Exhibit 10.1

 

Walter Energy, Inc.
2014 Long-Term Incentive Plan

 

1.                                      Purpose.  The purpose of the Walter
Energy, Inc. 2014 Long-Term Incentive Plan is to provide a means through which
the Company and its Affiliates may attract and retain key personnel and to
provide a means whereby directors, officers, employees, consultants and advisors
(and prospective directors, officers, employees, consultants and advisors) of
the Company and its Affiliates can acquire and maintain an equity interest in
the Company, or be paid incentive compensation, including incentive compensation
measured by reference to the value of Common Stock, thereby strengthening their
commitment to the welfare of the Company and its Affiliates and aligning their
interests with those of the Company’s stockholders.

 

2.                                      Definitions.  The following definitions
shall be applicable throughout the Plan.

 

(a)                                 “Absolute Share Limit” has the meaning given
such term in Section 5(b) of the Plan.

 

(b)                                 “Affiliate” means (i) any person or entity
that directly or indirectly controls, is controlled by or is under common
control with the Company and/or (ii) to the extent provided by the Committee,
any other person or entity in which the Company has a material equity interest. 
The term “control” (including, with correlative meaning, the terms “controlled
by” and “under common control with”), as applied to any person or entity, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting or other securities, by contract or otherwise.

 

(c)                                  “Award” means, individually or
collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based
Award and Performance Compensation Award granted under the Plan.

 

(d)                                 “Board” means the Board of Directors of the
Company.

 

(e)                                  “Cause” has the meaning ascribed to such
term in any employment agreement, offer letter or similar binding agreement by
and between a Service Recipient and a Participant or, if there is no such
agreement or letter or such term is not defined therein, in the case of a
particular Award, unless the applicable Award agreement states otherwise,
“Cause” means (i) the Participant has failed to follow the lawful instructions
of the Board or his or her direct superiors, other than as a result of his or
her incapacity due to physical or mental illness or injury, (ii) the Participant
has engaged or is about to engage in conduct harmful (whether financially,
reputationally or otherwise) to the Company or an Affiliate, (iii) the
Participant has been convicted of, or plead guilty or no contest to, a felony or
any crime involving as a material element fraud or dishonesty, (iv) the willful
misconduct or gross neglect of the Participant that could reasonably be expected
to result in harm (whether financially, reputationally or otherwise) to the
Company or an Affiliate, (v) the willful violation by the Participant of the
Company’s written policies that could reasonably be expected to result in harm
(whether financially, reputationally or otherwise) to the Company or an
Affiliate, (vi) the Participant’s fraud or misappropriation, embezzlement or
misuse of funds or property belonging to the Company or an

 

--------------------------------------------------------------------------------

 

Affiliate (other than good faith expense account disputes), (vii) the
Participant’s act of personal dishonesty which involves personal profit in
connection with the Participant’s employment or service with the Company or an
Affiliate, or (viii) the willful breach by the Participant of fiduciary duty
owed to the Company or an Affiliate.  Any determination of whether Cause exists
shall be made by the Committee in its sole and absolute discretion.

 

(f)                                   “Change in Control” of the Company means
the occurrence of any one or more of the following events:

 

(i)                                     A change in the effective control of the
Company, which occurs only on either of the following dates:

 

(A)                               The date any Person or Group (other than the
Company, any Subsidiary of the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, such
Subsidiary or such proportionately owned corporation), acquires ownership of
stock of the Company representing more than thirty percent (30%) of the total
voting power of the stock of the Company; or

 

(B)                               The date a majority of the members of the
Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board before the
date of the appointment or election.

 

(ii)                             The date any Person or Group (other than the
Company, any Subsidiary of the Company or any corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, such
Subsidiary or such proportionately owned corporation) acquires all or
substantially all of the Company’s assets.

 

(g)                                  “Code” means the Internal Revenue Code of
1986, as amended, and any successor thereto.  Reference in the Plan to any
section of the Code shall be deemed to include any regulations or other
interpretative guidance under such section, and any amendments or successor
provisions to such section, regulations or guidance.

 

(h)                                 “Committee” means the Compensation and Human
Resources Committee of the Board or subcommittee thereof if required with
respect to actions taken to comply with Section 162(m) of the Code in respect of
Awards or, if no such Compensation Committee or subcommittee thereof exists, the
Board; provided, however, that with respect to Awards granted to Non-Employee
Directors, the term “Committee” shall refer to the Board.

 

(i)                                     “Common Stock” means the common stock,
par value $0.01 per share, of the Company (and any stock or other securities
into which such Common Stock may be converted or into which it may be
exchanged).

 

2

--------------------------------------------------------------------------------

 

(j)                                    “Company” means Walter Energy, Inc., a
Delaware corporation, and any successor thereto.

 

(k)                                 “Date of Grant” means the date on which the
granting of an Award is authorized, or such other date as may be specified in
such authorization.

 

(l)                                     “Designated Foreign Subsidiaries” means
all Affiliates organized under the laws of any jurisdiction or country other
than the United States of America that may be designated by the Board or the
Committee from time to time.

 

(m)                                   “Detrimental Activity” means any of the
following: (i) unauthorized disclosure of any confidential or proprietary
information of the Company or its Affiliates; (ii) any activity that would be
grounds to terminate the Participant’s employment or service with the Service
Recipient for Cause; (iii) the breach of any non-competition, non-solicitation
or other agreement containing restrictive covenants, with the Company or its
Affiliates, or (iv) fraud or misconduct contributing to any financial
restatements or irregularities, as determined by the Committee in its sole
discretion.

 

(n)                                       “Disability” has the meaning ascribed
to such term in any employment agreement, offer letter or similar binding
agreement by and between a Service Recipient and a Participant or, if there is
no such agreement or letter or such term is not defined therein, in the case of
a particular Award, unless the Applicable Award agreement states otherwise,
“Disability” means a condition entitling the Participant to receive benefits
under a long-term disability plan of the Company or an Affiliate, or, in the
absence of such a plan, the complete and permanent inability by reason of
illness or accident to perform the duties of the occupation at which a
Participant was employed or served when such disability commenced.  Any
determination of whether Disability exists shall be made by the Company in its
sole and absolute discretion.

 

(o)                                 “Effective Date” means March 4, 2014.

 

(p)                                 “Eligible Director” means a person who is
(i) a “non-employee director” within the meaning of Rule 16b-3 under the
Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of
the Code and (iii) an “independent director” under the rules of the NYSE or any
other securities exchange or inter-dealer quotation system on which the Common
Stock is listed or quoted, or a person meeting any similar requirement under any
successor rule or regulation.

 

(q)                                 “Eligible Person” means any (i) individual
employed by the Company or an Affiliate; provided, however, that no such
employee covered by a collective bargaining agreement shall be an Eligible
Person unless and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument relating
thereto, (ii) director or officer of the Company or an Affiliate,
(iii) consultant or advisor to the Company or an Affiliate who may be offered
securities registrable pursuant to a registration statement on Form S-8 under
the Securities Act, or (iv) any prospective employees, directors, officers,
consultants or advisors who have accepted offers of employment or consultancy
from the Company or one of its Affiliates (and would satisfy the provisions of
clauses (i) through (iii) above once he or she begins employment with or
providing services to the Company or one of its

 

3

--------------------------------------------------------------------------------

 

Affiliates), who, in the case of each of clauses (i) through (iv) above has
entered into an Award agreement or who has received written notification from
the Committee or its designee that they have been selected to participate in the
Plan.  Solely for purposes of this Section 2(q), “Affiliate” shall be limited to
(1) a Subsidiary, (2) any parent corporation of the Company within the meaning
of Section 424(e) of the Code (“Parent”), (3) any corporation, trade or business
of which fifty percent (50%) or more of the combined voting power of such
entity’s outstanding securities is directly or indirectly controlled by the
Company or any Subsidiary or Parent, (4) any corporation, trade or business
which, directly or indirectly, controls fifty percent (50%) or more of the
combined voting power of the outstanding securities of the Company and (5) any
other entity in which the Company or any Subsidiary or Parent has a material
equity interest and which is designated as an “Affiliate” by the Committee.

 

(r)                                    “Exchange Act” means the Securities
Exchange Act of 1934, as amended, and any successor thereto.  Reference in the
Plan to any section of (or rule promulgated under) the Exchange Act shall be
deemed to include any rules, regulations or other interpretative guidance under
such section or rule, and any amendments or successor provisions to such
section, rules, regulations or guidance.

 

(s)                                   “Exercise Price” has the meaning given
such term in Section 7(b) of the Plan.

 

(t)                                    “Fair Market Value” of a share of Common
Stock as of a given date shall be (a) if the Common Stock is traded on the NYSE
or another securities exchange, the mean of the high and low sales prices
(rounded to the nearest $0.01) of a share of Common Stock as reported by the
NYSE or such other exchange on such date, or if shares were not traded on such
date, then on the last preceding date on which a trade occurred; or (b) if the
Common Stock is not traded on the NYSE or another securities exchange, the fair
market value of a share of Common Stock as established by the Committee acting
in good faith based on a reasonable valuation method that is consistent with the
requirements of Section 409A of the Code and all other applicable rules and
regulations.

 

(u)                                 “Immediate Family Members” has the meaning
given such term in Section 14(b) of the Plan.

 

(v)                                 “Incentive Stock Option” means an Option
which is designated by the Committee as an incentive stock option as described
in Section 422 of the Code and otherwise meets the requirements set forth in the
Plan.

 

(w)                               “Minimum Vesting Condition” shall mean, with
respect to any Award, that vesting of (or lapsing of restrictions on) such Award
does not occur any more rapidly than ratably over a three (3) year period, if
the vesting or lapsing of restrictions occurs solely due to the passage of time,
or over a one year period, if the vesting or lapsing of restrictions are subject
to performance vesting conditions.

 

(x)                                 “Indemnifiable Person” has the meaning given
such term in Section 4(e) of the Plan.

