Employment Agreement
Executive Severance Plan
EXHIBIT 10.5
 
                              EMPLOYMENT AGREEMENT
 
      THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into this 14th day of
March, 2005 (the "Effective Date"), by and between Bennett K. Hatfield
("Executive") and International Coal Group, Inc. (the "Company"), a Delaware
corporation.
 
                                    RECITALS:
 
      A. ICG desires to employ Executive, and Executive desires to be employed
by ICG, under the terms and conditions of this Agreement.
 
      B. The Board of Directors has also determined that it is in the best
interests of the stockholders and ICG to promote stability among key officers.
 
      IN CONSIDERATION OF THE FOREGOING, the mutual covenants contained herein,
and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as follows:
 
1.    DEFINITIONS.
 
      1.1 "ACCOUNTANTS" has the meaning set forth in Section 10.7(B)(i).
 
      1.2 "ANNUAL BONUS" has the meaning set forth in Section 5.2.
 
      1.3 "APPLICANT VIOLATOR SYSTEM" has the meaning set forth in Section 12.4.
 
      1.4 "BASE SALARY" has the meaning set forth in Section 5.1.
 
      1.5 "BOARD" or "BOARD OF DIRECTORS" means the board of directors of the
Company.
 
      1.6 "CAUSE" means (A) the commission by Executive of (i) a felony or (ii)
any serious crime involving fraud, dishonesty or breach of trust; (B) gross
negligence or intentional misconduct by Executive with respect to ICG or in the
performance of his duties to ICG; (C) failure to follow a reasonable, lawful and
specific direction of the Board of Directors; (D) failure by Executive to
cooperate in any corporate investigation; or (E) breach by Executive of any
material provision of this Agreement, which breach is not corrected by Executive
within ten (10) calendar days after receipt by Executive of written notice from
ICG of such breach. For purposes of this definition, no act or failure to act by
the Executive shall be considered "intentional" unless done or omitted to be
done by the Executive in bad faith and without reasonable belief that the
Executive's action or omission was in the best interests of ICG.
 
      1.7 "CHANGE IN CONTROL" means that (A) WL Ross & Co. LLC's percentage of
Company Stock held (9.2% on the Effective Date) is reduced by 50% or more solely
as a result of a sale by WL Ross & Co. LLC of Company Stock, or (B) a person or
entity acquires 40% or more of Company Stock after which the individuals who
constitute the Board immediately prior to such acquisition cease for any reason
to constitute at least a majority thereof.
 
      1.8 "CODE" has the meaning set forth in Section 5.3(B).
 
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      1.9 "COMPANY STOCK" has the meaning set forth in Section 5.3(A)(i).
 
      1.10 "COVERED PAYMENTS" has the meaning set forth in Section 10.7(A).
 
      1.11 "DISABILITY" or "DISABLED" means the absence of Executive from
Executive's duties with the Company on a full time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness that
is determined to be total and permanent by a physician selected by the Company
or its insurers and reasonably acceptable to Executive or Executive's legal
representative.
 
      1.12 "EBITDA" has the meaning set forth in Section 5.2.
 
      1.13 "EXCISE TAX" has the meaning set forth in Section 10.7(A).
 
      1.14 "EXCISE TAX REIMBURSEMENT" has the meaning set forth in Section
10.7(A).
 
      1.15 "GOOD REASON" means the termination of Executive's employment by
Executive pursuant to Section 9.2, such written notice being given within thirty
(30) days of the occurrence of any of the following events:
 
            (A) involuntary reduction in Executive's Base Salary unless with
      Executive's consent such reduction occurs simultaneously with a reduction
      in officers' salaries generally applicable on a company-wide basis;
 
            (B) involuntary discontinuance or reduction in Executive's Annual
      Bonus award opportunities unless with Executive's consent such
      discontinuance or reduction occurs simultaneously with a generally
      applicable company-wide reduction or elimination of all officers' bonus
      awards occurs simultaneously with such discontinuance or reduction;
 
            (C) involuntary discontinuance of Executive's participation in any
      employee benefit plan or plans maintained by ICG unless such plan(s) are
      discontinued by reason of law or loss of tax deductibility to ICG with
      respect to contributions to such plan(s), or with Executive's consent such
      discontinuance occurs as a matter of ICG policy applied equally to all
      participants in such plan(s) that are in the same classification of
      employees as Executive;
 
            (D) failure to obtain an assumption of ICG's obligations under this
      Agreement by any successor to ICG, regardless of whether such entity
      becomes a successor to ICG as a result of a merger, consolidation, sale of
      assets of ICG, or other form of reorganization, except when the rights and
      obligations of ICG under this Agreement are vested in the successor to ICG
      by operation of law;
 
            (E) failure of there to be an Initial Public Offering within
      twenty-four (24) months of the Effective Date;
 
            (F) a Change in Control;
 
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            (G) involuntary relocation of Executive's primary office to a
      location more than fifty (50) miles from the location mutually agreed to
      by Executive and the Company pursuant to Section 8.6 of this Agreement;
      and
 
            (H) material reduction of Executive's duties and authority as set
      forth in Section 3 of this Agreement as in effect on the Effective Date.
 
      1.16 "GUIDANCE" has the meaning set forth in Section 14.3.
 
      1.17 "ICG" means International Coal Group, Inc. and each of the affiliates
of International Coal Group, Inc. (meaning any entity that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, International Coal Group, Inc.), along with all
successors and assigns of each of such entities.
 
      1.18 "INITIAL PUBLIC OFFERING" or "IPO" means an initial offering of
common stock of ICG that is completed by the sale of such shares pursuant to
ICG's first effective registration statement for the sale of shares filed under
the Securities Act of 1933, as amended.
 
      1.19 "IRS" means the Internal Revenue Service.
 
      1.20 "PLAN" means the International Coal Group, Inc. 2005 Management
Equity Incentive Compensation Plan or if such plan has not been adopted as of
the Effective Date, such plan as subsequently adopted which shall contemplate
the equity grants set forth in Section 5.3.
 
      1.21 "PROTECTED EMPLOYEE" has the meaning set forth in Section 11.2.
 
      1.22 "TARGETED ANNUAL BONUS" has the meaning set forth in Section 5.2.
 
      1.23 "TERM" has the meaning set forth in Section 4.
 
      1.24 "TERMINATION DATE" means the date on which the termination of
Executive's employment with ICG becomes effective.
 
2.    EMPLOYMENT.
 
      ICG hereby employs Executive, and Executive hereby accepts employment,
according to the terms and conditions set forth in this Agreement and for the
period specified in Section 4 of this Agreement.
 
3.    DUTIES.
 
            (A) During the Term, Executive shall serve as President and Chief
      Executive Officer of the Company, and agrees to serve as an officer,
      director and/or employee of such affiliates of ICG in accordance with
      reasonable and lawful directions from ICG's Board of Directors and in
      accordance with ICG's Articles of Incorporation and Bylaws, as both may be
      amended from time to time. Executive will report directly to the Board of
      Directors, and its Chairman.
 
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            (B) The Board of Directors will elect Executive as a director of the
      Company, effective no later than March 31, 2005. During the Term, the
      Company shall use its best efforts to re-nominate and elect Executive as a
      director of the Company upon the expiration of his initial term as a
      member of the Board of Directors.
 
