Exhibit 10.1

 

FORM OF
CLOUD PEAK ENERGY INC.
2009 LONG TERM INCENTIVE PLAN
PERFORMANCE SHARE UNIT AWARD AGREEMENT

 

THIS AGREEMENT, made as of the 2nd day of March 2015 (the “Grant Date”), between
Cloud Peak Energy Inc., a Delaware corporation (the “Company”), and
                     (the “Grantee”).

 

WHEREAS, the Company has adopted the Cloud Peak Energy Inc. 2009 Long Term
Incentive Plan, as amended from time to time (the “Plan”), in order to provide
an additional incentive to certain employees and directors of the Company and
its Subsidiaries; and

 

WHEREAS, the Committee responsible for administration of the Plan has determined
to grant Performance Share Units to the Grantee as provided herein.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1. Grant of Performance Share Units.

 

The Company hereby grants to the Grantee an award of        Performance Share
Units (the “Award”).  Upon fulfillment of the requirements set forth below, the
Grantee shall have the right to receive with respect to each vested Performance
Share Unit under this Award (a) one share of common stock of the Company (a
“Share”), (b) an amount of cash equal to the Fair Market Value of one Share on
the last day of the Performance Period, or (c) any combination of the foregoing,
as determined by the Committee in its sole discretion.  This grant is in all
respects limited and conditioned as hereinafter provided, and is subject in all
respects to the terms and conditions of the Plan now in effect and as it may be
amended from time to time (but only to the extent that such amendments apply to
outstanding grants of Performance Share Units).  Except as otherwise expressly
set forth herein, such terms and conditions are incorporated herein by
reference, made a part hereof, and shall control in the event of any conflict
with any other terms of this Agreement, and the capitalized terms used in this
Agreement shall have the same definitions set forth in the Plan.

 

2. Performance Share Unit Performance Period.

 

The performance period for this Award shall commence on January 1, 2015 and
shall end on December 31, 2017 (the “Performance Period”).  The Award shall be
subject to performance vesting requirements based upon the achievement of
Performance Goals as set forth in Appendix A to this Agreement.

 

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3. Dividends.

 

The Grantee shall be entitled to receive dividend equivalents, which represent
the right to receive Shares measured by the dividend payable with respect to
Performance Share Units (“Dividend Equivalent Rights”).  Dividend Equivalents
Rights on Performance Share Units will accrue and be reinvested into additional
Performance Share Units through the Performance Period.  The additional
Performance Share Units will be subject to the vesting conditions and other
terms and restrictions that apply to the Performance Share Units granted in
Section 1 and will be paid as set forth in Section 5 of this Agreement.

 

4. Performance Share Unit Service Period and Termination of Employment.

 

4.1                               Service Period.  In addition to performance
vesting requirements, the Award will be subject to service vesting
requirements.  The service period for this Award will commence on the Grant Date
and will end on the date the Award is paid as set forth in Section 5 of this
Agreement (the “Service Period”).

 

4.2                               Termination—Generally.  Subject to Sections
4.3 and 7 hereof, if the Grantee’s employment with the Company or any of its
Subsidiaries is terminated on or before the last day of the Service Period, the
Performance Share Units granted hereunder shall immediately be forfeited to the
Company in their entirety without payment of consideration therefor to the
Grantee and the Grantee shall not be entitled to any Shares or cash under this
Agreement.

 

4.3                               Qualifying Terminations.  If the Grantee’s
employment with the Company or any of its Subsidiaries is terminated for any of
the reasons set forth below (and subject to Section 7 hereof), in each case if
such termination occurs on or before the last day of the Service Period, the
Grantee, or the Grantee’s legatee or legatees under his or her will, or his or
her distributees, as applicable, shall be entitled to a Pro Rata Portion (as
defined below) of the Award.  The “Pro Rata Portion” shall mean the total number
of Performance Share Units which otherwise would have vested and become payable
pursuant to Section 5 hereof had the Grantee remained employed to the end of the
Service Period, multiplied by a fraction, the numerator of which is the number
of days between (A) the Grant Date and (B) the date of the Grantee’s termination
of employment, and the denominator of which is 1,095.  The Grantee’s Pro Rata
Portion of the Award shall be paid, based on actual performance achieved, in
accordance with Section 5 of this Agreement.

 

4.3.1    death

 

4.3.2    Disability (as defined in the Plan)

 

4.3.3    Redundancy (as defined below)

 

4.3.4    Retirement (as defined below)

 

4.3.5    If the Grantee is not subject to an Employment Agreement, termination
for any other reason, other than a termination by the Company for Cause (as
defined in the Plan), if there are

 

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exceptional circumstances and the Committee so decides prior to the date of the
termination of the Grantee’s employment.

