Document:

Exhibit 10.24.2

 

	

    	
Walter Energy, Inc.

P.O. Box 20608

Tampa, Florida 33622-0608

 

www.walterenergy.com
    

 

February 2, 2011

 

Ms. Lisa A. Honnold

4211 W. Boy Scout Blvd.

Tampa, FL 33607

 

Dear Lisa:

 

This letter agreement summarizes our discussions regarding your commitment (the “Commitment”) to continue serving in your current position with Walter Energy, Inc. (“Walter”) through and including June 30, 2011 (the “Commitment Date”).

 

1.                                       Subject to (x) your Commitment and (y) 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 A (the “Release”) on or prior to the 45th day following the date on which your employment with Walter terminates (such date, the “Severance Date” and the conditions set forth in (x) and (y), collectively, the “Conditions”), you shall be entitled to receive the following payments and benefits:

 

(i)                                  For the period commencing on the day immediately following the Severance Date and ending on December 31, 2011, base salary continuation at the rate in effect as of the Severance Date (which base salary shall be deemed to include any interim supplements you are receiving or may receive for serving in your current position (such base salary, the “Adjusted Base Salary”)); provided such Adjusted 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. In addition, no later than December 31, 2011, payment of an amount equal to one times your target bonus (based upon your Adjusted Base Salary) under the Executive Incentive Plan (or successor annual bonus plan).

 

(ii)                               For the period commencing on January 1, 2012  and ending on December 31, 2012, payment, in substantially equal installments, of an amount equal to the sum of (x) twelve (12) months of Adjusted Base Salary plus (y) one times your target bonus (based upon your Adjusted Base Salary) under the Executive Incentive Plan (or successor annual bonus plan); provided such payment 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.

 

(iii)                            For the period commencing January 1, 2013 and ending on June 30, 2013, payment, in substantially equal installments, of an amount equal to six (6) months of Adjusted Base Salary; provided such payment 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.

 

 

(iv)                           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) June 30, 2013, (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 (iv), 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.

 

(v)                              For a period of twelve (12) months following the Severance Date, Walter agrees to provide you with outplacement services through DBM or such other nationally recognized outplacement firm as may be reasonably selected by Walter;

 

provided, however, that if, prior to the Commitment Date, your employment (A) is terminated by Walter without “Cause” (as defined in the applicable Equity Award Agreement (as defined below)), (B) terminates due to death or “Disability” (as defined in the applicable Equity Award Agreements (as defined below)), or (C) is terminated by you for any reason following (I) (x)  the consummation of the transactions contemplated by the Arrangement Agreement, dated December 2, 2010, between Walter and Western Coal Corp. (the “Arrangement Agreement”) or (y)  the termination of the Arrangement Agreement, in each case, in accordance with the terms set forth in the Arrangement Agreement, and (II) your successor being appointed to the office held by you and a four (4) week transition period following such appointment having expired, during which period you continued to serve as an officer of Walter, you will still be entitled to the payments and benefits provided for under this Paragraph 1; and provided further 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 in this Paragraph 1 or, after timely delivery, revoke it within the time period specified in such Release.

 

2.                                       In addition to the foregoing, notwithstanding anything to the contrary in (i) that certain Non—Qualified Stock Option Agreement, by and between you and Walter, dated February 27, 2008, (ii) that certain Non-Qualified Stock Option Agreement, by and between you and Walter,

 

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dated February 27, 2009, (iii) that certain Non-Qualified Stock Option Agreement by and between you and Walter, dated March 2, 2010, (iv) that certain Restricted Stock Unit Award Agreement by and between you and Walter, effective as of February 27, 2008, (v) that certain Restricted Stock Unit Award Agreement by and between you and Walter, effective as of February 27, 2009, and (vi) that certain Restricted Stock Unit Award Agreement, effective as of March 2, 2010 (collectively, the “Equity Award Agreements”), but subject to the Conditions (provided, that, for the avoidance of doubt, with respect to clauses (a) and (b) below, you shall not be required to execute and deliver the Release prior to the applicable vesting date set forth in such clauses (a) and (b)):

