Document:

Director Compensation Amendment

IMATION CORP.

DIRECTORS COMPENSATION PROGRAM
EFFECTIVE MAY 4, 2005
(As amended May 2, 2012)

SECTION 1. PURPOSE

(a)    The purpose of the Program is to attract and retain well-qualified persons for service as nonemployee directors of the Company and to promote identity of interest between directors and stockholders of the Company. The Program is designed and intended to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as such Rule may be amended from time to time, and shall be interpreted in a manner consistent with the requirements thereof, as now or hereafter construed, interpreted and applied by regulations, rulings and cases. 

(b)    The Program is also intended to comply in form and operation with the requirements of Section 409A of the Code, or an exception thereto. 

SECTION 2. DEFINITIONS 

The following words and phrases have the meaning indicated below, unless the context clearly indicates otherwise. 

(a)    “Affiliate” means any entity that, together with the Company, is treated as a single employer under Code section 414(b) or (c).  For purposes of determining whether a Termination of Employment has occurred, the term Affiliate will be determined by applying Code section 1563(a)((1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b) and in applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses that are under common control for purposes of Code section 414(c), the phrase “at least 50 percent” will be used instead of “at least 80 percent” each place it appears.
(b)    “Accounting Date” means the first business day following the annual meeting of stockholders of the Company, or, if no annual meeting is held during a calendar year, it means December 31. 

(c)    “Basic Fee” means the annual retainer payable to an Eligible Director at the annual rate in effect on the Accounting Date for such Eligible Director's services on the Board (exclusive of any Chairperson Fee, Non-Executive Chairman Fee or Meeting Fees.) 

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

(e)    “Chairperson Fee” means the annual retainer payable to an Eligible Director at the annual rate in effect on the Accounting Date for such Eligible Director's services as the chairperson of any committee of the Board.

(f)    “Change in Control” has the meaning given it in Section 8(b) to the extent it is consistent with and satisfies the definition of “Change of Control” under Code section 409A. 

(g)    “Change in Control Price” of the Common Stock shall equal the higher of (i) if applicable, the price paid for the Common Stock in the transaction constituting a Change in Control and (ii) the Fair 

Market Value of the Common Stock as of the last trading day preceding the date of the Change in Control. 

(h)    “Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations or binding rules promulgated thereunder. 

(i)    “Committee” means the Compensation Committee of the Board. 

(j)    “Common Stock” means the common stock, par value $.01 per share, of the Company. 

(k)    “Company” means Imation Corp. 

(l)    “Dividend Equivalent Credit” has the meaning given it in Section 7(b). 

(m)    “Election Form” means the Election Form attached as Exhibit B hereto or such other form as may be deemed acceptable by the Secretary of the Company from time to time. 

(n)    “Eligible Director” means each member of the Board who is not at the time of reference an employee of the Company or any of its subsidiaries. 

(o)    “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

(p)    “Fair Market Value” as of any date means, the fair market value as defined under the Stock Plan. 

(q)    “Meeting Fees” means the amounts payable to an Eligible Director in arrears on any Quarterly Payment Date for attendance at meetings or participation in teleconferences of the Board or any committee of the Board (exclusive of any Basic Fee, Chairperson Fee or Non-Executive Chairman Fee). 

(r)    “Non-Executive Chairman Fee” means the annual retainer payable to the Eligible Director who is selected to be the Non-Executive Chairman at the annual rate in effect on the Accounting Date for such Eligible Director's services as the Non-Executive Chairman. 

(s)    “Program” means the Company's Directors Compensation Program, as amended from time to time. 

(t)    “Proration Fraction” means a fraction, the numerator of which is the number of days from the date an Eligible Director first becomes an Eligible Director to the date of the next succeeding annual meeting of stockholders and the denominator of which is 365.

(u)    “Quarterly Payment Date” means the date established by the Company from time to time for payment, in arrears, of all Meeting Fees earned by Eligible Directors during the preceding calendar quarter, provided such date shall not be later than the fifteenth day of the third month following the end of such calendar quarter. 

(v)    “Restricted Stock Unit” means a right to receive payment of one share of Common Stock in accordance with the conditions set forth in Section 7 hereof or conditions established by the Committee. 

(w)    “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time. 

(x)    “Separation from Service” means the individual has ceased to be a member of the Board 

and has ceased to provide services as an independent contractor (including as a member of any board of directors) of the Company and all Affiliates, or such other change in status that constitutes a “separation from service” under Code section 409A.

(x)    “Stock Plan” means the then current stock incentive plan of the Company used to grant stock based awards to Eligible Directors. 

SECTION 3. ADMINISTRATION 

(a)    The Program shall be administered by the Committee. 

(b)    In administering the Program, it will be necessary to follow various laws and regulations. It may be necessary from time to time to change or waive requirements of the Program to conform with the law, to meet special circumstances not anticipated or covered in the Program, or to carry on successful operation of the Program, and in connection therewith, the Committee shall have the full power and authority to: 

(i)    Prescribe, amend, and rescind rules and regulations relating to the Program, establish procedures deemed appropriate for its administration, interpret the provisions of the Program, remedy ambiguities, and make any and all other determinations not herein specifically authorized which may be necessary or advisable for its effective administration; 

(ii)    Make any amendments to or modifications of the Program which may be required or necessary to make the Program set forth herein comply with the provisions of any laws, federal or state, or any regulations issued thereunder, and to cause the Company at its expense to take any action related to the Program which may be required under such laws or regulations; 

(iii)    Contest on behalf of the Eligible Directors or the Company, at the sole discretion of the Committee and at the expense of the Company, any ruling or decision on any issue related to the Program, and conduct any such contest and any resulting litigation to a final determination, ruling, or decision; and

(iv)    Grant stock-based awards under the Program, as provided in Section 5 hereof. 

(c)    Unless otherwise expressly provided in the Program, all designations, determinations, interpretations and other decisions under or with respect to the Program or any award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Eligible Director or beneficiary, and any employee of the Company. 

SECTION 4. FEES/EXPENSES 

(a)    Each Eligible Director who is first elected to the Board at, or who continues to serve on the Board immediately following an annual meeting of stockholders, is entitled to receive a Basic Fee and a Chairperson Fee for serving as chairperson of a committee of the Board (as applicable). 

(b)    Any Eligible Director who is designated as the Non-Executive Chairman is entitled to receive a Non-Executive Chairman Fee for services as the Non-Executive Chairman. 

(c)    Each Eligible Director who joins the Board or becomes a chairperson of a committee of the Board or Non-Executive Chairman after the annual meeting of stockholders is entitled to receive a Basic Fee, Chairperson Fee or Non-Executive Chairman Fee (as applicable) multiplied by the Proration 

Fraction, as of the date such Eligible Director first becomes an Eligible Director, chairperson of a committee of the Board or Non-Executive Chairman. 

(d)    Each Eligible Director is entitled to receive a Meeting Fee for attendance at a meeting of the Board or a Committee of the Board or participation in a teleconference in lieu of such meeting. The Meeting Fees are payable in arrears on the Quarterly Payment Date. Any member of the Board who interviews a Board candidate shall be entitled to receive compensation in an amount equal to the Meeting Fee for an in person Board meeting for each such interview. 

(e)    The current rate of the Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and Meeting Fees are set forth on the attached Exhibit A, and may be amended from time to time by the Board or any committee given responsibility for determining Board of Director compensation. 

(f)    Each Eligible Director is entitled to reimbursement for reasonable travel costs of attending Board and committee meetings and interviews of Board candidates. Such reimbursement shall be payable in cash after receipt of documentation by the Company from such Eligible Director, provided reimbursement is made no later than the end of the calendar year following the calendar year in which the expense was incurred.

SECTION 5. ANNUAL GRANT OF STOCK BASED AWARD 

(a)    Each Eligible Director who is first elected to the Board at, continues to serve on the Board or is serving as the Non-Executive Chairman of the Board immediately following an annual meeting of stockholders shall be granted a stock based award (i.e., options, restricted stock, etc.) as of the date of such meeting in type, proportion and amount to be determined by the Committee and under, and in accordance with, the terms of the Stock Plan. 
(b)    Each Eligible Director who joins the Board after an annual meeting of stockholders, shall be granted a stock based award pursuant to this Section 5 as of the date such Eligible Director first becomes an Eligible Director based on the dollar value of the grant made at the time of the immediately preceding annual meeting of stockholders (“Grant”), multiplied by the Proration Fraction and allocated in the same manner as the Grant. An Eligible Director who is appointed the Non-Executive Chairman of the Board after an annual meeting of stockholders, shall be granted a stock based award pursuant to this Section 5 as of the date such Eligible Director first becomes the Non-Executive Chairman of the Board based on dollar value of the grant made at the time of the immediately preceding annual meeting of stockholders (Non-Executive Grant”), multiplied by the Proration Fraction and allocated in the same manner as the Non-Executive Grant.
(c)    Terms and conditions of stock based awards (such as grant price, vesting schedule, etc.) shall be as determined by the Committee and under, and in accordance with, the terms of the Stock Plan. 
(d)    The amount and composition of the current annual stock based award are set forth on the attached Exhibit A, which may be amended from time to time by the Board or any committee given responsibility for determining Board of Director compensation. 

SECTION 6. MATCHING GIFT PROGRAM 

Each Eligible Director is entitled to a matching gift from the Company of up to $15,000 per calendar year to qualifying charitable institutions, prorated for any calendar year that Eligible Director joins the Board. Each Eligible Director must submit evidence of such gift to the Company and the Company will send the matching contribution directly to the qualifying charitable institution on behalf of the Eligible Director. 

SECTION 7. ELECTIONS TO RECEIVE COMMON STOCK OR RESTRICTED STOCK UNITS 

(a)    Elections. 

(i)    Common Stock. Each Eligible Director who is not covered by clause (iii) below, may elect to receive, in lieu of a cash payment for his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof, as elected by the Eligible Director), a number of shares of Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)), which is calculated by dividing his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof), by the Fair Market Value of one share of Common Stock on the Accounting Date or Quarterly Payment Date, as applicable. To be effective, any such election shall be made by submitting a completed and executed Election Form to the Secretary of the Company prior to the relevant Accounting Date or Quarterly Payment Date, as applicable.

