Document:

Exhibit 10.49

 

Amendment to the Russell Goldsmith Amended and Restated Employment Agreement

 

This document (“Amendment”) hereby amends the terms of the June 24, 2010 Amended and Restated Employment Agreement between Russell Goldsmith (“Goldsmith”), City National Bank (“CNB”), and City National Corporation (“Corporation”) (referred to as the “Agreement”). The terms of this Amendment shall control notwithstanding any provision in the Agreement to the contrary, and the terms of the Agreement shall be construed and interpreted consistent with the terms of this Amendment. Capitalized terms not otherwise defined herein shall have the same meaning as in the Agreement. Unless expressly stated herein, the terms of this Amendment shall not modify or amend any requirements or terms under the Agreement with respect to vesting or acceleration of any existing equity awards to Goldsmith.  The parties shall take appropriate actions to ensure that all payments and awards described shall be deductible under IRC section 162(m) or are deferred and settled upon termination, and all new awards types described herein, except for the SERP awards in Section 10 of the Agreement, shall be issued in accordance with the terms of the Corporation’s 2008 Omnibus Plan. This Amendment is effective as of the date of execution.

 

1.                                       Section 7(a)—Performance Annual Stock Awards

 

Section 7(a) of the Agreement provides for an annual award of restricted stock units (“RSUs”) in an amount equal to a valuation of $1,320,000 if the Performance Goal is achieved at 60% of target, scaled down and modified if less than 60% of the Performance Goal is achieved.  Section 7(a) is hereby amended to require that the target value of RSUs granted annually shall hereafter be set at a valuation of $1,125,000, rather than $1,320,000, subject to the same percentage of target thresholds and reductions as now provided in the Agreement.  Unless deferred by Goldsmith, the RSUs awarded under this Amendment shall hereafter be settled solely in cash as soon as reasonably practicable following vesting. This change is effective immediately for 2012 RSUs awards and all future RSU awards to be delivered under the amended Section 7(a).

 

Section 7(a) of the Agreement is also amended to require that the target value of annual Stock Options to be awarded thereunder shall hereafter be set at a valuation of $1,125,000, rather than at a valuation of up to $1,320,000. All such Stock Option awards shall hereafter be replaced with long-term incentive cash awards (“LTICAs”) effective for 2012 awards and for all future annual grants.  The LTICA’s shall have the following essential terms and features for 2012 (the LTICAs for 2013 and 2014 will be identical although the measurement period will be appropriately adjusted):

 

·                  The target LTICA award valuation shall be $1,125,000.

 

·                  Payment at target will be based on comparing the Corporation’s cumulative actual diluted EPS (“EPS”) for the years 2012-2014 to the sum of the three separate annual target EPS amounts set by the “Committee” (as defined in the Agreement) by not later than March 15, of each year.  If cumulative actual EPS is equal to or greater than the Committee established cumulative target EPS, the full target award will be payable.

 

·                  If the cumulative actual EPS is 75% of target, then 60% of the LTICA will be payable.  For performance between 75% and 100%, the amount of LTICA payable will be proportionately adjusted upward.  No LTICA is payable if cumulative actual EPS is less than 75% of the sum of the Committee established targets.

 

·                  An additional amount of up to $562,500 in LTICA shall be awarded in either 2015 or 2016, if cumulative actual EPS is 5% greater ($375,000 bonus LTICA) or 7.5% greater ($562,500 bonus LTICA) than cumulative target EPS.  For 2015, the sum of cumulative target EPS for 2012-2015 (with the Committee setting an EPS goal for 2015 by March 15, 2015) will be calculated.  If cumulative actual EPS is 5% greater than this sum, a $375,000 bonus LTICA shall be payable.  If cumulative actual EPS is 7.5% greater than this sum, a $562,500 bonus LTICA shall be payable.  There shall be proration if cumulative actual EPS is greater than 5% but less than 7.5%.  If the full $562,500 LTICA bonus is not earned in 2015, a similar calculation will be made for 2016.  The LTICA bonus payable for performance through 2016 will be calculated and an additional LTICA bonus will be made to the extent this bonus exceeds the bonus, if any, earned for 2012-2015 performance.

