Exhibit 10.1





Exhibit 10.1




WESTMORELAND COAL COMPANY




AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN FOR EMPLOYEES

AND NON-EMPLOYEE DIRECTORS




1. Purpose




The purpose of this 2007 Equity Incentive Plan for Employees and Non-Employee Directors (the
“Plan”) of Westmoreland Coal Company, a Delaware corporation (the “Company”), is to advance the
interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and
motivate persons who are expected to make important contributions to the Company and by providing
such persons with equity ownership opportunities and performance-based incentives that are intended
to better align the interests of such persons with those of the Company’s stockholders.



2. Eligibility




All of the Company’s employees, officers and directors are eligible to be granted options,
stock appreciation rights, restricted stock, restricted stock units and other stock-based awards
(each, an “Award”) under the Plan. Each person who receives an Award under the Plan is deemed a
“Participant”.



Except where the context otherwise requires, the term “Company” shall include any of the
Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f)
of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the
“Code”) and any other business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as determined by the Board of
Directors of the Company (the “Board”); provided, however, that the term “Company” shall be limited
to include only entities that are eligible issuers of service recipient stock (as defined in Treas.
Reg. Section 1.409A-1(b)(5)(iii)(E)), or the applicable successor regulations for Awards that would
otherwise be subject to Section 409A, unless the Board of Directors determines otherwise.



3. Administration and Delegation




(a) Administration by Board of Directors. The Plan will be administered by the Board.
The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may
construe and interpret the terms of the Plan and any Award agreements entered into under the Plan.
The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or
any Award in the manner and to the extent it shall deem expedient to carry the Plan into effect and
it shall be the sole and final judge of such expediency. All decisions by the Board shall be made
in the Board’s sole discretion and shall be final and binding on all persons having or claiming any
interest in the Plan or in any Award. No director or person acting pursuant to the authority
delegated by the Board shall be liable for any action or determination relating to or under the
Plan made in good faith.


 


 









 





(b) Appointment of Committees. To the extent permitted by applicable law, the Board
may delegate any or all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a
Committee of the Board to the extent that the Board’s powers or authority under the Plan have been
delegated to such Committee.



4. Stock Available for Awards




(a) Number of Shares. Subject to adjustment under Section 10, Awards may be made
under the Plan for up to 700,000 shares of common stock, $2.50 par value per share, of the Company
(the “Common Stock”). If any Award expires; is terminated, surrendered or canceled without having
been fully exercised; is forfeited in whole or in part (including as the result of shares of Common
Stock subject to such Award being repurchased by the Company at the original issuance price
pursuant to a contractual repurchase right); is settled in cash or otherwise results in any Common
Stock not being issued, the unused Common Stock covered by such Award shall again be available for
the grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by a
Participant to exercise an Award shall be added to the number of shares of Common Stock available
for the grant of Awards under the Plan. However, in the case of Incentive Stock Options (as
hereinafter defined), the foregoing provisions shall be subject to any limitations under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.



(b) Section 162(m) Per-Participant Limit. The maximum number of shares of Common
Stock with respect to which Awards may be granted to any Participant under the Plan shall be
200,000 per calendar year. For purposes of the foregoing limit, the combination of an Option in
tandem with a SAR (as each is hereafter defined) shall be treated as a single Award. The
per-Participant limit described in this Section 4(b) shall be construed and applied consistently
with Section 162(m) of the Code or any successor provision thereto, and the regulations thereunder
(“Section 162(m)”).



(c) Substitute Awards. In connection with a merger or consolidation of an entity with
the Company or the acquisition by the Company of property or stock of an entity, the Board may
grant Awards in substitution for any options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan.
Substitute Awards shall not count against the overall share limit set forth in Section 4(a), except
as may be required by reason of Section 422 and related provisions of the Code.



5. Stock Options




(a) General. The Board may grant options to purchase Common Stock (each, an “Option”)
and determine the number of shares of Common Stock to be covered by each Option, the exercise price
of each Option and the conditions and limitations applicable to the exercise of each Option,
including conditions relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option that is not intended to be an Incentive Stock Option (as
hereinafter defined) shall be designated a “Nonstatutory Stock Option.”


 


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(b) Incentive Stock Options. An Option that the Board intends to be an “incentive
stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be
granted to employees of Westmoreland Coal Company, any of Westmoreland Coal Company’s present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any
other entities the employees of which are eligible to receive Incentive Stock Options under the
Code, and shall be subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any other party, if an
Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive
Stock Option or for any action taken by the Board, including without limitation the conversion of
an Incentive Stock Option to a Nonstatutory Stock Option.




