Document:

Exhibit
10.3

 

Confidential
Separation Agreement

 

This
Confidential Separation Agreement (“Agreement”) is entered into between Jim
Walter Resources, Inc., its successors, assigns, affiliates, insurers and
related entities, (hereinafter “Employer” or “Company”) and Michael T. Madden,
Vice President, Marketing, Transportation and Quality Control, for Jim Walter
Resources, Inc. hereinafter “Employee.” 
In consideration for the mutual promises set forth below, Employer and
Employee agree as follows:

 

WHEREAS,
it is agreed and understood that Employee’s service with the Company is to be
at will, and either Employee or the Company may terminate the employment
relationship at any time for any reason, with or without cause, and with or
without notice to the other.  Nothing
herein or elsewhere constitutes or shall be construed as a commitment to employ
Employee or pay Employee severance, other than what is stipulated in this
Agreement, for any period of time. 
Employee confirms that he has read and has fully understood the contents
of this covenant; and

 

WHEREAS,
Employee acknowledges and agrees that, as long as Employee is employed by the
Company, Employee will respect and safeguard the Company’s trade secrets and
confidential information including the contents of the Agreement, and,
furthermore, Employee acknowledges and agrees that, following his separation
from the Company, that Employee will not release or divulge any of the Company’s
trade secrets and/or confidential information, including the contents of this
Agreement, without the expressed written consent of the President of the
Company; and

 

WHEREAS,
the following restrictive covenants will be followed:

 

(a) Non-Compete.
It is understood and agreed that the Employer is in the coal mining and methane
gas business.  The nature and methods
employed in the Employer’s business are such that the Employee will have
substantial relationships with specific businesses and personnel, prospective
and existing, vendors, contractors, customers, and employees of the Employer that
result in the creation of customer goodwill. 
Therefore, following the termination of employment under this Agreement
for any reason and continuing for a period of one (1) year from the date
of such termination, so long as the Employer or any affiliate, successor or
assigns thereof carries on the name or like business within the Restricted Area
(including the states and/or countries Jim Walter Resources operates in as of
the Employee’s date of separation), Employee shall not, directly or indirectly,
for himself or herself or on behalf of, or in conjunction with, any other
person, persons, company, partnership, corporation, business entity or
otherwise:

 

1.               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 Employer or
any corporation controlling, controlled by, under common control with, or
otherwise related to Employer, including but not limited to Jim Walter
Resources, Inc. or any other affiliated companies; or

 

1

 

2.               Hire away any independent
contractors or personnel of Employer and/or entice any such persons to leave
the employ of Employer or its affiliated entities without the prior written
consent of Employer.

 

(b) Non-Disparagement.  Following the termination of employment under
this Agreement for any reason and continuing for so long as the Employer or any
affiliate, successor or assigns thereof carries on the name or like business within
the Restricted Area, Employee shall not, directly or indirectly, for himself or
herself or on behalf of, or in conjunction with, any other person, persons,
company, partnership, corporation, business entity or otherwise:

 

1.               Make any statements or announcements
or permit anyone to make any public statements or announcements concerning
Employee’s termination with Employer, or

 

2.               Make any statements that are
inflammatory, detrimental, slanderous, or negative in any way to the interests
of the Employer or its affiliated entities.

 

NOW
THEREFORE, in consideration of the stipulated premises and mutual promises
herein contained, it is agreed as follows:

 

In
the event of Employee’s involuntary termination, other than for “cause,”
Employee will be eligible for severance benefits.  For purposes of this Agreement, “cause” is
defined as being serious misconduct (theft, dishonesty or assault), habitual
neglect of duty or incompetence, conduct incompatible with Employee’s duties or
prejudicial to Employer’s business and/or willful disobedience to the Employer’s
orders.

 

The
severance benefits for which Employee would be eligible are:

 

·                  Twelve months
of salary continuance at Employee’s base rate of pay at the time of
termination.

 

·                  Twelve months
of continuing fringe benefits to the extent plans permit continued
participation.  In any event, health and
life insurance will continue for the period of Employee’s contractual severance
and the COBRA election period will not commence until the expiration of that
period.

 

Agreed
to and executed this 24th day of October, 2006.

 

 

	
  /s/
  George Richmond

  	
   

  	
  /s/
  Michael T. Madden

  
	
  George
  Richmond

  	
   

  	
  Michael
  T. Madden

  
	
  Chief
  Executive Officer

  	
   

  	
  Vice
  President, Marketing,

  
	
  Jim
  Walter Resources, Inc.

  	
   

  	
  Transportation &
  Quality Control

  
	
   

  	
   

  	
  Jim
  Walter Resources, Inc.

  

 

2Exhibit 10.4

 

AMENDMENT TO

CONFIDENTIAL SEPARATION AGREEMENT

 

This AMENDMENT TO
CONFIDENTIAL SEPARATION AGREEMENT (this “Amendment”), is made and
entered into effective as of December 17, 2008, by and between Jim Walter
Resources, Inc. (the “Company”) and Michael Madden (“Employee”).

