Sample Business Contracts

Employment Agreement - P&L Coal Holdings Corp. and Irl F. Engelhardt

Employment Forms

  • Employment Agreement. Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
  • Consulting Agreement. Answer simple questions to build a contract with a consultant. Specify the services rendered, when payment is due, as well as IP rights.
  • Commission Agreement. Employers who compensate their sales employees based on commissions can prepare an agreement to reduce misunderstandings by specifying the base salary and how commissions are calculated.
  • Executive Employment Agreement. Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Sales Representative Contract. Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
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                              EMPLOYMENT AGREEMENT

                  AGREEMENT,  made as of May 19,  1998 by and  between  P&L Coal
Holdings  Corporation,  a  Delaware  corporation  (the  "Company")  and  Irl  F.
Engelhardt (the "Executive").


                  In order to induce Executive to continue to serve as the Chief
Executive  Officer  (the  "CEO") and  Chairman  of the Board of  Directors  (the
"Board")  of  the  Company,  the  Company  desires  to  provide  Executive  with
compensation  and other  benefits on the terms and  conditions set forth in this

                  Executive  is willing to accept  such  employment  and perform
services for the Company, on the terms and conditions hereinafter set forth.

                  It  is  therefore  hereby agreed by and between the parties as

                  1.       Employment.

                  1.1 Subject to the terms and conditions of this Agreement, the
Company  agrees to employ  Executive  during the Term  hereof as its CEO. In his
capacity as the CEO of the Company,  Executive  shall  report to the Board,  and
shall have the customary  powers,  responsibilities  and  authorities of CEOs of
corporations of the size, type and nature of the Company, as it exists from time
to time, and as are assigned by the Board.

                 1.2  Subject to the terms and  conditions  of this  Agreement,
Executive hereby accepts  employment as the CEO of the Company  commencing as of
the date hereof (the "Commencement  Date") and agrees,  subject to any period of
vacation  and sick leave,  to devote his full  business  time and efforts to the
performance of services,  duties and  responsibilities in connection  therewith,
subject at all times to review and control of the Board. In addition, during the
term of employment  under this  Agreement  (the "Term of  Employment"),  (i) the
Company agrees to nominate  Executive for election to the Board and use its best
efforts to cause his election to the Board and Executive  agrees to serve on the
Board of the Company and (ii) Executive also agrees to serve, if elected,  as an
officer and/or director of any Subsidiary of the Company, without the payment of
any  additional  compensation  therefor.  Upon the  termination  of  Executive's
employment  for any reason,  Executive  shall resign as a member of the Board of
the Company or any Subsidiary of the Company.

                  1.3 Nothing in this Agreement  shall  preclude  Executive from
engaging in 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 with respect to
which  Executive or such family  member is not  substantially  involved with the
management or operation of the entity in which Executive has invested  (provided
that no such investment in publicly  traded equity  securities or other property
may exceed 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 boards 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. The Company agrees that it has approved Executive serving
in the following  capacities:  director of Mercantile  Bank of St. Louis,  N.A.,
Chairman of the Center for Energy and Economic  Development  and Chairman of the
Coal  Industry  Advisory  Board,  and that these  positions  do not  require any
additional approval of the Board.

                  2. Term of Employment.  Executive's  Term of Employment  shall
commence on the Commencement  Date and,  subject to termination  under the terms
hereunder,  shall have a  three-year  term,  which shall  extend on a day-to-day
basis for an "evergreen" three-year term.

                  3.       Compensation.

                  3.1 Salary.  During the Term of Employment,  the Company shall
pay Executive a base salary  ("Base  Salary") at an initial rate of $700,000 per
annum.  Base Salary shall be payable in  accordance  with the  ordinary  payroll
practices of the Company.  During the Term of  Employment,  the Board shall,  in
good faith,  review,  at least annually,  Executive's  Base Salary in accordance
with the Company's customary  procedures and practices regarding the salaries of
senior  executives  and may,  if  determined  by the  Board  to be  appropriate,
increase Executive's Base Salary following such review; provided,  however, that
no such  increase  shall be made  before  the  Company  obtains  ratings  on its
unsecured  debt from  Standard & Poor's  and  Moody's of at least BBB- and Baa3,
respectively  ("Investment-Grade Credit Rating"). "Base Salary" for all purposes
herein shall be deemed to be a reference to any such increased amount.

