Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

AGREEMENT, as of the date set forth on the signature page hereof, by and between Peabody Energy Corporation, a Delaware corporation (the “Company”), and the undersigned executive (the “Executive”).

RECITALS

To induce Executive to serve in the executive team position set forth on the signature page hereof, the Company desires to provide Executive with compensation and other benefits on the terms and conditions set forth in this Agreement.

Executive is willing to accept such employment and perform services for the Company, on the terms and conditions hereinafter set forth.

It is therefore hereby agreed by and between the parties as follows:

1.            Employment.

1.1          Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term hereof in the executive team position set forth on the signature page hereof.  In such capacity, Executive shall report to the Chief Executive Officer of the Company (the “CEO”) and shall have the customary powers, responsibilities and authorities of executives holding such positions in corporations of the size, type and nature of the Company, as it exists from time to time, and as are assigned by the Board of Directors of the Company (the “Board”) and the CEO. 

1.2          Subject to the terms and conditions of this Agreement, Executive hereby accepts employment in the executive team position set forth on the signature page hereof commencing as of the date of this Agreement set forth on the signature page hereof (the “Commencement Date”) and agrees, subject to any period of vacation or other approved leave, to devote his full business time and efforts to the performance of services, duties and responsibilities in connection therewith, subject at all times to review and control of the Board and the CEO.

 

 

1.3          Nothing in this Agreement shall preclude Executive from engaging in charitable work and community affairs, from delivering lectures, fulfilling speaking engagements or teaching at educational institutions, from managing any investment made by him or his immediate family with respect to which Executive or such family member is not substantially involved with the management or operation of the entity in which Executive has invested (provided that no such investment in publicly traded equity securities or other property may exceed five percent (5%) of the equity of any entity, without the prior approval of the CEO or the Board) or from serving, subject to the prior approval of the CEO or the Board, as a member of boards of directors or as a trustee of any other corporation,
association or entity, to the extent that any of the above activities do not materially interfere with the performance of his duties hereunder.  For purposes of the preceding sentence, any approval by the CEO or the Board required therein shall not be unreasonably withheld. 

2.            Term of Employment.  Executive’s term of employment under this Agreement (the “Term of Employment”) shall commence on the Commencement Date and, subject to termination by the terms hereunder, shall have an initial term of two years (the “Initial Term”), which, beginning on the first anniversary of the Commencement Date, shall extend thereafter on a day-to-day basis for an “evergreen” two-year term.

3.            Compensation.

3.1          Salary.  During the Term of Employment, the Company shall pay Executive a base salary (“Base Salary”) at an initial rate as set forth on the signature page hereof.  Base Salary shall be payable in accordance with the ordinary payroll practices of the Company.  During the Term of Employment, the Board and the CEO shall, in good faith, review, at least annually, Executive’s Base Salary in accordance with the Company’s customary procedures and practices regarding the salaries of senior executives and may, if determined by the Board to be appropriate, increase Executive’s Base Salary following such review.  “Base Salary” for all purposes herein shall be deemed to be a reference to any such increased amount.

3.2          Annual Bonus.  In addition to his Base Salary, Executive shall, commencing with the 2007 fiscal year and continuing each fiscal year thereafter, be eligible to receive an annual cash bonus (the “Bonus”) during the term of his employment hereunder to be developed by the Board, based on achievement of performance targets established by the Board 

 

2

 

 

in consultation with the CEO as soon as practicable at or after the beginning of the fiscal year for which the performance targets relate.  A Bonus award shall be payable to Executive at the time bonuses are paid to executive officers in accordance with the Company’s policies and practices as set by the Board in consultation with the CEO.  Notwithstanding the foregoing, with respect to the 2007 fiscal year Executive shall be eligible to receive a Bonus equal to the amount to which Executive would have been entitled had he been employed by the Company during the entire 2007 fiscal year.  Executive’s Bonus target for the 2007 fiscal year is set forth on the signature page hereof.

3.3          Additional Lump-sum Payment.  If Executive (a) remains in the Company’s employ until Executive attains age fifty-five (55) or (b) dies or becomes Disabled during the Term of Employment, the Company shall pay Executive (or, in the event of Executive’s death, Executive’s estate) $800,000 in a lump sum as soon as administratively feasible (and in no event later than the end of the short-term deferral period under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) following the termination of Executive’s employment with the Company.

4.            Employee Benefits.

4.1          Equity-Based Compensation.  In conjunction with the execution of this Agreement, the Company and Executive expect to enter into Restricted Stock Grant Agreements in substantially the forms attached hereto as Exhibits A and B, respectively (together with any other agreement approved by the Board and designated by the Board as an “Ancillary Document” for purposes of this Agreement, the “Ancillary Documents”).