 

4

--------------------------------------------------------------------------------

 

(y)                                 “Negative Discretion” means the discretion
authorized by the Plan to be applied by the Committee to eliminate or reduce the
size of a Performance Compensation Award consistent with Section 162(m) of the
Code.

 

(z)                                  “Nonqualified Stock Option” means an Option
which is not designated by the Committee as an Incentive Stock Option.

 

(aa)                          “Non-Employee Director” means a member of the
Board who is not an employee of the Company or any Affiliate.

 

(bb)                          “NYSE” means the New York Stock Exchange.

 

(cc)                            “Option” means an Award granted under Section 7
of the Plan.

 

(dd)                          “Option Period” has the meaning given such term in
Section 7(c) of the Plan.

 

(ee)                            “Other Stock-Based Award” means an Award granted
under Section 10 of the Plan.

 

(ff)                              “Participant” means an Eligible Person who has
been selected by the Committee to participate in the Plan and to receive an
Award pursuant to the Plan.

 

(gg)                            “Performance Compensation Award” means any Award
designated by the Committee as a Performance Compensation Award pursuant to
Section 11 of the Plan.

 

(hh)                          “Performance Criteria” means the criterion or
criteria that the Committee shall select for purposes of establishing the
Performance Goals for a Performance Period with respect to any Performance
Compensation Award under the Plan.

 

(ii)                                  “Performance Formula” means, for a
Performance Period, the one or more objective formulae applied against the
relevant Performance Goal to determine, with regard to the Performance
Compensation Award of a particular Participant, whether all, some portion but
less than all, or none of the Performance Compensation Award has been earned for
the Performance Period.

 

(jj)                                “Performance Goals” means, for a Performance
Period, the one or more goals established by the Committee for the Performance
Period based upon the Performance Criteria.

 

(kk)                          “Performance Period” means the one or more periods
of time of not less than 12 months, as the Committee may select, over which the
attainment of one or more Performance Goals will be measured for the purpose of
determining a Participant’s right to, and the payment of, a Performance
Compensation Award.

 

(ll)                                  “Permitted Transferee” has the meaning
given such term in Section 14(b) of the Plan.

 

(mm)                        “Person” means any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

 

5

--------------------------------------------------------------------------------

 

(nn)                          “Plan” means this Walter Energy, Inc. 2014
Long-Term Incentive Plan, as it may be amended and restated from time to time.

 

(oo)                          “Prior Plan” means the Amended and Restated 2002
Long-Term Incentive Award Plan of Walter Industries, Inc., as it may be amended
from time to time.

 

(pp)                          “Restricted Period” means the period of time
determined by the Committee during which an Award is subject to restrictions or,
as applicable, the period of time within which performance is measured for
purposes of determining whether an Award has been earned.

 

(qq)                          “Restricted Stock” means Common Stock, subject to
certain specified restrictions (which may include, without limitation, a
requirement that the Participant remain continuously employed or provide
continuous services for a specified period of time), granted under Section 9 of
the Plan.

 

(rr)                                “Restricted Stock Unit” means an unfunded
and unsecured promise to deliver shares of Common Stock, cash, other securities
or other property, subject to certain restrictions (which may include, without
limitation, a requirement that the Participant remain continuously employed or
provide continuous services for a specified period of time), granted under
Section 9 of the Plan.

 

(ss)                              “SAR Period” has the meaning given such term
in Section 8(c) of the Plan.

 

(tt)                                “Securities Act” means the Securities Act of
1933, as amended, and any successor thereto.  Reference in the Plan to any
section of (or rule promulgated under) the Securities Act shall be deemed to
include any rules, regulations or other interpretative guidance under such
section or rule, and any amendments or successor provisions to such section,
rules, regulations or guidance.

 

(uu)                          “Service Recipient” means, with respect to a
Participant holding a given Award, either the Company or an Affiliate of the
Company by which the original recipient of such Award is, or following a
Termination was most recently, principally employed or to which such original
recipient provides, or following a Termination was most recently providing,
services, as applicable.

 

(vv)                          “Stock Appreciation Right” or “SAR” means an Award
granted under Section 8 of the Plan.

 

(ww)                      “Strike Price” has the meaning given such term in
Section 8(b) of the Plan.

 

(xx)                          “Subsidiary” means, with respect to any specified
Person:

 

(i)                                     any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
such entity’s voting securities (without regard to the occurrence of any
contingency and after giving effect to any voting agreement or stockholders’
agreement that effectively transfers voting power) is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

 

6

--------------------------------------------------------------------------------

 

(ii)                                  any partnership (or any comparable foreign
entity) (A) the sole general partner (or functional equivalent thereof) or the
managing general partner of which is such Person or Subsidiary of such Person or
(B) the only general partners (or functional equivalents thereof) of which are
that Person or one or more Subsidiaries of that Person (or any combination
thereof).

 

(yy)                          “Substitute Award” has the meaning given such term
in Section 5(e) of the Plan.

 

(zz)                            “Sub-Plans” means, any sub-plan to this Plan
that has been adopted by the Board or the Committee for the purpose of
permitting the offering of Awards to employees of certain Designated Foreign
Subsidiaries or otherwise outside the United States of America, with each such
sub-plan designed to comply with local laws applicable to offerings in such
foreign jurisdictions.  Although any Sub-Plan may be designated a separate and
independent plan from the Plan in order to comply with applicable local laws,
the Absolute Share Limit shall apply in the aggregate to the Plan and any
Sub-Plan adopted hereunder.

 

(aaa)                         “Termination” means the termination of a
Participant’s employment or service, as applicable, with the Service Recipient.

 

3.                                      Effective Date; Duration.  The Plan
shall be effective as of the Effective Date, subject to approval of the
Company’s stockholders.  The expiration date of the Plan, on and after which
date no Awards may be granted hereunder, shall be the tenth anniversary of the
Effective Date; provided, however, that such expiration shall not affect Awards
then outstanding, and the terms and conditions of the Plan shall continue to
apply to such Awards.

 

4.                                      Administration.

 

(a)                           The Committee shall administer the Plan.  To the
extent required to comply with the provisions of Rule 16b-3 promulgated under
the Exchange Act (if the Board is not acting as the Committee under the Plan) or
necessary to obtain the exception for performance-based compensation under
Section 162(m) of the Code, as applicable, it is intended that each member of
the Committee shall, at the time he or she takes any action with respect to an
Award under the Plan, be an Eligible Director.  However, the fact that a
Committee member shall fail to qualify as an Eligible Director shall not
invalidate any Award granted by the Committee that is otherwise validly granted
under the Plan.

 

(b)                           Subject to the provisions of the Plan and
applicable law, the Committee shall have the sole and plenary authority, in
addition to other express powers and authorizations conferred on the Committee
by the Plan, to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to a Participant; (iii) determine the number of shares of
Common Stock to be covered by, or with respect to which payments, rights, or
other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what extent,
and under what circumstances Awards may be settled or exercised in cash, shares
of Common Stock, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances the delivery of cash, shares of
Common Stock, other securities, other Awards or

 

7

--------------------------------------------------------------------------------

 

other property and other amounts payable with respect to an Award shall be
deferred either automatically or at the election of the Participant or of the
Committee; (vii) interpret, administer, reconcile any inconsistency in, correct
any defect in and/or supply any omission in the Plan and any instrument or
agreement relating to, or Award granted under, the Plan; (viii) establish,
amend, suspend, or waive any rules and regulations and appoint such agents as
the Committee shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.

 

(c)                            Except to the extent prohibited by applicable law
or the applicable rules and regulations of any securities exchange or
inter-dealer quotation system on which the securities of the Company are listed
or traded, the Committee may allocate all or any portion of its responsibilities
and powers to any one or more of its members and may delegate all or any part of
its responsibilities and powers to any person or persons selected by it.  Any
such allocation or delegation may be revoked by the Committee at any time. 
Without limiting the generality of the foregoing, the Committee may delegate to
one or more officers of the Company or any Subsidiary the authority to act on
behalf of the Committee with respect to any matter, right, obligation, or
election which is the responsibility of or which is allocated to the Committee
herein, and which may be so delegated as a matter of law, except for grants of
Awards to persons (i) who are Non-Employee Directors or otherwise are subject to
Section 16 of the Exchange Act or (ii) who are, or who are reasonably expected
to be, “covered employees” for purposes of Section 162(m) of the Code.

 

(d)                           Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or
with respect to the Plan or any Award or any documents evidencing Awards granted
pursuant to the Plan shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive and binding upon all persons
or entities, including, without limitation, the Company, any of its Affiliates,
any Participant, any holder or beneficiary of any Award, and any stockholder of
the Company.

 

(e)                            No member of the Board, the Committee or any
employee or agent of the Company (each such person, an “Indemnifiable Person”)
shall be liable for any action taken or omitted to be taken or any determination
made with respect to the Plan or any Award hereunder (unless constituting fraud
or a willful criminal act or omission).  Each Indemnifiable Person shall be
indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense (including attorneys’ fees) that may be imposed upon or
incurred by such Indemnifiable Person in connection with or resulting from any
action, suit or proceeding to which such Indemnifiable Person may be a party or
in which such Indemnifiable Person may be involved by reason of any action taken
or omitted to be taken or determination made under the Plan or any Award
agreement and against and from any and all amounts paid by such Indemnifiable
Person with the Company’s approval, in settlement thereof, or paid by such
Indemnifiable Person in satisfaction of any judgment in any such action, suit or
proceeding against such Indemnifiable Person, and the Company shall advance to
such Indemnifiable Person any such expenses promptly upon written request (which
request shall include an undertaking by the Indemnifiable Person to repay the
amount of such advance if it shall ultimately be determined as provided below
that the Indemnifiable Person is not entitled to be indemnified); provided that
the Company shall have the right, at its own expense, to assume and

 

8

--------------------------------------------------------------------------------

 

defend any such action, suit or proceeding and once the Company gives notice of
its intent to assume the defense, the Company shall have sole control over such
defense with counsel of the Company’s choice.  The foregoing right of
indemnification shall not be available to an Indemnifiable Person to the extent
that a final judgment or other final adjudication (in either case not subject to
further appeal) binding upon such Indemnifiable Person determines that the acts
or omissions or determinations of such Indemnifiable Person giving rise to the
indemnification claim resulted from such Indemnifiable Person’s fraud or willful
criminal act or omission or that such right of indemnification is otherwise
prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. 
The foregoing right of indemnification shall not be exclusive of or otherwise
supersede any other rights of indemnification to which such Indemnifiable
Persons may be entitled under the Company’s Certificate of Incorporation or
Bylaws, as a matter of law, individual indemnification agreement or contract or
otherwise, or any other power that the Company may have to indemnify such
Indemnifiable Persons or hold them harmless.