 

(a)                                  any and all outstanding and unvested stock options and restricted stock units subject to the Equity Award Agreements that are scheduled to vest in 2011 shall be deemed to be fully vested as of the earlier to occur of February 27, 2011 and the Severance Date in connection with the termination of your employment by Walter other than for “Cause”;

 

(b)                                 any and all outstanding and unvested stock options and restricted stock units subject to the Equity Award Agreements that are scheduled to vest in 2012 shall be deemed to be fully vested effective as of the earlier to occur of March 31, 2011 and the Severance Date in connection with the termination of your employment by Walter other than for “Cause”; and

 

(c)                                  any and all outstanding and unvested stock options and restricted stock units subject to the Equity Award Agreements that are scheduled to vest in 2013 shall be deemed to be fully vested effective as of the Severance Date;

 

provided, however, that if, prior to the Commitment Date, your employment (A) is terminated by Walter without “Cause”, (B) terminates due to death or “Disability”, or (C) is terminated by you for any reason following (I) (x) the consummation of the transactions contemplated by the Arrangement Agreement or (y) the termination of the Arrangement Agreement, in each case, in accordance with the terms set forth in the Arrangement Agreement and (II) your successor being appointed to the office held by you and a four (4) week transition period following such appointment having expired, during which period you continued to serve as an officer of Walter, you will still be entitled to the rights provided for under clause (c) of this Paragraph 2;

 

Other than the amendments to the vesting schedules as specifically provided for in this paragraph 2, such stock options and restricted stock units shall continue to be subject to, and you shall continue your rights and obligations under, the terms and conditions of the Equity Award Agreements and the Amended and Restated 2002 Long-Term Incentive Award Plan of Walter Energy, Inc. This letter agreement, upon execution by the parties, hereby serves as an amendment to each of the Equity Award Agreements.

 

3.                                       Notwithstanding anything herein to the contrary and for the avoidance of doubt, you shall not be entitled to the severance payments, rights and benefits under this letter agreement in the event your employment terminates on or prior to the Commitment Date in connection with a Change of Control of the Company (as defined in your Amended and Restated Executive Change-in-Control Severance Agreement, amended and restated December 17, 2008 (the “Change in Control Agreement”) that occurs on or prior to the Commitment Date. Severance

 

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payments, rights and benefits payable in connection with such a termination of employment, if any, shall be determined and paid under such Change in Control Agreement.

 

4.                                       Except as expressly provided for herein, the severance payments, rights and benefits described in this letter agreement will be the only such payments, rights and benefits you are to receive as a result of the termination of your employment in connection with the relocation of Walter’s headquarters from Tampa, Florida to Birmingham, Alabama (the “Relocation”) and your election to decline Walter’s offer to participate in the Relocation and you agree you are not entitled to any additional payments, rights or benefits not otherwise described in this letter agreement. Any payments, rights or benefits received under this letter agreement will not be taken into account for purposes of determining benefits under any employee benefit plan of Walter, except to the extent required by law, or as otherwise expressly provided by the terms of such plan or this letter agreement. Walter shall withhold from any amounts payable hereunder all Federal, state, city or other taxes as legally shall be required.

 

5.                                       This letter agreement (x) constitutes the entire agreement between the parties with respect to the termination of your employment in connection with the Relocation and your election to decline Walter’s offer of participate in the Relocation, (y) supersedes all other prior written or oral agreements or understandings concerning such subject matter (other than the Change in Control Agreement or the agreements referred to herein) and (z) may only be amended or modified by a written agreement executed by you and Walter (or any of its respective successors). Neither party hereto admits any liability or wrongdoing whatsoever in amicably resolving all maters which are subject to the Release.

 

6.                                       To the extent that any dispute or question arises concerning the interpretation or applicable of the terms of this letter agreement, any such dispute or question hereunder shall be construed, interpreted and governed in accordance with the laws of the State of Florida without reference to rules relating to conflicts of law.