 

 

·                  In the event a Change in Control occurs prior to completion of the 2012-2014 performance period, the LTICA shall be deemed earned at $1,500,000 (133 1/3% of the $1,125,000 target), and payout shall occur on the earlier to occur of vesting or any involuntary termination without cause or in case of a good reason termination (as those terms are defined in section 10(b) of the Agreement).  If a Change in Control occurs during the 2015-2016 performance period, the LTICA shall be deemed earned at $375,000, and payout shall occur on the earlier to occur of vesting or any involuntary termination without cause or in case of a good reason termination (as those terms are defined in section 10(b) of the Agreement).

 

·                  In the event Goldsmith’s employment terminates for any reason, the treatment of LTICAs shall be consistent with restricted stock units under section 10 of the Agreement and there shall be no change or acceleration in the LTICA payout, which accordingly may depend on EPS performance of the Corporation for periods subsequent to his employment.

 

·                  The Committee shall set the annual performance EPS target for each year described above consistent with the Corporation’s established annual EPS goal.

 

·                  Notwithstanding any provisions to the contrary herein, payment of the LTICA shall be subject to the requirement that the Performance Goal for the year of grant be achieved at a level at least equal to 40% of target.

 

·                  Unless deferred by Goldsmith, the LTICA shall be paid as soon as reasonably practicable following vesting.

 

2.                                       Section 7(b)—Performance Stock Options

 

This section of the Agreement is amended, effective for 2012 and later awards, to require that instead of performance stock option awards, Goldsmith shall receive performance cash awards, based on the same metrics used under this section of the Agreement to determine the award of performance stock options.  The amount of performance cash awards for 2012 and hereafter shall be only 5/6ths of the amount that would have been awarded under the Agreement in the form of performance stock options.  For clarity and by way of example, 50th percentile performance under the metrics applicable shall hereafter result in a performance cash award of $750,000, not $900,000.

 

The performance period for the 2012 performance cash award shall be the three-year period ending 6/30/15.  The amount to be paid shall be determined by comparing the Corporation’s TSR percentile to that of the KBW Bank Index, in the manner described in Section 7(b) the Agreement, and consistent with the manner in which the Committee has previously made such comparison.

 

Assuming that Goldsmith is employed throughout the contract period, he shall be entitled to a similar performance cash award grant for the two performance periods beginning 7/1/13 and 7/1/14.  Treatment of performance cash awards in the event of retirement, disability, death, shall be consistent with the treatment of previous performance stock options under Section 7(b) of the Agreement.

 

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In the event a Change in Control occurs prior to completion of the performance period, the performance cash award shall be deemed earned at $1,000,000 (133 1/3% of $750,000 target), and payout shall occur on the earlier to occur of vesting or involuntary termination without cause or good reason termination (as those terms are defined in section 10(b) of the Agreement).

 

3.                                       Section 11 and Appendix A—Supplemental Retirement Benefits

 

In exchange for cancellation of his rights to receive supplemental retirement benefits under the Supplemental Retirement Plan included as Appendix A of the Agreement (“Plan”), Goldsmith shall receive fully vested interests in the deferred compensation stock fund under the amended and restated Supplemental Retirement Plan (“Amended Plan”) as forth in Exhibit A, in accordance with the following terms and conditions:

 

·                  There shall be first determined the Present Value of the Accumulated SERP Benefit (“the Present Value”) under the Plan as of March 14, 2012, using the assumptions used in computing that number for the Pension Table in the 2012 Proxy Statement is $8,347,725.00.

 

·                  Goldsmith shall be awarded fully vested interests in the deferred compensation stock fund under the Amended Plan computed by dividing the Present Value by the closing price of the Corporation stock as of March 14, 2012.

 

·                  Settlement of the stock fund units under the Amended Plan shall be in shares of the Corporation.

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of this 14th day of March, 2012.