(c) Exercise Price; Fair Market Value.



(1) The Board shall establish the exercise price of each Option and specify such exercise
price in the applicable option agreement. The exercise price shall be not less than 100% of the
Fair Market Value (as defined below) of a share of Common Stock on the date the Option is granted;
provided that if the Board approves the grant of an Option with an exercise price to be determined
on a future date, the exercise price shall be not less than 100% of the Fair Market Value of a
share of Common Stock on such future date.



(2) The “Fair Market Value” of a share of Common Stock for purposes of the Plan shall be
determined as follows:




(A) if the Common Stock trades on a national securities exchange, the closing
sale price (for the primary trading session) in the principal U.S. market for the
Common Stock on the date of grant; or




(B) if the Common Stock does not trade on any such exchange, the average of the
closing bid and asked prices as reported by an authorized OTCBB market data vendor
as listed on the OTCBB website (otcbb.com) on the date of grant; or




(C) if the Common Stock is not publicly traded, the Board will determine the
Fair Market Value for purposes of the Plan using any measure of value it determines
to be appropriate (including, as it considers appropriate, relying on appraisals) in
a manner consistent with the valuation principles under Section 409A of the Code,
except as the Board or Committee may expressly determine otherwise; or




(D) for any date that is not a trading day, the Fair Market Value of a share of
Common Stock for such date will be determined by using the closing sale price or
average of the closing bid and asked prices, as appropriate, for the immediately
preceding trading day and with the timing in the formulas above adjusted
accordingly.


 


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The Board may substitute a particular time of day or other measure of “closing sale price” or
“closing bid and asked prices” if appropriate because of exchange or market procedures or can, in
its sole discretion, use weighted averages either on a daily basis or such longer period as
complies with Section 409A of the Code. The Board has sole discretion to determine the Fair Market
Value for purposes of this Plan, and all Awards are conditioned on the Participants’ agreement that
the Board’s determination is conclusive and binding even though others might make a different
determination.



(d) Duration of Options. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Board may specify in the applicable option agreement, provided,
however, that no Option will be granted for a term in excess of 10 years.



(e) Exercise of Option. Options may be exercised by delivery to the Company of a
written notice of exercise signed by the proper person or by any other form of notice (including
electronic notice) approved by the Board, together with payment in full as specified in Section
5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject to
the Option will be delivered by the Company following exercise either as soon as practicable or,
subject to such conditions as the Board shall specify, on a deferred basis (with the Company’s
obligation to be evidenced by an instrument providing for future delivery of the deferred shares at
the time or times specified by the Board).



(f) Payment Upon Exercise. Common Stock purchased upon the exercise of an Option
granted under the Plan shall be paid for as follows:




(1) in cash or by check, payable to the order of the Company;



(2) except as may otherwise be provided in the applicable option agreement, by (i) delivery of
an irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax withholding or (ii)
delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions
to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;



(3) to the extent provided for in the applicable option agreement or approved by the Board, in
its sole discretion, by delivery (either by actual delivery or attestation) of shares of Common
Stock owned by the Participant valued at their Fair Market Value, provided (i) such method of
payment is then permitted under applicable law, (ii) such Common Stock, if acquired directly from
the Company, was owned by the Participant for such minimum period of time, if any, as may be
established by the Board in its discretion and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;



(4) to the extent provided for in the applicable Nonstatutory Stock Option agreement or
approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the
Company, as a result of which the Participant would receive (A) the number of shares of Common
Stock underlying the Option so exercised reduced by (B) the number of shares of Common Stock equal
to the aggregate exercise price of the Option divided by the Fair Market Value on the date of
exercise;



(5) to the extent provided for in the applicable Incentive Stock Option agreement or approved
by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a
result of which the Participant would receive the number of
 shares of Common Stock underlying the Option so exercised reduced by the number of shares of
Common Stock equal to the aggregate exercise price of the Option divided by the Fair Market Value
on the date of exercise; provided, however, that such provision shall only be operative in an
Incentive Stock Option agreement to the extent that the inclusion of the provision will not cause
the Option to fail to qualify as an Incentive Stock Option under the applicable Code rules;


 


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(6) payment of such other lawful consideration as the Board may determine; or




(7) by any combination of the above permitted forms of payment.



