Exhibit 10.2
2007
Patriot Award
EXTENDED LONG-TERM INCENTIVE AWARD
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT , dated
___, 2007 (the “ Grant Date ”) is made by and
between PATRIOT COAL CORPORATION , a Delaware corporation
(the “ Company ”), and the undersigned employee
or other service provider of the Company or a Subsidiary (as
defined below) or an Affiliate (as defined below) of the Company
(the “ Optionee ”).
WHEREAS , the Company wishes
to afford the Optionee the opportunity to purchase shares of its
$.01 par value common stock (the “ Common Stock
”);
WHEREAS , the Company wishes
to carry out the Plan (as hereinafter defined), the terms of which
are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS , the Administrator
appointed to administer the Plan has determined that it would be to
the advantage and best interest of the Company and its stockholders
to grant the Options provided for herein to the Optionee as an
incentive for increased efforts during his or her term of office
with the Company or its Subsidiaries or Affiliates, and has advised
the Company thereof and instructed the undersigned officer to issue
the options;
NOW, THEREFORE , in
consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Whenever the following terms are used
in this Agreement, they shall have the meanings specified below.
Capitalized terms that are not defined in this Agreement shall have
the meanings specified in the Plan.
Section 1.1 — “
Affiliate ” means any Person that (i) is directly
or indirectly controlling, controlled by, or under common control
with the Company and (ii) would, together with the Company, be
classified as the “service recipient” (as defined in
the regulations under Code Section 409A) with respect to the
Optionee. For purposes of this definition, the term
“control” (including, with correlative meanings, the
terms “controlling,” “controlled by” and
“under common control with”), as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities, by
contract or otherwise.
Section 1.2 — “
Cause ” means (i) any material and uncorrected
breach by Optionee of the terms of his or her employment or service
agreement with the Company, if any, including, but not limited to,
engaging in action in violation of any restrictive covenants
therein, (ii) any willful fraud or dishonesty of Optionee
involving the property or business of the Company, (iii) a
deliberate or willful refusal or failure of Optionee to comply with
any major corporate policy of the Company which is communicated to
Optionee in writing or (iv) Optionee’s conviction of, or
plea of nolo contendere to, any felony if such
conviction results in his or her imprisonment;
provided
that with respect to clauses (i), (ii) or (iii) above,
Optionee shall have 10 days following 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.
Section 1.3 — “
Code ” means the Internal Revenue Code of 1986, as
amended.
Section 1.4 — “
Good Reason ” means (i) a reduction by the
Company in Optionee’s base salary, (ii) a material
reduction in the aggregate program of employee benefits and
perquisites to which Optionee is entitled (other than a reduction
which affects all executives), (iii) relocation by more than
50 miles from Optionee’s workplace, (iv) any material
diminution or material adverse change in Optionee’s duties,
responsibilities or reporting relationships, which causes Optionee
to fall below the level of the executive team, or (v) a
material decline in Optionee’s bonus opportunity.
Section 1.5 — “
Options ” means the non-qualified options to purchase
Common Stock granted under this Agreement.
Section 1.6 — “
Person ” means an individual, partnership,
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority
or other entity of whatever nature.
Section 1.7 — “
Plan ” means the Patriot Coal Corporation 2007
Long-Term Equity Incentive Plan, as it may be amended from time to
time.
Section 1.8 — “
Retirement ” means retirement at or after age 55 with
at least ten (10) years of service with the Company.
Section 1.9 — “
Subsidiary ” means any corporation that (i) is in
an unbroken chain of corporations beginning with the Company if
each of the corporations, or group of commonly controlled
corporations, other than the last corporation in the unbroken
chain, then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain and (ii) would, together with the
Company, be classified as a “service recipient” (as
defined in the regulations under Code Section 409A) with
respect to the Optionee.
ARTICLE 2
GRANT OF OPTIONS
Section 2.1 — Grant of
Options . For good and valuable consideration, the Company
hereby grants to the Optionee an Option to purchase any part or all
of the number of shares of Common Stock set forth on the signature
page hereof upon the terms and subject to the conditions set forth
in this Agreement.
Section 2.2 — Exercise
Price . The exercise price of the shares of Common Stock
covered by the Option shall be such amount per share as set forth
on the signature page hereof (which shall not be less than the Fair
Market Value (as determined in accordance with guidance issued
under Code Section 409A) of a share of Common Stock on the
Grant Date), subject to adjustment pursuant to Section 6.1 of
the Plan without commission or other charge.
2
Section 2.3 — No
Obligation of Employment or Service . Nothing in this Agreement
or in the Plan shall confer upon the Optionee any right to continue
in the service of the Company or any Subsidiary or Affiliate or
interfere with or restrict in any way the rights of the Company and
its Subsidiaries or Affiliates, which are hereby expressly
reserved, to terminate the service of the Optionee at any time for
any reason whatsoever, with or without Cause.
ARTICLE 3
EXERCISABILITY OF OPTIONS
Section 3.1 — Option
Vesting . Unless otherwise provided in this Agreement, this
Option shall become exercisable as follows:
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| Date Option |
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Percentage of shares of
Common |
|
becomes exercisable |
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Stock as to which Option is
exercisable |
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Fifth anniversary
of Grant Date
|
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50 |
% |
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Sixth anniversary
of Grant Date
|
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75 |
% |
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Seventh
anniversary of Grant Date
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100 |
% |
This
Option shall become exercisable, pursuant to the schedule above,
with respect to the nearest whole number of shares of Common Stock,
as determined by the Administrator in its sole discretion.
Section 3.2 —
Acceleration Events . Notwithstanding anything in this
Article 3 to the contrary, this Option shall become
exercisable with respect to 100% of the shares of Common Stock (but
only to the extent such Option has not otherwise terminated or
become exercisable) upon (i) the Optionee’s Termination
of Employment due to death or Disability, or (ii) a Change of
Control.
Section 3.3 — Effect of
Termination of Employment . Except as otherwise provi
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