(b) *Appointment of Committees**.*To the extent permitted by applicable law, the Boardmay delegate any or all of its powers under the Plan to one or more committees or subcommittees ofthe Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or aCommittee of the Board to the extent that the Board’s powers or authority under the Plan have beendelegated to such Committee.4. *Stock Available for Awards*     (a) *Number of Shares**.*Subject to adjustment under Section 10, Awards may be madeunder 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 havingbeen fully exercised; is forfeited in whole or in part (including as the result of shares of CommonStock subject to such Award being repurchased by the Company at the original issuance pricepursuant to a contractual repurchase right); is settled in cash or otherwise results in any CommonStock not being issued, the unused Common Stock covered by such Award shall again be available forthe grant of Awards under the Plan. Further, shares of Common Stock tendered to the Company by aParticipant to exercise an Award shall be added to the number of shares of Common Stock availablefor the grant of Awards under the Plan. However, in the case of Incentive Stock Options (ashereinafter 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 ortreasury shares.     (b) *Section **162(m)**Per-Participant Limit**.*The maximum number of shares of CommonStock with respect to which Awards may be granted to any Participant under the Plan shall be200,000 per calendar year. For purposes of the foregoing limit, the combination of an Option intandem with a SAR (as each is hereafter defined) shall be treated as a single Award. Theper-Participant limit described in this Section 4(b) shall be construed and applied consistentlywith 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 withthe Company or the acquisition by the Company of property or stock of an entity, the Board maygrant Awards in substitution for any options or other stock or stock-based awards granted by suchentity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deemsappropriate 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), exceptas 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 priceof 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 considersnecessary or advisable. An Option that is not intended to be an Incentive Stock Option (ashereinafter 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 “incentivestock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only begranted to employees of Westmoreland Coal Company, any of Westmoreland Coal Company’s present orfuture parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and anyother entities the employees of which are eligible to receive Incentive Stock Options under theCode, and shall be subject to and shall be construed consistently with the requirements of Section422 of the Code. The Company shall have no liability to a Participant, or any other party, if anOption (or any part thereof) that is intended to be an Incentive Stock Option is not an IncentiveStock Option or for any action taken by the Board, including without limitation the conversion ofan 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 exerciseprice in the applicable option agreement. The exercise price shall be not less than 100% of theFair 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 determinedon a future date, the exercise price shall be not less than 100% of the Fair Market Value of ashare of Common Stock on such future date.          (2) The “Fair Market Value” of a share of Common Stock for purposes of the Plan shall bedetermined as follows:     (A) if the Common Stock trades on a national securities exchange, the closingsale price (for the primary trading session) in the principal U.S. market for theCommon Stock on the date of grant; or     (B) if the Common Stock does not trade on any such exchange, the average of theclosing bid and asked prices as reported by an authorized OTCBB market data vendoras 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 theFair Market Value for purposes of the Plan using any measure of value it determinesto be appropriate (including, as it considers appropriate, relying on appraisals) ina 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 ofCommon Stock for such date will be determined by using the closing sale price oraverage of the closing bid and asked prices, as appropriate, for the immediatelypreceding trading day and with the timing in the formulas above adjustedaccordingly.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, inits sole discretion, use weighted averages either on a daily basis or such longer period as
