Exhibit 10.1
ARCH COAL, INC.
1997 STOCK INCENTIVE PLAN
(As Amended and Restated on December 5th, 2008)
SECTION 1
Statement of Purpose

1.1.   The Arch Coal, Inc. 1997 Stock Incentive Plan (the “Plan”) has been
established by Arch Coal, Inc. in order to:

  (a)   attract and retain executive, managerial and other salaried employees;  
  (b)   motivate participating employees, by means of appropriate incentives, to
achieve long-range goals;     (c)   provide incentive compensation opportunities
that are competitive with those of other major corporations; and     (d)  
further identify a Participant’s interests with those of the Company’s other
stockholders through compensation based on the Company’s common stock; thereby
promoting the long-term financial interest of the Company and its Related
Companies, including the growth in value of the Company’s equity and enhancement
of long-term stockholder return.

SECTION 2
Definitions

2.1.   Unless the context indicates otherwise, the following terms shall have
the meaning set forth below:

  (a)   Acquiring Corporation. The term “Acquiring Corporation” shall mean the
surviving, continuing successor or purchasing corporation in an acquisition or
merger with the Company in which the Company is not the surviving corporation.  
  (b)   Award. The term “Award” shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Stock, Performance Units, Merit Awards, Phantom Stock Awards and Stock acquired
through purchase under Section 12.     (c)   Award Agreement. The term “Award
Agreement” shall mean any written agreement, contract, or other instrument or
document evidencing any Award, which shall not become effective until executed
or acknowledged by a Participant.     (d)   Board. The term “Board” shall mean
the Board of Directors of the Company acting as such but shall not include the
Committee or other committees of the Board acting on behalf of the Board.

 

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

 

  (e)   Cause. The term “Cause” shall mean (a) the continued failure by the
Participant to substantially perform his or her duties with the Company (other
than any such failure resulting from his or her incapacity due to physical or
mental illness), or (b) the engaging by the Participant in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.  
  (f)   Change in Control. A “Change in Control” shall mean a change in control
of the Company of a nature that would be required to be reported (assuming such
event has not been “previously reported”) in response to Item 1(a) of a Current
Report on Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act as in
effect on the date this Plan is approved by the shareholders of the Company;
provided that, without limitation, such a Change in Control shall be deemed to
have occurred (1) upon the approval of the Board (or if approval of the Board is
not required as a matter of law, the shareholders of the Company) of (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Stock would
be converted into cash, securities or other property, other than a merger in
which the holders of the Stock immediately prior to the merger will have more
than 50% of the ownership of common stock of the surviving corporation
immediately after the merger, (B) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company, or (C) adoption of any plan or proposal for
the liquidation or dissolution of the Company, or (2) when any “person” (as
defined in Section 13(d) of the Exchange Act), other than a Significant
Stockholder, or any subsidiary of the Company or employee benefit plan or trust
maintained by the Company or any of its subsidiaries, shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Stock outstanding at the time, without
the prior approval of the Board.     (g)   Code. The term “Code” means the
Internal Revenue Code of 1986, as amended. A reference to any provision of the
Code shall include reference to any successor provision of the Code.     (h)  
Committee. The term “Committee” means the Personnel & Compensation Committee of
the Board.     (i)   Company. The term “Company” means Arch Coal, Inc., a
Delaware corporation.     (j)   Date of Termination. A Participant’s “Date of
Termination” shall be the date on which his or her employment with all Employer
and Related Companies terminates for any reason; provided that, for purposes of
this Plan only, a Participant’s employment shall not be considered terminated by
reason of the Participant’s leave of absence from an Employer or a Related
Company that is approved in advance by the Participant’s Employer.
Notwithstanding the above, to the extent any Award constitutes nonqualified
deferred compensation which is subject to the limitations and restrictions of
Code Section 409A, a Participant’s “Date of Termination” shall be the date he or
she has a separation from service as determined in accordance with

2

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

 

      the rules promulgated under Code Section 409A and the resolutions of the
Board regarding such determination.     (k)   Disability. Except as otherwise
provided by the Committee, a Participant shall be considered to have a
“Disability” during the period in which he or she is unable, by reason of a
medically determined physical or mental impairment, to carry out his or her
duties with an Employer, which condition, in the discretion of the Committee,
shall generally be an event which qualifies as a “long term disability” under
applicable long term disability benefit programs of the Company.     (l)  
Employee. The term “Employee” shall mean a person with an employment
relationship with an Employer.     (m)   Employer. The Company and each
Subsidiary which, with the consent of the Company, participates in the Plan for
the benefit of its eligible Employees are referred to collectively as the
“Employers” and individually as an “Employer”.     (n)   Exchange Act. The term
“Exchange Act” means the Securities Exchange Act of 1934, as amended.     (o)  
Exercise Price. The term “Exercise Price” means, with respect to each share of
Stock subject to an Option, the price fixed by the Committee in the applicable
Award Agreement at which such share may be purchased from the Company pursuant
to the exercise of such Option, which price at no time may be less than 100% of
the Fair Market Value of the Stock on the date the Option is granted, except as
permitted and contemplated by Section 21 of the Plan.     (p)   Fair Market
Value. The “Fair Market Value” of the Stock on any given date shall be the last
sale price, regular way, or, in case no such sale takes place on such date, the
average of the closing bid and asked prices, regular way, of the Stock, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the NYSE or,
if the Stock is not listed or admitted to trading on the NYSE, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Stock is listed or admitted to trading or, if the Stock is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price on such date or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market on such date, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use, or, if on any such date the Stock is not quoted
by any such organization, the average of the closing bid and asked prices on
such date as furnished by a professional market maker making a market in the
Stock. If the Stock is not publicly held or so listed or publicly traded, “Fair
Market Value” per share of Stock shall mean the Fair Market Value per share as
reasonably determined by the Committee.