(ii)    Restricted Stock Units.  Each Eligible Director who is not covered by clause (iii) below, may elect to receive, in lieu of cash payment for his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees, Restricted Stock Units (including fractional Restricted Stock Units) calculated by dividing his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee and/or Meeting Fees (or a portion thereof, as elected by the Eligible Director) for services to be performed in the following the calendar year by the Fair Market Value of one share of Common Stock on the Accounting Date or Quarterly Payment Date, as applicable. To be effective, any such election relating to the Basic Fee, Chairperson Fee, Non-Executive Chairman Fee or Meeting Fees shall be made by submitting a completed and executed Election Form to the Secretary of the Company prior to the calendar year in which the Eligible Director wishes the election to be in effect and such election shall be irrevocable for such calendar year. 
 
(iii)    New Directors. Each Eligible Director who during the preceding twenty-four (24) months has not participated in any deferred compensation arrangement of the Company or any Affiliate that would be treated as a single plan with this Plan under Treas. Reg. Sec. 1.409A-1(c)(2)(i) and who joins the Board between annual meetings of stockholders may elect prior to first becoming an Eligible Director to receive, in lieu of cash payment for his or her Basic Fee, Chairperson Fee and/or Non-Executive Chairman Fee, a number of shares of Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)) and/or Restricted Stock Units (including fractional Restricted Stock Units) up to the number which is calculated by (A) multiplying the sum of his or her Basic Fee, Chairperson Fee, Non-Executive Chairman Fee (or a portion thereof, as elected by the Eligible Director) payable with respect to the time prior to the next annual meeting of stockholders which the Eligible Director is first elected to the Board by the Proration Fraction and (B) dividing the product resulting from clause (A) by the Fair Market Value of one share of 

Common Stock on the date that the Eligible Director becomes an Eligible Director. Each Eligible Director may also elect to receive, in lieu of cash payment for his or her Meeting Fees (or a portion thereof, as elected by the Eligible Director), Common Stock (excluding fractional shares, which shall be paid in cash (or carried over to the next payment if an Eligible Director elects to be paid all in Common Stock)) Restricted Stock Units (including fractional Restricted Stock Units) calculated by dividing his or her Meeting Fees (or portion thereof) by the Fair Market Value of one share of Common Stock on the Quarterly Payment Date. To be effective, any such election shall be made by submitting a completed and executed Election Form to the Secretary of the Company prior to the date that the Eligible Director becomes a Director, and such Election Form shall be irrevocable on the date he or she first becomes an Eligible Director for that calendar year with respect to any election (or lack of election) to receive Restricted Stock Units.

(b)    Restricted Stock Units. 

(i)    Account. Upon the grant of Restricted Stock Units to an Eligible Director, such units shall be credited to an account established for such Eligible Director.  A Restricted Stock Unit shall be treated as granted on the corresponding Accounting Date or last day of the calendar quarter relating to the fees for which the Restricted Stock Units are determined.  Each Eligible Director shall receive an annual statement showing the number of Restricted Stock Units that have been credited to the Eligible Director's account under the Program. 

(ii) Dividend Equivalent Credits. An Eligible Director's account shall be credited with Dividend Equivalent Credits equivalent to the amount of dividends paid by the Company to holders of outstanding shares of Common Stock based on the number of Restricted Stock Units credited to the Eligible Director's account on the dividend record date for shares of Common Stock. Such Dividend Equivalent Credit shall be converted into an equivalent number of Restricted Stock Units (including fractional Restricted Stock Units) based on the fair market value of one share of Common Stock on the related dividend payment date and such Restricted Stock Units shall be subject to the same distribution timing as the underlying Restricted Stock Units to which the Dividend Equivalent Credits related. If a dividend is paid in cash, each Eligible Director shall be credited, as of each applicable dividend payment date, in accordance with the following formula: 
(A X B) / C

in which “A” equals the number of Restricted Stock Units held by the Eligible Director on the dividend record date, “B” equals the cash dividend per share and “C” equals the Fair Market Value per share of Common Stock on the dividend payment date. If a dividend is paid in property other than cash, Dividend Equivalent Credits shall be credited, as of the applicable dividend payment date, in accordance with the formula set forth above, except that “B” shall equal the fair market value per share of the property that the Eligible Director would have received in respect of the number of shares of Common Stock equal to the number of Restricted Stock Units held by the Eligible Director as of the dividend record date, had such shares been owned by the Eligible Director as of the record date for such dividend. 

(iii)    Time of Payment. All payments in respect of an Eligible Director's Restricted Stock Units shall be made as soon as practicable but not more than ninety (90) days following the earlier of (A) the Eligible Director's death (B) the occurrence of a Change in Control, and (C) the specific date (including upon the Eligible Director's Separation from Service) the Eligible Director has elected to receive payment pursuant to the applicable Election Form pursuant to which such Eligible Director elected to receive such Restricted Stock Units in lieu of cash.  If distribution is to 

be made upon a Separation from Service and the individual is a “specified employee,” as defined under Code section 409A, on the date of such Separation from Service, then no distribution will be made before the date that is six (6) months after the date of the individual's Separation from Services, or if earlier, upon his or her death.

(iv)    Form of Payment. Payment in respect of Restricted Stock Units shall be made in one lump sum payment in the form of shares of Common Stock. For purposes of the preceding sentence, any payment made upon the occurrence of a Change in Control in full or partial payment of Restricted Stock Units shall be made in cash in an amount equal the Change in Control Price multiplied by the number of Restricted Stock Units (including fractional units). 

(c)    Stock Plan. 

All shares of Common Stock and all Restricted Stock Units awarded pursuant to this Section 7 shall be awarded under, and in accordance with, the terms of the Stock Plan. Restricted Stock Units awarded hereunder shall be considered Other Stock-Based Awards under the Plan. 

SECTION 8. CHANGE IN CONTROL 

(a)    For purposes of this Section 8, “Act” shall mean the Securities Exchange Act of 1934. 

(b)    For purposes of the Program, a “Change in Control” of the Company shall be deemed to have occurred if any one of the following events shall occur:

(i)    the consummation of a transaction or series of related transactions during a 12-month period in which a person, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act) that owns (after application of the attribution rules of Section 318 of the Code) less than 35% of the combined voting power of the Company's outstanding voting stock prior to such transaction or the first of such series of related transactions), other than the Company or a subsidiary of the Company, or any employee benefit plan of the Company or a subsidiary of the Company, acquires ownership (after application of the attribution rules of Section 318 of the Code) of 35% or more of the combined voting power of the Company's then outstanding voting stock (other than in connection with a Business Combination in which clauses (1) and (2) of Section 8(b) (iii) apply); or

(ii)    a majority of the members of the Company's Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's Board of Directors prior to the date of the election or appointment; or 

(iii)    the consummation of a reorganization, merger, statutory share exchange, consolidation or similar transaction involving the Company,  a sale or other disposition in a transaction or series of related transactions within a 12-month period of all or substantially all of the Company's assets or the issuance by the Company of its stock in connection with the acquisition of assets or stock of another entity (each, a “Business Combination”) in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the owners of the Company's outstanding voting stock immediately prior to such Business Combination own (after application of the attribution rules of Section 318 of the Code) immediately after the transaction or transactions more than 50% of the combined voting power of the then outstanding voting stock (or comparable equity interests) of the entity resulting from such 

Business Combination (including an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one of more subsidiaries), and (2) no person, entity or group (other than a direct or indirect parent entity of the Company that, after giving effect to the Business Combination, beneficially owns 100% of the outstanding voting securities (or comparable equity interests) of the entity resulting from the Business Combination) has acquired, during a 12-month period, ownership (after application of the attribution rules of Section 318 of the Code) of 35% or more of the combined voting power of the then outstanding voting stock (or comparable equity interests) of the entity resulting from such Business Combination.

Notwithstanding anything herein stated, no Change in Control shall be deemed to occur unless such event constitutes a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of a business under Code section 409A.

SECTION 9. AMENDMENT; TERMINATION 

The Board may at any time and from time to time alter, amend, suspend, or terminate the Program in whole or in part; provided, however, that no amendment which requires stockholder approval in order for the exemptions available under Rule 16b-3 to be applicable to the Program and the Eligible Directors shall be effective unless the same shall be approved by the stockholders of the Company entitled to vote thereon. 

SECTION 10. RIGHTS OF ELIGIBLE DIRECTORS 

Nothing contained in the Program or with respect to any grant shall interfere with or limit in any way the right of the stockholders of the Company to remove any Eligible Director from the Board pursuant to the bylaws of the Company, nor confer upon any Eligible Director any right to continue in the service of the Company as a director. 

SECTION 11. GENERAL RESTRICTIONS 

(a)    Investment Representations. The Company may require any Eligible Director to whom Common Stock is issued, as a condition of receiving such Common Stock, to give written assurances in substance and form satisfactory to the Company and its counsel to the effect that such person is acquiring the Common Stock for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to such other effects as the Company deems necessary or appropriate in order to comply with federal and applicable state securities laws.

(b)    Compliance with Securities Laws. Each issuance shall be subject to the requirement that, if at any time counsel to the Company shall determine that the listing, registration or qualification of the shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, is necessary as a condition of, or in connection with, the issuance of shares thereunder, such issuance may not be accepted or exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained on conditions acceptable to the Committee. Nothing herein shall be deemed to require the Company to apply for or to obtain such listing, registration or qualification. 

(c)    Nontransferability. Except as otherwise provided by the Committee, Restricted Stock Units under this Program shall not be transferable by an Eligible Director other than by the laws of descent and distribution. 

(d)    No Acceleration of Distribution of Restricted Stock Units. The distribution of Restricted Stock Units may not be accelerated, including upon termination of the Program, if such acceleration would cause the distribution to become subject to tax under Code Section 409A. 

SECTION 12. WITHHOLDING 

The Company may defer making payments or delivering shares of Common Stock under the Program for up to 30 days to ensure that satisfactory arrangements have been made for the payment of any federal, state or local income or employment taxes that the Company reasonably determines in its sole discretion are required to be withheld with respect to such payment or delivery. 

SECTION 13. GOVERNING LAW 

The Program and all rights hereunder shall be construed in accordance with and governed by the internal law, and not the law of conflicts, of the State of Delaware. 

SECTION 14. UNFUNDED PROGRAM 

The Program shall be unfunded and shall not create (or be construed to create) a trust or a separate fund or funds. The Program shall not establish any fiduciary relationship between the Company and any Eligible Director or other person. To the extent any person holds any rights by virtue of a grant under the Program, such right shall be no greater than the right of an unsecured general creditor of the Company. 