 

	
Russell Goldsmith
    	
 
    
	
 
    	
 
    
	
/s/   Russell Goldsmith
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
CITY NATIONAL BANK
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Michael B. Cahill
    	
 
    
	
Michael B. Cahill
    	
 
    
	
Executive Vice President and General Counsel
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
CITY NATIONAL CORPORATION
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Michael B. Cahill
    	
 
    
	
Michael B. Cahill
    	
 
    
	
Executive Vice President and General Counsel
    	
 
    

 

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Exhibit A

 

APPENDIX A TO EMPLOYMENT AGREEMENT

FOR RUSSELL GOLDSMITH

 

AMENDED AND RESTATED

SUPPLEMENTAL RETIREMENT BENEFIT

 

The purpose of this Appendix A to the Employment Agreement is to provide a supplemental retirement benefit for Russell Goldsmith (“Goldsmith”), which shall be in addition to any benefits which he may be entitled to receive under qualified retirement plans of the Employer.  As of March 14, 2012 (the “Amendment Date”), this supplement retirement benefit shall be amended and restated as set forth below.

 

ARTICLE I

DEFINITIONS

 

All capitalized terms used herein which are defined in the Employment Agreement shall have the meaning set forth therein.  In addition, the following terms shall have the meaning set forth below:

 

“Beneficiary” or “Beneficiaries” shall mean the person or persons last designated in writing by a Goldsmith in accordance with procedures established by the Committee to receive the benefits specified hereunder in the event of the Participant’s death while employed.  If there is no Beneficiary designation in effect, or if there is no Surviving Spouse, then the Beneficiary or Beneficiaries shall be, in order of priority: (a) the revocable living trust established by the Goldsmith during his or her lifetime, (b) Goldsmith’s children, per stirpes; or (c) Goldsmith’s estate.  The filing of a new beneficiary designation will cancel all beneficiary designations previously filed.

 

“Final Average Compensation” shall mean the average of the sum of the Annual Base Compensation and Annual Bonus which Goldsmith earns during the highest three out of his last five calendar years of employment with the Employer.

 

“Normal Retirement Date” shall mean the date on which Goldsmith attains age 62, which will be February 14, 2012.  Goldsmith was born on February 14, 1950.

 

“Surviving Spouse” shall mean Goldsmith’s spouse at the time of his termination of employment with the Employer, if she remains alive after Goldsmith’s death.

 

“Years of Service” shall mean complete and partial years of service with the Employer, measured from Goldsmith’s commencement date on October 15, 1995 to the most recent anniversary of his commencement date.

 

 

ARTICLE II

CALCULATION AND VESTING OF SUPPLEMENTAL RETIREMENT BENEFIT

 

2.1 As of the Amendment Date, Goldsmith has accrued the right to receive an annual supplemental retirement benefit at his Normal Retirement Date based on the following formula:

 

1.5432% multiplied times Years of Service (up to a maximum of 25.2% after 16.33 Years of Service) multiplied times Final Average Compensation.

 

2.2 Under the formula set forth in Section 2.1, the present value of the supplemental retirement benefit accrued as of Amendment Date by Goldsmith is $8,347,725 (“Present Value”).

 

2.3 Following the Amendment Date, Goldsmith shall no longer be entitled to accrue any additional Final Average Compensation or Years of Service credit.  In lieu of accruing any such additional credits, Goldsmith shall be entitled to a benefit based upon the Present Value and any earnings thereon as provided in Article III.

 

2.4 As of the Amendment Date, Goldsmith has a fully vested right to the Present Value.

 

2.5 Effective December 22, 2008, Goldsmith elected to have his supplemental retirement benefits (both with respect to amounts subject to Section 409A and with respect to amounts that are “grandfathered” under Section 409A) to be paid in a lump sum on the first day of the month following his termination of employment.  As of the Amendment Date, Goldsmith’s election will be irrevocable.

 

ARTICLE III

CNC STOCK FUND

 

3.1 As of the Amendment Date, the Present Value shall be deemed to be invested in the CNC Stock Fund with respect to that number of shares of City National Corporation Common Stock (“CNC Stock”), including fractional shares, as determined by the closing price of CNC Stock on March 14, 2012.

 

3.2 All cash dividends which are paid on CNC Stock held in the CNC Stock Fund will be deemed to be reinvested in the CNC Stock Fund as determined by the closing price of CNC Stock on the dividend payable date.

