Employment Agreement - Fluor Corp., A.T. Massey Coal Co. Inc. and Don L. Blankenship
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), entered into as of October
1, 1998, by and between FLUOR CORPORATION ("Fluor"), A.T. MASSEY COAL COMPANY,
INC., ("Massey"), and DON L. BLANKENSHIP (the "Executive").
W I T N E S S E T H :
WHEREAS, Massey and its parent corporation Fluor desire to retain the
experience, abilities and service of the Executive upon the terms and conditions
specified herein; and
WHEREAS, the Executive is willing to enter into this Agreement upon the
terms and conditions specified herein;
NOW, THEREFORE, in consideration of the premises, the terms and
provisions set forth herein, the mutual benefits to be gained by the performance
thereof and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Employment. Massey hereby offers and the Executive hereby
accepts such offer, all upon the terms and conditions set forth herein.
SECTION 2. Term. Subject to the terms and conditions of this Agreement,
the Executive shall be employed by Massey commencing on October 1, 1998, (the
"Effective Date") and terminating on October 31, 2001, (the "Primary Term")
unless sooner terminated pursuant to Section 5 of this Agreement.
SECTION 3. Duties and Responsibilities.
A. Capacity. The Executive shall serve in the capacity of Chairman and
Chief Executive Officer of Massey. The Executive shall perform the duties
ordinarily expected of a Chairman and Chief Executive Officer and shall also
perform such other duties consistent therewith as the Chief Executive Officer of
Fluor shall, from time to time, reasonably determine.
B. Full-Time Duties. The Executive shall devote his full business time,
attention and energies to the business of Massey. Notwithstanding anything
herein to the contrary, the Executive shall be allowed to (a) manage the
Executive's personal investments and affairs, and (b) (i) serve on boards or
committees of civic or charitable organizations or trade associations, and (ii)
with the permission of the Chief Executive Officer of Fluor, serve on the board
of directors of any corporation or as an advisory director of any corporation;
provided that such activities do not interfere with the proper performance of
his duties and responsibilities specified in Section 3(A).
SECTION 4. Compensation.
A. Base Salary. During the term of this Agreement, the Executive shall
receive a salary
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(the "Base Salary") of $650,000 per annum effective October 1, 1998. The Base
Salary shall be payable by Massey in accordance with the general payroll
practices of Massey in effect from time to time. During the term of this
Agreement, the Base Salary shall be increased to $700,000 per annum on January
1, 1999, to $800,000, per annum on January 1, 2000, and to $900,000 per annum on
January 1, 2001.
B. Annual Incentive Bonus. The Executive shall be eligible for an
annual bonus with a target amount of at least $540,000, $625,000, $650,000, and
$700,000, based upon company performance for fiscal years 1998, 1999, 2000, and
2001, respectively. The bonus amounts will be paid in installments at mid year
and year end consistent with past payment practices. The following table shows
the target payment amounts for each fiscal year's performance:
FY YEAR END TOTAL
-------------------------------------------------
1998 $190,000 $350,000 $540,000
1999 $275,000 $350,000 $625,000
2000 $300,000 $350,000 $650,000
2001 $350,000 $350,000 $700,000
The bonus payments will be based on the financial performance of Massey
for each of the stated fiscal years. There will be predetermined performance
goals and objectives established and mutually agreed to by the Chairman and CEO
of Fluor and the Executive. The award payments will be made in accordance with
standard company practices.
C. Long Term Incentive Award. The Executive shall participate in
Fluor's Long Term Incentive program. The Executive's award under the Long Term
Incentive Program will have a target value of $450,000 for each three-year
performance cycle that commences during the Primary Term. The Executive will
participate in fiscal year 1999, 2000 and 2001 performance cycle.
The Long Term Incentive Award for each cycle shall consist of a cash
award of $67,350 which may range up to 2 times the target level as determined by
the Chief Executive Officer of Fluor in a manner consistent with Massey's
established Long Term Incentive program based on predetermined Massey
performance over the performance cycle. Each of the cash awards will be
evidenced by an Award Agreement between Fluor and the Executive pursuant to the
Fluor Special Executive Incentive Plan ("SEIP").
The program will also consist of annual grants of 16,260 non-qualified
stock options, 3,170 shares of restricted stock, and 1,820 restricted units.
