Exhibit 10.18
GRANT AGREEMENT
NON-QUALIFIED STOCK OPTION 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 ("Optionee").
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock ("Common Stock");
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 Non-Qualified Options
provided for herein to the Optionee 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 Options;
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 - "Active Trading Market" shall mean, as to the Common Stock, that
the Common Stock is listed or quoted on a national exchange or the NASDAQ
National Market.
Section 1.2 - "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 1.3 - "Board of Directors" or "Board" shall mean the Board of Directors
of the Company.
Section 1.4 - "Cause" shall mean (i) any material and uncorrected breach by
Optionee 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 Optionee
involving the property or business of the Company, (iii) a deliberate or willful
refusal or failure of Optionee to comply with any major corporate policy of the
Company which is communicated to Optionee in writing or (iv) Optionee'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, Optionee 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 Optionee 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 Options.
Section 1.5 - "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
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(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.
As used in herein, "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 1.6 - "Committee" shall mean the Compensation Committee of the Company,
duly appointed by the Board as the Administrator under Section 2 of the Plan.
Section 1.7 - "Disability" shall mean Optionee's absence from the full-time
performance of Optionee's duties pursuant to a reasonable determination made in
accordance with the Company's disability plan that Optionee 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 - "Good Reason" shall mean (i) a reduction by the Company in
Optionee's Base Salary, (ii) a material reduction in the aggregate program of
employee benefits and perquisites to which Optionee is entitled (other than a
reduction which affects all executives), (iii) relocation by more than 50 miles
from Optionee's workplace, (iv) any material diminution or material adverse
change in Optionee's duties, responsibilities or reporting relationships, which
causes Optionee to fall below the level of the executive team, or (v) a material
decline in Optionee's Bonus opportunity.
Section 1.9 - "Options" shall mean the non-qualified options to purchase Common
Stock granted under this Agreement.
Section 1.10 - "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 1.11 - "Plan" shall mean the Peabody Energy Corporation Long-Term Equity
Incentive Plan, as from time to time amended.
Section 1.12 - Pronouns - The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
Section 1.13 - "Public Offering" shall mean the sale of shares of any class of
the Company's stock to the public pursuant to an effective registration
statement (other than a registration statement on Form S-4 or S-8 or any similar
or successor form) filed under the Securities Act of 1933 which results in an
Active Trading Market of the lesser of 25% of the outstanding shares of Common
Stock and an aggregate value of securities that are registered equal to $250
million.
Section 1.14 - "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.
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Section 1.15 - "Retirement" shall mean normal retirement at age 62.
Section 1.16 - "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 1.17 - "Termination of Employment" shall mean a termination of the
Optionee's employment with the Company (regardless of the reason therefor).
ARTICLE II
GRANT OF OPTIONS
Section 2.1 - Grant of Options. For good and valuable consideration, the Company
shall grant to the Optionee an Option to purchase any part or all of an
aggregate of the number of shares set forth with respect to each such Option on
the signature page hereof of its Common Stock upon the terms and conditions set
forth in this Agreement.
Section 2.2 - Exercise Price. The exercise price of the shares of Common Stock
covered by the Option shall be such amount per share as set forth on the
signature page hereof, subject to adjustment pursuant to Section 2.4 herein
without commission or other charge.
Section 2.3 - No Obligation of Employment. Nothing in this Agreement or in the
Plan shall confer upon the Optionee 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 Optionee at any
time for any reason whatsoever, with or without Cause.
Section 2.4 - Adjustments in Options.
(a) In the event that the outstanding shares of the stock subject
to an Option 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
shares or other consideration as to which such Option, or portions thereof then
unexercised, shall be exercisable and the exercise price therefor. Any such
adjustment made by the Committee shall be final and binding upon the Optionee,
the Company and all other interested persons.
(b) Upon a Recapitalization Event which is not a Change of
Control, each share of Common Stock subject to an Option shall be entitled to
receive any amounts distributed in connection therewith, as if the Option had
been exercised, and any amounts so distributed shall be applied to the exercise
price of Options until the aggregate amount of such dividend equivalent has been
fully applied.
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ARTICLE III
EXERCISABILITY OF OPTIONS
Section 3.1 - Options. Unless otherwise provided in this Agreement, this Option
shall become exercisable as follows:
Date Option Percentage of Common Stock as to
Becomes Exercisable which Option Is Exercisable
--------------------------- --------------------------------
After the first anniversary 33.33%
of the Grant Date
After the second anniversary 66.67%
of the Grant Date
After the third anniversary 100%
of the Grant Date
This Option shall become exercisable, pursuant to the schedule above, with
respect to the nearest whole number of shares of Common Stock, as determined by
the Committee in its sole discretion.
