Document:

exv10w1

Exhibit 10.1

2009 Patriot Award

PERFORMANCE-BASED RESTRICTED STOCK UNITS AWARD AGREEMENT

     THIS
AGREEMENT, dated [•], (the “Grant Date”), is made by and between PATRIOT
COAL CORPORATION, a Delaware corporation (the “Company”), and the undersigned employee or
other service provider of the Company or a Subsidiary (as defined below) or an Affiliate (as
defined below) of the Company (the “Grantee”).

     WHEREAS, the Company wishes to afford the Grantee the opportunity to own shares of its $.01
par value common stock (the “Common Stock”);

     WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and

     WHEREAS, the Administrator appointed to administer the Plan has determined that it would be to
the advantage and best interest of the Company and its stockholders to grant the restricted stock
units provided for herein to the Grantee as an incentive for increased efforts during his or her
term of office with the Company or its Subsidiaries or Affiliates, and has advised the Company
thereof and instructed the undersigned officer to grant the award;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as
follows:

ARTICLE 1

DEFINITIONS

     Whenever the following terms are used in this Agreement, they shall have the meanings
specified below. Capitalized terms that are not defined in this Agreement shall have the meanings
specified in the Plan.

     Section 1.1 “Affiliate” means any Person that (i) is directly or indirectly
controlling, controlled by, or under common control with the Company and (ii) would, together with
the Company, be classified as the “service recipient” (as defined in the regulations under Code
Section 409A) with respect to the Grantee. For purposes of this definition, the term “control”
(including, with correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise.

     Section 1.2 “Cause” shall mean (i) any material and uncorrected breach by the Grantee
of the terms of his or her employment agreement with the Company, including, but not limited to, a
violation of Section 13 thereof, (ii) any willful fraud or dishonesty of the Grantee involving the
property or business of the Company, (iii) a deliberate or willful refusal or failure of the
Grantee to comply with any major corporate policy of the Company which is communicated to the
Grantee in writing or (iv) the Grantee’s conviction of, or plea of nolo contendere
to, any felony if such conviction or plea results in his or her imprisonment; provided
that, with respect to

 

 

clauses (i), (ii) and (iii) above, the Grantee shall have thirty (30) days following his or
her receipt of written notice of the conduct that is the basis for the potential termination for
Cause within which to cure such conduct to prevent termination for Cause by the Company;
provided further that, notwithstanding the foregoing, in the event that the
Grantee is subject to a definition of “Cause” in his or her employment agreement with the Company
that contains any terms that are more favorable to the Grantee, “Cause” (including the related cure
period) shall include such terms.

     Section 1.3 “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated with respect thereto.

     Section 1.4 “Good Reason” means: (i) a reduction by the Company in the Grantee’s base
salary; (ii) a material reduction in the aggregate program of employee benefits and perquisites to
which the Grantee is entitled (other than a reduction that generally affects all executives); (iii)
a material decline in the Grantee’s bonus or long term incentive award opportunities (other than a
decline that generally affects all executives); (iv) relocation of the Grantee’s primary office by
more than 50 miles from the location of the Grantee’s primary office as specified in his or her
employment agreement with the Company; or (v) any material diminution or material adverse change in
the Grantee’s title, duties, responsibilities or reporting relationships. If the Grantee does not
give notice to the Company (as described in the Grantee’s employment agreement with the Company)
within ninety (90) days after an event giving rise to Good Reason, the Grantee’s right to claim
Good Reason termination on the basis of such event shall be deemed waived. Notwithstanding the
foregoing, in the event that the Grantee is subject to a definition of “Good Reason” in his or her
employment agreement with the Company that is more favorable to the Grantee, “Good Reason”
(including any related notice period) shall have the meaning described therein.

