Employment Agreement - Peabody Energy Corp. and Gregory H. Boyce
EMPLOYMENT AGREEMENT
AGREEMENT, as of the date set forth on the signature page
hereof, by and between Peabody Energy Corporation, a Delaware corporation (the
"Company") and the undersigned executive (the "Executive").
RECITALS
In order to induce Executive to serve in the executive team
position set forth on the signature page hereof, the Company desires to provide
Executive with compensation and other benefits on the terms and conditions set
forth in this Agreement.
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
follows:
1. Employment.
1.1 Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive during the Term hereof in the
executive team position set forth on the signature page hereof. In such
capacity, Executive shall report to Irl F. Engelhardt (the "CEO"), and shall
have the customary powers, responsibilities and authorities of executives
holding such positions in corporations of the size, type and nature of the
Company, as it exists from time to time, and as are assigned by the Board of
Directors of the Company (the "Board") and the CEO.
1.2 Subject to the terms and conditions of this
Agreement, Executive hereby accepts employment in the executive team position
set forth on the signature page hereof
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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 or
the CEO.
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 CEO or the Board) or from serving, subject to the prior approval
of the CEO or 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 CEO or
the Board required therein shall not be unreasonably withheld.
2. Term of Employment. Executive's term of employment
under this Agreement (the "Term of Employment") shall commence on the
Commencement Date and, subject to termination by the terms hereunder, shall have
an initial term of three years (the "Initial Term"), which, beginning on the
first anniversary of the Commencement Date, shall extend thereafter on a
day-to-day basis for an "evergreen" three-year term.
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3. Compensation.
3.1 Salary. During the Term of Employment, the Company
shall pay Executive a base salary ("Base Salary") at an initial rate as set
forth on the signature page hereof. Base Salary shall be payable in accordance
with the ordinary payroll practices of the Company. During the Term of
Employment, the Board and the CEO 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. "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 2003 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 in consultation
with the CEO as soon as practicable at the beginning of the fiscal year for
which the performance targets relate. A Bonus award shall be payable to
Executive at the time bonuses are paid to executive officers in accordance with
the Company's policies and practices as set by the Board in consultation with
the CEO. Notwithstanding the foregoing, with respect to the 2003 fiscal year,
Executive shall receive a Bonus equal to the sum of (i) the amount equal to the
prorated target bonus to which Executive is entitled at current place of
employment, plus (ii) an amount equal to the Bonus to which Executive would have
been entitled, had he been employed by the Company during the entire 2003 fiscal
year (assuming the discretionary portion of such Bonus is paid at target),
multiplied by a fraction the numerator of which is the number of days in the
period beginning on the Commencement Date and ending on the last day of the 2003
fiscal
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year and the denominator of which is 365. Executive's Bonus target for the
portion of the 2003 fiscal year during which Executive is employed by the
Company is set forth on the signature page hereof.
3.3 Additional Lump-sum Payment. In the event Executive
(a) remains in the Company's employ until Executive attains age fifty-five (55),
(b) terminates employment under section 6.1 on or after age fifty-two, or (c)
dies or becomes disabled, the Company shall pay Executive (or, in the event of
Executive's death, Executive's estate) $800,000 in a lump sum as soon as
administratively feasible following the termination of Executive's employment
with the Company.