SECTION 15. HEADINGS 

The headings of sections and subsections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of the Program.

EXHIBIT A
FEES
(as of May 2, 2012)

	
		
	Basic Fee
	$50,000

	Non-Executive Chairman
	$ 87,500, in addition to the Basic Fee for service as a member of the Board of Directors.

	Committee Chair
	Audit & Finance: $10,000
Compensation:  $10,000
Nominating & Governance: $7,500

	Board Meetings/Teleconferences
	$ 1,500/$1,000

	Audit & Finance
Meetings/Teleconferences
	$ 1,500/$1,000

	Compensation Committee
Meetings/Teleconferences
	$ 1,500/$1,000

	Nomination & Governance
Meetings/Teleconferences
	$ 1,500/$1,000

	Annual Stock Based Grants
	All Eligible Directors: Dollar value $175,000 in restricted stock (calculated using modified Black-Scholes model)
Non-Executive Chairman: $87,500 in restricted stock, in addition to the Annual Stock Based Grant for service as a member of the Board of Directors

EXHIBIT B

IMATION CORP.
DIRECTORS COMPENSATION PROGRAM
ELECTION FORM

THIS ELECTION is made by _________ (the “Eligible Director”), effective as of the ___ day of ___, 200_. 

WHEREAS, Imation Corp., a Delaware corporation (the “Company”) has a director compensation program (the “Program”); 

WHEREAS, the Eligible Director has the option under the Program to receive Common Stock and/or Restricted Stock Units in lieu of payment of certain cash compensation for service as a director of the Company; 

NOW, THEREFORE, in accordance with the terms and conditions of the Program, the Eligible Director hereby agrees as follows: 

The Program 

This Election is entered into pursuant to the Program, which is incorporated herein by reference and made a part hereof. The Eligible Director hereby acknowledges receipt of a copy of the Program. All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Program. 

Basic Fee, Chairperson Fee and Non-Executive Chairman Fee (“Annual Grant”) 

The Basic Fee, Chairperson Fee and Lee Director Fee is payable (and prorated) on the date first elected to the Board of Directors (if other than at an annual meeting of stockholders). Thereafter, the Basic Fee, Chairperson Fee and Non-Executive Chairman Fee is payable on each Accounting Date following the Annual Meeting of Stockholders. 

** Special Tax Rules Relating to Election to Receive Restricted Stock Units 

Due to Internal Revenue Code Section 409A relating to the taxation of deferred compensation, an election to receive Restricted Stock Units under the Program can only be made for services performed and payments to be received following the calendar year in which the election is made (e.g., an election made in 2007 is not effective until January 1, 2008). Also, the election must remain in effect for the ENTIRE calendar year. Any change in or termination of the election can only be made the year before it is to go in effect (e.g., a change for 2008 must be made before the end of 2007.)

    

Subject to the terms and conditions of the Program, the Eligible Director hereby elects to receive the Basic Fee, the Chairperson and Non-Executive Chairman Fee, if applicable, in the following manner: 

BASIC FEE 

___ %   Election to receive Common Stock in lieu of Cash 

___ %   Election to receive Restricted Stock Units in lieu of Cash** 
        
___ %   Election to receive Cash 
Total:            100 %    
   

CHAIRPERSON FEE: (if applicable)

               ___ %   Election to receive Common Stock in lieu of Cash 

___ %   Election to receive Restricted Stock Units in lieu of Cash**

___ %   Election to receive Cash 
Total:            100 %    
MEETING FEES: 

Subject to the terms and conditions of the Program, the Eligible Director elects to receive Meeting Fees compensation in the following manner, with such fees payable on each Quarterly Payment Date: 

___ %   Election to receive Common Stock in lieu of Cash 

___ %   Election to receive Restricted Stock Units in lieu of Cash** 

___ %   Election to receive Cash 
Total:            100 %    

NON-EXECUTIVE CHAIRMAN FEE: (if applicable) 

___ %   Election to receive Common Stock in lieu of Cash 

___ %   Election to receive Restricted Stock Units in lieu of Cash**
            
___ %   Election to receive Cash 

Total:            100 %    

DISTRIBUTION ELECTION FOR RESTRICTED STOCK UNITS: (Must be completed if Eligible Director has made an Election to Receive Restricted Stock Units.) 

The Eligible Director hereby elects to receive payment of his or her Restricted Stock Units on the earlier to occur of a Change in Control, his or her death or the following date: 

___    ___-year anniversary of the grant date (please specify)
___    The date the Eligible Director incurs a “separation from service” with Company (within the meaning of Section 409A of the Internal Revenue Code). 
 
___    Other (please specify date only): ___________________________ 

Term of Election 

This Election will remain in effect until terminated or changed by the Eligible Director pursuant to written notice to the Secretary of the Company or filing of a new Election Form. Note: A change or termination of an Election to receive Restricted Stock Units will not become effective until January 1 of the calendar year following the calendar year the change or termination is filed with the Secretary of the Company.

IN WITNESS WHEREOF, the Eligible Director has entered into this Election on the day and year first above written, and the Company has accepted this Election as of such day and year. 

ELIGIBLE DIRECTOR 

___________________________________________
Signature 

Accepted and Agreed to by IMATION CORP. 

By:_________________________________
Title:________________________________Exhibit 10.1

 

 

 

 

 

 

 

 

 

 

JAMES RIVER COAL COMPANY

2012 EQUITY INCENTIVE PLAN

 

 

 

 

 

 

 

 

 

 

    	

    	 

    
 

Table of Contents

 

	 	Page
	ARTICLE 1 - GENERAL PROVISIONS	 
	 	 
	1.1	Establishment of Plan	1
	1.2	Purposes of Plan	1
	1.3	Types of Awards	1
	1.4	Effective Date	1
	1.5	Duration of the Plan	1
	 	 
	ARTICLE 2 - DEFINITIONS	1
	 	 
	ARTICLE 3 - ADMINISTRATION	6
	 	 
	3.1	General	6
	3.2	Authority of the Committee.	6
	3.3	Participation Outside of the United States	7
	3.4	Delegation of Authority	7
	3.5	Award Agreements	7
	3.6	Indemnification	8
	 	 
	ARTICLE 4 - SHARES SUBJECT TO THE PLAN	8
	 	 
	4.1	Number of Shares.	8
	4.2	Individual Limits	9
	4.3	Adjustment of Shares	9
	4.4	Assumed Awards	10
	 	 
	ARTICLE 5 - STOCK OPTIONS	10
	 	 
	5.1	Grant of Options	10
	5.2	Agreement	10
	5.3	Option Exercise Price	11
	5.4	Duration of Options	11
	5.5	Exercise of Options	11
	5.6	Payment	11
	5.7	Nontransferability of Options.	11
	5.8	Special Rules for ISOs	12
	 	 
	ARTICLE 6 - STOCK APPRECIATION RIGHTS	13
	 	 
	6.1	Grant of Stock Appreciation Rights (or SARs)	12
	6.2	Agreement	13
	6.3	Payment	13
	6.4	Duration of SARs	13

    	i

    	 

    

 

Table of Contents

(continued)

 

 

	 	Page
	ARTICLE 7 - STOCK AWARDS, RESTRICTED STOCK  AND RESTRICTED STOCK UNITS	13
	 	 
	7.1	Grant of Stock Awards, Restricted Stock and Restricted Stock Units	13
	7.2	Restricted Stock Agreement	13
	7.3	Restricted Stock Unit Agreement	13
	7.4	Nontransferability	14
	7.5	Certificates	14
	7.6	Dividends and Other Distributions	14
	 	 
	ARTICLE 8 - PERFORMANCE SHARES AND UNITS	14
	 	 
	8.1	Grant of Performance Shares/Units	14
	8.2	Value of Performance Shares/Units	15
	8.3	Earning of Performance Shares/Units	15
	8.4	Form and Timing of Payment of Performance Shares/Units	15
	8.5	Nontransferability	15
	 	 
	ARTICLE 9 - PERFORMANCE MEASURES	16
	 	 
	ARTICLE 10 - BENEFICIARY DESIGNATION	16
	 	 
	ARTICLE 11 - DEFERRALS	17
	 	 
	ARTICLE 12 - WITHHOLDING	17
	 	 
	12.1	Tax Withholding	17
	12.2	Share Withholding	17
	 	 
	ARTICLE 13 - AMENDMENT AND TERMINATION	17
	 	 
	13.1	Amendment or Termination of Plan	17
	13.2	Amendment of Award Agreement	17
	13.3	Cancellation of Awards for Detrimental Activity	18
	13.4	Assumption or Cancellation of Awards Upon a Corporate Transaction	18
	13.5	No Repricing	19
	 	 
	ARTICLE 14 - MISCELLANEOUS PROVISIONS	19
	 	 
	14.1	Restrictions on Shares	19
	14.2	Special Rule Related to Securities Trading Policy	20
	14.3	Rights of a Shareholder	20
	14.4	No Implied Rights	20
	14.5	Transfer of Employee	20
	14.6	Compliance with Laws.	21
	14.7	Successors	21
	14.8	Tax Elections	21
	14.9	Unfunded Plan	21
	14.10	Compliance With Code Section 409A	21
	14.11	Legal Construction.	22

 

 

 

 

 

    	ii

    	 

    

 

 

JAMES RIVER COAL COMPANY

2012 EQUITY INCENTIVE PLAN

 

 

ARTICLE 1- GENERAL
PROVISIONS

 

1.1Establishment
of Plan. James River Coal Company, a Virginia corporation (the “Company”), hereby establishes an incentive compensation
plan known as the “James River Coal Company 2012 Equity Incentive Plan” (the “Plan”), as set forth in this
document.

 

1.2Purposes
of Plan. The objectives of the Plan are to (i) attract, retain and incentivize employees, directors, consultants, advisors
and other persons who perform services for the Company; (ii) provide incentives to those individuals who contribute significantly
to the long-term performance and growth of the Company and its affiliates; and (iii) align the long-term financial interests of
employees and other Eligible Participants (as defined below) with those of the Company’s shareholders.

 

1.3Types
of Awards. Awards under the Plan may be made to Eligible Participants in the form of Incentive Stock Options, Nonqualified
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Stock Awards, Performance Shares, Performance
Units or any combination of these.

