Document:

exv10w13

 

EXHIBIT 10.13

NQO AGREEMENT

     THIS AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by and between
the Participant and Coleman Cable, Inc. (the “Company”);

WITNESSETH THAT:

     WHEREAS, the Company maintains the Coleman Cable, Inc. Long-Term Incentive Plan (the “Plan”),
which is incorporated into and forms a part of this Agreement, and the Participant has been
selected by the committee administering the Plan (the “Committee”) to receive a Non-Qualified Stock
Option Award under the Plan;

     NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:

     1. Terms of Award. The following terms used in this Agreement shall have the meanings
set forth in this paragraph 1:

	(a)	 	The “Participant” is                     .
	 
	(b)	 	The “Grant Date” is                     .
	 
	(c)	 	The number of “Covered Shares” is                     shares of Stock.
	 
	(d)	 	The “Exercise Price” is $                     per share.

Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this
Agreement.

     2. Award and Exercise Price. This Agreement specifies the terms of the option (the
“Option”) granted to the Participant to purchase the number of Covered Shares of Stock at the
Exercise Price per share as set forth in paragraph 1. The Option is not intended to constitute an
“incentive stock option” as that term is used in Code section 422.

     3. Date of Exercise. Subject to the limitations of this Agreement, each Installment
of Covered Shares of the Option shall be exercisable on and after the Vesting Date for such
Installment as described in the following schedule (but only if the Date of Termination has not
occurred before the Vesting Date):

	 	 	 
	 	 	VESTING DATE
	 	 	APPLICABLE TO
	INSTALLMENT	 	INSTALLMENT
	1/3 of Covered
Shares

	 	One-Year Anniversary of the Grant Date
	 
	 	 
	1/3 of Covered
Shares

	 	Two-Year Anniversary of the Grant Date
	 
	 	 
	1/3 of Covered
Shares

	 	Three-Year Anniversary of the Grant Date

 

 

Notwithstanding the foregoing provisions of this paragraph 3, the Option shall become fully vested
and exercisable upon the Date of Termination, if the Date of Termination occurs by reason of the
Participant’s death or Disability.

The Option may be exercised on or after the Date of Termination only as to that portion of the
Covered Shares for which it was exercisable immediately prior to (or became exercisable on) the
Date of Termination.

     4. Expiration. The Option shall not be exercisable after the Company’s close of
business on the last business day that occurs prior to the Expiration Date. The “Expiration Date”
shall be the earliest to occur of:

	(a)	 	the ten-year anniversary of the Grant Date;
	 
	(b)	 	if the Date of Termination occurs by reason of death or Disability, the one-year anniversary
of such Date of Termination; or
	 
	(c)	 	if the Date of Termination occurs for reasons other than death or Disability, the 90-day
anniversary of such Date of Termination.

     5. Method of Option Exercise. Subject to the terms of this Agreement and the Plan,
the Option may be exercised in whole or in part by filing a written notice with the Secretary of
the Company at its corporate headquarters prior to the Company’s close of business on the last
business day that occurs prior to the Expiration Date. Such notice shall specify the number of
shares of Stock which the Participant elects to purchase, and shall be accompanied by payment of
the Exercise Price for such shares of Stock indicated by the Participant’s election. Payment shall
be by cash or by check payable to the Company. Except as otherwise provided by the Committee
before the Option is exercised: (i) all or a portion of the Exercise Price may be paid by the
Participant by delivery of shares of Stock owned by the Participant and acceptable to the Committee
having an aggregate Fair Market Value (valued as of the date of exercise) that is equal to the
amount of cash that would otherwise be required; and (ii) the Participant may pay the Exercise
Price by authorizing a third party to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.
Except as otherwise provided by the Committee, payments made with shares of Stock in accordance
with clause (i) above shall be limited to shares held by the Participant for not less than six
months prior to the payment date. The Option shall not be exercisable if and to the extent the
Company determines that such exercise would violate applicable state or Federal securities laws or
the rules and regulations of any securities exchange on which the Stock is traded. If the Company
makes such a determination, it shall use all reasonable efforts to obtain compliance with such
laws,
rules and regulations. In making any determination hereunder, the Company may rely on the
opinion of counsel for the Company.

 

 

     6. Withholding. All deliveries and distributions under this Agreement are subject to
withholding of all applicable taxes. At the election of the Participant, and subject to such rules
and limitations as may be established by the Committee from time to time, such withholding
obligations may be satisfied through the surrender of shares of Stock (i) which the Participant
already owns, or (ii) to which the Participant is otherwise entitled under the Plan; provided,
however, that shares described in this clause (ii) may be used to satisfy not more than the
Company’s minimum statutory withholding obligation (based on minimum statutory withholding rates
for Federal and state tax purposes, including payroll taxes, that are applicable to such
supplemental taxable income).

     7. Transferability. The Option is not transferable other than as designated by the
Participant by will or by the laws of descent and distribution, and during the Participant’s life,
may be exercised only by the Participant.

