Document:

EXHIBIT 10.5

 

FOURTH AMENDMENT TO

CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO CREDIT
AGREEMENT (the “Fourth Amendment”) is dated as of May 15,
2008, and is made by and among RHINO ENERGY LLC,
a Delaware limited liability company formerly known as CAM Holdings LLC (the “Borrower”),
EACH OF THE GUARANTORS (as hereinafter
defined), the LENDERS  PARTY HERETO,
and PNC BANK, NATIONAL ASSOCIATION, in its
capacity as administrative agent for the Lenders under this Agreement
(hereinafter referred to in such capacity as the “Agent”).

 

RECITALS:

 

WHEREAS, the Borrower, the Guarantors (as
defined therein), the Lenders (as defined therein), and the Agent are parties
to that certain Credit Agreement, dated as of August 30, 2006, as amended
by that certain First Amendment to Credit Agreement, dated as of December 28,
2006, as amended by that certain Second Amendment to Credit Agreement and
Consent, dated March 8, 2007, as amended by that certain Third Amendment
to Credit Agreement, dated February 29, 2008 (as so amended and as the
same may be further amended, modified or supplemented from time to time, the “Credit
Agreement”); and

 

WHEREAS, the Borrower and the Guarantors have requested that the
Lenders agree to amend certain provisions of the Credit Agreement including
amending the definition of “Excluded Subsidiaries” and the definition of
Collateral in the Security Agreements to exclude all titled motor vehicles, all
pursuant to the terms and subject to the applicable conditions set forth
herein, and the Required Lenders (as defined in the Credit Agreement) have
agreed to amend the Credit Agreement as hereinafter provided.

 

NOW, THEREFORE, in consideration of the
foregoing and intending to be legally bound, and incorporating the
above-defined terms herein, the parties hereto agree as follows:

 

1.             Recitals &
Definitions.  The
foregoing recitals are true and correct and incorporated herein by
reference.  Unless otherwise defined
herein, capitalized terms used herein shall have the meanings given to them in
the Credit Agreement.

 

2.             Amendments to Credit
Agreement.  The Credit
Agreement is hereby amended as follows:

 

(a)       New Definition.  Section 1.1 [Certain Definitions] of the
Credit Agreement is hereby amended to insert the following new definition in
the appropriate alphabetical order therein:

 

“Fourth Amendment shall mean that certain Fourth Amendment to
Credit Agreement, dated as of May 15, 2008, among the Borrower, the
Guarantors, the Lenders 

 

 

party
thereto and the Agent.”

 

 

(b)       Existing
Definitions.  The
following definitions in Section 1.1 [Certain Definitions] of the Credit
Agreement are hereby amended and restated as follows:

 

“Excluded
Subsidiaries shall mean individually and collectively, CAM - Colorado LLC,
Taylorville Mining LLC, Rhino Energy, and Rhino Energy WV LLC and any of their
respective Subsidiaries now existing or hereafter acquired.”

 

“Guarantor shall mean each of the parties to this Agreement
which is designated as a ‘Guarantor’ on the signature page hereof, and
each other Person which joins this Agreement as a Guarantor after the date
hereof pursuant to Section 11.18, specifically excluding, however,
Rhino Energy.”

 

(c)       Dividends and
Related Distributions. 
Subsection 8.2.5 (i) of the Credit Agreement shall be amended and
restated as follows:

 

“(i)  upon ten (10) Business Days prior notice to the Agent,
Borrower may transfer equity interests in any Excluded Subsidiary (other than
any Subsidiaries of Rhino Energy WV, LLC with regard to which the restrictions
in this paragraph shall not apply and whose equity interests may be transferred
without regard to the procedures and restrictions below), provided, however,
(a) that no uncured Event of Default shall be in existence at the time of
such transfer, (b) that at the time of such transfer, the Loan Parties can
demonstrate pro forma compliance with the covenants after taking into account
such transfer by delivering to the Agent a Compliance Certificate, and (c) that
the Borrower shall deliver any documentation related to such transfer, which
such documentation shall be reasonably satisfactory, in form and substance, to
the Agent; and upon such transfer, such Excluded Subsidiary shall cease to be a
Loan Party and shall be released as a Guarantor, and the pledge of the equity
interest therein and the security interest in after-acquired property of such
Excluded Subsidiary shall be released;”

 

(d)       Disposition of
Assets or Subsidiaries. 
Subsection 8.2.7 (v) of the Credit Agreement shall be amended and
restated as follows:

 

“(v) any sale, conveyance, assignment, lease, abandonment or other
transfer or disposal of assets of the Excluded Subsidiaries.”

 

(e)       Subsidiaries,
Partnerships and Joint Ventures.  Section 8.2.9 of the Credit Agreement
shall be amended and restated as follows:

 

“8.2.9      Subsidiaries, Partnerships
and Joint Ventures.

 

Each
of the Loan Parties shall not, and shall not permit any of its Subsidiaries to,
own or create directly or indirectly any Subsidiaries other than:  (i) any Subsidiary which has joined this
Agreement as Guarantor on the Closing Date; and (ii) any Subsidiary formed
after the Closing Date which joins this Agreement as a Guarantor pursuant to Section 11.18
[Joinder of Guarantors], provided that the Required Lenders shall have
consented 

 

2

 

to such formation and joinder and such Subsidiary (other than Rhino
Energy and Rhino Energy WV LLC and its Subsidiaries (now existing or hereafter
acquired)) and the Loan
Parties, as applicable, shall grant and cause to be perfected first priority
Liens to the Agent for the benefit of the Lenders in the assets held by, and
stock of or other ownership interests in, such Subsidiary, (other than Rhino
Energy and Rhino Energy WV LLC and its Subsidiaries (now existing or hereafter
acquired)).  Each of the Loan Parties shall not become or
agree to:  (1) become a general or
limited partner in any general or limited partnership, except that the Loan
Parties may be general or limited partners in other Loan Parties, (2) become
a member or manager of, or hold a limited liability company interest in, a
limited liability company, (other than Rhino Energy and Rhino Energy WV LLC and
its Subsidiaries (now existing or hereafter acquired)), except that the Loan Parties may be members
or managers of, or hold limited liability company interests in, other Loan
Parties, or (3) become a joint venturer or hold a joint venture interest
in any joint venture, (other than Rhino Energy and Rhino Energy WV LLC and its
Subsidiaries (now existing or hereafter acquired)).”