3

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

 

  (q)   Immediate Family. With respect to a particular Participant, the term
“Immediate Family” shall mean, whether through consanguinity or adoptive
relationships, the Participant’s spouse, children, stepchildren, siblings and
grandchildren.     (r)   Incentive Stock Option. The term “Incentive Stock
Option” shall mean any Incentive Stock Option granted under the Plan.     (s)  
Merit Award. The term “Merit Award” shall mean any Award granted under the Plan
other than Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock, Restricted Stock Units, or Stock Appreciation Rights.     (t)  
Non-Employee Director. The term “Non-Employee Director” shall mean a person who
qualifies as such under Rule 16b-3(b)(3) under the Exchange Act or any successor
provision, and who also qualifies as an “outside director” under Section 162(m)
of the Code.     (u)   Non-Qualified Stock Option. The term “Non-qualified Stock
Option” shall mean any Non-Qualified Stock Option granted under the Plan.    
(v)   NYSE. The term “NYSE” refers to the New York Stock Exchange, Inc.     (w)
  Option. The term “Option” shall mean any Incentive Stock Option or
Non-Qualified Stock Option granted under the Plan.     (x)   Participant. The
term “Participant” means an Employee who has been granted an award under the
Plan.     (y)   Performance-Based Compensation. The term “Performance-Based
Compensation” shall have the meaning ascribed to it in Section 162(m)(4)(C) of
the Code.     (z)   Performance Goals. The term “Performance Goals” means the
goals established by the Committee under an Award which, if met, will entitle
the Participant to payment under such Award and will qualify such payment as
“Performance-Based Compensation” as that term is used in Code
Section 162(m)(4)(C). Such goals will be based upon such business criteria as
the Committee may from time to time determine.     (aa)   Performance Period.
The term “Performance Period” shall mean the period over which applicable
performance is to be measured.     (bb)   Performance Stock. The term
“Performance Stock” shall have the meaning ascribed to it in Section 10 of the
Plan.     (cc)   Performance Units. The term “Performance Units” shall have the
meaning ascribed to it in Section 11 of the Plan.

4

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

 

  (dd)   Phantom Stock Award. The term “Phantom Stock Award” shall mean any
Phantom Stock Award granted under the Plan.     (ee)   Plan. The term “Plan”
shall mean this Arch Coal, Inc. 1997 Stock Incentive Plan as the same may be
from time to time amended or revised.     (ff)   Related Companies. The term
“Related Companies’ means any Significant Stockholder and their subsidiaries;
and any other company during any period in which it is a Subsidiary or a
division of the Company, including any entity acquired by, or merged with or
into, the Company or a Subsidiary.     (gg)   Restricted Period. The term
“Restricted Period” shall mean the period of time for which shares of Restricted
Stock or Restricted Stock Units are subject to forfeiture pursuant to the Plan
or during which Options and Stock Appreciation Rights are not exercisable.    
(hh)   Restricted Stock. The term “Restricted Stock” shall have the meaning
ascribed to it in Section 8 of the Plan.     (ii)   Restricted Stock Units. The
term “Restricted Stock Units” shall have the meaning ascribed to it in Section 9
of the Plan.     (jj)   Retirement. “Retirement” of a Participant shall occur
when a Participant’s Date of Termination occurs on or after the date on which
the Participant attains age 55 and such Participant has not been terminated for
Cause.     (kk)   SEC. “SEC” means the Securities and Exchange Commission.    
(ll)   Significant Stockholder. The term “Significant Stockholder” shall mean
any shareholder of the Company who, immediately prior to the Effective Date,
owned more than 5% of the common stock of the Company.     (mm)   Stock. The
term “Stock” shall mean shares of common stock, $.01 par value per share, of the
Company.     (nn)   Stock Appreciation Rights. The term “Stock Appreciation
Rights” shall mean any Stock Appreciation Right granted under the Plan.     (oo)
  Subsidiary. The term “Subsidiary” shall mean any present or future subsidiary
corporation of the Company within the meaning of Code Section 424((f).     (pp)
  Tax Date. The term “Tax Date” shall mean the date a withholding tax obligation
arises with respect to an Award.

5

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

 

SECTION 3
Eligibility

3.1.   Subject to the discretion of the Committee and the terms and conditions
of the Plan, the Committee shall determine and designate from time to time, the
Employees or other persons as contemplated by Section 21 of the Plan who will be
granted one or more Awards under the Plan.

SECTION 4
Operation and Administration

4.1.   The Plan has been adopted by the Board and approved by the shareholders
of the Company. To the extent required pursuant to Section 162(m) of the Code,
the Plan shall be resubmitted to shareholders for reapproval no later than at
the first shareholders’ meeting that occurs during the fifth year following the
year of the initial approval and thereafter at five year intervals, in each
case, as may be required to qualify any Award hereunder as Performance-Based
Compensation. The Plan shall be unlimited in duration and remain in effect until
termination by the Board; provided however, that no Incentive Stock Option may
be granted under the Plan after April 1, 2007.   4.2.   Plenary authority to
administer, manage and control the operation and administration of the Plan
shall be vested in the Committee, which authority shall include, but shall not
be limited to:

  (a)   Subject to the provisions of the Plan, the authority and discretion to
select Employees to receive Awards, to determine the time or times of receipt,
to determine the types of Awards and the number of shares covered by the Awards,
to establish the terms, conditions, performance criteria, restrictions, and
other provisions of such Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
respective Employee, his or her present and potential contribution to the
Company’s success and such other factors as the Committee deems relevant.    
(b)   Subject to the provisions of the Plan, the authority and discretion to
determine the extent to which Awards under the Plan will be structured to
conform to the requirements applicable to Performance-Based Compensation as
described in Code Section 162(m), and to take such action, establish such
procedures, and impose such restrictions at the time such awards are granted as
the Committee determines to be necessary or appropriate to conform to such
requirements.     (c)   The authority and discretion to interpret the Plan and
the Awards granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, to make all other determinations that it
deems necessary or advisable for the administration of the Plan and to correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award, in each case, in the manner and to the extent the Committee deems
necessary or advisable to carry it into effect.

