1.0.0.3falseStock-Based Compensation Awardsfalse1$falsefalseUSDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli020us-gaap_ShareBasedCompensationAbstractus-gaaptruenadurationstringNo definition available.falsefalsefalsefalsefalsetruefalsefalsefalse1falsefalse00falsefalseNo definition available.false31us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlockus-gaaptruenadurationstringNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalse00<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 17 - us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>(17) Stock-Based Compensation Awards</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company’s primary stock-based compensation plan is the Alpha Natural Resources, Inc. 2005
Long-Term Incentive Plan (the “2005 LTIP”). The principal purpose of the 2005 LTIP is to attract,
motivate, reward and retain selected employees, consultants and directors through the granting of
stock-based compensation awards. The 2005 LTIP provides for a variety of awards, including
non-qualified stock options (“options”), incentive stock options (within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended), stock appreciation rights, non-vested shares,
dividend equivalents, performance-based awards and other stock-based awards. The 2005 LTIP is
currently authorized for the issuance of awards for up to 8,838,841 shares of common stock. At
December 31, 2009, 4,476,502 shares of common stock were available for grant under the 2005 LTIP.
Due to certain restrictions in the 2005 LTIP, the Company cannot grant stock-based awards to legacy
employees of Foundation that became employees of the Company subsequent to the Merger on July 31,
2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 31, 2009, subsequent to the Merger, the Company adopted the Foundation Amended and
Restated 2004 Stock Incentive Plan (the “2004 SIP”). The 2004 SIP permits the Company to grant its
key employees, directors and consultants options, stock appreciation rights, restricted stock or
other stock-based awards. The awards under the 2004 SIP may be granted at fair value with an
exercise price of no less than 100% of the fair market value of the Company’s common stock on the
date of grant. The 2004 SIP is currently authorized for the issuance of awards for up to 6,480,675
shares of common stock, and as of December 31, 2009, 1,396,816 shares of common stock were
available for grant under the plan.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Upon vesting of restricted stock and restricted share units (both time-based and
performance-based) or the exercise of options, shares are issued from the 2005 LTIP and the
2004 SIP, respective of which plan the awards were granted from.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November 2008, the Board of Directors authorized the Company to repurchase common shares
from employees (upon the election by the employee) to satisfy the employees’ minimum statutory tax
withholdings upon the vesting of restricted stock and restricted share units (both time-based and
performance-based). During the year ended December 31, 2009, the Company repurchased 309,457
common shares from employees at an average price paid per share of $28.68. Shares that are
repurchased to satisfy the employees’ minimum statutory tax withholdings are recorded in <i>Treasury
stock </i>at cost, and these shares are not added back into the pool of shares available for grant of
the respective plans the shares were granted from.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At December 31, 2009, the Company had three types of stock-based awards outstanding:
restricted stock, restricted share units (both time-based and performance-based), and options.
Stock-based compensation expense from continuing operations totaled $37,802, $17,344, and
$9,539 for the years ended December 31, 2009, 2008, and 2007, respectively. For the years ended
December 31, 2009, 2008, and 2007, approximately 78%, 52%, and 61%, respectively, of stock-based
compensation expense from continuing operations is reported as <i>Selling, general and administrative
expenses </i>and approximately 22%, 48%, and 39%, respectively, of the stock-based compensation expense
from continuing operations was recorded as a component of <i>Cost of coal sales</i>. The total tax benefit
recognized for stock-based compensation for the years ending
December 31, 2009, 2008 and 2007 were $434, $3,608 and $2,275, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Below is a summary of the key terms and methods of valuation for the Company’s stock-based
compensation.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Restricted Stock Awards</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company grants certain of its executive officers, directors and key employee’s restricted
stock of Alpha Natural Resources, Inc. common stock pursuant to the Company’s 2005 LTIP. The
Company can also grant certain of its executive officers, directors and key employee’s restricted
stock of Alpha Natural Resources, Inc. common stock pursuant to the Company’s 2004 SIP, of which
none were granted in 2009. For executive officers and key employees, the restricted stock vest
ratably over three-year periods or cliff vest after three years (with accelerated vesting upon a
change of control), depending on the recipients’ position with the company. For the Company’s
directors, restricted stock grants vest at the time of grant, but are restricted until six months
after termination of such director’s service on the Company’s Board of Directors (with accelerated
vesting upon a change of control). The fair value of restricted share awards is estimated based on
the closing stock
price at the date of the grant, and, for purposes of expense recognition, the total number of
awards expected to vest is adjusted for estimated forfeitures, which is being amortized over the
requisite service periods.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the years ended December 31, 2009, 2008, and 2007, the Company granted restricted
shares to its executive officers, directors and key employees in the amount of 921,901, 399,561,
and 611,863, respectively, of which 1,189,271 remain outstanding at December 31, 2009.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Restricted stock award activity for the year ended December 31, 2009 is summarized in the
