1
EXHIBIT 10.6
ALLIANCE RESOURCE MANAGEMENT GP, LLC
EMPLOYMENT AGREEMENT
AGREEMENT, effective as of the date of closing of the initial public
offering of Alliance Resource Partners, L.P. (the "Effective Date"), among
Alliance Resource Partners, L.P. ("Alliance"), Alliance Resource Holdings, Inc.
("Alliance Holdings"); and
Alliance Resource Management GP, LLC (the "Managing General Partner")
(reference below to the "Company" shall include either or all of Alliance,
Alliance Holdings and the Managing General Partner), and [ ] (the
"Executive").
WHEREAS, the Company wishes to obtain the continued services of the
Executive; WHEREAS, the Executive is willing to commit to continued employment
with the Company on the terms herein provided;
WHEREAS, both the Executive and the Company desire that this Agreement
shall supercede and render invalid any previous employment agreement between
the Executive and Alliance Coal Corporation or its successors;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements of the parties herein contained, the parties hereto agree as
follows:
1. Term.
(a) General. Subject to the provisions for earlier termination
hereinafter provided, the Executive's employment hereunder shall be for a term
commencing on the Effective Date and ending on December 31, 2001 (the
"Agreement Expiration Date"); provided, however, that the Agreement Expiration
Date shall be automatically extended for successive one year periods beginning
on January 1, 2002, and each January 1 thereafter unless the Board of Directors
of the Company (the
2
"Board") or the Executive shall give contrary written notice to the other party
pursuant to the terms of Section 10 below at least twelve (12) months prior to
the date on which the Agreement would otherwise renew.
(b) Non-Renewal by the Company. In the event the Company gives written
notice that it shall not extend the Agreement ("Non-Renewal"), on the earlier
of the Agreement Expiration Date or the last day of employment of the Executive
(unless terminated for Cause as defined below), the Executive shall receive a
payment equal to 135% of the Base Salary as in effect on the payment date (the
"Non-Renewal Payment").
(c) Change in Control. Notwithstanding the foregoing, in the event a
Change in Control of the Company occurs during the Employment Term, the
Employment Term shall continue to the later of the then Agreement Expiration
Date or the end of the twenty-fourth (24th) full calendar month following the
date of the Change in Control. For purposes of this Agreement, a "Change in
Control" of the Company shall be deemed to have occurred if (i)The Beacon Group
LLC or its affiliates, including any funds under its management ("Beacon"), no
longer directly or indirectly owns a controlling interest in the Managing
General Partner or (ii) if the Managing General Partner has sold a significant
portion of the assets of Alliance under its control.
In the event a Non-Renewal notice has been given and thereafter a
Change in Control should occur within one hundred eighty (180) days of the
earlier of the Agreement Expiration Date or the Executive's last day of
employment with the Company (other than a termination for Cause, death or
disability), then the Executive shall receive the payments described in Section
4(d)(v) below, less the Non-Renewal Payment described above, if already paid
out.
2
3
2. Positions and Duties.
During the Employment Term the Executive shall serve as [ ] and
shall perform such employment duties, consistent with his position, as
specified by the Board of Directors of the Company (the "Board") and the Chief
Executive Officer. The Executive shall devote his full productive time, energy
and ability to the proper and efficient conduct of the Company's business. The
Executive may participate as a passive investor in other business enterprises
and engage in such community activities as shall not interfere with the
performance of his obligations hereunder and as are approved in advance by the
Board or the Chief Executive Officer. The Executive shall observe and comply
with all lawful and reasonable rules of conduct set by the Board for executives
of the Company, and shall endeavor to promote the business, reputation and
interests of the Company.
3. Compensation.
(a) Salary. During the Employment Term the Company shall pay the
Executive a base salary of [ ] dollars ($[ ]) per annum, subject to review
annually for such increases as the Board in its sole discretion may determine
(such amount, as so increased in the Board's discretion, being hereinafter
referred to as the "Base Salary"). The Base Salary shall be paid in accordance
with the Company's normal payroll practices.
(b) Other Compensation.
(i) Short-Term Incentive Plan. The Executive shall be entitled to
participate in the Short-term Incentive Plan of the Company (the "SIP") on the
same basis as other similarly situated executives of the Company. The Company
may equitably adjust the SIP in the event of an acquisition by the Company of
ten million dollars ($10,000,000) or more in order to reflect appropriate
changes in earnings before interest, taxes, depreciation and amortization or
other targets.
