EXHIBIT-10.14
EMPLOYMENT AGREEMENT
This AGREEMENT is entered into as of
11:59 p.m. New York time on the date set forth
on the signature page hereof, by and between Patriot Coal
Corporation, a Delaware corporation (the “Company”),
and the undersigned employee (the “Employee”).
RECITALS
To induce Employee to serve in the
executive positions set forth on the signature page hereof, the
Company desires to provide Employee with compensation and other
benefits on the terms and subject to the conditions set forth in
this Agreement.
Employee is willing to accept such
employment and perform services for the Company, on the terms and
subject to the conditions hereinafter set forth.
It is therefore hereby agreed by and
between the parties as follows:
1. Employment .
1.1 Subject to the terms and conditions of this Agreement,
the Company agrees to employ Employee during the Term of Employment
hereof as an officer of the Company in the roles of Chairman of the
Board of Directors of the Company (the “Board”) and as
Executive Advisor, as described in Exhibit A hereto. In such
capacities, Employee shall be directed by the Board, and shall have
the powers, responsibilities and authorities as set forth in
Exhibit A hereto. Employee shall be subject to annual
performance reviews by the Board.
1.2 Subject to the terms and conditions of this Agreement,
Employee hereby accepts employment in such Board and management
positions commencing as of the date hereof (the “Commencement
Date”) and agrees, subject to any period of vacation and sick
leave, to devote such time as is necessary to perform the services,
duties and responsibilities in connection therewith. Upon the
termination of Employee’s employment for any reason, Employee
shall resign as a member of the Board of the Company or any
Subsidiary of the Company, if the Board requests Employee to do
so.
1.3 Nothing in this Agreement shall preclude Employee from
engaging in trade association activities, charitable work and
community affairs, from delivering lectures, fulfilling speaking
engagements or teaching at educational institutions, from managing
any investment made by him or his immediate family (provided that
no such investment in publicly traded equity securities may exceed
five percent (5%) of the equity of any entity, without the prior
approval of the Board) or from serving, subject to the prior
approval of the Board, as a member of the board of directors or as
a trustee of any other corporation, association or entity, to the
extent that any of the above activities do not materially interfere
with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the Board required therein
shall not be unreasonably withheld.
2. Term and Location of
Employment .
2.1 Term of Employment . Employee’s term of
employment as Executive Advisor under this Agreement shall commence
on the Commencement Date and, subject to termination as provided in
this Agreement, shall have a term ending on December 31, 2010
(the “Term of Employment”). Throughout the Term of
Employment, Company agrees to provide Employee with meaningful
assignments commensurate with Employee’s role as Executive
Advisor. Following the Term of Employment, Employee shall be not
entitled to any severance payments, but will be entitled to Accrued
Obligations as follows: the Company shall pay to the Employee
(a) within five (5) business days following the date of
termination of Employee’s employment, a lump sum equal to
(i) Employee’s Base Salary earned on or prior to the
date of such termination but not yet paid to Employee in accordance
with the Company’s customary procedures and practices
regarding the salaries of senior executives, (ii) any business
expenses incurred by Employee and not yet reimbursed by the Company
under Section 5 below as of the date of such termination,
(iii) any vacation time accrued but unused as of the date of
such termination, and (iv) any 2007 Bonus or Bonus (as
described in Section 3.2 hereof) earned but not yet paid for
any calendar year prior to the date of such termination, and
(b) any benefits accrued and vested under any of the
Company’s employee benefit programs, plans and practices on
or prior to the date of termination of Employee’s employment
(remuneration described in (a) and (b) above are
collectively referred to as the “Accrued Obligations”
herein) in accordance with the terms of such programs, plans and
practices.
2.2 Location of Employment . Employee shall perform
his duties described in this Agreement at the Company’s
headquarters located at the address set forth in Section 9
hereof. If the Company relocates its headquarters as distance of
more than 50 miles from such address, Employee shall, in his
discretion, perform his duties at a location other than at the
Company’s headquarters, provided that Employee is accessible
during the Company’s regular business hours by telephone.