 

(f)      Joinder of Guarantors.  The last sentence of Section 11.18 of
the Credit Agreement is hereby amended as follows:

 

“Notwithstanding the foregoing or anything else
contained in this Agreement, upon and after the First Amendment Effective Date,
Rhino Energy and Rhino Energy WV LLC and its Subsidiaries (now existing or
hereafter acquired) shall not (a) be required to join in this Agreement or
any other Loan Document as a Guarantor, (b) be required to grant any Liens
to the Agent for the benefit of the Lenders in the assets held by Rhino Energy
or Rhino Energy WV LLC and its Subsidiaries (now existing or hereafter
acquired), or (c) be required to have pledged any ownership interests held
by it or any Loan Party in Rhino Energy or the Subsidiaries of Rhino Energy WV
LLC (now existing or hereafter acquired).”

 

3.             Conditions to Closing.  This Fourth Amendment shall become effective
on the date of this Fourth Amendment provided that each of the following
conditions has been satisfied to the satisfaction of the Agent on such date:

 

(a)       Execution and
Delivery of Fourth Amendment.  The Borrower, the other Loan Parties, the
Required Lenders, and the Agent shall have executed this Fourth Amendment, and
all other documentation necessary for effectiveness of this Fourth Amendment
shall have been executed and delivered all to the satisfaction of the Borrower,
the Required Lenders and the Agent.

 

(b)       Security Agreement.  The Loan Parties shall have executed and
delivered to Agent and amendment to Security Agreements, each in form and
substance satisfactory to the Agent.

 

(c)       Officer’s
Certificate.  There shall
be delivered to the Agent a certificate of the Loan Parties, dated the date of
the Fourth Amendment and signed by the Chief Executive Officer, President, Vice
President or Chief Financial Officer of each Loan Party, certifying that:  (i) the representations and warranties
of the Borrower contained in Article 6 of the Credit Agreement shall be
true and accurate on and as of the date of the Fourth Amendment with the 

 

3

 

same
effect as though such representations and warranties had been made on and as of
such date (except representations and warranties which relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein); (ii) the
Loan Parties shall have performed and complied with all covenants and
conditions of the Credit Agreement and this Fourth Amendment; and (iii) no
Event of Default or Potential Default under the Credit Agreement shall have
occurred and be continuing or shall exist.

 

(d)       Representations
and Warranties; No Event of Default.  The representations and warranties contained
in Section 6 of the Credit Agreement and this Fourth Amendment, and of
each Loan Party in each of the other Loan Documents, are true and correct on
and as of the date of this Fourth Amendment with the same effect as though such
representations and warranties had been made on and as of such date (except representations
and warranties which relate solely to an earlier date or time, which
representations and warranties were true and correct on and as of the specific
dates or times referred to therein), each of the Loan Parties has performed and
complied with all covenants and conditions hereof and thereof, and no Event of
Default or Potential Default has occurred and is continuing or exists as of the
date of this Fourth Amendment; and by its execution and delivery of this Fourth
Amendment, the Borrower and each other Loan Party certifies to each such
effect.

 

(e)       Payment of Fees.  The Borrower has paid, or caused to be paid,
all fees, costs and expenses payable to the Agent or for which the Agent is
entitled to be reimbursed, including but not limited to the reasonable fees and
expenses of the Agent’s legal counsel.

 

(f)        Consents.  All material consents required to effectuate
the transactions contemplated by this Fourth Amendment have been obtained.

 

(g)       Legal Details.  All legal details and proceedings in connection
with the transactions contemplated by this Fourth Amendment are in form and
substance satisfactory to the Agent and counsel for the Agent, and the Agent
has received all such other counterpart originals or certified or other copies
of such documents and proceedings in connection with such transactions, in form
and substance satisfactory to the Agent and its counsel, as the Agent or its
counsel may reasonably request.

 

4.             Representations and
Warranties.  By its
execution and delivery of this Fourth Amendment to the Agent, the Borrower and
each of the other Loan Parties represents and warrants to the Agent and the
Lenders as follows:

 

(a)       Authorization, Etc.  Each Loan Party has duly authorized, executed
and delivered this Fourth Amendment.

 

(b)       Material Adverse
Change.  After giving effect to this
Fourth Amendment, no Material Adverse Change shall have occurred with respect
to the Borrower or any of the other Loan Parties since the Closing Date of the
Credit Agreement.

 

4

 

(c)       Litigation.  After giving effect to this Fourth Amendment,
there are no actions, suits, investigations, litigation or governmental
proceedings pending or, to the Borrower’s or any other Loan Party’s knowledge,
threatened against any of the Loan Parties that could reasonably be expected to
result in a Material Adverse Change.

 

5.             Miscellaneous.

 

(a)       Full Force and
Effect.  All provisions of the Credit
Agreement and the other Loan Documents remain in full force and effect on and
after the date of this Fourth Amendment and the date hereof except as expressly
amended hereby.  The parties do not amend
any provisions of the Credit Agreement or any other Loan Document except as
expressly amended hereby.

 

(b)       Counterparts.  This Fourth Amendment may be signed in
counterparts (by facsimile transmission or otherwise) but all of which together
shall constitute one and the same instrument.

 

(c)       Incorporation
into Credit Agreement.  This
Fourth Amendment shall be incorporated into the Credit Agreement by this
reference.  All representations,
warranties, Events of Default and covenants set forth herein shall be a part of
the Credit Agreement as if originally contained therein.

 

(d)       Governing Law.  This Fourth Amendment shall be deemed to be a
contract under the Laws of the Commonwealth of Pennsylvania and for all
purposes shall be governed by and construed and enforced in accordance with the
internal laws of the Commonwealth of Pennsylvania without regard to its
conflict of laws principles.

 

(e)       No Novation.  Except as amended hereby, all of the terms
and conditions of the Credit Agreement and the other Loan Documents shall
remain in full force and effect.  The
Borrower, the other Loan Parties, each Lender, and the Agent acknowledge and
agree that this Fourth Amendment is not intended to constitute, nor does it
constitute, a novation, interruption, suspension of continuity, satisfaction,
discharge or termination of the obligations, loans, liabilities, or
indebtedness under the Credit Agreement or the other Loan Documents.