Each of the stock options and restricted stock grants will be evidenced by an
Award Agreement between Fluor and the Executive pursuant to the 1996 Fluor
Executive Stock Plan (the "ESP") and each of the restricted unit grants will be
evidenced by an Award Agreement between Fluor and the Executive pursuant to the
Fluor Special Executive Incentive Plan.
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D. Shadow Stock. Subject to the following terms and conditions, the
Executive shall be granted units of shadow stock ("Units") pursuant to the 1982
Fluor Shadow Stock Plan (the "Shadow Plan") at the times and in the amounts set
forth in the following table:
Date of Grant Amount of Grant
------------- ---------------
October 1, 1998 60,000 Units
October 1, 1999 60,000 Units
October 1, 2000 60,000 Units
October 1, 2001 60,000 Units
In the event the Executive remains continuously employed by Massey
through the expiration of the Primary Term, then all restrictions on the Units
will expire and the then value of the Units will thereupon be credited to the
Executive's account in the Fluor Executive Deferred Compensation Program. In the
event the Executive's employment with Massey terminates prior to the expiration
of the Primary Term following a "Change of Control" (as such terms are
hereinafter defined) or the Executive's employment is terminated by Massey for
reasons which do not constitute "Cause" as defined herein then the date of any
grants referred to the foregoing table which have not been made as of the
Executive's termination date shall be accelerated to such termination date and
all restrictions on the Units will expire and the then value of the Units will
thereupon be credited to the Executive's account in the Fluor Executive Deferred
Compensation Program. In the event that the Executive's employment with Massey
terminates prior to the expiration of the Primary Term due to death or permanent
and total disability as defined by Massey personnel policy, then the
restrictions shall lapse as to the Units which had been granted prior to the
Executive's termination date and the then value of such Units will thereupon be
credited to the Executive's account in the Fluor Executive Deferred Compensation
Program and Executive's right to a grant of the remaining Units shall thereupon
terminate. In the event the Executive's employment with Massey terminates prior
to the expiration of the Primary Term for any reason other than those set forth
in the three preceding sentences, then all of the Executive's rights in the
Units which have previously been granted and in those which have yet to be
granted shall terminate as of the date of termination, and all rights thereunder
shall cease. The Units will be evidenced by a Shadow Stock Agreement between
Fluor and the Executive.
E. Stock Appreciation Rights (SARs). As of the Effective Date, the
Executive shall be granted units of Stock Appreciation Rights (SARs) pursuant to
the 1997 Fluor Stock Appreciation Rights Plan (the "SAR Plan"). The number of
shares awarded shall be 300,000. All restrictions on the SARs will expire and
the then value of the SARs will thereupon be credited to Executive's account in
the Fluor Executive Deferred Compensation Program in the event (x) the Executive
remains continuously employed by Massey through the expiration of the Primary
Term, (y) the Executive's employment with Massey terminates prior to the
expiration of the Primary Term following a "Change of Control" (as such terms
are hereinafter defined), or (z) the Executive's employment is terminated by
Massey for reasons which do not constitute "Cause" as defined herein. In the
event that the Executive's employment with Massey terminates prior to the
expiration of the Primary Term due to death or permanent and total disability as
defined by Massey personnel policy, then the restrictions shall lapse as to a
pro rata portion of the SARs, the then value of such pro rata portion of the
SARs will thereupon be credited to the Executive's account in the Fluor
Executive Deferred Compensation Program and
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the pro rata portion to become exercisable shall be determined in accordance
with the following table and the portion which does not become exercisable shall
terminate and all rights thereunder shall cease:
DATE OF DEATH PRO RATA PORTION
OR DISABILITY TO BE CREDITED
------------- --------------
October 1, 1998, through 25%
September 30, 1999
October 1, 1999, through 50%
September 30, 2000
October 1, 2000, through 75%
September 30, 2001
On or after October 1, 2001 100%
In the event the Executive's employment with Massey terminates prior to
the expiration of the Primary Term for any reason other than those set forth in
the two preceding sentences, then all of the Executive's rights in the SARs
shall terminate as of the date of termination, and all rights thereunder shall
cease. The SARs shall have a ten-year term from the Effective Date, subject to
earlier expiration in accordance with the plan documents. The SARs will be
evidenced by an SAR Agreement between Fluor and the Executive.
