NON-QUALIFIED STOCK OPTION
AGREEMENT
THIS
AGREEMENT, dated [ • ] (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:
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 ” shall mean (i) any material and
uncorrected breach by the Optionee of the terms of his or her
employment agreement with the Company, including, but not limited
to, a violation of Section 13 thereof, (ii) any willful
fraud or dishonesty of the Optionee involving the property or
business of the Company, (iii) a deliberate or willful refusal
or failure of the Optionee to comply with any major corporate
policy of the Company which is communicated to the Optionee in
writing or (iv) the Optionee’s conviction of, or plea of
nolo contendere to, any felony if such conviction or
plea results in his or her imprisonment; provided
that ,
with respect to clauses (i), (ii) and (iii) above, the
Optionee shall have thirty (30) days following his or her
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; provided
further that , notwithstanding the foregoing, in the
event that the Optionee is subject to a definition of
“Cause” in his or her employment agreement with the
Company that contains any terms that are more favorable to the
Optionee, “Cause” (including the related cure period)
shall include such terms.
Section 1.3
“ Code ” means the Internal Revenue Code of
1986, as amended, and the regulations promulgated with respect
thereto.
Section 1.4
“ Good Reason ” means: (i) a reduction by
the Company in the Optionee’s base salary; (ii) a
material reduction in the aggregate program of employee benefits
and perquisites to which the Optionee is entitled (other than a
reduction that generally affects all executives); (iii) a
material decline in the Optionee’s bonus or long term
incentive award opportunities (other than a decline that generally
affects all executives); (iv) relocation of the
Optionee’s primary office by more than 50 miles from the
location of the Optionee’s primary office as specified in his
or her employment agreement with the Company; or (v) any
material diminution or material adverse change in the
Optionee’s title, duties, responsibilities or reporting
relationships. If the Optionee does not give notice to the Company
(as described in the Optionee’s employment agreement with the
Company) within ninety (90) days after an event giving rise to
Good Reason, the Optionee’s right to claim Good Reason
termination on the basis of such event shall be deemed waived.
Notwithstanding the foregoing, in the event that the Optionee is
subject to a definition of “Good Reason” in his or her
employment agreement with the Company that is more favorable to the
Optionee, “Good Reason” (including any related notice
period) shall have the meaning described therein.
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.
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Section 1.10
“ Termination of Employment ” means a
termination of the Optionee’s employment or service with the
Company, a Subsidiary or an Affiliate (regardless of the reason
therefor).
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.
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 on such dates as
follows, provided that the Optionee has remained continuously
employed by the Company through such applicable date:
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Date
Option
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Percentage of shares of
Common
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becomes
exerci
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