EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT, made as of May 19, 1998 by and between P&L Coal
Holdings Corporation, a Delaware corporation (the "Company") and Irl X.
Xxxxxxxxxx (the "Executive").
RECITALS
In order to induce Executive to continue to serve as the Chief
Executive Officer (the "CEO") and Chairman of the Board of Directors (the
"Board") of the Company, the Company desires to provide Executive with
compensation and other benefits on the terms and conditions set forth in this
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 as its CEO. In his
capacity as the CEO of the Company, Executive shall report to the Board, and
shall have the customary powers, responsibilities and authorities of CEOs of
corporations of the size, type and nature of the Company, as it exists from time
to time, and as are assigned by the Board.
1.2 Subject to the terms and conditions of this Agreement,
Executive hereby accepts employment as the CEO of the Company commencing as of
the date hereof (the "Commencement Date") and agrees, subject to any period of
vacation and sick leave, to devote his full business time and efforts to the
performance of services, duties and responsibilities in connection therewith,
subject at all times to review and control of the Board. In addition, during the
term of employment under this Agreement (the "Term of Employment"), (i) the
Company agrees to nominate Executive for election to the Board and use its best
efforts to cause his election to the Board and Executive agrees to serve on the
Board of the Company and (ii) Executive also agrees to serve, if elected, as an
officer and/or director of any Subsidiary of the Company, without the payment of
any additional compensation therefor. Upon the termination of Executive's
employment for any reason, Executive shall resign as a member of the Board of
the Company or any Subsidiary of the Company.
1.3 Nothing in this Agreement shall preclude Executive from
engaging in charitable work and community affairs, from delivering lectures,
fulfilling speaking engagements or teaching at educational institutions, from
managing any investment made by him or his immediate family with respect to
which Executive or such family member is not substantially involved with the
management or operation of the entity in which Executive has invested (provided
that no such investment in publicly traded equity securities or other property
may exceed 5% of the equity of any entity, without the prior approval of the
Board) or from serving, subject to the prior approval of the Board, as a member
of boards of directors or as a trustee of any other corporation, association or
entity, to the extent that any of the above activities do not materially
interfere with the performance of his duties hereunder. For purposes of the
preceding sentence, any approval by the Board required therein shall not be
unreasonably withheld. The Company agrees that it has approved Executive serving
in the following capacities: director of Mercantile Bank of St. Louis, N.A.,
Chairman of the Center for Energy and Economic Development and Chairman of the
Coal Industry Advisory Board, and that these positions do not require any
additional approval of the Board.
2. Term of Employment. Executive's Term of Employment shall
commence on the Commencement Date and, subject to termination under the terms
hereunder, shall have a three-year term, which shall extend on a day-to-day
basis for an "evergreen" three-year term.
3. Compensation.
3.1 Salary. During the Term of Employment, the Company shall
pay Executive a base salary ("Base Salary") at an initial rate of $700,000 per
annum. Base Salary shall be payable in accordance with the ordinary payroll
practices of the Company. During the Term of Employment, the Board shall, in
good faith, review, at least annually, Executive's Base Salary in accordance
with the Company's customary procedures and practices regarding the salaries of
senior executives and may, if determined by the Board to be appropriate,
increase Executive's Base Salary following such review; provided, however, that
no such increase shall be made before the Company obtains ratings on its
unsecured debt from Standard & Poor's and 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 as soon as
practicable at the beginning of the fiscal year for which the performance target
relates. Executive's target Bonus for the 1999 fiscal year shall be equal to
150% of his Base Salary, and such target shall not be increased before the
Company obtains an Investment-Grade Credit Rating. A Bonus award shall be
payable to Executive at the time bonuses are paid to executive officers in
accordance with the Companies policies and practices as set by the Board in
consultation with Executive.
4. Employee Benefits.
4.1 Equity and Stock Options. Simultaneously with the
execution of this Agreement, the Company and Executive are entering into the
Common Stock Ownership Agreement, the Grant Agreement[s] and the Stockholders
Agreement in the forms attached hereto as Exhibits A, B and C, respectively
(together with any other agreement approved by the Board and designated by the
Board an "Ancillary Document" for purposes of this Agreement, the "Ancillary
Documents"). Executive shall not be eligible to receive any stock option or
other equity incentive other than as set forth in the Ancillary Documents.
