Exhibit 10.19
GRANT AGREEMENT
PERFORMANCE UNITS AGREEMENT
THIS AGREEMENT, dated as of ___________ ("Grant Date") is made by and
between PEABODY ENERGY CORPORATION, a Delaware corporation (the "Company"), and
the undersigned employee of the Company or a Subsidiary (as defined below) or
Affiliate (as defined below) of the Company ("Grantee").
WHEREAS, the Company wishes to afford the Grantee the opportunity to
participate in future increases in Company value;
WHEREAS, the Company wishes to carry out the Plan (as hereinafter
defined), the terms of which are hereby incorporated by reference and made a
part of this Agreement; and
WHEREAS, the Committee (as hereinafter defined), appointed to
administer the Plan, has determined that it would be to the advantage and best
interest of the Company and its stockholders to grant the Performance Units
provided for herein to the Grantee as an incentive for increased efforts during
his term of office with the Company or its Subsidiaries or Affiliates, and has
advised the Company thereof and instructed the undersigned officers to issue
said Performance Units;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties, hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - "Affiliate", as applied to any Person, shall mean any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
Section 1.2 - "Board of Directors" or "Board" shall mean the Board of Directors
of the Company.
Section 1.3 - "Cause" shall mean (i) any material and uncorrected breach by
Grantee of the terms of his employment agreement with the Company, if any,
including, but not limited to, engaging in action in violation of any
restrictive covenants therein, (ii) any willful fraud or dishonesty of Grantee
involving the property or business of the Company, (iii) a deliberate or willful
refusal or failure of Grantee to comply with any major corporate policy of the
Company which is communicated to Grantee in writing or (iv) Grantee'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, Grantee 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 Grantee 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 Performance Units.
Section 1.4 - "Change of Control" shall mean:
(a) any Person (other than a Person holding securities
representing 10% or more of the combined voting power of the Company's
outstanding securities as of May 22, 2001, the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any company owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
becomes the beneficial owner, directly or indirectly, of securities of the
Company, representing 50% or more of the combined voting power of the Company's
then-outstanding securities;
(b) during any period of twenty-four consecutive months
(not including any period prior to May 22, 2001), individuals who at the
beginning of such period constitute the Board, and any new director (other than
(A) a director nominated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause 1.5(a), (c) or (d) or (B) a
director nominated by any Person (including the Company) who publicly announces
an intention to take or to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which if consummated would constitute
a Change in Control) whose election by the Board or nomination for election by
the Company's shareholders was approved by a vote of at least three-fourths
(3/4) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;
(c) the consummation of any merger, consolidation, plan
of arrangement, reorganization or similar transaction or series of transactions
in which the Company is involved, other than such a transaction or series of
transactions which would result in the shareholders of the Company immediately
prior thereto continuing to own (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the securities of the Company or such surviving entity
(or the parent, if any) outstanding immediately after such transaction(s) in
substantially the same proportions as their ownership immediately prior to such
transaction(s); or
2
(d) the shareholders of the Company approve a plan of
complete liquidation of the Company or the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a liquidation of
the Company into a wholly owned subsidiary.
For purposes of this Section 1.5, "Person" (including a "group"), has the
meaning as such term is used for purposes of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (or any successor section thereto).
Section 1.5 - "Committee" shall mean the Compensation Committee of the Company,
duly appointed by the Board as the Administrator under Section 2 of the Plan.
Section 1.6 - "Common Stock" shall mean the common stock of the Company, par
value $0.01.
Section 1.7 - "Disability" shall mean Grantee's absence from the full-time
performance of Grantee's duties pursuant to a reasonable determination made in
accordance with the Company's disability plan that Grantee 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.
Section 1.8 - "FMV per Share" shall mean the average of the closing prices of
the shares of Common Stock for the 4 weeks immediately preceding the
Determination Date (as defined below), or, with respect to the Grant Date, the
average of the closing prices of the shares of Common Stock for the 4 weeks
immediately following the Grant Date; notwithstanding the foregoing, in the
event of a Change of Control, "FMV per Share" shall mean the per share value of
equity based on amounts paid in the Change of Control.
Section 1.9 - "Good Reason" shall mean (i) a reduction by the Company in
Grantee's Base Salary, (ii) a material reduction in the aggregate program of
employee benefits and perquisites to which Grantee is entitled (other than a
reduction which affects all executives), (iii) relocation by more than 50 miles
from Grantee's workplace, (iv) any material diminution or material adverse
change in Grantee's duties, responsibilities or reporting relationships, which
causes Grantee to fall below the level of the executive team, or (v) a material
decline in Grantee's Bonus opportunity.
Section 1.10 - "Incentive Amount" shall mean the Dollar amount payable to
Grantee hereunder with respect to the Performance Units, if any, as calculated
in Article IV.
Section 1.11 - "Performance Units" shall mean the units granted on a performance
basis under this Agreement. The value of each Performance Unit shall be equal to
the FMV per Share as of the Grant Date or the relevant Determination Date (as
defined below).
Section 1.12 - "Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature.
Section 1.13 - "Plan" shall mean the Peabody Energy Corporation Long-Term Equity
Incentive Plan, as from time to time amended.