(g) Limitation on Repricing. Unless such action is approved by the Company’s
stockholders: (i) no outstanding Option granted under the Plan may be amended to provide an
exercise price per share that is lower than the then-current exercise price per share of such
outstanding Option (other than adjustments pursuant to Section 10) and (2) the Board may not cancel
any outstanding option (whether or not granted under the Plan) and grant in substitution therefor
new Awards under the Plan covering the same or a different number of shares of Common Stock and
having an exercise price per share lower than the then-current exercise price per share of the
cancelled option.



6. Director Awards.




(a) Initial Grant. Upon the commencement of service on the Board by any individual
who is not then an employee of the Company or any subsidiary of the Company, the Company may elect
to grant to such person an Award with a value determined in a manner deemed appropriate by the
Board, with such award being made in the Board’s sole discretion.



(b) Annual Grant. On the date of each annual meeting of stockholders of the Company,
the Company shall grant to each member of the Board of Directors of the Company who is serving as a
director of the Company immediately following such annual meeting and who is not then an employee
of the Company or any of its subsidiaries, an Award with a value equal to $50,000 based on the Fair
Market Value of the Company’s common stock.



(c) Grant or Base Price. The grant or base price or exercise price of an Award
granted under this Section 6 shall not be less than 100% of the Fair Market Value per share of
Common Stock on the date of grant of the Award.




(d) Terms of Director Awards.



(1) Subject to clauses (2) and (3) below, Awards granted under this Section 6 shall vest
according to the Schedule specified in the Award.



(2) Upon the occurrence of a Reorganization Event or a Change in Control Event (as such terms
are defined below), Awards made to directors shall be treated in accordance with Sections 10(b) and
10(c).


 


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(3) If a Participant’s service as a director terminates for any reason other than a
Reorganization Event or a Change in Control Event, and if the Participant has served as a
director for three years or more, then such Participant’s Awards shall vest and become fully
exercisable on the date such Participant ceases to be a director. If a Participant’s service as a
director terminates for any reason other than a Reorganization Event or a Change in Control Event,
and such Participant has served as a director for less than three years, then all of the
Participant’s unvested Awards shall expire on the date such Participant ceases to be a director;
provided, however, that the Board may in its sole discretion provide for the vesting of any
unvested Award if the Participant’s service as a director terminates by reason of death or
disability.



(4) Awards granted under this Section 6 shall expire at the time specified in the relevant
Award, which in the case of Options shall be the earlier of 10 years from the date of grant or
three months following cessation of Board service.




(5) Awards shall contain such other terms and conditions as the Board shall determine.



(e) Board Discretion. This Plan is not intended to limit the Board’s ability to
revise the incentive compensation payable to the directors, and the Board retains the specific
authority to from time to time increase or decrease the dollar values specified in Section 6(a) and
Section 6(b) and to amend the terms of director Awards as set forth in Section 6(d).



7. Stock Appreciation Rights.




(a) General. The Board may grant Awards consisting of a stock appreciation right
(“SAR”) entitling the holder, upon exercise, to receive an amount of Common Stock or cash or a
combination thereof (such form to be determined by the Board) determined in whole or in part by
reference to appreciation, from and after the date of grant, in the Fair Market Value of a share of
Common Stock. The date as of which such appreciation or other measure is determined shall be the
exercise date.



(b) Grants. SARs may be granted in tandem with, or independently of, Options granted
under the Plan.



(c) Grant or Base Price. The grant or base price or exercise price of an SAR shall
not be less than 100% of the Fair Market Value per share of Common Stock on the date of grant of
the SAR; provided that if the Board approves the grant of an SAR with an exercise price to be
determined on a future date, the exercise price shall be not less than 100% of the Fair Market
Value of a share of Common Stock on such future date.




(d) Term. The term of an SAR shall not be more than 10 years from the date of grant.



(e) Exercise. SARs may be exercised by delivery to the Company of a written notice of
exercise signed by the proper person or by any other form of notice (including electronic notice)
approved by the Board, together with any other documents required by the Board.


 


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	8.	 	Restricted Stock; Restricted Stock Units.





(a) General. The Board may grant Awards entitling recipients to acquire shares of
Common Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula price (or to require forfeiture of such
shares if issued at no cost) from the recipient in the event that conditions specified by the Board
in the applicable Award are not satisfied prior to the end of the applicable restriction period or
periods established by the Board for such Award. Instead of granting Awards for Restricted Stock,
the Board may grant Awards entitling the recipient to receive shares of Common Stock to be
delivered at the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock
and Restricted Stock Units are each referred to herein as a “Restricted Stock Award”).