 

4.3.6    If the Grantee is subject to an Employment Agreement, termination by
the Company for any reason other than for Cause as defined therein.

 

4.3.7    If the Grantee is subject to an Employment Agreement, termination by
the Grantee for Good Reason as defined therein.

 

4.4       Definitions.  For purposes of this Agreement:

 

(a)  “Employment Agreement” means an effective, written employment agreement
between the Grantee and the Company.  Notwithstanding any provision herein to
the contrary, in the event of any inconsistency between this Section 4 or
Section 7 and any Employment Agreement, the terms of the Employment Agreement
shall control.

 

(b)  “Redundancy” means the Company or any of its Subsidiaries, as applicable,
has ceased, or intends to cease, to carry on the business or particular business
function for the purposes of which the Grantee is or was employed by it, or has
ceased, or intends to cease, to carry on that business or particular business
function in the place where the Grantee is or was employed.

 

(c)  “Retirement” means retirement at or after age 65, or early retirement at or
after age 55 with 10 years of service with the Company.

 

5. Payment of Vested Performance Share Units.  For each vested Performance Share
Unit, if any, the Company will pay or deliver to the Grantee as soon as
administratively practicable following the Committee’s certification that
vesting has occurred, but no later than the fifteenth day of the third month
following the end of the calendar year in which the Performance Period ends, and
subject to the satisfaction of Section 9 below: (a) one Share, (b) an amount of
cash equal to the Fair Market Value of one Share, or (c) a combination of the
foregoing, as determined by the Committee in its sole discretion. 
Notwithstanding any provision of this Agreement to the contrary, the issuance of
any Shares pursuant to this Section 5 will be subject to compliance with all
applicable requirements of federal, state, or foreign law with respect to such
securities and with the requirements of any stock exchange or market system upon
which the Shares may then be listed.  No Shares will be issued hereunder if such
issuance would constitute a violation of any applicable federal, state, or
foreign securities laws or other law or regulations or the requirements of any
stock exchange or market system upon which the Shares may then be listed.  In
addition, Shares will not be issued hereunder unless (a) a registration
statement under the Securities Act is at the time of issuance in effect with
respect to the shares issued or (b) in the opinion of legal counsel to the
Company, the shares issued may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act. 
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any Shares subject to the
Performance Share Units will relieve the Company of any liability in respect of
the failure to issue such Shares as to which such requisite authority has not
been obtained.  As a condition to any issuance hereunder, the Company may
require the Grantee to

 

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satisfy any qualifications that may be necessary or appropriate to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect to such compliance as may be requested by the Company. 
From time to time, the Board and appropriate officers of the Company are
authorized to take the actions necessary and appropriate to file required
documents with governmental authorities, stock exchanges, and other appropriate
persons to make Shares available for issuance.

 

6. Adjustments.  In the event of a Change in Capitalization, the Committee shall
make equitable adjustments to the number and class of Shares underlying the
Performance Share Units subject to this Agreement as provided under the terms of
the Plan.  The Committee’s adjustment shall be made in accordance with the
provisions of Article 12 of the Plan and shall be final, binding and conclusive
for all purposes of the Plan and this Agreement.  Unless the Committee
determines otherwise, the number of Performance Share Units subject to this
Award shall always be a whole number.

 

7. Effect of a Change in Control.

 

7.1  Change in Control—Generally.  In the event a Change in Control (as defined
in the Plan) occurs, the surviving or successor entity is expected to assume
this Agreement.  If, however, the surviving or successor entity does not assume
this Agreement, the Committee may, in its sole discretion, exercise its
authority under the Plan to modify the Award under this Agreement, including,
but not limited to, by providing for the end of the Performance Period in
connection with the occurrence of such Change in Control and the deemed
achievement of Performance Goals at target, with payment with respect to vested
Performance Share Units occurring in connection with the occurrence of such
Change in Control, which payment shall be made in accordance with the schedule
described in Section 4 of this Agreement and in the form provided under
Section 5 of this Agreement.

 

7.2  Termination Following a Change in Control.  If there is a Change in Control
(as defined in the Plan) and the surviving or successor entity has assumed this
Agreement, and within two (2) years after such Change in Control the Grantee’s
employment with the Company or any of its Subsidiaries is terminated (i) by the
Company or any of its Subsidiaries without Cause (as defined in the Plan or, if
applicable, an Employment Agreement) or (ii) if the Grantee is subject to an
Employment Agreement, by the Grantee for Good Reason as defined therein, the
Grantee shall be entitled, following the completion of the Performance Period,
to settlement with respect to the total number of Performance Share Units which
otherwise would have vested and become payable had he or she remained employed
to the end of the Service Period, based on actual performance achieved, in
accordance with Section 5 of this Agreement.

 

8. Restrictions on Transfer.  Performance Share Units may not be sold, assigned,
hypothecated, pledged or otherwise transferred or encumbered in any manner
except by will or the laws of descent and distribution.