following table:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="66%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Grant Date</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">952,789</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19.33</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">921,901</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18.92</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Vested
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(521,333</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">19.80</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Forfeited/Expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(164,086</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">18.59</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">1,189,271</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">18.97</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of restricted stock awards that vested for the years ended December 31, 2009, 2008 and 2007 was $11,453, $11,874 and $2,029. As of December 31, 2009, there was $10,045 of unamortized compensation cost related to
non-vested restricted stock awards which is expected to be recognized as expense over a
weighted-average period of 1.84 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Restricted Share Units</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Time-Based Share Units</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company grants certain of its executive officers, directors and key employees time-based
share units of common stock pursuant to the Company’s 2005 LTIP and the 2004 SIP, which the Company
adopted subsequent to the Merger with Foundation on July 31, 2009. For time-based share units
awarded to executive officers and key employees, the share units vest, subject to continued
employment, ratably over three-year periods or cliff vest after three years (with accelerated
vesting upon a change of control), depending on the recipients’ position with the company. For the
Company’s directors, time-based share unit awards vest at the time of grant, but are restricted
until six months after termination of such director’s service on the Company’s Board of Directors
(with accelerated vesting upon a change of control). The fair value of time-based share unit
awards is estimated based on the closing stock price at the date of the grant, and, for purposes of
expense recognition, the total number of awards expected to vest is adjusted for estimated
forfeitures, which is being amortized over the requisite service periods. Upon vesting of
time-based share units, the Company issues authorized and unissued shares of the Company’s common
stock to the recipient.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the years ended December 31, 2009, 2008, and 2007, the Company granted time-based share
units under the 2005 LTIP to certain executive officers, directors and key employee’s in the amount
of 218,750, 5,925, and 6,296, respectively, of which 214,804 remained outstanding at December 31,
2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the year ended December 31, 2009, the Company granted time-based share units under the
2004 SIP to certain executive officers, directors and key employee’s in the amount of 139,650 from
the 2004 SIP, all of which remained outstanding at December 31, 2009.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 31, 2009, the Company assumed 540,002 former Foundation performance share unit awards
that converted to time-based share units upon change of control due to the Merger. These awards
vest over various periods through February 29, 2012. The Company determined the fair value of
these share units at the time of the Merger was $8,541, which will be recognized over the requisite
service periods of the awards. On December 28, 2009, 8,242 of these share units were converted
into common shares and were subsequently repurchased by the Company at an average price of $45.37
per share to satisfy tax obligations related to early retirement eligible employees, as defined in
the 2004 SIP. At December 31, 2009, 531,760 of these time-based share units remained outstanding.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Time-based share unit activity for the year ended December 31, 2009 is summarized in the
following table:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="66%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-<br />
Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Grant Date</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">17,056</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">26.39</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Assumed
</div></td>
<td> </td>
<td> </td>
<td align="right">540,002</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33.31</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">358,400</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33.40</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Vested
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(8,242</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">33.32</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Forfeited/Expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(21,002</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">33.81</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">886,214</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33.17</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of time-based share unit awards that vested in the year ended December 31, 2009 was $374. As of December 31, 2009, there was $11,721 of unamortized compensation cost related to
non-vested time-based share units which is expected to be recognized as expense over a
weighted-average period of 2.09 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><b>Performance-Based Share Units</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company grants certain of its executive officers and key employees performance-based share
units of Alpha Natural Resources, Inc. common stock pursuant to the Company’s 2005 LTIP. The
Company can also grant certain of its executive officers and key employees performance-based share
units pursuant to the Company’s 2004 SIP, of which none were granted in 2009. The
performance-based share units awarded under the 2005 LTIP and the 2004 SIP cliff vest after three
years, subject to continued employment (with accelerated vesting upon a change of control). Upon
vesting of performance-based share units, the Company issues authorized and unissued shares of the
Company’s common stock to the recipient.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2009, the Company awarded 355,672 performance-based share units, of which 336,982