     Section 1.5 “Payment Amount” means the number of shares of Common Stock, as certified
by the Compensation Committee of the Board, equal to the product of multiplying:

(i) the Target Restricted Stock Units;

(ii) the Service Vesting Percentage;

(iii) the TSR Multiplier; and

(iv) except for any Grantee who is employed at any time on the effective date of a Change of
Control, a fraction, the numerator of which is the total number of months (and fractions
thereof) in the Performance Period and the denominator of which is 36.

     Section 1.6 “Peer Companies” shall mean Alpha Natural Resources, Inc., Arch Coal,
Inc., Consol Energy Inc., Foundation Coal Holdings, Inc., International Coal Group, Inc., James
River Coal Co., Massey Energy Co., Peabody Energy Corporation and Westmoreland Coal Company. The
Compensation Committee of the Board may adjust the Peer Companies as provided in Section 5.8
herein.

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     Section 1.7 “Performance Period” shall mean the period beginning January 1, 2009 and
ending on December 31, 2011. In the event that a Change of
Control occurs prior to December 31, 2011, “Performance Period” shall mean the period beginning January 1, 2009 and ending on
the effective date of the Change of Control.

     Section 1.8 “Person” means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.

     Section 1.9 “Plan” means the Patriot Coal Corporation 2007 Long-Term Equity Incentive
Plan, as it may be amended from time to time.

     Section 1.10 “Service Vesting Percentage” means the percentage computed in accordance
with Section 3 hereof.

     Section 1.11 “Subsidiary” means any corporation that (i) is in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of commonly
controlled corporations, other than the last corporation in the unbroken chain, then owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain and (ii) would, together with the Company, be classified as a
“service recipient” (as defined in the regulations under Code Section 409A) with respect to the
Grantee.

     Section 1.12 “Target Restricted Stock Units” means the number of hypothetical shares
of Common Stock granted to the Grantee as set forth on the signature page hereof upon the terms and
subject to the conditions set forth in this Agreement.

     Section 1.13 “TSR” means, with respect to any of the Peer Companies or the Company,
the compound growth rate, expressed as a percentage with one decimal point, in the value of a share
of common stock in the company due to stock appreciation and dividends, assuming dividends are
reinvested in common stock of the company, during the Performance Period. For this purpose, the
“Beginning Stock Price” shall mean the average of the daily closing sales prices on the New York
Stock Exchange Composite Transaction Tape for the period December 1, 2008 through January 30, 2009;
and, the “Ending Stock Price” shall mean the average of the daily closing sales prices on the New
York Stock Exchange Composite Transaction Tape for the trading days in the month of December
immediately preceding the final day of the Performance Period. The TSR is calculated as follows:

Ending Stock Price + value of dividends paid and 

reinvested during the Performance Period

 

Beginning Stock Price

     “TSR Multiplier” means the number set forth below based on the TSR of the Company
relative to the TSR of the Peer Companies, determined by ranking the performance of the Company and
the Peer Companies in order from highest to lowest based on each of the Company and the Peer
Companies’ respective TSR for the Performance Period.

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	 	 	Company Performance	 	 
	Target Performance Threshold	 	Relative to Peer Companies	 	TSR Multiplier*
	Above Maximum Performance Percentile
	 	Above 75th Percentile	 	 	2.0	 
	Maximum Performance Percentile
	 	75th Percentile	 	 	2.0	 
	Target Performance
	 	55th Percentile	 	 	1.0	 
	Threshold Performance
	 	35th Percentile	 	 	0.5	 
	Below Maximum Performance Percentile
	 	Below 35th Percentile	 	 	0.0	 

 

			
	*	 	The TSR Multiplier between threshold performance and target performance and target performance and
maximum performance will be interpolated on a straight-line basis.

Notwithstanding the foregoing,

(i) If a Change of Control occurs prior to December 31, 2011, then the TSR Multiplier shall be no
less than one, without regard to the TSR of the Company relative to the TSR of the Peer Companies;

(ii) If TSR of the Company is greater than 25% per year compounded annually, then the TSR
Multiplier shall be no less than one, without regard to the TSR of the Company relative to the TSR
of the Peer Companies; and

(iii) If TSR of the Company is negative, then the TSR Multiplier shall be one if the TSR of the
Company relative to the TSR of the Peer Companies is at or above the 55th percentile, otherwise the
TSR Multiplier shall be zero.