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complies with Section 409A of the Code. The Board has sole discretion to determine the Fair MarketValue for purposes of this Plan, and all Awards are conditioned on the Participants’ agreement thatthe Board’s determination is conclusive and binding even though others might make a differentdetermination.     (d) *Duration of Options**.*Each Option shall be exercisable at such times and subjectto 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 awritten notice of exercise signed by the proper person or by any other form of notice (includingelectronic notice) approved by the Board, together with payment in full as specified in Section5(f) for the number of shares for which the Option is exercised. Shares of Common Stock subject tothe 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’sobligation to be evidenced by an instrument providing for future delivery of the deferred shares atthe time or times specified by the Board).     (f) *Payment Upon Exercise**.*Common Stock purchased upon the exercise of an Optiongranted 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 ofan irrevocable and unconditional undertaking by a creditworthy broker to deliver promptly to theCompany 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 instructionsto a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay theexercise price and any required tax withholding;          (3) to the extent provided for in the applicable option agreement or approved by the Board, inits sole discretion, by delivery (either by actual delivery or attestation) of shares of CommonStock owned by the Participant valued at their Fair Market Value, provided (i) such method ofpayment is then permitted under applicable law, (ii) such Common Stock, if acquired directly fromthe Company, was owned by the Participant for such minimum period of time, if any, as may beestablished by the Board in its discretion and (iii) such Common Stock is not subject to anyrepurchase, forfeiture, unfulfilled vesting or other similar requirements;          (4) to the extent provided for in the applicable Nonstatutory Stock Option agreement orapproved by the Board in its sole discretion, by delivery of a notice of “net exercise” to theCompany, as a result of which the Participant would receive (A) the number of shares of CommonStock underlying the Option so exercised reduced by (B) the number of shares of Common Stock equalto the aggregate exercise price of the Option divided by the Fair Market Value on the date ofexercise;          (5) to the extent provided for in the applicable Incentive Stock Option agreement or approvedby the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as aresult of which the Participant would receive the number of
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shares of Common Stock underlying the Option so exercised reduced by the number of shares ofCommon Stock equal to the aggregate exercise price of the Option divided by the Fair Market Valueon the date of exercise; provided, however, that such provision shall only be operative in anIncentive Stock Option agreement to the extent that the inclusion of the provision will not causethe Option to fail to qualify as an Incentive Stock Option under the applicable Code rules;          (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’sstockholders: (i) no outstanding Option granted under the Plan may be amended to provide anexercise price per share that is lower than the then-current exercise price per share of suchoutstanding Option (other than adjustments pursuant to Section 10) and (2) the Board may not cancelany outstanding option (whether or not granted under the Plan) and grant in substitution therefornew Awards under the Plan covering the same or a different number of shares of Common Stock andhaving an exercise price per share lower than the then-current exercise price per share of thecancelled option.6. *Director Awards**.*     (a) *Initial Grant**.*Upon the commencement of service on the Board by any individualwho is not then an employee of the Company or any subsidiary of the Company, the Company shallgrant to such person an Award with a value determined in a manner deemed appropriate by the Board,which may include a value determined using Black-Scholes modeling, equal to $60,000.     (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 both servingas a director of the Company immediately prior to and immediately following such annual meeting andwho is not then an employee of the Company or any of its subsidiaries, an Award with a valuedetermined in a manner deemed appropriate by the Board, which may include a value determined usingBlack-Scholes modeling, equal to $30,000; provided, however, that a director shall not be eligibleto receive an Award under this Section 6(b) until such director has served on the Board for atleast seven months.     (c) *Grant or Base Price**.*The grant or base price or exercise price of an Awardgranted under this Section 6 shall not be less than 100% of the Fair Market Value per share ofCommon 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 vestaccording to the Schedule specified in the Award.