            (C) While Executive is employed by ICG as a full-time employee,
      Executive shall serve ICG, faithfully, diligently, competently and to the
      best of his ability, and will exclusively devote his full time, energy and
      attention to the business of ICG and to the promotion of its interests.
      Executive shall not, without the written consent of the Board of Directors
      either render services to or for any person, firm, corporation or other
      entity or organization in exchange for compensation, regardless of the
      form in which such compensation is paid and whether or not it is paid
      directly or indirectly to Executive, or serve as a board member, director
      or trustee of any corporation or organization regardless of whether
      Executive is paid for such services. Nothing in this Section 3 shall
      preclude Executive from managing his personal investments and affairs,
      provided that such activities in no way interfere with the proper
      performance of his duties and responsibilities as President and Chief
      Executive Officer.
 
            (D) Executive shall develop and present to the Board for review and
      approval an incentive and perquisite benefit program for senior executive
      officers of the Company.
 
            (E) Subject to approval by the Board of Directors, Executive may by
      June 30, 2005, make reasonable modifications to the forecasted 2005 EBITDA
      and further in a timely manner make forecasts for subsequent years EBITDA
      which if reasonable shall be the basis for Executive's Annual Bonus.
 
            (F) Subject to the direction of the Board of Directors, Executive
      shall have powers as are typically granted to a Chief Executive Officer of
      a corporation engaged in a similar business to Company (including, without
      limitation, the power to make decisions with respect to hiring and
      termination of employees).
 
4.    TERM OF EMPLOYMENT.
 
      Subject to Article 9, the term of this Agreement (the "Term") shall
commence on Executive's first day of employment with ICG which shall be mutually
agreed to by ICG and Executive but in any event no later than April 1, 2005. The
Term shall end on March 31, 2008. The Term shall automatically be extended by
one (1) year on each March 31, beginning March 31, 2007, unless not later than
December 31 of each year, beginning December 31, 2006, ICG notifies Executive,
or Executive notifies ICG, that it or he, as the case may be, does not desire to
have the Term extended. For example, if such notice of non-extension is not
given by December 31, 2006, the Term of this Agreement shall automatically be
extended to March 31, 2009.
 
5.    COMPENSATION.
 
      5.1 BASE SALARY. While employed under this Agreement, Executive will
receive as his compensation for the performance of his duties and obligations to
ICG under this Agreement a Base Salary of Five Hundred Thousand Dollars
($500,000) per year, which will be payable in such installments established by
ICG for all salaried employees, and which will be subject to
 
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annual review for purposes of salary increases by the Board of Directors or any
committee designated by the Board of Directors (the base salary, as it may be
increased from time to time, is referred to herein as the "Base Salary").
 
      5.2 BONUS. In addition to his Base Salary, Executive will be entitled to a
performance-based annual cash bonus (the "Annual Bonus"), which will be paid as
soon as practicable following the determination by the Board of Directors of the
amount of such Annual Bonus following preparation of ICG's financial results for
the year in question. Executive will be eligible for the "Targeted Annual
Bonus," if ICG's earnings before interest, taxes, depreciation and amortization
("EBITDA") is between 90% and 110% of ICG's forecasted EBITDA; provided,
however, that the Annual Bonus awarded will increase by 2% of variance above
110% or decrease by 2% of variance below 90%. For 2005, the Targeted Annual
Bonus amount will be Seven Hundred Thousand Dollars ($700,000). The Targeted
Annual Bonus for the remainder of the Term will be 200% of Base Salary. The
Annual Bonus payable for 2005 and 2006 will not be less than Five Hundred
Thousand Dollars ($500,000) per year.
 
      5.3 EQUITY COMPENSATION.
 
            (A) Pursuant to the terms of the Plan and award agreements
      thereunder, within seven days of the Effective Date, ICG will grant
      Executive the following equity awards:
 
                  (i) Options to purchase a number of shares of common stock of
            the Company ("Company Stock") determined by dividing $3.5 million by
            the fair market value per share of the Company Stock on the date of
            grant. The exercise price for each option shall be the fair market
            value of the Company Stock on the date of grant. All such options
            will vest 25% on the issuance date and 25% annually on each of the
            first, second and third anniversaries of the Effective Date.
 
                  (ii) A grant of 206,250 restricted shares of Company Stock.
            The restrictions on such shares of Company Stock will lapse
            one-third (1/3) annually on each of the first, second and third
            anniversaries of the Effective Date. If 206,250 multiplied by the
            average sales price per share of Company Stock of any IPO during the
            Term is less than $2.0625 million, then Executive shall be granted
            additional restricted shares of Company Stock so that the total
            value of the Company Stock (based upon the average sales price per
            share of Company Stock in the IPO) granted under this Section
            5.3(A)(ii) equals $2.0625 million. The restrictions on such
            additional restricted shares of Company Stock will lapse one-third
            (1/3) annually on each of the first, second and third anniversaries
            of the Effective Date.
 
                  (iii) A grant of 68,750 unrestricted shares of Company Stock.
            If 68,750 multiplied by the average sales price per share of Company
            Stock of any IPO during the Term is less than $687,500, then
            Executive shall be granted additional shares of Company Stock so
            that the total value of the Company Stock (based upon the average
            sales price per share of Company Stock in the IPO) granted under
            this Section 5.3(A)(iii) equals $687,500.
 
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            (B) Provided that Executive shall make timely elections under
      Section 83(b) of the Internal Revenue Code of 1986, as amended (the
      "Code"), the Company will pay Executive an income tax "gross-up" payment
      such that Executive will be made whole for the federal and state income
      and employment tax impact of the equity compensation vesting of the grants
      provided for in Sections 5.3(A)(ii) and (iii) and the gross-up payment
      contemplated herein.
 
            (C) Any unvested grants pursuant to Sections 5.3(A)(i) and (ii) will
      accelerate and vest if: (i) there occurs a Change in Control; (ii) ICG has
      had an underwriting of not less than $100 million of equity and Company
      Stock has become listed and traded on a registered securities exchange
      (NYSE, AMEX or NASDAQ) for thirty (30) consecutive trading days at 150% or
      more of the price of Company Stock upon an Initial Public Offering; (iii)
      Executive's employment is terminated other than for Cause or terminates
      with Good Reason; or (iv) Wilbur L. Ross ceases to serve as chairman of
      the Board of Directors.
 
      5.4 SIGN ON BONUS PAYMENT. As soon as reasonably practicable, but not
later than thirty (30) days after the Effective Date, ICG will pay to Executive
One Hundred Eight Thousand Three Hundred Eleven Dollars ($108,311) to compensate
Executive for incentive compensation lost by virtue of his resignation of
employment from his prior employer.
 
      5.5 ADDITIONAL TERM LIFE INSURANCE. In addition to any life insurance
provided to Executive under Section 8.1, Company shall commencing on the
Effective Date pay the premiums for a period of 120 months on a $3 million term
life insurance policy on Executive from a company mutually agreed to by Company
and Executive, which policy is to be owned by Executive's designee.
 