F. Housing Assistance. In the event (x) the Executive remains continuously
employed by Massey through the expiration of the Primary Term, (y) the
Executive's employment with Massey terminates prior to the expiration
of the Primary Term following a "Change of Control" (as such terms are
herein defined, or (z) the Executive's employment is terminated by
Massey for reasons which do not constitute "Cause" as defined herein,
then Massey and/or Fluor shall reimburse Executive for up to $360,000
in actual costs incurred by Executive for the purchase or construction
of a first or second home, including without limitation the cost of the
lot and furnishings for such home the ("Maximum Amount") together with
an appropriate "make whole" gross up for income taxes arising from such
reimbursement. In that the Executive's employment with Massey
terminates prior to the expiration of the Primary Term due to death or
permanent and total disability as defined by Massey personnel policy,
then Massey and or Fluor shall reimburse Executive for a pro-rata
portion of the Maximum Amount, together with an appropriate "make
whole" gross up for income taxes arising from such reimbursement. The
pro-rata portion to be reimbursed shall be determined in accordance
with the following table:
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DATE OF DEATH PRO RATA PORTION
OR DISABILITY TO BE REIMBURSED
------------- ----------------
October 1, 1998, through 25%
September 30, 1999
October 1, 1999, through 50%
September 30, 2000
October 1, 2000, through 75%
September 30, 2001
SECTION 5. Termination of Employment.
Notwithstanding the provisions of Section 2, the Executive's employment
hereunder may terminate under any of the following conditions:
A. Death. The Executive's employment under this Agreement shall
terminate automatically upon this death.
B. Disability. The Executive's employment under this Agreement may be
terminated due to his Disability. "Disability" shall mean permanent and total
disability as defined by Massey personnel policy.
C. Termination by Company for Cause. The Executive's employment
hereunder may be terminated for Cause by Massey. For purposes of this Agreement,
"Cause" means:
(1) willful and persistent failure by Executive to reasonably
perform his duties:
(2) conviction of a misdemeanor involving moral turpitude
which materially affects Executive's ability to perform his duties
hereunder or materially adversely affects Executive's or Employer's
reputation or conviction of a felony;
(3) material dishonesty, defalcation, or embezzlement or
misappropriation of corporate assets or opportunities: or
(4) any material default by Executive in the performance of
any covenants or agreements of Executive set forth in this Agreement.
Any termination of the Executive's employment for Cause under this
Section 5(C) shall be authorized by the Chief Executive Officer of Fluor. The
Executive shall be given notice by the CEO specifying in detail the particular
act or failure to act on which the CEO is relying in proposing to terminate him
for Cause and offering the Executive an opportunity, on a date at least 1 day
after the receipt of such notice, to have a hearing, with counsel, before the
Chief Executive Officer.
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SECTION 6. Change of Control.
A. Upon the Executive's termination of employment for any reason
within two years following a Change of Control, as defined below, any
restrictions on any stock option, restricted stock, stock appreciation right,
Unit or other equity-based incentive provided under the ESP, the SAR Plan, the
Shadow Plan or any other plan of Fluor (a "Stock Plan") shall lapse immediately.
B. A Change of Control shall have the meaning set forth in the ESP as
of the Effective date, or any definition that is more favorable to the Executive
that is set forth in any subsequent Stock Plan or that is approved by the Board
for the benefit of Massey's senior executives.
SECTION 7. Payments Upon Termination.
A. Upon termination of the Executive's employment for any reason prior
to the expiration of the Primary Term, Massey and/or Fluor shall be obligated to
pay, and the Executive shall be entitled to receive:
(1) all accrued and unpaid Base Salary under Section 4 to the
date of termination;
(2) any unpaid bonus under Section 4(B) or long-term incentive
award under Section 4(C) for the fiscal year or performance cycle
ending prior to the date of termination;
(3) any benefits to which he is entitled under the terms of
the Executive Deferred Compensation Program, the Long-Term Incentive
Award Program, and any other applicable employee pension or benefit
plan or program, or applicable law.