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          (2) Upon the occurrence of a Reorganization Event or a Change in Control Event (as such termsare defined below), Awards made to directors shall be treated in accordance with Sections 10(b) and10(c).          (3) If a Participant’s service as a director terminates for any reason other than aReorganization Event or a Change in Control Event, and if the Participant has served as a directorfor three years or more, then such Participant’s Awards shall vest and become fully exercisable onthe date such Participant ceases to be a director. If a Participant’s service as a directorterminates for any reason other than a Reorganization Event or a Change in Control Event, and suchParticipant has served as a director for less than three years, then all of the Participant’sunvested 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 ifthe 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 relevantAward, which in the case of Options shall be the earlier of 10 years from the date of grant orthree 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 torevise the incentive compensation payable to the directors, and the Board retains the specificauthority to from time to time increase or decrease the dollar values specified in Section 6(a) andSection 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 acombination thereof (such form to be determined by the Board) determined in whole or in part byreference to appreciation, from and after the date of grant, in the Fair Market Value of a share ofCommon Stock. The date as of which such appreciation or other measure is determined shall be theexercise date.     (b) *Grants**.*SARs may be granted in tandem with, or independently of, Options grantedunder the Plan.     (c) *Grant or Base Price**.*The grant or base price or exercise price of an SAR shallnot be less than 100% of the Fair Market Value per share of Common Stock on the date of grant ofthe SAR; provided that if the Board approves the grant of an SAR with an exercise price to bedetermined on a future date, the exercise price shall be not less than 100% of the Fair MarketValue 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.
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     (e) *Exercise**.*SARs may be exercised by delivery to the Company of a written notice ofexercise 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.8. *Restricted Stock; Restricted Stock Units**.*     (a) *General**.*The Board may grant Awards entitling recipients to acquire shares ofCommon Stock (“Restricted Stock”), subject to the right of the Company to repurchase all or part ofsuch shares at their issue price or other stated or formula price (or to require forfeiture of suchshares if issued at no cost) from the recipient in the event that conditions specified by the Boardin the applicable Award are not satisfied prior to the end of the applicable restriction period orperiods 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 bedelivered at the time such shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stockand 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 aRestricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and theissue price, if any.     (c) *Additional Provisions Relating to Restricted Stock*.          (1) *Dividends**.*Participants holding shares of Restricted Stock will be entitled toall ordinary cash dividends paid with respect to such shares, unless otherwise provided by theBoard. If any such dividends or distributions are paid in shares, or consist of a dividend ordistribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash orother property will be subject to the same restrictions on transferability and forfeitability asthe shares of Restricted Stock with respect to which they were paid. Each dividend payment will bemade no later than the end of the calendar year in which the dividends are paid to shareholders ofthat class of stock or, if later, the 15th day of the third month following the date the dividendsare paid to shareholders of that class of stock.          (2) *Stock Certificates**.*The Company may require that any stock certificates issued inrespect of shares of Restricted Stock shall be deposited in escrow by the Participant, togetherwith a stock power endorsed in blank, with the Company (or its designee). At the expiration of theapplicable restriction periods, the Company (or such designee) shall deliver the certificates nolonger subject to such restrictions to the Participant or if the Participant has died, to thebeneficiary designated, in a manner determined by the Board, by a Participant to receive amountsdue or exercise rights of the Participant in the event of the Participant’s death (the “DesignatedBeneficiary”). In the absence of an effective designation by a Participant, “DesignatedBeneficiary” 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 toreceive from the Company one share of Common Stock or an amount of cash equal to the Fair