(a)          Restricted Stock Grant A.  On the Commencement Date, the Company intends to grant Executive an award of 45,198 restricted shares of Company stock under the Company’s Long-Term Equity Incentive Plan.  The award will be governed by and subject to the terms of the award agreement and the Long-Term Equity Incentive Plan, but will provide for vesting of one third of the restricted shares on each of October 1, 2007, April 1, 2008 and April 1, 2009, provided that Executive remains employed with the Company on those dates.  The award will become fully vested if Executive’s employment is terminated by the Company for a reason other than Cause (as defined in 

 

3

 

 

Section 6.2(b) hereof) or terminated by Executive for Good Reason (as defined in Section 6.1(b) hereof). 

(b)          Restricted Stock Grant B.  On the Commencement Date, the Company intends to grant Executive an award of 9,000 restricted shares of Company stock under the Company’s Long-Term Equity Incentive Plan.  The award will be governed by and subject to the terms of the award agreement and the Long-Term Equity Incentive Plan, but will provide for vesting of 3,000 of the restricted shares on each of the grant date, the third anniversary of the grant date, and the sixth anniversary of the grant date, provided that Executive remains employed with the Company on those dates.  The award will become fully vested if Executive’s employment is terminated by the Company for a reason other than Cause (as defined in Section 6.2(b)
hereof) or terminated by Executive for Good Reason (as defined in Section 6.1(b) hereof).

4.2          Employee Benefit Programs, Plans and Practices; Perquisites.  The Company shall provide Executive while employed hereunder with coverage under such employee benefit plans (commensurate with his position in the Company and to the extent permitted under any employee benefit plan) in accordance with the terms thereof, including the Continuation Benefits (as defined herein), Directors and Officers (“D&O”) insurance policy, which covers claims arising out of actions or inactions occurring during the Term of Employment, in accordance with the D&O insurance policy, and other employee benefits which the Company may make available to its senior executives from time to time in its discretion.  The Company shall also provide Executive
with perquisites which the Company may make available to its senior executives from time to time in its discretion.

4.3          Vacation.  Executive shall be entitled to the number of business days paid vacation in each calendar year as determined in accordance with the Company’s applicable vacation policies, which shall be taken at such times as are consistent with Executive’s responsibilities hereunder.

4.4          Personal Leave.  Executive shall be entitled to five business days of paid leave in each of the first two calendar years of this Agreement, which shall be taken at such times as are consistent with Executive’s responsibilities hereunder.

 

4

 

 

4.5          Tax Return Preparation.  The Company will reimburse Executive for the expense he incurs for the preparation of his annual income tax return during the Term of Employment, subject to prevailing Company policy regarding documentation of such expense.

5.            Expenses.  Subject to prevailing Company policy or such guidelines as may be established by the Board, the Company will reimburse Executive for all reasonable expenses incurred by Executive in carrying out his duties.

6.            Termination of Employment.

6.1            Termination Not for Cause or for Good Reason.

(a)         General.  The Company or Executive may terminate Executive’s Term of Employment at any time for any reason by written notice at least 30 days in advance.  If the Executive’s employment is terminated (i) by the Company other than for Cause (as defined in Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof) or death or (ii) by Executive for Good Reason (as defined in Section 6.1(b) hereof), then:

(1)          the Company, as liquidated damages and in lieu of any other damages therefor, shall (A) continue to pay to Executive Base Salary for a period ending on the second anniversary date of such termination (the “Continuation Period”), with such payments to be made in accordance with the terms of Section 3.1 and (B) pay to Executive an additional amount equal to two times the higher of (x) Executive’s target Bonus for the year of termination (as established by the Board under Section 3.2 hereof), or (y) the annualized average of the actual Bonus awards paid to Executive in the two-year period prior to such termination (or the total period of Executive’s employment with the Company, if
fewer than two years) (the “Severance Payments”).  The Severance Payments shall be made in substantially equal installments over the Continuation Period in accordance with Company payroll practices, unless the CEO or the Board approves payment in a lump sum; provided that in no event will any payment be made until six months have elapsed following Executive’s termination date if so required under Code Section 409A;

(2)          the Company shall pay to Executive (i) any unpaid Bonus earned by Executive with respect to the year immediately preceding the year of 

 

5

 

 

termination, if any, and (ii) a prorated bonus (the “Prorated Bonus”) for the year of termination, payable when such bonuses are paid to other senior executives of the Company, calculated as the Bonus Executive would have received in such year based on the Company’s actual performance multiplied by a fraction, the numerator of which is the number of business days during the year of termination that Executive was employed and the denominator of which is the total number of business days during the year of termination; provided that in no event will any payment be made until six months have elapsed following Executive’s termination date if so required under Code Section 409A;

(3)          the Company shall also continue to provide Executive during the Continuation Period with life insurance, medical and other benefits set forth on the signature page hereof (collectively, the “Continuation Benefits”); provided, however, that the Company shall not be obligated to provide any benefits under plans which are not permitted by the terms of such plan or by applicable law or could jeopardize the plan’s tax status; provided, further, that any such coverage shall terminate to the extent that Executive is offered or obtains comparable benefits from
any other employer during the Continuation Period; and;

(4)          Executive’s equity-based compensation (including any restricted stock) shall be governed by the applicable terms and conditions of the relevant Ancillary Documents.