 

(f)                             Notwithstanding anything to the contrary
contained in the Plan, the Board may, in its sole discretion, at any time and
from time to time, grant Awards and administer the Plan with respect to such
Awards.  Any such actions by the Board shall be subject to the applicable
rules of the NYSE or any other securities exchange or inter-dealer quotation
system on which the Common Stock is listed or quoted.  In any such case, the
Board shall have all the authority granted to the Committee under the Plan.

 

5.                                      Grant of Awards; Shares Subject to the
Plan; Limitations.

 

(a)                           The Committee may, from time to time, grant Awards
to one or more Eligible Persons.

 

(b)                                 Awards granted under the Plan shall be
subject to the following limitations: (i) subject to Section 12 of the Plan, no
more than 4,300,000 shares of Common Stock (the “Absolute Share Limit”) shall be
available for Awards under the Plan, provided that (x) any shares of Common
Stock subject to such Awards other than Options or SARs shall be counted against
this limit as 1.47 shares of Common Stock for every one (1) share of Common
Stock granted, and (y) any shares of Common Stock subject to such Awards of
Options or SARs shall be counted against this limit as one (1) share of Common
Stock for every one (1) share of Common Stock granted; (ii) subject to
Section 12 of the Plan, grants of Options or SARs under the Plan in respect of
no more than 1,500,000 shares of Common Stock may be made to any individual
Participant during any single fiscal year of the Company (for this purpose, if a
SAR is granted in tandem with an Option (such that the SAR expires with respect
to the number of shares of Common Stock for which the Option is exercised), only
the shares underlying the Option shall count against this limitation);
(iii) subject to Section 12 of the Plan, no more than the number of shares of
Common Stock equal to the Absolute Share Limit may be issued in the aggregate
pursuant to the exercise of Incentive Stock Options granted under the Plan;
(iv) subject to Section 12 of the Plan, no more than 500,000 shares of Common
Stock may be issued in respect of Performance Compensation Awards denominated in
shares of Common Stock granted pursuant to Section 11 of the Plan to any
individual Participant for a single fiscal year during a Performance Period (or
with respect to each single fiscal year in the event a Performance Period
extends beyond a single fiscal year), or in the event such share

 

9

--------------------------------------------------------------------------------

 

denominated Performance Compensation Award is paid in cash, other securities,
other Awards or other property, no more than the Fair Market Value of such
shares of Common Stock on the last day of the Performance Period to which such
Award relates; (v) the maximum number of shares of Common Stock subject to
Awards granted during a single fiscal year to any Non-Employee Director, taken
together with any cash fees paid to such Non-Employee Director during the fiscal
year, shall not exceed $600,000 in total value (calculating the value of any
such Awards based on the grant date fair value of such Awards for financial
reporting purposes and excluding, for this purpose, the value of any dividend
equivalent payments paid pursuant to any Award granted in a previous fiscal
year); and (vi) the maximum amount that can be paid to any individual
Participant for a single fiscal year during a Performance Period (or with
respect to each single fiscal year in the event a Performance Period extends
beyond a single fiscal year) pursuant to a Performance Compensation Award
denominated in cash (described in Section 11(a) of the Plan) shall be
$3,000,000.

 

(c)                            Shares of Common Stock shall be deemed to have
been issued in settlement of Awards whether or not they are actually delivered
or the Fair Market Value equivalent of such shares is paid in cash; provided,
however, that no shares shall be deemed to have been issued in settlement of a
SAR that settles only in cash; provided, further that in no event shall such
shares increase the number of shares of Common Stock that may be delivered
pursuant to Incentive Stock Options granted under the Plan.  In no event shall
(i) shares tendered or withheld on the exercise of Options or other Award for
the payment of the exercise or purchase price or withholding taxes, (ii) shares
not issued upon the settlement of a SAR that settles in shares of Common Stock,
or (iii) shares purchased on the open market with cash proceeds from the
exercise of Options, in each case, again become available for other Awards under
the Plan.  If and to the extent an Award under the Plan expires, terminates or
is canceled or forfeited for any reason whatsoever, the shares covered by such
Award shall again become available for other Awards under the Plan in accordance
with Section 5(f).

 

(d)                           Shares of Common Stock issued by the Company in
settlement of Awards may be authorized and unissued shares, shares held in the
treasury of the Company, shares purchased on the open market or by private
purchase or a combination of the foregoing.  Following the Effective Date, no
further awards shall be granted under the Prior Plan.

 

(e)                            Awards may, in the sole discretion of the
Committee, be granted under the Plan in assumption of, or in substitution for,
outstanding awards previously granted by an entity directly or indirectly
acquired by the Company or with which the Company combines (“Substitute
Awards”).  Substitute Awards shall not be counted against the Absolute Share
Limit; provided, that Substitute Awards issued in connection with the assumption
of, or in substitution for, outstanding options intended to qualify as
“incentive stock options” within the meaning of Section 422 of the Code shall be
counted against the aggregate number of shares of Common Stock available for
Awards of Incentive Stock Options under the Plan.  Subject to applicable stock
exchange requirements, available shares under a stockholder approved plan of an
entity directly or indirectly acquired by the Company or with which the Company
combines (as appropriately adjusted to reflect the acquisition or combination
transaction) may be used for Awards under the Plan and shall not reduce the
number of shares of Common Stock available for issuance under the Plan.

 

10

--------------------------------------------------------------------------------

 

(f)                             Each share of Common Stock that again becomes
available for grant pursuant to this Section 5 shall be added back as (i) one
(1) share of Common Stock if such shares were subject to Options or SARs, and
(ii) as 1.47 shares of Common Stock if such shares were subject to Awards other
than Options or SARs.

 

6.                                      Eligibility.  Participation in the Plan
shall be limited to Eligible Persons.

 

7.                                      Options.

 

(a)                           General.  Each Option granted under the Plan shall
be evidenced by an Award agreement, in written or electronic form, which
agreement need not be the same for each Participant.  Each Option so granted
shall be subject to the conditions set forth in this Section 7, and to such
other conditions not inconsistent with the Plan as may be reflected in the
applicable Award agreement.  All Options granted under the Plan shall be
Nonqualified Stock Options unless the applicable Award agreement expressly
states that the Option is intended to be an Incentive Stock Option.  Incentive
Stock Options shall be granted only to Eligible Persons who are employees of the
Company and its Affiliates, and no Incentive Stock Option shall be granted to
any Eligible Person who is ineligible to receive an Incentive Stock Option under
the Code.  No Option shall be treated as an Incentive Stock Option unless the
Plan has been approved by the stockholders of the Company in a manner intended
to comply with the stockholder approval requirements of Section 422(b)(1) of the
Code, provided that any Option intended to be an Incentive Stock Option shall
not fail to be effective solely on account of a failure to obtain such approval,
but rather such Option shall be treated as a Nonqualified Stock Option unless
and until such approval is obtained.  In the case of an Incentive Stock Option,
the terms and conditions of such grant shall be subject to and comply with such
rules as may be prescribed by Section 422 of the Code.  If for any reason an
Option intended to be an Incentive Stock Option (or any portion thereof) shall
not qualify as an Incentive Stock Option, then, to the extent of such
nonqualification, such Option or portion thereof shall be regarded as a
Nonqualified Stock Option appropriately granted under the Plan.

 

(b)                           Exercise Price.  Except as otherwise provided by
the Committee in the case of Substitute Awards, the exercise price (“Exercise
Price”) per share of Common Stock for each Option shall not be less than 100% of
the Fair Market Value of such share (determined as of the Date of Grant);
provided, however, that in the case of an Incentive Stock Option granted to an
employee who, at the time of the grant of such Option, owns stock representing
more than 10% of the voting power of all classes of stock of the Company or any
Affiliate, the Exercise Price per share shall be no less than 110% of the Fair
Market Value per share on the Date of Grant.

 

(c)                            Vesting and Expiration.

 

(i)                                     Options shall vest and become
exercisable in such manner and on such date or dates determined by the Committee
and shall expire after such period, not to exceed ten years, as may be
determined by the Committee (the “Option Period”); provided, that if the Option
Period (other than in the case of an Incentive Stock Option) would expire at a
time when trading in the shares of Common Stock is prohibited by the Company’s
insider trading policy (or Company-imposed “blackout period”), the Option Period
shall be automatically extended until the 30th day following the expiration of
such

 

11

--------------------------------------------------------------------------------

 

prohibition; provided, however, that in no event shall the Option Period exceed
five years from the Date of Grant in the case of an Incentive Stock Option
granted to a Participant who on the Date of Grant owns stock representing more
than 10% of the voting power of all classes of stock of the Company or any
Affiliate.

 

(ii)                                  Unless otherwise provided by the Committee
in an Award agreement or otherwise, in the event of (A) a Participant’s
Termination by the Service Recipient for Cause, all outstanding Options granted
to such Participant shall immediately terminate and expire, (B) a Participant’s
Termination due to death or Disability, each outstanding unvested Option granted
to such Participant shall immediately terminate and expire, and each outstanding
vested Option shall remain exercisable for three (3) years thereafter (but in no
event beyond the expiration of the Option Period) and (C) a Participant’s
Termination for any other reason, each outstanding unvested Option granted to
such Participant shall immediately terminate and expire, and each outstanding
vested Option shall remain exercisable for ninety (90) days thereafter (but in
no event beyond the expiration of the Option Period).