Company shall provide Employee with an office and an executive
assistant.
3. Compensation
.
3.1 Salary . During the Term of Employment, the
Company shall pay Employee a base salary (“Base
Salary”) in the amount set forth on the signature page
hereof. The Base Salary shall be payable in accordance with the
ordinary payroll practices of the Company. During the Term of
Employment, the Board shall review in good faith, at least
annually, Employee’s Base Salary in accordance with the
Company’s customary procedures and practices regarding the
salaries of the management team and may, if determined by the Board
to be appropriate, increase Employee’s Base Salary following
such review. “Base Salary” for all purposes herein
shall be deemed to be a reference to any such increased amount.
Notwithstanding anything herein to the contrary, because he is an
employee of the Company, Employee shall not be entitled to any
director’s fees or compensation.
3.2 Annual Bonus . In addition to his Base Salary,
Employee shall, commencing with the 2008 calendar year and
continuing for each calendar year thereafter during the Term of
Employment, be eligible to receive an annual cash bonus (the
“Bonus”) in accordance with a program to be developed
by the Board and CEO, based on achievement of performance targets
established by the Board as soon as practicable at or
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after the
beginning of the calendar year to which the performance targets
relate. Employee’s target annual Bonus percentage is set
forth on the signature page hereof. With respect to 2007, Employee
shall be eligible for a discretionary cash bonus (the “2007
Bonus”) based on the amount of time Employee has been
employed by the Company during 2007, and the Company’s
performance in accordance with performance targets, which shall be
established by the Board before or as soon as practicable after the
Commencement Date. A Bonus award for any calendar year and any 2007
Bonus award shall be payable to Employee at the time bonuses are
paid to other members of the management team for such calendar year
in accordance with the Company’s policies and practices as
set by the Board, but in no event later than March 15 of the
calendar year following the later of (a) the calendar year in
which the Bonus or 2007 Bonus is earned or (b) the calendar
year in which the Bonus or 2007 Bonus is no longer subject to a
substantial risk of forfeiture within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended (the
“Code”) and the guidance promulgated and in effect
thereunder (“Section 409A”).
4. Employee
Benefits .
4.1 Equity .
(a) Upon the commencement of
employment, Employee shall receive a one-time equity-based
compensation award under the Company’s equity incentive plans
(the “Long Term Incentive Award”) with a value based on
the fair market value of the underlying stock as set forth on the
signature page hereof. The Long Term Incentive Award shall be made
in the form of restricted stock.
(b) As of the date of termination of
Employee’s employment due to Employee’s Disability (as
defined in Section 6.4 hereof) or death, or upon the
occurrence of a change in control (as defined in the applicable
equity-based plan or award) the Long Term Incentive Award granted
to the Employee by the Company shall become immediately and fully
vested.
(c) The Long Term Incentive Award
shall be governed by a separate grant agreement (together with any
other agreement approved by the Board and designated by the Board
as an “Ancillary Document” for purposes of this
Agreement, the “Ancillary Documents”). To the extent
permitted by any applicable law and the rules of any exchange on
which the Company’s stock is listed, in the event of any
conflict between an Ancillary Document and the terms of this
Agreement, the terms of this Agreement shall govern.
(d) The Long Term Incentive Award and
any other equity-based awards granted to the Employee by the
Company shall be approved by a committee of the Board comprised of
individuals who are both disinterested directors (within the
meaning of Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) and independent directors
(within the meaning of applicable stock exchange rules) and shall
be exempt from Section 16(b) of the Exchange Act by reason of
Rule 16b-3 under the Exchange Act.