3
4
(ii) Long-Term Incentive Plan. The Executive shall be entitled to
participate in the Long-term Incentive (the "LTIP") on the same basis as other
similarly situated executives of the Company.
(iii) Changes to Plans. It is understood that the Company may,
from time to time, amend the SIP, the LTIP and any other of its incentive,
compensation and benefit plans and programs (a "Compensation Plan"). However,
the Company shall maintain, with respect to the Executive, plans or programs
relating to annual short-term incentive, long-term incentive and supplemental
pension which provide, in the aggregate, a compensation opportunity equivalent
to the aggregate opportunity currently provided by the SIP, the LTIP and the
Company's Supplemental Executive Retirement Plan (the "SERP").
(c) Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him in the course of his
employment by the Company hereunder, as per Company policies currently in
effect, provided that the Executive properly accounts therefor.
(d) Other Benefits.
(i) The Executive shall be entitled to participate in or receive
benefits on the same basis as other executive officers of the Company under the
Company's employee benefit plans and arrangements for senior management and
their dependents, as applicable, including life insurance plans, pension and
profit-sharing plans (including the SERP), medical and health plans or other
employee welfare benefit plans, annual paid vacation, sick leave, sick pay and
short-term and long-term disability benefits and holidays, as in effect from
time to time.
(ii) Without limiting the generality of the foregoing, the
Executive shall be entitled to reimbursement for expenses of personal financial
advice (including tax preparation, legal
4
5
and estate planning) up to a maximum of three thousand dollars ($3,000) per
year and annual physical examination expenses.
4. Termination.
The Executive's employment by the Company pursuant hereto is subject
to termination during the Employment Term as follows:
(a) Death. The Executive's employment hereunder shall terminate upon
his death. In such event, the Executive's Base Salary shall be paid through the
date of death, and eligibility for all other benefits shall be determined by
the terms of the applicable plan or program.
(b) Disability. The Company may, by written notice to the Executive,
terminate the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from his duties hereunder on a full time basis for six (6) months (the
"Disability Period"). The Executive's Base Salary shall continue to be paid
during the Disability Period and subsequently in accordance with Company
disability policies, and eligibility for all other benefits shall be determined
by the terms of any applicable plan or program.
(c) Termination by the Company for Cause or Executive's Voluntary
Termination. The Company shall be entitled to terminate the Executive's
employment at any time under this Section 4(c), by written notice to the
Executive delivered pursuant to Section 10, if it has "Cause", which shall
mean:
(i) fraud or embezzlement on the part of the Executive;
(ii) conviction of or the entry of a plea of nolo contendere by
the Executive to any felony;
(iii) gross insubordination or a material breach of, or the
willful failure or refusal by the Executive to perform and discharge his
duties, responsibilities or
5
6
obligations under this Agreement (other than by reason of disability or death)
that is not corrected within thirty (30) days following written notice thereof
to the Executive by the Company, such notice to state with specificity the
nature of the breach, failure or refusal; or
(iv) any act of willful misconduct by the Executive which (A) is
intended to result in substantial personal enrichment of the Executive at the
expense of the Company and its affiliates or (B) has a material adverse impact
on the business or reputation of the Company and its affiliates (such
determination to be made by the Board in the good faith exercise of its
reasonable judgment).
In addition, the Executive may terminate employment hereunder
voluntarily at any time by written notice to the Company. In the event of
termination for Cause or by the Executive's voluntary termination, the
Executive's Base Salary and other benefits shall be paid through the Date of
Termination (as hereafter defined), and the Executive shall have no further
rights to compensation or benefits other than as determined by the terms of any
applicable plan or program.
(d) Without Cause. The Company may terminate the Executive's
employment at any time by giving written notice to the Executive of its intent
to terminate this Agreement without Cause. In such event:
(i) the Executive shall be paid Base Salary and other benefits to
which the Executive is entitled through the Date of Termination;
(ii) the Executive shall be paid continuation of Base Salary for a
period of eighteen (18) months, plus a lump sum payment, payable at the end of
the salary continuation period, equal to one hundred fifty percent (150%) of
the highest award of
6
7
incentive compensation paid pursuant to the SIP in the current or three (3)
prior years (which for this purpose shall include payments made by Alliance
Coal Corporation);
(iii) all awards held by the Executive under the LTIP (options and
restricted units) shall become immediately payable and exercisable and any
restrictions on the sale of units shall be lifted.