 

(d)                           Method of Exercise and Form of Payment.  No shares
of Common Stock shall be issued pursuant to any exercise of an Option until
payment in full of the Exercise Price therefor is received by the Company and
the Participant has paid to the Company an amount equal to any Federal, state,
local and non-U.S.  income, employment and any other applicable taxes required
to be withheld.  Options which have become exercisable may be exercised by
delivery of written or electronic notice of exercise to the Company (or
telephonic instructions to the extent provided by the Committee) in accordance
with the terms of the Option accompanied by payment of the Exercise Price.  The
Exercise Price shall be payable (i) in cash, check, cash equivalent and/or
shares of Common Stock valued at the Fair Market Value at the time the Option is
exercised (including, pursuant to procedures approved by the Committee, by means
of attestation of ownership of a sufficient number of shares of Common Stock in
lieu of actual issuance of such shares to the Company); provided, that such
shares of Common Stock are not subject to any pledge or other security interest;
or (ii) by such other method as the Committee may permit in its sole discretion,
including without limitation: (A) in other property having a fair market value
on the date of exercise equal to the Exercise Price; (B) if there is a public
market for the shares of Common Stock at such time, by means of a
broker-assisted “cashless exercise” pursuant to which the Company is delivered
(including telephonically to the extent permitted by the Committee) a copy of
irrevocable instructions to a stockbroker to sell the shares of Common Stock
otherwise issuable upon the exercise of the Option and to deliver promptly to
the Company an amount equal to the Exercise Price; or (C) a “net exercise”
procedure effected by withholding the minimum number of shares of Common Stock
otherwise issuable in respect of an Option that are needed to pay the Exercise
Price and all applicable required withholding and any other applicable taxes. 
Any fractional shares of Common Stock shall be settled in cash.

 

(e)                            Notification upon Disqualifying Disposition of an
Incentive Stock Option.  Each Participant awarded an Incentive Stock Option
under the Plan shall notify the Company in writing immediately after the date he
or she makes a disqualifying disposition of any Common Stock acquired pursuant
to the exercise of such Incentive Stock Option.  A disqualifying disposition is
any disposition (including, without limitation, any sale) of such Common Stock

 

12

--------------------------------------------------------------------------------

 

before the later of (A) two years after the Date of Grant of the Incentive Stock
Option or (B) one year after the date of exercise of the Incentive Stock
Option.  The Company may, if determined by the Committee and in accordance with
procedures established by the Committee, retain possession, as agent for the
applicable Participant, of any Common Stock acquired pursuant to the exercise of
an Incentive Stock Option until the end of the period described in the preceding
sentence, subject to complying with any instructions from such Participant as to
the sale of such Common Stock.

 

(f)                             Compliance With Laws, etc.  Notwithstanding the
foregoing, in no event shall a Participant be permitted to exercise an Option in
a manner which the Committee determines would violate the Sarbanes-Oxley Act of
2002, as it may be amended from time to time, or any other applicable law or the
applicable rules and regulations of the Securities and Exchange Commission or
the applicable rules and regulations of any securities exchange or inter-dealer
quotation system on which the securities of the Company are listed or traded.

 

8.                                      Stock Appreciation Rights.

 

(a)                           General.  Each SAR granted under the Plan shall be
evidenced by an Award agreement.  Each SAR so granted shall be subject to the
conditions set forth in this Section 8, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement.  Any Option granted under the Plan may include tandem SARs.  The
Committee also may award SARs to Eligible Persons independent of any Option.

 

(b)                           Strike Price.  Except as otherwise provided by the
Committee in the case of Substitute Awards, the strike price (“Strike Price”)
per share of Common Stock for each SAR shall not be less than 100% of the Fair
Market Value of such share (determined as of the Date of Grant). 
Notwithstanding the foregoing, a SAR granted in tandem with (or in substitution
for) an Option previously granted shall have a Strike Price equal to the
Exercise Price of the corresponding Option.

 

(c)                            Vesting and Expiration.

 

(i)                                     A SAR granted in connection with an
Option shall become exercisable and shall expire according to the same vesting
schedule and expiration provisions as the corresponding Option.  A SAR granted
independent of an Option shall vest and become exercisable and shall expire in
such manner and on such date or dates determined by the Committee and shall
expire after such period, not to exceed ten years, as may be determined by the
Committee (the “SAR Period”); provided, that if the SAR Period would expire at a
time when trading in the shares of Common Stock is prohibited by the Company’s
insider trading policy (or Company-imposed “blackout period”), the SAR Period
shall be automatically extended until the 30th day following the expiration of
such prohibition.

 

(ii)                                  Unless otherwise provided by the Committee
in an Award agreement or otherwise, in the event of (A) a Participant’s
Termination by the Service Recipient for Cause, all outstanding SARs granted to
such Participant shall immediately terminate and expire, (B) a Participant’s
Termination due to death or Disability, each outstanding

 

13

--------------------------------------------------------------------------------

 

unvested SAR granted to such Participant shall immediately terminate and expire,
and each outstanding vested SAR shall remain exercisable for three (3) years
thereafter (but in no event beyond the expiration of the SAR Period) and (C) a
Participant’s Termination for any other reason, each outstanding unvested SAR
granted to such Participant shall immediately terminate and expire, and each
outstanding vested SAR shall remain exercisable for ninety (90) days thereafter
(but in no event beyond the expiration of the SAR Period).

 

(d)                           Method of Exercise.  SARs which have become
exercisable may be exercised by delivery of written or electronic notice of
exercise to the Company in accordance with the terms of the Award, specifying
the number of SARs to be exercised and the date on which such SARs were awarded.

 

(e)                            Payment.  Upon the exercise of a SAR, the Company
shall pay to the Participant an amount equal to the number of shares subject to
the SAR that are being exercised multiplied by the excess of the Fair Market
Value of one share of Common Stock on the exercise date over the Strike Price,
less an amount equal to any Federal, state, local and non-U.S.  income,
employment and any other applicable taxes required to be withheld.  The Company
shall pay such amount in cash, in shares of Common Stock valued at Fair Market
Value, or any combination thereof, as determined by the Committee.  Any
fractional shares of Common Stock shall be settled in cash.

 

(f)                             Substitution of SARs for Nonqualified Stock
Options.  The Committee shall have the authority in its sole discretion to
substitute, without the consent of the affected Participant or any holder or
beneficiary of SARs, SARs settled in shares of Common Stock (or settled in
shares or cash in the sole discretion of the Committee) for outstanding
Nonqualified Stock Options, provided that (i) the substitution shall not
otherwise result in a modification of the terms of any such Nonqualified Stock
Option, (ii) the number of shares of Common Stock underlying the substituted
SARs shall be the same as the number of shares of Common Stock underlying such
Nonqualified Stock Options and (iii) the Strike Price of the substituted SARs
shall be equal to the Exercise Price of such Nonqualified Stock Options.

 

9.                                      Restricted Stock and Restricted Stock
Units.

 

(a)                                 General.  Each grant of Restricted Stock and
Restricted Stock Units shall be evidenced by an Award agreement.  Each
Restricted Stock and Restricted Stock Unit grant shall be subject to the
conditions set forth in this Section 9, and to such other conditions not
inconsistent with the Plan as may be reflected in the applicable Award
agreement.

 

(b)                           Stock Certificates and Book Entry; Escrow or
Similar Arrangement.  Upon the grant of Restricted Stock, the Committee shall
cause a stock certificate registered in the name of the Participant to be issued
or shall cause share(s) of Common Stock to be registered in the name of the
Participant and held in book-entry form subject to the Company’s directions and,
if the Committee determines that the Restricted Stock shall be held by the
Company or in escrow rather than issued to the Participant pending the release
of the applicable restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (i) an escrow agreement
satisfactory to the Committee, if applicable, and (ii) the appropriate stock

 

14

--------------------------------------------------------------------------------

 

power (endorsed in blank) with respect to the Restricted Stock covered by such
agreement.  If a Participant shall fail to execute and deliver (in a manner
permitted under Section 14(a) of the Plan or as otherwise determined by the
Committee) an agreement evidencing an Award of Restricted Stock and, if
applicable, an escrow agreement and blank stock power within the amount of time
specified by the Committee, the Award shall be null and void.  Subject to the
restrictions set forth in this Section 9 and the applicable Award agreement, the
Participant generally shall have the rights and privileges of a stockholder as
to such Restricted Stock, including, without limitation, the right to vote such
Restricted Stock (provided that if the lapsing of restrictions with respect to
any grant of Restricted Stock is contingent on satisfaction of performance
conditions (other than or in addition to the passage of time), any dividends
payable on such shares of Restricted Stock shall be held by the Company and
issued (without interest) to the Participant within fifteen (15) days following
the date on which the restrictions on such Restricted Stock lapse (and the right
to any such accumulated dividends shall be forfeited upon the forfeiture of the
Restricted Stock to which such dividends relate)).  To the extent shares of
Restricted Stock are forfeited, any stock certificates issued to the Participant
evidencing such shares shall be returned to the Company, and all rights of the
Participant to such shares and as a stockholder with respect thereto shall
terminate without further obligation on the part of the Company.