 

[SIGNATURE PAGES FOLLOW]

 

5

 

[SIGNATURE PAGE TO FOURTH  AMENDMENT TO
CREDIT AGREEMENT]

 

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Fourth Amendment as of the day and year
first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  RHINO
  ENERGY LLC, a Delaware limited 

  liability company formerly known as “CAM 

  Holdings LLC”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  	
  (SEAL)

  
	
   

  	
  Name:
  

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM
  MINING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:
  

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM-BB
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM-KENTUCKY
  REAL ESTATE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  RHINO
  NORTHERN HOLDINGS LLC,

  
	
   

  	
  formerly
  known as “CAM-Ohio Holdings LLC”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM
  COAL TRADING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LEESVILLE
  LAND, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM
  AIRCRAFT LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOPEDALE
  MINING LLC, formerly known as

  
	
   

  	
  “CAM-Ohio
  LLC”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  CAM-OHIO
  REAL ESTATE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
  SPRINGDALE
  LAND, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAM-COLORADO
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TAYLORVILLE
  MINING LLC, formerly known

  
	
   

  	
  as
  “CAM-Illinois LLC”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CLINTON
  STONE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  McCLANE
  CANYON MINING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RHINO
  COALFIELD SERVICES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RHINO
  RECLAMATION SERVICES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SANDS
  HILL MINING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RHINO
  SERVICES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  DEANE
  MINING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RESERVE
  HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RHINO
  TRUCKING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOSEPH R. MILLER

  
	
   

  	
  Name:

  	
  Joseph
  R. Miller

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  PNC
  BANK, NATIONAL ASSOCIATION,

  individually and as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RICHARD MUNSICK

  
	
   

  	
  Name:

  	
  Richard
  C. Munsick

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  BANK
  OF AMERICA, N.A

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  STEPHEN HOFFMAN

  
	
   

  	
  Name:

  	
  Stephen
  J. Hoffman

  
	
   

  	
  Title:

  	
  Managing
  Director

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  THE
  HUNTINGTON NATIONAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DON ROBINSON

  
	
   

  	
  Name:

  	
  Don
  Robinson

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  NATIONAL
  CITY BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DAVID M. METZ

  
	
   

  	
  Name:

  	
  David
  M. Metz

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  RAYMOND
  JAMES BANK, FSB, individually

  and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  ROYAL  BANK OF CANADA.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JAY SARTAIN

  
	
   

  	
  Name:

  	
  Jay
  T. Sartain

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
   

  	
  UNION
  BANK OF CALIFORNIA, N.A.,

  individually and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  RICHARD REEVES

  
	
   

  	
  Name:

  	
  Richard
  Reeves

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

 

	
   

  	
  WACHOVIA  BANK, NATIONAL

  ASSOCIATION,
  individually and as Co-

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JONATHAN R. RICHARDSON

  
	
   

  	
  Name:

  	
  Jonathan
  R. RichardsonExhibit 10.7

 

RHINO RESOURCES, INC.

LONG-TERM INCENTIVE PLAN

 

SECTION  1.        Purpose of the Plan.

 

The Rhino Resources, Inc. Long-Term Incentive
Plan (the “Plan”) is intended to promote the interests of Rhino Resources, Inc.,
a Delaware corporation (the “Company”), by providing a means by which
Employees, Consultants and Directors may acquire or increase their equity
interest in the Company and may develop a sense of proprietorship and personal
involvement in the development and financial success of the Company, and to
encourage them to remain with and devote their best efforts to the business of
the Company, thereby advancing the interests of the Company and its
stockholders.  The Plan is also
contemplated to enhance the ability of the Company and its Affiliates to
attract and retain the services of individuals who are essential for the growth
and profitability of the Company.

 

SECTION  2.        Definitions.

 

As used in the Plan, the following terms shall have
the meanings set forth below:

 

“Award” shall mean an Option, Restricted Stock,
Performance Award, Phantom Share, Stock Payment, SAR or Other Stock-Based Award.

 

“Award Agreement” shall mean any written or electronic
agreement, contract, instrument or document evidencing any Award, which may,
but need not, be executed or acknowledged by a Participant.

 

“Affiliate” shall mean, with respect to any Person,
any other Person that directly or indirectly through one or more intermediaries
controls, is controlled by or is under common control with, the Person in
question.  As used herein, the term “control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

 

“Board” shall mean the Board of Directors of the
Company, as constituted from time to time.

 

“Change of Control” shall mean, and shall be deemed to
have occurred upon one or more of the following events:

 

(i)            any “person” or “group” within the meaning of those
terms as used in Sections 13(d) and 14(d)(2) of the Exchange Act,
other than the Wexford Group or an Affiliate of the Company, shall become the
beneficial owner, by way of merger, consolidation, recapitalization,
reorganization or otherwise, of 50% or more of the voting power of the voting
securities of the Company;

 

(ii)           the equity owners of the Company approve, in one or a
series of transactions, a plan of complete liquidation of the Company; or

 

 

(iii)          the sale or other disposition by the Company of all or
substantially all of its assets in one or more transactions to any Person other
than an Affiliate.

 

Notwithstanding the foregoing, with respect to an
Award that is subject to Section 409A of the Internal Revenue Code of
1986, as amended, “Change of Control” shall mean a “change in control event” as
defined in the regulations and guidance issued under Section 409A.

 

“Code” shall mean the Internal Revenue Code of 1986,
as amended from time to time, and the rules and regulations thereunder.

 

“Committee” shall mean the administrator of the Plan
in accordance with Section 3, and shall include reference to the
Compensation Committee of the Board (or any other committee of the Board
designated, from time to time, by the Board to act as the Committee under the
Plan), the Board or subcommittee, as applicable.

 

“Consultant” shall mean any individual who is not an
Employee or a member of the Board and who provides consulting, advisory or
other similar services to the Company or an Affiliate, other than a member of
the Wexford Group.

 

“Director” shall mean any member of the Board who is
not an Employee or a Consultant (other than in that individual’s capacity as a
Director).