 

1.4Effective
Date. The Plan shall be effective on March 5, 2012, the date it was approved by the Board of Directors of the Company (the
“Effective Date”), subject to approval by the Company’s shareholders within the 12-month period immediately thereafter.

 

1.5Duration
of the Plan. The Plan shall commence on the Effective Date. Unless the Plan is sooner amended or terminated in accordance with
Article 13, the Plan shall remain in effect until all Awards under the Plan have been satisfied by the issuance of Shares or payment
of cash or have expired or otherwise terminated, but no Awards shall be granted on or after the tenth (10th) anniversary
of the Effective Date.

 

ARTICLE 2 - DEFINITIONS

 

Except where the context
otherwise indicates, the following definitions apply:

 

2.1“Agreement”
means the written agreement evidencing an Award granted to the Participant under the Plan.

 

2.2“Award”
means an award granted to a Participant under the Plan that is an Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Stock Award, Performance Share, Performance Unit or combination of these.

 

2.3“Board”
means the Board of Directors of the Company.

 

    	1

    	 

    

2.4“Cause”
means, unless provided otherwise in the Agreement, (i) with respect to the Company or any Employer, the commission by the Participant
of an act of fraud, embezzlement, theft or proven dishonesty, or any other illegal act or practice (whether or not resulting in
criminal prosecution or conviction); (ii) the willful engaging by the Participant in misconduct which is deemed by the Committee,
in good faith, to be materially injurious to the Company or any Employer, monetarily or otherwise; or (iii) the willful and continued
failure or habitual neglect by the Participant to perform his duties with the Company or the Employer substantially in accordance
with the operating and personnel policies and procedures of the Company or the Employer generally applicable to all their employees.
For purposes of this Plan, no act or failure to act by the Participant shall be deemed to be "willful" unless done or
omitted to be done by the Participant not in good faith and without reasonable belief that the Participant's action or omission
was in the best interest of the Company and/or the Employer. "Cause" under either (i), (ii) or (iii) shall be determined
by the Committee in its sole discretion. Notwithstanding the foregoing, if the Participant has entered into an employment agreement
with the Company that is binding as of the date of employment termination, and if such employment agreement defines "Cause,"
then the definition of "Cause" in such agreement shall apply to the Participant in this Plan.

 

2.5“Change
in Control” means:

 

(a)The
acquisition (other than from the Company) by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act (but without regard to any time period specified in Rule 13d-3(d)(1)(i))), of forty percent (40%) or more of the
combined voting power of then outstanding securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); excluding, however, (1) any acquisition by the Company or (2) any acquisition
by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company;

 

(b)A
majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed
by a majority of the Company’s Board prior to the date of the appointment or election.

 

(c)Consummation
by the Company of a reorganization, merger, or consolidation (a “Transaction”); excluding, however, a Transaction pursuant
to which (i) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding
Company Voting Securities immediately prior to such Transaction will beneficially own, directly or indirectly, more than fifty
percent (50%) of the combined voting power of the outstanding securities of such corporation entitled to vote generally in the
election of directors of the corporation resulting from such Transaction (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly)
in substantially the same proportions relative to each other as their ownership, immediately prior to such Transaction, of the
Outstanding Company Voting Securities; or

 

(d)Consummation
of the sale or other disposition of all or substantially all of the assets of the Company.

 

    	2

    	 

    

Provided, however, with respect
to any Award subject to Code Section 409A, a Change in Control shall not be deemed to occur unless the transaction also constitutes
a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets
of the Company, each as defined in Code Section 409A(a)(2)(A)(v) and the regulations promulgated thereunder.

 

2.6“Code”
means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. All citations to sections of the Code are to
such sections as they may from time to time be amended or renumbered.

 

2.7“Committee”
means the Compensation Committee of the Board or such other committee consisting of two or more members as may be appointed by
the Board to administer this Plan pursuant to Article 3. All members shall be independent directors within the meaning of the Listing
Standards and any other standards as the Board or the Committee may prescribe from time to time; provided, however,
that, (a) if the Committee is comprised of at least three directors, and (b) the Listing Standards permit one member of the Committee
not to be independent within the meaning of the Listing Standards, then the Board may appoint a member who is not so independent,
provided, further, that such appointment otherwise complies with the Listing Standards. If any member of the Committee
does not qualify as (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act, and (ii)
an “outside director” within the meaning of Section 162(m) of the Code, a subcommittee of the Committee shall be appointed
to grant Awards to Named Executive Officers and to officers who are subject to Section 16 of the Act, and each member of such subcommittee
shall satisfy the requirements of (i) and (ii) above. References to the Committee in the Plan shall include and, as appropriate,
apply to any such subcommittee.

 

2.8“Company”
means James River Coal Company, a Virginia corporation, and its successors and assigns.

 

2.9“Director”
means any individual who is a member of the Board of Directors of the Company; provided, however, that any Director who is employed
by the Company or any Employer shall not be considered a Director for purposes of grants of Awards under the Plan, but instead
shall be considered an employee for purposes of grants of Awards under the Plan.

 

2.10“Disability”
means, unless provided otherwise in an Award Agreement (in which case such definition shall apply for purposes of the Plan with
respect to that particular Award): (i) with respect to any Incentive Stock Option, disability as determined under Code Section
22(e)(3), and (ii) with respect to any other Award, that the Participant is “disabled” as determined under Code
Section 409A(a)(2)(C) and any regulations promulgated thereunder. All determinations of Disability shall be made by the Committee
or its designee.

 

2.11“Effective
Date” shall have the meaning ascribed to such term in Section 1.4 hereof.

 

2.12“Eligible
Participant” means an employee of the Employer (including an officer) as well as any other natural person, including
a Director or proposed Director and a consultant or advisor who provides bona fide services to the Employer not in connection with
the offer or sale of securities in a capital-raising transaction, subject to limitations as may be provided by the Code, the Exchange
Act or the Committee, as shall be determined by the Committee.

 

    	3

    	 

    

2.13“Employer”
means the Company and any entity controlled by the Company, controlling the Company or under common control with the Company, including
any entity during any period that it is a “parent corporation” or a “subsidiary corporation” with respect
to the Company within the meaning of Code Sections 424(e) and 424(f). With respect to all purposes of the Plan, including but not
limited to, the establishment, amendment, termination, operation and administration of the Plan, the Company shall be authorized
to act on behalf of all other entities included within the definition of “Employer.”

 

2.14“Exchange
Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. All citations to sections of
the Exchange Act or rules thereunder are to such sections or rules as they may from time to time be amended or renumbered.

 

2.15“Fair
Market Value” means the fair market value of a Share, as determined in good faith by the Committee; provided, however,
that

 

(a)if
the Shares are traded on a national or regional securities exchange on a given date, Fair Market Value on such date shall be the
closing sales price for a Share on the securities exchange on such date (or, if no sales of Shares were made on such exchange on
such date, on the next preceding day on which sales were made on such exchange), all as reported in The Wall Street Journal
or such other source as the Committee deems reliable; and

 

(b)if
the Shares are not listed on any securities exchange, but nevertheless are publicly traded and reported (through the OTC Bulletin
Board or otherwise), Fair Market Value on such date shall be the closing sales price on such date (or, if there are no sales on
such date, on the next preceding day).

 

For purposes of subsection (a)
above, if Shares are traded on more than one securities exchange then the largest U.S. exchange on which Shares are traded shall
be referenced to determine Fair Market Value.

 

2.16“Incentive
Stock Option” or “ISO” means an Option granted to an Eligible Participant under Article 5 of the Plan
that is intended to meet the requirements of Section 422 of the Code.

 

2.17“Insider”
shall mean an individual who is, on the relevant date, subject to the reporting requirements of Section 16(a) of the Act.

 

2.18“Listing
Standards” means the listing standards of any exchange or self-regulatory organization which lists or quotes the securities
of the Company.

 

2.19“Named
Executive Officer” means a Participant who is (or is expected to be as of the date of vesting and/or payout of an Award)
one of the group of “covered employees” as defined in the regulations promulgated or other guidance issued under Section
162(m) of the Code, as determined by the Committee.

 

    	4

    	 

    

2.20“Nonqualified
Stock Option” or “NQSO” means an Option granted to an Eligible Participant under Article 5 of the
Plan that is not intended or otherwise fails to meet the requirements of Section 422 of the Code.

 

2.21“Option”
means an Incentive Stock Option or a Nonqualified Stock Option. An Option shall be designated as either an Incentive Stock Option
or a Nonqualified Stock Option, and in the absence of such designation, shall be treated as a Nonqualified Stock Option.

 

2.22“Option
Exercise Price” or “Exercise Price” means the price at which a Share may be purchased by a Participant
pursuant to an Option.

 

2.23“Participant”
means an Eligible Participant to whom an Award has been granted.

 

2.24“Performance
Measures” means the performance measures set forth in Article 9, which are used for performance-based Awards to Named
Executive Officers.

 

2.25“Performance
Share” means an Award under Article 8 of the Plan that is valued by reference to a Share, which value may be paid to
the Participant by delivery of such property as the Committee shall determine, including without limitation, cash or Shares, or
any combination thereof, upon achievement of such performance objectives during the relevant performance period as the Committee
shall establish at the time of such Award or thereafter, but not later than the time permitted by Section 162(m) of the Code in
the case of a Named Executive Officer, unless the Committee determines not to comply with Section 162(m) of the Code.

 

2.26“Performance
Unit” means an Award under Article 8 of the Plan that has a value set by the Committee, which value may be paid to the
Participant by delivery of such property as the Committee shall determine, including without limitation, cash or Shares, or any
combination thereof, upon achievement of such performance objectives during the relevant performance period as the Committee shall
establish at the time of such Award or thereafter, but not later than the time permitted by Section 162(m) of the Code in the case
of a Named Executive Officer, unless the Committee determines not to comply with Section 162(m) of the Code.

 

2.27“Permitted
Transferee” means any members of the immediate family of the Participant (e.g., spouse, parent, sibling, children, grandchildren,
niece and nephew), any trusts for the benefit of such family members or any partnerships whose only partners are such family members,
each as determined by the Committee in accordance with applicable tax and securities laws.

 

2.28“Person”
shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) thereof.

 

2.29“Plan”
means this James River Coal Company 2012 Equity Incentive Plan, as amended from time to time.