 

(c)                            Vesting.  The Restricted Period with respect to
Restricted Stock and Restricted Stock Units shall lapse in such manner and on
such date or dates determined by the Committee, and the Committee shall
determine the treatment of the unvested portion of Restricted Stock and
Restricted Stock Units upon Termination of the Participant granted the
applicable Award.  Grants of Restricted Stock and Restricted Stock Units that
are settled in shares of Common Stock shall comply with the Minimum Vesting
Condition; provided that the Minimum Vesting Condition need not be applied to
Restricted Stock or Restricted Stock Units (i) issued to any person newly
employed by or retained to perform services for the Company or any of its
Affiliates, (ii) in the event of death, Disability or retirement or in
connection with a corporate transaction (which includes, but is not limited to,
a Change in Control, a divestiture, spin-off, split-off, asset transfer,
outsourcing or joint venture formation), in each case, as the Committee may
otherwise determine, or (iii) granted through the assumption of, or substitution
for, outstanding awards previously granted by a company acquired by the Company
or any of its Affiliates or with which the Company or any of its Affiliates
combines.

 

(d)                                 Issuance of Restricted Stock and Settlement
of Restricted Stock Units.

 

(i)                                     Upon the expiration of the Restricted
Period with respect to any shares of Restricted Stock, the restrictions set
forth in the applicable Award agreement shall be of no further force or effect
with respect to such shares, except as set forth in the applicable Award
agreement.  If an escrow arrangement is used, upon such expiration, the Company
shall issue to the Participant, or his or her beneficiary, without charge, the
stock certificate (or, if applicable, a notice evidencing a book entry notation)
evidencing the shares of Restricted Stock which have not then been forfeited and
with respect to which the Restricted Period has expired (rounded down to the
nearest full share).  Dividends, if any, that may have been withheld by the
Committee and attributable to any particular share of Restricted Stock shall be
distributed to the Participant in cash or, at the sole discretion of the
Committee, in shares of Common Stock having a Fair Market Value (on

 

15

--------------------------------------------------------------------------------

 

the date of distribution) equal to the amount of such dividends, upon the
release of restrictions on such share and, if such share is forfeited, the
Participant shall have no right to such dividends.

 

(ii)                                  Unless otherwise provided by the Committee
in an Award agreement or otherwise, upon the expiration of the Restricted Period
with respect to any outstanding Restricted Stock Units, the Company shall issue
to the Participant, or his or her beneficiary, without charge, one share of
Common Stock (or other securities or other property, as applicable) for each
such outstanding Restricted Stock Unit; provided, however, that the Committee
may, in its sole discretion, elect to (i) pay cash or part cash and part shares
of Common Stock in lieu of issuing only shares of Common Stock in respect of
such Restricted Stock Units or (ii) defer the issuance of shares of Common Stock
(or cash or part shares of Common Stock and part cash, as the case may be)
beyond the expiration of the Restricted Period if such extension would not cause
adverse tax consequences under Section 409A of the Code.  If a cash payment is
made in lieu of issuing shares of Common Stock, the amount of such payment shall
be equal to the Fair Market Value of the Common Stock as of the date on which
the Restricted Period lapsed with respect to such Restricted Stock Units.  To
the extent provided in an Award agreement, the holder of outstanding Restricted
Stock Units shall be entitled to be credited with dividend equivalent payments
(upon the payment by the Company of dividends on shares of Common Stock) either
in cash or, at the sole discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to the amount of such dividends (and interest
may, at the sole discretion of the Committee, be credited on the amount of cash
dividend equivalents at a rate and subject to such terms as determined by the
Committee), which accumulated dividend equivalents (and interest thereon, if
applicable) shall be payable at the same time as the underlying Restricted Stock
Units are settled following the release of restrictions on such Restricted Stock
Units, and, if such Restricted Stock Units are forfeited, the Participant shall
have no right to such dividend equivalent payments.

 

(e)                            Legends on Restricted Stock.  Each certificate,
if any, representing Restricted Stock awarded under the Plan, if any, shall bear
a legend substantially in the form of the following, in addition to any other
information the Company deems appropriate, until the lapse of all restrictions
with respect to such shares of Common Stock:

 

TRANSFER OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY IS RESTRICTED
PURSUANT TO THE TERMS OF THE WALTER ENERGY, INC. 2014 LONG-TERM INCENTIVE PLAN
AND A RESTRICTED STOCK AWARD AGREEMENT, BETWEEN WALTER ENERGY, INC. AND
PARTICIPANT.  A COPY OF SUCH PLAN AND AWARD AGREEMENT IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICES OF WALTER ENERGY, INC.

 

10.                               Other Stock-Based Awards.  The Committee may
issue unrestricted Common Stock, rights to receive grants of Awards at a future
date, or other Awards denominated in Common Stock (including, without
limitation, performance shares or performance units), under the Plan to Eligible
Persons, alone or in tandem with other Awards, in such amounts as the

 

16

--------------------------------------------------------------------------------

 

Committee shall from time to time in its sole discretion determine.  Each Other
Stock-Based Award granted under the Plan shall be evidenced by an Award
agreement.  Each Other Stock-Based Award so granted shall be subject to such
conditions not inconsistent with the Plan as may be reflected in the applicable
Award agreement, including, without limitation, those set forth in
Section 14(c) of the Plan.  Grants of Other Stock-Based Awards that are settled
in shares of Common Stock shall comply with the Minimum Vesting Condition;
provided, that the Minimum Vesting Condition need not be applied to Other
Stock-Based Awards (i) issued to any person newly employed by or retained to
perform services for the Company or any of its Affiliates, (ii) in the event of
death, Disability or retirement or in connection with a corporate transaction
(which includes, but is not limited to, a Change in Control, a divestiture,
spin-off, split-off, asset transfer, outsourcing or joint venture formation), in
each case, as the Committee may otherwise determine, or (iii) granted through
the assumption of, or substitution for, outstanding awards previously granted by
a company acquired by the Company or any of its Affiliates or with which the
Company or any of its Affiliates combines.

 

11.                               Performance Compensation Awards.

 

(a)                                 General.  The Committee shall have the
authority, at or before the time of grant of any Award, to designate such Award
as a Performance Compensation Award intended to qualify as “performance-based
compensation” under Section 162(m) of the Code.  The Committee shall also have
the authority to make an award of a cash bonus to any Participant and designate
such Award as a Performance Compensation Award intended to qualify as
“performance-based compensation” under Section 162(m) of the Code. 
Notwithstanding anything in the Plan to the contrary, if the Company determines
that a Participant who has been granted an Award designated as a Performance
Compensation Award is not (or is no longer) a “covered employee” (within the
meaning of Section 162(m) of the Code), the terms and conditions of such Award
may be modified without regard to any restrictions or limitations set forth in
this Section 11 (but subject otherwise to the provisions of Section 13 of the
Plan).

 

(b)                           Discretion of Committee with Respect to
Performance Compensation Awards.  With regard to a particular Performance
Period, the Committee shall have sole discretion to select the length of such
Performance Period, the type(s) of Performance Compensation Awards to be issued,
the Performance Criteria that will be used to establish the Performance Goal(s),
the kind(s) and/or level(s) of the Performance Goal(s) that is (are) to apply
and the Performance Formula.  Within the first ninety (90) days of a Performance
Period (or, within any other maximum period allowed under Section 162(m) of the
Code), the Committee shall, with regard to the Performance Compensation Awards
to be issued for such Performance Period, exercise its discretion with respect
to each of the matters enumerated in the immediately preceding sentence and
record the same in writing.

 

(c)                                  Performance Criteria.  The Performance
Criteria that will be used to establish the Performance Goal(s) may be based on
the attainment of specific levels of performance of the Company (and/or one or
more Affiliates, divisions or operational and/or business units, product lines,
brands, business segments, administrative departments, or any combination of the
foregoing) and shall be limited to the following: (i) net earnings, net income
(before or after taxes) or consolidated net income; (ii) basic or diluted
earnings per share (before or after taxes); (iii) net revenue or net revenue
growth; (iv) gross revenue or gross revenue growth, gross profit

 

17

--------------------------------------------------------------------------------

 

or gross profit growth; (v) net operating profit (before or after taxes);
(vi) return measures (including, but not limited to, return on investment,
assets, capital, employed capital, invested capital, equity, or sales);
(vii) cash flow measures (including, but not limited to, operating cash flow,
free cash flow, and cash flow return on capital), which may but are not required
to be measured on a per share basis; (viii) earnings before or after interest,
taxes, depreciation and/or amortization (including EBIT and EBITDA); (ix) gross
or net operating margins; (x) productivity ratios; (xi) share price (including,
but not limited to, growth measures and total stockholder return); (xii) expense
targets or cost reduction goals, general and administrative expense savings;
(xiii) operating efficiency or safety measures; (xiv) objective measures of
customer/client satisfaction; (xv) working capital targets; (xvi) measures of
economic value added or other ‘value creation’ metrics; (xvii) enterprise value;
(xviii) sales; (xix) stockholder return; (xx) customer/client retention;
(xxi) competitive market metrics; (xxii) employee retention; (xxiii) objective
measures of personal targets, goals or completion of projects (including but not
limited to succession and hiring projects, completion of specific acquisitions,
reorganizations or other corporate transactions or capital-raising transactions,
expansions of specific business operations and meeting divisional or project
budgets); (xxiv) comparisons of continuing operations to other operations;
(xxv) market share; (xxvi) cost of capital, debt leverage year-end cash position
or book value; (xxvii) strategic objectives; (xxviii) unit costs, total costs,
production measures, sales price or (xxix) any combination of the foregoing. 
Any one or more of the Performance Criteria may be stated as a percentage of
another Performance Criteria, or used on an absolute or relative basis to
measure the performance of the Company and/or one or more Affiliates as a whole
or any divisions or operational and/or business units, product lines, brands,
business segments, administrative departments of the Company and/or one or more
Affiliates or any combination thereof, as the Committee may deem appropriate, or
any of the above Performance Criteria may be compared to the performance of a
selected group of comparison companies, or a published or special index that the
Committee, in its sole discretion, deems appropriate, or as compared to various
stock market indices.  The Committee also has the authority to provide for
accelerated vesting of any Award based on the achievement of Performance Goals
pursuant to the Performance Criteria specified in this paragraph.  To the extent
required under Section 162(m) of the Code, the Committee shall, within the first
ninety (90) days of a Performance Period (or, within any other maximum period
allowed under Section 162(m) of the Code), define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period.