6.    WITHHOLDING.
 
      All compensation payable to Executive shall be paid net of amounts
withheld for federal, state, municipal or local income taxes, Executive's share,
if any, of any payroll taxes and such other federal, state, municipal or local
taxes as may be applicable to amounts paid by an employer to its employee or to
the employer/employee relationship.
 
7.    PURCHASE OF COMPANY STOCK.
 
      Within forty-five (45) days of the Effective Date, Executive, using his
own funds, shall purchase and the Company shall sell, 25,000 shares of Company
Stock at $8 per share. Executive shall pay for such shares in cash. Should this
purchase be deemed a bargain purchase, Company shall pay to Executive an income
tax "gross-up" payment such that Executive will be made whole for the federal
and state income and employment tax impact of the bargain purchase element and
the gross-up payment contemplated herein.
 
8.    OTHER BENEFITS OF EMPLOYMENT.
 
      8.1 EMPLOYEE BENEFITS. Executive will be entitled to participate in such
hospitalization, life insurance, long and short term disability, 401(k) and
other employee benefit plans and programs, if any, as may be adopted by ICG from
time to time, in accordance with the
 
                                      -6-
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provisions of such plans and programs and on the same basis as other full-time
salaried employees of ICG who participate in such employee benefit plans (except
to the extent that the benefits provided under any of such plans or programs are
expressly offset by any of the benefits provided under or pursuant to this
Agreement).
 
      8.2 EXECUTIVE BENEFITS. Executive shall be entitled to participate in any
employee benefit adopted by ICG for executive level employees. At a minimum for
Executive, such benefits shall include a company automobile consistent with
ICG's then policy on company automobiles; participation in such deferred
compensation arrangements as may be approved by the Board; reasonable retirement
planning services; reasonable financial and tax preparation services; and the
use of private aircraft for business purposes as appropriate. The Company shall
pay to Executive an income tax "gross-up" payment such that Executive will be
made whole for the federal and state income tax impact of any taxable executive
benefits provided hereunder and the gross-up payment contemplated herein;
provided, however, that the Company shall not be responsible for any tax impact
to Executive as a result of Section 409A of the Code.
 
      8.3 STOCK BASED AWARDS. Executive shall be eligible to receive grants of
stock options, performance units, stock appreciation rights, restricted stock,
deferred shares, and other stock-based awards in accordance with the provisions
of the Plan or other stock-based award or long-term incentive plan that ICG may
adopt or amend or supersede from time to time. The terms of such grants shall be
determined by the Board of Directors (or its designee as provided in the Plan or
as appointed by the Board of Directors) in accordance with the Plan; provided,
however, that notwithstanding any provision of the Plan to the contrary, in the
event of (i) any termination of Executive's employment for any reason other than
for Cause pursuant to Section 9.1, or (ii) termination of employment for Good
Reason pursuant to Section 9.2, any stock-based award granted to Executive prior
to such Termination Date shall immediately vest and be exercisable by or issued
to the Executive under the Plan.
 
      8.4 TAXES AND WITHHOLDING. Executive shall be responsible for paying all
federal, state, municipal or local taxes payable by him with respect to any
benefits provided under this Section 8, and ICG will, when required by law or
when otherwise appropriate or customary, withhold from the benefits or other
compensation amounts sufficient to satisfy such taxes, unless taxes are to be
paid by ICG as set forth in the provisions of this Agreement.
 
      8.5 REIMBURSEMENT OF EXPENSES.
 
            (A) Following submission of appropriate documentation in accordance
      with its policies in effect from time to time, ICG will pay or reimburse
      Executive for all business expenses which Executive incurs in performing
      his duties under this Agreement, including, but not limited to, travel,
      entertainment, professional dues and subscriptions, and all dues, fees,
      and expenses associated with membership in various professional, business,
      and civic associations and societies in which Executive participates in
      accordance with ICG's policies in effect from time to time.
 
            (B) ICG will reimburse Executive for the reasonable travel expenses
      incurred by Executive in the course of interviewing for the position
      contemplated by this Agreement.
 
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      8.6 RELOCATION. ICG's executive offices will be relocated to a location
mutually agreed to by the Company and Executive. If such offices are not located
in Charleston, West Virginia, or are subsequently relocated to a location more
than thirty (30) miles from Charleston, West Virginia, and Executive elects to
relocate his residence to such relocated offices, Executive will be entitled to
relocation benefits pursuant to ICG's relocation assistance program, which shall
include the reasonable and customary costs both in the sale and purchase of
Executive's primary residence, the purchase of Executive's primary residence by
ICG or its assignee for 95% of the primary residence's appraised value if it is
not sold within ninety (90) days of its initial listing, as well as the
reasonable costs associated with the relocation of Executive's household
belongings, and to the extent not deductible by Executive, in each case, the
Company shall pay to Executive an income tax "gross-up" payment such that
Executive will be made whole for the federal and state income tax impact of any
taxable benefit provided pursuant to this Section 8.6 and the gross-up payment
contemplated herein. It is expressly understood that Executive shall be under no
obligation to relocate his residence to within thirty (30) miles of ICG's
executive offices.
 
      8.7 VACATION. Notwithstanding any policy of the company for salaried
employees, Executive will be entitled to four (4) weeks paid vacation and ICG
recognized holidays.
 
9.    TERMINATION.
 
      9.1 TERMINATION BY ICG.
 
            (A) This Agreement shall automatically terminate effective upon (i)
      the date of Executive's death; (ii) the date that Executive is determined
      to be permanently Disabled or (iii) the date of Executive's retirement.
 
            (B) ICG may terminate this Agreement, and Executive's employment
      with ICG, without Cause upon ninety (90) days' prior written notice to
      Executive.
 
            (C) ICG may terminate this Agreement, and Executive's employment
      with ICG, with Cause; provided, that, Executive shall not be deemed to
      have been terminated for Cause hereunder unless and until there shall have
      been delivered to the Executive written notice of termination by ICG along
      with a copy of a resolution duly adopted by the affirmative vote of not
      less than a majority of the Board of Directors then in office (excluding
      Executive if Executive is then a member of the Board) at a meeting of the
      Board of Directors called and held for such purpose, after reasonable
      notice to Executive and an opportunity for Executive, together with
      Executive's counsel (if Executive chooses to have counsel present at such
      meeting), to be heard before the Board, finding that, in the good faith
      opinion of the Board, Executive had committed an act constituting Cause as
      herein defined and specifying the particulars thereof in detail.
 
      9.2 TERMINATION BY EXECUTIVE. Executive may terminate this Agreement, and
his employment with ICG, with or without Good Reason, upon ninety (90) days'
prior written notice to ICG.
 
      9.3 NOTICE. Any purported termination of this Agreement by ICG or
Executive shall be communicated by written notice of termination to the other
party, pursuant to Section 14.6.
 
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Such notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provisions so indicated, and shall specify the Termination Date (which shall not
be earlier than the date of the notice).
 