(5)          Reimbursable expenses incurred by Executive prior to the termination of his employment with the Company and not previously reimbursed by the Company shall be reimbursed pursuant to Section 5 hereof.

Notwithstanding the foregoing, if Executive breaches any provision of Section 11 hereof, the remaining balances of the Severance Payments, the Prorated Bonus and any Continuation Benefits shall be forfeited.

 (b)         “Good Reason.”  For purposes of this Agreement, “Good Reason” shall mean (i) a reduction by the Company in Executive’s Base Salary (in which event Severance Payments shall be made based on Executive’s Base Salary in effect prior to any such reduction), (ii) a material reduction in the aggregate program of employee 

 

6

 

 

benefits and perquisites to which Executive is entitled (other than a reduction which affects all executives), (iii) relocation by more than 50 miles from Executive’s workplace, (iv) any material diminution or material adverse change in Executive’s duties, responsibilities or reporting relationships which causes Executive to fall below the level of the executive team (including, but not limited to, Executive’s ceasing to report directly to the CEO), or (v) a material decline in Executive’s annual and long-term bonuses opportunity.

(c)          Termination by Executive for Good Reason shall be made by delivery to the Company by Executive of written notice, given at least 45 days prior to such termination, which sets forth the conduct believed to constitute Good Reason; provided, however, that the Company shall have the opportunity to cure the Good Reason during the first 30 days of such notice period and if the Good Reason is cured within such 30-day period, Executive’s notice of termination shall be deemed withdrawn.  If no notice is given within 90 days of the event giving rise to Good Reason, the Good Reason shall be deemed waived.

(d)          Gross-Up Payment.

(i)           If Executive becomes entitled to any payment, benefit or distribution (or combination thereof) by the Company, any affiliated company, or one or more trusts established by the Company for the benefit of its employees, whether paid or payable pursuant to Section 6.1 of this Agreement or any other plan, arrangement, or agreement with the Company or any affiliated company (the “Payments”), which are or become subject to the excise tax imposed by Code Section 4999 or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the “Excise Tax”), the Company shall make to Executive an additional payment
(the “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments; 

 

7

 

 

provided, however, that such Gross-Up Payment shall not exceed $3,000,000 (such amount may be increased from time to time by the Board).

(ii)          All determinations required to be made under this Section 6.1(d), including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm as may be designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within ten business days of the receipt of notice from Executive that Payments were made, or such earlier time as is required by the Company; provided that for purposes of determining the amount of any Gross-Up Payment, Executive shall be deemed to
pay federal income tax at the highest marginal rates applicable to individuals in the calendar year in which any such Gross-Up Payment is to be made and deemed to pay state and local income taxes at the highest effective rates applicable to individuals in the state or locality of Executive’s residence or place of employment in the calendar year in which any such Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes, taking into account limitations applicable to individuals subject to federal income tax at the highest marginal rates.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant to this Section 6.1(d), shall be paid by the Company to Executive (or to the appropriate taxing authority on Executive’s behalf) when due.  If the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall so indicate to Executive in writing.  Any determination by the Accounting Firm shall be binding upon the Company and Executive.  As a result of the uncertainty in the application of Section 4999 of the Code, it is possible that the amount of the Gross-Up Payment determined by the Accounting Firm to be due to (or on behalf of) Executive was lower than the amount actually due (“Underpayment”).  In the event that the Company exhausts its remedies hereunder and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall 

 

8

 

 

determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

(iii)        Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any Gross-Up Payment.  Such notification shall be given as soon as practicable, but no later than ten business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid.  Executive shall not pay such claim prior to the expiration of the thirty-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order to effectively contest such claim and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.  Without limitation on the foregoing provisions of this Section 6.1(d), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or 

 

9

 

 

contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, further, that if the Company directs Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; provided, further, that if Executive is required to extend the statute of limitations to enable the Company to contest such claim, Executive may limit this extension solely to such contested amount.  The Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(iv)         If, after the receipt by Executive of an amount paid or advanced by the Company pursuant to this Section 6.1(d), Executive becomes entitled to receive any refund with respect to a Gross-Up Payment, Executive shall (subject to the Company’s complying with the requirements of Section 6.1(d)(iii)) promptly pay to the Company the amount of such refund received (together with any interest paid or credited thereon after taxes applicable thereto).  If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 6.1(d), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid.