     8. Heirs and Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by
merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s
assets and business. If any rights exercisable by the Participant or benefits distributable to the
Participant under this Agreement have not been exercised or distributed, respectively, at the time
of the Participant’s death, such rights shall be exercisable by the Designated Beneficiary, and
such benefits shall be distributed to the Designated Beneficiary, in accordance with the provisions
of this Agreement and the Plan. The “Designated Beneficiary” shall be the beneficiary or
beneficiaries designated by the Participant in a writing filed with the Committee in such form and
at such time as the Committee shall require. If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that
would have been exercisable by the Participant and any benefits distributable to the Participant
shall be exercised by or distributed to the legal representative of the estate of the Participant.
If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the
Participant but dies before the Designated Beneficiary’s exercise of all rights under this
Agreement or before the complete distribution of benefits to the Designated Beneficiary under this
Agreement, then any rights that would have been exercisable by the Designated Beneficiary shall be
exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits
distributable to the Designated Beneficiary shall be distributed to the legal representative of the
estate of the Designated Beneficiary.

     9. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the Committee shall have all
powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of
the Agreement by the Committee and any decision made by it with respect to the Agreement is final
and binding on all persons.

     10. Plan Governs. Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall be subject to the terms of the Plan, a copy of which
may be obtained by the Participant from the office of the Secretary of the Company; and this
Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the
Committee from time to time pursuant to the Plan.

 

 

     11. Fractional Shares. In lieu of issuing a fraction of a share of Stock resulting
from any exercise of the Option, resulting from an adjustment of the Option pursuant to paragraph
4.2(f) of the Plan or otherwise, the Company will be entitled to pay to the Participant an amount
equal to the fair market value of such fractional share.

     12. Not An Employment Contract. The Option will not confer on the Participant any
right with respect to continuance of employment or other service with the Company or any
Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate or modify the terms of such Participant’s employment or other service
at any time.

     13. Notices. Any written notices provided for in this Agreement or the Plan shall be
in writing and shall be deemed sufficiently given if either hand delivered or if sent by fax or
overnight courier, or by postage paid first class mail. Notices sent by mail shall be deemed
received three business days after mailing but in no event later than the date of actual receipt.
Notices shall be directed, if to the Participant, at the Participant’s address indicated by the
Company’s records, or if to the Company, at the Company’s principal executive office.

     14. Fractional Shares. In lieu of issuing a fraction of a share of Stock resulting
from any exercise of the Option, resulting from an adjustment of the Option pursuant to paragraph
4.2(f) of the Plan or otherwise, the Company will be entitled to pay to the Participant an amount
equal to the fair market value of such fractional share.

     15. No Rights As Shareholder. The Participant shall not have any rights of a
shareholder with respect to the shares subject to the Option, until a stock certificate has been
duly issued following exercise of the Option as provided herein.

     16. Amendment. This Agreement may be amended in accordance with the provisions of the
Plan, and may otherwise be amended by written agreement of the Participant and the Company without
the consent of any other person.

     17. Definitions. For purposes of this Agreement, the terms used in this Agreement
shall be subject to the following:

	(a)	 	Date of Termination. The term “Date of Termination” means the first day occurring on
or after the Grant Date on which the Participant is not employed by the Company or any
Subsidiary, regardless of the reason for the termination of employment; provided that a
termination of employment shall not be deemed to occur by reason of a transfer of the
Participant between the Company and a Subsidiary or between two Subsidiaries; and further
provided that the Participant’s employment shall not be considered terminated while the
Participant is on a leave of absence from the Company or a Subsidiary approved by the
Participant’s employer. If, as a result of a sale or other transaction, the
Participant’s employer ceases to be a Subsidiary (and the Participant’s employer is or
becomes an entity that is separate from the Company), and the Participant is not, at the
end of the 30-day period following the transaction, employed by the 

 

 

	 	 	Company or an entity
that is then a Subsidiary, then the occurrence of such transaction shall be treated as the
Participant’s Date of Termination caused by the Participant being discharged by the
employer.

	(b)	 	Disability. The Participant shall be considered to have a “Disability” during the
period in which the Participant is unable, by reason of a medically determinable physical or
mental impairment, to engage in any substantial gainful activity, which condition, in the
opinion of a physician selected by the Committee, is expected to have a duration of not less
than 120 days.

	(c)	 	Plan Definitions. Except where the context clearly implies or indicates the
contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.

     IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused
these presents to be executed in its name and on its behalf, all as of the Grant Date.

	 	 	 	 	 
	 

	 	Participant	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Coleman Cable, Inc.	 	 
	 
	 	 	 	 
	 

	 	By:exv10w1

 

EXHIBIT 10.1

November 10, 2006

Steven F. Leer

2 Bellerive Country Club Grounds

St, Louis, MO 63141

Re: Arch Coal, Inc.

Dear Steve:

     In order to encourage you to remain in the employ of the Company, this Agreement sets forth
those benefits which the Company will provide to you in the event your employment with the Company
(1) is Terminated without Cause during the term of this Agreement, or (2) you resign for Good
Reason following a Change in Control under the circumstances described below.