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Market Value of one share of Common Stock, as provided in the applicable Award agreement. TheBoard may, in its discretion, provide that settlement of Restricted Stock Units shall be deferredin a manner consistent with Section 409A, on a mandatory basis or at the election of theParticipant.          (2) *Voting Rights**.*A Participant shall have no voting rights with respect to anyRestricted Stock Units.          (3) *Dividend Equivalents**.*To the extent provided by the Board, in its solediscretion, a grant of Restricted Stock Units may provide Participants with the right to receive anamount equal to any dividends or other distributions declared and paid on an equal number ofoutstanding shares of Common Stock (“Dividend Equivalents”). Dividend Equivalents may be paidcurrently or credited to an account for the Participants, may be settled in cash and/or shares ofCommon Stock and may be subject to the same restrictions on transfer and forfeitability as theRestricted Stock Units with respect to which paid, as determined by the Board in its solediscretion, subject in each case to such terms and conditions as the Board shall establish, in eachcase 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 partby reference to, or are otherwise based on, shares of Common Stock or other property, may begranted hereunder to Participants (“Other Stock-Based Awards”), including without limitation Awardsentitling recipients to receive shares of Common Stock to be delivered in the future. Such OtherStock-Based Awards shall also be available as a form of payment in the settlement of other Awardsgranted under the Plan or as payment in lieu of compensation to which a Participant is otherwiseentitled. Other Stock-Based Awards may be paid in shares of Common Stock or cash, as the Boardshall determine. Subject to the provisions of the Plan, the Board shall determine the terms andconditions 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 orother similar change in capitalization or event, or any dividend or distribution to holders ofCommon Stock other than an ordinary cash dividend, (i) the number and class of securities availableunder this Plan, (ii) the sub-limit set forth in Section 4(b), (iii) the number and class ofsecurities and exercise price per share of each outstanding Option, (iv) the share- and per-shareprovisions and the grant or base price of each outstanding SAR, (v) the number of shares subject toand the repurchase price per share subject to each outstanding Restricted Stock Award, (vi) theshare- and per-share-related provisions and the purchase price, if any, of each outstanding OtherStock-Based Award, and (vii) the terms and conditions of each Award issuable under Section 6, shallbe equitably adjusted by the Company (or substituted Awards may be made, if applicable) in themanner determined by the Board. Without limiting the generality of the foregoing, in the event theCompany effects a split of the Common Stock by means of a stock dividend and the exercise price ofand the number of shares subject to an outstanding Option are adjusted as of the
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date of the distribution of the dividend (rather than as of the record date for suchdividend), then an optionee who exercises an Option between the record date and the distributiondate for such stock dividend shall be entitled to receive, on the distribution date, the stockdividend 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 therecord date for such stock dividend.     (b) *Reorganization Events*.          (1) *Definition**.*A “Reorganization Event” shall mean: (a) any merger or consolidationof the Company with or into another entity as a result of which all of the Common Stock of theCompany is converted into or exchanged for the right to receive cash, securities or other propertyor is cancelled, (b) any exchange of all of the Common Stock of the Company for cash, securities orother property pursuant to a share exchange transaction or (c) any liquidation or dissolution ofthe Company.          (2) *Consequences of a Reorganization Event on Awards Other than Restricted StockAwards**.*In connection with a Reorganization Event, the Board may take any one or more of thefollowing actions as to all or any (or any portion of) outstanding Awards other than RestrictedStock Awards on such terms as the Board determines: (i) provide that Awards shall be assumed, orsubstantially equivalent Awards shall be substituted, by the acquiring or succeeding corporation(or an affiliate thereof), (ii) upon written notice to a Participant, provide that theParticipant’s unexercised Options or other unexercised Awards will terminate immediately prior tothe consummation of such Reorganization Event unless exercised by the Participant within aspecified period following the date of such notice, (iii) provide that outstanding Awards shallbecome 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 aReorganization Event under the terms of which holders of Common Stock will receive uponconsummation 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, ifany, of (A) the Acquisition Price times the number of shares of Common Stock subject to theParticipant’s Options or other Awards (to the extent the exercise price does not exceed theAcquisition Price) over (B) the aggregate exercise price of all such outstanding Options or otherAwards and any applicable tax withholdings, in exchange for the termination of such Options orother 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 theexercise price thereof and any applicable tax withholdings) and (vi) any combination of theforegoing. In taking any of the actions permitted under this Section 10(b), the Board shall not beobligated 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, followingconsummation of the Reorganization Event, the Option confers the right to purchase, for each shareof Common Stock subject to the Option immediately prior to the consummation of the ReorganizationEvent, the consideration (whether cash, securities or other property) received as a result of theReorganization Event by holders of Common Stock for each share of Common Stock held immediatelyprior to the consummation of the Reorganization Event (and if holders were offered a choice ofconsideration, the type of consideration chosen by the holders of a