 

10

 

 

6.2            Voluntary Termination by Executive; Discharge for Cause.

(a)         In the event that Executive’s employment is terminated (i) by the Company for Cause, as hereinafter defined, or (ii) by Executive other than for Good Reason, Disability or death, Executive shall be entitled to receive only (A) any Base Salary accrued but unpaid prior to such termination, (B) any vacation accrued but unused prior to such termination and any other benefits provided under the employee benefit programs, plans and practices referred to in Section 4.2 hereof, in accordance with their terms, and (C) pursuant to Section 5 hereof, reimbursable expenses incurred by Executive prior to the termination of his employment with the Company and not previously reimbursed by the Company.  After the termination of Executive’s employment under this Section 6.2,
the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive, except as provided in the previous sentence, shall thereupon cease and terminate.

(b)          As used herein, the term “Cause” shall be limited to (i) any material and uncorrected breach by Executive of the terms of this Agreement, including, but not limited to, engaging in action in violation of Section 11 hereof, (ii) any willful fraud or dishonesty of Executive involving the property or business of the Company, (iii) a deliberate or willful refusal or failure of Executive to comply with any major corporate policy of the Company which is communicated to Executive in writing or (iv) Executive’s conviction of, or plea of nolo contendere to, any felony if such conviction shall result in his imprisonment; provided that with
respect to clauses (i), (ii) or (iii) above, Executive shall have 10 days following written notice of the conduct which is the basis for the potential termination for Cause within which to cure such conduct in order to prevent termination for Cause by the Company. Except for violations of Section 11 hereof or terminations under Section 6.2(b)(iv) above, only actions, conduct, and events occurring during the term of employment with the Company shall be the subject of a termination For Cause.               

6.3            Disability.  

(a)         In the event of the Disability (as defined in (b) below) of Executive during the Term of Employment, the Company may terminate Executive’s Term of Employment 

 

11

 

 

upon written notice to Executive (or Executive’s personal representative, if applicable) effective upon the date of receipt thereof (the “Disability Commencement Date”).  The obligation of the Company to make any further payments under this Agreement shall, except for earned but unpaid Base Salary, any unpaid Bonus earned by the Executive with respect to the year immediately preceding the year of termination, amounts attributable to accrued but unused vacation days, vested benefits under other Company provided benefit plans and the Prorated Bonus, cease as of the Disability Commencement Date.

 (b)        The term “Disability,” for purposes of this Agreement, generally shall mean Executive’s absence from the full-time performance of Executive’s duties pursuant to a reasonable determination made in accordance with the Company’s long-term disability plan that Executive is disabled and entitled to long term disability benefits as a result of incapacity due to physical or mental illness that lasts, or is reasonably expected to last, for at least six months; provided, however, that with respect to any deferred compensation provided by this Agreement that is subject to Code Section 409A (such as the compensation described in Section 3.3), the term
“Disability” shall mean Executive’s (i) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not fewer than 12 months, or (ii) receipt, by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not fewer than 12 months, of income replacement benefits for a period of not fewer than three months under an accident and health plan covering Company employees.  Benefits under all other employee benefit programs, plans and practices shall be paid in accordance with their terms.

6.4          Death.  In the event of Executive’s death during his Term of Employment hereunder or at any time thereafter while payments are still owing to Executive under the terms of this Agreement, all obligations of the Company to make any further payments, other than the obligation to pay any accrued but unpaid Base Salary, any unpaid Bonus earned by the Executive with respect to the year immediately preceding the year of termination, amounts attributable to accrued but unused vacation days, vested Benefits under other Company provided benefit plans  and the Prorated Bonus or any remaining payments that were payable to Executive by reason of 

 

12

 

 

his termination of employment under Section 6.1 to which Executive was entitled at the time of his death, shall terminate upon Executive’s death.  Benefits under all other employee benefit programs, plans and practices shall be paid in accordance with their terms.  

6.5          No Further Notice or Compensation or Damages.  Executive understands and agrees that he shall not be entitled to any further notice, compensation or damages upon Termination of Employment under this Agreement, other than amounts specified in this Section 6 and the Ancillary Documents.

6.6          Executive’s Duty to Provide Materials.  Upon the termination of the Term of Employment for any reason, Executive or his estate shall surrender to the Company all correspondence, letters, files, contracts, mailing lists, customer lists, advertising materials, ledgers, supplies, equipment, checks, and all other materials and records of any kind that are the property of the Company or any of its subsidiaries or affiliates, that may be in Executive’s possession or under his control, including all copies of any of the foregoing.

7.            Notices.  All notices or communications hereunder shall be in writing, addressed as follows: 

To the Company:

Chief Executive Officer

Peabody Energy Corporation

701 Market Street, Suite 900

St. Louis, Missouri 63101-1826

 

	
             
 	
            with copies to:
 

 

David R. Shevitz, Esq.

Kathleen Sheil Scheidt, Esq.

Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois  60661

 

To Executive at the address set forth on the signature page hereof

 

Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of sending shall constitute the time at which notice was given. 