3
Section 1.14 - Pronouns - The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
Section 1.15 - "Recapitalization Event" shall mean a recapitalization,
reorganization, stock dividend or other special corporate restructuring which
results in an extraordinary distribution to the stockholders of cash and/or
securities through the use of leveraging or otherwise but which does not result
in a Change of Control.
Section 1.16 - "Retirement" shall mean normal retirement at age 62.
Section 1.17 - "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of
commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.18 - "Termination of Employment" shall mean a termination of the
Grantee's employment with the Company (regardless of the reason therefor).
ARTICLE II
GRANT OF PERFORMANCE UNITS
Section 2.1 - Grant of Performance Units. For good and valuable consideration,
the Company shall grant to the Grantee such number of Performance Units as set
forth on the signature page hereof (based on such FMV per Share as of the Grant
Date as set forth on the signature page hereof) upon the terms and conditions
set forth in this Agreement.
Section 2.2 - No Obligation of Employment. Nothing in this Agreement or in the
Plan shall confer upon the Grantee any right to continue in the employ of the
Company or any Subsidiary or Affiliate or shall interfere with or restrict in
any way the rights of the Company and its Subsidiaries or Affiliates, which are
hereby expressly reserved, to terminate the employment of the Grantee at any
time for any reason whatsoever, with or without Cause.
Section 2.3 - Adjustments in Performance Units. In the event that shares of
Common Stock are, from time to time, changed into or exchanged for a different
number or kind of shares of the Company or other securities of the Company by
reason of a merger, consolidation, recapitalization event, reclassification,
stock split, stock dividend, combination of shares, or otherwise, the Committee
shall make an appropriate and equitable adjustment in the number and kind of
Performance Units, or other consideration payable hereunder, and the applicable
FMV per Share. Any such adjustment made by the Committee shall be final and
binding upon the Grantee, the Company and all other interested persons.
4
ARTICLE III
VESTING OF PERFORMANCE UNITS
Section 3.1 - Performance Units. Unless otherwise provided in this Article III,
the Performance Units shall vest on the 15th of each calendar month, in equal
monthly increments, over the period beginning on the Grant Date and ending on
______________ (the "Performance Cycle").
Section 3.2 - Effect of Certain Events. Notwithstanding the foregoing, during
the Performance Cycle, (i) the Performance Units shall not continue to vest, any
and all Performance Units which remain unvested shall terminate immediately, and
the Grantee shall be entitled to the Incentive Amount calculated pursuant to
Section 4.1 hereof with respect to vested Performance Units, upon the earliest
of: (1) a Termination of Employment on account of death, Disability or
Retirement, (2) a Termination of Employment by the Company without Cause, or by
the Grantee for Good Reason, (3) a Change of Control, or (4) a Recapitalization
Event; and (ii) all Performance Units shall terminate, and the Grantee shall not
be entitled to any Incentive Amount hereunder (unless such Incentive Amount
previously became due hereunder), upon the earlier of: (1) a Termination of
Employment by the Company for Cause, and (2) a Termination of Employment by the
Grantee without Good Reason.
ARTICLE IV
PAYMENT OF INCENTIVE AMOUNT
Section 4.1 - Determination of Incentive Amount. The Incentive Amount payable to
the Grantee hereunder shall be determined on the earliest to occur of the
following events (the "Determination Date"): (i) December 31, XXXX; (ii) a
Termination of Employment on account of death, Disability or Retirement, (iii) a
Termination of Employment by the Company without Cause, or by the Grantee for
Good Reason, (iv) a Change of Control, or (v) a Recapitalization Event. Any
subsequent occurrence of an event described in Article III hereof shall not
constitute a Determination Date, and no further payment shall be made to the
Grantee hereunder. The Incentive Amount shall be equal to the number of
Performance Units that are vested as of the Determination Date pursuant to
Article III hereof, multiplied by the FMV per Share as of the Determination
Date, and further multiplied, in the event the Determination Date is December
31, xxxx, by the applicable percentage based on the matrix below (the
"Applicable Percentage"):
APPLICABLE PERCENTAGE
80%ile 50% 88% 100% 113% 125% 140% 155% 170% 185% 200% 200%
75%ILE 50% 88% 100% 113% 125% 140% 155% 170% 185% 200% 200%
70%ile 45% 83% 95% 108% 120% 135% 150% 165% 180% 195% 195%
65%ile 40% 78% 90% 103% 115% 130% 145% 160% 175% 190% 190%
60%ile 35% 73% 85% 98% 110% 125% 140% 155% 170% 185% 185%
TSR 55%ile 30% 68% 80% 93% 105% 120% 135% 150% 165% 180% 180%
PERCENTILE - S&P 50%ILE 25% 63% 75% 88% 100% 115% 130% 145% 160% 175% 175%
45%ile 21% 58% 71% 83% 96% 111% 126% 141% 156% 171% 171%
40%ile 17% 54% 67% 79% 92% 107% 122% 137% 152% 167% 167%
35%ILE 12% 50% 63% 75% 88% 102% 117% 132% 147% 162% 162%
<35%ile 0% 38% 50% 63% 75% 90% 105% 120% 135% 150% 150%
------ ----- ----- ----- ----- ----- ------ ----- ----- ----- -----
<40%ile 40%ILE 45%ile 50%ILE 55%ile 60%ile 65%ile 70%ile 75%ile 80%ILE 85%ile
TSR PERCENTILE - INDUSTRY
5
where:
"TSR Percentile - Industry" represents the Company's average total shareholder
return (based on the closing price of the shares of Common Stock on the
Determination Date) expressed as a percentage of an industry peer group index
(weighted at 75% of the total award opportunity hereunder), which peer group
shall include such companies as shall be selected by the Committee in its sole
discretion from time to time; and
"TSR Percentile - S&P" represents the Company's average total shareholder return
(based on the closing price of the shares of Common Stock on the Determination
Date) expressed as a percentage of the Standard & Poor Industrial Index
(weighted at 25% of the total award opportunity hereunder).