ARTICLE 2

GRANT OF TARGET RESTRICTED STOCK UNITS

     Section 2.1 Grant of Target Restricted Stock Units. For good and valuable
consideration, the Company hereby grants to the Grantee the Target Restricted Stock Units. Each
Target Restricted Stock Unit covered by this Agreement represents, subject to applicable vesting
conditions, an unfunded and unsecured promise of the Company to issue to the Grantee one share of
Common Stock, with such share number adjusted based upon the TSR of the Company relative to the TSR
of each of the Peer Companies during the Performance Period.

     Section 2.2 Transfer Restrictions. At any time prior to the Company’s issuance of
certificates in accordance with Section 4.1 hereof, the Target Restricted Stock Units or any
interest therein cannot be directly or indirectly transferred, sold, assigned, pledged,
hypothecated or otherwise disposed of.

     Section 2.3 No Obligation of Employment or Service. Nothing in this Agreement or in
the Plan shall confer upon the Grantee any right to continue in the service of the Company or any
Subsidiary or Affiliate or interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate the service of the
Grantee at any time for any reason whatsoever.

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ARTICLE 3

VESTING OF TARGET RESTRICTED STOCK UNITS

     Section 3.1 Service Vesting Percentage. The Service Vesting Percentage shall be
computed as follows: (i) 100% on December 31, 2011, provided that the Grantee does not
incur a Termination of Employment prior to such date; (ii) 100% on the effective date of a Change
of Control; (iii) 100% upon the Grantee’s Termination of Employment due to death or Disability; and
(iv) a pro rata portion, upon the Grantee’s Termination of Employment by the Company without Cause
or Termination of Employment by the Grantee for Good Reason, equal to a fraction, the numerator of
which is the number of days starting from January 1, 2009 until the date of the Grantee’s
Termination of Employment and the denominator of which is 1095.

     Section 3.2 Effect of Termination of Employment; Forfeiture. Except as otherwise
provided in Section 3.1 hereof, no unvested Target Restricted Stock Unit shall become vested
following the Grantee’s Termination of Employment, and any unvested Target Restricted Stock Units
shall be immediately and automatically forfeited upon the earlier to occur of (i) Termination of
Employment, or (ii) January 1, 2012.

ARTICLE 4

ISSUANCE OF STOCK

     Section 4.1 Payment of Restricted Stock Units. On (i) a Change of Control that occurs
prior to December 31, 2011 or (ii) as soon as practicable, but in no event later that January
15, 2012, the Company shall issue to the Grantee (or, in the event of the Grantee’s death, to his
or her estate or beneficiary) certificates representing the number of shares of Common Stock equal
to the Payment Amount.

     Section 4.2 Conditions to Issuance of Stock Certificates. Shares of Common Stock that
may be issued in accordance with Section 4.1 hereof may be either previously authorized but
unissued shares or issued shares that have been reacquired by the Company. In accordance with
Treasury Regulation Section 1.409A-2(b)(7)(ii)), if the Administrator reasonably anticipates that
issuing Common Stock in accordance with Section 4.1 will violate federal securities laws or other
applicable laws, the Company will pay the Payment Amount in the form of cash rather than shares of
Common Stock no later than as required under Section 4.1.

     Section 4.3 Rights as Stockholder. The Grantee shall not be, and shall not have any
of the rights or privileges of, a stockholder of the Company in respect of any shares of Common
Stock corresponding to vested Target Restricted Stock Units granted hereunder unless and until the
certificates representing the number of shares of Common Stock equal to the Payment Amount are
issued in accordance with Section 4.1. The Grantee shall not be entitled to receive any dividends
paid with respect to the shares of Common Stock with respect to record dates occurring prior to the
date of such issue, and the Grantee shall not be entitled to vote the shares of Common Stock with
respect to record dates for such voting rights occurring prior to the date of such issue.