10.   COMPENSATION AND BENEFITS UPON TERMINATION OF EMPLOYMENT.
 
      10.1 TERMINATION OF EMPLOYMENT UPON DEATH. If Executive's employment is
terminated by reason of death, his estate shall be entitled to receive only the
Base Salary to which Executive was entitled through the date of death, any
accrued unpaid bonus compensation due to Executive with respect to the calendar
year prior to his death, bonus compensation for the calendar year in which
Executive's death occurs (calculated on a pro rata basis), and such other
benefits as may be available to Executive or his estate through ICG's benefit
plans and policies. The payment of said bonus compensation shall be made in a
lump sum within sixty (60) days from the Termination Date and the current year's
bonus amount by March 15 of such subsequent year.
 
      10.2 TERMINATION OF EMPLOYMENT UPON DISABILITY. If Executive's employment
is terminated due to his Disability, Executive shall be entitled to receive only
the Base Salary to which he was entitled through the Termination Date due to
Disability, any unpaid bonus compensation due to Executive with respect to the
calendar year prior to termination for Disability, bonus compensation for the
calendar year in which the Termination Date occurs (calculated on a pro rata
basis), and such other benefits as may be available to Executive through ICG's
benefit plans and policies. The payment of said bonus or incentive compensation
shall be made in a lump sum within sixty (60) days from the Termination Date and
the current year's bonus amount by March 15 of such subsequent year.
 
      10.3 TERMINATION OF EMPLOYMENT BY ICG FOR CAUSE. If Executive's employment
is terminated for Cause as provided in Section 9.1(C), Executive shall be
entitled to receive the Base Salary to which he was entitled through the
Termination Date, any unpaid bonus due to Executive with respect to a prior
year, and such other benefits as may be available to him through ICG's benefit
plans and policies in effect on the Termination Date, other than any unpaid
bonus compensation for the calendar year of termination, which shall be
forfeited.
 
      10.4 TERMINATION BY ICG WITHOUT CAUSE OR TERMINATION BY EXECUTIVE FOR GOOD
REASON. If ICG terminates Executive's employment without Cause pursuant to
Section 9.1(B) or if Executive terminates his employment for Good Reason
pursuant to Section 9.2, Executive shall receive the Base Salary to which he was
entitled through the Termination Date, any unpaid bonus due to Executive with
respect to a prior year, bonus compensation for the calendar year in which the
Termination Date occurs (calculated on a pro rata basis) and severance pay equal
to (A) three (3) times his Base Salary; (B) three (3) times the Executive's
Annual Bonus for the year preceding termination of employment; and (C) medical
and dental coverage under the plan(s) in effect under the COBRA eligibility
period for Executive and any eligible dependents for the period of time
Executive and/or his dependents(s) remain eligible for COBRA, but not to exceed
two (2) years from the Termination Date; provided, that Executive shall pay the
employee portion of all premiums, co-pays and deductibles on the same terms and
conditions as other senior executives of the Company from time to time. Such
severance and bonus compensation
 
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shall be paid quarterly on the last business day of each of the eight (8)
calendar quarters commencing immediately after the Termination Date. Executive
agrees that he shall not be entitled to any additional compensation or benefits
other than what is set out in Sections 5.3, 5.5 and 10.4. Executive and ICG
agree that the receipt of severance benefits as defined in this Section 10.4 are
conditioned upon and subject to Executive and ICG executing a valid release
agreement releasing any and all claims which Executive has or may have against
ICG arising out of Executive's employment (other than enforcement of this
Agreement and any benefits to which Executive is entitled to under the benefit
programs of the Company).
 
      10.5 TERMINATION OF EMPLOYMENT BY EXECUTIVE OTHER THAN FOR GOOD REASON. If
Executive terminates employment with ICG pursuant to Section 9.2 other than for
Good Reason or Executive elects to not renew this Agreement for an additional
term, Executive shall be entitled to receive only the Base Salary to which he
was entitled through the Termination Date, any unpaid bonus compensation due to
Executive for the calendar year prior, bonus compensation for the calendar year
in which the Termination Date occurs (calculated on a pro rata basis), and such
other benefits as may be available to him through ICG's benefit plans and
policies through the Termination Date. The payment of any prior year's bonus
shall be made in a lump sum within sixty (60) days from the Termination Date and
the current year's bonus by March 15 of the subsequent year. If the Company
elects not to renew this Agreement for an additional term and Executive
terminates employment, Executive shall be entitled to receive compensation equal
to one (1) years of his Base Salary plus one (1) times the average of
Executive's previous three (3) years annual bonus (or if Executive was employed
for less than three (3) years, the average of Executive's bonus during the
actual employment term), which shall be paid quarterly on the last business day
of each of the four (4) calendar quarters commencing immediately after the
Termination Date.
 
      10.6 NON-PAYMENT DUE TO BREACH. In the event Executive materially breaches
the covenants set forth in Section 11 hereof, then ICG's obligation to make any
remaining payments under this Agreement that have not already been paid to
Executive shall be terminated.
 
      10.7 CERTAIN FURTHER PAYMENTS BY ICG.
 
            (A) In the event that any amount or benefit paid or distributed to
      Executive pursuant to this Agreement, taken together with any amounts or
      benefits otherwise paid or distributed to Executive by ICG or any
      affiliated company (collectively, the "Covered Payments"), are or become
      subject to the tax (the "Excise Tax") imposed under Section 4999 of the
      Code), or any similar tax that may hereafter be imposed, ICG shall pay to
      Executive at the time specified in this Section 10.7 an additional amount
      (the "Excise Tax Reimbursement") such that the net amount retained by
      Executive with respect to such Covered Payments, after deduction of any
      Excise Tax on the Covered Payments and any federal, state and local income
      or employment tax and Excise Tax on the Excise Tax Reimbursement provided
      for by this Section 10.7, but before deduction for any federal, state or
      local income or employment tax withholding on such Covered Payments, shall
      be equal to the amount of the Covered Payments.
 
            (B) For purposes of determining whether any of the Covered Payments
      will be subject to the Excise Tax and the amount of such Excise Tax:
 
                                      -10-
<PAGE>
 
                  (i) such Covered Payments will be treated as "parachute
            payments" within the meaning of Section 280G of the Code, and all
            "parachute payments" in excess of the "base amount" (as defined
            under Section 280G(b)(3) of the Code) shall be treated as subject to
            the Excise Tax, unless, and except to the extent that, in the good
            faith judgment of ICG's independent certified public accountants
            appointed prior to the date upon which a change in control became
            effective or tax counsel selected by such accountants (the
            "Accountants"), ICG has a reasonable basis to conclude that such
            Covered Payments (in whole or in part) either do not constitute
            "parachute payments" or represent reasonable compensation for
            personal services actually rendered (within the meaning of Section
            280G(b)(4)(B) of the Code) in excess of the "base amount," or such
            "parachute payments" are otherwise not subject to such Excise Tax;
            and
 
                  (ii) the value of any non-cash benefits or any deferred
            payment or benefit shall be determined by the Accountants in
            accordance with the principles of Section 280G of the Code.
 
            (C) For purposes of determining the amount of the Excise Tax
      Reimbursement, Executive shall be deemed to pay:
 
                  (i) federal income taxes at the highest applicable marginal
            rate of federal income taxation for the calendar year in which the
            Excise Tax Reimbursement is to be made; and
 
                  (ii) any applicable state and local income taxes at the
            highest applicable marginal rate of taxation for the calendar year
            in which the Excise Tax Reimbursement is to be made, net of the
            maximum reduction in federal income taxes which could be obtained
            from the deduction of such state or local taxes if paid in such
            year.
 