 

(d)                           Modification of Performance Goal(s).  In the event
that applicable tax and/or securities laws change to permit Committee discretion
to alter the governing Performance Criteria without obtaining stockholder
approval of such alterations, the Committee shall have sole discretion to make
such alterations without obtaining stockholder approval.  Unless otherwise
determined by the Committee at the time a Performance Compensation Award is
granted, the Committee shall, during the first ninety (90) days of a Performance
Period (or, within any other maximum period allowed under Section 162(m) of the
Code), or at any time thereafter to the extent the exercise of such authority at
such time would not cause the Performance Compensation Awards granted to any
Participant for such Performance Period to fail to qualify as “performance-based
compensation” under Section 162(m) of the Code, specify adjustments or
modifications to be made to the calculation of a Performance Goal for such
Performance Period, based on and in order to appropriately reflect the following
events: (i) asset write-downs; (ii) litigation or claim judgments or
settlements; (iii) the effect of changes in tax

 

18

--------------------------------------------------------------------------------

 

laws, accounting principles, or other laws or regulatory rules affecting
reported results; (iv) any reorganization and restructuring programs;
(v) extraordinary nonrecurring items as described in Accounting Standards
Codification Topic 225-20 (or any successor pronouncement thereto) and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s annual report to stockholders for the
applicable year; (vi) acquisitions or divestitures; (vii) any other specific,
unusual or nonrecurring events, or objectively determinable category thereof;
(viii) foreign exchange gains and losses; (ix) discontinued operations and
nonrecurring charges; and (x) a change in the Company’s fiscal year.

 

(e)                            Payment of Performance Compensation Awards.

 

(i)                                     Condition to Receipt of Payment.  Unless
otherwise provided in the applicable Award agreement, a Participant must be
employed by the Company on the last day of a Performance Period to be eligible
for payment in respect of a Performance Compensation Award for such Performance
Period.

 

(ii)                                  Limitation.  Unless otherwise provided in
the applicable Award agreement, a Participant shall be eligible to receive
payment in respect of a Performance Compensation Award only to the extent that:
(A) the Performance Goals for such period are achieved; and (B) all or some of
the portion of such Participant’s Performance Compensation Award has been earned
for the Performance Period based on the application of the Performance Formula
to such achieved Performance Goals.

 

(iii)                               Certification.  Following the completion of
a Performance Period, the Committee shall review and certify in writing whether,
and to what extent, the Performance Goals for the Performance Period have been
achieved and, if so, calculate and certify in writing that amount of the
Performance Compensation Awards earned for the period based upon the Performance
Formula.  The Committee shall then determine the amount of each Participant’s
Performance Compensation Award actually payable for the Performance Period and,
in so doing, may apply Negative Discretion.

 

(iv)                              Use of Negative Discretion.  In determining
the actual amount of an individual Participant’s Performance Compensation Award
for a Performance Period, the Committee may reduce or eliminate the amount of
the Performance Compensation Award earned under the Performance Formula in the
Performance Period through the use of Negative Discretion.  Unless otherwise
provided in the applicable Award agreement, the Committee shall not have the
discretion to (A) grant or provide payment in respect of Performance
Compensation Awards for a Performance Period if the Performance Goals for such
Performance Period have not been attained, or (B) increase a Performance
Compensation Award above the applicable limitations set forth in Section 5 of
the Plan.

 

(f)                                   Timing of Award Payments.  Unless
otherwise provided in the applicable Award agreement, Performance Compensation
Awards granted for a Performance Period shall be paid to Participants as soon as
administratively practicable following completion of the certifications required
by this Section 11.  Any Performance Compensation Award that has been deferred
shall not (between the date as of which the Award is deferred and the payment
date) increase (i)

 

19

--------------------------------------------------------------------------------

 

with respect to a Performance Compensation Award that is payable in cash, by a
measuring factor for each fiscal year greater than a reasonable rate of interest
set by the Committee or (ii) with respect to a Performance Compensation Award
that is payable in shares of Common Stock, by an amount greater than the
appreciation of a share of Common Stock from the date such Award is deferred to
the payment date.  Any Performance Compensation Award that is deferred and is
otherwise payable in shares of Common Stock shall be credited (during the period
between the date as of which the Award is deferred and the payment date) with
dividend equivalents (in a manner consistent with the methodology set forth in
the last sentence of Section 9(d)(ii) of the Plan).

 

12.                               Changes in Capital Structure and Similar
Events.  In the event of (a) any dividend (other than regular cash dividends) or
other distribution (whether in the form of cash, shares of Common Stock, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, split-off, spin-off,
combination, repurchase or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to acquire
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event (including, without limitation, a Change in
Control) that affects the shares of Common Stock, or (b) unusual or nonrecurring
events (including, without limitation, a Change in Control) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate, or changes in applicable rules, rulings, regulations or other
requirements of any governmental body or securities exchange or inter-dealer
quotation system, accounting principles or law, such that in either case an
adjustment is determined by the Committee in its sole discretion to be necessary
or appropriate, then the Committee shall make any such adjustments in such
manner as it may deem equitable, including without limitation, any or all of the
following:

 

(i)                                     adjusting any or all of (A) the Absolute
Share Limit, or any other limit applicable under the Plan with respect to the
number of Awards which may be granted hereunder, (B) the number of shares of
Common Stock or other securities of the Company (or number and kind of other
securities or other property) which may be issued in respect of Awards or with
respect to which Awards may be granted under the Plan (including, without
limitation, adjusting any or all of the limitations under Section 5 of the Plan)
and (C) the terms of any outstanding Award, including, without limitation,
(1) the number of shares of Common Stock or other securities of the Company (or
number and kind of other securities or other property) subject to outstanding
Awards or to which outstanding Awards relate, (2) the Exercise Price or Strike
Price with respect to any Award or (3) any applicable performance measures
(including, without limitation, Performance Criteria and Performance Goals);

 

(ii)                                  providing for a substitution or assumption
of Awards (or awards of an acquiring company), accelerating the exercisability
of, lapse of restrictions on, or termination of, Awards or providing for a
period of time (which shall not be required to be more than ten (10) days) for
Participants to exercise outstanding Awards prior to the occurrence of such
event (and any such Award not so exercised shall terminate upon the occurrence
of such event); and

 

20

--------------------------------------------------------------------------------

 

(iii)                               cancelling any one or more outstanding
Awards and causing to be paid to the holders holding vested Awards (including
any Awards that would vest as a result of the occurrence of such event but for
such cancellation) the value of such Awards, if any, as determined by the
Committee (which if applicable may be based upon the price per share of Common
Stock received or to be received by other stockholders of the Company in such
event), including without limitation, in the case of an outstanding Option or
SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market
Value (as of a date specified by the Committee) of the shares of Common Stock
subject to such Option or SAR over the aggregate Exercise Price or Strike Price
of such Option or SAR, respectively (it being understood that, in such event,
any Option or SAR having a per share Exercise Price or Strike Price equal to, or
in excess of, the Fair Market Value of a share of Common Stock subject thereto
may be canceled and terminated without any payment or consideration therefor);

 

provided, however, that in the case of any “equity restructuring” (within the
meaning of the Financial Accounting Standards Board Accounting Standards
Codification Topic 718 (or any successor pronouncement thereto)), the Committee
shall make an equitable or proportionate adjustment to outstanding Awards to
reflect such equity restructuring.  Any adjustment in Incentive Stock Options
under this Section 12 (other than any cancellation of Incentive Stock Options)
shall be made only to the extent not constituting a “modification” within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this
Section 12 shall be made in a manner which does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Exchange Act.  Any such
adjustment shall be conclusive and binding for all purposes.  Payments to
holders pursuant to clause (iii) above shall be made in cash or, in the sole
discretion of the Committee, in the form of such other consideration necessary
for a Participant to receive property, cash, or securities (or combination
thereof) as such Participant would have been entitled to receive upon the
occurrence of the transaction if the Participant had been, immediately prior to
such transaction, the holder of the number of shares of Common Stock covered by
the Award at such time (less any applicable Exercise Price or Strike Price).  In
addition, prior to any payment or adjustment contemplated under this Section 12,
the Committee may require a Participant to (A) represent and warrant as to the
unencumbered title to his Awards, (B) bear such Participant’s pro rata share of
any post-closing indemnity obligations, and be subject to the same post-closing
purchase price adjustments, escrow terms, offset rights, holdback terms, and
similar conditions as the other holders of Common Stock, and (C) deliver
customary transfer documentation as reasonably determined by the Committee.

 

13.                               Amendments and Termination.

 

(a)                                 Amendment and Termination of the Plan.  The
Board may amend, alter, suspend, discontinue, or terminate the Plan or any
portion thereof at any time; provided, that no such amendment, alteration,
suspension, discontinuation or termination shall be made without stockholder
approval if (i) such approval is necessary to comply with any regulatory
requirement applicable to the Plan (including, without limitation, as necessary
to comply with any rules or regulations of any securities exchange or
inter-dealer quotation system on which the securities of the Company may be
listed or quoted) or for changes in GAAP to new accounting standards, (ii) it
would materially increase the number of securities which may be issued under the
Plan (except for increases pursuant to Section 5 or 12 of the Plan), or (iii) it

 

21

--------------------------------------------------------------------------------

 

would materially modify the requirements for participation in the Plan;
provided, further, that any such amendment, alteration, suspension,
discontinuance or termination that would materially and adversely affect the
rights of any Participant or any holder or beneficiary of any Award theretofore
granted shall not to that extent be effective without the consent of the
affected Participant, holder or beneficiary.  Notwithstanding the foregoing, no
amendment shall be made to the last proviso of Section 13(b) of the Plan without
stockholder approval.

