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EXHIBIT 10.1




ARCH COAL, INC.

1997 STOCK INCENTIVE PLAN

(As Amended and Restated on July 22, 2004)




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 Employers and Related
Companies terminates for any reason; provided that for purposes of this Plan
only, a Participant’s employment shall not be deemed to be terminated by reason
of a transfer of the Participant between the Company and a Related Company
(including Employers) or between two Related Companies (including Employers);
and further provided that 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.



     (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



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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.




     (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.



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     (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.



     (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.



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     (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.



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.



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     (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.



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.




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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.




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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



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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 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




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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.




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)




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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.




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 by the Committee or as otherwise 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



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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 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




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adjustments as the Committee, in its sole discretion, deems desirable.




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.




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.




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




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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.




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, to be distributed in a lump sum or
installments, as determined by the Committee; 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




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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 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.




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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. The Committee shall determine, in its sole discretion, the manner of
payment, which may include cash or shares of Stock in such proportions as the
Committee shall determine.




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.




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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 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


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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.




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, (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.


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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 prior to the time the Participant has become entitled to payment under the
Award.




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




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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.



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 surviving direct or indirect parent corporation of the
merged or acquired entity, the Committee may grant


21









 






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.





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