            (D) In the event that the Excise Tax is subsequently determined by
      the Accountants or pursuant to any proceeding or negotiations with the IRS
      to be less than the amount taken into account hereunder in calculating the
      Excise Tax Reimbursement made, Executive shall repay to ICG, at the time
      that the amount of such reduction in the Excise Tax is finally determined,
      the portion of such prior Excise Tax Reimbursement that would not have
      been paid if such Excise Tax had been applied in initially calculating
      such Excise Tax Reimbursement. Notwithstanding the foregoing, in the event
      any portion of the Excise Tax Reimbursement to be refunded to ICG has been
      paid to any federal, state or local tax authority, repayment thereof shall
      not be required until actual refund or credit of such portion has been
      made to Executive. Executive and ICG shall mutually agree upon the course
      of action to be pursued (and the method of allocating the expenses
      thereof) if Executive's good faith claim for refund or credit is denied.
 
            (E) In the event that the Excise Tax is later determined by the
      Accountants or pursuant to any proceeding or negotiations with the IRS to
      exceed the amount taken into account hereunder at the time the Excise Tax
      Reimbursement is made (including, but not limited to, by reason of any
      payment the existence or amount of which cannot be
 
                                      -11-
<PAGE>
 
      determined at the time of the Excise Tax Reimbursement), ICG shall make an
      additional Excise Tax Reimbursement in respect of such excess (plus any
      interest or penalty payable with respect to such excess) at the time that
      the amount of such excess is finally determined.
 
            (F) The Excise Tax Reimbursement (or portion thereof) provided for
      in Section 10.7(A) above shall be paid to Executive not later than ten
      (10) business days following the payment of the Covered Payments;
      provided, however, that if the amount of such Excise Tax Reimbursement (or
      portion thereof) cannot be finally determined on or before the date on
      which payment is due, ICG shall pay to Executive by such date an amount
      estimated in good faith by the Accountants to be the minimum amount of
      such Excise Tax Reimbursement and shall pay the remainder of such Excise
      Tax Reimbursement as soon as the amount thereof can be determined, but in
      no event later than forty five (45) calendar days after payment of the
      related Covered Payment.
 
11.   CONFIDENTIALITY AND NON-SOLICITATION.
 
      11.1 NON-DISCLOSURE. Executive, both during the term hereof and
thereafter, will not, directly or indirectly, use for himself or use for, or
disclose to, any party other than ICG, any secret or confidential information or
data regarding the business of ICG or any secret or confidential information or
data regarding the business or property of ICG or regarding any secret or
confidential apparatus, process, system or other method at any time use,
developed or investigated by or for ICG, whether or not developed, acquired,
discovered or investigated by Executive. Upon termination or expiration of this
Agreement or as soon thereafter as possible, Executive shall promptly deliver to
ICG all memoranda, notes, records, plats, sketches, plans or other documents
made by, compiled by, delivered to, or otherwise acquired by Executive
concerning the business or properties of ICG or any secret or confidential
product, apparatus or process used, developed, acquired or investigated by ICG.
 
      11.2 NO SOLICITATION. Executive hereby agrees and covenants that during
the term of this Agreement, and for a period of two (2) years thereafter so long
as ICG is not in material breach of this Agreement, he shall not, directly or
indirectly, on his own behalf or with others (A) induce or attempt to induce any
ICG employee who is a direct report to Executive or who is a president, mine
superintendent or maintenance superintendent or an equivalent position of any
subsidiary or operating unit of ICG ("Protected Employee") to leave the employ
of ICG, or in any way interfere with the relationship between ICG and any
Protected Employee except that it is specifically agreed by Executive and ICG
that this Section 11.2 is not violated by any response by a Protected Employee
to a publicly announced job opening with Executive or his subsequent employer
whether such announcement appears in newspapers, trade publications, web sites
or similar public media; (B) induce or attempt to induce any referral source,
customer or other business relation of ICG not to do business with ICG, or to
cease doing business with ICG; or (C) solicit, divert or actively take away, or
attempt to solicit, divert or take away, for purposes of conducting a business
substantially similar to the business of ICG, any individual, corporation,
partnership or other association or entity who as of the Termination Date, both
(i) had a business relationship with ICG or, to Executive's knowledge, was
during the ninety (90) day period preceding the Termination Date solicited in
writing by ICG for business (whether or not he, she or it became an actual
customer) and (ii) was personally contacted by Executive during such
 
                                      -12-
<PAGE>
 
ninety (90) day period; provided, however, that the foregoing provisions of this
Section 11.2 shall not prohibit Executive from participating in any response to
an open bidding or quote request of any customer of ICG, or prohibit Executive
from any solicitation that does not, directly or indirectly, divert business
from ICG; and, provided further, that Executive and any subsequent employer may
in the ordinary course of business compete with ICG for customers, properties or
otherwise, without violating this Section 11.2, provided that Executive shall
not attempt to induce any entity with which ICG has any existing business
relationship to terminate that business relationship prior to the termination of
existing contracts or orders with that entity.
 
      11.3 INJUNCTIVE RELIEF. Executive acknowledges that it is impossible to
measure in money the damages that will accrue to ICG by reason of Executive's
failure to observe any of the obligations imposed on him by this Section 11.
Accordingly, if ICG shall institute an action to enforce the provisions hereof,
Executive hereby waives the claim or defense that an adequate remedy at law is
available to ICG, and Executive agrees not to urge in any such action the claim
or defense that such remedy at law exists.
 
      11.4 SEVERABILITY. If a final determination is made by a court having
competent jurisdiction that the time or territory or any other restriction
contained in Sections 11.1 and 11.2 is an unenforceable restriction on
Executive's activities, the provisions of such sections shall not be rendered
void but shall be deemed amended to apply such maximum time and scope and such
other restrictions as such court may judicially determine or otherwise indicate
to be reasonable.
 
12.   REPRESENTATIONS.
 
      12.1 Executive hereby represents that he is not subject to any restriction
of any nature whatsoever on his ability to enter into this Agreement or to
perform his duties and responsibilities hereunder, including, but not limited
to, any covenant not to compete with any former employer, including, but not
limited to, Arch Coal, Inc., any covenant not to disclose or use any non-public
information acquired during the course of any former employment or any covenant
not to solicit any customer of any former employer, including, but not limited
to, Arch Coal, Inc.
 
      12.2 Executive hereby represents that, except as he has disclosed in
writing to ICG, he is not bound by the terms of any agreement with any previous
company or other party to refrain from using or disclosing any trade secret or
confidential or proprietary information in the course of Executive's employment
with ICG or to refrain from competing, directly or indirectly, with the business
of such previous company or any other party.
 
      12.3 Executive hereby represents that, to the best of his knowledge, his
performance of all the terms of this Agreement and as an employee of ICG does
not and will not breach any agreement with another party, including without
limitation any agreement to keep in confidence proprietary information,
knowledge or data Executive acquired in confidence or in trust prior to his
employment with ICG, and that he will not knowingly disclose to ICG or induce
ICG to use any confidential or proprietary information or material belonging to
any previous company or others.
 