                  3.2 Annual  Bonus.  In addition to his Base Salary,  Executive
shall,  commencing  with the 1999  fiscal year and  continuing  each fiscal year
thereafter, be eligible to receive an annual cash bonus (the "Bonus") during the
term  of his  employment  hereunder  to be  developed  by the  Board,  based  on
achievement  of  performance  targets  established  by  the  Board  as  soon  as
practicable at the beginning of the fiscal year for which the performance target
relates.  Executive's  target  Bonus for the 1999  fiscal year shall be equal to
150% of his Base  Salary,  and such  target  shall not be  increased  before the
Company  obtains an  Investment-Grade  Credit  Rating.  A Bonus  award  shall be
payable to  Executive  at the time  bonuses  are paid to  executive  officers in
accordance  with the  Companies  policies  and  practices as set by the Board in
consultation with Executive.

                  4.       Employee Benefits.

                  4.1  Equity  and  Stock  Options.   Simultaneously   with  the
execution of this  Agreement,  the Company and  Executive  are entering into the
Common Stock Ownership  Agreement,  the Grant  Agreement[s] and the Stockholders
Agreement  in the forms  attached  hereto as Exhibits  A, B and C,  respectively
(together with any other  agreement  approved by the Board and designated by the
Board an "Ancillary  Document" for purposes of this  Agreement,  the  "Ancillary
Documents").  Executive  shall not be eligible  to receive  any stock  option or
other equity incentive other than as set forth in the Ancillary Documents.

                  4.2  Employee  Benefit  Programs,  Plans  and  Practices.  The
Company shall provide  Executive  while  employed  hereunder with coverage under
such employee benefits (commensurate with his position in the Company and to the
extent  permitted under any employee  benefit plan) in accordance with the terms
thereof, including the Continuation Benefits (as defined herein), D&O insurance,
which covers  claims  arising out of actions or inactions  occurring  during the
Term of  Employment,  in  accordance  with the D&O insurance  policy,  and other
employee  benefits which the Company may make available to its senior executives
from time to time in its  discretion.  The Company shall also provide  Executive
with perquisites  which the Company may make available to its senior  executives
from time to time in its discretion.

                  4.3  Vacation.  Executive  shall be entitled to that 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 consistent with Executive's responsibilities hereunder.

                  5.  Expenses.  Subject to  prevailing  Company  policy or such
guidelines  as may be  established  by the Board,  the  Company  will  reimburse
Executive for all reasonable  expenses incurred by Executive in carrying out his

                  6.       Termination of Employment.

                  6.1  Termination  Not for  Cause or for Good  Reason.  (a) The
Company or Executive  may terminate  Executive's  Term of employment at any time
for any  reason by  written  notice at least  thirty  (30) days in  advance.  If
Executive's employment is terminated (i) by the Company other than for Cause (as
defined in Section 6.2(b) hereof), Disability (as defined in Section 6.3 hereof)
or death or (ii) by  Executive  for Good  Reason (as  defined in Section  6.1(b)
hereof) during the Term of Employment, the Company, as liquidated damages and in
lieu of an other damages  therefor,  shall (A) continue to pay Executive's  Base
Salary for a period of three (3) years (the  "Continuation  Period") and (B) pay
to Executive a bonus  replacement  payment in an additional amount equal to 100%
of his Base Salary for each of the three years following such  termination  (the
"Severance  Payments").  The Severance Payments shall be paid in a lump sum. For
the year of termination, Executive shall receive a prorated bonus (the "Prorated
Bonus"),  payable when such bonuses are paid to other senior  executives  of the
Company,  calculated  as the Bonus  Executive  would have  received in such year
based  on  the  Company's  actual  performance  multiplied  by a  fraction,  the
numerator of which is the number of business days during the year of termination
that Executive was employed and the  denominator of which is the total number of
business  days during the year of  termination.  In addition,  the Company shall
continue to provide  Executive  during the  Continuation  Period  with  medical,
dental  and  vision  benefits,   defined   contribution   plans  (qualified  and
non-qualified)  benefits,  defined benefit plans  (qualified and  non-qualified)
benefits, life insurance, AD&D insurance,  health care reimbursement account and
day care  reimbursement  account  (collectively,  the  "Continuation  Benefits")
comparable to those provided to other senior executives; provided, however, that
the Company  shall not be obligated to provide any benefits  under tax qualified
plans which are not permitted by the terms of such plan or by applicable  law or
could  jeopardize  the  plan's  tax  status;  provided,  further,  that any such
coverage  shall  terminate  to the extent that  Executive  is offered or obtains
comparable  benefits from any other  employer  during the  Continuation  Period.
Notwithstanding the foregoing, if Executive breaches any provision of Section 11
hereof,  the  remaining  balance  of the  Prorated  Bonus  and any  Continuation
Benefits shall be forfeited.