 

9. Withholding of Taxes.  The Grantee shall pay to the Company, or the Company
and the Grantee shall agree on such other arrangements necessary for the Grantee
to pay, the applicable federal, state and local income taxes required by law to
be withheld (the “Withholding Taxes”),

 

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if any, upon the vesting and/or settlement of Performance Share Units.  The
Company shall have the right to deduct from any distribution of cash to any
Grantee, an amount equal to the Withholding Taxes with respect to the Shares or
cash delivered pursuant to the terms of this Agreement.  In satisfaction of the
obligation to pay Withholding Taxes to the Company upon the delivery of any
Shares following the vesting of Performance Share Units, the Grantee may make a
written election which may be accepted or rejected in the discretion of the
Company, to have withheld a portion of such Shares then deliverable to the
Grantee having an aggregate Fair Market Value as of the date such Restrictions
lapse equal to the Withholding Taxes.

 

10. No Rights as a Shareholder.  Until Shares are issued, if at all, in
satisfaction of the Company’s obligations under this Award, in the time and
manner specified above, the Grantee shall have no rights as a shareholder.

 

11. Securities Laws or Dodd-Frank Clawback Policies.  This Agreement is subject
to any written clawback policies the Company, with the approval of the Board of
Directors of Cloud Peak Energy Inc., may adopt.  These clawback policies may
subject the Grantee’s rights and benefits under this Agreement to reduction,
cancellation, forfeiture or recoupment if certain specified events and wrongful
conduct occur, including, but not limited to, an accounting restatement due to
the Company’s material noncompliance with financial reporting regulations or
other events and wrongful conduct specified in any such clawback policies
adopted by the Company, with the approval of the Board of Directors of Cloud
Peak Energy Inc., to conform to the Dodd-Frank Act and resulting rules issued by
the Securities and Exchange Commission and that the Company determines should
apply to this Agreement.

 

12. No Right to Continued Employment.  Nothing in this Agreement or the Plan
shall be interpreted or construed to confer upon the Grantee any right with
respect to continuance of employment by the Company, any Subsidiary or any
Division, nor shall this Agreement or the Plan interfere in any way with the
right of the Company, any Subsidiary or any Division to terminate the Grantee’s
employment therewith at any time.

 

13. Grantee Bound by the Plan.  The Grantee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.

 

14. Severability.  Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.

 

15. Governing Law.  Except as to matters of federal law, the validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware without giving effect to the conflicts of
laws principles thereof.

 

16. Signature in Counterpart.  This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signature
thereto and hereto were upon the same instrument.

 

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17. Notice. All notices required or permitted under this Agreement must be in
writing and personally delivered or sent by mail and shall be deemed to be
delivered on the date on which it is actually received by the person to whom it
is properly addressed or if earlier the date it is sent via certified United
States mail. Any person entitled to notice hereunder may waive such notice in
writing.

 

18. Successors in Interest.  This Agreement shall inure to the benefit of and be
binding upon any successor to the Company.  This Agreement shall inure to the
benefit of the Grantee’s legal representatives.  All obligations imposed upon
the Grantee and all rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Grantee’s beneficiaries, heirs,
executors, administrators and successors.

 

19. Modification of Agreement.  This Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only by
a written instrument executed by the parties hereto.  No waiver by either party
hereto of any breach by the other party hereto of any provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions at the time or at any prior or subsequent time.

 

20. Resolution of Disputes.  Any dispute or disagreement which may arise under,
or as a result of, or in any way relate to, the interpretation, construction or
application of this Agreement shall be determined by the Committee.  Any
determination made hereunder shall be final, binding and conclusive on the
Grantee and the Company for all purposes; provided however, that this dispute
resolution provision shall not interfere with the Grantee’s rights to pursue and
protect his legal rights in a court of competent jurisdiction.

 

21. Information Confidential.

 

As partial consideration for the granting of the Award hereunder, the Grantee
hereby agrees to keep confidential all information and knowledge, except that
which has been disclosed in any public filings required by law, that the Grantee
may have relating to the terms and conditions of this Agreement; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Grantee’s spouse and tax and financial advisors.  In
the event any breach of this promise comes to the attention of the Company, it
shall take into consideration that breach in determining whether to recommend
the grant of any future similar award to the Grantee, as a factor weighing
against the advisability of granting any such future award to the Grantee.

 

22. Sections and Other Headings.  The section and other headings contained in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.

 

 

 CLOUD PEAK ENERGY INC.