6

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

 

4.3.   Any interpretation of the Plan by the Committee and any decision made by
it under the Plan shall be final and binding on all persons. The express grant
in the Plan of any specific power to the Committee shall not be construed as
limiting any power or authority of the Committee. Provided, however, that except
as otherwise permitted under Treasury Regulation 1.162-27(e)(2)(iii)(C), the
Committee may not increase any Award once made if payment under such Award is
intended to constitute Performance-Based Compensation.   4.4.   The Committee
may only act at a meeting by unanimous consent if comprised of two members, and
otherwise by a majority of its members. Any determination of the Committee may
be made without a meeting by the unanimous written consent of its members. In
addition, the Committee may authorize one or more of its members or any officer
of an Employer to execute and deliver documents and perform other administrative
acts pursuant to the Plan.   4.5   No member or authorized delegate of the
Committee shall be liable to any person for any action taken or omitted in
connection with the administration of the Plan unless attributable to his or her
own fraud or gross misconduct. The Committee, the individual members thereof,
and persons acting as the authorized delegates of the Committee under the Plan,
shall be indemnified by the Employers against any and all liabilities, losses,
costs and expenses (including legal fees and expenses) of whatsoever kind and
nature which may be imposed on, incurred by, or asserted against, the Committee
or its members or authorized delegates by reason of the performance of any
action pursuant to the Plan if the Committee or its members or authorized
delegates did not act in willful violation of the law or regulation under which
such liability, loss, cost or expense arises. This indemnification shall not
duplicate but may supplement any coverage available under any applicable
insurance policy, contract with the indemnitee or the Company’s By-laws.   4.6.
  Notwithstanding any other provision of the Plan to the contrary, but without
giving effect to Awards made pursuant to Section 21, the maximum number of
shares of Stock with respect to which any Participant may receive any Award of
(i) an Option or a Stock Appreciation Right under the Plan during any calendar
year is 300,000; (ii) the maximum number of shares with respect to which any
Participant may receive Awards of Restricted Stock or Restricted Stock Units
during any calendar year is 100,000; (iii) the maximum number of shares with
respect to which any Participant may receive Merit Awards during any calendar
year is 100,000; and (iv) the maximum number of shares with respect to which any
Participant may receive other Awards during any calendar year is 100,000
(including the Awards described in Sections 4.6(i) through 4.6(iii), which may
be further granted pursuant to this Section 4.6(iv)).   4.7.   To the extent
that the Committee determines that it is necessary or desirable to conform any
Awards under the Plan with the requirements applicable to “Performance-Based
Compensation”, as that term is used in Code Section 162(m)(4)(C), it may, at or
prior to the time an Award is granted, establish Performance Goals for a
particular Performance Period. If the Committee establishes Performance Goals
for a Performance Period, it may approve a payment from that particular
Performance Period upon attainment of the Performance Goal.

7

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

 

SECTION 5
Shares Available Under the Plan

5.1.   The shares of Stock with respect to which Awards may be made under the
Plan shall be shares of currently authorized but unissued or treasury shares
acquired by the Company, including shares purchased in the open market or in
private transactions. Subject to the provisions of Section 16, the total number
of shares of Stock available for grant of Awards shall not exceed nine million
(9,000,000) shares of Stock. Except as otherwise provided herein, if any Award
shall expire or terminate for any reason without having been exercised in full,
the unissued shares of Stock subject thereto (whether or not cash or other
consideration is paid in respect of such Award) shall again be available for the
purposes of the Plan. Any shares of Stock which are used as full or partial
payment to the Company upon exercise of an Award shall be available for purposes
of the Plan.

SECTION 6
Options

6.1.   The grant of an “Option” under this Section 6 entitles the Participant to
purchase shares of Stock at a price fixed at the time the Option is granted, or
at a price determined under a method established at the time the Option is
granted, subject to the terms of this Section 6. Options granted under this
Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options,
and subject to Subsection 6.6 and Sections 15 and 20, shall not be exercisable
for at least six months from the date of grant, as determined in the discretion
of the Committee. An “Incentive Stock Option” is an Option that is intended to
satisfy the requirements applicable to an “incentive stock option” described in
Section 422(b) of the Code. A “Non-Qualified Option” is an Option that is not
intended to be an “incentive stock option” as that term is described in Section
422(b) of the Code.   6.2.   The Committee shall designate the Employees to whom
Options are to be granted under this Section 6 and shall determine the number of
shares of Stock to be subject to each such Option. To the extent that the
aggregate Fair Market Value of Stock with respect to which Incentive Stock
Options are exercisable for the first time by any individual during any calendar
year (under all plans of the Company and all Related Companies) exceeds
$100,000, such Options shall be treated as Non-Qualified Stock Options, but only
to the extent required by Section 422 of the Code.   6.3.   The determination
and payment of the purchase price of a share of Stock under each Option granted
under this Section shall be subject to the following terms of this Subsection
6.3:

  (a)   The purchase price shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option is
granted; provided, however, that in no event shall the price per share be less
than the Fair Market Value per share on the date of the grant except as
otherwise permitted by Section 21 of the Plan;     (b)   The full purchase price
of each share of Stock purchased upon the exercise of any Option shall be paid
at the time of such exercise and, as soon as practicable

8

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

 

      thereafter, a certificate representing the shares so purchased shall be
delivered to the person entitled thereto; and     (c)   The purchase price shall
be paid either in cash, in shares of Stock (valued at Fair Market Value as of
the day of exercise), through a combination of cash and Stock (so valued) or
through such cashless exercise arrangement as may be approved by the Committee
and established by the Company, provided that any shares of Stock used for
payment shall have been owned by the Participant for at least six (6) months.