(iv) the Executive shall be provided, at a cost to the Executive
not greater than the cost prior to termination, the same or equivalent group
health, accident, disability and life insurance coverage as in effect for the
Executive immediately prior to the Date of Termination, until the earlier of
(A) eighteen (18) months following the Date of Termination or (B) the date the
Executive has commenced new employment and has thereby become eligible for
similar benefits; and
(v) Notwithstanding the foregoing, in the event a Change in
Control occurs during the Employment Term or within one hundred eighty (180)
days following the Date of Termination, (i) the payments described in Section
4(d)(ii) above shall be for a period of twenty-four (24) months instead of
eighteen (18) months, for Base Salary and two hundred percent (200%) instead of
one hundred fifty (150%) for incentive compensation (and, at the election of
the Executive within ten (10) days of receipt of the notice of the termination
of his employment (which election shall govern any additional payments due if a
Change in Control occurs after such election), he may receive a lump sum
payment in respect of the Base Salary and incentive compensation payments
discounted at the average interest rate charged on the Company's debt at the
time of such election, such payment to be made within thirty (30) days of the
Date of Termination). Any non-vested restricted units and options previously
granted to the Executive shall be immediately vested and
7
8
exercisable (and if already forfeited, such awards shall be reinstated as
vested awards or the Company, in its discretion, may pay the Executive such
awards in common units or cash) and all restricted units (whether vested or
unvested) held by the Executive under any LTIP shall become immediately payable
by the Company and any restrictions on the sale of such vested units shall be
lifted.
(vi) the Executive shall have such other rights in respect of any
incentive or other compensation plan as may be set forth in such plan.
(e) Good Reason. The Executive shall be entitled to terminate his
employment at any time under this Section 4(e), by written notice to the
Company delivered pursuant to Section 10, if he has "Good Reason", which shall
mean:
(i) reduction in his Base Salary;
(ii) the Company's failure to pay him any compensation due under
this Agreement;
(iii) the Company's failure to continue to provide benefits
substantially similar to those then enjoyed by the Executive unless the Company
provides aggregate benefits equivalent to those then in effect;
(iv) the Company's failure to continue a Compensation Plan or to
continue the Executive's participation in a plan on a basis not materially less
favorable to the Executive, subject to the power of the Board to amend such
plans as provided in Section 3(b)(iii) herein;
(v) the Company's failure, no less than five (5) days prior to any
transaction in which any person is to become a successor to the Company, to
obtain the
8
9
written agreement of such successor to perform this Agreement from and after
such transaction;
(vi) the Company's purported termination of the Executive's
employment for Cause or disability not pursuant to a procedure indicating the
specific provision of this Agreement relied upon by the Company as the basis
for such termination of employment;
(vii) an action whereby Beacon conveys, or agrees to convey
pursuant to a binding agreement, voting control (as contrasted with a
"controlling interest" in Section 1(c)) of the Company to a Strategic
Competitor. For the purposes of this agreement, a "Strategic Competitor" shall
mean any person who directly or indirectly controls or operates a coal mining
business which is in competition with the Company; or
(viii) the receipt of written notice from the Company to not
extend the Employment Term pursuant to Section 1(a) hereof; provided however,
in such event the Executive's remedies shall be limited to those set forth in
Section 1(b) or 1(c) hereof.
The Executive may not terminate for Good Reason unless he has
given written notice delivered pursuant to Section 10 hereof to the Company of
the action or inaction giving rise to Good Reason, and if such action or
inaction is not corrected within thirty (30) days thereafter, such notice to
state with specificity the nature of the breach, failure or refusal.
In the event of termination for Good Reason, except pursuant to
Section 4(e)(viii), the Executive's compensation and other rights shall be the
same as applicable in the event of a termination by the Company without Cause
as described in Section 4(d) above.
9
10
(f) Date of Termination. The date on which a termination pursuant to
this Section 4 becomes effective (the "Date of Termination" or "Termination
Date") shall be:
(i) in the case of a termination pursuant to Sections 4(b), 4(d)
or 4(e) hereof, the date on which the party terminating this Agreement gives
the other party written notice thereof in accordance with Section 10 hereof;
(ii) in the case of a termination pursuant to Section 4(a) hereof,
the date of death of the Executive; or
(iii) in the case of a termination pursuant to Section 4(c), the
later of the date on which written notice is given in accordance with Section
10 hereof or the end of the thirty (30) day "cure" period.