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ARTICLE 5

MISCELLANEOUS

     Section 5.1 Tax Consequences. Unless otherwise specifically provided in another
agreement between the Company and the Grantee, the Company shall not be liable or responsible in
any way for any tax consequences to the Grantee relating to the Target Restricted Stock Units, and
the Grantee agrees to be responsible for any and all taxes with respect to the Target Restricted
Stock Units. The Company shall be entitled to require payment in cash or deduction from other
compensation payable to the Grantee of any sums required by Federal, state or local law to be
withheld with respect to the Target Restricted Stock Units. The Administrator may, in its
discretion and in satisfaction of the foregoing requirement, allow the Company to withhold shares
of Common Stock issued pursuant to Article 4 (or allow the return of Shares) having a Fair Market
Value equal to the sums required to be so withheld.

     Section 5.2 Administration. The Administrator has the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken
and all interpretations and determinations made by the Administrator in good faith shall be final
and binding upon the Grantee, the Company and all other interested persons. No member of the
Administrator shall be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Target Restricted Stock Units. In its absolute
discretion, the Board of Directors may at any time and from time to time exercise any and all
rights and duties of the Administrator under the Plan and this Agreement.

     Section 5.3 Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any notice to be given to
the Grantee shall be addressed to him or her at the address given beneath his or her signature
hereto. By a notice given pursuant to this Section 5.3, either party may hereafter designate a
different address for notices to be given to him, her or it. Any notice that is required to be
given to the Grantee shall, if the Grantee is then deceased, be given to the Grantee’s personal
representative if such representative has previously informed the Company of his, her or its status
and address by written notice under this Section 5.3. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the United States Postal
Service.

     Section 5.4 Titles. Titles and headings are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this Agreement.

     Section 5.5 Pronouns. The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.

     Section 5.6 Applicability of Plan. The shares of Common Stock issued to the Grantee
hereunder shall be subject to all of the terms and provisions of the Plan, to the extent applicable
to such shares. In the event of any conflict between this Agreement and the Plan, the terms of the
Plan shall control.

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     Section 5.7 Amendment. This Agreement may be amended only by a writing executed by
the parties hereto that specifically states that it is amending this Agreement

     Section 5.8 TSR Adjustment. To the extent permissible under Section 162(m) of the
Code, the Compensation Committee of the Board shall have the right to adjust (i) the companies that
compose the Peer Companies or (ii) the calculation or terms of the TSR with respect to any of the
Peer Companies or the Company in the event of any company stock dividend, stock split, combination
or exchange of shares, recapitalization or other change in the capital structure of the company,
corporate separation or division of the company (including, but not limited to, a split-up,
spin-off, split-off or distribution to company stockholders other than a normal cash dividend),
sale by the company of all or a substantial portion of its assets (measured on either a stand-alone
or consolidated basis), reorganization (whether or not such reorganization comes within the
definition of such term in Section 368 of the Code), rights offering, partial or complete
liquidation, or any other corporate transaction, company share offering or other event involving
the company and having an effect similar to any of the foregoing. Any such adjustment by the
Compensation Committee of the Board shall be final, binding and conclusive.

     Section 5.9 Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by arbitration. Arbitrators shall be selected,
and arbitration shall be conducted, in accordance with the rules of the American Arbitration
Association. The Company shall pay any legal fees in connection with such arbitration in the event
that the Grantee prevails on a material element of his or her claim or defense. Notwithstanding
anything in this Section 5.9 to the contrary, payments made under this Section 5.9 that are
provided during one calendar year shall not affect the amount of such payments provided during a
subsequent calendar year, payments under this Section 5.9 may not be exchanged or substituted for
other forms of compensation to the Grantee, and any such reimbursement or payment will be paid
within sixty (60) days after the Grantee prevails, but in no event later than the last day of
Grantee’s taxable year following the taxable year in which he incurred the expense giving rise to
such reimbursement or payment. This Section 5.9 shall remain in effect throughout the Grantee’s
employment and for a period of five (5) years following the Grantee’s Termination of Employment.