SECTION A. DEFINITIONS

     1. “Agreement” shall mean this letter agreement.

     2. “Average Annual Bonus” shall be the highest of (i) the most recent annual bonus paid to
you, (ii) if your Date of Termination occurs after the end of the calendar year but prior to the
payment of annual bonuses with respect to the prior year, the amount calculated as payable as your
annual bonus pursuant to the bonus targets approved by the Board of Directors of the Company for
such year compared to the actual performance of the Company for such year; or (iii) the average
annual bonus paid to you in the three full calendar years preceding the Date of Termination. If
you have not been employed by the Company for three full calendar years prior to the Date of
Termination, the average annual bonus for purposes of clause (iii) of this definition shall be a
percentage of your highest annual salary in effect at any time during the term of this Agreement
equal to the average percentage of annual base pay paid as an annual bonus to all executives of the
Company at your Incentive Compensation level in the three calendar years preceding the Date of
Termination.

     3. “Board” shall mean the Company’s Board of Directors.

     4. “Cause” shall occur hereunder only upon (A) the willful and/or continued failure by you
substantially to perform your duties with the Company (other than any such failure resulting from
your incapacity due to physical or mental illness) after a written demand for substantial
performance is delivered to you by the Board which specifically identifies the manner in which the
Board believes that you have not substantially performed your duties, (B) the willful engaging by
you in gross misconduct materially and demonstrably injurious to the Company including, without
limitation, a violation of the Company’s Code of Business Conduct in effect from time to time, or
(C) your conviction of or the entering of a plea of nolo contendere to the commission of a felony.
For purposes of this paragraph, no act, or failure to act, on your part shall be considered
“willful” unless done, or omitted to be done, by you not in good faith and without reasonable
belief that your action or omission was in the best interest of the Company.

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     5. “Change in Control” shall be deemed to have occurred if (i) there shall be consummated (A)
any consolidation, merger, or share exchange of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company’s Common Stock would
be converted into cash, securities or other property, other than a merger of the Company in which
the holders of the Company’s Common Stock immediately prior to the merger have substantially the
same proportionate ownership of common stock of the surviving corporation immediately after the
merger, or (B) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company, or (ii) the
stockholders of the Company shall approve any plan or proposal for the liquidation or dissolution
of the Company, or (iii) at any time during a period of two (2) consecutive years, “Continuing
Directors” shall cease for any reason to constitute at least a majority of the Board. For such
purpose, “Continuing Directors” shall be directors who were in office at the beginning of such two
year period and new directors whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the Continuing Directors then in
office.

     6. “COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act, as amended.

     7. “Common Stock” shall mean the common stock, par value $0.01 per share, of the Company.

     8. “Company” shall mean Arch Coal, Inc. and any successor to its business and/or assets which
executes and delivers the agreement provided for in Section F, paragraph 1 hereof or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

     9. “Competitive Activity” shall have the meaning as set forth in Section D, paragraph 7.

     10. “Competitive Operation” shall have the meaning as set forth in Section D, paragraph 7.

     11. “Confidential Information” shall mean information relating to the Company’s, its
divisions’ and Subsidiaries’ and their successors’ business practices and business interests,
including, but not limited to, customer and supplier lists, business forecasts, business and
strategic plans, financial and sales information, information relating to products, process,
equipment, operations, marketing programs, research, or product development, engineering records,
computer systems and software, personnel records or legal records.

     12. “Date Of Termination” shall mean: (A) if this Agreement is terminated for Disability, 30
days after the Notice of Termination is given by the Company to you (provided that you shall not
have returned to the performance of your duties on a full-time basis during such 30 day period),
(B) if your employment is terminated for Good Reason by you, the date specified in the Notice of
Termination, and (C) if your employment is Terminated for any other reason, the date on which a
Notice of Termination is received by you unless a later date is specified.

     13. “Disability” shall occur if, as a result of your incapacity due to physical or mental
illness, you shall have been absent from your duties with the Company for six consecutive months
and shall not have returned to full-time performance of your duties within 30 days after written
notice is given to you by the Company.

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     14. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     15. “Excise Tax” shall have the meaning as set forth in Section E.

     16. “Good Reason” shall mean:

     (a) without your express written consent, the assignment to you after a Change in
Control, of any duties inconsistent with, or a significant diminution of, your position,
duties, responsibilities or status with the Company immediately prior to a Change in
Control, or a diminution in your title(s) as in effect immediately prior to a Change in
Control or any removal of you from, or any failure to reelect you to, any of such positions;

     (b) a reduction by the Company in your base salary in effect immediately prior to a
Change in Control or a failure by the Company to increase (within fifteen months of your
last increase in base salary) your base salary after a Change in Control in an amount which
is substantially similar, on a percentage basis, to the average percentage increase in base
salary for all corporate officers of the Company during the preceding 12 months;