3.4 Signing Bonus and Deferred Compensation Account. (a)
As of the Commencement Date, the Company grants Executive, as a signing bonus
(the "Signing Bonus"), an amount equal to the fair market value of 20,000 shares
of the Company's common stock (based on the average closing price for the
Company's common stock as reported on the New York Stock Exchange during the
30-day period immediately preceding the Commencement Date), to be reflected on
the Company's accounting records as deferred compensation payable to Executive
in a lump sum (with any earnings thereon, as described below) as soon as
administratively feasible following the termination of Executive's employment
with the Company. Notwithstanding the foregoing, the Signing Bonus (and any
earnings thereon) initially shall constitute unvested and forfeitable deferred
compensation and shall become vested and nonforfeitable on the date on which
Executive attains age 55 or, if earlier, on the fifth anniversary of the date on
which Executive becomes the Company's chief executive officer; provided,
however, that in the event Executive's employment with the Company is terminated
before the Signing Bonus (and any earnings thereon) becomes vested and
nonforfeitable pursuant
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to the immediately preceding clause, the Signing Bonus (and any earnings
thereon) shall be subject to the following:
(1) In the event Executive's employment with the Company is
terminated (i) by Executive for Good Reason, (ii) by the Company
without Cause, or (iii) as a result of Executive's death or Disability,
the Signing Bonus (and any earnings thereon) shall become vested and
nonforfeitable as of the date of such termination; and
(2) In the event Executive's employment with the Company is
terminated for any other reason, the Signing Bonus (and any earnings
thereon) shall be immediately forfeited.
(b) In the event Executive's employment with the Company
is terminated before Executive reaches age 55, the amount payable by the Company
under this Section 3.4 (unless the Signing Bonus is otherwise forfeited pursuant
to Section 3.4(a) hereof) shall be equal to the greater of (i) the value of the
Signing Bonus as of the Commencement Date, as determined under Section 3.4(a)
hereof, plus interest thereon, which shall accrue annually, during the period
beginning on the Commencement Date and ending on the date of payment (if any) of
the Signing Bonus, at a rate equal to twelve month LIBOR plus 2, as adjusted on
each anniversary date of the Commencement Date, and (ii) an amount equal to the
fair market value of 20,000 shares of the Company's common stock as of the date
of termination of Executive's employment with the Company (based on the average
closing price for the Company's common stock as reported on the New York Stock
Exchange during the 30-day period immediately preceding the date of such
termination).
(c) In the event Executive's employment with the Company
is terminated after Executive reaches age 55 but before Executive reaches age
62, the amount payable by the Company under this Section 3.4 (unless the Signing
Bonus is otherwise forfeited pursuant to Section 3.4(a) hereof) shall be equal
to the greater of (i) the amount to which Executive would
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have been entitled under Section 3.4(b) with interest accruing to the date of
termination, without any forfeiture, (ii) an amount equal to $1,600,000 reduced
by .333% for each month that the termination date occurs before reaching age 62,
or (iii) an amount equal to the fair market value of 20,000 shares of the
Company's common stock as of the date of termination of Executive's employment
with the Company (based on the average closing price for the Company's common
stock as reported on the New York Stock Exchange during the 30-day period
immediately preceding the date of such termination).
(d) In the event Executive's employment with the Company
is terminated after Executive age 62, the provisions of the immediately
preceding paragraph shall apply; provided, however, that the amount described in
Section 3.4(c)(ii) hereof shall be equal to $1,600,000.
(e) Notwithstanding anything herein to the contrary,
Executive shall not be deemed to have any beneficial ownership interest in any
reserve, account, fund or other asset of the Company and shall be an unsecured
general creditor of the Company for purposes of this Section 3.4. For purposes
of valuing any shares under this section 3.4, an adjustment shall be made to
account for the new number or new kind of shares of the Company or other
securities of the Company due to a merger, consolidation, recapitalization
event, reclassification, stock split, stock dividend, combination of shares, or
otherwise.
4. Employee Benefits.
4.1 Equity-Based Compensation. Simultaneously with the
execution of this Agreement, the Company and Executive are entering into the
Restricted Stock Grant Agreement, and the Option Grant Agreement in the forms
attached hereto as Exhibits A and B, respectively
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(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").
4.2 Employee Benefit Programs, Plans and Practices;
Perquisites. The Company shall provide Executive while employed hereunder with
coverage under such employee benefit plans (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), Directors and Officers ("D&O") insurance policy, 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 the 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
duties.