6.4.   Except as otherwise expressly provided in the Plan, an Option granted
under this Section 6 shall be exercisable in accordance with the following terms
of this Subsection 6.4.

  (a)   The terms and conditions relating to exercise of an Option shall be
established by the Committee and shall be set forth in the applicable Award
Agreement, and may include, without limitation, conditions relating to
completion of a specified period of service, achievement of performance
standards prior to exercise of the Option, or achievement of Stock ownership
objectives by the Participant. No Option may be exercised by a Participant after
the expiration date applicable to that Option.     (b)   The exercise of an
Option will result in the surrender of the corresponding rights under a tandem
Stock Appreciation Right, if any.

6.5.   The exercise period of any Option shall be determined by the Committee
and shall be set forth in the applicable Award Agreement but the term of any
Option shall not extend more than ten years after the date of grant.

SECTION 7
Stock Appreciation Rights

7.1.   Subject to the terms of this Section 7, a Stock Appreciation Right
granted under the Plan entitles the Participant to receive, in cash or Stock (as
determined in accordance with Subsection 7.4), value equal to all or a portion
of the excess of: (a) the Fair Market Value of a specified number of shares of
Stock at the time of exercise; over (b) a specified price which shall not be
less than 100% of the Fair Market Value of the Stock at the time the Stock
Appreciation Right is granted, or, if granted in tandem with an Option, the
exercise price with respect to shares under the tandem Option.   7.2.   Subject
to the provisions of the Plan, the Committee shall designate the Employees to
whom Stock Appreciation Rights are to be granted under the Plan, shall determine
the exercise price or a method by which the price shall be established with
respect to each such Stock Appreciation Right, and shall determine the number of
shares of Stock on which each Stock Appreciation Right is based. A Stock
Appreciation Right may be granted in connection with all or any portion of a
previously or contemporaneously granted Option or not in connection with an
Option. If a Stock Appreciation Right is granted in connection with an Option
then, in the discretion of the Committee, the Stock Appreciation Right may, but
need not, be granted in tandem with the Option.

9

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

 

7.3.   The exercise of Stock Appreciation Rights shall be subject to the
following:

  (a)   If a Stock Appreciation Right is not in tandem with an Option, then the
Stock Appreciation Right shall be exercisable in accordance with the terms
established by the Committee in connection with such rights and as set forth in
the applicable Award Agreement but, subject to Sections 15 and 20, shall not be
exercisable for six months from the date of grant and the term of any Stock
Appreciation Right shall not extend more than ten years from the date of grant;
and may include, without limitation, conditions relating to completion of a
specified period of service, achievement of performance standards prior to
exercise of the Stock Appreciation Rights, or achievement of objectives relating
to Stock ownership by the Participant; and     (b)   If a Stock Appreciation
Right is in tandem with an Option, then the Stock Appreciation Right shall be
exercisable only at the time the tandem Option is exercisable and the exercise
of the Stock Appreciation Right will result in the surrender of the
corresponding rights under the tandem Option.

7.4.   Upon the exercise of a Stock Appreciation Right, the value to be
distributed to the Participant, in accordance with Subsection 7.1, shall be
distributed in shares of Stock (valued at their Fair Market Value at the time of
exercise), in cash, or in a combination of Stock or cash, in the discretion of
the Committee.

SECTION 8
Restricted Stock

8.1.   Subject to the terms of this Section 8, Restricted Stock Awards under the
Plan are grants of Stock to Participants, the vesting of which is subject to
certain conditions established by the Committee and set forth in the applicable
Award Agreement, with some or all of those conditions relating to events (such
as continued employment or satisfaction of performance criteria) occurring after
the date of the grant of the Award, provided, however, that to the extent that
vesting of a Restricted Stock Award is contingent on continued employment, the
required employment period shall generally (unless otherwise determined by the
Committee) not be less than one year following the grant of the Award unless
such grant is in substitution for an Award under this Plan or a predecessor plan
of the Company or a Related Company. To the extent, if any, required by the
General Corporation Law of the State of Delaware, a Participant’s receipt of an
Award of newly issued shares of Restricted Stock shall be made subject to
payment by the Participant of an amount equal to the aggregate par value of such
newly issued shares of Stock.   8.2.   The Committee shall designate the
Employees to whom Restricted Stock is to be granted, and the number of shares of
Stock that are subject to each such Award. The Award of shares under this
Section 8 may, but need not, be made in conjunction with a cash-based incentive
compensation program maintained by the Company, and may, but need not, be in
lieu of cash otherwise awardable under such program.

10

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

 

8.3.   Shares of Restricted Stock granted to Participants under the Plan shall
be subject to the following terms and conditions:

  (a)   Restricted Stock granted to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Restricted Period;    
(b)   The Participant as owner of such shares shall have all the rights of a
stockholder, including but not limited to the right to vote such shares and,
except as otherwise provided in the Award Agreement or as provided by the Plan,
the right to receive all dividends and other distributions paid on such shares.
    (c)   Each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the Participant but,
at the discretion of the Committee, each such certificate may be deposited with
the Company with a stock power endorsed in blank or in a bank designated by the
Committee;     (d)   The Committee may award Restricted Stock as
Performance-Based Compensation, which shall be Restricted Stock that will be
earned (or for which earning is accelerated) upon the achievement of Performance
Goals established by the Committee and the Committee may specify the number of
shares that will be earned upon achievement of different levels of performance;
except as otherwise provided by the Committee, achievement of maximum targets
during the Performance Period shall result in the Participant’s earning of the
full amount of Restricted Stock comprising such Performance-Based Compensation
and, in the discretion of the Committee, achievement of the minimum target but
less than the maximum target, the Committee may result in the Participant’s
earning of a portion of the Award; and     (e)   Except as otherwise provided by
the Committee and set forth in the applicable Award Agreement, any Restricted
Stock which is not earned by the end of a Restricted Period or Performance
Period, as the case may be, shall be forfeited. If a Participant’s Date of
Termination occurs prior to the end of a Restricted Period or Performance
Period, as the case may be, the Committee may determine, in its sole discretion,
that the Participant will be entitled to settlement of all or any portion of the
Restricted Stock as to which he or she would otherwise be eligible, and may
accelerate the determination of the value and settlement of such Restricted
Stock or make such other adjustments as the Committee, in its sole discretion,
deems desirable. Subject to the limitations of the Plan and the Award of
Restricted Stock, upon the vesting of Restricted Stock, such Restricted Stock
will be transferred free of all restrictions to the Participant (or his or her
legal representative, beneficiary or heir).

SECTION 9
Restricted Stock Units

9.1.   Subject to the terms of this Section 9, a Restricted Stock Unit entitles
a Participant to receive shares for the units at the end of a Restricted Period,
or at a later date if distribution has been deferred, to the extent provided by
the Award with the vesting of such units to be

11

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

 

    contingent upon such conditions as may be established by the Committee and
set forth in the Award Agreement (such as continued employment or satisfaction
of performance criteria) occurring after the date of grant of the Award,
provided, however, that to the extent that the vesting of a Restricted Stock
Unit is contingent on continued employment, the required employment period shall
generally not be less than one year following the date of grant of the Award
unless such grant is in substitution for an Award under this Plan or a
predecessor plan of the Company or a Related Company. The Award of Restricted
Stock Units under this Section 9 may, but need not, be made in conjunction with
a cash-based incentive compensation program maintained by the Company, and may,
but need not, be in lieu of cash otherwise awardable under such program.   9.2.
  The Committee shall designate the Employees to whom Restricted Stock Units
shall be granted and the number of units that are subject to each such Award.
During any period in which Restricted Stock Units are outstanding and have not
been settled in Stock, the Participant shall not have the rights of a
stockholder, but, in the discretion of the Committee, may be granted the right
to receive a payment from the Company in lieu of a dividend in an amount equal
to any cash dividends that might be paid during the Restricted Period.   9.3  
Except as otherwise provided by the Committee, any Restricted Stock Unit which
is not earned by the end of a Restricted Period shall be forfeited. If a
Participant’s Date of Termination occurs prior to the end of a Restricted
Period, the Committee, in its sole discretion, may determine that the
Participant will be entitled to settlement of all, any portion, or none of the
Restricted Stock Units as to which he or she would otherwise be eligible, and
may accelerate the determination of the value and settlement of such Restricted
Stock Units or make such other adjustments as the Committee, in its sole
discretion, deems desirable.   9.4   Notwithstanding anything to the contrary in
this Section 9, an election to defer receipt of shares at the end of a
Restricted Period may be made by a Participant only in accordance with the terms
of a separate written nonqualified deferred compensation plan sponsored by the
Company and only to the extent made in accordance with the election timing rules
under Code Section 409A. Unless otherwise subject to such a deferral election,
Restricted Stock Units shall be settled on or after the last day of the
Restricted Period set forth in the Award Agreement, but in no event later than
the March 15th of the calendar year following the calendar year in which the
Restricted Period ends. Any acceleration of the settlement of a Restrict Stock
Unit Award described in Section 9.3 shall be made only to the extent permissible
under Code Section 409A.

SECTION 10
Performance Stock

10.1.   Subject to the terms of this Section 10, an Award of Performance Stock
provides for the distribution of Stock to a Participant upon the achievement of
performance objectives, which may include Performance Goals, established by the
Committee and set forth in the applicable Award Agreement.

12

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

 

10.2.   The Committee shall designate the Employees to whom Awards of
Performance Stock are to be granted, and the number of shares of Stock that are
subject to each such Award. The Award of shares of Performance Stock under this
Section 10 may, but need not, be made in conjunction with a cash-based incentive
compensation program maintained by the Company, and may, but need not, be in
lieu of cash otherwise awardable under such program.   10.3.   Except as
otherwise provided by the Committee and set forth in the applicable Award
Agreement, any Award of Performance Stock which is not earned by the end of the
Performance Period shall be forfeited. If a Participant’s Date of Termination
occurs prior to the end of a Performance Period, the Committee, in its sole
discretion, may determine that the Participant will be entitled to settlement of
all, any portion, or none of the Performance Stock as to which he or she would
otherwise be eligible, and may accelerate the determination of the value and
settlement of such Performance Stock or make such other adjustments as the
Committee, in its sole discretion, deems desirable.   10.4   Except as otherwise
provided by the Committee under Section 10.3 or in an Award Agreement,
settlement of any earned Performance Stock shall occur on or after the last day
of the Performance Period, but in no event later than the March 15th of the
calendar year following the calendar year in which the Performance Period ends.
Any acceleration of the settlement of a Performance Share described in
Section 10.3 shall be made only to the extent permissible under Code
Section 409A.

SECTION 11
Performance Units

11.1.   Subject to the terms of this Section 11, the Award of Performance Units
under the Plan entitles the Participant to receive value for the units at the
end of a Performance Period to the extent provided under the Award. The number
of Performance Units earned, and value received from them, will be contingent on
the degree to which the performance measures set forth in the Award Agreement.
are met.   11.2.   The Committee shall designate the Employees to whom
Performance Units are to be granted, and the number of Performance Units to be
subject to each such Award.   11.3.   For each Participant, the Committee will
determine the value of Performance Units, which may be stated either in cash or
in units representing shares of Stock; the performance measures used for
determining whether the Performance Units are earned; the Performance Period
during which the performance measures will apply; the relationship between the
level of achievement of the performance measures and the degree to which
Performance Units are earned; whether, during or after the Performance Period,
any revision to the performance measures or Performance Period should be made to
reflect significant events or changes that occur during the Performance Period;
and the number of earned Performance Units that will be settled in cash and/or
shares of Stock.