 

2.30“Restricted
Stock” means an Award of Shares under Article 7 of the Plan, which Shares are issued with such restriction(s) as the
Committee, in its sole discretion, may impose, including without limitation, any restriction on the right to retain such Shares,
to sell, transfer, pledge or assign such Shares, to vote such Shares, and/or to receive any cash dividends with respect to such
Shares, which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee
may deem appropriate.

    	5

    	 

    

2.31“Restricted
Stock Unit” or “RSU” means a right granted under Article 7 of the Plan to receive a number of Shares,
or a cash payment for each such Share equal to the Fair Market Value of a Share, on a specified date.

 

2.32“Restriction
Period” means the period commencing on the date an Award of Restricted Stock or an RSU is granted and ending on such
date as the Committee shall determine.

 

2.33“Retirement”
means termination of employment with the Company and all Employers other than for Cause after a Participant has reached the age
of 65 years.

 

2.34“Share”
means one share of common stock of the Company (as such Share may be adjusted pursuant to the provisions of Section 4.3 of
the Plan including any new or different stock or securities resulting from the changes described in Section 4.3).

 

2.35“Stock
Appreciation Right” or “SAR” means an Award granted under Article 6 which provides for an amount payable
in Shares and/or cash, as determined by the Committee, equal to the excess of the Fair Market Value of a Share on the day the Stock
Appreciation Right is exercised over the specified purchase price.

 

2.36“Stock
Award” means a grant of Shares under Article 7 that is not generally subject to restrictions and pursuant to which a
certificate for the Shares is transferred to or registered in the name of, the Participant.

 

ARTICLE 3- ADMINISTRATION

 

3.1General.
This Plan shall be administered by the Committee. The Committee, in its discretion, may delegate to one or more of its members
such of its powers as it deems appropriate.

 

3.2Authority
of the Committee.

 

(a)Subject
to the other provisions of the Plan, the Committee shall be authorized to (i) select persons eligible to participate in the
Plan and to receive one or more Awards under the Plan, (ii) determine the form and substance of Awards made under the Plan
to each Participant, and the conditions and restrictions, if any, subject to which such Awards will be made, (iii) modify
the terms of Awards made under the Plan, (iv) interpret, construe and administer the Plan and Awards granted hereunder, (v) make
any adjustments necessary or desirable in connection with Awards made under the Plan to eligible Participants located outside the
United States, (vi) adopt, amend, or rescind such rules, regulations and procedures, and make such other determinations, for
carrying out the Plan as it may deem appropriate, and

    	6

    	 

    

(b)The
Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Agreement in the manner
and to the extent it shall deem desirable to carry it into effect.

 

(c)In
the event the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in
connection with the acquisition of another corporation or business entity, the Committee may, in its discretion, make such adjustments
in the terms of Awards under the Plan as it shall deem appropriate.

 

(d)All
acts, determinations and decisions of the Committee made or taken pursuant to grants of authority under the Plan or with respect
to any questions arising in connection with the administration and interpretation of the Plan, including the severability of any
and all of the provisions thereof, shall be conclusive, final and binding upon all parties, including the Company, its shareholders,
Participants, Eligible Participants and their estates, beneficiaries and successors.

 

3.3Participation
Outside of the United States. The Committee or its designee shall have the authority to amend the Plan (including by the adoption
of appendices or subplans) and/or the terms and conditions relating to an Award to the extent necessary to permit participation
in the Plan by eligible individuals who are located outside of the United States on terms and conditions comparable to those afforded
to eligible individuals located within the United States.

 

3.4Delegation
of Authority. Except with respect to Named Executive Officers and Insiders, the Committee may, at any time and from time to
time, delegate to one or more persons any or all of its authority under Section 3.2, to the full extent permitted by law and any
applicable Listing Standards. To the extent permitted by law, the Committee may also grant authority to employees or designate
employees of the Company to execute documents on behalf of the Committee or to otherwise assist the Committee in the administration
and operation of the Plan.

 

3.5Award
Agreements. Each Award granted under the Plan shall be evidenced by a written Agreement. Each Agreement shall be subject to
and incorporate, by reference or otherwise, the applicable terms and conditions of the Plan, and any other terms and conditions,
not inconsistent with the Plan, as may be imposed by the Committee, including without limitation, provisions related to the consequences
of termination of employment. A copy of such Agreement shall be provided to the Participant, and the Committee may, but need not,
require that the Participant sign (or otherwise acknowledge receipt of) a copy of the Agreement or a copy of a notice of grant.
Each Participant may be required, as a condition to receiving an Award under this Plan, to enter into an agreement with the Company
containing such non-compete, confidentiality, and/or non-solicitation provisions as the Committee may adopt and approve from time
to time (as so modified or amended, the “Non-Compete Agreement”). The provisions of the Non-Compete Agreement may also
be included in, or incorporated by reference in, the written Award Agreement.

    	7

    	 

    

3.6Indemnification.
In addition to such other rights of indemnification as they may have as directors or as members of the Committee, the members of
the Committee shall be indemnified by the Company against reasonable expenses, including attorney’s fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they
or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award
granted thereunder, and against all amounts paid by them in settlement thereof, provided such settlement is approved by independent
legal counsel selected by the Company, or paid by them in satisfaction of a judgment or settlement in any such action, suit or
proceeding, except as to matters as to which the Committee member has been negligent or engaged in misconduct in the performance
of his duties; provided, that within 60 days after institution of any such action, suit or proceeding, a Committee member shall
in writing offer the Company the opportunity, at its own expense, to handle and defend the same.

 

ARTICLE 4- SHARES
SUBJECT TO THE PLAN

 

4.1Number
of Shares.

 

(a)Subject
to adjustment as provided in (b) below and in Section 4.3, the aggregate number of Shares that are available for issuance pursuant
to Awards under the Plan is one million (1,000,000) Shares. All of the Shares available for issuance under the Plan may be issued
pursuant to Incentive Stock Options. All Shares authorized for issuance under the Plan shall be made available from Shares currently
authorized but unissued or Shares currently held (or subsequently acquired) by the Company as treasury shares, including Shares
purchased in the open market or in private transactions.

 

(b)The
following rules shall apply for purposes of the determination of the number of Shares available for grant under the Plan:

 

(i)If,
for any reason, any Shares awarded or subject to purchase under the Plan are not delivered or purchased, or are reacquired by the
Company, for reasons including, but not limited to, a forfeiture of Restricted Stock, the settlement of an Award in cash rather
than Shares, or termination, expiration or cancellation of an Award, such Shares shall not be charged against, or if previously
charged against, shall be added back to, the aggregate number of Shares available for issuance pursuant to Awards under the Plan;
provided, however, the following Shares may not again be made available for issuance as Awards under the Plan (x) Shares used to
pay the exercise price of an outstanding award, (y) Shares used to pay withholding taxes related to an outstanding award,
or (z) Shares not issued or delivered as a result of the net settlement of an outstanding Award.

 

(ii)Each
Share subject to a Stock Award shall be counted as one Share subject to an Award. Each RSU and each Performance Share awarded that
may be settled in Shares shall be counted as one Share subject to an Award. Each Performance Unit awarded that may be settled in
Shares shall be counted as a number of Shares subject to an award, with the number determined by dividing the value of the Performance
Unit at grant by the Fair Market Value of a Share at Grant. Performance Shares and Units and RSUs that may not be settled in Shares
shall not result in a charge against the aggregate number of Shares available for issuance pursuant to Awards under this Plan.

    	8

    	 

    

(iii)Each
Option and Stock Appreciation Right that may be settled in Shares shall be counted as one Share subject to an award. Stock Appreciation
Rights that may not be settled in Shares shall not result in a charge against the aggregate number of Shares available for issuance.
In addition, if a Stock Appreciation Right is granted in connection with an Option and the exercise of the Stock Appreciation Right
results in the loss of the Option right, the Shares that otherwise would have been issued upon the exercise of such related Option
shall not result in a charge against the aggregate number of Shares available for issuance pursuant to Awards under this Plan.

 

4.2Individual
Limits. Except to the extent the Committee determines that an Award to a Named Executive Officer shall not comply with the
performance-based compensation provisions of Section 162(m) of the Code, the following rules shall apply to Awards under the Plan:

 

(a)Options
and SARs. The maximum number of Shares subject to Options and Stock Appreciation Rights that, in the aggregate, may be granted
in any one calendar year to any one Participant shall be four hundred thousand (400,000) Shares.

 

(b)Restricted
Stock and RSUs. The maximum aggregate number of Shares of Restricted Stock and Restricted Stock Units that may be granted in
any one calendar year to any one Participant shall be two hundred fifty thousand (250,000) Shares.

 

(c)Performance
Awards. With respect to Performance Awards that have a specific dollar-value target or are performance units, the maximum aggregate
payout (determined as of the end of the applicable performance cycle) with respect to Performance Awards granted in any one calendar
year to any one Participant shall be $2,000,000. With respect to Performance Awards that are payable in Shares, the maximum aggregate
payout (determined as of the end of the applicable performance cycle) with respect to Performance Awards granted in any calendar
year to any one Participant shall be two hundred fifty thousand (250,000) Shares.

 

4.3Adjustment
of Shares. If any change in corporate capitalization, such as a stock split, reverse stock split, stock dividend, or any corporate
transaction such as a reorganization, reclassification, merger or consolidation or separation, including a spin-off, of the Company
or sale or other disposition by the Company of all or a portion of its assets, any other change in the Company’s corporate
structure, or any distribution to shareholders (other than a cash dividend) results in the outstanding Shares, or any securities
exchanged therefor or received in their place, being exchanged for a different number or class of shares or other securities of
the Company, or for shares of stock or other securities of any other corporation; or new, different or additional shares or other
securities of the Company or of any other corporation being received by the holders of outstanding Shares; then equitable adjustments
shall be made by the Committee, as it determines are necessary and appropriate, in:

    	9

    	 

    

(a)the
limitations on the aggregate number of Shares that may be awarded as set forth in Section 4.1, including, without limitation, with
respect to Incentive Stock Options;

 

(b)the
limitations on the aggregate number of Shares that may be awarded to any one single Participant as set forth in Section 4.2;

 

(c)the
number and class of Shares that may be subject to an Award, and that have not been issued or transferred under an outstanding Award;

 

(d)the
Option Price under outstanding Options and the number of Shares to be transferred in settlement of outstanding Stock Appreciation
Rights; and

 

(e)the
terms, conditions or restrictions of any Award and Agreement, including the price payable for the acquisition of Shares; provided,
however, that, to the extent possible and desirable, all such adjustments made in respect of each ISO shall be accomplished so
that such Option shall continue to be an incentive stock option within the meaning of Section 422 of the Code.

