any such litigation or arbitration, so long as the Executive prevails on any material issues.

 

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Article 8. Successors

 

8.1        Successors to the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) of all or substantially all the assets of the Company by agreement, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor in accordance with the operation of law and such successor shall be deemed the “Company” for purposes of this Agreement.

 

8.2        Assignment by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If the Executive dies while any amount would still be payable to him hereunder had he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee, or if there is no such designee, to the Executive’s estate.

 

Article 9. Miscellaneous

 

9.1        Entire Agreement. This Agreement contains the entire understanding of the Company and the Executive with respect to the termination of the Executive’s employment and the consequences thereof (including, without limitation, severance, benefits and other programs maintained by the Company).

 

9.2        Notices. All notices, requests, demands, and other communications hereunder shall be sufficient if in writing and shall be deemed to have been duly given if delivered by hand or if sent by registered or certified mail to the Executive at the last address he has filed in writing with the Company or, in the case of the Company, at its principal offices.

 

9.3        Execution in Counterparts. This Agreement may be executed by the parties hereto in counterparts, each of which shall be deemed to be original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.

 

9.4        Conflicting Agreements. The Executive hereby represents and warrants to the Company that his entering into this Agreement, and the obligations and duties undertaken by him hereunder, will not conflict with, constitute a breach of, or otherwise violate the terms of, any other employment or other agreement to which he is a party, except to the extent any such conflict, breach, or violation under any such agreement has been disclosed to the Board in writing in advance of the signing of this Agreement.

 

9.5        Severability. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. Further, the captions of this Agreement are not part of the provisions hereof and shall have no force and effect.

 

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Notwithstanding any other provisions of this Agreement to the contrary, the Company shall have no obligation to make any payment to the Executive hereunder to the extent, but only to the extent, that such payment is prohibited by the terms of any final order of a federal or state court or regulatory agency of competent jurisdiction; provided, however, that such an order shall not affect, impair, or invalidate any provision of this Agreement not expressly subject to such order.

 

9.6        Modification. No provision of this Agreement may be modified, waived, or discharged unless such modification, waiver, or discharge is agreed to in writing and signed by the Executive and by a member of the Board, as applicable, or by the respective parties’ legal representatives or successors.

 

9.7        Applicable Law. To the extent not preempted by the laws of the United States, the laws of Delaware shall be the controlling law in all matters relating to this Agreement without giving effect to principles of conflicts of laws.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on this 1st day of March, 2011.

 

	
ATTEST
    	
Walter   Energy, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Catherine C. Bona
    	
 
    	
By:
    	
/s/   Michael T. Tokarz
    
	
Corporate   Secretary
    	
Title:
    	
Michael T. Tokarz
    
	
 
    	
Chairman of the Board of Directors
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Keith Calder
    
	
 
    	
Keith   Calder
    
	
 
    	
March   2, 2011
    
						

 

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EXHIBIT A

 

WAIVER AND GENERAL RELEASE OF CLAIMS

 

This Waiver and General Release of Claims (“Waiver”) is entered into with respect to the mutual promises and the payments, rights and benefits provided under that certain Executive Change-in-Control Severance Agreement, adopted on March 2, 2011, by and between Walter Energy, Inc. (“Employer”) and Keith Calder (“Employee”) (the “CIC Agreement”).

 

1.             Employee separated his employment with Employer on                         , 20    .

 

2.             In consideration for the payments, rights and benefits provided under the CIC Agreement, on behalf of himself, his heirs, executors, administrators, and assigns, Employee, to the fullest extent permitted by law, forever releases and discharges Employer and all of its affiliated or related entities, their parent, successors, assigns, officers, directors, agents, and employees from all claims, known or unknown, of any kind which Employee may have relating to Employer (in its capacities as Employee’s former employer or otherwise), and the other released parties referred to above and which exist or are based on occurrences which have occurred on or prior to the date of execution by Employee of this Waiver.  This release includes, but is not limited to, all liabilities relating to employment and separation from employment, and for the payment of earnings, bonuses, severance pay, salary, relocation benefits, accruals under any vacation, sick leave, or holiday plans, any employee benefits, any charge, claim or lawsuit under any federal, state, or local law, including but not limited to, claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §2000(e) et  seq., as amended, (specifically, but without limitation, by the Pregnancy Discrimination Act), the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act, as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §621 et  seq., the Americans with Disabilities Act, 42 U.S.C. §12101 et  seq., the Fair Labor Standards Act, 29 U.S.C. §201 et  seq., the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et  seq., the Employee Retirement Income Security Act, 29 U.S.C. §1001 et  seq., the Occupational Safety and Health Act, as amended, 29 U.S.C. §651, et  seq., the National Labor Relations Act, as amended, 29 U.S.C. §141, et  seq., the Immigration Reform Control Act, as amended, 29 U.S.C. §1801, et  seq., and any tort, contract, and quasi-contract or other common law claims, including, but not limited to, claims for wrongful termination, discrimination, harassment, retaliation, negligent or intentional infliction of emotional distress, negligent hiring, negligent supervision, negligence, invasion of privacy, defamation, slander, assault, battery, misrepresentation, or conspiracy.

