Document:

exv10w1

 

Exhibit 10.1

AMENDMENT NO. 2 TO THE

PEABODY ENERGY CORPORATION

2004 LONG-TERM EQUITY INCENTIVE PLAN

     WHEREAS, Peabody Energy Corporation (the “Corporation”) adopted and maintains the Peabody
Energy Corporation 2004 Long-Term Equity Incentive Plan (the “Plan”);

     WHEREAS, pursuant to Section 16 of the Plan, the Board of Directors of the Corporation (the
“Board”) may amend the Plan for various purposes, including but not limited to preventing an
expense charge to the Corporation, subject to the limitations set forth therein;

     WHEREAS, the Corporation contemplates spinning off a portion of its business into another
entity and distributing a dividend in the form of stock of that other entity (such transaction
referred to herein as “Project Gemini”), which, if such actions were to constitute a
“Recapitalization Event” under the Plan, would cause the Corporation to incur a substantial expense
under the Plan;

     WHEREAS, the “Recapitalization Event” definition was not intended by the Corporation to apply
in a transaction such as Project Gemini, which does not include a cash dividend or the distribution
of additional cash value to the shareholders of the Corporation; and

     WHEREAS, the Corporation deems it appropriate to amend the “Recapitalization Event” definition
used in the Plan;

     NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 2007, as follows:

I.

     Section 17(o) of the Plan is hereby amended to read in its entirety as follows:

     “(o) For purposes hereof, ‘Recapitalization Event’ shall mean a
recapitalization, reorganization, stock dividend or other special corporate
restructuring which results in an extraordinary distribution to the stockholders
of cash and/or securities through the use of leveraging or otherwise but which
does not result in a Change in Control; provided, however, that neither the
distribution by the Corporation to its shareholders of the common stock of
Patriot Coal Corporation (the “Distribution”) nor any of the transactions
undertaken in connection with the Distribution shall be considered or treated as
a Recapitalization Event.’”

II.

     In all other respects, the Plan shall remain unchanged and in full force and
effect.

[SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, this amendment is executed this 10th day of October, 2007.

	 	 	 	 	 
	 	PEABODY ENERGY CORPORATION

 	 
	 	

By:  	 	 
	 	

Title:	 
	 	 	 	 
	 

2exv10w2

 

Exhibit 10.2

AMENDMENT NO. 3 TO THE

PEABODY ENERGY CORPORATION

2004 LONG-TERM EQUITY INCENTIVE PLAN

     WHEREAS, Peabody Energy Corporation (the “Company”) adopted and maintains the Peabody Energy
Corporation 2004 Long-Term Equity Incentive Plan (the “Plan”);

     WHEREAS, pursuant to Section 16 of the Plan, (i) the Board of Directors of the Company (the
“Board”) has the right to amend the Plan and (ii) the Plan administrator may amend the terms and
conditions of outstanding grants under the Plan if such amendment does not adversely affect the
participant’s rights without his or her consent; and

     WHEREAS, the Company contemplates spinning off a portion of its business during 2007 to
Patriot Coal Corporation (“Patriot”), resulting in the transfer of several Company employees to
employment with Patriot and constituting a Termination of Employment for such employees within the
meaning of outstanding grants;

     WHEREAS, many of the Company employees who are expected to transfer to Patriot hold unvested
awards under the Plan and the Company would like to permit continued vesting of some of those
awards after such spin-off;

     WHEREAS, the Company deems it appropriate to amend the Plan to permit such continued vesting;
and

     WHEREAS, the Company desires to amend the Plan to comply with Section 409A.

     NOW, THEREFORE, the Plan is hereby amended effective on October 31, 2007, the effective date
of such spin-off (the “Effective Date”), as follows:

     1. Section 6 of the Plan is hereby amended by adding the following to the end thereof:

     Notwithstanding the foregoing, no SAR may be granted under this Plan that has an
exercise price that is less than the Fair Market Value of a share of Common Stock on the
date of grant.

     For purposes of this Plan, “Fair Market Value” means, as of any applicable date, (a)
the closing sales price for one share of Common Stock on such date as reported on the New
York Stock Exchange or, if the foregoing does not apply, on such other stock exchange on
which the Corporation’s Common Stock is then listed or admitted to trading, or on the last
previous day on which a sale was reported if no sale of a share of Common Stock was reported
on such date, or (b) if the foregoing subsection (a) does not apply, the fair market value
of a share of Common Stock as reasonably determined in good faith by the Board in accordance
with Code Section 409A. For purposes of subsection (b), the determination of such Fair
Market Value by the Board will be made no less frequently

 

 

than every twelve (12) months and will either (x) use one of the safe harbor
methodologies permitted under Treasury Regulation Section 1.409-1(b)(iv)(B)(2) or (y)
include, as applicable, the value of tangible and intangible assets of the Corporation, the
present value of future cash flows of the Corporation, the market value of stock or other
equity interests in similar corporations and other entities engaged in trades or businesses
substantially similar to those engaged in by the Corporation, the value of which can be
readily determined through objective means (such as through trading prices or an established
securities market or an amount paid in an arms’ length private transaction), and other
relevant factors such as control premiums or discounts for lack of marketability and whether
the valuation method is used for other purposes that have a material economic effect on the
Corporation, its stockholders or its creditors.