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majority of the outstanding shares of Common Stock); provided, however, that if theconsideration received as a result of the Reorganization Event is not solely common stock of theacquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent ofthe acquiring or succeeding corporation, provide for the consideration to be received upon theexercise 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 shareconsideration received by holders of outstanding shares of Common Stock as a result of theReorganization Event.          (3) *Consequences of a Reorganization Event on Restricted Stock Awards**.*Upon theoccurrence of a Reorganization Event other than a liquidation or dissolution of the Company, therepurchase and other rights of the Company under each outstanding Restricted Stock Award shallinure 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 orexchanged for pursuant to such Reorganization Event in the same manner and to the same extent asthey applied to the Common Stock subject to such Restricted Stock Award. Upon the occurrence of aReorganization Event involving the liquidation or dissolution of the Company, except to the extentspecifically provided to the contrary in the instrument evidencing any Restricted Stock Award orany other agreement between a Participant and the Company, all restrictions and conditions on allRestricted 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 anindividual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) ofthe Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficialownership of any capital stock of the Company if, after such acquisition, suchPerson beneficially owns (within the meaning of Rule 13d-3 promulgated under theExchange Act) 20% or more of either (x) the then-outstanding shares of common stockof the Company (the “Outstanding Company Common Stock”) or (y) the combined votingpower of the then-outstanding securities of the Company entitled to vote generallyin the election of directors (the “Outstanding Company Voting Securities”);provided, however, that for purposes of this subsection (A), the followingacquisitions shall not constitute a Change in Control Event: (i) any acquisitiondirectly from the Company (excluding an acquisition pursuant to the exercise,conversion or exchange of any security exercisable for, convertible into orexchangeable for common stock or voting securities of the Company, unless the Personexercising, converting or exchanging such security acquired such security directlyfrom the Company or an underwriter or agent of the Company), (ii) any acquisition byany employee benefit plan (or related trust) sponsored or maintained by the Companyor any corporation controlled by the Company, or (iii) any acquisition by anycorporation pursuant to a Business Combination (as defined below) which complieswith clauses (x) and (y) of subsection (C) of this definition; and provided,further, that
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if any person beneficially owns 20% or more of the Outstanding Company CommonStock or the Outstanding Company Voting Securities, but notwithstanding suchownership, a Change in Control Event has not occurred because the Person’sacquisition of all or a portion of such Person’s shares is or was an acquisitiondescribed in clause (i) of the preceding proviso, then the acquisition by thatPerson of any additional shares of Common Stock other than pursuant to a stocksplit, stock dividend, or other similar event shall constitute a Change in ControlEvent; or (II) notwithstanding the foregoing clause (A)(I), the acquisition of 20%or more of the Outstanding Company Common Stock or the Outstanding Company VotingSecurities shall not be a Change of Control Event if the Person acquiring suchinterest in the Company’s outstanding securities does not thereby become an“Acquiring Person” under the terms of the Rights Agreement (defined below) in effecton the date of the shareholder approval of this Plan; *provided, however,*that ifsuch Person would become an “Acquiring Person” under the terms of the RightsAgreement upon the acquisition of a specified percentage of the Outstanding CompanyCommon Stock or the Outstanding Company Voting Securities greater than 20% (the“Modified Ownership Threshold”), then it shall be a Change of Control Event underthis Plan if such Person acquires a beneficial interest in the Outstanding CompanyCommon Stock or the Outstanding Company Voting Securities at or above the ModifiedOwnership Threshold, thereby making such Person an “Acquiring Person” under theterms 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 asEquiServe Trust Company, N.A.), as rights agent, as amended by the First Amendmentto the Amended and Restated Rights Agreement, dated as of May 2, 2007.     (B) such time as the Continuing Directors (as defined below) do not constitutea majority of the Board (or, if applicable, the Board of Directors of a successorcorporation to the Company), where the term “Continuing Director” means at any datea member of the Board (x) who was a member of the Board on the date of the initialadoption of this Plan by the Board or (y) who was nominated pursuant to the terms ofthe Standby Purchase Agreement, dated as of May 2, 2007 between the Company andTontine Capital Partners, L.P. or (z) who was nominated or elected subsequent tosuch date by at least a majority of the directors who were Continuing Directors atthe time of such nomination or election or whose election to the Board wasrecommended or endorsed by at least a majority of the directors who were ContinuingDirectors at the time of such nomination or election; provided, however, that thereshall be excluded from this clause (y) any individual whose initial assumption ofoffice occurred as a result of an actual or threatened election contest with respectto the election or removal of directors or other actual or threatened solicitationof proxies or consents, by or on behalf of a person other than the Board; or     (C) the consummation of a merger, consolidation, reorganization,recapitalization or share exchange involving the Company or a sale or other
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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 ofthe individuals and entities who were the beneficial owners of the OutstandingCompany Common Stock and Outstanding Company Voting Securities immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than 50% ofthe then-outstanding shares of common stock and the combined voting power of thethen-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 suchtransaction owns the Company or substantially all of the Company’s assets eitherdirectly or through one or more subsidiaries) (such resulting or acquiringcorporation is referred to herein as the “Acquiring Corporation”) in substantiallythe same proportions as their ownership of the Outstanding Company Common Stock andOutstanding Company Voting Securities, respectively, immediately prior to suchBusiness Combination and (y) no Person (excluding any employee benefit plan (orrelated trust) maintained or sponsored by the Company or by the AcquiringCorporation) beneficially owns, directly or indirectly, 20% or more of thethen-outstanding shares of common stock of the Acquiring Corporation, or of thecombined voting power of the then-outstanding securities of such corporationentitled to vote generally in the election of directors (except to the extent thatsuch 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) andirrespective of whether such an event is also a Reorganization Event, effective immediately priorto a Change in Control Event, except to the extent specifically provided to the contrary in theinstrument 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 inthe 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 becomevested or exercisable upon a Change of Control Event if such employee is Terminated within 12months following such Change of Control or the director is removed from the Board within 12 monthsof the Change of Control, or, if a regular meeting of shareholders occurs within 12 months of theChange of Control, such director is not nominated for re-election at such meeting after he or sheexpresses a desire to be so nominated. For purposes of the foregoing, “Terminated” meansinvoluntary dismissal or a material change in the employee’s level of total compensation or amaterial change in his or her level of responsibility which, in either such case, causes theemployee to voluntarily terminate his or her employment.          (3) *Effect on Restricted Stock Awards.* Notwithstanding the provisions of Section10(b) and irrespective of whether such an event is also a Reorganization Event, effectiveimmediately prior to a Change in Control Event, except to the extent specifically provided to thecontrary in the instrument evidencing any Restricted Stock Award or any other agreement
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between a Participant and the Company, all restrictions and conditions on all Restricted StockAwards then-outstanding shall automatically be deemed terminated or satisfied.          (4) *Effect on SARs and Other Stock-Based Awards**.*Upon the occurrence of a Change ofControl Event, unless specifically provided to the contrary in the instrument evidencing any Awardor any other agreement between a participant and the Company, unvested SARs granted to an employeeor a director of the Company will automatically become vested or exercisable upon a Change ofControl Event if such employee is Terminated within 12 months following such Change of Control orthe director is removed from the Board within 12 months of the Change of Control, or, if a regularmeeting of shareholders occurs within 12 months of the Change of Control, such director is notnominated 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 theemployee’s level of total compensation or a material change in his or her level of responsibilitywhich, 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 ControlEvent 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 byoperation of law, except by will or the laws of descent and distribution or, other than in the caseof an Incentive Stock Option, pursuant to a qualified domestic relations order, and, during thelife of the Participant, shall be exercisable only by the Participant; provided, however, that theBoard may permit or provide in an Award for the gratuitous transfer of the Award by the Participantto or for the benefit of any immediate family member, family trust or other entity established forthe benefit of the Participant and/or an immediate family member thereof if, with respect to suchproposed transferee, the Company would be eligible to use a Form S-8 for the registration of thesale 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 suchtime 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 Companyconfirming 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 toauthorized transferees.     (b) *Documentation**.*Each Award shall be evidenced in such form (written, electronic orotherwise) as the Board shall determine. Such written instrument may be in the form of anagreement signed by the Company and the Participant or a written confirming memorandum to theParticipant from the Company. Each Award may contain terms and conditions in addition to those setforth in the Plan.     (c) *Board Discretion**.*Except as otherwise provided by the Plan, each Award may bemade alone or in addition or in relation to any other Award. The terms of each Award need not beidentical, 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 thedisability, death, termination of employment, authorized leave of absence or other change in theemployment 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 DesignatedBeneficiary, may exercise rights under the Award.     (e) *Withholding**.*The Participant must satisfy all applicable federal, state, andlocal or other income and employment tax withholding obligations before the Company will deliverstock certificates or otherwise recognize ownership of Common Stock under an Award. The Companymay decide to satisfy the withholding obligations through additional withholding on salary orwages. If the Company elects not to or cannot withhold from other compensation, the Participantmust pay the Company the full amount, if any, required for withholding or have a broker tender tothe Company cash equal to the withholding obligations. Payment of withholding obligations is duebefore the Company will issue any shares on exercise or release from forfeiture of an Award or, ifthe Company so requires, at the same time as is payment of the exercise price unless the Companydetermines 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 CommonStock, including shares retained from the Award creating the tax obligation, valued at their FairMarket Value; provided, however, except as otherwise provided by the Board, that the total taxwithholding where stock is being used to satisfy such tax obligations cannot exceed the Company’sminimum statutory withholding obligations (based on minimum statutory withholding rates for federaland state tax purposes, including payroll taxes, that are applicable to such supplemental taxableincome). Shares surrendered to satisfy tax withholding requirements cannot be subject to anyrepurchase, forfeiture, unfulfilled vesting or other similar requirements.     (f) *Amendment of Award**.*Subject to Section 5(g), the Board may amend, modify orterminate any outstanding Award, including but not limited to, substituting therefor another Awardof the same or a different type, changing the date of exercise or realization, and converting anIncentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent tosuch action shall be required unless (i) the Board determines that the action, taking into accountany related action, would not materially and adversely affect the Participant’s rights under thePlan or (ii) the change is permitted under Section 10 hereof.     (g) *Conditions on Delivery of Stock**.*The Company will not be obligated to deliver anyshares of Common Stock pursuant to the Plan or to remove restrictions from shares previouslydelivered under the Plan until (i) all conditions of the Award have been met or removed to thesatisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal mattersin connection with the issuance and delivery of such shares have been satisfied, including anyapplicable 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 oragreements as the Company may consider appropriate to satisfy the requirements of any applicablelaws, rules or regulations.     (h) *Acceleration**.*The Board may at any time provide that any Award shall becomeimmediately exercisable in full or in part, free of some or all restrictions or conditions, orotherwise 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 maybe 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 toqualify as “performance-based compensation” under Section 162(m) (“Performance- BasedCompensation”) shall be made only by a Committee (or subcommittee of a Committee) comprised solelyof 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 toCovered Employees, references to the Board or to a Committee shall be deemed to be references tosuch Committee or subcommittee. “Covered Employee” shall mean any person who is a “coveredemployee” under Section 162(m)(3) of the Code.          (3) *Performance Measures**.*For any Award that is intended to qualify asPerformance-Based Compensation, the Committee shall specify that the degree of granting, vestingand/or payout shall be subject to the achievement of one or more objective performance measuresestablished by the Committee, which shall be based on the relative or absolute attainment ofspecified 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 basedon meeting specified cost targets, business expansion goals, and goals relating toacquisitions or divestitures, or