(b) Terms and Conditions. The Board shall determine the terms and conditions of a
Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the
issue price, if any.




(c) Additional Provisions Relating to Restricted Stock.



(1) Dividends. Participants holding shares of Restricted Stock will be entitled to
all ordinary cash dividends paid with respect to such shares, unless otherwise provided by the
Board. If any such dividends or distributions are paid in shares, or consist of a dividend or
distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or
other property will be subject to the same restrictions on transferability and forfeitability as
the shares of Restricted Stock with respect to which they were paid. Each dividend payment will be
made no later than the end of the calendar year in which the dividends are paid to shareholders of
that class of stock or, if later, the 15th day of the third month following the date the dividends
are paid to shareholders of that class of stock.



(2) Stock Certificates. The Company may require that any stock certificates issued in
respect of shares of Restricted Stock shall be deposited in escrow by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the
applicable restriction periods, the Company (or such designee) shall deliver the certificates no
longer subject to such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts
due or exercise rights of the Participant in the event of the Participant’s death (the “Designated
Beneficiary”). In the absence of an effective designation by a Participant, “Designated
Beneficiary” shall mean the Participant’s estate.




(d) Additional Provisions Relating to Restricted Stock Units.



(1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e.,
settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to
receive from the Company one share of Common Stock or an amount of cash equal to the Fair Market
Value of one share of Common Stock, as provided in the applicable Award agreement. The Board may,
in its discretion, provide that settlement of Restricted Stock Units shall be deferred in a manner
consistent with Section 409A, on a mandatory basis or at the election of the Participant.



(2) Voting Rights. A Participant shall have no voting rights with respect to any
Restricted Stock Units.


 


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(3) Dividend Equivalents. To the extent provided by the Board, in its sole
discretion, a grant of Restricted Stock Units may provide Participants with the right to receive an
amount equal to any dividends or other distributions declared and paid on an equal number of
outstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paid
currently or credited to an account for the Participants, may be settled in cash and/or shares of
Common Stock and may be subject to the same restrictions on transfer and forfeitability as the
Restricted Stock Units with respect to which paid, as determined by the Board in its sole
discretion, subject in each case to such terms and conditions as the Board shall establish, in each
case to be set forth in the applicable Award agreement.



9. Other Stock-Based Awards.




Other Awards of shares of Common Stock, and other Awards that are valued in whole or in part
by reference to, or are otherwise based on, shares of Common Stock or other property, may be
granted hereunder to Participants (“Other Stock-Based Awards”), including without limitation Awards
entitling recipients to receive shares of Common Stock to be delivered in the future. Such Other
Stock-Based Awards shall also be available as a form of payment in the settlement of other Awards
granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise
entitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Board
shall determine. Subject to the provisions of the Plan, the Board shall determine the terms and
conditions of each Other Stock-Based Award, including any purchase price applicable thereto.



10. Adjustments for Changes in Common Stock and Certain Other Events.




(a) Changes in Capitalization. In the event of any stock split, reverse stock split,
stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or
other similar change in capitalization or event, or any dividend or distribution to holders of
Common Stock other than an ordinary cash dividend, (i) the number and class of securities available
under this Plan, (ii) the sub-limit set forth in Section 4(b), (iii) the number and class of
securities and exercise price per share of each outstanding Option, (iv) the share- and per-share
provisions and the grant or base price of each outstanding SAR, (v) the number of shares subject to
and the repurchase price per share subject to each outstanding Restricted Stock Award, (vi) the
share- and per-share-related provisions and the purchase price, if any, of each outstanding Other
Stock-Based Award, and (vii) the terms and conditions of each Award issuable under Section 6, shall
be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the
manner determined by the Board. Without limiting the generality of the foregoing, in the event the
Company effects a split of the Common Stock by means of a stock dividend and the exercise price of
and the number of shares subject to an outstanding Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such dividend), then an
optionee who exercises an Option between the record date and the distribution date for such stock
dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to
the shares of Common Stock acquired upon such Option exercise, notwithstanding the
fact that such shares were not outstanding as of the close of business on the record date for
such stock dividend.


 


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(b) Reorganization Events.



(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidation
of the Company with or into another entity as a result of which all of the Common Stock of the
Company is converted into or exchanged for the right to receive cash, securities or other property
or is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities or
other property pursuant to a share exchange transaction or (c) any liquidation or dissolution of
the Company.