 

4.4Assumed
Awards. In the event the Company assumes outstanding equity awards or the right or obligation to make such awards in connection
with the acquisition of or merger with another corporation or business entity, the Committee shall make such adjustments in the
terms of such assumed or substituted awards under the Plan, including the number of Shares subject to such award and the exercise
price, as it shall deem equitable and appropriate to prevent dilution or enlargement of benefits intended to be made available
under the Plan. Such assumed or substituted awards will generally not count against the aggregate number of Shares available for
issuance of Awards under the Plan, provided in each case that the requirements are met for the exemption for mergers and acquisitions
under rules and regulations of the stock exchange or other recognized market or quotation system on which the Shares are principally
traded or quoted at the relevant time.

 

ARTICLE 5- STOCK
OPTIONS

 

5.1Grant
of Options. Subject to the terms and provisions of the Plan, Options may be granted to Eligible Participants at any time and
from time to time as shall be determined by the Committee. The Committee shall have sole discretion in determining the number of
Shares subject to Options granted to each Participant. The Committee may grant a Participant ISOs, NQSOs or a combination thereof,
and may vary such Awards among Participants; provided that only an employee of the Employer may be granted ISOs.

 

5.2Agreement.
Each Option grant shall be evidenced by an Agreement that shall specify the Option Exercise Price, the duration of the Option,
the number of Shares to which the Option pertains and such other provisions as the Committee shall determine. The Option Agreement
shall further specify whether the Award is intended to be an ISO or an NQSO. Any portion of an Option that is not designated in
the Agreement as an ISO or otherwise fails or is not qualified as an ISO (even if designated as an ISO) shall be an NQSO. The Committee
may provide in the Option Agreement for transfer restrictions, repurchase rights, vesting requirements, acceleration provisions
and other rights or limitations on the Option or the Shares to be issued pursuant to the exercise of an Option.

    	10

    	 

    

5.3Option
Exercise Price. The Option Exercise Price for each grant of an ISO or an NQSO shall not be less than one hundred percent (100%)
of the Fair Market Value of a Share on the date the Option is granted.

 

5.4Duration
of Options. Each Option shall expire at such time as the Committee shall determine at the time of grant; provided, however,
that no Option shall be exercisable later than the tenth (10th) anniversary of its grant date. . If an Agreement does
not specify an expiration date, the Option’s expiration date shall be the 10th anniversary of its grant date, provided
that the Option may expire earlier as provided in the Agreement or in this Plan.

 

5.5Exercise
of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions
as the Committee shall in each instance approve, including, without limitation, conditions related to the employment of or provision
of services by the Participant with the Company or any Employer, which need not be the same for each grant or for each Participant.
The Committee may provide in the Agreement for automatic accelerated vesting and other rights upon the occurrence of a Change in
Control of the Company or upon the occurrence of other events as specified in the Agreement.

 

5.6Payment.
Options shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for the Shares (less any amount previously paid by
the Participant to acquire the Option). The Option Exercise Price upon exercise of any Option shall be payable to the Company in
full, in any of the following manners, to the extent permitted by applicable laws and unless such manner is not permitted by the
Committee with respect to some or all Options: (a) in cash, (b) in cash equivalent approved by the Committee, (c) by tendering
previously acquired Shares (or delivering a certification or attestation of ownership of such Shares) having an aggregate Fair
Market Value at the time of exercise equal to the total Option Exercise Price (provided that the tendered Shares must have been
held by the Participant for such period required by the Committee), (d)  by having the Company withhold Shares from the Shares
acquired upon exercise of the Option having an aggregate Fair Market Value at the time of exercise equal to the total Option Exercise
Price, (e) by a net exercise method, (f) by a cashless exercise method, including a broker-assisted cashless exercise, or
(g) by a combination of any of the above methods. The Committee also may allow exercise and payment by any other means that the
Committee determines to be consistent with the Plan's purpose and applicable law.

 

5.7Nontransferability
of Options.

 

(a)Incentive
Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under the Plan shall
be exercisable during his or her lifetime only by such Participant.

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(b)Nonqualified
Stock Options. Except as otherwise provided in a Participant’s Award Agreement consistent with securities and other applicable
laws, rules and regulations, no NQSO granted under this Article 5 may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s
Award Agreement, all NQSOs granted to a Participant under this Article 5 shall be exercisable during his or her lifetime only by
such Participant. In the event of a transfer permitted by the Agreement, appropriate evidence of any transfer to the Permitted
Transferees shall be delivered to the Company at its principal executive office. If all or part of an Option is transferred to
a Permitted Transferee, the Permitted Transferee’s rights thereunder shall be subject to the same restrictions and limitations
with respect to the Option as the Participant, and any reference in the Option Agreement to the employment by or performance of
services for the Company by the Participant shall continue to refer to the employment of, or performance of services by, the Participant
who transferred the Option.

 

5.8Special
Rules for ISOs. Notwithstanding the above, in no event shall any Participant who owns (within the meaning of Section 424(d)
of the Code) stock of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of stock
of the Company be eligible to receive an ISO at an Option Exercise Price less than one hundred ten percent (110%) of the Fair Market
Value of a Share on the date the ISO is granted or be eligible to receive an ISO that is exercisable later than the fifth (5th)
anniversary date of its grant. No Participant may be granted ISOs (under the Plan and all other incentive stock option plans of
the Employer) which are first exercisable in any calendar year for Shares having an aggregate Fair Market Value (determined as
of the date an Option is granted) that exceeds One Hundred Thousand Dollars ($100,000). Any such excess shall instead automatically
be treated as a NQSO.

 

ARTICLE 6- STOCK
APPRECIATION RIGHTS

 

6.1Grant
of Stock Appreciation Rights (or SARs). A Stock Appreciation Right may be granted to an Eligible Participant in connection
with an Option granted under Article 5 of this Plan or may be granted independently of any Option. A Stock Appreciation Right shall
entitle the holder, within the specified period (which may not exceed 10 years), to exercise the SAR and receive in exchange therefor
a payment having an aggregate value equal to the amount by which the Fair Market Value of a Share on the exercise date exceeds
the specified purchase price (which, unless provided otherwise, shall be the Fair Market Value on the grant date), times the number
of Shares with respect to which the SAR is exercised. The Committee may provide in the Agreement for automatic exercise on a certain
date, for payment of the proceeds on a certain date, and/or for accelerated vesting and other rights upon the occurrence of a Change
in Control or upon the occurrence of other events specified in the Agreement. SARs shall be subject to the same transferability
restrictions as Nonqualified Stock Options.

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6.2Agreement.
Each SAR grant shall be evidenced by an Agreement that shall specify the exercise price, the duration of the SAR, the number of
Shares to which the SAR pertains and such other provisions as the Committee shall determine.

 

6.3Payment.
The Committee shall have sole discretion to determine in each Agreement whether the payment with respect to the exercise of an
SAR will be in the form of all cash, all Shares, or any combination thereof. If payment is to be made in Shares, the number of
Shares shall be determined based on the Fair Market Value of a Share on the date of exercise or the date of payment, as applicable.
If the Committee elects to make full payment in Shares, no fractional Shares shall be issued and cash payments shall be made in
lieu of fractional Shares. The Committee shall have sole discretion to determine and set forth in the Agreement the timing of any
payment made in cash or Shares, or a combination thereof, upon exercise of SARs, including whether payment will be made in a lump
sum, in annual installments or otherwise deferred; and the Committee shall have sole discretion to determine and set forth in the
Agreement whether any deferred payments may bear amounts equivalent to interest or cash dividends.

 

6.4Duration
of SARs.  Each SAR shall expire at such time as the Committee shall determine at the time of grant; provided, however,
that no SAR shall be exercisable later than the tenth (10th) anniversary of its grant date. If an Agreement does not specify an
expiration date, the SAR’s expiration date shall be the 10th anniversary of its grant date, provided that the SAR may
expire earlier as provided in the Agreement or in this Plan.

 

ARTICLE 7- STOCK
AWARDS, RESTRICTED STOCK

AND RESTRICTED STOCK UNITS

 

7.1Grant
of Stock Awards, Restricted Stock and Restricted Stock Units. Stock Awards and Awards of Restricted Stock and Restricted Stock
Units ("RSUs") may be made to Eligible Participants as a reward for past service or as an incentive for the performance
of future services. Stock Awards and Awards of Restricted Stock and RSUs may be made either alone or in addition to or in tandem
with other Awards granted under the Plan.

 

7.2Restricted
Stock Agreement. The Restricted Stock Agreement shall set forth the terms of the Restricted Stock Award, as determined by the
Committee, including, without limitation, the purchase price, if any, to be paid for such Restricted Stock, which may be zero,
subject to such minimum consideration as may be required by applicable law; any restrictions applicable to the Restricted Stock
such as continued service or achievement of performance goals; the length of the Restriction Period, if any, and whether any circumstances,
such as death, Disability, or a Change in Control, will shorten or terminate the Restriction Period; and rights of the Participant
to vote or receive or accrue dividends with respect to the Shares during the Restriction Period.

 

7.3Restricted
Stock Unit Agreement. The Restricted Stock Unit Agreement shall set forth the terms of the RSU Award, as determined by the
Committee, including without limitation, the number of RSUs granted to the Participant; the restrictions, terms and conditions
of the RSU; whether the RSU will be settled in cash, Shares, or a combination of the two and the date when the RSU will be settled;
any requirements such as continued service or achievement of certain performance measures; the length of the Restriction Period,
if any; whether any circumstances such as Change in Control, termination of employment, Disability or death will shorten or terminate
any vesting or Restriction Period; and whether dividend equivalents will be paid or accrued with respect to the RSUs.

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7.4Nontransferability.
Except as otherwise provided in a Participant’s Award Agreement, no RSUs and no Shares of Restricted Stock received by a
Participant shall be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period.