 

7.                                       This letter agreement is intended to comply with Section 409A of the Code and will be interpreted accordingly. References under this letter 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 herein 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 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

 

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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 letter 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 letter agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.

 

8.                                       This letter 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.

 

[The remainder of this page intentionally left blank.]

 

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If the foregoing terms and conditions are acceptable and agreed to by you, please sign on the line provided below to signify such acceptance and agreement and return the executed copy to the undersigned.

 

 

	
 
    	
 
    	
WALTER ENERGY, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Joseph B. Leonard
    
	
 
    	
 
    	
Name:
    	
Joseph B. Leonard
    
	
 
    	
 
    	
Title:
    	
Interim Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Accepted and Agreed
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Lisa A. Honnold
    	
 
    	
 
    
	
Lisa A. Honnold
    	
 
    	
 
    

 

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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 letter agreement, dated February 2, 2011, by and between Employer and Employee (the “Letter Agreement”).

 

1.                                       Employee separated her employment with Employer on                        , 2011.

 

2.                                       In consideration for the payments, rights and benefits provided under the Letter Agreement, on behalf of herself, her 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., the Florida Civil Rights Act, Fla.  Stat. §760 et  seq., the Florida Equal Pay Act §725.07, Florida’s Workers’ Compensation Anti-Retaliation Provision, §440.205, Florida’s Wage Rate Provision, §448.07, Florida’s Attorney’s Fees Provision for Successful Litigations in Suits for Unpaid Wages, §448.08, the Florida Private and Public Whistleblower Act, §448.102 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 she has not filed any charges, including charges against Employer with the Equal Employment Opportunity Commission (“EEOC”), the Florida Commission on Human Relations (“FCHR”), the Federal or Florida Department of Labor, 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 the existence and terms of this Waiver will remain confidential; provided that Employee may reveal the terms of the Waiver to her 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 her employment, she 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 winch gives or is intended to give Employer an advantage over its competitors who do not have the information. Employee agrees that she is required to return all severance payments provided under the Letter Agreement if she 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 she may have which arises after the date of this Waiver.

 

b.                                      That she 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 she 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 she 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 she has forty-five (45) days to consider this Waiver.

 

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f.                                         That she 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 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 Florida, 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 she has read this Waiver fully and completely and she understands its significance.

 

h.                                      That she enters into this Waiver knowingly and voluntarily and on her own free will and choice.

 

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

 

j.                                          That she 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 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 is made and entered into in the State of Florida, and shall in all respects be interpreted, enforced and governed, under the laws of the said state. The language of

 

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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.

 

PLEASE READ CAREFULLY. THIS WAIVER INCLUDES

A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

 

	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name Printed:
    
	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

 

Date hand delivered to Employee:                            , 2011.

 

45-day period to consider this Waiver ends:                            , 2011.

 

4Exhibit 10.25

 

 

April 1, 2011

 

Mr. Michael T. Madden

3829 South Cove Drive

Birmingham, AL 35213

 

Dear Mike,

 

We are pleased that you have accepted the position of Global Head — Marketing 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 Global Head — Marketing of Walter, you will have such duties, responsibilities and authorities as the Chief Executive Officer of Walter (the “CEO”) determines are appropriate for your position. You will report to the CEO or to his designee.

 

It is agreed and understood that this letter agreement (including the schedules and exhibit attached hereto) (collectively, the “Agreement”) and the other agreements referred to in this Agreement, including, without limitation, the Amended and Restated Executive Change-in-Control Agreement by and between you and Walter, effective December 17, 2008, and the Amended and Restated Change-in-Control Agreement by and between you and Walter, effective December 18, 2008, as each may be amended from time to time (collectively, the “CIC Agreements”) 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. 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.