 

13

 

 

8.            Separability.  If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect.  

9.            Assignment.  This Agreement shall be binding upon, inure to the benefit of and be enforceable by the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company.

10.          Amendment.  This Agreement may be amended only by written agreement of the parties hereto. 

11.            Nondisclosure of Confidential Information; Non-Competition.

(a)         Executive, both during the term hereof and thereafter, will not, directly or indirectly,  use for himself or use for, or disclose to, any party other than the Company, or any subsidiary of the Company (other than in the ordinary course of Executive’s duties for the benefit of the Company or any subsidiary of the Company), any secret or confidential information regarding the business or property of the Company or its subsidiaries or regarding any secret or confidential apparatus, process, system, or other method at any time used, developed, acquired, discovered or investigated by or for the Company or its subsidiaries, whether or not developed, acquired, discovered or investigated by Executive.  At the termination of Executive’s employment or at any other
time the Company or any of its subsidiaries may request, Executive shall promptly deliver to the Company all memoranda, notes, records, plats, sketches, plans or other documents made by, compiled by, delivered to, or otherwise acquired by Executive concerning the business or properties of the Company or its subsidiaries or any secret or confidential product, apparatus or process used developed, acquired or investigated by the Company or its subsidiaries.

(b)          In consideration of the Company’s obligations under this Agreement, Executive agrees that during the period of his employment hereunder and for a period of 

 

14

 

 

one year thereafter, without the prior written consent of the Board, (i) he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any entity which is in competition with the business of the Company or its subsidiaries and (ii) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or offer employment to any person who is or has been employed by the Company or its subsidiaries at any time during the 12 months immediately preceding such solicitation.

(c)          For purposes of this Section 11, an entity shall be deemed to be in competition with the Company if it is principally involved in the purchase, sale or other dealing in any property or the rendering of any service purchased, sold, dealt in or rendered by the Company as a part of the business of the Company within the same geographic area in which the Company effects such sales or dealings or renders such services.  Notwithstanding this subsection 11(c) or subsection 11(b), nothing herein shall be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive’s beneficial ownership of any class of such company’s securities does not exceed 5% of the outstanding securities of such class.  

(d)          Executive agrees that this covenant not to compete is reasonable under the circumstances and will not interfere with his ability to earn a living or to otherwise meet his financial obligations.  Executive and the Company agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended.  Executive agrees that any breach of the covenants contained in this Section 11 would irreparably injure the Company.  Accordingly, Executive agrees that, in the event that a court enjoins Executive
from any activity prohibited by this Section 11, the Company may, in addition to pursuing any other remedies it may have in law or in equity, cease making any payments otherwise required by this Agreement and obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive.

 

15

 

 

12.          Beneficiaries; References.  Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death, and may change such election, in either case by giving the Company written notice thereof.  In the event of Executive’s death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative.  Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.

13.          Dispute Resolution.  Any dispute or controversy arising under or in connection with this Agreement (other than an action to enforce the covenants in Section 11 hereof) or the Ancillary Documents shall be resolved by arbitration in St. Louis, Missouri.  Three arbitrators shall be selected, and arbitration shall be conducted, in accordance with the rules of the American Arbitration Association.  The arbitrators shall have the discretion to award the cost of arbitration, arbitrators’ fees and the respective attorneys’ fees of each party between the parties as they see fit.

14.          Governing Law.  This Agreement shall be construed, interpreted and governed in accordance with the laws of the State of Missouri, without reference to rules relating to conflicts of law.

15.          Effect on Prior Agreements.  This Agreement and the Ancillary Documents contain the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding, both written and oral, between the Company, any affiliate of the Company or any predecessor of the Company or affiliate of the Company and Executive.

16.          Withholding.  The Company shall be entitled to withhold from payment any amount of withholding required by law.

17.          Currency.  All dollar amounts or references contained in this Agreement and the Ancillary Documents refer to the United States dollar.

18.          Survival.  Notwithstanding the expiration of the term of this Agreement, the provisions of Section 11 hereunder shall remain in effect as long as is reasonably necessary to give effect thereto in accordance with the terms hereof.

 

16

 

 

19.          Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original.