 

“Employee” shall mean any employee of the Company or an
Affiliate, other than a member of the Wexford Group.

 

“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended.

 

“Fair Market Value” shall mean, as of any applicable
date, the last reported sales price for a Share on the New York Stock Exchange
(or such other national securities exchange which constitutes the principal
trading market for the Shares) for the applicable date as reported by such
reporting service approved by the Committee; provided, however, that if Shares
shall not have been quoted or traded on such applicable date, Fair Market Value
shall be determined based on the next preceding date on which they were quoted
or traded, or, if deemed appropriate by the Committee, in such other manner as
it may determine to be appropriate.  In the
event the Shares are not publicly traded at the time a determination of its
Fair Market Value is required to be made hereunder, the determination of Fair
Market Value shall be made in good faith by the Committee.

 

“Incentive Stock Option” or “ISO” shall mean an option
granted under Section 6(a) of the Plan that is intended to qualify as
an “incentive stock option” under Section 422 of the Code or any successor
provision thereto.

 

“Non-Qualified Stock Option” or “NQO” shall mean an
option granted under Section 6(a) of the Plan that is not intended to
be an Incentive Stock Option.

 

“Other Stock-Based Award” shall mean an award granted
pursuant to Section 6(g) of the Plan that is not otherwise
specifically provided for in another paragraph of Section 6 and the value
of which is based in whole or in part upon the value of a Share.

 

2

 

“Option” shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.

 

“Participant” shall mean any Employee, Consultant or
Director granted an Award under the Plan.

 

“Performance Award” shall mean any right granted under
Section 6(c) of the Plan.

 

“Performance Criteria” shall mean the following
business criteria with respect to the Company or any Affiliate or any division
or operating unit of either: net income (either before or after interest,
taxes, depreciation and/or amortization), revenue, operating earnings, cash
flow, cash flow return on capital, return on net assets, return on stockholders’
equity, return on assets, return on capital, stockholder returns, gross or net
profit margins, productivity, expense, margins, cost reductions, controls or
savings, operating efficiency, working capital, economic value added, earnings
per share, earnings per share from operations, price per share of stock, market
share, coal reserves, any of which may be measured either in absolute terms or
as compared to any incremental increase or as compared to results of a peer
group.

 

“Person” shall mean individual, corporation,
partnership, limited liability company, association, joint-stock company,
trust, unincorporated organization, government or political subdivision thereof
or other entity.

 

“Phantom Shares” shall mean an Award of the right to
receive Shares, cash equal to the Fair Market Value of such Shares or any
combination thereof, in the Committee’s discretion, which is granted pursuant
to Section 6(d) of the Plan.

 

“Restricted Period” shall mean the period established
by the Committee with respect to an Award during which the Award remains
subject to forfeiture, is subject to restrictions or is not exercisable by the
Participant.

 

“Restricted Stock” shall mean any Share, prior to the
lapse of restrictions thereon, granted under Section 6(b) of the
Plan.

 

“Rule 16b-3” shall mean Rule 16b-3
promulgated by the SEC under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.

 

“SAR” shall mean a stock appreciation right granted
under Section 6(e) of the Plan that entitles the holder to receive
the excess of the Fair Market Value of a Share on the relevant date over the
exercise price of such SAR, with the excess paid in cash and/or in Shares in
the discretion of the Committee.

 

“SEC” shall mean the Securities and Exchange
Commission or any successor thereto.

 

“Shares” or “Common Shares” or “Common Stock” shall
mean the common stock of the Company and such other securities or property as
may become the subject of Awards under the Plan.

 

“Stock Payment” means a payment in the form of Shares.

 

3

 

“Wexford Group” means Wexford Capital LLC and its
Affiliates, excluding the Company and its subsidiaries.

 

SECTION  3.        Administration.

 

(a)           The Committee. 
The Plan shall be administered by the Compensation Committee of the
Board (or any other committee of the Board designated, from time to time, by
the Board to act as the Committee under the Plan).  Notwithstanding the foregoing, Awards made to
Directors shall be administered by the Board. 
The term “Committee” as used herein shall refer to the Compensation
Committee (or other Board committee), the Board, or the subcommittee (as
defined in paragraph (c) of this Section 3), as applicable.

 

(b)           Committee Powers.  A
majority of the Committee shall constitute a quorum, and the acts of the
members of the Committee who are present at any meeting thereof at which a
quorum is present, or acts unanimously approved by the members of the Committee
in writing, shall be the acts of the Committee. 
Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by the Plan,
the Committee shall have full power and authority to:  (i) designate Participants; (ii) determine
the type or types of Awards to be granted to a Participant; (iii) determine
the number of Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) interpret and
administer the Plan and any instrument or agreement relating to an Award made
under the Plan; (vii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (viii) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan.  Unless
otherwise expressly provided in the Plan, all designations, determinations, interpretations,
and other decisions under or with respect to the Plan 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 all Persons, including the Company, any
Subsidiary, any Participant, any holder or beneficiary of any Award, any
stockholder and any other Person.

 

(c)           Delegation to a Subcommittee. 
The Committee may, subject to any applicable law, regulatory, securities
exchange or other similar restrictions, delegate to one or more members of the
Board or officers of the Company (the “subcommittee”), the authority to
administer the Plan as to Awards to Employees and Consultants who are not
subject to Section 16(b) of the Exchange Act.  The Committee may impose such limitations and
restrictions, in addition to any required restrictions/limitations, as the
Committee may determine in its sole discretion. 
Any grant made pursuant to such a delegation shall be subject to all of
the provisions of the Plan concerning this type of Award.

 

4

 

SECTION  4.        Shares Available for Awards.

 

(a)           Shares Available. 
Subject to adjustment as provided below, the number of Shares that may
be issued with respect to Awards granted under the Plan shall be equal to 5% of
the number of Shares outstanding on the close of the effective date of the
initial public offering of the Shares. 
If an Award is forfeited or otherwise lapses, expires, terminates or is
canceled without the actual delivery of Shares or is settled in cash, then the
Shares covered by such Award, to the extent of such forfeiture, expiration,
lapse, termination or cancellation, shall again be Shares that may be issued
with respect to Awards granted under the Plan. 
Shares tendered or withheld by the Company to satisfy tax withholding,
exercise price or other payment obligations shall not be available for issuance
under future Awards.