 

(b)                                 Amendment of Award Agreements.  The
Committee may, to the extent consistent with the terms of any applicable Award
agreement, waive any conditions or rights under, amend any terms of, or alter,
suspend, discontinue, cancel or terminate, any Award theretofore granted or the
associated Award agreement, prospectively or retroactively (including after a
Participant’s Termination); provided that any such waiver, amendment,
alteration, suspension, discontinuance, cancellation or termination that would
materially and adversely affect the rights of any Participant with respect to
any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant; provided, further, that without stockholder
approval, except as otherwise permitted under Section 12 of the Plan, (i) no
amendment or modification may reduce the Exercise Price of any Option or the
Strike Price of any SAR, (ii) the Committee may not cancel any outstanding
Option or SAR and replace it with a new Option or SAR (with a lower Exercise
Price or Strike Price, as the case may be) or other Award or cash payment that
is greater than the intrinsic value (if any) of the cancelled Option or SAR, and
(iii) the Committee may not take any other action which is considered a
“repricing” for purposes of the stockholder approval rules of any securities
exchange or inter-dealer quotation system on which the securities of the Company
are listed or quoted.

 

14.                               General.

 

(a)                           Award Agreements.  Each Award under the Plan shall
be evidenced by an Award agreement, which shall be delivered to the Participant
and shall specify the terms and conditions of the Award and any rules applicable
thereto, including without limitation, the effect on such Award of the death,
Disability or Termination of a Participant, or of such other events as may be
determined by the Committee.  For purposes of the Plan, an Award agreement may
be in any such form (written or electronic) as determined by the Committee
(including, without limitation, a Board or Committee resolution, an employment
agreement, a notice, a certificate or a letter) evidencing the Award.  The
Committee need not require an Award agreement to be signed by the Participant or
a duly authorized representative of the Company.

 

(b)                           Nontransferability.  (i)  Each Award shall be
exercisable only by a Participant during the Participant’s lifetime, or, if
permissible under applicable law, by the Participant’s legal guardian or
representative.  No Award may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, including, without
limitation, pursuant to a domestic relations order, to the extent permitted by
applicable law, other than by will or by the laws of descent and distribution
and any such purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against the Company or
an Affiliate; provided that the designation of a beneficiary shall not
constitute an assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.

 

22

--------------------------------------------------------------------------------

 

(ii)                                  Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit Awards (other than Incentive Stock
Options) to be transferred by a Participant, without consideration, subject to
such rules as the Committee may adopt consistent with any applicable Award
agreement to preserve the purposes of the Plan, to: (A) any person who is a
“family member” of the Participant, as such term is used in the instructions to
Form S-8 under the Securities Act or any successor form of registration
statement promulgated by the Securities and Exchange Commission (collectively,
the “Immediate Family Members”); (B) a trust solely for the benefit of the
Participant and his or her Immediate Family Members; (C) a partnership or
limited liability company whose only partners or stockholders are the
Participant and his or her Immediate Family Members; or (D) a beneficiary to
whom donations are eligible to be treated as “charitable contributions” for
federal income tax purposes;

 

(each transferee described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a “Permitted Transferee”); provided that the Participant gives
the Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such a transfer would comply with the requirements of the Plan.

 

(iii)                               The terms of any Award transferred in
accordance with the immediately preceding sentence shall apply to the Permitted
Transferee and any reference in the Plan, or in any applicable Award agreement,
to a Participant shall be deemed to refer to the Permitted Transferee, except
that (A) Permitted Transferees shall not be entitled to transfer any Award,
other than by will or the laws of descent and distribution, (B) Permitted
Transferees shall not be entitled to exercise any transferred Option unless
there shall be in effect a registration statement on an appropriate form
covering the shares of Common Stock to be acquired pursuant to the exercise of
such Option if the Committee determines, consistent with any applicable Award
agreement, that such a registration statement is necessary or appropriate,
(C) the Committee or the Company shall not be required to provide any notice to
a Permitted Transferee, whether or not such notice is or would otherwise have
been required to be given to the Participant under the Plan or otherwise, and
(D) the consequences of the Termination of the Participant under the terms of
the Plan and the applicable Award agreement shall continue to be applied with
respect to the Participant, including, without limitation, that an Option shall
be exercisable by the Permitted Transferee only to the extent, and for the
periods, specified in the Plan and the applicable Award agreement.

 

(c)                            Dividends and Dividend Equivalents.  The
Committee in its sole discretion may provide a Participant as part of an Award
with dividends, dividend equivalents, or similar payments in respect of Awards,
payable in cash, shares of Common Stock, other securities, other Awards or other
property, on a current or deferred basis, on such terms and conditions as may be
determined by the Committee in its sole discretion, including without
limitation, payment directly to the Participant, withholding of such amounts by
the Company subject to vesting of the Award or reinvestment in additional shares
of Common Stock, Restricted Stock or other Awards; provided, that no dividends,
dividend equivalents or other similar payments shall be payable in respect of
outstanding (i) Options or SARs or (ii) unearned Performance Compensation Awards
or other unearned Awards subject to performance conditions (other than

 

23

--------------------------------------------------------------------------------

 

or in addition to the passage of time) (although dividends, dividend equivalents
or other similar payments may be accumulated in respect of unearned Awards and
paid within fifteen (15) days after such Awards are earned and become payable or
distributable).

 

(d)                           Tax Withholding.

 

(i)                                     A Participant shall be required to pay
to the Company or any Affiliate, and the Company or any Affiliate shall have the
right and is hereby authorized to withhold, from any cash, shares of Common
Stock, other securities or other property issuable or deliverable under any
Award or from any compensation or other amounts owing to a Participant, the
amount (in cash, Common Stock, other securities or other property) of any
required withholding or any other applicable taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the Committee or
the Company to satisfy all obligations for the payment of such withholding or
any other applicable taxes.

 

(ii)                                  Without limiting the generality of clause
(i) above, the Committee may, in its sole discretion, permit a Participant to
satisfy, in whole or in part, the foregoing withholding liability by (A) the
issuance of shares of Common Stock (which are not subject to any pledge or other
security interest) owned by the Participant having a Fair Market Value equal to
such withholding liability or (B) having the Company withhold from the number of
shares of Common Stock otherwise issuable or deliverable pursuant to the
exercise or settlement of the Award a number of shares with a Fair Market Value
equal to such withholding liability, provided that with respect to shares
withheld pursuant to clause (B), the number of such shares may not have a Fair
Market Value greater than the minimum required statutory withholding liability.

 

(e)                            No Claim to Awards; No Rights to Continued
Employment; Waiver.  No employee of the Company or any Affiliate, or other
person, shall have any claim or right to be granted an Award under the Plan or,
having been selected for the grant of an Award, to be selected for a grant of
any other Award.  There is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards.  The terms and conditions of
Awards and the Committee’s determinations and interpretations with respect
thereto need not be the same with respect to each Participant and may be made
selectively among Participants, whether or not such Participants are similarly
situated.  Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company or any Affiliate, nor shall it be construed as giving any Participant
any rights to continued service on the Board.  The Company or any of its
Affiliates may at any time dismiss a Participant from employment or discontinue
any consulting relationship, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or any Award agreement. 
By accepting an Award under the Plan, a Participant shall thereby be deemed to
have waived any claim to continued exercise or vesting of an Award or to damages
or severance entitlement related to non-continuation of the Award beyond the
period provided under the Plan or any Award agreement, except to the extent of
any provision to the contrary in any written employment contract or other
agreement between the Company and its Affiliates and the Participant, whether
any such agreement is executed before, on or after the Date of Grant.

 

24

--------------------------------------------------------------------------------

 

(f)                             International Participants.  With respect to
Participants who reside or work outside of the United States of America and who
are not (and who are not expected to be) “covered employees” within the meaning
of Section 162(m) of the Code, the Committee may in its sole discretion amend
the terms of the Plan and create or amend Sub-Plans or amend outstanding Awards
with respect to such Participants in order to conform such terms with the
requirements of local law or to obtain more favorable tax or other treatment for
a Participant, the Company or its Affiliates.

 

(g)                            Designation and Change of Beneficiary.  Each
Participant may file with the Committee a written designation of one or more
persons as the beneficiary(ies) who shall be entitled to receive the amounts
payable with respect to an Award, if any, due under the Plan upon his or her
death.  A Participant may, from time to time, revoke or change his or her
beneficiary designation without the consent of any prior beneficiary by filing a
new designation with the Committee.  The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant’s death, and in no event shall it be
effective as of a date prior to such receipt.  If no beneficiary designation is
filed by a Participant, the beneficiary shall be deemed to be his or her spouse
or, if the Participant is unmarried at the time of death, his or her estate.

 

(h)                           Termination.  Except as otherwise provided in an
Award agreement, unless determined otherwise by the Committee at any point
following such event: (i) neither a temporary absence from employment or service
due to illness, vacation or leave of absence (including, without limitation, a
call to active duty for military service through a Reserve or National Guard
unit) nor a transfer from employment or service with one Service Recipient to
employment or service with another Service Recipient (or vice-versa) shall be
considered a Termination; and (ii) if a Participant’s undergoes a Termination of
employment, but such Participant continues to provide services to the Company
and its Affiliates in a non-employee capacity, such change in status shall not
be considered a Termination for purposes of the Plan.  Further, unless otherwise
determined by the Committee, in the event that any Service Recipient ceases to
be an Affiliate of the Company (by reason of sale, divestiture, spin-off, or
other similar transaction), unless a Participant’s employment or service is
transferred to another entity that would constitute a Service Recipient
immediately following such transaction, such Participant shall be deemed to have
suffered a Termination hereunder as of the date of the consummation of such
transaction.

 

(i)                               No Rights as a Stockholder.  Except as
otherwise specifically provided in the Plan or any Award agreement, no person
shall be entitled to the privileges of ownership in respect of shares of Common
Stock which are subject to Awards hereunder until such shares have been issued
or delivered to such person.

 

(j)                              Government and Other Regulations.