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4.2 Employee Benefit
Programs, Plans and Practices; Perquisites . During the Term of
Employment, the Company shall provide Employee with employee
benefits and perquisites at a level (a) commensurate with his
position in the Company and consistent with his status as a
part-time employee and (b) at least as favorable to the
Employee as the Company provides to its other members of the
management team, including retirement benefits, health and welfare
benefits (both active and retiree), the Continuation Benefits (as
defined in Section 6.2(a)(2)), and other employee benefits and
perquisites which the Company may make available to its members of
the management team from time to time. To the extent permitted by
applicable law, applicable tax-qualification requirements, and any
relevant benefit plan document, Employee’s service with
Peabody Energy Corporation and its affiliates shall be taken into
account for purposes of determining eligibility, vesting, level of
benefits and benefit accruals under the Company’s benefit
plans (except to the extent that such service credit would result
in a duplication of benefits).
4.3 Vacation .
Employee shall be entitled to the number of business days paid
vacation in each calendar year as determined in accordance with the
Company’s applicable vacation policies, which shall be taken
at such times as are reasonably consistent with Employee’s
responsibilities hereunder.
5. Expenses .
Subject to prevailing Company policy or such guidelines as may be
established by the Board, the Company will reimburse Employee for
all reasonable expenses incurred by Employee in carrying out his
duties on behalf of the Company, provided that such
reimbursement is not gross income to Employee.
6. Termination of
Employment . The Employee may terminate Employee’s Term
of Employment at any time, for any reason or for Good Reason, by
written notice at least thirty (30) days in advance. The Board of
Directors may terminate Employee’s service as Chairman of the
Board at any time for any reason. The Company may only terminate
Employee’s Term of Employment as Executive Advisor for Cause,
as defined in Section 6.3(b) hereof, Disability, as defined in
Section 6.4 hereof, or death.
6.1 Termination of
Employment for Any Reason . The Company shall pay the Accrued
Obligations (as defined in Section 2.1 hereof) in accordance
with the terms of such programs, plans and practices in the event
of a termination of the Employee’s employment as Executive
Advisor for any reason, whether or not such termination occurs
during the Term of Employment.
6.2 Termination for Good
Reason . (a) If, during the Term of Employment, Employee
terminates his employment as Executive Advisor for Good Reason and
if such termination constitutes a Separation from Service (as
hereinafter defined), Employee shall provide notice to the Company
at least thirty (30) days in advance of the date of
termination and such notice shall describe the conduct Employee
believes to constitute Good Reason and if the Company shall have
the opportunity to cure the Good Reason within thirty
(30) days of receiving such notice. If the Company cures the
conduct that is the basis for the potential termination for Good
Reason within such thirty (30) day period, Employee’s
notice of termination shall be deemed withdrawn.
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If
Employee’s employment is terminated by Employee as Executive
Advisor for Good Reason (as defined in Section 6.2(b) hereof),
the Company, as severance, shall pay to Employee an amount (the
“Severance Payment”) equal to the total of
(A) plus (B), as determined below:
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(i) |
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Employee’s Base Salary; multiplied by |
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(ii) |
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a fraction equal to (x) the number of calendar days during
the period between the date that Employee’s employment is
terminated and the date that Employee’s Term of Employment
would otherwise expire under this Agreement by reason of the
passage of time (the “Remaining Term”), divided by
(y) three hundred sixty five (365); plus |
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(i) |
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six percent (6%) of Employee’s Base Salary; multiplied
by |
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(ii) |
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a fraction equal to (x) the number of calendar days in the
Remaining Term, divided by (y) three hundred sixty five (365). |
The Company
shall pay the Employee the Severance Payment in a lump sum on the
six (6) month anniversary of the Employee’s Separation
from Service.
“Separation from Service” means Employee’s
termination of employment from the Company which constitutes a
“separation from service,” as such term is defined
under Section 409A.