     (c) the failure by the Company to continue in effect any retirement, stock ownership or
health and welfare plan in which you are participating or are eligible to participate at the
time of a Change in Control (or plans providing you with substantially similar benefits),
except as otherwise required by the terms of such plans as in effect at the time of any
Change in Control, or the taking of any action by the Company which would adversely affect
your participation in or materially reduce your benefits under any of such plans or deprive
you of any material fringe benefits enjoyed by you at the time of the Change in Control or
the failure by the Company to provide you with the number of paid vacation days to which you
are entitled in accordance with the vacation policies of the Company in effect at the time
of a Change in Control, unless a comparable plan is substituted therefore;

     (d) the failure by the Company to continue in effect any incentive plan or arrangement
(including without limitation, the Company’s incentive compensation plan, annual bonus and
contingent bonus arrangements and credits and the right to receive performance awards and
similar incentive compensation benefits) in which you are participating at the time of a
Change in Control (or to substitute and continue other plans or arrangements providing you
with substantially similar benefits), or a reduction in your Incentive Compensation level in
effect at the time of a Change in Control except as otherwise required by the terms of such
plans or arrangements as in effect at the time of any Change in Control;

     (e) the failure by the Company to continue in effect any plan or arrangement to receive
securities of the Company (including, without limitation, any plan or arrangement to receive
and exercise stock options, stock appreciation rights, restricted stock or grants thereof or
to acquire stock or other securities of the Company) in which you are participating at the
time of a Change in Control (or to substitute and continue plans or arrangements providing
you with substantially similar benefits), except as otherwise required by the terms of such
plans or arrangements as in effect at the time of any Change in Control, or the taking of
any action by the Company which would

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adversely affect your participation in or materially
reduce your benefits under any such plan or arrangement;

     (f) the relocation of the Company’s principal executive offices to a location outside
the St. Louis metropolitan area, or the Company’s requiring you to be based anywhere other
than at your current location or at the location of the Company’s principal executive or
divisional offices, except for required travel on the Company’s business to an extent
substantially consistent with your present business travel obligations, or, in the event you
consent to any such relocation of the Company’s principal executive or divisional offices,
the failure by the Company to pay (or reimburse you for) all reasonable moving expenses
incurred by you relating to a change of your
principal residence in connection with such relocation and to indemnify you against any
loss (defined as the difference between the actual sale price of such residence and the
greater of (a) your aggregate investment in such residence, or (b) the fair market value of
such residence as determined by a real estate appraiser reasonably satisfactory to both you
and the Company) realized in the sale of your principal residence in connection with any
such change of residence;

     (g) any breach by the Company of any material provision of this Agreement; or

     (h) any failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company.

     17. “Gross-up Payment” shall have the meaning as set forth in Section E.

     18. “Notice of Termination” shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment under the provision so
indicated.

     19. “Payment” shall have the meaning as set forth in Section E.

     20. “Person” shall have the meaning as set forth in Sections 13(d) and 14(d)(2) of the
Exchange Act.

     21. “Qualifying Termination” shall mean the termination of your employment after a Change in
Control while this Agreement is in effect, unless such termination is (a) by reason of your death
or Disability, (b) by the Company for Cause, or (c) by you other than for Good Reason.

     22. “Significant Stockholder” shall mean any stockholder of the Company who, immediately prior
to the Effective Date, owned more than 5% of the common stock of the Company.

     23. “Solicitation Activity” shall have the meaning as set forth in Section D, paragraph 7.

     24. “Specified Employee” shall mean a key employee (as defined in Code Section 416(i)(5))
determined in accordance with the meaning of such term under Code Section 409A and the regulations
promulgated thereunder. The identification date for purposes of determining

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whether you are a key
employee shall be the identification date used for the same purpose under the Arch Coal, Inc.
Deferred Compensation Plan.

     24. “Subsidiary” shall mean any corporation of which more than 20% of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned by the Company, by the Company and one or more other
Subsidiaries, or by one or more other Subsidiaries.

SECTION B. TERM AND BENEFITS

     This Agreement shall be in effect for a period of one year from the date you accept this
Agreement and shall automatically renew for successive one year periods unless terminated by either
party by at least one year advance written notice prior to the commencement of the next succeeding
one year period at which time the Agreement shall terminate at the end of the next succeeding one
year period. During the term of employment hereunder, you agree to devote your full business time
and attention to the business and affairs of the Company and to use your best efforts, skills and
abilities to promote its interests.

     In the event of your retirement, at your election or in accordance with the Company’s
generally applicable retirement policies, as in effect from time to time, this Agreement shall
automatically terminate, without additional notice to you, as of the effective date of your
retirement. Notwithstanding the first sentence of this paragraph and the first sentence of this
Section B, if a Change in Control should occur while you are still an employee of the Company and
while this Agreement is in effect, then this Agreement shall continue in effect from the date of
such Change in Control for a period of two years. Prior to a Change in Control, your employment
may be terminated by the Company for Cause at any time pursuant to a Notice of Termination. In
such event, you shall not be entitled to the benefits provided hereunder. No benefits shall be
payable hereunder unless your employment is terminated without Cause or there shall have been a
Change in Control and your employment by the Company shall thereafter terminate in accordance with
Section D hereof.