remain outstanding as of December 31, 2009. Recipients of these awards can receive shares of the
Company’s common stock at the end of a performance period which ends on December 31, 2011, based on
the Company’s actual performance against pre-established operating income goals, strategic goals,
and total shareholder return goals. In order to receive the shares, the recipient must also be
employed by the Company on the vesting date. The performance-based share units represent the number
of shares of common stock to be awarded based on the achievement of targeted performance and may
range from 0 percent to 200 percent of the targeted amount. The grant date fair value of the awards
related to operating income targets is based on the closing price of the Company’s common stock on
the grant date and is being amortized over the performance period. The fair value of the awards
related to total shareholder return targets is based upon a Monte Carlo simulation and is being
amortized over the performance period. Prior to November 18, 2009, the portion of the awards
related to strategic goals did not meet the definition of a grant date. After the successful
completion of the Merger, the Company determined that attainment of the strategic goals of the
awards was achieved on November 18, 2009, thus requiring the Company to recognize the associated
expense based on the closing stock price on that date. The Company reassesses at each reporting
date whether achievement of each of the performance conditions is probable, as well as estimated
forfeitures, and adjusts the accruals of compensation expense as appropriate. At December 31, 2009,
the Company had assessed the operating income, strategic goals and total shareholder return targets
as probable of achievement. As of December 31, 2009, there was $7,667 of unamortized compensation
cost related to the 2009 performance-based share units which is expected to be recognized as
expense over a weighted-average period of 1.97 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2008, the Company awarded 165,045 performance-based share units, of which 151,035
remain outstanding as of December 31, 2009. Recipients of these awards can receive shares of the
Company’s common stock at the end of a performance period which ends on December 31, 2010, based on
the Company’s actual performance against pre-established operating income goals, strategic goals,
and total shareholder return goals. In order to receive the shares, the recipient must also be
employed by the Company on the vesting date. The performance-based share units represent the number
of shares of common stock to be awarded based on the achievement of targeted performance and may
range from 0 percent to 150 percent of the targeted amount. The grant date fair value of the awards
related to operating income targets is based on the closing price of the Company’s common stock on
the grant date and is being amortized over the performance period. The fair value of the awards
related to total shareholder return targets is based upon a Monte Carlo simulation and is being
amortized over the performance period. Prior to
November 18, 2009, the portion of the awards
related to strategic goals did not meet the definition of a grant. After the successful completion
of the Merger, the Company determined that attainment of the
strategic goals of the awards was achieved on November 18, 2009, thus requiring the Company to recognize the associated expense based
on the closing stock price on that date. The Company reassesses at each reporting date whether
achievement of each of the performance conditions is probable, as well as estimated forfeitures,
and adjusts the accruals of compensation expense as appropriate. At December 31, 2009, the Company
had assessed the operating income, strategic goals and total shareholder return targets as probable
of achievement. As of December 31, 2009, there was $1,752 of unamortized compensation cost related
to the 2008 performance-based share units which is expected to be recognized as expense over a
weighted-average period of 1.02 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2007, the Company awarded 377,247 performance-based share units, of which 301,275
remain outstanding as of December 31, 2009. Recipients of these awards can receive shares of the
Company’s common stock at the end of a performance period which ended on December 31, 2009, based
on the Company’s actual performance against pre-established operating income goals, strategic
goals, and total shareholder return goals. In order to receive the shares, the recipient must also
be employed by the Company on the vesting date. The performance-based share units represent the
number of shares of common stock to be awarded based on the achievement of targeted performance and
may range from 0 percent to 150 percent of the targeted amount. The grant date fair value of the
awards related to operating income targets is based on the closing price of the Company’s common
stock on the grant date and is being amortized over the performance period. The fair value of the
awards related to total shareholder return targets is based upon a Monte Carlo simulation and is
being amortized
over the performance period. Prior to November 18, 2009, the portion of the awards related to
strategic goals did not meet the definition of a grant date. After the successful completion of the
Merger, the Company determined that attainment of the strategic goals of the awards was achieved on
November 18, 2009, thus requiring the Company to recognize the associated expense based on the
closing stock price on that date. The Company reassesses at each reporting date whether achievement
of each of the performance conditions is probable, as well as estimated forfeitures, and adjusts
the accruals of compensation expense as appropriate. At December 31, 2009, the Company evaluated
its performance against the pre-established operating income goals, strategic goals, and total
shareholder return goals and determined that there was an achievement of 150 percent of the target
award, which amounts to 451,913 shares with a total compensation cost of $8,890. Accordingly, the
Company adjusted the previously adjusted recorded compensation expense for these shares as of
December 31, 2009, and there is $18 of compensation expense to be recognized in the remaining
service period of these awards.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Performance-based share unit activity for the year ended December 31, 2009 is summarized in