 

(b)           Sources of Shares Deliverable Under
Awards.  Any Shares delivered pursuant to an Award may
consist, in whole or in part, of authorized and unissued Shares or of treasury
Shares.

 

(c)           Adjustments. 
In the event of a stock dividend or stock split with respect to Shares,
the number of Shares with respect to which Awards may be granted, the number of
Shares subject to outstanding Awards, the grant or exercise price with respect
to outstanding Awards and the individual annual grant limits with respect to
Awards (other than dollar denominated Awards) automatically shall be
proportionately adjusted, without action by the Committee; provided, however,
such automatic adjustment shall be evidenced by written addendums to the Plan
and Award Agreements prepared by the Company and, with respect to Options,
shall be in accordance with the Treasury Regulations concerning Incentive Stock
Options.  Further, in the event that the
Committee determines that any distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, reorganization,
merger, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and type of Shares (or other securities or property) with respect to
which Awards may be granted, (ii) the number and type of Shares (or other
securities or property) subject to outstanding Awards, and (iii) the grant
or exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided
that the number of Shares subject to any Award denominated in Shares shall
always be a whole number.

 

(d)           Individual Participant Limits. 
Subject to adjustment pursuant to the above paragraph (c), “Adjustments,”
the maximum aggregate number of Shares that may be subject to Share-denominated
Awards granted under the Plan to any individual during any calendar year shall
not exceed 500,000.  The method of
counting such Shares shall conform to any requirements applicable to performance-based
compensation under Section 162(m) of the Code or the rules and
regulations promulgated thereunder.  The
maximum amount of dollar-denominated Awards that may be granted or paid to any
individual during any calendar year shall not exceed $2,000,000.

 

5

 

SECTION  5.        Eligibility.

 

Any Employee, Consultant or Director shall be eligible
to be designated a Participant by the Committee. No individual shall have any
right to be granted an Award pursuant to this Plan.

 

SECTION  6.        Awards.

 

(a)           Options.  Subject to
the provisions of the Plan, the Committee shall have the authority to determine
Participants to whom Options shall be granted, the number of Shares to be
covered by each Option, the purchase price therefor and the conditions and
limitations applicable to the exercise of the Option, including the following
terms and conditions and such additional terms and conditions, as the Committee
shall determine, that are not inconsistent with the provisions of the Plan.

 

(1)           Exercise Price.  The purchase
price per Share purchasable under an Option shall be determined by the
Committee at the time the Option is granted, but shall not be less than the
Fair Market Value per Share on the effective date of such grant.

 

(2)           Time and Method of Exercise. 
The Committee shall determine and provide in the Award Agreement or by
action subsequent to the grant the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the form
or forms (which may include, without limitation, cash, check acceptable to the
Company, Shares already-owned for more than six months (unless such holding
requirement is waived by the Committee), Shares otherwise issuable upon the Option
exercise, a “cashless-broker” exercise (through procedures approved by the
Committee), other securities or other property, a note, or any combination
thereof, having a Fair Market Value on the exercise date equal to the relevant
exercise price) in which payment of the exercise price and tax withholding
obligation with respect thereto may be made or deemed to have been made.  The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or
part of an Option may vest and be exercised. 
No portion of an Option which is unexercisable at termination of the
Participant’s employment or service, as applicable, shall thereafter become
exercisable, except as may be otherwise provided
by the Committee either in the Award Agreement or by action following the grant
of the Option.

 

(3)           Incentive Stock Options.  An Incentive
Stock Option may be granted only to an individual who is an employee of the
Company or any parent or subsidiary corporation (as defined in Section 424
of the Code) at the time the Option is granted and must be granted within 10
years from the date the Plan was approved by the Board or the shareholders,
whichever is earlier.  To the extent that
the aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar
year under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be
treated as a Non-Qualified Stock Option. 
The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements,
which of a Participant’s Incentive Stock 

 

6

 

Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Participant of such
determination as soon as practicable after such determination.  No Incentive Stock Option shall be granted to
an individual if, at the time the Option is granted, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporation, within the
meaning of section 422(b)(6) of the Code, unless (i) at the time such
Option is granted the option price is at least 110% of the Fair Market Value of
the Common Stock subject to the Option and (ii) such Option by its terms
is not exercisable after the expiration of five years from the date of
grant.  An Incentive Stock Option shall
not be transferable otherwise than by will or the laws of descent and
distribution, and shall be exercisable during the Participant’s lifetime only
by such Participant or the Participant’s guardian or legal representative.  The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of Section 422
of the Code, or any successor provision, and any regulations promulgated
thereunder.

 

(b)           Restricted Stock. 
Subject to the provisions of the Plan, the Committee shall have the
authority to determine the Participants to whom Restricted Stock shall be
granted, the number of Shares of Restricted Stock to be granted to each such
Participant, the duration of the Restricted Period during which, and the
conditions, including the Performance Criteria or other specified criteria,
including the passage of time, if any, under which the Restricted Stock may
vest or be forfeited to the Company, and the other terms and conditions of such
Awards.  However, except as provided in Section 6(b)(3) with
respect to waivers, (i) the minimum Restricted Period for a Restricted
Stock Award the vesting of which is based on the achievement of Performance
Criteria shall not be less than one year and (ii) the minimum Restricted
Period for a Restricted Stock Award the vesting of which is based solely on the
passage of time shall not be less than three years.

 

(1)           Dividends.  Dividends
paid on Restricted Stock may be paid directly to the Participant, may be
subject to risk of forfeiture and/or transfer restrictions during any period
established by the Committee or sequestered and held in a bookkeeping cash
account (with or without interest) or reinvested on an immediate or deferred
basis in additional shares of Common Stock, which credit or shares may be
subject to the same restrictions as the underlying Award or such other
restrictions, all as determined by the Committee in its discretion, as provided
in the Award Agreement.

 

(2)           Registration.  Any
Restricted Stock may be evidenced in such manner as the Committee shall deem
appropriate, including, without limitation, book-entry registration or issuance
of a stock certificate or certificates. 
In the event any stock certificate is issued in respect of Restricted
Stock granted under the Plan, such certificate shall be registered in the name
of the Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.