B. Upon termination of the Executive's employment by Massey without
Cause pursuant to Section 5 (C), Massey and/or Fluor shall be obligated to pay
and the Executive shall be entitled to receive:
(1) all of the amounts and benefits described in Section 7
(A);
(2) Base Salary for the remaining Primary Term, as if there
had been no termination;
(3) annual bonuses for the remainder of the Primary Term
(including a pro rated bonus for any partial year), equal to the target
bonus for each such fiscal year, such bonuses to be paid at the same
time annual bonuses are regularly paid by Massey to him;
(4) the "Maximum Amount" together with tax "make whole"
gross-up described in Section 4(F).
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C. In the event of any termination of employment under this Section 7,
the Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he
may obtain.
SECTION 8. Amendment; Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each Party entitled to
the benefits thereof. No failure or delay on the part of any party in exercising
any right, power or privilege granted hereunder shall constitute a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege granted hereunder.
SECTION 9. Entire Agreement. Except as contemplated herein, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes any and all prior written or oral
agreements, arrangements of understandings between Fluor, Massey and the
Executive with respect thereto; provided, however, that this Agreement shall not
affect or impair in any way the rights and obligations of Fluor and Executive
under the Special Successor Development and Retention Program established in
August, 1998.
SECTION 10. Notices. All notices or communications hereunder shall be
in writing, addressed as follows or to any address subsequently provided to the
other party:
To Fluor:
Fluor Corporation
Attention: Chief Legal Officer
3353 Michelson Drive
Irvine, CA 92698
To Massey:
A. T. Massey Coal Company, Inc.
Attention: Chief Legal Officer
4 North 4th Street
Richmond, VA 23219
To the Executive:
Don Blankenship
P.O. Box 895
Matewan, WV 25678
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All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery or overnight courier, upon receipt, (ii)
if sent by telecopy or facsimile transmission, upon confirmation of receipt by
the sender of such transmission or (iii) if sent by registered or certified
mail, on the fifth day after the day on which such notice is mailed.
SECTION 11. Severability. In the event that any term or provision of
this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining terms and provisions hereof shall
not be in any way affected or impaired thereby, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained therein.
SECTION 12. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns (it being understood and agreed that, except as expressly provided
herein, nothing contained in this Agreement is intended to confer upon any other
person or entity any rights, benefits or remedies of any kind or character
whatsoever). No rights or obligations of Fluor or Massey under this Agreement
may be assigned or transferred by Fluor or Massey except that such rights or
obligations may be assigned or transferred pursuant to a merger or consolidation
in which Fluor or Massey is not the continuing entity, or the sale or
liquidation as described of all or substantially all of the assets of Fluor or
Massey, provided that the assignee or transferee is the successor to all or
substantially all of the assets of Fluor or Massey and such assignee or
transferee assumes the liabilities, obligations and duties of Fluor or Massey,
as contained in this Agreement, either contractually or as a matter of law.
Fluor or Massey further agrees that, in the event of a sale of assets or
liquidation as described in the preceding sentence, it shall take whatever
action it legally can in order to cause such assignee or transferee to expressly
assume the liabilities, obligations and duties of Fluor or Massey hereunder. In
the event of the sale, liquidation, consolidation, or merger of Massey or
substantially all the assets of Massey in which Fluor does not retain an
ownership interest of more than 50%, Fluor agrees to guarantee payment to
Executive of all amounts due under this or related agreements referenced herein.
SECTION 13. Governing Law; Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the State of California
(except that no effect shall be given to any conflicts of law principles thereof
that would require the application of the laws of another jurisdiction). Any
dispute or misunderstanding arising out of or in connection with this Agreement
shall first be settled, if possible, by the parties themselves through
negotiation and, failing success at negotiation through mediation, and failing
success at mediation, shall be arbitrated at Irvine, California. Unless
otherwise agreed upon by Massey and the Executive, the arbitration shall be had
before three arbitrators, each party designating an arbitrator and the two
designees naming a third arbitrator experienced in employment related
controversies. The procedure shall be in accordance with the rules and
regulations of the American Arbitration Association.
SECTION 14. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
SECTION 15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date set forth above.
FLUOR CORPORATION
By: /s/ Philip J. Carroll
--------------------------------
Philip J. Carroll
A. T. MASSEY COAL COMPANY, INC.
By: /s/ James L. Gardner
--------------------------------
James L. Gardner
Executive:
/s/ Donald L. Blankenship
-----------------------------------
Donald L. Blankenship
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