 

Mike, we are delighted that you are remaining with Walter and we look forward to continuing to work 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/   Keith Calder
    	
 
    	
May 3 / 2011
    
	
Keith   Calder
    	
 
    	
Date
    
	
Chief   Executive Officer
    	
 
    	
 
    
	
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/   Michael T. Madden
    	
 
    	
May 26, 2011
    
	
Michael   T. Madden
    	
 
    	
Date
    

 

 

Enclosures:

 

Schedule A                                   Remuneration & Benefits

Schedule B                                   Terms and Conditions

 

	
 
    	
Initials
    	
 
    	
/s/   
    

 

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SCHEDULE A

 

REMUNERATION & BENEFITS

 

	
Name:
    	
Michael   T. Madden
    
	
 
    	
 
    
	
Role Title:
    	
Global   Head — Marketing
    
	
 
    	
 
    
	
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.
    

 

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 $375,000 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.

 

Annual Bonus (EIP):                                                                                               You will continue to participate in Walter’s Executive Incentive Plan, as it may be amended from time to time (the “EIP”) and, in this position, will be eligible to earn an annual target bonus of 70% 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

 

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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 (x) individual objectives and/or (y) departmental goals, in each case, as determined and recommended by the management of Walter and subsequently approved by the Compensation Committee. 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 determined as follows: (i) the portion of your bonus, if any, that relates to your employment with Walter from January 1, 2011 through the day immediately prior to the Date of Appointment will be based solely on the base salary earned by you during such period and your annual target bonus percentage as in effect immediately prior to the Date of Appointment, and (ii) the portion of your bonus, if any, that relates to your employment with Walter from the Date of Appointment through the last day of the 2011 fiscal year will be based solely on the Base Salary earned during such period and your Target Bonus. Notwithstanding anything in this Agreement to the contrary, with respect to any bonus to be paid hereunder, such bonus will be paid in accordance with the EIP and, to the extent possible, will be structured to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) as performance based compensation thereunder; provided however, to the extent not deductible by Walter, such payment will be deferred until it can be paid by Walter on a tax deductible basis.

 

As you are aware, 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 remain a participant 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 remain eligible to receive annual equity grants from Walter.

 

Your annual equity grant in respect of the 2011 fiscal year (which includes the equity grant made by Walter to you on February 16, 2011) will be valued at 90% of Base Salary,

 

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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.

 

Company Vehicle:                                                                                                           You will continue to be provided with the use of a company-  owned or company-leased vehicle during the term of your employment, subject to Water’s policies regarding replacement vehicles and reimbursement for operating costs and maintenance.

 

Expenses:                                                                                                                                                           Continued 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:                                                                                                                                          Continued participation in Walter’s life and health insurance benefit programs in accordance with their terms, as they may change from time to time.

 

Retirement Plan:                                                                                                                   Continued participation in all Walter’s retirement plans that you currently participate in, including, but not limited to, the Pension Plan for Salaried Employees of Walter Industries, Inc. Subsidiaries, Divisions and Affiliates, the Walter Industries, Inc. Supplemental Pension Plan, and the Walter Energy 401(k) Plan, according to their terms as they may change from time to time.

 

Leave:                                                                                                                                                                            Continued 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.

 

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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 A (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.

 

· 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 first 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

 

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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 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;

 

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 Agreements). 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 Agreements.

 

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

 

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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 Water 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 Waiter 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. 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.

 

Relocation:                                                                                                                                                  The location of the Walter Corporate Office will be Chicago, Illinois. You will be provided with relocation assistance under the Walter Energy Relocation policy, a copy of which will be provided under separate cover.

 

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SCHEDULE B

 

TERMS AND CONDITIONS

 

1.                             It is agreed and understood that your employment with Walter continues to be at will, and either you or Water 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 continue to employ you or pay you severance, other than as stated in Schedule A or in the CIC Agreements, 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 without the prior written consent of the CEO or his designee.

 

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

 

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 have and will continue to 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,

 

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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 Western 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.

 

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,

 

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omissions, fraud or misconduct may include and are not limited to circumstances where Water 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 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 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 ail 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)(l)(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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