AMENDED 2000 PERFORMANCE UNIT
PLAN
Section 1.1 The purpose of the Plan is to
provide a financial incentive for key executives to encourage and
reward desired performance that will further the growth,
development and financial success of Westmoreland Coal Company (the
“Company”), to align the interests of the
Company’s key executives and shareholders and to enhance the
Company’s ability to maintain a competitive position in
attracting and retaining qualified personnel who contribute, and
are expected to contribute, materially to the success of the
Company.
Section 2.1 Whenever the following terms
are used in this Plan, they shall have the meaning specified below
unless the context clearly indicates to the contrary. The masculine
pronoun shall include the feminine and neuter and the singular
shall include the plural, where the context so
indicates.
“
Affiliate” shall mean (i) any entity that,
directly or indirectly, is controlled by the Company, (ii) any
entity in which the Company has a significant equity interest,
(iii) an affiliate of the Company, as defined in
Rule 12b-2 promulgated under Section 12 of the Exchange
Act, and (iv) any entity in which the Company has at least
twenty percent (20%) of the combined voting power of the
entity’s outstanding voting securities, in each case as
designated by the Board as being a participating employer in the
Plan.
“Assigned Value”
shall mean the value assigned by the
Committee, in its sole and absolute discretion, to a Performance
Unit which is valued other than by reference to the Fair Market
Value of the Common Stock, for the attainment of each of Threshold
Performance, Target Performance and Maximum Performance in any
Performance Period.
“
Award ” shall mean a Performance Unit granted under
the Plan to a Participant by the Committee pursuant to such terms,
conditions, restrictions and/or limitations, if any, as the
Committee may establish that are not inconsistent with the
provisions of this Plan.
“
Award Certificate ” shall mean any written
acknowledgment or other instrument or document evidencing any Award
and describing the anticipated time, manner and method of payment
of fully vested Awards at the end of the Performance Period, which
is signed by or acknowledged by the Company.
“Award
Notification” shall
mean any written acknowledgment or other instrument or document
that provides notice of a Participant’s selection by the
Committee to receive an Award, which is signed or acknowledged by
the Company.
“Base
Value” shall mean
the average of the Daily Price of the Common Stock for the twenty
(20) consecutive trading days on which one or more trades occurs
immediately preceding the commencement of the Performance
Period.
“
Board ” shall mean the Board of Directors of the
Company.
“
Cause ” shall mean (i) the engaging by the
Participant in willful conduct or misconduct that is injurious to
the Company or its Subsidiaries or Affiliates, or (ii) the
embezzlement or misappropriation of funds or property of the
Company or its Subsidiaries or Affiliates by the Participant, or
the final conviction of the Participant of a felony or the entrance
of a plea of guilty or nolo contendere by the Participant to a
felony, or (iii) any behavior that brings the employee into
public disrepute, contempt, scandal or ridicule or that reflects
unfavorably upon the reputation or high moral or ethical standards
of the Company. For purposes of this paragraph, no act, or failure
to act, on the Participant’s part shall be considered
“willful” unless done, or omitted to be done, by the
Participant without reasonable belief that the Participant’s
action or omission was in the best interest of the Company. Any
determination of Cause shall be made by the Committee, in its sole
discretion, and shall be final and binding on a
Participant.
“Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
“
Committee ” shall mean a committee of the Board
composed of not less than two Non-Employee Directors, all of whom
shall be “nonemployee directors” with respect to the
Plan within the meaning of Section 16 and all of whom may be
“outside directors” for purposes of Section 162(m) of
the Code. The members of the Committee shall be appointed by and
serve at the pleasure of the Board. In the absence of a resolution
of the Board determining otherwise, “Committee” shall
mean the Compensation and Benefits Committee of the
Board.
“Common Stock”
shall mean the common stock of the
Company, par value $2.50 per share, and any equity security of the
Company issued or authorized to be issued in the future, but
excluding any preferred stock and any warrants, options or other
rights to purchase common Stock.
“
Common Stock Appreciation” shall mean the difference
between the Fair Market Value of the Common Stock and the Base
Value of a Performance Unit at the expiration of the Performance
Period for that Performance Unit.
“Company” shall mean Westmoreland Coal Company or any
successor thereto.
“Covered Officer”
shall mean at any date (i) any
individual who, with respect to the previous tax year of the
Company, was a “covered employee” of the company within
the meaning of Code Section 162(m), excluding any such individual
whom the Committee, in its discretion, reasonably expects not to be
a “covered employee” with respect to the current tax
year of the Company and (ii) any individual who was not a
“covered employee” under Code Section 162(m) for the
previous tax year of the Company, but whom the Committee, in its
discretion, reasonably expects to be a “covered
employee” with respect to the current tax year of the Company
or with respect to the tax year of the Company in which any
applicable Award will be paid.
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“Daily
Price” shall mean
the average of the highest and lowest sale price occurring during
any given trading day on which the Common Stock of the Company is
traded.
“Disability” shall mean the disability of a Participant under
the terms of the then effective long term disability plan of the
Company.
“Employee” shall mean any employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or an
Affiliate or Subsidiary, whether such employee is so employed at
the time this Plan is adopted or becomes so employed subsequent to
the adoption of this Plan.
“Employer” shall mean the Company or an Affiliate or
Subsidiary, whichever at the time employs the Employee.