SECTION C. TERMINATION PRIOR TO CHANGE IN CONTROL

     1. Compensation Prior to a Change in Control. If you are Terminated by the Company
without Cause during the term of this Agreement and prior to a Change in Control, you shall be
entitled to the following:

     (a) A single lump sum payment equal to two times the higher of: (1) your annual salary
immediately prior to your Date of Termination, or (2) your highest annual salary during the
three fiscal years preceding the fiscal year in which your Date of Termination occurs.

     (b) To the extent you are covered thereunder on the Date of Termination, a single lump
sum payment equal to the product of (i) 18 and (ii) the monthly COBRA rate in effect from
time to time for your and your eligible dependents’ coverage under the Company’s health
plans. Upon your Termination, you and any covered dependents shall be entitled to elect to
continue participation in the Company’s health plans in accordance with COBRA and the
otherwise applicable terms of such plans, including

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terms relating to payment of COBRA
premiums or retiree medical contributions, if eligible and timely elected.

     (c) A single lump sum payment equal to the product of (i) 24 and (ii) the monthly
premium rate applicable upon conversion of your non-optional Company-group life insurance to
individual coverage at the rate applicable to the converted policy assuming timely
application to the insurance company for conversion and, if you have not timely applied for
conversion, then at the group rate on the Date of Termination.

     (d) If and when payments are made, payment in cash of any pro-rata portion (up through
your Date of Termination) of any amounts you would have received under the Company’s
performance unit/share plans, Annual Incentive Compensation Plan, and any other similar
executive compensation plan in which you were a participant immediately prior to your Date
of Termination.

     (e) A single lump sum payment in cash equal to your Average Annual Bonus.

     (f) To the extent you are participating thereunder on the Date of Termination, a single
lump sum payment equal to the sum of (i) (A) the Company matching contribution you would
have received under the Company’s thrift plan and nonqualified deferred compensation
plan as if you had been contributing the same percentage of your eligible compensation
under such plans as in effect on your Date of Termination during the 24-month period
following your Date of Termination and (B) the annual cash balance credit amount you would
have received under the Company’s cash balance plan and nonqualified supplemental retirement
plan during the 24-month period following your Date of Termination and (ii) an amount such
that after payment by you of all taxes, including any income and employment taxes imposed on
such amount, you retain an amount equal to the amount calculated under (i) above. For
purposes of this calculation, payments made pursuant to paragraph 1(a) and 1(e) hereof shall
be deemed includable compensation under these plans to the same extent as if you had
remained an active employee of the Company and the payments were made for base salary and
annual bonus, respectively, during the 24-month period following your Date of Termination.

     (g) To the extent you had elected to receive such services prior to the Date of
Termination, financial counseling services shall be provided to you in accordance with the
Company’s financial counseling services plan during the 24-month period following your Date
of Termination; provided that, the maximum amount payable to the provider of such services
shall not exceed $5,000.

     (h) Reasonable outplacement services, for a period not to exceed the 24-month period
following your Date of Termination.

     (i) A single lump sum payment equal to the value of all unused, earned and accrued
vacation as of your Date of Termination.

     (j) All unexpired, non-restricted stock options held by you under any Company stock
option plan shall immediately vest as of your Date of Termination, and shall be exercisable,
if at all, in accordance with the option agreements and plans granting such options to you.

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     However, in the event that your employment with the Company is Terminated during the term of
this Agreement and prior to a Change in Control and such Termination is not a Termination without
Cause (including, without limitation, termination by reason of your voluntary termination,
retirement, death, or Disability), or if your employment is terminated for Cause during the term of
this Agreement, you shall not be entitled to receive any benefits under this Agreement.

     2. Release. In exchange for the benefits herein and as a condition to receiving any
benefits under this Agreement, you agree to execute a release in substantially the form used by the
Company on the Date of Termination, which completely releases the Company to the fullest extent
permitted by law from all claims you may have against the Company on your Date of Termination
except claims related to (a) claims for benefits to which you are entitled under this Agreement and
(b) any applicable worker’s compensation or unemployment compensation.

     3. Payment of Benefits. Unless otherwise provided in this Agreement or in the
applicable compensation or stock option plan or program, all payments shall be made to you in a
single lump sum within 60 days after your Date of Termination. These benefits are in addition to
all accrued and vested benefits to which you are entitled to under any of the Company’s plans and
arrangements, including but not limited to, the accrued vested benefits to which you are eligible
for and entitled to receive under any of the Company’s qualified and non-qualified benefit or
retirement plans, or any successor plans in effect on your Date of Termination hereunder, except
that if you are disabled on the Date of Termination so as to make you eligible for long-term
disability benefits on or after that date, you will not be eligible for pension credits for one
year from the Date of Termination, except that if you are disabled on the Date of Termination so as
to make you eligible to receive long-term disability benefits under a Company plan on
or after that date, you will not receive the portion of the single lump sum payment described
in Section C, paragraph 1(f)(i)(B).

