EXHIBIT 10.15
EMPLOYMENT AGREEMENT
AGREEMENT, as of the date set forth on the signature page hereof, by
and between P&L Coal Holdings Corporation, a Delaware corporation (the
"Company") and the undersigned executive (the "Executive").
RECITALS
In order to induce Executive to continue 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 the Chief Executive Officer of the Company (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 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 two 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" one-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 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;
provided, however, that no such increase shall be made before the Company
obtains ratings on its unsecured debt from Standard & Poor's and Xxxxx'x 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 in consultation with the CEO as
soon as practicable at the beginning of the fiscal year for which the
performance targets relate. Executive's target Bonus for the 1999 fiscal year is
set forth on the signature page hereof, 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 Company's policies and practices as set by the Board in
consultation with the CEO.
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 Option 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; Perquisites. 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 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 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), the
Company, as liquidated damages and in lieu of any other damages therefor, shall
(A) continue to pay to Executive Base Salary through the end of the Initial Term
if such termination occurs during the first year of the Initial Term or for a
period of one year for such termination thereafter (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 the Bonus actually paid in
the year prior to such termination (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. In addition, the Company shall pay to Executive
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. The Company shall also continue to provide
Executive during the Continuation Period with qualified and nonqualified defined
benefit and 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. 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 and is approved by the initial CEO;
provided, however; that if the initial CEO terminates without Good Reason,
voluntarily retires, dies or has a Disability or if such reduction is necessary
to maintain the financial viability or solvency of the Company, the reduction
does not require the approval of the initial CEO); or, without the approval of
the initial CEO: (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, or (v) a material
decline in Executive's Bonus opportunity; provided, however, that after a Change
of Control of the Company or an IPO (as those terms are defined in the 1998
Stock Purchase and Option Plan for Key Employees of P&L Coal Holdings
Corporation), clauses (ii) through (v) above shall be replaced by the following:
(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, 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. In the event
that Executive is terminated for failure to meet performance goals, as
determined by the initial CEO, such termination shall be considered a
termination for Cause for all purposes relating to his equity (stock and
options), but it shall be considered a termination without Cause for purposes of
such Executive's right to receive Severance Payments, the Prorated Bonus and the
Continuation Benefits.
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 foregoing.
7. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
P&L Coal Holdings Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxxxxx 00000-0000
attn: Chief Executive Officer
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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 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.
(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.
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. 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/ I. F. Xxxxxxxxxx
Name: Irl X. Xxxxxxxxxx
Title: Chairman and Chief Executive Officer
Signature of Executive: /s/ Xxxx Xxxxxx
Date of Agreement: May 19, 1998
Name of Executive: Xxxx Xxxxxx
Address of Executive: 000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Executive Team Position: President and CEO Citizens Power
Base Salary: $300,000 per annum
Bonus Target: 200% of Base Salary
Continuation Benefits: 1. Medical, dental and vision benefits;
2. Defined contribution plans (qualified and non-
qualified);
3. Defined benefit plans (qualified and non-qualified);
4. Life insurance;
5. AD&D;
6. Health care reimbursement account; and
7. Day care reimbursement account.