                                      -13-
<PAGE>
 
      12.4 Executive further represents that, to his knowledge, his past actions
in the coal industry will not cause ICG to be permanently or materially permit
blocked due to Executive's employment hereunder, and Executive will promptly and
diligently cooperate to remove as soon as reasonably practicable any asserted
link under the "Applicant Violator System" as maintained by the Federal Office
of Surface Mining and any similar state program.
 
13.   INDEMNIFICATION.
 
      ICG shall, to the fullest extent to which it is empowered to do so by the
General Corporation Law of Delaware, or any other applicable laws, as from time
to time in effect, and in the manner therein provided, indemnify and hold
harmless Executive, through the duration of the Term and all statutory periods
during which any such claim may be brought or asserted, from and against any
actual, threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, investigative or otherwise, to which Executive
is or is threatened to be made a party by reason of the fact that he is or was a
director, officer, employee or agent of ICG. Executive will be further covered
by the indemnification and limitations on liability of officers and directors
provided under ICG's Certificate of Incorporation and By-laws and any separate
agreement between ICG and Executive and/or any officers and directors
indemnification insurance policy now or hereafter paid for by ICG.
 
14.   MISCELLANEOUS.
 
      14.1 ASSIGNMENT. This Agreement shall be binding upon the parties hereto,
their respective heirs, personal representatives, executors, administrators and
successors; provided, however, that Executive shall not assign this Agreement.
 
      14.2 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the State of Delaware without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
 
      14.3 COMPLIANCE WITH SECTION 409A OF THE CODE. This Agreement is intended
to comply with Section 409A of the Code and shall be construed and interpreted
in accordance with such intent. To the extent any benefit paid under this
Agreement shall be subject to Section 409A of the Code, such benefit shall be
paid in a manner that will comply with Section 409A of the Code, including
proposed, temporary or final regulations or any other guidance issued by the
Secretary of Treasury and the IRS with respect thereto (the "Guidance"). Any
provision of this Agreement that would cause the payment of any benefit to fail
to satisfy Section 409A of the Code shall have no force and effect until amended
to comply with Code Section 409A (which amendment may be retroactive to the
extent permitted by the Guidance).
 
      14.4 ARBITRATION.
 
            (A) Any dispute, claim or controversy arising out of or relating to
      this Agreement, including without limitation any dispute, claim or
      controversy concerning validity, enforceability, breach or termination
      hereof, shall be finally settled through arbitration by a single
      arbitrator selected under the rules of the American Arbitration
      Association for arbitration of employment disputes conducted in the city
      of Executive's
 
                                      -14-
<PAGE>
 
      domicile. Each party will be entitled to present evidence and argument to
      the arbitrator. The arbitrator will have the right only to interpret and
      apply the provisions of this Agreement and may not change any of its
      provisions, except as expressly provided in Section 14.7. The arbitrator
      will permit reasonable pre-hearing discovery of facts, to the extent
      necessary to establish a claim or a defense to a claim, subject to
      supervision by the arbitrator. In addition, the Company shall propose a
      reasonable set of rules to guide any proceedings under this Section
      14.4(A). Such rules shall be designed to lead to a prompt and just result
      without undue delay or expense, but will not be unduly prejudicial to
      either party. The determination of the arbitrator will be conclusive and
      binding upon the parties and judgment upon the same may be entered in any
      court having jurisdiction thereof. The arbitrator will give written notice
      to the parties stating the arbitrator's determination, and will furnish to
      each party a signed copy of such determination. The expenses of
      arbitration will be borne equally by ICG and Executive or as the
      arbitrator equitably determines consistent with the application of state
      or federal law; provided, however, that Executive's share of such expenses
      will not exceed the maximum permitted by law. Any arbitration or action
      pursuant to this Section 14.4(A) will be governed by and construed in
      accordance with the substantive laws of the state of Executive's domicile
      and, where applicable, federal law, without giving effect to the
      principles of conflict of laws of such state.
 
            (B) Notwithstanding Section 14.4(A), ICG will not be required to
      seek or participate in arbitration regarding any actual or threatened
      breach of Executive's covenants in Section 11, but may pursue its
      remedies, including injunctive relief, for such breach in a court of
      competent jurisdiction in state of Executive's domicile, or in the sole
      discretion of ICG, in a court of competent jurisdiction where Executive
      has committed or is threatening to commit a breach of Executive's
      covenants in Section 11, and no arbitrator may make any ruling
      inconsistent with the findings or rulings of such court.
 
      14.5 ENTIRE AGREEMENT. This Agreement between Executive and ICG, set forth
the entire agreement of the parties concerning the employment of Executive by
ICG, and any other oral or written statements, representations, agreements, or
understandings made or entered into prior to or contemporaneously with the
execution of this Agreement, are hereby rescinded, revoked, and rendered null
and void by the parties. Both parties hereto have participated in the selection
of the words and phrases set forth in this Agreement in order to express their
joint intentions in entering into this employment relationship, and the parties
hereto agree that there shall not be strict interpretation against either party
in connection with any review of this Agreement in which interpretation thereof
is an issue.
 
      14.6 NOTICES. Any notice required or permitted under this Agreement shall
be deemed to have been effectively made or given if in writing and personally
delivered, or mailed properly addressed in a sealed envelope, postage prepaid by
certified or registered mail, delivered by a reputable overnight delivery
service or sent by facsimile. Unless otherwise changed by notice, notice shall
be properly addressed to Executive if addressed to the address of Executive on
the books and records of ICG at the time of the delivery of such notice, and
properly addressed to ICG if addressed to:
 
                                      -15-
<PAGE>
 
                           Corporate Secretary
                           International Coal Group Inc.
                           2000 Ashland Drive
                           Ashland, Kentucky 41101
 
      14.7 SEVERABILITY. Wherever there is any conflict between any provision of
this Agreement and any statute, law regulation or judicial precedent, the latter
shall prevail, but in such event the provisions of this Agreement thus affected
shall be curtailed and limited only to the extent necessary to bring them within
the requirements of law. In the event that any provision of this Agreement shall
be held by a court of competent jurisdiction to be indefinite, invalid, void or
voidable or otherwise unenforceable, the balance of this Agreement shall
continue in full force and effect unless such construction would clearly be
contrary to the intentions of the parties or would result in an unconscionable
injustice.
 
      14.8 SURVIVAL. Executive and ICG agree that upon termination of
Executive's employment, the obligations of each of the parties under this
Agreement shall expire as of the Termination Date, including, without
limitation, the obligations of ICG to pay any compensation to Executive, except
to the extent otherwise specifically provided in this Agreement. Notwithstanding
the foregoing, the obligations contained in Section 11 of this Agreement, the
provisions hereof relating to the obligations of ICG described in the preceding
sentence and any other provision of this Agreement that is intended to continue
in full force and effect after the termination of Executive's employment, shall
survive the termination or expiration of this Agreement in accordance with the
terms set forth therein.
 