“Fair
Market Value” shall
mean the average of the Daily Price of the Common Stock for the
last twenty (20) consecutive trading days of a Performance
Period on which one or more trades of Common Stock
occurs.
“
Maximum Award” shall mean the Award payable under the
Plan for Maximum Performance in any Performance Period.
“Maximum Performance”
shall mean the Performance Goals
established for any Performance Period, the attainment of which is
necessary for the payment of the Maximum Award of a Target Award
with an Assigned Value for that Performance Period.
“
Non-Employee Director ” shall mean a member of the
Board who is not an Employee or officer of the Company or any of
its Subsidiaries or Affiliates.
“Participant”
shall mean an Employee who is
selected to participate in the Plan.
“
Performance Goals ” shall mean performance goals or
objectives established by the Committee for each Performance Period
pursuant to this Plan, the attainment of which is necessary for the
payment of an Award to a Participant at the completion of the
Performance Period. Performance Goals may be described in terms of
Company-wide objectives or objectives that are related to the
performance of the individual Participant or the Affiliate,
Subsidiary, or division, department or function within the Company,
Affiliate or Subsidiary in which the Participant is employed. Any
Performance Goals applicable to the Awards intended to qualify as
“performance-based compensation” under Section 162(m)
of the Code shall be limited to specified levels of, or increases
in, the Company’s, Affiliate’s or Subsidiary’s
market share, sales, costs, return on equity, earnings per share,
earnings before interest and taxes, earnings before interest,
taxes, depreciation and amortization, earnings growth, return on
capital, return on assets, total shareholder return and/or increase
in the Fair Market Value of the Common Stock , measurements of
safety performance or any combination thereof. Each Performance
Goal may be expressed on an absolute and/or relative basis, may be
based on or otherwise employ comparisons based on internal targets,
the past performance of the Company and/or the past or current
performance of other companies, and in the case of earnings-based
measures, may use or employ comparisons relating to capital,
shareholders’ equity and/or Shares outstanding, or
to
3
assets or net
assets. Except in the case of Performance Goals related to an Award
intended to qualify under Section 162(m) of the Code, if the
Committee determines that a change in the business, operations,
corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or
circumstances render the Performance Goals unsuitable, the
Committee, after the commencement of a Performance Period, may
modify such Performance Objectives, in whole or in part, as the
Committee deems appropriate and equitable.
“
Performance Period ” shall mean the period of time
specified in an Award Notification to be used in measuring the
degree to which the Performance Goals relating to Performance Units
granted under that Award Notification have been met; provided,
however, that for purposes of the initial Performance Period of the
Plan, Performance Period shall mean the period commencing on
July 1, 2000 and ending June 30, 2003.
“Performance Unit”
shall mean a right that is
(i) denominated in cash or Common Stock, (ii) valued, as
determined by the Committee, either in accordance with the
achievement of such Performance Goals during such Performance
Periods as the Committee shall establish or with reference to the
Fair Market Value of the Common Stock, and (iii) payable at
such time and in such form as the Committee shall determine in
accordance with the terms and conditions of Article VI
hereof.
“
Plan ” shall mean the 2000 Performance Unit Plan, as
amended from time to time.
“
Retirement ” shall mean the Termination of Employment
of a Participant from the employ or service of the Company or any
of its Affiliates or Subsidiaries in accordance with the terms of
the applicable Company retirement plan, or if a Participant is not
covered by any such plan, the Termination of Employment of a
Participant on or after the earliest to occur of the
following:
(a) the
attainment by the Participant of the age of 65 or the achievement
of five years of employment or service with the Company, whichever
occurs later; or
(b) the
attainment by the Participant of the age of 62 and twenty years of
employment or service with the Company.
“
Section 16 ” shall mean Section 16 of the
Exchange Act and the rules promulgated thereunder and any successor
provision thereto as in effect from time to time.
“
Section 162(m)” shall mean Section 162(m) of the
Code and the rules promulgated thereunder or any successor
provision thereto as in effect from time to time.
“
Subsidiary ” shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the
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.
“
Target Award” shall mean the Award payable under the
Plan for Target Performance in any Performance Period.
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“
Target Performance ” shall mean the Performance Goals
established for any Performance Period, the attainment of which is
necessary for the payment of a Target Award with an Assigned Value
for that Performance Period.
“
Termination of Employment ” shall mean the time when
the employee-employer relationship between a Participant and the
Employer is terminated for any reason, with or without Cause,
including, but not by way of limitation, a termination by
resignation or discharge, but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of a
Participant by the Employer; (ii) at the discretion of the
Committee, terminations which result in a temporary severance of
the employee-employer relationship; and (iii) at the
discretion of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by the
Employer with the former Employee. Notwithstanding the foregoing,
the Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of
Employment. However, notwithstanding any provision of this Plan,
the Employer has an absolute and unrestricted right to terminate an
Employee’s employment at any time for any reason whatsoever,
with or without Cause.
“
Threshold Performance ” shall mean the level of
attainment of a Performance Goal necessary for the payment of any
Award with an Assigned Value upon the completion of any Performance
Period for that Award.
Article III — Plan
Administration
Section 3.1 Subject to the authority and
powers of the Board in relation to the Plan as hereinafter
provided, the Plan shall be administered by the Committee;
provided, however, that the Committee may not exercise any
authority otherwise
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