13

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

 

11.4.   Settlement of Performance Units shall be subject to the following:

  (a)   The Committee will compare the actual performance to the performance
measures established for the Performance Period and determine the number of
Performance Units as to which settlement is to be made;     (b)   Settlement of
Performance Units earned shall be wholly in cash, wholly in Stock or in a
combination of the two, as determined by the Committee, and shall be distributed
in the form set forth in the Award Agreement. If the Award Agreement does not
provide for a form of payment, payment shall be made in a single lump sum
payment. Except as otherwise provided by the Committee under Section 11.5 or in
an Award Agreement, settlement of any earned Performance Units shall occur on or
after the last day of the Performance Period, but in no event later than the
March 15th of the calendar year following the calendar year in which the
Performance Period ends. Any acceleration of the settlement of a Performance
Unit described in Section 11.5 shall be made only to the extent permissible
under Code Section 409A; and     (c)   Shares of Stock distributed in settlement
of Performance Units shall be subject to such vesting requirements and other
conditions, if any, as the Committee shall determine, including, without
limitation, restrictions of the type that may be imposed with respect to
Restricted Stock under Section 8.

11.5.   Except as otherwise provided by the Committee and set forth in the
applicable Award Agreement, any Award of Performance Units which is not earned
by the end of the Performance Period shall be forfeited. If a Participant’s Date
of Termination occurs prior to the end of a Performance Period, the Committee,
in its sole discretion, may determine that the Participant will be entitled to
settlement of all, any portion, or none of the Performance Units as to which he
or she would otherwise be eligible, and may accelerate the determination of the
value and settlement of such Performance Units or make such other adjustments as
the Committee, in its sole discretion, deems desirable.

SECTION 12
Stock Purchase Program

12.1.   The Committee may, from time to time, establish one or more programs
under which Employees will be permitted to purchase shares of Stock under the
Plan, and shall designate the Employees eligible to participate under such Stock
purchase programs. The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs, shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the Committee’s discretion,
the average Stock value over a period determined by the Committee), and further
provided that if newly issued shares of Stock are sold, the purchase price may
not be less than the aggregate par value of such newly issued shares of Stock.  
12.2.   The Committee may impose such restrictions with respect to shares
purchased under this Section 12, as the Committee, in its sole discretion,
determines to be appropriate. Such

14

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

 

    restrictions may include, without limitation, restrictions of the type that
may be imposed with respect to Restricted Stock under Section 8.

SECTION 13
Stock Awards

13.1.   The Committee may from time to time make an Award of Stock under the
Plan to selected Employees for such reasons and in such amounts as the
Committee, in its sole discretion, may determine. The consideration to be paid
by an Employee for any such Award, if any, shall be fixed by the Committee from
time to time, but, if required by the General Corporation Law of the State of
Delaware, it shall not be less than the aggregate par value of the shares of
Stock awarded to him or her.

SECTION 14
Phantom Stock Awards

14.1.   The Committee may make Phantom Stock Awards to selected Employees which
may be based solely on the value of the underlying shares of Stock, solely on
any earnings or appreciation thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete authority to determine the
number of hypothetical or target shares as to which each such Phantom Stock
Award is subject and to determine the terms and conditions of each such Phantom
Stock Award. There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected Employee, and the terms and conditions of
each such Phantom Stock Award may differ from each other.   14.2.   The
Committee shall establish and shall set forth in the applicable Award Agreement
the vesting or performance measures for each Phantom Stock Award on the basis of
such criteria and to accomplish such objectives as the Committee may from time
to time, in its sole discretion, determine. Such measures may be based on years
of service or periods of employment, or the achievement of individual or
corporate performance objectives, but shall, in each instance, be based upon one
or more of the business criteria as determined pursuant to Section 4.7. The
vesting and performance measures determined by the Committee shall be
established at the time a Phantom Stock Award is made. Phantom Stock Awards may
not be sold, assigned, transferred, pledged, or otherwise encumbered, except as
provided in Section 17, during the Performance Period.   14.3.   Settlement of
Phantom Stock earned shall be wholly in cash, wholly in Stock or in a
combination of the two, as determined by the Committee, and shall be distributed
in the form set forth in the Award Agreement. If the Award Agreement does not
provide for a form of payment, payment shall be made in a single lump sum
payment. Except as otherwise provided by the Committee under Section 14.4 or in
an Award Agreement, settlement of any earned Phantom Stock shall occur on or
after the last day of the Performance Period, but in no event later than the
March 15th of the calendar year following the calendar year in which the
Performance Period ends. Any acceleration of the settlement of Phantom Stock
described in Section 14.4 shall be made only to the extent permissible under
Code Section 409A.

15

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

 

14.4.   Except as otherwise provided by the Committee and set forth in the
applicable Award Agreement, any Award of Phantom Stock which is not earned by
the end of the Performance Period shall be forfeited. If a Participant’s Date of
Termination occurs prior to the end of a Performance Period, the Committee, in
its sole discretion, may determine that the Participant will be entitled to
settlement of all or a portion of the Phantom Stock for which he or she would
otherwise be eligible, and may accelerate the determination of the value and
settlement of Phantom Stock or make such other adjustment as the Committee, in
its sole discretion, deems desirable.