 

(3)           Forfeiture and Restrictions Lapse. 
Except as otherwise determined by the Committee or the terms of the
Award Agreement, upon a Participant’s termination of employment or service (as
determined under criteria established by the Committee) for any reason during
the applicable Restricted Period, all Restricted Stock shall be forfeited 

 

7

 

by the Participant and re-acquired by the
Company.  The Committee may waive in
whole or in part any or all remaining restrictions with respect to such
Participant’s Restricted Stock; provided, however, if the Award is intended to
qualify as performance based compensation under Section 162(m) of the
Code, such waiver may be only in compliance with the requirements of Section 162(m) of
the Code.  Unrestricted Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Stock promptly after the applicable restrictions have
lapsed or otherwise been satisfied.

 

(4)           Restrictions.  Restricted
Stock shall be subject to such restrictions on transferability and other
restrictions as the Committee may impose (including, without limitation,
restrictions on the right to vote Restricted Stock or the right to receive
dividends on the Restricted Stock). 
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.  During the Restricted Period, Restricted
Stock will be subject to such limitations on transfer as necessary to comply
with Section 83 of the Code.

 

(c)           Performance Awards. 
The Committee shall have the authority to determine the Participants who
shall receive a Performance Award, which shall be denominated as a cash amount
at the time of grant and confer on the Participant the right to receive all or
part of such Award upon the achievement of such performance goals, length of
service or other specified criteria during such period as the Committee shall
establish with respect to the Award.  The
Committee, in its discretion, may determine whether an Award is to qualify as
performance-based compensation as described in Section 162(m) (4) (C) of
the Code.

 

(1)           Terms and Conditions.  Subject to
the terms of the Plan and any applicable Award Agreement, the Committee shall
determine the goals or criteria to be achieved during any period, the length of
any performance period and the amount of any Performance Award.

 

(2)           Payment of Performance Awards. 
Performance Awards shall be paid (in cash and/or in Shares, in the sole
discretion of the Committee) in a lump sum following the close of the
performance period.

 

(3)           Forfeiture and Restrictions Lapse. 
Except as otherwise determined by the Committee or the terms of the
Award Agreement that granted the Performance Award, upon a Participant’s
termination of employment or service, as applicable (as determined under
criteria established by the Committee) for any reason during the applicable
period, all Performance Awards shall be forfeited by the Participant and
re-acquired by the Company.  The
Committee may waive in whole or in part any or all remaining restrictions with
respect to such Participant’s Performance Award; provided, however, if the
Award is intended to qualify as performance based compensation under Section 162(m) of
the Code, such waiver may be only in compliance with the requirements of Section 162(m) of
the Code.  Unrestricted Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be issued to the
holder of Performance Awards promptly after the applicable restrictions have
lapsed or otherwise been satisfied.

 

8

 

(d)           Phantom Shares. 
The Committee shall have the authority to grant Awards of Phantom Shares
to Participants upon such terms and conditions as the Committee may determine.

 

(1)           Terms and Conditions.  Each Phantom
Share Award shall constitute an agreement by the Company to issue or transfer a
specified number of Shares or pay an amount of cash equal to the Fair Market
Value of a specified number of Shares, or a combination thereof to the
Participant in the future, subject to the fulfillment during the Restricted
Period of such conditions, including those linked to the Performance Criteria
or other specified criteria, including the passage of time, if any, as the
Committee may specify at the date of grant. 
During the Restricted Period, the Participant shall not have any right
to transfer any rights under the subject Award, shall not have any rights of
ownership in the Phantom Shares and shall not have any right to vote such
shares.

 

(2)           Dividend Equivalents.  Any Phantom
Share award may provide, in the discretion of the Committee, that any or all
dividends or other distributions paid on Shares during the Restricted Period be
credited in a cash bookkeeping account (with or without interest) or that
equivalent additional Phantom Shares be awarded, which account or Phantom
Shares may be subject to the same restrictions as the underlying Award or such
other restrictions as the Committee may determine.

 

(3)           Forfeiture and Restrictions Lapse. 
Except as otherwise determined by the Committee or set forth in the
Award Agreement, upon a Participant’s termination of employment or service (as
determined under criteria established by the Committee) for any reason during
the applicable Restricted Period, all Phantom Shares shall be forfeited by the
Participant.  The Committee may, upon or
in connection with a Qualifying Event, waive in whole or in part any or all
remaining restrictions with respect to such Participant’s Phantom Shares;
provided, however, if the Award is intended to qualify as performance based
compensation under Section 162(m) of the Code, such waiver may be
only in compliance with the requirements of Section 162(m) of the
Code.

 

(4)           Payment of Phantom Shares. Phantom Shares may be paid (in cash
and/or in Shares, in the sole discretion of the Committee) in a lump sum or in
installments following the close of the Restricted Period, or at such later
deferral date elected by the Participant, in accordance with procedures
established by the Committee with respect to such Award.

 

(e)           SARs.  The Committee
shall have the authority to determine the Participants to whom SARs shall be
granted, the number of Shares to be covered by each SAR, the exercise price and
the conditions and limitations applicable to the exercise of the SAR, including
the following terms and conditions and such additional terms and conditions, as
the Committee shall determine, that are not inconsistent with the provisions of
the Plan.  A SAR may be granted (a) in
connection and simultaneously with the grant of an Option, (b) with respect
to a previously granted Option, or (c) independent of an Option.

 

9

 

(1)           Exercise Price.  The exercise
price per SAR shall be determined by the Committee at the time the SAR is
granted, but shall not be less than the Fair Market Value per Share on the
effective date of such grant.

 

(2)           Time of Exercise.  The Committee
shall determine and provide in the Award Agreement the time or times at which a
SAR may be exercised in whole or in part.

 

(3)           Method of
Payment.  The Committee shall determine, in its
discretion, whether the SAR shall be paid in cash, shares of Common Stock or a
combination of the two.

 

(f)            Stock Payments. 
Stock Payments may be made to Directors, Employees and Consultants in
such number of Shares and may be based upon such criteria as may be determined
to be appropriate by the Committee in its discretion.