 

(i)                                     The obligation of the Company to settle
Awards in shares of Common Stock or other consideration shall be subject to all
applicable laws, rules, and regulations, and to such approvals by governmental
agencies as may be required.  Notwithstanding any terms or conditions of any
Award to the contrary, the Company shall be under no

 

25

--------------------------------------------------------------------------------

 

obligation to offer to sell or to sell, and shall be prohibited from offering to
sell or selling, any shares of Common Stock pursuant to an Award unless such
shares have been properly registered for sale pursuant to the Securities Act
with the Securities and Exchange Commission or unless the Company has received
an opinion of counsel, satisfactory to the Company, that such shares may be
offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully
complied with.  The Company shall be under no obligation to register for sale
under the Securities Act any of the shares of Common Stock to be offered or sold
under the Plan.  The Committee shall have the authority to provide that all
shares of Common Stock or other securities of the Company or any Affiliate
issued under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, the applicable
Award agreement, the Federal securities laws, or the rules, regulations and
other requirements of the Securities and Exchange Commission, any securities
exchange or inter- dealer quotation system on which the securities of the
Company are listed or quoted and any other applicable Federal, state, local or
non-U.S.  laws, rules, regulations and other requirements, and, without limiting
the generality of Section 9 of the Plan, the Committee may cause a legend or
legends to be put on certificates representing shares of Common Stock or other
securities of the Company or any Affiliate issued under the Plan to make
appropriate reference to such restrictions or may cause such Common Stock or
other securities of the Company or any Affiliate issued under the Plan in
book-entry form to be held subject to the Company’s instructions or subject to
appropriate stop-transfer orders.  Notwithstanding any provision in the Plan to
the contrary, the Committee reserves the right to add any additional terms or
provisions to any Award granted under the Plan that it in its sole discretion
deems necessary or advisable in order that such Award complies with the legal
requirements of any governmental entity to whose jurisdiction the Award is
subject.

 

(ii)                                  The Committee may cancel an Award or any
portion thereof if it determines, in its sole discretion, that legal or
contractual restrictions and/or blockage and/or other market considerations
would make the Company’s acquisition of shares of Common Stock from the public
markets, the Company’s issuance of Common Stock to the Participant, the
Participant’s acquisition of Common Stock from the Company and/or the
Participant’s sale of Common Stock to the public markets, illegal, impracticable
or inadvisable.  If the Committee determines to cancel all or any portion of an
Award in accordance with the foregoing, the Company shall pay to the Participant
an amount equal to the excess of (A) the aggregate Fair Market Value of the
shares of Common Stock subject to such Award or portion thereof canceled
(determined as of the applicable exercise date, or the date that the shares
would have been vested or issued, as applicable), over (B) the aggregate
Exercise Price or Strike Price (in the case of an Option or SAR, respectively)
or any amount payable as a condition of issuance of shares of Common Stock (in
the case of any other Award).  Such amount shall be delivered to the Participant
as soon as practicable following the cancellation of such Award or portion
thereof.

 

(k)                            No Section 83(b) Elections Without Consent of
Company.  No election under Section 83(b) of the Code or under a similar
provision of law may be made unless expressly permitted by the terms of the
applicable Award agreement or by action of the Committee in

 

26

--------------------------------------------------------------------------------

 

writing prior to the making of such election.  If a Participant, in connection
with the acquisition of shares of Common Stock under the Plan or otherwise, is
expressly permitted to make such election and the Participant makes the
election, the Participant shall notify the Company of such election within ten
(10) days of filing notice of the election with the Internal Revenue Service or
other governmental authority, in addition to any filing and notification
required pursuant to Section 83(b) of the Code or other applicable provision.

 

(l)                               Payments to Persons Other Than Participants. 
If the Committee shall find that any person to whom any amount is payable under
the Plan is unable to care for his or her affairs because of illness or
accident, or is a minor, or has died, then any payment due to such person or his
or her estate (unless a prior claim therefor has been made by a duly appointed
legal representative) may, if the Committee so directs the Company, be paid to
his or her spouse, child, relative, an institution maintaining or having custody
of such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment.  Any such
payment shall be a complete discharge of the liability of the Committee and the
Company therefor.

 

(m)                       Nonexclusivity of the Plan.  Neither the adoption of
this Plan by the Board nor the submission of this Plan to the stockholders of
the Company for approval shall be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under this Plan, and such arrangements may be either applicable
generally or only in specific cases.

 

(n)                           No Trust or Fund Created.  Neither the Plan nor
any Award shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any Affiliate, on the
one hand, and a Participant or other person or entity, on the other hand.  No
provision of the Plan or any Award shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes.  Participants shall have no
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.

 

(o)                           Reliance on Reports.  Each member of the Committee
and each member of the Board shall be fully justified in acting or failing to
act, as the case may be, and shall not be liable for having so acted or failed
to act in good faith, in reliance upon any report made by the independent public
accountant of the Company and its Affiliates and/or any other information
furnished in connection with the Plan by any agent of the Company or the
Committee or the Board, other than himself.

 

(p)                           Relationship to Other Benefits.  No payment under
the Plan shall be taken into account in determining any benefits under any
pension, retirement, profit sharing, group insurance or other benefit plan of
the Company except as otherwise specifically provided in such other plan or as
required by applicable law.

 

27

--------------------------------------------------------------------------------

 

(q)                           Governing Law.  The Plan shall be governed by and
construed in accordance with the internal laws of the State of Delaware
applicable to contracts made and performed wholly within the State of Delaware,
without giving effect to the conflict of laws provisions thereof.

 

(r)                              Severability.  If any provision of the Plan or
any Award or Award agreement is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction or as to any person or entity or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, person or entity or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

(s)                             Obligations Binding on Successors.  The
obligations of the Company under the Plan shall be binding upon any successor
corporation or organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or organization
succeeding to substantially all of the assets and business of the Company.

 

(t)                              409A of the Code.

 

(i)                                     Notwithstanding any provision of the
Plan to the contrary, it is intended that the provisions of this Plan comply
with Section 409A of the Code, and all provisions of this Plan shall be
construed and interpreted in a manner consistent with the requirements for
avoiding taxes or penalties under Section 409A of the Code.  Each Participant is
solely responsible and liable for the satisfaction of all taxes and penalties
that may be imposed on or in respect of such Participant in connection with this
Plan (including any taxes and penalties under Section 409A of the Code), and
neither the Company nor any Affiliate shall have any obligation to indemnify or
otherwise hold such Participant (or any beneficiary) harmless from any or all of
such taxes or penalties.  With respect to any Award that is considered “deferred
compensation” subject to Section 409A of the Code, references in the Plan to
“termination of employment” (and substantially similar phrases) shall mean
“separation from service” within the meaning of Section 409A of the Code.  For
purposes of Section 409A of the Code, each of the payments that may be made in
respect of any Award granted under the Plan is designated as separate payments.

 

(ii)                                  Notwithstanding anything in the Plan to
the contrary, if a Participant is a “specified employee” within the meaning of
Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Awards that
are “deferred compensation” subject to Section 409A of the Code and which would
otherwise be payable upon the Participant’s “separation from service” (as
defined in Section 409A of the Code) shall be made to such Participant prior to
the date that is six months after the date of such Participant’s “separation
from service” or, if earlier, the Participant’s date of death.  Following any
applicable six month delay, all such delayed payments will be paid in a single
lump sum on the earliest date permitted under Section 409A of the Code that is
also a business day.

 

28

--------------------------------------------------------------------------------

 

(iii)                               Unless otherwise provided by the Committee
in an Award agreement or otherwise, in the event that the timing of payments in
respect of any Award (that would otherwise be considered “deferred compensation”
subject to Section 409A of the Code) would be accelerated upon the occurrence of
(A) a Change in Control, no such acceleration shall be permitted unless the
event giving rise to the Change in Control satisfies the definition of a change
in the ownership or effective control of a corporation, or a change in the
ownership of a substantial portion of the assets of a corporation pursuant to
Section 409A of the Code and any Treasury Regulations promulgated thereunder or
(B) a Disability, no such acceleration shall be permitted unless the Disability
also satisfies the definition of “Disability” pursuant to Section 409A of the
Code and any Treasury Regulations promulgated thereunder.

 

(u)                                 Clawback/Forfeiture.  Notwithstanding
anything to the contrary contained herein, an Award agreement may provide that
the Committee may in its sole discretion cancel such Award if the Participant
has engaged in or engages in any Detrimental Activity.  The Committee may also
provide in an Award agreement that if the Participant otherwise has engaged in
or engages in any Detrimental Activity, the Participant will forfeit any gain
realized on the vesting or exercise of such Award, and must repay the gain to
the Company.  The Committee may also provide in an Award agreement that if the
Participant receives any amount in excess of what the Participant should have
received under the terms of the Award for any reason (including without
limitation by reason of a financial restatement, mistake in calculations or
other administrative error), then the Participant shall be required to repay any
such excess amount to the Company.  Without limiting the foregoing, all Awards
shall be subject to reduction, cancellation, forfeiture or recoupment to the
extent necessary to comply with applicable law.

 

(v)                           Code Section 162(m) Re-approval.  If so determined
by the Committee, the provisions of the Plan regarding Performance Compensation
Awards shall be submitted for re-approval by the stockholders of the Company no
later than the first stockholder meeting that occurs in the fifth year following
the year in which stockholders previously approved such provisions, in each case
for purposes of exempting certain Awards granted after such time from the
deduction limitations of Section 162(m) of the Code.  Nothing in this
subsection, however, shall affect the validity of Awards granted after such time
if such stockholder approval has not been obtained.

 

(w)                         Expenses; Gender; Titles and Headings.  The expenses
of administering the Plan shall be borne by the Company and its Affiliates. 
Masculine pronouns and other words of masculine gender shall refer to both men
and women.  The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings shall control.

 

*                                        
*                                         *

 

29

--------------------------------------------------------------------------------