SECTION 15
Termination of Employment

15.1.   If a Participant’s employment is terminated by the Participant’s
Employer for Cause, all of the Participant’s unvested Awards, including any
unexercised Options, shall be forfeited.   15.2.   Except as may be set forth in
the applicable Award Agreement, with respect to Awards made prior to July 22,
2004, if a Participant’s Date of Termination occurs by reason of death,
Disability or Retirement, all Options and Stock Appreciation Rights outstanding
immediately prior to the Participant’s Date of Termination shall immediately
become exercisable and shall be exercisable until one year from the
Participant’s Date of Termination and thereafter shall be forfeited if not
exercised, and all restrictions on any Awards outstanding immediately prior to
the Participant’s Date of Termination shall immediately lapse. Except as may be
set forth in the applicable Award Agreement, for Awards made after July 22,
2004, if a Participant’s Date of Termination occurs by reason of death or
Disability, (i) all unvested Awards outstanding immediately prior to the
Participant’s Date of Termination shall continue to vest as if such Employee had
remained in the employ of the Company and (ii) all vested Options and Stock
Appreciation Rights shall remain exercisable and, in each case, such Awards
shall be exercisable until one year from the later of the (i) Participant’s Date
of Termination or (ii) the vesting date of such Award and thereafter shall be
forfeited. Except as may be set forth in the applicable Award Agreement, for
Awards made after July 22, 2004, if a Participant’s Date of Termination occurs
by reason of Retirement, (i) all unvested Awards outstanding immediately prior
to the Participant’s Date of Termination shall be forfeited and (ii) all vested
Options and Stock Appreciation Rights shall remain exercisable and shall be
exercisable until one year from the Participant’s Date of Termination and
thereafter shall be forfeited. Options and Stock Appreciation Rights which are
or become exercisable at the time of a Participant’s death may be exercised by
the Participant’s designated beneficiary or, in the absence of such designation,
by the person to whom the Participant’s rights will pass by will or the laws of
descent and distribution.   15.3.   Except as may be set forth in the applicable
Award Agreement, for Awards made prior to July 22, 2004, if a Participant’s Date
of Termination occurs by reason of Participant’s employment being terminated by
the Participant’s Employer for any reason other than Cause, or by the
Participant with the written consent and approval of the Participant’s Employer,
the Restricted Period shall lapse on a proportion of any Awards outstanding
immediately prior to the Participant’s Date of Termination (except that, to the
extent that an Award of Restricted Stock, Restricted Stock Units, Performance
Units, Performance Stock

16

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

 

    and Phantom Stock is subject to a Performance Period), such proportion of
the Award shall remain subject to the same terms and conditions for vesting as
were in effect prior to the Date of Termination and shall be determined at the
end of the Performance Period. The proportion of an Award upon which the
Restricted Period shall lapse shall be a fraction, the denominator of which is
the total number of months of any Restricted Period applicable to an Award and
the numerator of which is the number of months of such Restricted Period which
elapsed prior to the Date of Termination. Except as may be set forth in the
applicable Award Agreement, for Awards made after July 22, 2004, if a
Participant’s Date of Termination occurs by reason of Participant’s employment
being terminated by the Participant’s Employer for any reason other than Cause,
or by the Participant with the written consent and approval of the Participant’s
Employer, (i) all unvested Awards outstanding immediately prior to the
Participant’s Date of Termination shall be forfeited and (ii) all vested Options
and Stock Appreciate Rights shall remain exercisable as provided in
Section 15.4.   15.4.   Options and Stock Appreciation Rights which are or
become exercisable by reason of the Participant’s employment being terminated by
the Participant’s Employer for reasons other than Cause or by the Participant
with the consent and approval of the Participant’s Employer, shall be
exercisable until 60 days from the Participant’s Termination Date and shall
thereafter be forfeited if not exercised.   15.5.   Except to the extent the
Company shall otherwise determine, if, as a result of a sale or other
transaction (other than a Change in Control), a Participant’s Employer ceases to
be a Related Company (and the Participant’s Employer is or becomes an entity
that is separate from the Company), the occurrence of such transaction shall be
treated as the Participant’s Date of Termination caused by the Participant’s
employment being terminated by the Participant’s Employer for a reason other
than Cause.   15.6.   Notwithstanding the foregoing provisions of this
Section 15, the Committee may, with respect to any Awards of a Participant (or
portion thereof) that are outstanding immediately prior to the Participant’s
Date of Termination, determine that a Participant’s Date of Termination will not
result in forfeiture or other termination of the Award, or may extend the period
during which any Options or Stock Appreciation Rights may be exercised, but
shall not extend such period beyond the expiration date set forth in the Award.
In no event may an Option or Stock Appreciation Right be extended to a date
which is more than ten years from the date of grant.

SECTION 16
Adjustments to Shares

16.1.   If the Company shall effect a reorganization, merger, or consolidation,
or similar event or effect any subdivision or consolidation of shares of Stock
or other capital readjustment, payment of stock dividend, stock split, spin-off,
combination of shares or recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving compensation therefor in
money, services or property, then the Committee shall appropriately adjust
(i) the number of shares of Stock available under the Plan, (ii) the number of
shares of Stock available under any individual or other limitations under the
Plan,

17

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

 

    (iii) the number of shares of Stock subject to outstanding Awards and
(iv) the per-share price under any outstanding Award to the extent that the
Participant is required to pay a purchase price per share with respect to the
Award.   16.2.   If the Committee determines that an adjustment in accordance
with the provisions of Subsection 16.1 would not be fully consistent with the
purposes of the Plan or the purposes of the outstanding Awards under the Plan,
the Committee may make such other adjustments, if any, that the Committee
reasonably determines are consistent with the purposes of the Plan and/or the
affected Awards.   16.3.   To the extent that any reorganization, merger,
consolidation, or similar event or any subdivision or consolidation of shares of
Stock or other capital readjustment, payment of stock dividend, stock split,
spin-off, combination of shares or recapitalization or other increase or
reduction of the number of shares of Stock hereunder is also accompanied by or
related to a Change in Control, the adjustment hereunder shall be made prior to
the acceleration contemplated by Section 20.