5. Confidential Information.
(a) The Executive recognizes that the services to be performed by him
hereunder are special, unique and extraordinary and that, by reason of his
employment with the Company, he may acquire Confidential Information (as
hereinafter defined) concerning the operation of the Company, the use or
disclosure of which would cause the Company substantial loss and damage which
could not be readily calculated and for which no remedy at law would be
adequate. Accordingly, the Executive agrees that he will not (directly or
indirectly) at any time, whether during or after the Employment Term:
(i) knowingly use for an improper personal benefit any
Confidential Information that he may learn or has learned by reason of his
employment with the Company; or
(ii) disclose any such Confidential Information to any person
except (A) in the performance of his obligations to the Company hereunder, (B)
in connection with the
10
11
enforcement of his rights under this Employment Agreement or (C) with the prior
consent of the Board.
As used herein "Confidential Information" includes information
with respect to the Company's facilities and methods, trade secrets and other
intellectual property, systems, patents and patent applications, procedures,
manuals, confidential reports, financial information, business plans, prospects
or opportunities, personnel information or lists of customers and suppliers;
provided, however, that such term shall not include any information that (x) is
or becomes generally known or available publicly other than as a result of
disclosure by the Executive which is not permitted as described in clause (ii)
above, or (y) the Company discloses to others without obtaining an agreement of
confidentiality.
(b) The Executive confirms that all Confidential Information is the
exclusive property of the Company. All business records, papers and documents
and electronic materials kept or made by the Executive relating to the business
of the Company which comprise Confidential Information shall be and remain the
property of the Company during the Employment Term and all times thereafter.
Upon the termination of his employment with the Company or upon the request of
the Company at any time, the Executive shall promptly deliver to the Company,
and shall retain no copies of, any written or electronic materials, records and
documents made by the Executive or coming into his possession concerning the
business or affairs of the Company and which comprise Confidential Information.
(c) The Executive shall keep the terms of this Agreement strictly
confidential, other than as may be necessary to enforce his rights hereunder or
as otherwise required by
11
12
law and except for estate planning or personal financial reasons; however, the
parties acknowledge that a copy of this Agreement (or a form of executive
agreement) may become public as required by applicable securities laws.
6. Non-Competition.
(a) In the event of termination of the Executive's employment by the
Company without Cause or by the Executive for Good Reason and for a period
equal to the number of months of Base Salary paid pursuant to Section 4(d)(ii)
or Section 4(d)(v) herein (whether or not a lump sum is elected), whichever is
applicable, (the "Restricted Period"), the Executive shall not (i) directly or
indirectly, for his own account or for the account of others, as an officer,
director, stockholder, owner, partner, employee, promoter, consultant, manager
or otherwise participate in the promotion, financing, ownership, operation, or
management of, or assist in or carry on through a proprietorship, corporation,
partnership or other form of business entity or otherwise the, location
development, mining and processing of coal (the "Business"), within the United
States or any other country in which the Company is conducting or is actively
planning to conduct Business as of the date of such termination, or (ii)
solicit or contact in an effort to do business with any person who was a
customer of the Company during the term of this Agreement, or any affiliate of
any such person, if such solicitation or contact is in competition with the
Company. Provided, however, that the Executive may, after the Termination Date,
elect not to be subject to the restrictions of the previous sentence by
delivering written notice to the Company, delivered as provided in Section 10,
irrevocably waiving his right to any future payment of amounts otherwise owing
to him under Sections 4(d)(ii) or Section 4(d)(v) whichever is applicable. Any
violation of the provisions of the first sentence hereof shall cause the
Executive to
12
13
forfeit all right to further compensation under Section 4(d)(ii) or 4(d)(v)
above as applicable. Nothing in this Section 6 shall prohibit the Executive
from acquiring or holding any issue of stock or securities of any person that
has any securities registered under Section 12 of the Securities Exchange Act
of 1934 as amended, listed on a national securities exchange or quoted on the
automated quotation system of the National Association of Securities Dealers,
Inc. so long as (x) the Executive is not deemed to be an "affiliate" of such
person as such term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act of 1933, as amended, and (y) the Executive, members of his
immediate family or persons under his control do not own or hold more than five
percent (5%) of any voting securities of any such person. The provisions of
clause (i) of this Section 6(a) shall not be effective as to any termination
that occurs as a result of and within one hundred eighty (180) days of a Change
in Control.