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     (N) except in the case of a Covered Employee, any other performance criteriaestablished by the Committee, and may be absolute in their terms or measured againstor in relationship to other companies comparably, similarly or otherwise situated.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 effectsof changes in accounting principles, (iv) the writedown of any asset, and (v) charges forrestructuring and rationalization programs. Such performance measures: (i) may vary by Participantand may be different for different Awards; (ii) may be particular to a Participant or thedepartment, branch, line of business, subsidiary, division, operating unit, or other unit in whichthe 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 withthe requirements of, Section 162(m). Awards that are not intended to qualify as Performance-BasedCompensation 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 anyPerformance Award that is intended to qualify as Performance-Based Compensation, the Committee mayadjust downwards, but not upwards, the cash or number of Shares payable pursuant to such Award, andthe Committee may not waive the achievement of the applicable performance measures except in thecase 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 onPerformance Awards as it may deem necessary or appropriate to ensure that such Awards satisfy allrequirements for Performance-Based Compensation.12. *Miscellaneous*     (a) *No Right To Employment or Other Status**.*No person shall have any claim or rightto be granted an Award, and the grant of an Award shall not be construed as giving a Participantthe right to continued employment or any other relationship with the Company. The Companyexpressly reserves the right at any time to dismiss or otherwise terminate its relationship with aParticipant free from any liability or claim under the Plan, except as expressly provided in theapplicable Award.     (b) *No Rights As Stockholder**.*Subject to the provisions of the applicable Award, noParticipant or Designated Beneficiary shall have any rights as a stockholder with respect to anyshares of Common Stock to be distributed with respect to an Award until becoming the record holderof such shares.     (c) *Effective Date and Term of Plan**.*The Plan shall become effective on the date thePlan is approved by the Company’s stockholders (the “Effective Date”). No Awards shall be grantedunder the Plan after the expiration of 10 years from the Effective Date, but Awards previouslygranted may extend beyond that date.
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     (d) *Amendment of Plan**.*The Board may amend, suspend or terminate the Plan or anyportion thereof at any time provided that (i) to the extent required by Section 162(m), no Awardgranted to a Participant that is intended to comply with Section 162(m) after the date of suchamendment shall become exercisable, realizable or vested, as applicable to such Award, unless anduntil such amendment shall have been approved by the Company’s stockholders if required by Section162(m) (including the vote required under Section 162(m)); (ii) no amendment that would requirestockholder approval under the rules of American Stock Exchange (“AMEX”) may be made effectiveunless 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 stockholderapproval of “material amendments” to equity compensation plans, then, from and after the effectivedate of such amendment to the AMEX rules, no amendment to the Plan (A) materially increasing thenumber 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 theclass of participants eligible to participate in the Plan shall be effective unless stockholderapproval is obtained. In addition, if at any time the approval of the Company’s stockholders isrequired as to any other modification or amendment under Section 422 of the Code or any successorprovision with respect to Incentive Stock Options, the Board may not effect such modification oramendment without such approval. Unless otherwise specified in the amendment, any amendment to thePlan adopted in accordance with this Section 12(d) shall apply to, and be binding on the holdersof, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Boarddetermines that such amendment does not materially and adversely affect the rights of Participantsunder the Plan. No Award shall be made that is conditioned upon stockholder approval of anyamendment to the Plan.     (e) *Compliance with Code Section 409A**.*No Award shall provide for deferral ofcompensation that does not comply with Section 409A of the Code, unless the Board, at the time ofgrant, specifically provides that the Award is not intended to comply with Section 409A of theCode. The Company shall have no liability to a Participant, or any other party, if an Award thatis intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant or forany action taken by the Board.     (f) *Governing Law**.*The provisions of the Plan and all Awards made hereunder shall begoverned by and interpreted in accordance with the laws of the State of Delaware, excludingchoice-of-law principles of the law of such state that would require the application of the laws ofa jurisdiction other than such state.
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