      14.9 PAYMENT OF LEGAL FEES. ICG will pay Executive's reasonable legal and
financial consulting fees and costs associated with entering into this Agreement
and further agrees to pay the Executive an income tax "gross-up" payment such
that Executive will be made whole for the federal and state employment tax
impact on such payment and the "gross up" payment contemplated herein.
 
      14.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
 
                         [Remainder of Page Left Blank]
 
                                      -16-
<PAGE>
 
      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
 
                                         Company:
 
                                         INTERNATIONAL COAL GROUP, INC.
 
                                         /s/ Wilbur L. Ross
                                         -------------------------------
                                         Wilbur L. Ross, Chairman
 
                                         Executive
 
                                         /s/ Bennett K. Hatfield
                                         -------------------------------
                                         Bennett K. Hatfield
 
                                      -17-
</TEXT>
</DOCUMENT>

 

EX-10.31 3 dex1031.htm INTERNATIONAL COAL GROUP, INC. EXECUTIVE SEVERANCE PLAN

Exhibit 10.31

INTERNATIONAL COAL GROUP, INC.

EXECUTIVE SEVERANCE PLAN

RECITALS

This Executive Severance Plan (the “Plan”) is adopted by International Coal Group, Inc. (“ICG”) and its Affiliates for the benefit of a select group of their management or highly-compensated employees. The purpose of the Plan is to provide employer funded severance benefits to certain selected employees of ICG and its Affiliates who satisfy the conditions for benefits set forth in the Plan including executing and not revoking a General Release in Full of All Claims. It is intended that the Plan be a “severance pay plan” as defined in Department of Labor Regulation section 2510.3-2(b) and an unfunded welfare plan maintained for the purpose of providing benefits for a select group of management or highly-compensated employees as described in Department of Labor Regulation section 2520.104-24.

ARTICLE I

DEFINITIONS

For purposes of this Plan and exhibits hereto the following definitions shall apply unless the context clearly indicates the contrary:

1.01 “Affiliate” shall mean any entity “controlled” by ICG. “Controlled” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, membership or partnership interests, election or appointment of directors, by contract or otherwise.

1.02 “Board of Directors” shall mean the Board of Directors of ICG.

1.03 “Certificate of Participation” is the form attached as Exhibit A which designates Employee as a Participant and under which Employee acknowledges the terms and conditions of his eligibility for benefits.

1.04 “Compensation Committee” shall mean the Compensation Committee of the Board of Directors and in the absence of such committee the Board of Directors.

1.05 “Designated Employee” shall mean an Employee of Employer who (i) is a member of a select group of management of Employer or is a highly compensated employee of Employer and (ii) who is designated pursuant to Article II by the Compensation Committee as eligible to participate in the Plan.

1.06 “Effective Date” shall mean December 15, 2006.

1.07 “Employee” shall mean an employee of an Employer.

1.08 “Employer” shall mean ICG, ICG, LLC, and any Affiliate which has adopted the Plan with the approval of ICG.

1.09 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.10 “General Release in Full of All Claims Agreement” means that certain agreement under which Participant releases all employment claims against ICG and its Affiliates in the form of Exhibit B as attached hereto and as shall be amended from time to time in the sole discretion of the Plan Administrator.

1.11 “ICG” shall mean International Coal Group, Inc., or any successor thereto.

1.12 “Involuntary Termination of Employment Not for Cause” shall mean (i) the termination of Designated Employee’s employment by his Employer for any reason other than those set forth in the following sentence or (ii) Designated Employee’s voluntary resignation following either (a) without the Designated Employee’s written consent, a 10% or more reduction in Regular Salary or (b) his Employer’s written request that Designated Employee voluntarily resign for any reason other than those set forth in the following sentence. Employee’s termination of employment will be deemed not for cause only if it is for some reason other than the following: i) conduct by the Employee that amounts to fraud, dishonesty, gross negligence, willful misconduct in connection with any of his employment duties, or willful violation of any of ICG’s or an Affiliate’s policies and procedures, ii) conviction of a felony,

 

1


or iii) the misappropriation of funds or property belonging to ICG or an Affiliate. Neither death nor termination as a result of sickness or disability shall be deemed to be an Involuntary Termination of Employment Not for Cause.

1.13 “Participants” shall mean those Designated Employees who have executed a Certificate of Participation.

1.14 “Plan” shall mean this International Coal Group, Inc. Executive Severance Plan and all attachments hereto.

1.15 “Plan Administrator” shall mean International Coal Group, Inc.

1.16 “Regular Salary” means the highest monthly regular salary paid to Participant by his Employer during the six months preceding his termination of employment.

ARTICLE II

ELIGIBILITY

The Compensation Committee shall, from time to time, designate Employees whom it finds are a member of a select group of management or highly-compensated employees (“select group employee”) to be eligible to participate in the Plan. In making the determination of who is a select group employee, the rules and regulations issued pursuant to ERISA shall control. The fact that an Employee is a select group employee shall not entitle him to participate in the Plan unless the Compensation Committee affirmatively designates such Employee as eligible to participate. Designated Employees will be furnished a Certificate of Participation signed by a member of the Compensation Committee to designate their eligibility for participation and only become a participant upon execution and return to the Plan Administrator of the Certificate of Participation.

ARTICLE III

SEVERANCE BENEFIT

3.01 If a Participant’s employment with Employer terminates in a manner which is an Involuntary Termination of Employment Not for Cause and Participant executes and does not revoke a General Release in Full of All Claims Agreement, Participant shall be entitled to the following benefits under this Plan: (i) Participant shall continue to receive his Regular Salary from his Employer for a twelve month period following his termination of employment (subject to the offset in Section 3.02 below and unless sooner terminated under Section 3.03 below), (ii) should Participant elect to continue his health coverage under COBRA through Employer’s group health plan, Employer shall pay the cost of such COBRA health coverage at the same classification (e.g., single, family, etc.) as in effect immediately prior to termination until the earlier of (a) Participant becoming ineligible for COBRA coverage, (b) the payment of eighteen monthly premiums following Participant’s termination of employment, or (c) termination pursuant to Section 3.03 below, (iii) continuation of the Employer provided standard group term life insurance for a twelve month period following his termination of employment (unless sooner terminated under Section 3.03 below), and (iv) financial consulting services (such as AYCO or such other financial consulting services provider that provide such services to Participants and arranged for by ICG or its Affiliates prior to such termination) for a period of twelve months, unless sooner terminated under Section 3.03 below.

3.02 If Participant is entitled to any salary continuation or any payment comparable to salary continuation from ICG or its Affiliates following his termination of employment pursuant to his employment agreement, other severance plan or any other salary continuation arrangement (collectively “primary salary continuation”), payments from such primary salary continuation shall reduce dollar for dollar any salary continuation under Section 3.01 and Participant shall only be entitled to payment pursuant to Section 3.01 to the extent that the total of such salary continuation under Section 3.01 exceeds Participant’s primary salary continuation. Primary salary continuation shall not include qualified or non-qualified deferred compensation arrangements, stock options, equity compensation or deferred bonuses.