     2. Section 7 of the Plan is hereby amended to add the following to the end thereof:

     Notwithstanding anything in the Plan or the applicable Restricted Stock agreement to
the contrary, employment with Patriot Coal Corporation or a subsidiary thereof (“Patriot”)
or with any successor (whether by merger, purchase or otherwise) to all or substantially all
of the stock, assets or businesses of Patriot Coal Corporation (a “Successor”) shall be
treated as employment with the Corporation for the following purposes under the Plan:

     (a) Continued vesting of any Restricted Stock award held by a Patriot Employee
(as defined below) that, immediately prior to such Patriot Employee’s transfer to
Patriot, is outstanding and unvested;

     (b) Continued vesting of any Restricted Stock award held by a Patriot
Senior Management Employee (as defined below) that is scheduled to vest by
January 3, 2008.

     Notwithstanding anything in the Plan or Restricted Stock agreement to the contrary, a
Restricted Stock award held by a Patriot Senior Management Employee that is scheduled to
vest later than January 3, 2008 shall be fully vested upon the effective date of the
spin-off of Patriot (“Spin-Off Date”).

     Notwithstanding anything in the Plan or Restricted Stock agreement to the contrary, a
Restricted Stock award held by a Patriot Employee shall become fully vested upon a Patriot
Change in Control (as such term is defined below).

     For purposes of the accelerated vesting provisions in the Restricted Stock agreement,
the terms “Change of Control” and “Recapitalization Event” (if applicable) shall continue to
have the meanings set forth in the Plan and shall apply only to the Corporation.

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     For purposes of this Plan, a “Patriot Change in Control” means:

     (i) any Person (other than Patriot, any trustee or other fiduciary
holding securities under an employee benefit plan of Patriot, or any
corporation owned, directly or indirectly, by the shareholders of Patriot in
substantially the same proportions as their ownership of stock of Patriot),
becomes the beneficial owner, directly or indirectly, of securities of
Patriot, representing 50% or more of the combined voting power of Patriot’s
then-outstanding securities;

     (ii) during any period of twenty-four consecutive months (not including
any period prior to November 1, 2007), individuals who at the beginning of
such period constitute the Board of Patriot, and any new director (other
than (A) a director nominated by a Person who has entered into an agreement
with Patriot to effect a transaction described in clause (i), (iii) or (iv)
or (B) a director nominated by any Person (including Patriot) who publicly
announces an intention to take or to consider taking actions (including, but
not limited to, an actual or threatened proxy contest) which if consummated
would constitute a Patriot Change in Control) whose election by the Patriot
Board or nomination for election by Patriot’s shareholders was approved by a
vote of at least three-fourths (3/4) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority thereof;

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

     (iv) the shareholders of Patriot approve a plan of complete liquidation
of Patriot or the sale or disposition by Patriot of all or substantially all
of Patriot’s assets, other than a liquidation of Patriot into a wholly owned
subsidiary.

     As used in this definition of Patriot Change in Control, “Person” (including a
“group”), has the meaning as such term is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (or any successor section
thereto).

3

 

     For purposes of this Plan, “Patriot Employee” means a Participant who transfers, within
one (1) year of the Spin-Off Date, from employment with the Corporation directly to
employment with Patriot and who is not a Patriot Senior Management Employee.

     For purposes of this Plan, “Patriot Senior Management Employee” means a Participant who
is a member of the Patriot senior executive team designated by the Corporation, who
transfers, within one (1) year of the Spin-Off Date, from employment with the Corporation
directly to employment with Patriot and who is party to a transition letter agreement with
the Corporation in connection with such transfer; provided, however that the Chairman of the
Board and Executive Advisor of Patriot shall not be considered to be a Patriot Senior
Management Employee.

     3. Section 9 of the Plan is hereby amended to add the following to the end thereof:

     Notwithstanding the foregoing, no NQSO may be granted under this Plan that has an
exercise price that is less than the Fair Market Value of a share of Common Stock on the
date of grant.