 

WHEREAS, the Employee and
the Company are parties to a Confidential Separation Agreement dated October 24,
2006 (the “Agreement”), which provides, among other things, for the
Employee to receive severance benefits in the event of Employee’s involuntary
termination without cause; and

 

WHEREAS, the parties desire
to amend the terms of the Agreement in order to comply with the final
regulations promulgated under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”).

 

NOW, THEREFORE, in
consideration of the mutual promises, covenants and agreements set forth herein
and in the Agreement, the parties hereto agree as follows:

 

1.             Amendment. The sentence
in the Agreement beginning “The severance benefits for which Employee would be
eligible” and the two bullet points thereafter are deleted and replaced with
the following:

 

“The severance benefits for
which Employee would be eligible are:

 

·                  Twelve (12) months of base
salary continuation at the rate in effect at the date of separation from
service (the “Severance Date”); provided that base salary will be
paid in accordance with the payroll dates in effect on the Severance Date, and
such payment dates will not be affected by any subsequent change in payroll
practices.

 

·                  Except as provided below,
continuation of all fringe benefits at the level in effect on the Severance
Date, in each case beginning immediately upon the Severance Date and continuing
until the earlier of (A) the date that is twelve (12) months after the Severance
Date, (B) the last date Employee is eligible to participate in the benefit
under applicable law, or (C) the date Employee is eligible to receive
comparable benefits from a subsequent employer, as determined solely by the
Company in good faith. Such benefits shall be provided to Employee at the same
coverage level and cost to Employee as in effect on the Severance Date.
Notwithstanding the foregoing, Employee’s participation in the Employee Stock
Purchase Plan and long-term disability insurance plan, and Employee’s ability
to make deferrals under the 401(k) plan, will cease effective on the
Severance Date.

 

 

To the extent required by
law, the Employee shall qualify for COBRA health benefit continuation coverage
beginning upon expiration of the twelve (12) month benefit continuation period
described above.

 

For purposes of enforcing
this subsection, Employee shall be deemed to have a duty to keep the Company
informed as to 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.

 

·                  Notwithstanding anything to
the contrary in this Agreement, if Employee is a Specified Employee (as defined
below) on the Severance Date, to the extent that Employee 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 Severance Date, such benefits or
payments shall not be provided or paid to Employee 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 Employee on the first business day after the
date that is six (6) months after the Severance Date (or, if earlier,
within fifteen (15) days following Employee’s date of death). If Employee is
required to pay for a benefit that is otherwise required to be provided by the
Company under this Agreement by reason of this subsection, Employee shall be
entitled to reimbursement for such payments on the first business day after the
date that is six (6) months after the Severance Date (or, if earlier,
within fifteen (15) days following Employee’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 Severance Date shall not be affected by this
subsection 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 subsection, 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 Regulations Sections 1.409A-1(b)(4) (short-term
deferral) or 1.409A-1(b)(9) (certain separation pay plans). This
subsection is intended to comply with the requirements of Section 409A(a)(2)(B)(i) of
the Code.

 

·                  Employee shall not be
entitled to severance benefits under this Agreement in the event the Employee
experiences a separation from service within twenty-four months  after a Change in Control of Walter
Industries, Inc. (as defined in Employee’s Executive Change in Control
Severance Agreements with Walter Industries, Inc.). Severance benefits
payable upon a separation from service during such period, if any, shall be
determined and paid under such Executive Change in Control Severance
Agreements.

 

 

For purposes of this
Agreement, the following terms have the meanings set forth below:

 

·                  “Involuntary termination”
means Employee’s involuntary separation from service within the meaning of
Treasury Regulations Section 1.409A-1(n)(1).

 

·                  “Separation from service”
means Employee’s “separation from service” from Employee’s employer within the meaning
of Section 409A(a)(2)(A)(i) of the Code and the default rules of
Treasury Regulations Section 1.409A-1(h). For this purpose, Employee’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 Regulations Sections 1.409A-1(g)) as the result of the
application of the rules of Treasury Regulations Sections 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.

 

·                  “Specified Employee”
means a “specified employee” of the service recipient that includes the Company
(as determined under Treasury Regulations Sections 1.409A-1(g)) within the
meaning of Section 409A(a)(2)(B)(i) of the Code and Treasury
Regulations 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 Regulations Section 1.409A-1(i).”

 

2.             Miscellaneous. All
capitalized terms that are used but not expressly defined in this Amendment
have the respective meanings ascribed to them in the Agreement. This Amendment
records the final, complete, and exclusive understanding among the parties
regarding the amendment of the Agreement. As amended by this Amendment, the
Agreement is ratified and remains in full force and effect in accordance with
its terms.

 

*     *     *

 

Agreed to and executed to be
effective as of the date first written above.

 

	
  Jim Walter Resources, Inc.

  	
   

  	
  Employee

  
	
   

  	
   

  	
   

  
	
  /s/ George R Richmond

  	
   

  	
  /s/ Michael T. Madden

  
	
  Name:

  	
  George
  R. Richmond

  	
   

  	
  Name:

  	
  Michael T. Madden

  
	
  Title:

  	
  CEO

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