4.2 Employee Benefit Programs, Plans and Practices. The
Company shall provide Executive while employed hereunder with coverage under
such employee benefits (commensurate with his position in the Company and to the
extent permitted under any employee benefit plan) in accordance with the terms
thereof, including the Continuation Benefits (as defined herein), D&O insurance,
which covers claims arising out of actions or inactions occurring during the
Term of Employment, in accordance with the D&O insurance policy, and other
employee benefits which the Company may make available to its senior executives
from time to time in its discretion. The Company shall also provide Executive
with perquisites which the Company may make available to its senior executives
from time to time in its discretion.
4.3 Vacation. Executive shall be entitled to that number of
business days paid vacation in each calendar year as determined in accordance
with the Company's applicable vacation policies, which shall be taken at such
times as are consistent with Executive's responsibilities hereunder.
5. Expenses. Subject to prevailing Company policy or such
guidelines as may be established by the Board, the Company will reimburse
Executive for all reasonable expenses incurred by Executive in carrying out his
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) during the Term of Employment, the Company, as liquidated damages and in
lieu of an other damages therefor, shall (A) continue to pay Executive's Base
Salary for a period of three (3) years (the "Continuation Period") and (B) pay
to Executive a bonus replacement payment in an additional amount equal to 100%
of his Base Salary for each of the three years following such termination (the
"Severance Payments"). The Severance Payments shall be paid in a lump sum. For
the year of termination, Executive shall receive a prorated bonus (the "Prorated
Bonus"), payable when such bonuses are paid to other senior executives of the
Company, calculated as the Bonus Executive would have received in such year
based on the Company's actual performance multiplied by a fraction, the
numerator of which is the number of business days during the year of termination
that Executive was employed and the denominator of which is the total number of
business days during the year of termination. In addition, the Company shall
continue to provide Executive during the Continuation Period with medical,
dental and vision benefits, defined contribution plans (qualified and
non-qualified) benefits, defined benefit plans (qualified and non-qualified)
benefits, life insurance, AD&D insurance, health care reimbursement account and
day care reimbursement account (collectively, the "Continuation Benefits")
comparable to those provided to other senior executives; provided, however, that
the Company shall not be obligated to provide any benefits under tax qualified
plans which are not permitted by the terms of such plan or by applicable law or
could jeopardize the plan's tax status; provided, further, that any such
coverage shall terminate to the extent that Executive is offered or obtains
comparable benefits from any other employer during the Continuation Period.
Notwithstanding the foregoing, if Executive breaches any provision of Section 11
hereof, the remaining balance of the Prorated Bonus and any Continuation
Benefits shall be forfeited.
(b) For purposes of this Agreement, "Good Reason" shall mean
(i) a reduction by the Company in Executive's Base Salary (in which event
Severance Payments shall be made based upon Executive's Base Salary in effect
prior to any such reduction), (ii) a material reduction in the aggregate program
of employee benefits and perquisites to which Executive is entitled (other than
a reduction which affects all executives), (iii) relocation by more than 50
miles from Executive's workplace, (iv) any material diminution or material
adverse change in Executive's duties, responsibilities or reporting
relationships, or (v) a material decline in Executive's Bonus opportunity.
(c) Termination by Executive for Good Reason shall be made by
delivery to the Company by Executive of written notice, given at least 45 days
prior to such termination, which sets forth the conduct believed to constitute
Good Reason; provided, however, that the Company shall have the opportunity to
cure the Good Reason during the first 30 days of such notice period and if the
Good Reason is cured within such 30-day period, Executive's notice of
termination shall be deemed withdrawn. If no notice is given within 90 days of
the event giving rise to Good Reason, the Good Reason shall be deemed waived.
6.2 Voluntary Termination by Executive; Discharge for Cause.
(a) In the event that Executive's employment is terminated (i) by the Company
for Cause, as hereinafter defined, (ii) by Executive other than for Good Reason,
Disability or death or (iii) by Executive for retirement, Executive shall only
be entitled to receive (A) any Base Salary accrued but unpaid prior to such
termination and (B) any vacation accrued but unused prior to such termination
and any other benefits provided under the employee benefit programs, plans and
practices referred to in Section 4.2 hereof, in accordance with their terms.