     Section 5.10 Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement regardless of the law that
might be applied under principles of conflicts of laws.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto,
effective on the Grant Date.

	 	 	 	 	 	 
	GRANTEE	 	PATRIOT COAL CORPORATION
	 
	 	 	 	 
	 

	 	By
	 	 

	 

	 	 	 	Richard M. Whiting
	 

	 	 	 	Its Chief Executive Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Address
	 	 	 	 
	 
	 	 	 	 
	Grantee’s Taxpayer Identification Number:	 	Aggregate number of Target
Restricted Stock Units granted
hereunder:                                            

8exv10w2

Exhibit 10.2

2009 Patriot Award

NON-QUALIFIED STOCK OPTION AGREEMENT

     THIS AGREEMENT, dated [•] (the “Grant Date”) is made by and between PATRIOT COAL
CORPORATION, a Delaware corporation (the “Company”), and the undersigned employee or other
service provider of the Company or a Subsidiary (as defined below) or an Affiliate (as defined
below) of the Company (the “Optionee”).

     WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase shares of its
$.01 par value common stock (the “Common Stock”);

     WHEREAS, the Company wishes to carry out the Plan (as hereinafter defined), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and

     WHEREAS, the Administrator appointed to administer the Plan has determined that it would be to
the advantage and best interest of the Company and its stockholders to grant the Options provided
for herein to the Optionee as an incentive for increased efforts during his or her term of office
with the Company or its Subsidiaries or Affiliates, and has advised the Company thereof and
instructed the undersigned officer to issue the options;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as
follows:

ARTICLE 1

DEFINITIONS

     Whenever the following terms are used in this Agreement, they shall have the meanings
specified below. Capitalized terms that are not defined in this Agreement shall have the meanings
specified in the Plan.

     Section 1.1 “Affiliate” means any Person that (i) is directly or indirectly
controlling, controlled by, or under common control with, the Company and (ii) would, together with
the Company, be classified as the “service recipient” (as defined in the regulations under Code
Section 409A) with respect to the Optionee. For purposes of this definition, the term “control”
(including, with correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise.

     Section 1.2 “Cause” shall mean (i) any material and uncorrected breach by the
Optionee of the terms of his or her employment agreement with the Company, including, but not
limited to, a violation of Section 13 thereof, (ii) any willful fraud or dishonesty of the Optionee
involving the property or business of the Company, (iii) a deliberate or willful refusal or failure
of the Optionee to comply with any major corporate policy of the Company which is communicated to
the Optionee in writing or (iv) the Optionee’s conviction of, or plea of nolo
contendere to, any felony if such conviction or plea results in his or her imprisonment;
provided

 

that, with respect to clauses (i), (ii) and (iii) above, the Optionee shall have
thirty (30) days following his or her receipt of written notice of the conduct that is the basis
for the potential termination for Cause within which to cure such conduct to prevent termination
for Cause by the Company; provided further that, notwithstanding the
foregoing, in the event that the Optionee is subject to a definition of “Cause” in his or her
employment agreement with the Company that contains any terms that are more favorable to the
Optionee, “Cause” (including the related cure period) shall include such terms.

     Section 1.3 “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated with respect thereto.