	
             
 	
            PEABODY ENERGY CORPORATION
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Gregory H. Boyce                                   12/21/06
 
	
             
 	
             
 	
            Gregory H. Boyce                                         Date
 
	
             
 	
             
 	
            President and Chief Executive Officer
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            EXECUTIVE
 
	
             
 	
             
 
	
             
 	
            /s/ Eric Ford                                          
                        12/22/06
 
	
             
 	
            Eric Ford                                          
                              Date
 

 

_________________________________________________

 

	
            Effective Date of Agreement:
 	
            First Day of Employment - TBD
 
	
             
 	
             
 
	
            Name of Executive:
 	
            Eric Ford
 
	
             
 	
             
 
	
            Address of Executive:
 	
            77 Moons Lane
 
	
             
 	
            Brookfield
 
	
             
 	
            Brisbane
 
	
             
 	
            Queensland 4069
 
	
             
 	
            Australia
 
	
             
 	
             
 
	
            Executive Team Position:
 	
            Executive Vice President and Chief Operating Officer
 
	
             
 	
             
 
	
            Base Salary:
 	
            $650,000 per annum
 
	
             
 	
             
 
	
            Annual Bonus Target:
 	
            80% of Base Salary (150% of Base Salary maximum)
 
	
             
 	
             
 
	
            Long-Term Incentive Plan Target:
 	
            250% of Base Salary (500% of Base Salary maximum)
 
	
             
 	
             
 
	
            Continuation Benefits:
 	
            1.   Medical, dental and vision benefits;
 
	
             
 	
            2.   Life insurance;
 
	
             
 	
            3.   Accidental death and dismemberment insurance;
 
	
             
 	
            and
 
	
             
 	
            4.   Health care reimbursement account.
 

 

 

17Exhibit 10.3

 

EXHIBIT A

 

 

RESTRICTED STOCK AGREEMENT

THIS AGREEMENT, dated _______________ ___, 2007 (the “Grant Date”) is made by and between PEABODY ENERGY CORPORATION, a Delaware corporation (the “Company”), and the undersigned employee of the Company or a Subsidiary (as defined below) or an Affiliate (as defined below) of the Company (“Grantee”).

WHEREAS, the Company wishes to afford the Grantee the opportunity to own shares of its $.01 par value Common Stock (“Common Stock”);

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

WHEREAS, the Committee (as hereinafter defined) appointed to administer the Plan has determined that it would be to the advantage and best interest of the Company and its stockholders to give the shares of Common Stock provided for herein to the Grantee, on a restricted basis, as an incentive for increased efforts during his or her term of office with the Company or its Subsidiaries or Affiliates, and has advised the Company thereof and instructed the undersigned officers to so grant;

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

ARTICLE I

DEFINITIONS

Whenever the following terms are used in this Agreement, they shall have the meaning specified below unless the context clearly indicates to the contrary.  Capitalized terms not otherwise defined in this Agreement shall have the meaning specified in the Plan.

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

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

Section 1.3 –  “Cause” shall mean (i) any material and uncorrected breach by Grantee of the terms of his or her employment agreement with the Company, if any, including, but not limited to, engaging in action in violation of any restrictive covenants therein, (ii) any willful fraud or dishonesty of Grantee involving the property or business of the Company, (iii) a deliberate or willful refusal or failure of Grantee to comply with any major corporate policy of the Company 

 

 

which is communicated to Grantee in writing, or (iv) Grantee’s conviction of, or plea of nolo contendere to, any felony if such conviction results in Grantee’s imprisonment; provided that with respect to clauses (i), (ii) or (iii) above, Grantee shall have 10 days following written notice of the conduct that is the basis for the potential termination for Cause within which to cure such conduct to prevent termination for Cause by the Company.

Section 1.4 –  “Committee” shall mean the Compensation Committee of the Company, duly appointed by the Board as the Administrator under Section 2 of the Plan.

Section 1.5 –  “EBITDA” shall mean income from continuing operations before deducting early debt extinguishment costs, net interest expenses, income taxes, minority interests, asset retirement obligation expense and depreciation, depletion and amortization.

Section 1.6 –  “Good Reason” shall mean (i) a reduction by the Company in Grantee’s Base Salary, or (ii) a material reduction in the aggregate program of employee benefits and perquisites to which Grantee is entitled (other than a reduction that affects all executives).

Section 1.7 –  “Person” shall mean an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

Section 1.8 –  “Plan” shall mean the Peabody Energy Corporation 2004 Long-Term Equity Incentive Plan, as amended from time to time.

Section 1.9 –  “Pronouns” The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates.

Section 1.10 –  “Retirement” shall mean normal retirement at or after age 55 with at least ten (10) years of service with the Company.

Section 1.11 –  “Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations, or group of commonly controlled corporations, other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Section 1.12 –  “Termination of Employment” shall mean a termination of the Grantee’s employment with the Company, a Subsidiary or an Affiliate (regardless of the reason therefor).

ARTICLE II

GRANT OF RESTRICTED STOCK

Section 2.1 –  Grant of Restricted Stock.  For good and valuable consideration, the Company shall grant to the Grantee the number of shares set forth on the signature page hereof of its Common Stock (the “Restricted Stock”) upon the terms and subject to the conditions set forth in this Agreement.

 

2

 

 

Section 2.2 –  Transfer Restrictions.  At any time prior to vesting in accordance with Article III, the shares of Restricted Stock or any interest therein cannot be directly or indirectly transferred, sold, assigned, pledged, hypothecated or otherwise disposed of.  Upon vesting in accordance with Article III, the shares of Restricted Stock shall cease to be restricted and shall become non-forfeitable, and the Grantee shall own such shares free of all restrictions otherwise imposed by this Agreement.