SECTION 17
Transferability and Deferral of Awards

17.1.   Awards under the Plan are not transferable except by will or by the laws
of descent and distribution. To the extent that a Participant who receives an
Award under the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this Section 17, the Committee may,
subject to any restrictions under applicable securities laws, permit Awards
under the Plan (other than an Incentive Stock Option) to be transferred by a
Participant for no consideration to or for the benefit of the Participant’s
Immediate Family (including, without limitation, to a trust for the benefit of a
Participant’s Immediate Family or to a Partnership comprised solely of members
of the Participant’s Immediate Family), subject to such limits as the Committee
may establish, provided the transferee shall remain subject to all of the terms
and conditions applicable to such Award prior to such transfer.   17.2.   The
Committee may permit a Participant to elect to defer payment under an Award
under such terms and conditions as the Committee, in its sole discretion, may
determine; provided that, any such deferral election must be made in accordance
with the terms of a separate written nonqualified deferred compensation plan
sponsored by the Company and only to the extent made in accordance with the
election timing rules under Code Section 409A.

SECTION 18
Award Agreement

18.1.   Each Participant granted an Award pursuant to the Plan shall sign an
Award Agreement which signifies the offer of the Award by the Company and the
acceptance of the Award by the Participant in accordance with the terms of the
Award and the provisions of the Plan. Each Award Agreement shall reflect the
terms and conditions of the Award. Participation in the Plan shall confer no
rights to continued employment with an Employer nor shall it restrict the right
of an Employer to terminate a Participant’s employment at any time for any

18

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

 

    reason, not withstanding the fact that the Participant’s rights under this
Plan may be negatively affected by such action.

SECTION 19
Tax Withholding

19.1   All Awards and other payments under the Plan are subject to withholding
of all applicable taxes, which withholding obligations shall be satisfied
(without regard to whether the Participant has transferred an Award under the
Plan) by a cash remittance, or with the consent of the Committee, through the
surrender of shares of Stock which the Participant owns or to which the
Participant is otherwise entitled under the Plan pursuant to an irrevocable
election submitted by the Participant to the Company at the office designated
for such purpose. The number of shares of Stock needed to be submitted in
payment of the taxes shall be determined using the Fair Market Value as of the
applicable tax date rounding down to the nearest whole share.

SECTION 20
Change in Control

20.1.   After giving effect to the provisions of Section 16 (relating to the
adjustment of shares of Stock), and except as otherwise provided in the Plan or
the Agreement reflecting the applicable Award, upon the occurrence of a Change
in Control:

  (a)   All outstanding Options (regardless of whether in tandem with Stock
Appreciation Rights) shall become fully exercisable and may be exercised at any
time during the original term of the Option;     (b)   All outstanding Stock
Appreciation Rights (regardless of whether in tandem with Options) shall become
fully exercisable and may be exercised at any time during the original term of
the Option;     (c)   All shares of Stock subject to Awards shall become fully
vested and be distributed to the Participant; and     (d)   Performance Units
may be paid out in such manner and amounts as may be reasonably determined by
the Committee.

    The accelerated payment of any Award upon a Change in Control as described
in this Section 20.1 shall occur only to the extent such payment would not
result in an adverse tax consequence to the Participant under Code Section 409A.
In addition, Performance Units shall be paid in accordance with the terms of the
Award Agreement.

SECTION 21
MERGERS / ACQUISITIONS

21.1   In the event of any merger or acquisition involving the Company and/or a
Subsidiary of the Company and another entity which results in the Company being
the survivor or the

19

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

 

    surviving direct or indirect parent corporation of the merged or acquired
entity, the Committee may grant Awards under the provisions of the Plan in
substitution for awards held by employees or former employees of such other
entity under any plan of such entity immediately prior to such merger or
acquisition upon such terms and conditions as the Committee, in its discretion,
shall determine and as otherwise may be required by the Code to ensure such
substitution is not treated as the grant of a new Award for tax or accounting
purposes.   21.2   In the event of a merger or acquisition involving the Company
in which the Company is not the surviving corporation, the Acquiring Corporation
shall either assume the Company’s rights and obligations under outstanding
Awards or substitute awards under the Acquiring Corporation’s plans, or if none,
securities for such outstanding Awards. In the event the Acquiring Corporation
elects not to assume or substitute for such outstanding Awards, and without
limiting Section 20, the Board shall provide that any unexercisable and/or
unvested portion of the outstanding Awards shall be immediately exercisable and
vested as of a date prior to such merger or consolidation, as the Board so
determines. The exercise and/or vesting of any Award that was permissible solely
by reason of this Section 21.2 shall be conditioned upon the consummation of the
merger or consolidation. Unless otherwise provided in the Plan or the Award, any
Awards which are neither assumed by the Acquiring Corporation nor exercised on
or prior to the date of the transaction shall terminate effective as of the
effective date of the transaction.

SECTION 22
Termination and Amendment

22.1   The Board may suspend, terminate, modify or amend the Plan, provided that
any amendment that would (a) increase the aggregate number of shares of Stock
which may be issued under the Plan, (b) would change the method of determining
the exercise price of Options, other than to change the method of determining
Fair Market Value of Stock as set forth in Section 2.1(o) of the Plan, or
(c) materially modify the requirements as to eligibility for participation in
the Plan, shall be subject to the approval of the Company’s stockholders, except
that any such increase or modification that may result from adjustments
authorized by Section 16 does not require such approval. No suspension,
termination, modification or amendment of the Plan may terminate a Participant’s
existing Award or materially and adversely affect a Participant’s rights under
such Award without the Participant’s consent.

20