     Section 1.4 “Good Reason” means: (i) a reduction by the Company in the Optionee’s
base salary; (ii) a material reduction in the aggregate program of employee benefits and
perquisites to which the Optionee is entitled (other than a reduction that generally affects all
executives); (iii) a material decline in the Optionee’s bonus or long term incentive award
opportunities (other than a decline that generally affects all executives); (iv) relocation of the
Optionee’s primary office by more than 50 miles from the location of the Optionee’s primary office
as specified in his or her employment agreement with the Company; or (v) any material diminution or
material adverse change in the Optionee’s title, duties, responsibilities or reporting
relationships. If the Optionee does not give notice to the Company (as described in the Optionee’s
employment agreement with the Company) within ninety (90) days after an event giving rise to Good
Reason, the Optionee’s right to claim Good Reason termination on the basis of such event shall be
deemed waived. Notwithstanding the foregoing, in the event that the Optionee is subject to a
definition of “Good Reason” in his or her employment agreement with the Company that is more
favorable to the Optionee, “Good Reason” (including any related notice period) shall have the
meaning described therein.

     Section 1.5 “Options” means the non-qualified options to purchase Common Stock
granted under this Agreement.

     Section 1.6 “Person” means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.

     Section 1.7 “Plan” means the Patriot Coal Corporation 2007 Long-Term Equity Incentive
Plan, as it may be amended from time to time.

     Section 1.8 “Retirement” means retirement at or after age 55 with at least ten (10)
years of service with the Company.

     Section 1.9 “Subsidiary” means any corporation that (i) is in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group of commonly
controlled corporations, other than the last corporation in the unbroken chain, then owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain and (ii) would, together with the Company, be classified as a
“service recipient” (as defined in the regulations under Code Section 409A) with respect to the
Optionee.

2

 

     Section 1.10 “Termination of Employment” means a termination of the Optionee’s
employment or service with the Company, a Subsidiary or an Affiliate (regardless of the reason
therefor).

ARTICLE 2

GRANT OF OPTIONS

     Section 2.1 Grant of Options. For good and valuable consideration, the Company
hereby grants to the Optionee an Option to purchase any part or all of the number of shares of
Common Stock set forth on the signature page hereof upon the terms and subject to the conditions
set forth in this Agreement.

     Section 2.2 Exercise Price. The exercise price of the shares of Common Stock covered
by the Option shall be such amount per share as set forth on the signature page hereof (which shall
not be less than the Fair Market Value (as determined in accordance with guidance issued under Code
Section 409A) of a share of Common Stock on the Grant Date), subject to adjustment pursuant to
Section 6.1 of the Plan without commission or other charge.

     Section 2.3 No Obligation of Employment or Service. Nothing in this Agreement or in
the Plan shall confer upon the Optionee any right to continue in the service of the Company or any
Subsidiary or Affiliate or interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate the service of the
Optionee at any time for any reason whatsoever, with or without Cause.

ARTICLE 3

EXERCISABILITY OF OPTIONS

     Section 3.1 Option Vesting. Unless otherwise provided in this Agreement, this Option
shall become exercisable on such dates as follows, provided that the Optionee has remained
continuously employed by the Company through such applicable date:

	 	 	 	 	 
	Date Option	 	Percentage of shares of Common
	becomes exercisable	 	Stock as to which Option is exercisable
	January 2, 2010
	 	 	33.33	%
	January 2, 2011
	 	 	33.33	%
	January 2, 2012
	 	 	33.34	%

This Option shall become exercisable, pursuant to the schedule above, with respect to the nearest
whole number of shares of Common Stock, as determined by the Administrator in its sole discretion.

     Section 3.2 Acceleration Events. Notwithstanding anything in this Article 3 to the
contrary, this Option shall become exercisable with respect to 100% of the shares of Common Stock
(but only to the extent such Option has not otherwise terminated) upon (i) the Optionee’s
Termination of Employment due to death or Disability, or (ii) a Change of Control. Upon

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Optionee’s (i) Termination of Employment by the Company without Cause or (ii) by the Optionee
for Good Reason, this Option shall vest and become exercisable with respect to the percentage of
shares of Common Stock that would have otherwise vested on the next vesting date as specified in
Section 3.1 herein.