the following table:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="66%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Grant Date</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Fair Value</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">527,183</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">16.59</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Granted
</div></td>
<td> </td>
<td> </td>
<td align="right">927,010</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29.25</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Earned
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35,219</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">21.15</td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Forfeited or expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(66,545</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">19.30</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Non-vested shares outstanding at December 31, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">1,352,429</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">29.43</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shares in the table above are based on the maximum shares that can be awarded based on the
achievement of the performance criteria. The fair value of performance-based share unit awards granted in 2006 and vested on February 10, 2009 was $748.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%"><i>Non-Qualified Stock Options</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November 10, 2004, options to acquire 569,985 shares of common stock at an exercise price
of $12.73 per share were issued under the 2004 LTIP to certain executive officers and key employees
of Alpha Coal Management (“ACM”). On February 11, 2005, in connection with the Company’s Internal
Restructuring, the outstanding options granted under the 2004 LTIP were automatically converted
into options to purchase shares of Alpha common stock. These options, subject to continued
employment, vest over a period of five years (with accelerated vesting upon a change of control),
of which was satisfied on November 10, 2009, and have a term of ten years. There have been no
awards granted from the 2004 LTIP since November 10, 2004 and no further options or awards were or
will be granted under this plan. As of December 31, 2009, 86,120 options under the 2004 LTIP were
outstanding and exercisable.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On February 11, 2005, options to acquire 692,905 shares of Alpha Natural Resources, Inc.
common stock at the initial public offering price of $19.00 per share were issued under the 2005
LTIP to certain executive officers, directors and key employees. Also in 2005, options to acquire
10,000 and 60,000 shares of the Company’s common stock at an exercise price of $24.85 per share and
$23.50 per share, respectively, were issued under the 2005 LTIP. All options issued pursuant to the
2005 LTIP vest over a period of five years and have a term of ten years, subject to continued
employment or service on the Company’s Board of Directors. As of December 31, 2009, 296,105 options
were outstanding and 186,524 were exercisable under the 2005 LTIP. No stock options were granted
under the 2005 LTIP during the years ended December 31, 2009, 2008 and 2007, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July 31, 2009, in connection with the Merger, the Company assumed 1,118,546 options from
Foundation that were issued under the 2004 SIP and fully vested upon change of control due to the
Merger. Of the 1,118,546 options assumed, 196,457 have a Merger ratio adjusted exercise price of
$4.50 and 922,089 have a Merger ratio adjusted exercise price of $7.87. These options have an
expiration date of August 10, 2014. The Company determined the fair value of these options at the
time of the Merger and recognized a one-time charge of $600 for stock-based compensation in the
third quarter of 2009. As of December 31, 2009, of the options assumed pursuant to the 2004 SIP,
82,568 of the $4.50 options were outstanding and exercisable and 583,612 of the $7.87 options were
outstanding and exercisable.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of the Foundation options assumed on July 31, 2009 was estimated using the
Black-Scholes option-pricing model using the following assumptions:
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Price of the underlying stock</i>:
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="12%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left">•</td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Closing stock price for Foundation on July 31, 2009 — $35.93
</div></td>
</tr>
<tr style="font-size: 8pt">
<td> </td>
</tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="12%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left">•</td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Closing stock price for Alpha on July 31, 2009 — $33.31
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Option exercise price:</i>
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="12%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left">•</td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Pre-conversion option exercise prices — $4.87 and $8.53
</div></td>
</tr>
<tr style="font-size: 8pt">
<td> </td>
</tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="12%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left">•</td>
<td width="1%"> </td>
<td>
<div style="text-align: justify">Post-conversion option exercise prices — $4.50 and $7.87 (Adjusted for the Merger ratio of 1.084)
</div></td>
</tr>
</table>
</div>
<div style="margin-top: 10pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Expected life in years </i>— 2.51 years
</div></td>
</tr>
<tr style="font-size: 8pt">
<td> </td>
</tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Risk-free interest rate </i>— 1.38%
</div></td>
</tr>
<tr style="font-size: 8pt">
<td> </td>
</tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Dividend yield </i>— 0.00%
</div></td>
</tr>
<tr style="font-size: 8pt">
<td> </td>
</tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="4%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>
<div style="text-align: justify"><i>Expected volatility </i>— 65.83%
</div></td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The assumed options were a one-time grant at Foundation’s initial public offering to eight
employees and as of the Merger date, six of these employees will continue to hold these options.