 

(g)           Other Stock-Based Awards.  The
Committee may also grant to Participants an Other Stock-Based Award, which
shall consist of a right which is an Award denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
as is deemed by the Committee to be consistent with the purposes of the Plan.  Subject to the terms of the Plan, the Committee
shall determine the terms and conditions of any such Other Stock-Based Award.

 

(h)           General.

 

(1)           Awards May Be
Granted Separately or Together.  Awards may,
in the discretion of the Committee, be granted either alone or in addition to,
in tandem with, any other Award granted under the Plan or any award granted
under any other plan of the Company or any Subsidiary.  Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company or any
Subsidiary may be granted either at the same time as or at a different time
from the grant of such other Awards or awards.

 

(2)           Limits on
Transfer of Awards.

 

(A)          Except as provided in paragraph (C) below, each
Award, and each right under any Award, shall be exercisable only by the
Participant during the Participant’s lifetime, or if permissible under
applicable law, by the Participant’s guardian or legal representative as
determined by the Committee.

 

(B)           Except as provided in paragraph (C) below, no
Award and no right under any such Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant
otherwise than by will or by the laws of descent and distribution, and any such
purported prohibited assignment, alienation, pledge, attachment, sale, transfer
or encumbrance shall be void and unenforceable against the Company or any subsidiary.

 

10

 

(C)           To the extent specifically approved in writing by the
Committee, an Award (other than an Incentive Stock Option) may be transferred
to immediate family members or related family trusts, limited partnerships or
similar entities or other Persons on such terms and conditions as the Committee
may establish or approve.  An Incentive
Stock Option may be transferred pursuant to a domestic relations order.

 

(3)           Terms of
Awards.  The term of each Award shall be for such
period as may be determined by the Committee.

 

(4)           Share
Certificate.  All certificates for Shares or other
securities of the Company or any Subsidiary delivered under the Plan pursuant
to any Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the
Plan or the rules, regulations, and other requirements of the SEC, any stock
exchange upon which such Shares or other securities are then listed, and any
applicable federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

 

(5)           Consideration
for Grants.  Awards may be granted for no cash
consideration or for such consideration as the Committee determines including,
without limitation, such minimal cash consideration as may be required by
applicable law.

 

(6)           Delivery of
Shares or other Securities and Payment by Participant of Consideration. 
No Shares or other securities shall be delivered pursuant to any Award
until payment in full of any amount required to be paid pursuant to the Plan or
the applicable Award Agreement (including, without limitation, any exercise
price or tax withholding) is received by the Company.  Such payment may be made by such method or
methods and in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards or other
property, withholding of Shares, cashless exercise with simultaneous sale, or
any combination thereof, provided that the combined value, as determined by the
Committee, of all cash and cash equivalents and the Fair Market Value of any
such Shares or other property so tendered to the Company, as of the date of
such tender, is at least equal to the full amount required to be paid pursuant
to the plan or the applicable Award Agreement to the Company.

 

(i)            Performance
Based Compensation.  The Committee shall determine
which Awards are intended by the Committee to qualify as “performance-based
compensation” as described in Section 162(m)(4)(C) of the Code.  The Committee shall establish performance
goals applicable to those Awards based upon the attainment of such target
levels of one or more of the Performance Criteria, over one or more periods of
time, which may be of varying and overlapping durations, as the Committee may
select.   The Performance Criteria shall
be subject to adjustment for changes in accounting standards required by the
Financial Accounting Standards Board after the goal is established, and, to the
extent provided for in the Award Agreement, shall be subject to adjustment for
specified significant extraordinary items or events.  In this regard, performance goals based on
stock price shall be proportionately adjusted for any 

 

11

 

changes in the price due to a stock split.  Performance Criteria may be absolute,
relative to one or more other companies, or relative to one or more indexes,
and may be contingent upon future performance of the Company or any Subsidiary,
division, unit or product line thereof. 
A performance goal need not be based upon an increase or positive result
under a Performance Criteria and could, for example, be based upon limiting
economic losses or maintaining the status quo. 
Which Performance Criteria to be used with respect to any grant, and the
weight to be accorded thereto if more than one factor is used, shall be
determined by the Committee, in its sole discretion, at the time of grant. To
the extent necessary to comply with the qualified performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, following
the completion of each specified performance period, the Committee shall
certify in writing whether the applicable performance goals have been achieved
for such performance period.  In
determining the amount earned by a Participant, the Committee shall have the
right to reduce or eliminate (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the performance period. 
Notwithstanding any other provision of the Plan, any Award which is
intended to constitute qualified performance-based compensation shall be
subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of
the Code, and the Plan shall be deemed amended to the extent necessary to
conform to such requirements.

 

SECTION  7.        Amendment and Termination.

 

Except to the extent prohibited by applicable law and
unless otherwise expressly provided in an Award Agreement or in the Plan:

 

(1)           Amendments to
the Plan.  The Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of any
stockholder, Participant, other holder or beneficiary of an Award, or other
Person; provided, however, notwithstanding any other provision of the Plan or
any Award Agreement, without the approval of the stockholders of the
Company  no such amendment, alteration,
suspension, discontinuation, or termination shall be made that would increase
the total number of Shares that may be issued under the Plan, except as
provided in Section 4(c) of the Plan. 
Notwithstanding the foregoing, the Plan may not be terminated with
respect to an Award that is subject to Section 409A unless such
termination would not result in the Award becoming subject to the additional
tax under Section 409A.

 

(2)           Amendments to
Awards.  Subject to Paragraph (1) above and Section 3(b),
the Committee may waive any conditions or rights under, amend any terms of, or
alter any Award theretofore granted, provided no change in any Award shall
materially adversely affect the rights of a Participant under the Award without
the consent of such Participant. 
Notwithstanding the foregoing, with respect to any Award intended to
qualify as performance-based compensation under Section 162(m) of the
Code, no adjustment other than an acceleration of vesting or payment upon the
Participant’s death, disability or a Change of Control, shall be authorized to
the extent such adjustment would cause the Award to fail to so qualify.

 

12

 

SECTION  8.        General Provisions.

 

(a)           No Rights to Awards. 
No Participant or other Person shall have any claim to be granted any
Award, there is no obligation for uniformity of treatment of Participants, or
holders or beneficiaries of Awards and the terms and conditions of Awards need
not be the same with respect to each recipient.