     4. No Duty to Mitigate. You shall not be required to mitigate the amount of any
payment provided for in this Section by seeking other employment or otherwise, nor shall the amount
of any payment provided for in this Section be reduced by any compensation earned by you as the
result of employment by another employer after your Date of Termination, or otherwise. Except as
provided herein, the Company shall have no right to set off against any amount owing hereunder any
claim which it may have against you.

SECTION D. TERMINATION FOLLOWING CHANGE IN CONTROL

     1. Qualifying Termination. If your termination is a Qualifying Termination, you shall
be entitled to receive the payments and benefits provided in this Section.

     2. Notice of Termination. Except as provided in Section F, paragraph 1, any
termination of your employment following a Change in Control shall be communicated by written
Notice of Termination to the other party hereto. No termination shall be effective without such
Notice of Termination.

7

 

     3. Compensation Upon Termination After a Change in Control.

     (a) If your termination is a Qualifying Termination, then the Company shall pay to you
as severance pay (and without regard to the provisions of any benefit or incentive plan), in
a lump sum cash payment, an amount equal to three times the higher of; (1) your annual
salary immediately prior to your Date of Termination, or (2) your highest annual salary
during the three fiscal years preceding the fiscal year in which your Date of Termination
occurs or, if greater, the prior three fiscal years preceding the fiscal year in which the
Change in Control occurs.

     (b) If your termination is a Qualifying Termination, in addition to the payments
required by the preceding paragraph, you shall be entitled to the following:

     (i) To the extent you are covered thereunder on the Date of Termination, a
single lump sum payment equal to the product of (i) 18 and (ii) the monthly COBRA
rate in effect from time to time for your and any covered dependents’ coverage under
the Company’s health plans. Upon your Termination, you and any covered dependents
shall be entitled to elect to continue participation in the Company’s health plans
in accordance with COBRA and the otherwise applicable terms of such plans, including
terms related to payment of COBRA premiums or retiree medical contributions, if
eligible and timely elected.

     (ii) A single lump sum payment equal to the product of (A) 36 and (B) the
monthly premium rate applicable upon conversion of your non-optional Company-group
life insurance to individual coverage at the rate applicable to the converted policy
assuming timely application to the insurance company for conversion and, if you have
not timely applied for conversion, then at the group rate on the Date of
Termination.

     (iii) Full payment in cash of any performance unit/share awards in existence on
your Date of Termination less any amounts paid to you under the applicable
performance unit/share plan upon a Change in Control pursuant to the provisions of
such plan; plus any pro rata portion (up through your Date of Termination) of any
amounts you would have received under the Company’s Incentive Compensation Plan and
any other similar executive compensation plan in which you were a participant
immediately prior to your Date of Termination.

     (iv) A single lump sum payment in cash of an amount equal to three times your
Average Annual Bonus.

     (v) Reasonable outplacement services, for a period not to exceed three (3)
years after your Date of Termination.

     (vi) To the extent you had elected to receive such services prior to the Date
of Termination, financial counseling services shall be provided to you by a firm
reasonably acceptable to you during the 36-month period following your Date of
Termination; provided that, the maximum amount payable to the provider of such
services shall not exceed $5,000.

8

 

     (vii) A single lump sum payment equal to the value of all unused, earned and
accrued vacation as of your Date of Termination pursuant to the Company’s policies
in effect immediately prior to the Change in Control.

     (viii) All unexpired stock options held by you under any Company stock option
plan shall immediately vest as of your Date of Termination, and shall be
exercisable, if at all, in accordance with the option agreements and plans granting
such options to you.

     (ix) To the extent you are participating thereunder on the Date of Termination,
a single lump sum payment equal to the sum of (i) (A) the Company matching
contribution you would have received under the Company’s thrift plan and
nonqualified deferred compensation plan as if you had been contributing the same
percentage of your eligible compensation under such plans as in effect on your Date
of Termination during the 36-month period following your Date of Termination and (B)
the annual cash balance credit amount you would have received under the Company’s
cash balance plan and nonqualified supplemental retirement plan during the 36-month
period following your Date of Termination and (ii) an amount such that after payment
by you of all taxes, including any income and employment taxes imposed on such
amount, you retain an amount equal to the amount calculated under (i) above. For
purposes of this calculation, payments made pursuant to paragraph 3(a) and 3(b)(iv)
hereof shall be deemed includable compensation under these plans to the same extent
as if you had remained an active employee of the Company and the payments were made
for base salary and annual bonus, respectively, during the 36-month period following
your Date of Termination.

     4. Release. In exchange for the benefits herein and as a condition to receiving any
benefits under this Agreement, you agree to execute a release in substantially the form used by the
Company on the Date of Termination, which completely releases the Company to the fullest extent
permitted by law from all claims you may have against the Company on your Date of Termination
except claims related to (a) claims for benefits to which you are entitled under this Agreement and
(b) any applicable worker’s compensation or unemployment compensation.

