WESTMORELAND COAL COMPANY Nonstatutory Stock Option Agreement Granted under the 2007 Equity Incentive Plan for Employees and Non-Employee Directors
Exhibit 10.3
XXXXXXXXXXXX COAL COMPANY
Nonstatutory Stock Option Agreement
Granted under the 2007 Equity Incentive Plan for Employees and Non-Employee Directors
Granted under the 2007 Equity Incentive Plan for Employees and Non-Employee Directors
1. Grant of Option.
This agreement evidences the grant by Xxxxxxxxxxxx Coal Company, a Delaware corporation (the
“Company”), on , 2008 (the “Grant Date”) to
, an [employee][officer] of the Company (the “Participant”), of
an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2007
Equity Incentive Plan for Employees and Non-Employee Directors (the “Plan”), a total of
shares (the “Shares”) of common stock, $2.50 par value per share, of the Company
(“Common Stock”) at $ per Share. Unless earlier terminated, this option shall expire
at 5:00 p.m., Eastern time, on (the “Final Exercise Date”).
It is intended that the option evidenced by this agreement shall not be an incentive stock
option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the
context, the term “Participant”, as used in this option, shall be deemed to include any person who
acquires the right to exercise this option validly under its terms.
2. Vesting Schedule.
This option will become exercisable (“vest”) as to % of the original
number of Shares on the [first anniversary] of the Grant Date and as to an additional
% of the original number of Shares at the end of each successive period
following the [first anniversary] of the Grant Date until the anniversary of the Grant Date.
The right of exercise shall be cumulative so that to the extent the option is not exercised in
any period to the maximum extent permissible it shall continue to be exercisable, in whole or in
part, with respect to all Shares for which it is vested until the earlier of the Final Exercise
Date or the termination of this option under Section 3 hereof or the Plan.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in writing,
signed by the Participant, and received by the Company at its principal office, accompanied by this
agreement, and payment in full in the manner provided in the Plan. The Participant may purchase
less than the number of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share.
(b) Continuous Relationship with the Company Required. Except as otherwise provided
in this Section 3, this option may not be exercised unless the Participant, at the time he
or she exercises this option, is, and has been at all times since the Grant Date, an employee,
officer or director of, or consultant or advisor to, the Company or any other entity the employees,
officers, directors, consultants, or advisors of which are eligible to receive option grants
under the Plan (an “Eligible Participant”).
(c) Termination of Relationship with the Company. If the Participant ceases to be an
Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the
right to exercise this option shall terminate 181 days after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be exercisable only to
the extent that the Participant was entitled to exercise this option on the date of such cessation.
Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract, confidentiality and
nondisclosure agreement or other agreement between the Participant and the Company, the right to
exercise this option shall terminate immediately upon written notice to the Participant from the
Company describing such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date
while he or she is an Eligible Participant and the Company has not terminated such relationship for
“cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of
one year following the date of death or disability of the Participant, by the Participant (or in
the case of death by an authorized transferee), provided that this option shall be
exercisable only to the extent that this option was exercisable by the Participant on the date of
his or her death or disability, and further provided that this option shall not be exercisable
after the Final Exercise Date.
(e) Termination for Cause. If, prior to the Final Exercise Date, the Participant’s
employment or other relationship with the Company is terminated by the Company for Cause (as
defined below), the right to exercise this option shall terminate immediately upon the effective
date of such termination of employment or other relationship. If, prior to the Final Exercise
Date, the Participant is given notice by the Company of the termination of his or her employment or
other relationship by the Company for Cause, and the effective date of such employment or other
termination is subsequent to the date of the delivery of such notice, the right to exercise this
option shall be suspended from the time of the delivery of such notice until the earlier of (i)
such time as it is determined or otherwise agreed that the Participant’s employment or other
relationship shall not be terminated for Cause as provided in such notice or (ii) the effective
date of such termination of employment or other relationship (in which case the right to exercise
this option shall, pursuant to the preceding sentence, terminate immediately upon the effective
date of such termination of employment or other relationship). If the Participant is party to an
employment, consulting or severance agreement with the Company that contains a definition of
“cause” for termination of employment or other relationship, “Cause” shall have the meaning
ascribed to such term in such agreement. Otherwise, “Cause” shall mean willful misconduct
by the Participant or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any provision of any
employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between
the Participant and the Company), as determined by the Company, which determination shall be
conclusive. The Participant shall be considered to have been discharged for “Cause” if
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the Company determines, within 30 days after the Participant’s resignation, that discharge for
cause was warranted.
4. Withholding.
No Shares will be issued pursuant to the exercise of this option unless and until the
Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any
federal, state or local withholding taxes required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, either voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, this option shall be exercisable only by
the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan (including the provisions relating to
amendments to the Plan), a copy of which is furnished to the Participant with this option.
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IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal
by its duly authorized officer. This option shall take effect as a sealed instrument.
| XXXXXXXXXXXX COAL COMPANY |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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PARTICIPANT’S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions
thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s 2007 Equity
Incentive Plan for Employees and Non-Employee Directors.
| PARTICIPANT: | ||||
| Address: | ||||
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