(2) Consequences of a Reorganization Event on Awards Other than Restricted Stock
Awards. In connection with a Reorganization Event, the Board may take any one or more of the
following actions as to all or any (or any portion of) outstanding Awards other than Restricted
Stock Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, or
substantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to a Participant, provide that the
Participant’s unexercised Options or other unexercised Awards will terminate immediately prior to
the consummation of such Reorganization Event unless exercised by the Participant within a
specified period following the date of such notice, (iii) provide that outstanding Awards shall
become exercisable, realizable, or deliverable, or restrictions applicable to an Award shall lapse,
in whole or in part prior to or upon such Reorganization Event, (iv) in the event of a
Reorganization Event under the terms of which holders of Common Stock will receive upon
consummation thereof a cash payment for each share surrendered in the Reorganization Event (the
“Acquisition Price”), make or provide for a cash payment to a Participant equal to the excess, if
any, of (A) the Acquisition Price times the number of shares of Common Stock subject to the
Participant’s Options or other Awards (to the extent the exercise price does not exceed the
Acquisition Price) over (B) the aggregate exercise price of all such outstanding Options or other
Awards and any applicable tax withholdings, in exchange for the termination of such Options or
other Awards, (v) provide that, in connection with a liquidation or dissolution of the Company,
Awards shall convert into the right to receive liquidation proceeds (if applicable, net of the
exercise price thereof and any applicable tax withholdings) and (vi) any combination of the
foregoing. In taking any of the actions permitted under this Section 10(b), the Board shall not be
obligated by the Plan to treat all Awards, or all Awards of the same type, identically.



For purposes of clause (i) above, an Option shall be considered assumed if, following
consummation of the Reorganization Event, the Option confers the right to purchase, for each share
of Common Stock subject to the Option immediately prior to the consummation of the Reorganization
Event, the consideration (whether cash, securities or other property) received as a result of the
Reorganization Event by holders of Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if the consideration received as a result of the
Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an
affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation,
provide for the consideration to be received upon the
exercise of Options to consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in value (as determined by the Board) to the per
share consideration received by holders of outstanding shares of Common Stock as a result of the
Reorganization Event.


 


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(3) Consequences of a Reorganization Event on Restricted Stock Awards. Upon the
occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the
repurchase and other rights of the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise,
apply to the cash, securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as
they applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of a
Reorganization Event involving the liquidation or dissolution of the Company, except to the extent
specifically provided to the contrary in the instrument evidencing any Restricted Stock Award or
any other agreement between a Participant and the Company, all restrictions and conditions on all
Restricted Stock Awards then outstanding shall automatically be deemed terminated or satisfied.




(c) Change in Control Events.




(1) Definition. A “Change in Control Event” shall mean:




(A) (I) except as provided in clause (A)(II) below, the acquisition by an
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial
ownership of any capital stock of the Company if, after such acquisition, such
Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) 20% or more of either (x) the then-outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting
power of the then-outstanding securities of the Company entitled to vote generally
in the election of directors (the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (A), the following
acquisitions shall not constitute a Change in Control Event: (i) any acquisition
directly from the Company (excluding an acquisition pursuant to the exercise,
conversion or exchange of any security exercisable for, convertible into or
exchangeable for common stock or voting securities of the Company, unless the Person
exercising, converting or exchanging such security acquired such security directly
from the Company or an underwriter or agent of the Company), (ii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (iii) any acquisition by any
corporation pursuant to a Business Combination (as defined below) which complies
with clauses (x) and (y) of subsection (C) of this definition; and provided,
further, that if any person beneficially owns 20% or more of the Outstanding Company
Common Stock or the Outstanding Company Voting Securities, but notwithstanding such
ownership, a Change in Control Event has not occurred because the Person’s
acquisition of all or a portion of such 

 


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Person’s
shares is or was an acquisition described in clause (i) of the preceding proviso, then the
acquisition by that Person of any additional shares of Common Stock other than
pursuant to a stock split, stock dividend, or other similar event shall constitute a
Change in Control Event; or (II) notwithstanding the foregoing clause (A)(I), the
acquisition of 20% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities shall not be a Change of Control Event if the
Person acquiring such interest in the Company’s outstanding securities does not
thereby become an “Acquiring Person” under the terms of the Rights Agreement
(defined below) in effect on the date of the shareholder approval of this Plan;
provided, however, that if such Person would become an “Acquiring Person” under the
terms of the Rights Agreement upon the acquisition of a specified percentage of the
Outstanding Company Common Stock or the Outstanding Company Voting Securities
greater than 20% (the “Modified Ownership Threshold”), then it shall be a Change of
Control Event under this Plan if such Person acquires a beneficial interest in the
Outstanding Company Common Stock or the Outstanding Company Voting Securities at or
above the Modified Ownership Threshold, thereby making such Person an “Acquiring
Person” under the terms of the Rights Agreement. The “Rights Agreement” referred to
in this clause (A)(II) means the Amended and Restated Rights Agreement, dated as of
February 7, 2003, between the Company and Computershare Trust Company, N.A.
(formerly known as EquiServe Trust Company, N.A.), as rights agent, as amended by
the First Amendment to the Amended and Restated Rights Agreement, dated as of May 2,
2007.