     5. Payment of Benefits. Unless otherwise provided in this Agreement or in the
applicable compensation or stock option plan or program, all payments shall be made to you within
30 days after your Date of Termination. These benefits are in addition to all accrued and vested
benefits to which you are entitled to under any of the Company’s plans and arrangements, including
but not limited to, the accrued vested benefits to which you are eligible for and entitled to
receive under any of the Company’s qualified and non-qualified benefit or retirement plans, or any
successor plans in effect on your Date of Termination hereunder, except that if you are disabled on
the Date of Termination so as to make you eligible for long-term disability benefits on or after
that date, you will not be eligible for pension credits for two years from the Date of Termination
and provided that, the payment described in paragraph 3(a) shall be made on the fifth day following
your Date of Termination. Notwithstanding the preceding sentence, the payment of the amounts
described in paragraphs 3(a) and 3(b)(i), (ii), (iii), (iv), (vi) and (ix) shall not be made until
the day after the last day of the six-month period beginning on your Date of Termination if you are
a Specified Employee to the extent required by Code Section 409A.

9

 

     6. No Duty to Mitigate. You shall not be required to mitigate the amount of any
payment provided for in this Section by seeking other employment or otherwise, nor shall the amount
of any payment provided for in this Section be reduced by any compensation earned by you as the
result of employment by another employer after your Date of Termination, or otherwise. Except as
provided herein, the Company shall have no right to set off against any amount owing hereunder any
claim which it may have against you.

     7. Competitive Activity and Solicitation Activity. In consideration of the foregoing,
you agree that if your employment is terminated during the term of this Agreement, then (i) during
a period ending six months following your Date of Termination you shall not engage in any
Competitive Activity and (ii) during a period ending one year following your Date of Termination
you shall not engage in any Solicitation Activity; provided, you shall not be subject to the
foregoing obligation if the Company breaches a material provision of this Agreement. If you choose
to engage in any Competitive Activity or Solicitation Activity during that period, the Company
shall be entitled to recover any benefits paid to you under this Agreement. For purposes of this
Agreement, “Competitive Activity” shall mean your participation, without the written consent of the
General Counsel of the Company, in the management of any business operation of any enterprise if
such operation (a “Competitive Operation”) engages in substantial and direct competition with any
business operation actively conducted by the Company or its divisions and Subsidiaries on your Date
of Termination. For purposes of this paragraph, a business operation shall be considered a
Competitive Operation if such business sells a competitive product or service which constitutes (i)
15% of that business’s total sales or (ii) 15% of the total sales of any individual subsidiary or
division of that business and, in either event, the Company’s sales of a similar product or service
constitutes (i) 15% of the total sales of the Company or (ii) 15% of the total sales of any
individual Subsidiary or division of the Company. Competitive Activity shall not include (i) the
mere ownership of securities in any enterprise, or (ii) participation in the management of any
enterprise or any business operation thereof, other than in connection with a Competitive Operation
of such enterprise. For purposes of this Agreement, “Solicitation Activity” shall mean your
solicitation for employment or retention, hiring or retention, without the written consent of the
General Counsel of the Company, of any person employed or retained by the Company on your Date of
Termination or during the six months preceding your Date of Termination.

SECTION E. ADDITIONAL PAYMENTS BY THE COMPANY

     Notwithstanding anything to the contrary in this Agreement, in the event that any payment or
distribution by the Company to or for your benefit, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, or any
interest or penalties with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company
shall pay to you an additional payment (a “Gross-up Payment”) in an amount such that after payment
by you of all taxes (including any interest or penalties imposed with respect to such taxes),
including any income, employment and Excise Tax imposed on any Gross-up Payment, you retain an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments. You and the
Company shall make an initial determination as to whether a Gross-up Payment is required and the
amount of any such Gross-up Payment. If you and the Company can not agree on whether a Gross-up
Payment is required or the amount thereof, then an independent nationally recognized accounting
firm, appointed by you, shall determine the amount of the Gross-up Payment. The Company shall

10

 

pay all expenses which you may incur in determining the Gross-up Payment. You shall notify the Company
in writing of any claim by the Internal Revenue Service which, if successful, would require the
Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by the Company and you) within ten days of the receipt of such claim. The Company shall
notify you in writing at least ten days prior to the due date of any response required with respect
to such claim if it plans to contest the claim. If the Company decides to contest such claim, you
shall cooperate fully with the Company in such action; provided, however, the Company shall bear
and pay directly or indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold you 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 the Company’s action. If, as a result of the Company’s action with respect
to a claim, you receive a refund of any amount paid by the Company with respect to such claim, you
shall promptly pay such refund to the Company. If the Company fails to timely notify you whether it
will contest such claim or the Company determines not to contest such claim, then the Company shall
immediately pay to you the portion of such claim, if any, which it has not previously paid to you.
Notwithstanding anything in this Section E, no Gross-up Payment shall be made after the March
15th following the calendar year in which your Date of Termination occurs, unless a
later date is required pursuant to Section D, paragraph 5.

SECTION F. MISCELLANEOUS

     1. Assumption of Agreement. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, share exchange or otherwise) to all or substantially
all of the business and/or assets of the Company, by agreement in form and substance satisfactory
to you, expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of any such succession
shall be a breach of a material provision of this Agreement and shall entitle you to terminate your
employment for Good Reason and receive the compensation in the same amount and on the same terms as
you would be entitled pursuant to Section D, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be deemed your Date of
Termination without a Notice of Termination being given.