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 the
Executive's employment is terminated (i) by the
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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), then:
(1) the Company, as liquidated damages and in lieu of any other
damages therefor, shall (A) continue to pay to Executive Base Salary
for a period ending on the third anniversary date of such termination
(the "Continuation Period"), with such payments to be made in
accordance with the terms of Section 3.1 and (B) pay to Executive an
additional amount equal to three (3) times the higher of (x)
Executive's target Bonus for the year of termination (as established by
the Board under Section 3.2 hereof), or (y) the annualized average of
the actual Bonus awards paid to Executive in the three-year period
prior to such termination (or the total period of Executive's
employment with the Company, if less than three years) (the "Severance
Payments"). The Severance Payments shall be made in substantially equal
installments over the Continuation Period in accordance with Company
payroll practices, unless the CEO or the Board approves payment in a
lump sum;
(2) the Company shall pay to Executive (i) any unpaid Bonus earned
by Executive with respect to the year immediately preceding the year of
termination, if any, and (ii) a prorated bonus (the "Prorated Bonus")
for the year of termination, 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;
(3) the Company shall also continue to provide Executive during
the Continuation Period with qualified and nonqualified defined
contribution pension, life insurance, medical and other benefits set
forth on the signature page hereof (collectively, the "Continuation
Benefits"); 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; and;
(4) Executive's equity-based compensation (including any options
and restricted stock) shall be governed by applicable terms and
conditions of the relevant Ancillary Documents.
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(5) Reimbursable expenses incurred by Executive prior to the
termination of his employment with the Company and not previously
reimbursed by the Company shall be reimbursed pursuant to Section 5
hereof.
Notwithstanding the foregoing, if Executive breaches any provision of Section 11
hereof, the remaining balance of the Severance Payments, 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, which causes Executive to fall below the level of the executive
team (including, but not limited to, Executive's ceasing to report directly to
the CEO, other than as a result of becoming the Company's chief executive
officer), (v) a material decline in Executive's annual and long-term bonuses
opportunity or (vi) the appointment of any person other than Executive as the
Company's chief executive officer immediately following the resignation or
termination of the CEO as CEO of the Company.
(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
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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.
(d) (i) If Executive becomes entitled to any
payment, benefit or distribution (or combination thereof) by the Company, any
affiliated company, or one or more trusts established by the Company for the
benefit of its employees, whether paid or payable pursuant to Section 6.1 of
this Agreement or any other plan, arrangement, or agreement with the Company or
any affiliated company (the "Payments"), which are or become subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the "Excise Tax"), the
Company shall make to Executive an additional payment (the "Gross-Up Payment")
in an amount such that after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment, Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments; provided, however, that such Gross-Up Payment shall not exceed
$3,000,000 as may be increased from time to time by the Board..
(ii) All determinations required to be made under
this Section 6.1(d), including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by a nationally recognized
certified public accounting firm as may be designated by the Company (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and Executive within ten business days of the receipt of notice from
Executive that
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Payments were made, or such earlier time as is required by the Company; provided
that for purposes of determining the amount of any Gross-Up Payment, Executive
shall be deemed to pay federal income tax at the highest marginal rates
applicable to individuals in the calendar year in which any such Gross-Up
Payment is to be made and deemed to pay state and local income taxes at the
highest effective rates applicable to individuals in the state or locality of
Executive's residence or place of employment in the calendar year in which any
such Gross-Up Payment is to be made, net of the maximum reduction in federal
income taxes that can be obtained from deduction of such state and local taxes,
taking into account limitations applicable to individuals subject to federal
income tax at the highest marginal rates. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 6.1(d), shall be paid by the Company to
Executive (or to the appropriate taxing authority on Executive's behalf) when
due. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it shall so indicate to Executive in writing. Any determination by
the Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code, it is
possible that the amount of the Gross-Up Payment determined by the Accounting
Firm to be due to (or on behalf of) Executive was lower than the amount actually
due ("Underpayment"). In the event that the Company exhausts its remedies
hereunder and Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of Executive.