In addition, if
Employee’s employment is terminated (i) due to
Disability (as defined in Section 6.4 hereof) or death or
(ii) by Employee for Good Reason (as defined in Section
6.2(b)) and if such termination constitutes a Separation from
Service,
(1) The Company shall pay to Employee
a prorated bonus (the “Prorated Bonus”) for the
calendar year of termination of Employee’s employment as
Executive Advisor, calculated as the 2007 Bonus or Bonus Employee
would have received in such year based on actual performance
multiplied by a fraction, the numerator of which is the number of
business days during the calendar year of termination that Employee
was employed and the denominator of which is the total number of
business days during the calendar year of termination. The Prorated
Bonus shall be payable when annual bonuses are paid to other
members of the management team of the Company, but in no event
later than March 15 of the calendar year following the later
of (a) the calendar year in which the Bonus or 2007 Bonus is
earned or (b) the calendar year in which the Bonus or 2007
Bonus is no longer subject to a substantial risk of forfeiture
within the meaning of Section 409A.
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(2) The Company
shall also continue to provide Employee, as though he remained
actively employed, through the end of the Term of Employment (the
“Benefit Continuation Period”), life insurance, group
health coverage (including medical, dental, and vision benefits),
accidental death & dismemberment coverage, and the health care
flexible spending account (to the extent required to comply with
COBRA continuation coverage requirements (collectively, the
“Continuation Benefits”) in accordance with the
applicable plan terms; provided , however , that any
such coverage shall terminate to the extent that Employee is
offered or obtains comparable benefits from any other employer
during the Benefit Continuation Period; provided ,
further , that the amount of Continuation Benefits provided
during one calendar year shall not affect the amount of
Continuation Benefits provided during a subsequent calendar year
(except with respect to health plan maximums), the Continuation
Benefits may not be exchanged or substituted for other forms of
compensation to Employee, and any reimbursement or payment under
the Continuation Benefit arrangements will be paid in accordance
with applicable plan terms and no later than the last day of
Employee’s taxable year following the taxable year in which
he incurred the expense giving rise to such reimbursement or
payment. Notwithstanding the foregoing, if Employee breaches any
provision of Section 14 hereof, the remaining balances of the
Severance Payment, the Prorated Bonus and any Continuation Benefits
shall be forfeited.
(b) For purposes of
this Agreement, the term “Good Reason” means:
(i) a reduction by the Company in Employee’s Base Salary
(in which event the Severance Payment shall be calculated based on
Employee’s Base Salary in effect prior to any such
reduction); (ii) a material reduction in the aggregate program
of employee benefits and perquisites to which Employee is entitled
(other than a reduction that generally affects all employees
serving in a similar position); (iii) a material decline in
Employee’s Bonus (other than a decline that generally affects
all employees serving in a similar position); or (iv) any
material diminution or material adverse change in Employee’s
title, duties, responsibilities or reporting relationships as
Executive Advisor. The removal of Employee as Chairman of the Board
shall not constitute Good Reason for this Agreement. Any amounts
due to the Employee in connection with a termination of employment
shall be computed without giving effect to any changes that give
rise to Good Reason. If Employee does not give notice to the
Company as described in Section 6.2(a) hereof within ninety
(90) days after an event giving rise to Good Reason, the
Employee’s right to claim Good Reason termination on the
basis of such event shall be deemed waived.
6.3
Voluntary Termination by Employee; Discharge for Cause .
(a) In the event that Employee’s employment as Executive
Advisor is terminated (i) by the Company for Cause (as
hereinafter defined) or (ii) by Employee other than for Good
Reason, the Company shall pay to Employee the Accrued
Obligations.
(b) As used herein,
the term “Cause” shall be limited to (i) any
material and uncorrected breach by Employee of the terms of this
Agreement, including, but not limited to, a violation of
Section 14 hereof, (ii) any willful fraud or dishonesty
of Employee involving the property or business of the Company,
(iii) a deliberate or willful refusal or failure of Employee
to comply with any major corporate policy of the
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Company which
is communicated to Employee in writing, or
(iv) Employee’s conviction of, or plea of nolo
contendere to, any felony if such conviction or plea results
in his imprisonment; provided that , with respect to
clauses (i), (ii) and (iii) above, Employee shall have
thirty (30) days following his receipt of written notice of
the conduct that is the basis for the potential termination for
Cause within which to cure such conduct to prevent termination for
Cause by the Company. If the Employee cures the conduct that is the
basis for the potential termination for Cause within such
thirty
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