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EXHIBIT
10.3
FOUNDATION COAL HOLDINGS,
INC.
2004 STOCK INCENTIVE
PLAN
RESTRICTED STOCK UNIT
AGREEMENT
THIS AGREEMENT, is made
effective as of June 29, 2007 (the “ Award
Date ” ), between Foundation Coal Holdings, Inc. (the
“ Company ” ) and Kurt D. Kost (the
“ Participant ” ).
R E C I T A L S
:
WHEREAS, the Company has
adopted the Plan (as defined below), the terms of which are hereby
incorporated by reference and made a part of this Agreement;
and
WHEREAS, the Compensation
Committee of the Board of Directors of the Company (the
“Committee”) has determined that the Participant be
awarded the Restricted Stock Units provided for herein pursuant to
the Plan and the terms set forth herein.
NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth, the
parties agree as follows:
1. Definitions .
Whenever the following terms are used in this Agreement, they shall
have the meanings set forth below. Capitalized terms not otherwise
defined herein shall have the same meanings as in the
Plan.
(a) Actual
EBITDA : “EBITDA” as defined in the Credit
Agreement dated as of July 30, 2004, and amended and restated
as of July 7, 2006, by and among Foundation PA Coal Company,
as borrower, FC 2 Corp. and Foundation Coal Corporation, as
guarantors, and the lenders named therein as in effect on the date
hereof. More specifically defined as income (or loss) from
continuing operations, plus interest expense, net of interest
income, income tax expense (benefit), accretion on asset retirement
obligations, and depreciation, depletion and amortization plus or
minus other adjustments as specified in Foundation Coal’s
bank credit agreement.
(b) Actual Free Cash
Flow : In respect of a fiscal year, EBITDA less the
sum of capital expenditures as set forth in the Company’s
unaudited financial statements; provided that the
Compensation Committee may make such equitable adjustments to
capital expenditures as it reasonably deems to be appropriate in
order to achieve the intention of this Agreement after giving
effect to significant events including, without limitation,
acquisitions, dispositions, mergers or similar
transactions.
(c) Actual
EBITDA/Revenue Margin : In respect of a fiscal year, the
actual EBITDA divided by the Revenue as reported in the
December 31 st audited Statement of Consolidated
Operations and Comprehensive Income (Loss) multiplied by 100 to
result in a percentage.
(d) Actual
Production : In respect of a fiscal year, the sum of
(i) tons produced in the East and (ii) tons produced in
the West divided by 5.
(e) Disability
: Participant becomes physically or mentally incapacitated so as to
be unable to perform the essential functions of Participant’s
duties.
(f) Earned
Portion : At any time, the portion of the Restricted Stock
Units which have become earned, as described in Section 3 of
this Agreement.
(g) EBITDA Restricted
Stock Unit : A Restricted Stock Unit with respect to which
the terms and conditions are set forth in Section 3(b) of this
Agreement.
(h) EBITDA/Revenue
Margin Restricted Stock Unit . A Restricted Stock Unit with
respect to which the terms and conditions are set forth in
Section 3(d) of this Agreement.
(i) Free Cash Flow
(“FCF”) Restricted Stock Unit : A Restricted
Stock Unit with respect to which the terms and conditions are set
forth in Section 3(c) of this Agreement.
(j) Performance
Actual : Each of the Actual EBITDA, Actual Free Cash Flow,
Actual EBITDA/Revenue Margin, and Actual Production.
(k) Performance
Date . Each of December 31, 2007 and December 31,
2008. Restricted Stock Units earned on these dates do not vest,
until February 28, 2009.
(l) Performance
Target : Each of the Target EBITDA, Target Free Cash Flow,
Target EBITDA/Revenue Margin, and Target Production.
(m) Plan : The
Foundation Coal Holdings, Inc. 2004 Stock Incentive Plan, as
amended and restated December 14, 2006, as the same may be
further amended, supplemented or modified from time to
time.
(n) Production
Restricted Stock Unit . A Restricted Stock Unit with
respect to which the terms and conditions are set forth in
Section 3(e) of this Agreement.
(o) Restricted Stock
Units : Collectively, the Time Restricted Stock Units,
EBITDA Restricted Stock Units, FCF Restricted Stock Units,
EBITDA/Revenue Margin, and Production.
(p) Retirement
: Voluntary termination by the Participant on or after the
attainment of age 55.
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(q) Target
EBITDA : $270.8 million in respect of 2007 and $222.1
million in respect of 2008; provided , that the Board may
make such equitable adjustments to Target EBITDA as it reasonably
deems to be appropriate (including adjustments made as a result of
acquisitions, dispositions, mergers, recapitalizations,
reorganizations, consolidations, spin-offs, distributions, other
extraordinary transactions, other changes in the structure of the
Company or any of its Affiliates, or significant capital
expenditures so that Target EBITDA equitably reflects the basis for
determining Actual EBITDA for the period in question).
(r) Target Free Cash
Flow : $92.4 million in respect of 2007 and $154.0 million
in respect of 2008; provided that the Board may make such
equitable adjustments to Target Free Cash Flow as it reasonably
deems to be appropriate in order to achieve the intention of this
agreement after giving effect to significant events including,
without limitation, acquisitions, dispositions, mergers or similar
transactions.
(s) Target
EBITDA/Revenue Margin : 20% with respect to 2007 and 2008;
provided that the Board may make such equitable adjustments
to Margin as it reasonably deems to be appropriate in order to
achieve the intention of this Agreement after giving effect to
significant events including , without limitation, acquisitions,
dispositions, mergers, or similar transactions.
(t) Target
Production : 28.9 million in respect of 2007 and
29.1 million in respect of 2008; provided that the
Board may make such equitable adjustments to Target Production as
it reasonably deems to be appropriate in order to achieve the
intention of this Agreement after giving effect to significant
events including, without limitation, acquisitions, dispositions,
mergers or similar transactions.
(u) Time Restricted
Stock Units . A Restricted Stock Unit with respect to which
the terms and conditions are set forth in Section 3(a) of this
Agreement.
2. Award of Restricted
Stock Units . The Company hereby awards to the Participant,
subject to the terms and conditions of this Agreement and the Plan,
10,920 Time Restricted Stock Units, 6,368 EBITDA Restricted Stock
Units, 6,368 FCF Restricted Stock Units, 6,368 EBITDA/Revenue
Margin Restricted Stock Units, and 6,368 Production Restricted
Stock Units. The Participant shall not possess any incidents of
ownership (including, without limitation, dividend and voting
rights) in Shares in respect of the Restricted Stock Units until
such Restricted Stock Units have vested and been distributed to the
Participant in the form of Shares. A Restricted Stock Unit is an
unfunded, unsecured right of the Participant to receive a share of
the Company’s common stock, par value $0.01 per share (the
“ Shares ”).
3. Earning of the
Restricted Stock Units .
(a) Time Restricted Stock
Units . Subject to the Participant’s continued Employment
with the Company and its Affiliates (except as provided in
Section 3(g)) through February 28, 2009, the Time
Restricted Stock Units shall be earned with respect to one-half of
the Shares on December 31, 2007 and one-half on
December 31, 2008.
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(b) EBITDA Restricted
Stock Units . Subject to the Participant’s continued
Employment with the Company and its Affiliates (except as provided
in Section 3(g)) through Februar
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