 

7.5Certificates.
Upon an Award of Restricted Stock to a Participant, Shares of Restricted Stock shall be registered in the Participant’s name.
Certificates, if issued, may either be held in custody by the Company until the Restriction Period expires or until restrictions
thereon otherwise lapse and/or be issued to the Participant and registered in the name of the Participant, bearing an appropriate
restrictive legend and remaining subject to appropriate stop-transfer orders. If required by the Committee, the Participant shall
deliver to the Company one or more stock powers endorsed in blank relating to the Restricted Stock. Upon grant of a Stock Award,
settlement of an RSU in Shares, and with respect to Restricted Stock, if and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period, unrestricted certificates for such shares shall be delivered
to the Participant or registered in the Participant’s name on the Company’s records; provided, however, that the Committee
may cause such legend or legends to be placed on any such certificates as it may deem advisable under the terms of the Plan and
the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state law.
The Company shall not be required to deliver any fractional Share but may pay, in lieu thereof, the Fair Market Value (determined
as of the date the restrictions lapse for Restricted Stock or the RSU is settled) of such fractional Share to the holder thereof.
Concurrently with the grant of an unrestricted Stock Award, the settlement of an RSU or the lapse of any risk of forfeiture applicable
to the Restricted Stock, the Participant shall be required to pay an amount necessary to satisfy any applicable federal, state
and local tax requirements as set out in Article 12 below.

 

7.6Dividends
and Other Distributions. Except as provided in this Article 7 or in the Award Agreement, a Participant receiving a Restricted
Stock Award shall have, with respect to such Restricted Stock Award, all of the rights of a shareholder of the Company, including
the right to vote the Shares to the extent, if any, such Shares possess voting rights and the right to receive any dividends; provided,
however, the Committee may require that any dividends on such Shares of Restricted Stock shall be automatically deferred and reinvested
in additional Restricted Stock subject to the same restrictions as the underlying Award, or may require that dividends and other
distributions on Restricted Stock shall be paid to the Company for the account of the Participant. The Committee shall determine
whether interest shall be paid on such amounts, the rate of any such interest, and the other terms applicable to such amounts.

 

ARTICLE 8- PERFORMANCE
SHARES AND UNITS

 

8.1Grant
of Performance Shares/Units. Performance Shares, Performance Units or both may be granted to Participants in such amounts and
upon such terms, and at any time and from time to time, as shall be determined by the Committee.

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8.2Value
of Performance Shares/Units. Each Performance Unit shall have an initial value that is established by the Committee at the
time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant.
The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Shares, Performance Units or both that will be paid out to the Participant. For purposes
of this Article 8, the time period during which the performance goals must be met shall be called a “Performance Period.”
For Awards intended to qualify under the performance-based compensation provisions of Code Section 162(m), the performance goals
shall be established at the beginning of the Performance Period within the time period required by Code Section 162(m).

 

8.3Earning
of Performance Shares/Units. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder
of Performance Shares/Units shall be entitled to receive a payout of the number and value of Performance Shares/Units earned by
the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance
goals have been achieved.

 

8.4Form
and Timing of Payment of Performance Shares/Units. Subject to the terms of this Plan, the Committee, in its sole discretion,
may pay earned Performance Shares/Units in the form of cash or in Shares (or in a combination thereof) which have an aggregate
Fair Market Value equal to the value of the earned Performance Shares/Units at the close of the applicable Performance Period.
Such Shares may be granted subject to any restrictions deemed appropriate by the Committee, including, without limitation, vesting
conditions or requirements related to continued employment. The determination of the Committee with respect to the form and timing
of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award and, for Awards intended
to qualify under the performance-based compensation provisions of Code Section 162(m), shall meet the requirements of Code Section
162(m).

 

Except as otherwise
provided in the Participant’s Award Agreement, a Participant shall be entitled to receive any dividends declared with respect
to Shares earned in connection with earned grants of Performance Shares/Units, that have not yet been distributed to the Participant
(such dividends may be subject to the same accrual, forfeiture, and payout restrictions as apply to dividends earned with respect
to Shares of Restricted Stock, as set forth in Section 7.6 herein).

 

8.5Nontransferability.
Except as otherwise provided in a Participant’s Award Agreement, Performance Shares/Units may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except
as otherwise provided in a Participant’s Award Agreement, a Participant’s rights under the Plan shall be exercisable
during the Participant’s lifetime only by the Participant or the Participant’s legal representative.

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ARTICLE 9- PERFORMANCE
MEASURES

 

Until the Committee
proposes for shareholder vote and shareholders approve a change in the general Performance Measures set forth in this Article 9,
the attainment of which may determine the degree of payout and/or vesting with respect to Named Executive Officers’ Awards
that are intended to qualify under the performance-based compensation provisions of Section 162(m) of the Code, the Performance
Measure(s) to be used for purposes of such Awards shall be chosen from among the following (which may relate to the Company or
a business unit, division or subsidiary): earnings, earnings per share, consolidated pre-tax earnings, net earnings, estimated
earnings, operating income, EBIT (earnings before interest and taxes), EBITDA (earnings before interest, taxes, depreciation and
amortization), gross margin, revenues, revenue growth, market value added, economic value added, return on equity, return on investment,
return on assets, return on net assets, return on capital employed, total shareholder return, profit, economic profit, capitalized
economic profit, after-tax profit, pre-tax profit, net income, cash flow measures, cash flow return, sales, sales volume, revenues
per employee, stock price, cost, or goals related to acquisitions or divestitures or related to safety and/or production initiatives.
The Committee can establish other Performance Measures for performance Awards granted to Eligible Participants who are not Named
Executive Officers and for performance Awards granted to Named Executive Officers that are not intended to qualify under the performance-based
compensation exception of Section 162(m) of the Code.

 

The Committee shall
be authorized to make adjustments in performance-based criteria or in the terms and conditions of other Awards in recognition of
unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or
accounting principles. The Committee shall also have the discretion to adjust the determinations of the degree of attainment of
the pre-established Performance Measures; provided, however, that Awards which are designed to qualify for the performance-based
compensation exception from the deductibility limitations of Section 162(m) of the Code, and which are held by Named Executive
Officers, may not be adjusted upward (except as a result of adjustments permitted by this paragraph), but the Committee shall retain
the discretion to adjust such Awards downward.

 

If applicable tax and/or
securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder
approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval.
In addition, in the event that the Committee determines that it is advisable to grant Awards that do not qualify for the performance-based
compensation exception from the deductibility limitations of Section 162(m) of the Code, the Committee may make such grants without
satisfying the requirements of Section 162(m) of the Code.

 

ARTICLE 10- BENEFICIARY
DESIGNATION

 

To the extent permitted
by the Committee, each Participant may, from time to time, name any beneficiary or beneficiaries (who may be named contingently
or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or
all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed
by the Company, and will be effective only when filed by the Participant in writing with the Company during the Participant’s
lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s estate. If required, the spouse of a married Participant domiciled in a community property jurisdiction shall
join in any designation of a beneficiary or beneficiaries other than the spouse.

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ARTICLE 11- DEFERRALS

 

The Committee may permit
a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant under an Award. If any such deferral election is permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals, which rules and procedures shall comply with Section 409A of the Code.

 

ARTICLE 12- WITHHOLDING

 

12.1Tax
Withholding. The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to
be withheld with respect to any taxable event arising as a result of any Award under this Plan. If a Participant makes a disposition
within the meaning of Section 424(c) of the Code and regulation promulgated thereunder, of any Share or Shares issued to him pursuant
to his exercise of an Incentive Stock Option within the two-year period commencing on the day after the date of the grant or within
the one-year period commencing on the day after the date of transfer of such Share or Shares to the Optionee pursuant to such exercise,
the Optionee shall, within ten (10) days of such disposition, notify the Company thereof, by delivery of written notice to the
Company at its principal executive office.

 

12.2Share
Withholding. With respect to withholding required upon the exercise of Options or SARS, upon the lapse of restrictions on Restricted
Stock or RSUs, or upon any other taxable event arising as a result of Awards granted hereunder which are to be paid in the form
of Shares, Participants may elect, unless not permitted by the Committee, to satisfy the withholding requirement, in whole or in
part, by having the Company withhold Shares having a fair market value on the date the tax is to be determined equal to not more
than the minimum amount of tax required to be withheld with respect to the transaction. All such elections shall be subject to
any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

ARTICLE 13- AMENDMENT
AND TERMINATION

 

13.1Amendment
or Termination of Plan. The Committee or the Board may at any time terminate or from time to time amend the Plan in
whole or in part, but no such action shall materially adversely affect any rights or obligations with respect to any Awards previously
granted under the Plan, unless the affected Participants consent in writing or the right to make such adverse amendment is clearly
reserved in this Plan or in the applicable Agreement. To the extent required by Section 162(m) or Section 422 of the Code, other
applicable law, and/or any Listing Standards, no amendment shall be effective unless approved by the shareholders of the Company.

 

13.2Amendment
of Award Agreement. The Committee may, at any time, amend outstanding Agreements in a manner not inconsistent with the terms
of the Plan; provided, however, except as provided in Sections 13.4 and 13.5 or in an Award Agreement, if such amendment is materially
adverse to the Participant, as determined by the Committee, the amendment shall not be effective unless and until the Participant
consents to such amendment. To the extent not inconsistent with the terms of the Plan, the Committee may, at any time, amend an
outstanding Agreement in a manner that is not unfavorable to the Participant (as determined by the Committee) without the consent
of such Participant.

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13.3Cancellation
of Awards; Clawback; Detrimental Activity. All Awards shall be subject to the Committee’s right to cancel such Awards
and/or to impose forfeitures to the extent required under Section 304 of the Sarbanes-Oxley Act of 2002 or required under any clawback
policy adopted by the Company that is applicable to an Award. The Committee may also provide in the Award Agreement that if a Participant
engages in any “Detrimental Activity” (as defined below or in the Award Agreement), the Committee may, notwithstanding
any other provision in this Plan to the contrary, cancel, rescind, suspend, withhold or otherwise restrict or limit any unexpired,
unexercised, unpaid or deferred Award as of the first date the Participant engages in the Detrimental Activity, unless sooner terminated
by operation of another term of this Plan or any other agreement. Without limiting the generality of the foregoing, the Agreement
may also provide that if the Participant exercises an Option or SAR, receives a Performance Share, Performance Unit, or RSU payout,
or receives Shares under an Award at any time during the period beginning six months prior to the date the Participant first engages
in Detrimental Activity and ending six months after the date the Participant ceases to engage in any Detrimental Activity, the
Participant shall be required to pay to the Company the excess of the then fair market value of the Shares subject to the Award
over the total price paid by the Participant for such Shares.