     Section 3.3 Effect of Termination of Employment. Except as otherwise provided in
Section 3.2, the Option shall not become exercisable as to any additional shares of Common Stock
following the Optionee’s Termination of Employment, and the portion of the Option which is then
unexercisable shall terminate immediately.

     Section 3.4 Expiration of Options. This Option may not be exercised to any extent by
the Optionee after the first to occur of the following events:

     (a) The tenth anniversary of the date hereof; or

     (b) The first anniversary of the date of Termination of Employment (i) by reason of
death or Disability; (ii) by the Company without Cause or (iii) by the Optionee for Good
Reason; or

     (c) The fifth anniversary of the date of Termination of Employment by reason of
Retirement; or

     (d) The date of a Termination of Employment by the Optionee without Good Reason (other
than by reason of Retirement) or by the Company for Cause; or

     (e) Upon a Change of Control, if either

     (i) the Administrator terminates this Option by paying the Optionee an amount
equal to the product of (x) the difference between the Change of Control price and
the Exercise Price (unless the Exercise Price is greater than the Change in Control
price, in which case this Option shall be terminated) and (y) the aggregate number
of shares of Common Stock for which the Option is exercisable, or

     (ii) the Optionee is permitted to exercise his or her Option prior to the
Change of Control.

ARTICLE 4

EXERCISE OF OPTION

     Section 4.1 Person Eligible to Exercise. During the lifetime of the Optionee, only
he or she, or in the event of Disability his or her representative or conservator, may exercise
this Option or any portion thereof. After the death of the Optionee, the Option may, prior to the
time when the Option becomes unexercisable under Section 3.4, be exercised by his or her
beneficiary or estate or Permitted Transferee.

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     Section 4.2 Partial Exercise. Any exercisable portion of this Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the
time when the Option or portion thereof becomes unexercisable under Section 3.4;
provided, however, that any partial exercise shall be for whole shares of Common
Stock only.

     Section 4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may
be exercised solely by delivery to the Secretary of the Company or designatee or his or her office
(or any third party designated by the Secretary of the Company to that effect) of all of the
following prior to the time when the Option or such portion becomes unexercisable under Section
3.4:

     (a) Notice in writing signed by the Optionee or another person then entitled to
exercise the Option or portion thereof, stating that the Option or portion thereof is
thereby exercised, such notice complying with all applicable rules established by the
Administrator;

     (b) Full payment (in cash, in shares of Common Stock, by check or by a combination
thereof) for the shares with respect to which such Option or portion thereof is exercised;

     (c) Full payment to the Company of all amounts which, under federal, state or local
law, it is required to withhold upon exercise of the Option; and

     (d) In the event the Option or portion thereof is exercised pursuant to Section 4.1 by
any person or persons other than the Optionee, appropriate proof of the right of such person
or persons to exercise the option.

     Section 4.4 Conditions to Issuance of Stock Certificates. The shares of Common Stock
deliverable upon the exercise of an Option, or any portion thereof, may be either previously
authorized but unissued shares or issued shares that have been reacquired by the Company. Such
shares shall be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock purchased upon the exercise of
an Option or portion thereof prior to fulfillment of both of the following conditions:

     (a) The obtaining of approval or other clearance from any state or federal governmental
agency that the Administrator, in its absolute discretion, determines to be necessary or
advisable; and

     (b) The lapse of such reasonable period of time following the exercise of the Option as
the Administrator may establish from time to time for administrative convenience.

     Section 4.5 Rights as Stockholder. The holder of an Option shall not be, and shall
not have any of the rights or privileges of, a stockholder of the Company in respect of any shares
purchasable upon the exercise of the Option or any portion thereof unless and until the Option has
been properly exercised and certificates representing such shares have been issued by the Company
to such holder.