     Notwithstanding anything in the Plan or the applicable NQSO agreement to the contrary,
employment with Patriot or with any Successor shall be treated as employment with the
Corporation for the following purposes under the Plan:

     (a) Continued vesting and exercisability of any NQSO held by a Patriot Employee
that, immediately prior to such Patriot Employee’s transfer to Patriot, is
outstanding and unvested;

     (b) Continued vesting and exercisability of any NQSO held by a Patriot Senior
Management Employee that was granted before 2006 and is scheduled to vest by January
3, 2008; and

     (c) Determining the number of years of service required for a “Retirement” for
purposes of the vesting and exercise period of NQSOs held by any Patriot Employee
and any Patriot Senior Management Employee under the provisions of any NQSO
agreement between such Employee and the Corporation.

     Notwithstanding the foregoing, any NQSO held by a Patriot Senior Management Employee
that was granted before 2006 and is scheduled to vest by January 3, 2008 shall cease to be
exercisable and expire on July 3, 2008, if not forfeited prior to such date. For purposes
of the accelerated vesting provisions in the NQSO agreements held by a Patriot Employee or a
Patriot Senior Management Employee, the terms “Change of Control” and “Recapitalization
Event” (if applicable) shall continue to have the meanings set forth in the Plan and shall
apply only to the Corporation.

4

 

     Notwithstanding anything in the Plan or NQSO agreement to the contrary, an NQSO award
held by a Patriot Employee shall become fully vested upon a Patriot Change in Control.

     Notwithstanding anything in the Plan or any NQSO agreement to the contrary, each
Accelerated Option (as defined below) shall vest and be deemed to be exercised on the
Spin-Off Date. The exercise price and tax withholding with respect to such exercise shall
be paid by the withholding by the Corporation of such number of Shares acquired by the
Participant upon such exercise of an aggregate Fair Market Value equal to the exercise price
plus the amount of any such tax withholding.

     For purposes of this Plan, the term “Accelerated Option” means a NQSO held by a Patriot
Senior Management Employee that was granted prior to 2006 and is scheduled to vest after
January 3, 2008.

     4. Section 11 of the Plan is hereby amended to add a new paragraph (e) to the end thereof that
reads as follows:

     Notwithstanding anything in the Plan or the applicable Performance Unit agreement to
the contrary, employment with Patriot or with any Successor shall be treated as employment
with the Corporation for the continued vesting of any Performance Unit held by a Patriot
Senior Management Employee that is scheduled to vest by January 3, 2008.

     A Performance Unit held by a Patriot Senior Management Employee that is scheduled to
vest after January 3, 2008 shall become payable at its full value (without proration) based
on the Corporation’s actual performance results as of December 31, 2007. Such payment shall
be made in the form of shares of Common Stock as soon as practicable after December 31,
2007, but no later than March 15, 2008.

     5. Section 17 of the Plan is hereby amended to add a new paragraph (p) to the end thereof that
reads as follows:

(p) To the extent applicable and notwithstanding any other provision of this Plan, this Plan
and Awards hereunder shall be administered, operated and interpreted in accordance with Code
Section 409A and Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance that may be
issued after the date on which the Board approves the Plan; provided, however, in the event
that the Administrator determines that any amounts payable hereunder may be taxable to a
Participant under Code Section 409A and related Department of Treasury guidance prior to the
payment and/or delivery to such Participant of such amount, the Corporation may (i) adopt
such amendments to the Plan and related Award, and appropriate policies and procedures,
including amendments and policies with retroactive effect, that the Administrator determines
necessary or appropriate to preserve the intended tax treatment of the benefits provided by
the Plan and Awards hereunder and/or (ii) take such other actions as the Administrator
determines necessary or

5

 

appropriate to comply with or exempt the Plan and/or Awards from the requirements of Code
Section 409A and related Department of Treasury guidance, including such Department of
Treasury guidance and other interpretive materials as may be issued after the date on which
the Board approves the Plan. The Corporation makes no guarantees to any Participant
regarding the tax treatment of Awards or payments made under the Plan, and, notwithstanding
the above provisions and any agreement or understanding to the contrary, if any Award,
payments or other amounts due to a Participant (or his or her beneficiaries, as applicable)
results in, or causes in any manner, the application of an accelerated or additional tax,
fine or penalty under Code Section 409A or otherwise to be imposed, then the Participant (or
his or her beneficiaries, as applicable) shall be solely liable for the payment of, and the
Corporation and its subsidiaries shall have no obligation or liability to pay or reimburse
(either directly or otherwise) the Participant (or his or her beneficiaries, as applicable)
for, any such additional taxes, fines or penalties.

     6. In all other respects, the Plan shall remain unchanged and in full force and effect.

	 	 	 	 	 
	 	 	PEABODY ENERGY CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

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