After the termination of Executive's employment under this Section 6.2, the
obligations of the Company under this Agreement to make any further payments, or
provide any benefits specified herein, to Executive, except as provided in the
previous sentence, shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i)
any material and uncorrected breach by Executive of the terms of this Agreement,
including, but not limited to, engaging in action in violation of Section 11
hereof, (ii) any willful fraud or dishonesty of Executive involving the property
or business of the Company, (iii) a deliberate or willful refusal or failure of
Executive to comply with any major corporate policy of the Company which is
communicated to Executive in writing or (iv) Executive's conviction of, or plea
of nolo contendere to, any felony if such conviction shall result in his
imprisonment; provided that with respect to clauses (i), (ii) or (iii) above,
Executive shall have 10 days following written notice of the conduct which is
the basis for the potential termination for Cause within which to cure such
conduct in order to prevent termination for Cause by the Company.
6.3 Disability. In the event of the Disability (as defined
below) of Executive during the Term of Employment, the Company may terminate
Executive's Term of Employment upon written notice to Executive (or Executive's
personal representative, if applicable) effective upon the date of receipt
thereof (the "Disability Commencement Date"). The obligation of the Company to
make any further payments under this Agreement shall, except for earned but
unpaid Base Salary, amounts attributable to accrued but unused vacation days and
the Prorated Bonus cease as of the Disability Commencement Date. The term
"Disability," for purposes of this Agreement, shall mean Executive's absence
from the full-time performance of Executive's duties pursuant to a reasonable
determination made in accordance with the Company's disability plan that
Executive is disabled as a result of incapacity due to physical or mental
illness that lasts, or is reasonably expected to last, for at least six months.
Benefits under all other employee benefit programs, plans and practices shall be
paid in accordance with their terms.
6.4 Death. In the event of Executive's death during his Term
of Employment hereunder or at any time thereafter while payments are still owing
to Executive under the terms of this Agreement, all obligations of the Company
to make any further payments, other than the obligation to pay any accrued but
unpaid Base Salary, amounts attributable to accrued but unused vacation days and
the Prorated Bonus or any remaining payments that were payable to Executive by
reason of his termination of employment under Section 6.1 to which Executive was
entitled at the time of his death, shall terminate upon Executive's death.
Benefits under all other employee benefit programs, plans and practices shall be
paid in accordance with their terms.
6.5 No Further Notice or Compensation or Damages. Executive
understands and agrees that he shall not be entitled to any further notice,
compensation or damages upon Termination of Employment under this Agreement,
other than amounts specified in this Section 6 and the Ancillary Documents.
6.6 Executive's Duty to Provide Materials. Upon the
termination of the Term of Employment for any reason, Executive or his estate
shall surrender to the Company all correspondence, letters, files, contracts,
mailing lists, customer lists, advertising materials, ledgers, supplies,
equipment, checks, and all other materials and records of any kind that are the
property of the Company or any of its subsidiaries or affiliates, that may be in
Executive's possession or under his control, including all copies of any of the
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 Legal Officer
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To Executive:
Irl X. Xxxxxxxxxx
000 Xxxx Xxxx
Xx. Xxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Any such notice or communication shall be delivered by hand or by courier or
sent certified or registered mail, return receipt requested, postage prepaid,
addressed as above (or to such other address as such party may designate in a
notice duly delivered as described above), and the third business day after the
actual date of sending shall constitute the time at which notice was given.
8. Separability. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
9. Assignment. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by the heirs and representatives of Executive
and the assigns and successors of the Company, but neither this Agreement nor
any rights or obligations hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation of the laws of
intestate succession) or by the Company, except that the Company may assign this
Agreement to any successor (whether by merger, purchase or otherwise) to all or
substantially all of the stock, assets or businesses of the Company.
10. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
11. Nondisclosure of Confidential Information;
Non-Competition. (a) Executive, both during the term hereof and thereafter, will
not, directly or indirectly, use for himself or use for, or disclose to, any
party other than the Company, or any subsidiary of the Company (other than in
the ordinary course of Executive's duties for the benefit of the Company or any
subsidiary of the Company), any secret or confidential information regarding the
business or property of the Company or its subsidiaries or regarding any secret
or confidential apparatus, process, system, or other method at any time used,
developed, acquired, discovered or investigated by or for the Company or its
subsidiaries, whether or not developed, acquired, discovered or investigated by
Executive. At the termination of Executive's employment or at any other time the
Company or any of its subsidiaries may request, Executive shall promptly deliver
to the Company all memoranda, notes, records, plats, sketches, plans or other
documents made by, compiled by, delivered to, or otherwise acquired by Executive
concerning the business or properties of the Company or its subsidiaries or any
secret or confidential product, apparatus or process used developed, acquired or
investigated by the Company or its subsidiaries.
(b) In consideration of the Company's obligations under this
Agreement, Executive agrees that during the period of his employment hereunder
and for a period of twelve (12) months thereafter, without the prior written
consent of the Board, (i) he will not, directly or indirectly, either as
principal, manager, agent, consultant, officer, stockholder, partner, investor,
lender or employee or in any other capacity, carry on, be engaged in or have any
financial interest in, any entity which is in competition with the business of
the Company or its subsidiaries and (ii) he shall not, on his own behalf or on
behalf of any person, firm or company, directly or indirectly, solicit or offer
employment to any person who is or has been employed by the Company or its
subsidiaries at any time during the twelve (12) months immediately preceding
such solicitation.
(c) For purposes of this Section 11, an entity shall be deemed
to be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company as a part of the business
of the Company within the same geographic area in which the Company effects such
sales or dealings or renders such services. Notwithstanding this subsection
11(c) or subsection 11(b), nothing herein shall be construed so as to preclude
Executive from investing in any publicly or privately held company, provided
Executive's beneficial ownership of any class of such company's securities does
not exceed 5% of the outstanding securities of such class.
(d) Executive agrees that this covenant not to compete is
reasonable under the circumstances and will not interfere with his ability to
earn a living or to otherwise meet his financial obligations. Executive and the
Company agree that if in the opinion of any court of competent jurisdiction such
restraint is not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of this
covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended. Executive agrees that any breach of the
covenants contained in this Section 11 would irreparably injure the Company.
Accordingly, Executive agrees that, in the event a court enjoins Executive from
any activity prohibited by this Section 11, the Company may, in addition to
pursuing any other remedies it may have in law or in equity, cease making any
payments otherwise required by this Agreement and obtain an injunction against
Executive from any court having jurisdiction over the matter restraining any
further violation of this Agreement by Executive.
12. Beneficiaries. Executive shall be entitled to select (and
change, to the extent permitted under any applicable law) a beneficiary or
beneficiaries to receive any compensation or benefit payable hereunder following
Executive's death, and may change such election, in either case by giving the
Company written notice thereof. In the event of Executive's death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
13. Dispute Resolution. Any dispute or controversy arising
under or in connection with this Agreement (other than an action to enforce the
covenants in Section 11 hereof) or the Ancillary Documents shall be resolved by
arbitration. Arbitrators shall be selected, and arbitration shall be conducted,
in accordance with the rules of the American Arbitration Association. The
Company shall pay any legal fees in connection with such arbitration in the
event that Executive prevails on a material element of his claim or defense.
14. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of the State of New York,
without reference to rules relating to conflicts of law.
15. Effect on Prior Agreements. This Agreement and the
Ancillary Documents contain the entire understanding between the parties hereto
and supersedes in all respects any prior or other agreement or understanding,
both written and oral, between the Company, any affiliate of the Company or any
predecessor of the Company or affiliate of the Company and Executive.
16. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
17. Survival. Notwithstanding the expiration of the term of
this Agreement, the provisions of Section 11 hereunder shall remain in effect as
long as is reasonably necessary to give effect thereto in accordance with the
terms hereof.
18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original.
P&L Coal Holdings Corporation
By /s/ H. E. Xxxxx
Name: Xxxxx X. Xxxxx
Title:
/s/ Irl X. Xxxxxxxxxx
Irl X. Xxxxxxxxxx