5

 

ARTICLE 5

MISCELLANEOUS

     Section 5.1 Tax Consequences. Unless otherwise specifically provided in another
agreement between the Company and the Optionee, the Company shall not be liable or responsible in
any way for any tax (including any withholding tax) consequences relating to the Options, and the
Optionee agrees to undertake to determine, and be responsible for, any and all tax (including any
withholding tax) consequences to himself or herself with respect to the Options. Notwithstanding
any other provision of this Agreement, shares of Common Stock shall not be released to the Optionee
unless the Optionee has paid to the Company, or made arrangements satisfactory to the Company
regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to
be withheld with respect to the Options.

     Section 5.2 Administration. The Administrator has the power to interpret the Plan
and this Agreement and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Administrator in good faith shall be
final and binding upon the Optionee, the Company and all other interested persons. No member of
the Administrator shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Options. In its absolute discretion, the Board of
Directors may at any time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.

     Section 5.3 Options Not Transferable. Neither the Option nor any interest or right
therein or part thereof shall be liable for the debts, contracts or engagements of the Optionee or
his or her successors in interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any
other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof
shall be null and void and of no effect; provided, however, that this Section 5.3
shall not prevent transfers by will or by the applicable laws of descent and distribution or
transfers without consideration to a Permitted Transferee to the extent permitted by the Plan.

     Section 5.4 Shares to Be Reserved. The Company shall at all times during the term of
the Option reserve and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Agreement.

     Section 5.5 Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any notice to be given to
the Optionee shall be addressed to him or her at the address given beneath his or her signature
hereto. By a notice given pursuant to this Section 5.5, either party may hereafter designate a
different address for notices to be given to him, her or it. Any notice that is required to be
given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee’s personal
representative if such representative has previously informed the Company of his, her or its status
and address by written notice under this Section 5.5. Any notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited

6

 

(with postage prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.

     Section 5.6 Titles. Titles and headings are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this Agreement.

     Section 5.7 Pronouns. The masculine pronoun shall include the feminine and neuter,
and the singular the plural, where the context so indicates.

     Section 5.8 Applicability of Plan. The Option and the shares of Common Stock issued
to the Optionee upon exercise of the Option shall be subject to all of the terms and provisions of
the Plan, to the extent applicable to the Option and such shares. In the event of any conflict
between this Agreement and the Plan, the terms of the Plan shall control.

     Section 5.9 Amendment. This Agreement may be amended only by a writing executed by
the parties hereto that specifically states that it is amending this Agreement.

     Section 5.10 Dispute Resolution. Any dispute or controversy arising under or in
connection with this Agreement shall be resolved by arbitration. Arbitrators shall be selected,
and arbitration shall be conducted, in accordance with the rules of the American Arbitration
Association. The Company shall pay any legal fees in connection with such arbitration in the event
that the Optionee prevails on a material element of his or her claim or defense. Notwithstanding
anything in this Section 5.10 to the contrary, payments made under this Section 5.10 that are
provided during one calendar year shall not affect the amount of such payments provided during a
subsequent calendar year, payments under this Section 5.10 may not be exchanged or substituted for
other forms of compensation to the Optionee, and any such reimbursement or payment will be paid
within sixty (60) days after the Optionee prevails, but in no later than the last day of Optionee’s
taxable year following the taxable year in which he incurred the expense giving rise to such
reimbursement or payment. This Section 5.1 shall remain in effect throughout the Optionee’s
employment and for a period of five (5) years following the Optionee’s Termination of Employment.

     Section 5.11 Governing Law. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement regardless of the law that
might be applied under principles of conflicts of laws.

[SIGNATURE PAGE FOLLOWS]

7

 

     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto,
effective on the Grant Date.

	 	 	 	 	 	 	 
	OPTIONEE	 	PATRIOT COAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Richard M. Whiting	 	 
	 

	 	 	 	Its Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Optionee’s Taxpayer Identification Number:

	 	Aggregate number of shares of Common
Stock for which the Option granted
hereunder is exercisable:_____________________	 	 
	 
	 	 	 	 	 	 
	______-______-______
	 	 	 	 	 	 
	 	 	Exercise Price per share of Common Stock:	 	 
	 

	 	[•]

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