(B) such time as the Continuing Directors (as defined below) do not constitute
a majority of the Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any date
a member of the Board (x) who was a member of the Board on the date of the initial
adoption of this Plan by the Board or (y) who was nominated pursuant to the terms of
the Standby Purchase Agreement, dated as of May 2, 2007 between the Company and
Tontine Capital Partners, L.P. or (z) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing Directors at
the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were Continuing
Directors at the time of such nomination or election; provided, however, that there
shall be excluded from this clause (y) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened solicitation
of proxies or consents, by or on behalf of a person other than the Board; or


 


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(C) the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), unless, immediately following such Business Combination, each of the
following two conditions is satisfied: (x) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly, more
than 50% of the then-outstanding shares of common stock and the combined voting
power of the then-outstanding securities entitled to vote generally in the election
of directors, respectively, of the resulting or acquiring corporation in such
Business Combination (which shall include, without limitation, a corporation which
as a result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the “Acquiring
Corporation”) in substantially the same proportions as their ownership of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
respectively, immediately prior to such Business Combination and (y) no Person
(excluding any employee benefit plan (or related trust) maintained or sponsored by
the Company or by the Acquiring Corporation) beneficially owns, directly or
indirectly, 20% or more of the then-outstanding shares of common stock of the
Acquiring Corporation, or of the combined voting power of the then-outstanding
securities of such corporation entitled to vote generally in the election of
directors (except to the extent that such ownership existed prior to the Business
Combination); or




(D) the liquidation or dissolution of the Company.



(2) Effect on Options. Notwithstanding the provisions of Section 10(b) and
irrespective of whether such an event is also a Reorganization Event, effective immediately prior
to a Change in Control Event, except to the extent specifically provided to the contrary in the
instrument evidencing any Option or any other agreement between a Participant and the Company.
Upon the occurrence of a Change of Control Event, unless specifically provided to the contrary in
the instrument evidencing any Award or any other agreement between a participant and the Company,
unvested options granted to an employee or a director of the Company will automatically become
vested or exercisable upon a Change of Control Event if such employee is Terminated within 12
months following such Change of Control or the director is removed from the Board within 12 months
of the Change of Control, or, if a regular meeting of shareholders occurs within 12 months of the
Change of Control, such director is not nominated for re-election at such meeting after he or she
expresses a desire to be so nominated. For purposes of the foregoing, “Terminated” means
involuntary dismissal or a material change in the employee’s level of total compensation or a
material change in his or her level of responsibility which, in either such case, causes the
employee to voluntarily terminate his or her employment.



(3) Effect on Restricted Stock Awards.  Notwithstanding the provisions of Section
10(b) and irrespective of whether such an event is also a Reorganization Event, effective
immediately prior to a Change in Control Event, except to the extent specifically provided to the
contrary in the instrument evidencing any Restricted Stock Award or any other agreement between a
Participant and the Company, all restrictions and conditions on all Restricted Stock Awards
then-outstanding shall automatically be deemed terminated or satisfied.


 


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(4) Effect on SARs and Other Stock-Based Awards. Upon the occurrence of a Change of
Control Event, unless specifically provided to the contrary in the instrument evidencing any Award
or any other agreement between a participant and the Company, unvested SARs granted to an employee
or a director of the Company will automatically become vested or exercisable upon a Change of
Control Event if such employee is Terminated within 12 months following such Change of Control or
the director is removed from the Board within 12 months of the Change of Control, or, if a regular
meeting of shareholders occurs within 12 months of the Change of Control, such director is not
nominated for re-election at such meeting after he or she expresses a desire to be so nominated.
For purposes of the foregoing, “Terminated” means involuntary dismissal or a material change in the
employee’s level of total compensation or a material change in his or her level of responsibility
which, in either such case, causes the employee to voluntarily terminate his or her employment.