Insufficient data existed to develop a reliable expected stock option life, therefore, the
simplified method was utilized to estimate the expected life of these options. The expected life in
years was determined by using the midpoint between the valuation date and the expiration date.
Expected volatility was based on both Alpha’s and Foundation’s pre-merger implied future stock
price volatilities derived from exchange traded options and actual historic stock price
volatilities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The weighted-average fair value of the Foundation options assumed on July 31, 2009 was $26.74.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Stock option activity for the year ended December 31, 2009 is summarized in the following
table:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="58%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Number of</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Contractual</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Term (Years)</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at December 31, 2008
</div></td>
<td> </td>
<td> </td>
<td align="right">519,984</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">17.87</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Assumed
</div></td>
<td> </td>
<td> </td>
<td align="right">1,118,546</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7.28</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Exercised
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(564,198</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">9.16</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px">Forfeited/Expired
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(25,927</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">15.39</td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Outstanding at December 31, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">1,048,405</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">11.32</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.78</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Exercisable at December 31, 2009
</div></td>
<td> </td>
<td> </td>
<td align="right">938,824</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">10.35</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4.73</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.20in">
<div align="center" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December 31, 2009, the options outstanding and the exercisable options had an aggregate
intrinsic value of $33,619 and $31,013, respectively. Cash received from the exercise of stock
options during the years ended December 31, 2009, 2008, and 2007 was $5,169, $3,586, and $3,932,
respectively. As of December 31, 2009, $117 of unrecognized compensation cost related to stock
options is expected to be recognized as expense over a weighted-average period of 0.20 years.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">A summary of the Company’s options outstanding and exercisable at December 31, 2009 follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="7%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10" style="border-bottom: 1px solid #000000"><b>Options Outstanding</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Options Exercisable</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Weighted-</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Average</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Remaining</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Exercise</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Life (yrs)</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Shares</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Price</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td valign="top" align="left">$</td>
<td valign="top" align="right">12.73</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">86,120</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">4.90</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">12.73</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">86,120</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">12.73</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td valign="top" align="left">$</td>
<td valign="top" align="right">19.00</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">258,105</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">5.10</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">19.00</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">162,524</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">19.00</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td valign="top" align="left">$</td>
<td valign="top" align="right">24.85</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">2,000</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">5.30</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">24.85</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">—</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">—</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td valign="top" align="left">$</td>
<td valign="top" align="right">23.50</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">36,000</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">5.40</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">23.50</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">24,000</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">23.50</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<tr valign="bottom" style="background: #cceeff; padding-top: 1px">
<td valign="top" align="left">$</td>
<td valign="top" align="right">4.50</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">82,568</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">4.60</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">4.50</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">82,568</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">4.50</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<tr valign="bottom" style="padding-top: 1px">
<td valign="top" align="left">$</td>
<td valign="top" align="right">7.87</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">583,612</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">4.60</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">7.87</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left"> </td>
<td valign="top" align="right">583,612</td>
<td valign="top"> </td>
<td> </td>
<td valign="top" align="left">$</td>
<td valign="top" align="right">7.87</td>
<td valign="top"> </td>
<td> </td>
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The total intrinsic value of options exercised during the years ended December 31, 2009, 2008,
and 2007 was $15,186, $6,692, and $3,081, respectively. The Company currently uses authorized and
unissued shares to satisfy share award exercises.
</div>
</div>
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