                  (b) For purposes of this  Agreement,  "Good Reason" shall mean
(i) a  reduction  by the  Company in  Executive's  Base  Salary (in which  event
Severance  Payments shall be made based upon  Executive'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 Executive is entitled (other than
a reduction  which  affects all  executives),  (iii)  relocation by more than 50
miles from  Executive's  workplace,  (iv) any  material  diminution  or material
adverse   change  in   Executive's   duties,   responsibilities   or   reporting
relationships, or (v) a material decline in Executive's Bonus opportunity.

                  (c)  Termination by Executive for Good Reason shall be made by
delivery to the Company by Executive of written  notice,  given at least 45 days
prior to such  termination,  which sets forth the conduct believed to constitute
Good Reason;  provided,  however, that the Company shall have the opportunity to
cure the Good Reason  during the first 30 days of such notice  period and if the
Good  Reason  is  cured  within  such  30-day  period,   Executive's  notice  of
termination shall be deemed  withdrawn.  If no notice is given within 90 days of
the event giving rise to Good Reason, the Good Reason shall be deemed waived.

                  6.2 Voluntary  Termination by Executive;  Discharge for Cause.
(a) In the event that  Executive's  employment is terminated  (i) by the Company
for Cause, as hereinafter defined, (ii) by Executive other than for Good Reason,
Disability or death or (iii) by Executive for  retirement,  Executive shall only
be  entitled to receive  (A) any Base  Salary  accrued but unpaid  prior to such
termination  and (B) any vacation  accrued but unused prior to such  termination
and any other benefits provided under the employee benefit  programs,  plans and
practices  referred to in Section 4.2 hereof,  in  accordance  with their terms.
After the  termination  of  Executive's  employment  under this Section 6.2, the
obligations of the Company under this Agreement to make any further payments, or
provide any benefits  specified herein, to Executive,  except as provided in the
previous sentence, shall thereupon cease and terminate.

                  (b) As used herein,  the term "Cause"  shall be limited to (i)
any material and uncorrected breach by Executive of the terms of this Agreement,
including,  but not limited to,  engaging in action in  violation  of Section 11
hereof, (ii) any willful fraud or dishonesty of Executive involving the property
or business of the Company,  (iii) a deliberate or willful refusal or failure of
Executive  to comply with any major  corporate  policy of the  Company  which is
communicated to Executive in writing or (iv) Executive's  conviction of, or plea
of nolo  contendere  to,  any  felony  if such  conviction  shall  result in his
imprisonment;  provided  that with respect to clauses (i),  (ii) or (iii) above,
Executive  shall have 10 days  following  written notice of the conduct which is
the basis for the  potential  termination  for Cause  within  which to cure such
conduct in order to prevent termination for Cause by the Company.

                  6.3  Disability.  In the event of the  Disability  (as defined
below) of Executive  during the Term of  Employment,  the Company may  terminate
Executive's  Term of Employment upon written notice to Executive (or Executive's
personal  representative,  if  applicable)  effective  upon the date of  receipt
thereof (the "Disability  Commencement  Date"). The obligation of the Company to
make any further  payments  under this  Agreement  shall,  except for earned but
unpaid Base Salary, amounts attributable to accrued but unused vacation days and
the  Prorated  Bonus  cease as of the  Disability  Commencement  Date.  The term
"Disability,"  for purposes of this Agreement,  shall mean  Executive's  absence
from the full-time  performance of Executive's  duties  pursuant to a reasonable
determination  made in  accordance  with  the  Company's  disability  plan  that
Executive  is  disabled  as a result of  incapacity  due to  physical  or mental
illness that lasts, or is reasonably  expected to last, for at least six months.
Benefits under all other employee benefit programs, plans and practices shall be
paid in accordance with their terms.