     2. Confidentiality. All Confidential Information which you acquire or have acquired
in connection with or as a result of the performance of services for the Company, whether under
this Agreement or prior to the effective date of this Agreement, shall be kept secret and
confidential by you unless (a) the Company otherwise consents or (b) you are legally required to
disclose such Confidential Information by a court of competent jurisdiction. This covenant of
confidentiality shall extend beyond the term of this Agreement and shall survive the termination of
this Agreement for any reason. If you breach this covenant of confidentiality, the Company shall
be entitled to recover from any benefits paid to you under this Agreement its damages resulting
from such breach.

     3. Employment. You agree to be bound by the terms and conditions of this Agreement
and to remain in the employ of the Company during any period following any public announcement by
any Person of any proposed transaction or transactions which, if effected, would result in a Change
in Control until a Change in Control has taken place. However,

11

 

nothing contained in this Agreement shall impair or interfere in any way with the right of the Company to terminate your employment for
Cause prior to a Change in Control.

     4. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled exclusively by arbitration in accordance with
the Center for Public Resources’ Model ADR Procedures and Practices, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
Notwithstanding the foregoing, the Company shall not be restricted from seeking equitable relief,
including injunctive relief as set forth in paragraph 5 of this Section, in the appropriate forum.
Any cost of arbitration will be paid by the Company. In the event of a dispute over the existence
of Good Reason or Cause after a Change in Control, the Company shall continue to pay your salary,
bonuses and plan benefits pending resolution of the dispute. If you prevail in the arbitration,
the remaining amounts due to you under this Agreement are to be immediately paid to you.

     5. Injunctive Relief. You acknowledge and agree that the remedy of the Company at law
for any breach of the covenants and agreements contained in paragraph 2 of this Section and in
Section D, paragraph 7 will be inadequate, and that the Company will be entitled to injunctive
relief against any such breach or any threatened, imminent, probable or possible breach. You represent and agree that
such injunctive relief shall not prohibit you from earning a livelihood acceptable to you.

     6. Notice. For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this Agreement, provided that
all notices to the Company shall be directed to the attention of the General Counsel of the
Company, or to such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective only upon receipt.

     7. Indemnification. The Company will indemnify you to the fullest extent permitted by
the laws of the State of Missouri and the existing bylaws of the Company, in respect of all your
services rendered to the Company and its divisions and Subsidiaries prior to your Date of
Termination. You shall be entitled to the protection of any insurance policies the Company now or
hereafter maintains generally for the benefit of its directors, officers and employees (but only to
the extent of the coverage afforded by the existing provisions of such policies) to protect against
all costs, charges and expenses whatsoever incurred or sustained by you in connection with any
action, suit or proceeding to which you may be made a party by reason of your being or having been
a director, officer or employee of the Company or any of its divisions or Subsidiaries during your
employment therewith.

     8. Further Assurances. Each party hereto agrees to furnish and execute such
additional forms and documents, and to take such further action, as shall be reasonably and
customarily required in connection with the performance of this Agreement or the payment of
benefits hereunder.

     9. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by you and
such officer(s) as may be specifically designated by the Board. No waiver by either party

12

 

hereto at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not set forth expressly in this Agreement.

     10. Termination of other Agreements. Upon execution by both parties, this Agreement
shall terminate and shall replace all prior employment and severance agreements between you and the
Company and its divisions or Subsidiaries and the terms hereof shall govern as if executed on the
initial date of such prior employment and severance agreements.

     11. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.

     12. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     13. Legal Fees And Expenses. Any other provision of this Agreement notwithstanding,
the Company shall pay all legal fees and expenses which you may incur as a result of the Company’s
unsuccessful contesting of the validity, enforceability or your interpretation of, or
determinations under, any part of this Agreement.

     14. Governing Law. This Agreement shall be governed in all respects by the laws of
the State of Missouri, without reference to its conflicts of law provisions.

     15. Agreement Binding on Successors. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns. This Agreement
shall inure to the benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If you should
die while any amounts would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee, or other designee or, if there be no such designee, to your
estate.

     16. Headings. All Headings are inserted for convenience only and shall not affect any
construction or interpretation of this Agreement.

     If this Agreement correctly sets forth our agreement on the subject matter hereof, please sign
and return to the Company the enclosed copy of this Agreement which will then constitute our
agreement on this matter.

	 	 	 
	 

	 	
	 

	 	

	 	 	 	 	 
	 	Sincerely,	 	
	 	 	 	 
	 	ARCH COAL, INC.	 		 
	 	 	 	 
	 	By:  	                                                  /s/ Sheila B. Feldman
 	 
	 	 	Sheila B. Feldman 	 
	 	 	Vice President, Human Resources 	 
	 

ACKNOWLEDGED AND ACCEPTED as

of this 10th day of November, 2006.

/s/ Steven F. Leer                    

Employee

13

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