The Board may specify in an Award at the time of the grant the effect of a Change in Control
Event on any Other Stock-Based Award.



11. General Provisions Applicable to Awards




(a) Transferability of Awards. Awards shall not be sold, assigned, transferred,
pledged or otherwise encumbered by the person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and distribution or, other than in the case
of an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during the
life of the Participant, shall be exercisable only by the Participant; provided, however, that the
Board may permit or provide in an Award for the gratuitous transfer of the Award by the Participant
to or for the benefit of any immediate family member, family trust or other entity established for
the benefit of the Participant and/or an immediate family member thereof if, with respect to such
proposed transferee, the Company would be eligible to use a Form S-8 for the registration of the
sale of the Common Stock subject to such Award under the Securities Act of 1933, as amended;
provided, further, that the Company shall not be required to recognize any such transfer until such
time as the Participant and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument in form and substance satisfactory to the Company
confirming that such transferee shall be bound by all of the terms and conditions of the Award.
References to a Participant, to the extent relevant in the context, shall include references to
authorized transferees.



(b) Documentation. Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Such written instrument may be in the form of an
agreement signed by the Company and the Participant or a written confirming memorandum to the
Participant from the Company. Each Award may contain terms and conditions in addition to those set
forth in the Plan.



(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be
made alone or in addition or in relation to any other Award. The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.


 


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(d) Termination of Status. The Board shall determine the effect on an Award of the
disability, death, termination of employment, authorized leave of absence or other change in the
employment or other status of a Participant and the extent to which, and the period during
which, the Participant, or the Participant’s legal representative, conservator, guardian or
Designated Beneficiary, may exercise rights under the Award.



(e) Withholding. The Participant must satisfy all applicable federal, state, and
local or other income and employment tax withholding obligations before the Company will deliver
stock certificates or otherwise recognize ownership of Common Stock under an Award. The Company
may decide to satisfy the withholding obligations through additional withholding on salary or
wages. If the Company elects not to or cannot withhold from other compensation, the Participant
must pay the Company the full amount, if any, required for withholding or have a broker tender to
the Company cash equal to the withholding obligations. Payment of withholding obligations is due
before the Company will issue any shares on exercise or release from forfeiture of an Award or, if
the Company so requires, at the same time as is payment of the exercise price unless the Company
determines otherwise. If provided for in an Award or approved by the Board in its sole discretion,
a Participant may satisfy such tax obligations in whole or in part by delivery of shares of Common
Stock, including shares retained from the Award creating the tax obligation, valued at their Fair
Market Value; provided, however, except as otherwise provided by the Board, that the total tax
withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s
minimum statutory withholding obligations (based on minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements cannot be subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.



(f) Amendment of Award. Subject to Section 5(g), the Board may amend, modify or
terminate any outstanding Award, including but not limited to, substituting therefor another Award
of the same or a different type, changing the date of exercise or realization, and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to
such action shall be required unless (i) the Board determines that the action, taking into account
any related action, would not materially and adversely affect the Participant’s rights under the
Plan or (ii) the change is permitted under Section 10 hereof.



(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any
shares of Common Stock pursuant to the Plan or to remove restrictions from shares previously
delivered under the Plan until (i) all conditions of the Award have been met or removed to the
satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied, including any
applicable securities laws and any applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the Company such representations or
agreements as the Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations.



(h) Acceleration. The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or conditions, or
otherwise realizable in full or in part, as the case may be.



 


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(i) Performance Awards.



(1) Grants. Restricted Stock Awards and Other Stock-Based Awards under the Plan may
be made subject to the achievement of performance goals pursuant to this Section 11(i)
(“Performance Awards”), subject to the limit in Section 4(b) on shares covered by such grants.



(2) Committee. Grants of Performance Awards to any Covered Employee intended to
qualify as “performance-based compensation” under Section 162(m) (“Performance- Based
Compensation”) shall be made only by a Committee (or subcommittee of a Committee) comprised solely
of two or more directors eligible to serve on a committee making Awards qualifying as
“performance-based compensation” under Section 162(m). In the case of such Awards granted to
Covered Employees, references to the Board or to a Committee shall be deemed to be references to
such Committee or subcommittee. “Covered Employee” shall mean any person who is a “covered
employee” under Section 162(m)(3) of the Code.