                  6.4 Death.  In the event of Executive's  death during his Term
of Employment hereunder or at any time thereafter while payments are still owing
to Executive under the terms of this  Agreement,  all obligations of the Company
to make any further  payments,  other than the obligation to pay any accrued but
unpaid Base Salary, amounts attributable to accrued but unused vacation days and
the Prorated  Bonus or any remaining  payments that were payable to Executive by
reason of his termination of employment under Section 6.1 to which Executive was
entitled  at the time of his death,  shall  terminate  upon  Executive's  death.
Benefits under all other employee benefit programs, plans and practices shall be
paid in accordance with their terms.

                  6.5 No Further Notice or  Compensation  or Damages.  Executive
understands  and agrees that he shall not be  entitled  to any  further  notice,
compensation  or damages upon  Termination of Employment  under this  Agreement,
other than amounts specified in this Section 6 and the Ancillary Documents.

                  6.6   Executive's   Duty  to  Provide   Materials.   Upon  the
termination  of the Term of Employment  for any reason,  Executive or his estate
shall surrender to the Company all correspondence,  letters,  files,  contracts,
mailing  lists,  customer  lists,  advertising  materials,   ledgers,  supplies,
equipment,  checks, and all other materials and records of any kind that are the
property of the Company or any of its subsidiaries or affiliates, that may be in
Executive's possession or under his control,  including all copies of any of the

                  7.  Notices.  All notices or communications hereunder shall be
in writing, addressed as follows:

                  To the Company:

                           P&L Coal Holdings Corporation
                           701 Market Street, Suite 700
                           St. Louis, Missouri 63101-1826
                           attn:  Chief Legal Officer

                  with a copy to:

                           Alvin H. Brown, Esq.
                           Simpson Thacher & Bartlett
                           425 Lexington Avenue
                           New York, New York  10017

                  To Executive:

                           Irl F. Engelhardt
                           901 Kent Road
                           St. Louis, MO  63124

                  with a copy to:

                           David R. Shevitz, Esq.
                           Brian T. Gardner, Esq.
                           Katten Muchin & Zavis
                           525 West Monroe Street
                           Suite 1600
                           Chicago, IL  60661-3693

Any such notice or  communication  shall be  delivered  by hand or by courier or
sent certified or registered mail,  return receipt  requested,  postage prepaid,
addressed  as above (or to such other  address as such party may  designate in a
notice duly delivered as described above),  and the third business day after the
actual date of sending shall constitute the time at which notice was given.

                  8.  Separability.  If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability  shall not affect the remaining  provisions  hereof which shall
remain in full force and effect.

                  9. Assignment.  This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the heirs and  representatives of Executive
and the assigns and  successors of the Company,  but neither this  Agreement nor
any rights or obligations  hereunder shall be assignable or otherwise subject to
hypothecation  by  Executive  (except  by will or by  operation  of the  laws of
intestate succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger,  purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company.

                  10.  Amendment.  This Agreement may only be amended by written
agreement of the parties hereto.

                  11.     Nondisclosure     of     Confidential     Information;
Non-Competition. (a) Executive, both during the term hereof and thereafter, will
not,  directly or  indirectly,  use for himself or use for, or disclose  to, any
party other than the Company,  or any  subsidiary of the Company  (other than in
the ordinary course of Executive's  duties for the benefit of the Company or any
subsidiary of the Company), any secret or confidential information regarding the
business or property of the Company or its  subsidiaries or regarding any secret
or confidential  apparatus,  process,  system, or other method at any time used,
developed,  acquired,  discovered or  investigated  by or for the Company or its
subsidiaries,  whether or not developed, acquired, discovered or investigated by
Executive. At the termination of Executive's employment or at any other time the
Company or any of its subsidiaries may request, Executive shall promptly deliver
to the Company all memoranda,  notes, records,  plats, sketches,  plans or other
documents made by, compiled by, delivered to, or otherwise acquired by Executive
concerning the business or properties of the Company or its  subsidiaries or any
secret or confidential product, apparatus or process used developed, acquired or
investigated by the Company or its subsidiaries.