Notwithstanding the foregoing, in the event the Company's average total
shareholder return as of the applicable Determination Date (based on the closing
price of the shares of Common Stock on such date) is negative, (i) no Incentive
Amount shall be paid hereunder if the TSR Percentile - Industry (as defined
above) is less than fifty percent (50%) as of that same date, and (ii) the
Applicable Percentage shall not exceed one hundred fifty percent (150%) if the
TSR Percentile - Industry (as defined above) equals or exceeds fifty percent
(50%) as of that same date.
Section 4.2 - Form and Time of Payment. The Incentive Amount shall be paid to
the Grantee in a lump sum in cash as soon as practicable after the Determination
Date; provided, however, that the Committee, in its sole discretion, may decide
to pay the Incentive Amount in Common Stock based on the FMV per Share as of the
applicable Determination Date.
Section 4.3 - Conditions to Issuance of Stock Certificates. In the event the
Committee decides to pay the Incentive Amount in Common Stock under Section 4.2,
the shares of Common Stock deliverable upon payment of the Incentive Amount may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock deliverable hereunder
prior to fulfillment of all of the following conditions:
(a) The obtaining of approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following
the Determination Date as the Committee may from time to time establish
for reasons of administrative convenience.
6
Section 4.4 - Rights as Stockholder. The Grantee shall not be, nor have any of
the rights or privileges of, a stockholder of the Company in respect of any
shares of Common Stock deliverable hereunder unless and until certificates
representing such shares shall have been issued by the Company to the Grantee.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration. The Committee shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret or revoke any such rules. All actions taken and all interpretations
and determinations made by the Committee shall be final and binding upon the
Grantee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Performance
Units. In its absolute discretion, the Board of Directors may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement.
Section 5.2 - Performance Units Not Transferable. Neither the Performance Units
nor any interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Grantee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3 - Withholding. No later than the date as of which an amount payable
hereunder first becomes includible in the Grantee's gross income for tax
purposes, the Grantee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any applicable withholding
taxes.
Section 5.4 - Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of its Secretary, and
any notice to be given to the Grantee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Grantee shall, if
the Grantee is then deceased, be given to the Grantee's personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 5.4. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
Section 5.5 - Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.
7
Section 5.6 - Applicability of Plan. The Performance Units and the shares of
Common Stock issued to the Grantee, if any, shall be subject to all of the terms
and provisions of the Plan, to the extent applicable to the Performance Units
and such shares. In the event of any conflict between this Agreement and the
Plan, the terms of the Plan shall control.
Section 5.7 - Amendment. This Agreement may be amended only by a writing
executed by the parties hereto which specifically states that it is amending
this Agreement.
Section 5.8 - Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement 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 the Grantee prevails
on a material element of his claim or defense.
Section 5.9 - Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement
regardless of the law that might be applied under principles of conflicts of
laws.
Section 5.10 - Jurisdiction. Any suit, action or proceeding against the Grantee
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, shall be brought in any court of competent jurisdiction in the
State of Delaware, as the Company may elect in its sole discretion, and the
Grantee hereby submits to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action, proceeding or judgment. The Grantee hereby
irrevocably waives any objections which he may now or hereafter have to the
laying of the venue of any suit, action or proceeding arising out of or relating
to this Agreement brought in any court of competent jurisdiction in the State of
Delaware, and hereby further irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in any
inconvenient forum. No suit, action or proceeding against the Company with
respect to this Agreement may be brought in any court, domestic or foreign, or
before any similar domestic or foreign authority other than in a court of
competent jurisdiction in the State of Delaware, and the Grantee hereby
irrevocably waives any right which he may otherwise have had to bring such an
action in any other court, domestic or foreign, or before any similar domestic
or foreign authority. The Company hereby submits to the jurisdiction of such
courts for the purpose of any such suit, action or proceeding.
8
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
PEABODY ENERGY CORPORATION
By____________________________________
Its___________________________________
________________________________ Aggregate number of Performance
[GRANTEE] Units: ________
FMV per Share as of Grant Date: $______
________________________________
________________________________
________________________________
Address
Grantee's Taxpayer Identification
Number: _____-_______-_______
9