Section 2.3 –  No Obligation of Employment.  Nothing in this Agreement or in the Plan shall confer upon the Grantee any right to continue in the employ of the Company or any Subsidiary or Affiliate or interfere with or restrict in any way the rights of the Company and its Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate the employment of the Grantee at any time for any reason whatsoever, with or without Cause.

Section 2.4 –  Adjustments in Restricted Shares.  In the event that the outstanding shares of the stock subject to this Restricted Stock grant are, from time to time, changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company by reason of a merger, consolidation, recapitalization event, reclassification, stock split, stock dividend, combination of shares, or otherwise, the Committee shall make an appropriate and equitable adjustment in the number and kind of shares that shall constitute Restricted Stock and in any other characteristics or terms applicable to the Restricted Stock as it may determine appropriate in its sole discretion to equitably reflect such corporate event or transaction.  Any such adjustment made by the Committee shall be final and binding upon the Grantee, the
Company and all other interested persons.

ARTICLE III

VESTING OF RESTRICTED STOCK

Section 3.1 –  Restricted Stock.  Unless otherwise provided in this Agreement, the shares of Restricted Stock shall become vested and non-forfeitable in accordance with the following schedule, provided that the Grantee does not experience a Termination of Employment before the designated dates:

	
            Vesting Date
 	
             
 	
            Percentage of Restricted
 tock that May Become Vested
 
	
             
 	
             
 	
             
 
	
            October 1, 2007
 	
             
 	
            33.33%
 
	
             
 	
             
 	
             
 
	
            April 1, 2008
 	
             
 	
            33.33%
 
	
             
 	
             
 	
             
 
	
            April 1, 2009
 	
             
 	
            33.33%
 

 

Section 3.2 –  Acceleration Events.  Notwithstanding anything in this Article III to the contrary, the shares of Restricted Stock shall become fully vested and non-forfeitable upon: (i) a Change of Control; (ii) the Grantee’s death while he or she is employed with the Company, a Subsidiary or an Affiliate; (iii) the Grantee’s Termination of Employment due to Disability; (iv) the Grantee’s Termination of Employment for Good Reason (as defined in the Grantee’s employment agreement); or (v) the Grantee’s involuntary Termination of Employment by the Company, a Subsidiary or an Affiliate for a reason other than Cause.

 

3

 

 

Section 3.3 –  Effect of Termination of Employment.  Unless otherwise provided in this Article III, no share of Restricted Stock shall become vested and non-forfeitable following Termination of Employment, and any such non-vested and forfeitable share of Restricted Stock shall be immediately and automatically forfeited upon Termination of Employment.

ARTICLE IV

RECEIPT OF STOCK

Section 4.1 –  Conditions to Issuance of Stock Certificates.  The shares of Common Stock deliverable hereunder may be either previously authorized but unissued shares or issued shares that have been reacquired by the Company.  Such shares shall be fully paid and nonassessable.  The Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock granted hereunder prior to fulfillment of both of the following conditions:

(a)          The obtaining of approval or other clearance from any state or federal governmental agency that the Committee, in its absolute discretion, determines to be necessary or advisable; and

(b)          The lapse of such reasonable period of time following the grant as the Committee may establish from time to time for administrative convenience.

Section 4.2 –  Escrow.  Upon issuance, the certificates for the shares of Restricted Stock shall be held in escrow by the Company until, and to the extent, the shares of Restricted Stock cease to be restricted and become non-forfeitable and the Grantee owns such shares free of all restrictions otherwise imposed by this Agreement.  Any new, substituted or additional securities or other property described in Section 2.4 shall immediately be delivered to the Company to be held in such escrow.  Shares of Restricted Stock, together with any other assets or securities held in escrow hereunder, shall be (i) surrendered to the Company for cancellation upon forfeiture, if any, of such shares of Restricted Stock by the Grantee hereunder or (ii), subject to the provisions of Section 5.1, released to the Grantee to the extent the shares of Restricted
Stock are no longer subject to any of the restrictions otherwise imposed by this Agreement.

Section 4.3 –  Rights as Stockholder.  The Grantee shall not be, and shall not have any of the rights or privileges of, a stockholder of the Company in respect of any shares granted hereunder unless and until the date on which certificates representing such shares shall have been issued by the Company to such Grantee (the “Issuance Date”).  The Grantee shall be entitled to receive any dividends paid with respect to the shares of Restricted Stock that become payable on or after the Issuance Date; provided, however, that no dividends shall be payable to or for the benefit of the Grantee for shares of Restricted Stock with respect to record dates occurring prior to the Issuance Date, or with respect to record dates occurring on or after the date, if any, on which the Grantee has forfeited
those shares of Restricted Stock.  The Grantee shall be entitled to vote the shares of Restricted Stock on or after the Issuance Date to the same extent as would have been applicable to the Grantee if the shares of Restricted Stock had then become fully vested and non-forfeitable; provided, however, that the Grantee shall not be entitled to vote the shares of Restricted Stock with respect to record dates for such voting rights occurring prior to the Issuance Date, or with respect to record dates occurring on or after the date, if any, on which the Grantee has forfeited those shares of Restricted Stock.