                  (b) In consideration of the Company's  obligations  under this
Agreement,  Executive agrees that during the period of his employment  hereunder
and for a period of twelve (12)  months  thereafter,  without the prior  written
consent  of the  Board,  (i) he will  not,  directly  or  indirectly,  either as
principal, manager, agent, consultant, officer, stockholder,  partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial  interest in, any entity which is in competition  with the business of
the Company or its  subsidiaries  and (ii) he shall not, on his own behalf or on
behalf of any person, firm or company, directly or indirectly,  solicit or offer
employment  to any  person  who is or has been  employed  by the  Company or its
subsidiaries  at any time during the twelve (12)  months  immediately  preceding
such solicitation.

                  (c) For purposes of this Section 11, an entity shall be deemed
to be in  competition  with the  Company if it is  principally  involved  in the
purchase,  sale or other dealing in any property or the rendering of any service
purchased,  sold,  dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
sales or dealings or renders  such  services.  Notwithstanding  this  subsection
11(c) or subsection  11(b),  nothing herein shall be construed so as to preclude
Executive  from  investing in any publicly or privately  held company,  provided
Executive's  beneficial ownership of any class of such company's securities does
not exceed 5% of the outstanding securities of such class.

                  (d)  Executive  agrees  that this  covenant  not to compete is
reasonable  under the  circumstances  and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations.  Executive and the
Company agree that if in the opinion of any court of competent jurisdiction such
restraint is not  reasonable  in any  respect,  such court shall have the right,
power and  authority to excise or modify such  provision or  provisions  of this
covenant  as to the  court  shall  appear  not  reasonable  and to  enforce  the
remainder of the covenant as so amended. Executive agrees that any breach of the
covenants  contained  in this Section 11 would  irreparably  injure the Company.
Accordingly,  Executive agrees that, in the event a court enjoins Executive from
any  activity  prohibited  by this  Section 11, the Company  may, in addition to
pursuing  any other  remedies it may have in law or in equity,  cease making any
payments  otherwise  required by this Agreement and obtain an injunction against
Executive from any court having  jurisdiction  over the matter  restraining  any
further violation of this Agreement by Executive.

                  12. Beneficiaries.  Executive shall be entitled to select (and
change,  to the extent  permitted  under any  applicable  law) a beneficiary  or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's  death,  and may change such election,  in either case by giving the
Company written notice thereof.  In the event of Executive's death or a judicial
determination  of his  incompetence,  reference  in this  Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.

                  13. Dispute  Resolution.  Any dispute or  controversy  arising
under or in connection with this Agreement  (other than an action to enforce the
covenants in Section 11 hereof) or the Ancillary  Documents shall be resolved by
arbitration.  Arbitrators shall be selected, and arbitration shall be conducted,
in  accordance  with the  rules of the  American  Arbitration  Association.  The
Company  shall pay any legal fees in  connection  with such  arbitration  in the
event that Executive prevails on a material element of his claim or defense.

                  14.   Governing  Law.  This  Agreement   shall  be  construed,
interpreted  and governed in accordance  with the laws of the State of New York,
without reference to rules relating to conflicts of law.

                  15.  Effect  on  Prior  Agreements.  This  Agreement  and  the
Ancillary Documents contain the entire understanding  between the parties hereto
and  supersedes in all respects any prior or other  agreement or  understanding,
both written and oral, between the Company,  any affiliate of the Company or any
predecessor of the Company or affiliate of the Company and Executive.

                  16.  Withholding.   The  Company shall be entitled to withhold
from payment any amount of  withholding  required by law.

                  17.  Survival.  Notwithstanding  the expiration of the term of
this Agreement, the provisions of Section 11 hereunder shall remain in effect as
long as is reasonably  necessary to give effect  thereto in accordance  with the
terms hereof.

                  18.  Counterparts.  This  Agreement  may be executed in two or
more counterparts, each of which will be deemed an original.

                      P&L Coal Holdings Corporation

                      By  /s/ H. E. Lentz
                        Name: Henry E. Lentz

                        /s/ Irl F. Engelhardt
                        Irl F. Engelhardt