(b) During the period of his employment and for one year thereafter,
the Executive shall not, whether for his own account or for the account of any
other person (excluding the Company), solicit or induce any of the Company's
employees to leave their employment with the Company or accept employment with
anyone else or hire any such employees.
(c) The Executive has carefully read and considered the provisions of
this Section 6 and, having done so, agrees that the restrictions set forth in
this Section 6 (including the Restricted Period, scope of activity to be
restrained and the geographical scope) are fair and reasonable and are
reasonably required for the protection of the interests of the Company, its
officers, directors, employees, creditors and shareholders. The Executive
understands that the restrictions contained in this Section 6 may limit his
ability
13
14
to engage in a business similar to the Company's business, but acknowledges
that he will receive sufficiently high remuneration and other benefits from the
Company hereunder to justify such restrictions.
7. Breach of Section 5 and Section 6.
The Executive acknowledges that a breach of any of the covenants
contained in Section 5 and Section 6 hereof may result in material, irreparable
injury to the Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries precisely and that,
in the event of such a breach, any payments remaining under the terms of this
Agreement shall cease and the Company shall be entitled to obtain a temporary
restraining order and a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by Section 5 or Section 6
hereof or such other relief as may be required to enforce any of the covenants
contained in Section 5 or Section 6 hereof.
8. Indemnification.
The Company agrees to indemnify the Executive to the fullest
extent permitted by law and shall maintain directors and officers insurance at
levels reasonably satisfactory to the Board.
9. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption
14
15
and agreement prior to the effectiveness of any such succession shall be a
material breach of this Agreement. As used in this Employment Agreement,
"Company" shall mean the Company as defined above and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee or other designee or, if there is no such designee, to the Executive's
estate. This Agreement is personal to the Executive and may not be assigned by
him.
10. Notice.
For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand or mailed by United
States overnight express mail, or nationally recognized private delivery
service on an overnight basis, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
[ ]
[ ]
[ ]
15
16
If to the Company:
Alliance Resource Management GP, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President and Chief Executive Officer
Notices may also be sent to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
11. Withholding.
Anything to the contrary notwithstanding, all payments required to
be made by the Company hereunder to the Executive, his spouse, his estate or
beneficiaries, shall be subject to withholding of such amounts relating to
taxes as the Company may reasonably determine it should withhold pursuant to
any applicable law or regulation. In lieu of withholding such amounts in whole
or in part, the Company may, in its sole discretion, accept other provisions
for payment of taxes as required by law, provided it is satisfied that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.
12. Miscellaneous.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the
16
17
same or at any prior or subsequent time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. This Agreement, upon its Effective Date, shall supercede and render
invalid any prior agreement between the Executive and the Company, Alliance
Coal Corporation or its successors. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
New York
13. Arbitration.
Any controversy or claim arising out of or relating to this
Agreement or the breach thereof, excepting any controversy or claim arising out
of or relating to Sections 5 or 6 of this Agreement or any breach thereof,
shall be settled by arbitration before a panel of three arbitrators
administered by the American Arbitration Association under its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. In any such arbitration, the
arbitrator shall not have the power to reform or modify this Agreement in any
way and to that extent their powers are so limited. Neither party shall resort
to litigation except to enforce or appeal from such arbitration or to enforce
Sections 5 and 6 of this Agreement.
14. Validity.
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
17
18
15. Counterparts.
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
ALLIANCE RESOURCE PARTNERS, L.P.
By: Date:
------------------------------------------ --------------------------
Name:
----------------------------------------
Title:
---------------------------------------
ALLIANCE RESOURCE MANAGEMENT GP, LLC
By: Date:
------------------------------------------ --------------------------
Name:
----------------------------------------
Title:
---------------------------------------
18
19
ALLIANCE RESOURCE HOLDINGS, INC.
By: Date:
------------------------------------------ --------------------------
Name:
----------------------------------------
Title:
---------------------------------------
EXECUTIVE:
By: Date:
------------------------------------------ --------------------------
Name:
----------------------------------------
Title:
---------------------------------------
19