 

For purposes of this
Section, “Detrimental Activity” means any of the following, as determined by the Committee in good faith: (i) the
violation of any agreement between the Company and the Participant relating to the disclosure of confidential information or trade
secrets, the solicitation of employees, customers, suppliers, licensees, licensors or contractors, or the performance of competitive
services; (ii) conduct that constitutes Cause (as defined in Section 2.5 above), whether or not the Participant’s employment
is terminated for Cause; (iii) making, or causing or attempting to cause any other person to make, any statement, either written
or oral, or conveying any information about the Company which is disparaging or which in any way reflects negatively upon the Company;
(iv) improperly disclosing or otherwise misusing any confidential information regarding the Company; or (v) the refusal or failure
of a Participant to provide, upon the request of the Company, a certification, in a form satisfactory to the Company, that he or
she is in full compliance with the terms and conditions of the Plan; provided, that the Committee may provide in the Agreement
that only certain of the restrictions provided above apply for purposes of the Award Agreement.

 

13.4Assumption
or Cancellation of Awards Upon a Corporate Transaction. In the event of a proposed sale of all or substantially all of the
assets or stock of the Company, the merger of the Company with or into another corporation such that shareholders of the Company
immediately prior to the merger exchange their shares of stock in the Company for cash and/or shares of another entity or any other
Change in Control or corporate transaction to which the Committee deems this provision applicable (any such event is referred to
as a “Corporate Transaction”), the Committee may, in its discretion, cause each Award to be assumed or for an equivalent
Award to be substituted by the successor corporation or a parent or subsidiary of such successor corporation (with such assumed
or substituted Award adjusted as appropriate).

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In addition or in the
alternative, the Committee, in its discretion, may determine that all or certain types of Awards will be cancelled at or immediately
prior to the time of the Corporate Transaction; provided, however, that at least 15 days prior to the Corporate Transaction (or,
if not feasible to provide 15 days notice, within a reasonable period prior to the Corporate Transaction), the Committee notifies
the Participant that, subject to rescission if the Corporate Transaction is not successfully completed within a certain period,
the Award will be terminated and provides the Participant, either, at the election of the Committee, (i) a payment (in cash or
Shares) equal to value of the Award, as determined below, or (ii) the right to exercise the Option or other Award as to all Shares,
including Shares as to which the Option or other Award would not otherwise be exercisable (or with respect to Restricted Stock,
RSUs, Performance Shares or Performance Units, provide that all restrictions shall lapse) prior to the Corporate Transaction. For
purposes of this provision, the value of the Award shall be the value determined in good faith by the Committee and shall generally
be measured as of the date of the Corporate Transaction and shall generally equal the value of all cash and/or Shares that would
be payable to the Participant upon exercise or vesting of the Award, less the amount of any payment required to be tendered by
the Participant upon such exercise; provided, however, the Committee may also determine that the amount payable to the Participant
upon cancellation of an Award shall equal the consideration the Participant would have received under the terms of the Corporate
Transaction if the Award was fully vested, paid, or exercised (as applicable) immediately prior to the closing of the Corporate
Transaction and, thus, the Participant was treated as a shareholder with respect to the Shares that would have been paid upon such
vesting, payment, or exercise. For example, the amount payable to the Participant upon the Committee’s decision to cancel
outstanding Options would usually equal the difference between the Fair Market Value of the Shares subject to the Options and the
Exercise Price for such Options, computed as of the date of the Corporate Transaction.

 

13.5No
Repricing. Other than in connection with a change in capitalization (as described in Section 4.3 of the Plan), the assumption
or cancellation of awards upon a corporate transaction (as described in Section 13.4), or an adjustment of assumed or substituted
awards (as described in Section 4.4 of the Plan), the Option Exercise Price of each Option and the exercise price of each SAR may
not be changed after the date of grant nor may any outstanding Option or SAR granted under the Plan be surrendered to the Company
as consideration for the grant of a new Option or SAR with a lower exercise price without approval of the Company’s shareholders.

 

ARTICLE 14 - MISCELLANEOUS
PROVISIONS

 

14.1Restrictions
on Shares. All certificates for Shares delivered under the Plan shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission,
any Listing Standards and any applicable federal or state laws, and the Committee may cause a legend or legends to be placed on
any such certificates to make appropriate reference to such restrictions. In making such determination, the Committee may rely
upon an opinion of counsel for the Company.

    	19

    	 

    

Notwithstanding any other
provision of the Plan, the Company shall have no liability to deliver any Shares under the Plan or make any other distribution
of the benefits under the Plan unless such delivery or distribution would comply with all applicable state and federal laws (including,
without limitation and if applicable, the requirements of the Securities Act of 1933), and any applicable requirements of any securities
exchange or similar entity.

 

14.2Special
Rule Related to Securities Trading Policy. The Company has established a securities trading policy (the “Policy”)
relative to disclosure and trading on inside information as described in the Policy. Under the Policy, certain employees and Directors
are prohibited from trading Shares or other securities of the Company except during certain “window periods” as described
in the Policy. If, under the terms of the Agreement, the last day on which an Option or SAR can be exercised falls on a date that
is not, in the opinion of the Company’s general counsel or outside counsel to the Company, within a window period permitted
by the Policy, the applicable exercise period shall automatically be extended by this Section 14.2 until the third business day
of a window period under the Policy (as determined by the Company’s general counsel or outside counsel to the Company), but
in no event beyond the expiration date of the full term of the Options or SARs.

 

14.3Rights
of a Shareholder. Except as otherwise provided in Article 7 of the Plan and in the Restricted Stock Agreement, each Participant
who receives an Award of Restricted Stock shall have all of the rights of a shareholder with respect to such Shares, including
the right to vote the Shares to the extent, if any, such Shares possess voting rights and receive dividends and other distributions.
Except as provided otherwise in the Plan or in an Agreement, no Participant awarded an Option, Stock Appreciation Right, RSU, Performance
Unit, or Performance Share shall have any right as a shareholder with respect to any Shares covered by such Award prior to the
date of issuance to him or his delegate of a certificate or certificates for such Shares or the date the Participant’s name
is registered on the Company’s book as the shareholder of record with respect to such Shares.

 

14.4No
Implied Rights. Nothing in the Plan or any Award granted under the Plan shall confer upon any Participant any right to continue
in the service of the Employer, or to serve as a Director thereof, or interfere in any way with the right of the Employer to terminate
his or her employment or other service relationship at any time. Unless otherwise determined by the Committee, no Award granted
under the Plan shall be deemed salary or compensation for the purpose of computing benefits under any employee benefit plan, severance
program, or other arrangement of the Employer for the benefit of its employees. No Participant shall have any claim to an Award
until it is actually granted under the Plan. To the extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall, except as otherwise provided by the Committee, be no greater than the right of an unsecured general
creditor of the Company.

 

14.5Transfer
of Employee.  The transfer of an employee from one Employer to another Employer shall not be considered a termination
of employment. Except as provided under Code Section 409A with respect to an Award subject to Code Section 409A or as provided
by the Committee; it shall not be considered a termination of employment if an employee is placed on temporary military, disability
or sick leave or such other leave of absence which is considered by the Committee as continuing intact the employment relationship.

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14.6Compliance
with Laws.

 

(a)At
all times when the Committee determines that compliance with Section 162(m) of the Code is required or desirable, all Awards to
Named Executive Officers shall comply with the requirements of Section 162(m) of the Code. In addition, in the event that changes
are made to Section 162(m) of the Code to permit greater flexibility with respect to any Awards, the Committee may, subject to
the requirements of Article 13, make any adjustments it deems appropriate.

 

(b)The
Plan and the grant of Awards shall be subject to all applicable federal and state laws, rules, and regulations and to such approvals
by any United States government or regulatory agency as may be required. It is the intent of the Company that the Awards made hereunder
comply in all respects with Rule 16b-3 under the Exchange Act and that any ambiguities or inconsistencies in construction
of the Plan be interpreted to give effect to such intention Any provision herein relating to compliance with Rule 16b-3 under the
Exchange Act shall not be applicable with respect to participation in the Plan by Participants who are not Insiders.

 

14.7Successors.
The terms of the Plan shall be binding upon the Company, and its successors and assigns.

 

14.8Tax
Elections. Each Participant agrees to give the Committee prompt written notice of any election made by such Participant under
Code Section 83(b) or any similar provision thereof. Notwithstanding the preceding sentence, the Committee may condition any Award
on the Participant’s not making an election under Code Section 83(b).

 

14.9Unfunded
Plan. The Plan shall be unfunded. Bookkeeping accounts may be established with respect to Participants who are granted Awards
under the Plan, but any such accounts will be used merely as a bookkeeping convenience. The Company shall not be required to segregate
any assets which may at any time be represented by Awards.

 

14.10Compliance
With Code Section 409A. Unless the Committee expressly determines otherwise, Awards are intended to be exempt from Code Section 409A
as stock rights or short-term deferrals and, accordingly, the terms of any Awards shall be construed and administered to preserve
such exemption (including with respect to the time of payment following a lapse of restrictions applicable to an Award). To the
extent that Section 409A applies to a particular Award granted under the Plan (notwithstanding the preceding sentence), then
the terms of the Award shall be construed and administered to permit the Award to comply with Section 409A, including, if
necessary, by delaying the payment of any Award payable upon separation from service to a Participant who is a “specified
employee” (as defined in Code Section 409A and determined consistently for all of the Company’s arrangements that are
subject to Code Section 409A), for a period of six months and one day after such Participant’s separation from service. In
the event any Person is subject to income inclusion, additional interest or taxes, or any other adverse consequences under Code
Section 409A, then neither the Company, the Committee, the Board nor its or their employees, designees, agents or contractors
shall be liable to any Participant or other Person in connection with such adverse consequences under Code Section 409A.

    	21

    	 

    

14.11Legal
Construction.

 

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

 

(b)Gender
and Number. Where the context admits, words in any gender shall include the other gender, words in the singular shall include
the plural and words in the plural shall include the singular.

 

(c)Governing
Law. To the extent not preempted by federal law, the Plan and all Agreements hereunder, shall be construed in accordance with
and governed by the laws of the Commonwealth of Virginia.

 

IN WITNESS WHEREOF,
this Plan is executed as of the date approved by the Compensation Committee of the Board of Directors of the Company, the 5th
day of March, 2012.

 

	 	
        JAMES RIVER COAL COMPANY

         

	 	By :  /s/ PETER T. SOCHA 

 

 

 

 

 

 

 

 

 

 

    	22

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