(3) Performance Measures. For any Award that is intended to qualify as
Performance-Based Compensation, the Committee shall specify that the degree of granting, vesting
and/or payout shall be subject to the achievement of one or more objective performance measures
established by the Committee, which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following:




(A) earnings before interest, taxes, depreciation and/or amortization,




(B) earnings before operating income or profit,




(C) operating efficiencies,




(D) return on equity, assets, capital, capital employed, or investment,




(E) after tax operating income,




(F) net income,




(G) earnings or book value per share,




(H) cash flow(s),




(I) total sales or revenues or sales or revenues per employee,




(J) production (separate work units or SWUs),




(K) stock price or total stockholder return,




(L) dividends,




(M) strategic business objectives, consisting of one or more objectives based
on meeting specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures, or




(N) except in the case of a Covered Employee, any other performance criteria
established by the Committee, and may be absolute in their terms or measured against
or in relationship to other companies comparably, similarly or otherwise situated.


 


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Such performance measures may be adjusted to exclude any one or more of (i) extraordinary items,
(ii) gains or losses on the dispositions of discontinued operations, (iii) the cumulative effects
of changes in accounting principles, (iv) the writedown of any asset, and (v) charges for
restructuring and rationalization programs. Such performance measures: (i) may vary by Participant
and may be different for different Awards; (ii) may be particular to a Participant or the
department, branch, line of business, subsidiary, division, operating unit, or other unit in which
the Participant works and may cover such period as may be specified by the Committee; and (iii)
shall be set by the Committee within the time period prescribed by, and shall otherwise comply with
the requirements of, Section 162(m). Awards that are not intended to qualify as Performance-Based
Compensation may be based on these or such other performance measures as the Board may determine.



(4) Adjustments. Notwithstanding any provision of the Plan, with respect to any
Performance Award that is intended to qualify as Performance-Based Compensation, the Committee may
adjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, and
the Committee may not waive the achievement of the applicable performance measures except in the
case of the death or disability of the Participant or a change in control of the Company.



(5) Other. The Committee shall have the power to impose such other restrictions on
Performance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy all
requirements for Performance-Based Compensation.



12. Miscellaneous




(a) No Right To Employment or Other Status. No person shall have any claim or right
to be granted an Award, and the grant of an Award shall not be construed as giving a Participant
the right to continued employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a
Participant free from any liability or claim under the Plan, except as expressly provided in the
applicable Award.



(b) No Rights As Stockholder. Subject to the provisions of the applicable Award, no
Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any
shares of Common Stock to be distributed with respect to an Award until becoming the record holder
of such shares.



(c) Effective Date and Term of Plan. The Plan shall become effective on the date the
Plan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be granted
under the Plan after the expiration of 10 years from the Effective Date, but Awards previously
granted may extend beyond that date.


 


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(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any
portion thereof at any time provided that (i) to the extent required by Section 162(m), no Award
granted to a Participant that is intended to comply with Section 162(m) after the date of such
amendment shall become exercisable, realizable or vested, as applicable to such Award, unless and
until such amendment shall have been approved by the Company’s stockholders if required by Section
162(m) (including the vote required under Section 162(m)); (ii) no amendment that would require
stockholder approval under the rules of American Stock Exchange (“AMEX”) may be made effective
unless and until such amendment shall have been approved by the Company’s stockholders; and (iii)
if the AMEX amends its corporate governance rules so that such rules no longer require stockholder
approval of “material amendments” to equity compensation plans, then, from and after the effective
date of such amendment to the AMEX rules, no amendment to the Plan (A) materially increasing the
number of shares authorized under the Plan (other than pursuant to Section 4(c) or 10), (B)
expanding the types of Awards that may be granted under the Plan, or (C) materially expanding the
class of participants eligible to participate in the Plan shall be effective unless stockholder
approval is obtained. In addition, if at any time the approval of the Company’s stockholders is
required as to any other modification or amendment under Section 422 of the Code or any successor
provision with respect to Incentive Stock Options, the Board may not effect such modification or
amendment without such approval. Unless otherwise specified in the amendment, any amendment to the
Plan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holders
of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board
determines that such amendment does not materially and adversely affect the rights of Participants
under the Plan. No Award shall be made that is conditioned upon stockholder approval of any
amendment to the Plan.



(e) Compliance with Code Section 409A. No Award shall provide for deferral of
compensation that does not comply with Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to comply with Section 409A of the
Code. The Company shall have no liability to a Participant, or any other party, if an Award that
is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or for
any action taken by the Board.



(f) Governing Law. The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware, excluding
choice-of-law principles of the law of such state that would require the application of the laws of
a jurisdiction other than such state.




 


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