 

GRANTEE

 

 

 

 

 

 

 

 

 

By:

Colin Marshall

 

Print Name:

Title:

President and Chief Executive Officer

 

 

 

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Appendix A

 

Cloud Peak Energy Inc.
Performance Share Plan
FY2015 through FY2017

 

The Committee has established the following Performance Share Plan terms for
Performance Share Unit grants. All Performance Share Award grants are made
pursuant to the Cloud Peak Energy Inc. 2009 Long Term Incentive Plan.

 

Performance Metric:  Relative Total Shareholder Return

 

Performance for the purposes of determining the vesting of the Performance Share
Unit Awards will be based on relative Total Shareholder Return (TSR).  Relative
TSR measures the Cloud Peak Energy share price movement over a performance
period relative to the share price movement of peer companies.

 

TSR = End of Period Share Price — Beginning of Period Share Price + Dividend(1)
Beginning of Period Share Price

 

The Beginning of Period Share Price and the End of Period Share Price for Cloud
Peak Energy and the peer companies will be calculated by using the first and
last, respectively, twenty (20) trading days of the performance period.

 

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(1) For purposes of calculating the dividend element of TSR, the Committee will
assume dividends are reinvested on a daily basis.

 

Grant Date

 

As defined above in the first paragraph of the Award Agreement

Performance Period

 

As defined above in Section 2 of the Award Agreement

Service Period

 

As defined above in Section 4 of the Award Agreement

Peer Companies

 

As set forth below

Target Performance

 

Median of the Peer Companies

Payout Range

 

0% to 200% of Target Performance, provided in no event can the payout exceed 15
times the “Target Opportunity” (which is defined as the Cloud Peak Energy
closing share price on the Grant Date multiplied by the target number of
Performance Share Units awarded).  In the event the payout would otherwise
exceed 15 times the Target Opportunity, the number of shares (or the Fair Market
Value cash equivalent of such shares) delivered or paid will be reduced to
reflect the number of whole shares such that the total payout is equal to 15
times the Target Opportunity.

 

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Peer Companies:

 

1.              Alliance Resource Partners LP

2.              Alpha Natural Resources, Inc.

3.              Arch Coal Inc.

4.              Cabot Oil & Gas Corporation

5.              Consol Energy Inc.

6.              EQT Corporation

7.              Foresight Energy LP

8.              Newfield Exploration Co.

9.              Noble Energy Inc.

10.       Peabody Energy Corp.

11.       Penn Virginia Corporation

12.       Rhino Resource Partners LP

13.       Sabine Oil & Gas Corporation

14.       Sandridge Energy, Inc.

15.       SM Energy Company

16.       SunCoke Energy Inc.

17.       Walter Energy, Inc.

18.       Westmoreland Coal Co.

19.       Whiting Petroleum Corp.

 

The Committee, in its sole discretion, will make such changes to the list of
Peer Companies as may be required to appropriately and equitably reflect the
merger, consolidation, acquisition or other similar event involving a Peer
Company.

 

Target Performance

 

TSR for each of the Peer Companies is calculated and ranked highest to lowest.
The Median TSR performance of the Peer Companies is the TSR at which half the
Peer Companies’ TSR results are below and half the Peer Companies’ TSR results
are above.

 

Payout Range

 

Grants of Performance Share Awards will be made at the Target Performance amount
defined as the Median performance of the Peer Companies. The amount vested at
Vesting will range from 0% to 200% of the Target Performance amount depending
upon the final positioning of CPE’s TSR to the median of the Peer Companies at
the end of the Performance Period (but in no event will the payout exceed 15
times the Target Opportunity, as described above).

 

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The extent to which Performance Share Units will vest will be determined as
follows:

 

Outcome Relative to Peer Group TSR

 

 

 

CPE Three-Year Percentile
Ranking in TSR

 

Percentage of Performance Share
Units Vesting

 

 

 

Below 25th Percentile

 

0

%

Threshold

 

25th Percentile

 

50

%

Target

 

50th Percentile

 

100

%

Maximum

 

90th Percentile

 

200

%

 

·                  If the Company’s Total Shareholder Return (TSR) is below the
25th percentile of the Company’s Performance Peer Group, then the payout is 0%.

·                  The payout is linear between the 25th percentile and the
50th percentile.

·                  The payout is linear between the 50th percentile and the
90th percentile.

·                  If the Company’s TSR in relation to its Performance Peer
Group is above the 50th percentile but the Company’s absolute TSR (calculated
using the same methodology as relative TSR) is negative during the Performance
Period, then the payout shall be reduced to the Target payout of 100% rather
than the higher percentage set forth above in this Appendix A.

 

The Committee, in its sole discretion, will determine and certify the number of
Performance Share Units that have vested at the end of the Performance Period
based on the performance of the Company, calculated using the performance grid
and guidelines set forth above.  No Performance Share Units will be deemed to
have vested (contractually or for purposes of income taxes) prior to the time
that the Committee certifies an applicable number of Performance Share Units to
have vested.

 

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