Section 3.2 - Acceleration Events. Notwithstanding anything in this Article III
to the contrary, this Option shall become fully exercisable early (but only to
the extent such Option has not otherwise terminated or become exercisable) upon
(i) a Termination of Employment on account of death or Disability, (ii) a Change
of Control or (iii) a Recapitalization Event.
Section 3.3 - Effect of Termination of Employment. Except as otherwise provided
in this Article III, no Option shall become exercisable as to any additional
shares of Common Stock following Termination of Employment, and such
unexercisable Option shall terminate immediately.
Section 3.4 - Expiration of Options. This Option may not be exercised to any
extent by Optionee after the first to occur of the following events:
(a) The tenth anniversary of the date hereof; or
(b) The first anniversary of the date of Termination of
Employment (i) by reason of death, Disability, or Retirement or (ii)
without Cause or for Good Reason; or
(c) The date of a Termination of Employment for Cause or
without Good Reason; or
(d) The date of a Termination of Employment for any
reason if the Option exercise price per share of Common Stock, as set
forth on the signature page hereof, is
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higher than the fair market value per share of Common Stock on the date
of the Termination of Employment; or
(e) Upon a Change of Control, the Committee may terminate
this Option, so long as the Optionee is cashed out at the Change of
Control price or is permitted to exercise his Option prior to the
Change of Control.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise. During the lifetime of the Optionee,
only he, or in the event of disability his committee or conservator, may
exercise this Option or any portion thereof. After the death of the Optionee,
any exercisable potion of an Option may, prior to the time when an Option
becomes unexercisable under Section 3.4, be exercised by his beneficiary or
estate.
Section 4.2 - Partial Exercise. Any exercisable portion of this Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.4; provided, however, that any partial exercise
shall be for whole shares of Common Stock only:
Section 4.3 - Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivering to the Secretary of the Company
or designatee or his office (or any third party designated by the Secretary of
the Company to that effect) all of the following prior to the time when the
Option or such portion becomes unexercisable under Section 3.4:
(a) Notice in writing signed by the Optionee or the other
person then entitled to exercise the Option or portion thereof, stating
that the Option or portion thereof is thereby exercised, such notice
complying with all applicable rules established by the Committee;
(b) Full payment (in cash, in Shares, by check or by a
combination thereof) for the shares with respect to which such Option
or portion thereof is exercised;
(c) Full payment to the Company of all amounts which,
under federal, state or local law, it is required to withhold upon
exercise of the Option; and
(d) In the event the Option or portion thereof shall be
exercised pursuant to Section 4.1 by any person or persons other than
the Optionee, appropriate proof of the right of such person or persons
to exercise the option.
Section 4.4 - Conditions to Issuance of Stock Certificates. The shares of Common
Stock deliverable upon the exercise of an Option, or any portion thereof, 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 purchased
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upon the exercise of an Option or portion thereof 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 exercise of the Option as the Committee may from time to time
establish for reasons of administrative convenience.
Section 4.5 - Rights as Stockholder. The holder of an Option shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in respect
of any shares purchasable upon the exercise of the Option or any portion thereof
unless and until certificates representing such shares shall have been issued by
the Company to such holder.
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
Optionee, 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 Options. 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 - Options Not Transferable. Neither the Option nor any interest or
right therein or part thereof shall be liable for the debts, contracts or
engagements of the Optionee 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, or transfers without consideration
to a Permitted Transferee as defined in Section 13 of the Plan.
Section 5.3 - Shares to Be Reserved. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of this Agreement.
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 Optionee 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
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for notices to be given to him. Any notice which is required to be given to the
Optionee shall, if the Optionee is then deceased, be given to the Optionee'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.
Section 5.6 - Applicability of Plan. The Option and the shares of Common Stock
issued to the Optionee upon exercise of the Option shall be subject to all of
the terms and provisions of the Plan, to the extent applicable to the Option 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 Optionee 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 Optionee
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
Optionee hereby submits to the non-exclusive jurisdiction of such courts for the
purpose of any such suit, action, proceeding or judgment. The Optionee 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 Optionee 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.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
PEABODY ENERGY CORPORATION
By
_______________________________
Its
_______________________________
_________________________________________ Aggregate number of shares of Common
[OPTIONEE] Stock for which the Option granted
hereunder is exercisable: ________
_________________________________________ Exercise Price per share of Common
Stock: $________
_________________________________________
_________________________________________
Address
Optionee's Taxpayer Identification Number:
__________-________-________
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