(iii) Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of any
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Gross-Up Payment. Such notification shall be given as soon as practicable, but
no later than ten business days after Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the thirty-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim, (ii) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company, (iii) cooperate with the Company in good faith in order
to effectively contest such claim and (iv) permit the Company to participate in
any proceedings relating to such claim; provided, however, that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as
a result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 6.1(d), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before
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any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, further, that
if the Company directs Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to Executive, on an
interest-free basis, and shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; provided, further,
that if Executive is required to extend the statute of limitations to enable the
Company to contest such claim, Executive may limit this extension solely to such
contested amount. The Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(iv) If, after the receipt by Executive of an
amount paid or advanced by the Company pursuant to this Section 6.1(d),
Executive becomes entitled to receive any refund with respect to a Gross-Up
Payment, Executive shall (subject to the Company's complying with the
requirements of Section 6.1(d)(iii)) promptly pay to the Company the amount of
such refund received (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 6.1(d), a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.
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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, Executive shall only be entitled to receive (A) any
Base Salary accrued but unpaid prior to such termination, (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, and (C) pursuant to Section 5
hereof, reimbursable expenses incurred by Executive prior to the termination of
his employment with the Company and not previously reimbursed by the Company.
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. Except for
violations of Section 11 hereof or terminations under Section 6.2(b)(iv) above,
only actions, conduct, and
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events occurring during the term of employment with the Company shall be the
subject of a termination For Cause.
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, any unpaid Bonus earned by the Executive with
respect to the year immediately preceding the year of termination, amounts
attributable to accrued but unused vacation days, vested benefits under other
Company provided benefit plans 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 long-term disability plan that Executive is disabled and
entitled to long term disability benefits 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, any unpaid Bonus earned by the Executive with
respect to the year immediately preceding the year of termination, amounts
attributable to accrued but unused vacation days, vested Benefits under other
Company provided benefit plans
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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 foregoing.
7. Notices. All notices or communications hereunder
shall be in writing, addressed as follows:
To the Company:
Peabody Energy Corporation
701 Market Street, Suite 700
St. Louis, Missouri 63101-1826
attn: Chief Executive Officer
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with a copy to:
David R. Shevitz, Esq., and
Michel Vanesse, Esq.
Katten Muchin Zavis Rosenman
525 West Monroe Street, Suite 1600
Chicago, Illinois 60661
To Executive at the address set forth on the signature page
hereof, 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
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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 one year 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.
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(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 that 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.
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12. Beneficiaries; References. 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. Any reference to the
masculine gender in this Agreement shall include, where appropriate, the
feminine.
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 in St. Louis, Missouri. Three arbitrators shall be
selected, and arbitration shall be conducted, in accordance with the rules of
the American Arbitration Association. The arbitrators shall have the discretion
to award the cost of arbitration, arbitrators' fees and the respective
attorneys' fees of each party between the parties as they see fit.
14. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of the State of Missouri,
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.
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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.
Peabody Energy Corporation
By /s/ IRL F. ENGELHARDT
------------------------
Name: Irl F. Engelhardt
Title: Chairman and CEO
SIGNATURE OF EXECUTIVE: /s/ GREGORY H. BOYCE
---------------------
DATE OF AGREEMENT: October 1, 2003
NAME OF EXECUTIVE: Gregory H. Boyce
ADDRESS OF EXECUTIVE: 701 Market Street
St. Louis, MO 63122
EXECUTIVE TEAM POSITION: President - Chief Operating Officer
BASE SALARY: $650,000 per annum
ANNUAL INCENTIVE TARGET: 80% of Base Salary
LONG-TERM INCENTIVE TARGET: 150% of Base Salary
CONTINUATION BENEFITS: 1. Medical, dental and vision benefits;
2. Defined contribution plans
(qualified and non-qualified);
3. Life insurance;
4. AD&D;
5. Health care reimbursement account;
and
6. Day care reimbursement account.
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