 

4

 

 

ARTICLE V

MISCELLANEOUS

Section 5.1 –  Tax Consequences.  The Company shall not be liable or responsible in any way for any tax (including any withholding tax) consequences relating to the shares of Restricted Stock, and the Grantee agrees to undertake to determine, and be responsible for, any and all tax (including any withholding tax) consequences to himself or herself with respect to the shares of Restricted Stock.  Notwithstanding any other provision of this Agreement, the shares of Restricted Stock, together with any other assets or securities held in escrow hereunder, shall not be released to the Grantee unless the Grantee has paid to the Company, or made arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to the grant of the shares of Restricted
Stock or the lapse of restrictions imposed by this Agreement.

Section 5.2 –  Section 83(b) Election.  The Grantee understands that Section 83 of the Code may tax as compensation income equal to the difference between the amount paid for the shares of Restricted Stock, if any, and the fair market value of the shares of Restricted Stock as of the date any restrictions on the shares of Restricted Stock lapse in the absence of an election under Section 83(b) of the Code.  In this context, “restriction” means the forfeitability of the shares of Restricted Stock pursuant to the terms of this Agreement.  To the extent that the Company has registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “restriction,” with respect to officers, directors, and 10% shareholders, may also mean the six-month period after the acquisition of the shares of
Restricted Stock during which sales of certain securities by such officers, directors, and ten percent (10%) shareholders would give rise to liability under Section 16(b) of the Exchange Act.  

The Grantee understands that he or she may elect to be taxed at the time he or she receives the shares of Restricted Stock and while the shares of Restricted Stock are subjected to restrictions rather than waiting to be taxed on the shares of Restricted Stock when and as the restrictions lapse.  The Grantee realizes that he or she may choose this tax treatment by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Grant Date and by filing a copy of such election with his or her tax return for the tax year in which the Restricted Shares were subjected to the restrictions.  THE GRANTEE UNDERSTANDS THAT FAILURE TO MAKE THIS FILING IN A TIMELY MANNER MAY RESULT IN THE RECOGNITION OF COMPENSATION INCOME BY THE GRANTEE, AS THE RESTRICTIONS LAPSE, ON ANY DIFFERENCE BETWEEN THE PURCHASE PRICE, IF ANY, AND THE FAIR MARKET VALUE OF
THE SHARES OF RESTRICTED STOCK AT THE TIME SUCH RESTRICTIONS LAPSE.  THE GRANTEE ACKNOWLEDGES THAT IT IS THE GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE.  THE GRANTEE ACKNOWLEDGES THAT HE OR SHE SHALL CONSULT HIS OWN TAX ADVISERS REGARDING THE ADVISABILITY OR NON-ADVISABILITY OF MAKING THE ELECTION UNDER SECTION 83(b) OF THE CODE AND ACKNOWLEDGES THAT HE OR SHE SHALL NOT RELY ON THE COMPANY OR ITS ADVISERS FOR SUCH ADVICE.

 

5

 

 

Section 5.3 –  Administration.  The Committee has the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and determinations made by the Committee shall be final and binding upon the Grantee, the Company and all other interested persons.  No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the shares of Restricted Stock.  In its absolute discretion, the Board of Directors may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement.

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

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

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

Section 5.7 –  Amendment.  This Agreement may be amended only by a writing executed by the parties hereto that specifically states that it is amending this Agreement.

Section 5.8 –  Dispute Resolution.  Any dispute or controversy arising under or in connection with this Agreement shall be resolved by arbitration.  Arbitrators shall be selected, and arbitration shall be conducted, in accordance with the rules of the American Arbitration Association.  The Company shall pay any legal fees in connection with such arbitration in the event that the Grantee prevails on a material element of his claim or defense.

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

 

[SIGNATURE PAGE FOLLOWS]

 

6

 

 

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

	
            GRANTEE
 	
             
 	
            PEABODY ENERGY CORPORATION
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
            By
 	
             
 
	
            Eric Ford
 	
             
 	
             
 	
            Gregory H. Boyce
 President and Chief Executive Officer
 
	
            77 Moons Lane
 Brookfield
 Brisbane
 Queensland 4069
 AUSTRALIA
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
            Grantee’s Taxpayer Identification Number:
 
 ________-______-__________
 	
             
 	
            Aggregate number of shares of Common Stock granted hereunder: 45,198
 

 

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]