 

3.             Employee represents that he has not filed any charges, including, but not limited to, charges against Employer with the Equal Employment Opportunity Commission (“EEOC”), suits, claims or complaints against Employer or the other released parties referred to above.  This Waiver forever bars all actions, claims and suits which arose or might arise in the future from any occurrences arising prior to the date of this Waiver and authorizes any court or administrative agency to dismiss any claim filed by Employee with prejudice.  If any administrative agency files any charge, claim or suit on Employee’s behalf, Employee agrees to waive all rights to recovery of any equitable or monetary relief and attorneys’ fees.

 

4.             Except as required by law, and unless and until this Waiver is disclosed by Employer or any of its affiliates as may be required by law, the parties to this Waiver agree that

 

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the existence and terms of this Waiver will remain confidential; provided that Employee may reveal the terms of the Waiver to his legal, tax and financial advisors, and immediate family, in deciding whether to execute this Waiver, so long as Employee advises each such person that they must keep its terms confidential on the same basis as is required of Employee.

 

5.             Employee acknowledges that during the course of his employment, he has had access to Employer’s confidential information.  Employee agrees not to use or disclose to any person or entity, at any time, any confidential information of Employer without first obtaining Employer’s written consent.  The term “confidential information” means any information not generally known which concerns Employer’s business or proposed future business and which gives or is intended to give Employer an advantage over its competitors who do not have the information.  Employee agrees that he is required to return all severance payments provided under the CIC Agreement if he fails to maintain the confidentiality of the proprietary information of Employer.  This amount shall serve as liquidated damages for the failure to maintain the confidentiality of the proprietary information and not as a penalty, and has been agreed to as a fair approximation of the damages likely to result from Employee’s failure to act properly with respect to the confidential information, and shall not release Employee from the effect of this Waiver.

 

6.             This Waiver shall not in any way be construed as an admission by Employer that it has acted wrongfully with respect to Employee or that Employee has any rights whatsoever against Employer or the other released parties set forth in paragraph 2 above.

 

7.             Employee specifically acknowledges the following:

 

a.             That Employee does not release or waive any right or claim that he may have which arises after the date of this Waiver.

 

b.             That he is releasing, among other rights, all claims and rights under the Age Discrimination in Employment Act (“ADEA”) and the Older Workers’ Benefit Protection Act (“OWBPA”), 29 U.S.C. §621, et  seq.

 

c.             That he possesses sufficient education and experience to fully understand the terms of this Waiver as it had been written, the legal and binding effect of the Waiver, and the exchange of benefits and promises herein.

 

d.             That he understands and agrees that Employer’s obligations to perform under the CIC Agreement is conditioned upon Employee’s performance of all agreements, releases and covenants to Employer.

 

e.             That he has forty-five (45) days to consider this Waiver.

 

f.              That he has seven (7) days to revoke this Waiver after acceptance.  A revocation must be in writing stating: “I hereby revoke the Waiver and General Release of Claims I executed on [insert date]” and postmarked via certified mail within such seven (7) day period to Walter Energy, Inc. attention Jim Skomp c/o Human

 

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Resources, Post Office Box 361370, Birmingham, Alabama 35236-1370.  This Waiver shall not become enforceable until the revocation period has expired.  If the last day of the revocation period is a Saturday, Sunday or legal holiday in Alabama, then the revocation period (and the deadline for the postmarking of the revocation letter) shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday.

 

g.             That he has read this Waiver fully and completely and he understands its significance.

 

h.             That he enters into this Waiver knowingly and voluntarily and on his own free will and choice.

 

i.              That he has been encouraged and given significant opportunity to consult with an attorney of his choice.

 

j.              That he acknowledges receipt of the information disclosure required by the OWBPA to accompany this Waiver.

 

8.             Employer and Employee agree that in the event it becomes necessary to enforce any provision of this Waiver, the prevailing party to such action, including appeals, shall be entitled to all their costs and attorneys’ fees.

 

9.             This Waiver shall be binding upon Employee and upon Employee’s heirs, administrators, representatives, executors, successors and assigns, and shall inure to the benefit of Employer and the other released parties and their successors and assigns.

 

10.           Employee represents that no inducements, statements or representations have been made that are not set out in this Waiver or the CIC Agreement and that Employee does not rely on any inducements, statements or representations not set forth herein or therein.

 

11.           Employee acknowledges that any and all prior understandings and agreements between the parties to this Waiver with respect to the subject matter of this Waiver are merged into this Waiver, which fully and completely expresses the entire Waiver and understanding of the parties to this Waiver with respect to the subject matter hereof.  This Waiver may not be orally amended, modified or changed and may be amended, modified or changed only by written instrument or instruments executed by duly authorized officers or other representatives of the parties to this Waiver.

 

12.           This Waiver shall in all respects be interpreted, enforced and governed under the laws of the State of Delaware.  The language of all parts of this Waiver shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties to this Waiver.

 

13.           Should any provision of this Waiver be declared or be determined by any Court to be illegal or invalid, the validity of the remaining parts, terms or provisions shall not be affected

 

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thereby and said illegal or invalid part, term or provision shall be deemed not to be a part of this Waiver.

 

PLEASE READ CAREFULLY.  THIS WAIVER INCLUDES

A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

	
 
    	
 
    
	
 
    	
Name Printed:
    
	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

 

Date hand delivered to Employee:                           ,           .

 

45-day period to consider this Waiver ends:                               ,         .

 

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