 

(b)           Tax Withholding. 
The Company or any Subsidiary is authorized to withhold from any Award,
from any payment due or transfer made under any Award or from any compensation
or other amount owing to a Participant the amount (in cash, Shares, or other
property) of any applicable taxes required to be withheld by the Company or
Subsidiary in respect of the Award, its exercise, the lapse of restrictions
thereon, or any payment or transfer under the Award and to take such other
action as may be necessary in the opinion of the Company to satisfy all of its
obligations for the payment of such taxes. 
In addition, the Committee may provide, in an Award Agreement, that the
Participant may direct the Company to satisfy such Participant’s tax
withholding obligations through the withholding of Shares otherwise to be
acquired upon the exercise or payment of such Award, but only to the extent
such withholding does not cause a charge to the Company’s financial earnings.

 

(c)           No Right to Employment or Retention. 
The grant of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any Affiliate or under any
other service contract with the Company or any Affiliate, or to remain on the
Board.  Further, the Company or a
subsidiary may at any time dismiss a Participant from employment or terminate
any contractual agreement or relationship with any Consultant, free from any
liability or any claim under the Plan, with or without cause, unless otherwise
expressly provided in the Plan, in any Award Agreement or any other agreement
or contract between the Company or a subsidiary and the affected
Participant.  If a Participant’s employer
ceases to be a subsidiary, such Participant shall be deemed to have terminated
employment for purposes of the Plan, unless specifically provided otherwise in
the Award Agreement.

 

(d)           Change of Control; Unusual Transactions
or Events.  In the event of any distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, reorganization, merger, spin-off, combination, repurchase, or
exchange of Shares or other securities of the Company, or other similar
corporate transaction or event or any unusual or nonrecurring transactions or
events affecting the Company, any Affiliate of the Company, or the financial
statements of the Company or any Affiliate, or of changes in applicable laws,
regulations or accounting principles, or a Change of Control and whenever the
Committee determines that action is appropriate in order to prevent the
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Award under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles, the Committee, in its sole discretion and on
such terms and conditions as it deems appropriate, either by amendment of the
terms of any outstanding Awards or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Participant’s
request, is hereby authorized to take any one or more of the following actions:

 

13

 

(1)           To provide for either (A) termination of any such
Award in exchange for an amount of cash, if any, equal to the amount that would
have been attained upon the exercise of such Award or realization of the
Participant’s rights (and, for the avoidance of doubt, if as of the date of the
occurrence of the transaction or event described in this Section 8(d) the
Committee determines in good faith that no amount would have been attained upon
the exercise of such Award or realization of the Participant’s rights, then
such Award may be terminated by the Company without payment) or (B) the
replacement of such Award with other rights or property selected by the
Committee in its sole discretion;

 

(2)           To provide that such Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices;

 

(3)           To make adjustments in the number and type of shares
of Common Stock (or other securities or property) subject to outstanding
Awards, and in the number and kind of outstanding Awards and/or in the terms
and conditions of (including the grant or exercise price), and the criteria
included in, outstanding Awards and Awards which may be granted in the future;

 

(4)           To provide that such Award shall be exercisable or
payable or fully vested with respect to all Shares covered thereby,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement; and

 

(5)           To provide that the Award cannot vest, be exercised or
become payable after such event;

 

however, to the extent an Award
Agreement provides for the vesting of the Award subject to such Award Agreement
upon a Change in Control, nothing in this Section 8(d) shall operate
or be construed as changing or negating such vesting provision of the Award
Agreement unless the Award is subject to 409A of the Code and payment upon the Change
of Control would subject the Award to the additional tax provided by Section 409A,
in which case such payment shall be made upon the first event or date that
would not subject the payment to such 409A tax.

 

(e)           Governing Law. 
The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable federal law.

 

(f)            Severability. 
If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any Person
or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed
amended to conform to the 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 Award, such provision shall be stricken
as to such 

 

14

 

jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

(g)           Other Laws.  The Committee
may refuse to issue or transfer any Shares or other consideration under an
Award, permit the exercise of an Award and/or the satisfaction of its tax
withholding obligation in the manner elected by the Participant, holder or
beneficiary if, acting in its sole discretion, it determines that the issuance
of transfer or such Shares or such other consideration, the manner of exercise
or satisfaction of the tax withholding obligation might violate any applicable
law or regulation, including without limitation, the Sarbanes-Oxley Act, or
entitle the Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a Participant, other
holder or beneficiary in connection with the exercise of such Award shall be
promptly refunded or refused, as the case may be, to the relevant Participant,
holder or beneficiary.

 

(h)           No Trust or Fund Created. 
Neither the Plan nor the Award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or any Subsidiary and a Participant or any other Person.  To the extent that any Person acquires a
right to receive payments from the Company or any Subsidiary pursuant to an
Award, such right shall be no greater than the right of any general unsecured
creditor of the Company or any Subsidiary.

 

(i)            No Fractional Shares. 
No fractional Shares shall be issued or delivered pursuant to the Plan
or any Award, and the Committee shall determine whether cash, other securities,
or other property shall be paid or transferred in lieu of any fractional Shares
or whether such fractional Shares or any rights thereto shall be cancelled,
terminated, or otherwise eliminated.

 

(j)            Headings.  Headings are
given to the Section and subsections of the Plan solely as a convenience
to facilitate reference.  Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the plan or any provision thereof.

 

SECTION  9.        Effective Date of Plan.

 

The Plan shall become effective as of the date it is
approved by the Board, provided it is subsequently approved by the stockholders
of the Company within 12 months of such date. 
No Awards may become vested and no Shares may be issued under the Plan
prior to the date the Plan is approved by the shareholders and, if not approved
by the shareholders within such 12-month period, all Awards then outstanding
shall automatically be forfeited without payment and the Plan shall terminate.

 

SECTION  10.      Term of the Plan.

 

No Award shall be granted under the Plan after the
10th anniversary of the date this Plan was first adopted by the Board.  However, unless otherwise expressly provided
in the Plan or in an applicable Award Agreement, any Award granted prior to
such termination, and the authority of the Board or the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such Award or to waive
any conditions or rights under such Award, shall extend beyond such termination
date.

 

15

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