3.03 During the Participant’s employment with ICG or its Affiliates, Participant will have access to and become familiar with various trade secrets and confidential information belonging to ICG and its various Affiliates including but not limited to costs and strategic planning information. Participant acknowledges that such confidential information and trade secrets are owned and shall continue to be owned by ICG and its Affiliates. Participant agrees not to use, communicate, reveal or otherwise make available such information for any purpose whatsoever or to divulge such information to any person, partnership, corporation or entity other than ICG or persons expressly designated by ICG unless such Participant is compelled to disclose it by judicial process. Additionally, Participant agrees that, for a period of one (1)year after termination of employment, he shall not, directly or indirectly, on his own behalf or with others (A) induce or attempt to induce any ICG employee who is a senior officer of ICG or a direct report to Participant or who is a president, mine superintendent or maintenance superintendent or an equivalent position of any subsidiary or operating unit of ICG or its Affiliates(“Protected Employee”) to leave the employ of ICG or its Affiliates, or in any way interfere with the

 

2


relationship between ICG and any Protected Employee, except that it is specifically understood that this provision is not violated by any response by a Protected Employee to a publicly announced job opening with Participant or his subsequent employer whether such announcement appears in newspapers, trade publications, web sites or similar public media; (B) induce or attempt to induce any referral source, customer or other business relation of ICG not to do business with ICG, or to cease doing business with ICG; or (C) solicit, divert or actively take away, or attempt to solicit, divert or take away, for purposes of conducting a business substantially similar to the business of ICG, any individual, corporation, partnership or other association or entity who as of the Termination Date, both (i) had a business relationship with ICG or its Affiliates or, to Participant’s knowledge, was during the ninety (90) day period preceding the date of termination of employment solicited in writing by ICG or its Affiliates for business (whether or not he, she or it became an actual customer) and (ii) was personally contacted by Participant during such ninety (90) day period; provided, however, that the foregoing provisions of this Section shall not prohibit Participant from participating in any response to an open bidding or quote request of any customer of ICG or its Affiliates, or prohibit Participant from any solicitation that does not, directly or indirectly, divert business from ICG; and, provided further, that Participant and any subsequent employer may in the ordinary course of business compete with ICG for customers, properties or otherwise, without violating this Section, provided that Participant shall not attempt to induce any entity with which ICG has any existing business relationship to terminate that business relationship prior to the termination of existing contracts or orders with that entity. Should Participant violate any portion of this provision, ICG’s and Affiliate’s obligation to make any severance benefit payments as set forth in Section 3.01 shall cease.

3.04 Any salary continuation benefit due the Participant shall be payable in accordance with the normal payroll practices of Employer and subject to all applicable withholding taxes. Upon Participant’s death after meeting all requirements for benefits, the salary continuation payments shall continue to be paid to his estate for the duration of the period described in Section 3.01.

ARTICLE IV

ADMINISTRATION

4.01 The Plan Administrator shall have full power and authority to administer, interpret and construe this Plan, and its interpretations and constructions hereof and actions hereunder, including any determination of the amount of payments to be made here from, shall be binding and conclusive on all persons for all purposes. No agent of ICG or Affiliate shall be liable to any person for any action taken or omitted in connection with the interpretation and administration of the Plan unless attributable to his own willful misconduct or lack of good faith.

4.02 Claims for benefits under the Plan must be filed in writing with the Compensation Committee. Written notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, a description of any additional material or information necessary for the claimant to perfect the claim and why such material or information is necessary. In addition, the claimant shall be furnished with an explanation of the Plan’s claims review procedure, time limits applicable to such procedures including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit termination on review. The information furnished to the claimant shall comply with Department of Labor Regulations Section 2560.5031(h).

4.03 Any Participant who has been denied a benefit by decision of the Compensation Committee pursuant to section 4.02 shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator a written request for a hearing. Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the written notification provided in section 4.02. The Plan Administrator shall then conduct a hearing within the next 60 days at which the claimant may be represented by an attorney or other representative of his choosing and expense, and at which the claimant shall have an opportunity to submit written and oral evidence and arguments in support of his claim. At the hearing (or prior thereto upon 5 business days written notice to the Plan Administrator), the claimant or his representative shall have an opportunity to review all documents in possession of the Plan Administrator which are pertinent to the claim and its disallowance. Either the claimant or the Plan Administrator may cause a court reporter to attend the hearing and record the proceedings. In such event, a complete written transcript of the proceedings shall be furnished to both parties by the court reporter. The full expense of such court reporter and such transcripts shall be borne by the party causing the court reporter to attend the meeting. A final decision as to the allowance of the claim shall be made by the Plan Administrator within 60 days of receipt of the appeal (unless there has been an extension of 60 days due to special circumstances, provided the delay and special circumstances occasioning it are communicated to the claimant within the 60 day period). Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, and a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records, and other information relevant to the claimant’s claim for benefits.

 

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ARTICLE V

AMENDMENTS

ICG reserves the right, at any time by action of its Compensation Committee to terminate, modify or amend, in whole or in part, any or all of the provisions of the Plan at anytime; provided, however, that (i) during the eighteen (18) month period following a Change in Control, the Plan (including any attached exhibits) may not be amended or terminated, if such amendment would be adverse to the interest of any Participant, without the consent of such Participant and (ii) no action by the Compensation Committee or the Board of Directors shall be retroactive nor place substantial additional limitations on the payment of severance benefits to the Participant. For purposes of Article V, “Change in Control” shall have the meaning ascribed to such term in the International Coal Group, Inc. 2005 Equity and Performance Incentive Plan.

ARTICLE VI

MISCELLANEOUS

6.01 Nothing in this Plan shall be construed to give any Participant or other person any right, title, interest or claim in or to any specific asset, fund, reserve account or property of any kind whatsoever owned by ICG or its Affiliates or in which they may have a right, title or interest now or in the future.

6.02 The Participants shall only have the status of general unsecured creditors of ICG and Affiliates. This Plan constitutes a mere promise by ICG and Affiliates to make severance payments in the future. This Plan is intended to be unfunded for tax purposes and for purpose of Title I of ERISA.

6.03 A Participant’s right to benefits under the Plan is not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by creditors of the Participant or the Participant’s beneficiary.

6.04 Nothing contained in the Plan shall be construed as conferring upon a Participant the right to continue to serve as an employee of ICG or its Affiliates or to assure Participant of any specific level of compensation from ICG or its Affiliates.

6.05 In connection with a termination of employment described in Section 3.01, the Plan Administrator shall furnish to Participant the General Release in Full of All Claims agreement for such Participant’s review and execution which if executed and not revoked within the time limits set forth therein shall release all claims Participant may have against ICG and its related persons. Participant shall have up to 45 days to consider the impact of the release and to discuss the release and its impact with his attorney.

6.06 As used herein, the masculine gender shall include the feminine and the singular shall include the plural as the circumstances require.

6.07 The Plan shall be governed by the laws of West Virginia.

6.08 To the extent applicable, it is intended that the Plan comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended and the rules and regulations promulgated thereunder (the “Code”). This Plan shall be administered in a manner consistent with this intent, and any provision that would cause the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Participant).

 

INTERNATIONAL COAL GROUP, INC.

By

 

/S/    ROGER L. NICHOLSON

Its

 

Senior Vice President and Secretary

 

ATTEST:

/S/    J.C. “MAX” WILKINSON

 

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