 

3.3 The number of shares of CNC Stock held in the CNC Stock Fund will be appropriately adjusted, as determined by the Committee, to reflect any stock splits, reverse stock splits, stock dividends, or similar events.

 

3.4 Shares in the CNC Stock Fund do not convey the rights to ownership of shares of CNC Stock and do not have voting rights.  The Parent Corporation’s and CNB’s obligations with respect to the CNC Stock Fund are unfunded.  Goldsmith will only acquire ownership and voting rights when shares of CNC Stock are actually distributed in accordance with the provisions of this Agreement.

 

 

ARTICLE IV

PAYMENT OF SUPPLEMENTAL RETIREMENT BENEFIT

 

4.1 Goldsmith’s supplemental retirement benefit shall be based on the number of shares deemed invested in the CNC Stock Fund and shall be paid, subject to Section 5.2, in a lump sum on the first day of the month following his termination of employment with the Employer for any reason.  Following the Amendment Date Goldsmith will not be entitled to installment or annuity payments.

 

4.2 If Goldsmith dies while he remains employed with the Employer and has a Surviving Spouse, his Surviving Spouse will be entitled to receive the benefit in the form of a lump sum.  If Goldsmith dies while he remains employed with the Employer and he does not have a Surviving Spouse, his Beneficiary or Beneficiaries will be entitled to receive the benefit in the form of a lump sum.

 

4.3 All distributions from the CNC Stock Fund will be made solely in CNC Stock, except that any fractional shares will be paid in cash.

 

ARTICLE V

SECTION 409A

 

5.1 The Agreement is intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and, with respect to amounts that are subject to Section 409A of the Code, shall in all respects be administered in accordance with Section 409A of the Code except for amounts payable under this Agreement that are “grandfathered” amounts within the meaning of Section 409A of the Code. “Grandfathered” amounts are amounts that were earned and vested by Goldsmith within the meaning of Section 409A prior to December 31, 2004.

 

5.2 Notwithstanding the foregoing provisions of this Agreement, in the event that Goldsmith is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the date of termination), amounts that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code that would otherwise be payable during the six-month period immediately following the effective date of termination shall instead be paid on the first business day after the date that is six months following Goldsmith’s “separation from service” within the meaning of Section 409A. If Goldsmith dies following the date of termination and prior to the payment of the any amounts delayed on account of Section 409A of the Code, such amounts shall be paid to the personal representative of Goldsmith’s estate on the first day of the month following his death. In no event shall the effective date of termination occur until Goldsmith experiences a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the effective date of termination for purposes of this Agreement. “Separation from Service” shall mean a “separation from service” within the meaning of Section 409A of the Code, as determined by the Committee in accordance with Section 1.409A-1(h) of the Treasury Regulations. For purposes of determining whether a Separation from Service has occurred, Goldsmith shall be considered to have separated from service as an employee when the facts and circumstances indicate that Goldsmith and the Employer reasonably anticipate that either (i) no further services will be performed for the Employer (including any affiliates) after a certain date, or (ii) that the level of bona fide services Goldsmith will perform for the Employer (including any affiliates) after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by Goldsmith (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if Goldsmith has been providing services to the Employer less than 36 months). Within the time period permitted by the applicable treasury regulations (or such later time as may be permitted under Section 409A or any IRS or Department of Treasury rules or other guidance issued thereunder), Employer may, in consultation with Goldsmith, modify the Agreement in the least restrictive manner necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A or in order to comply with the provisions of Section 409A, other applicable provisions(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and without any diminution in the value of the payments to Goldsmith.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        day of                 , 2012 (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 (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 one share of common stock of the Company (“Share”) for each vested Performance Share Unit.  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 Vesting.

 

The performance period for this Award shall commence on January 1, 2012 and shall end on December 31, 2014 (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.

 

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 Shares 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 4 of this Agreement.

 

4.                                       Payment of Vested Performance Share Units.

 

For each vested Performance Share Unit, one Share shall be delivered to the Grantee as soon as administratively practicable following vesting at the completion of the Performance Period, but no later than the fifteenth day of the third month following the end of the calendar year in which such vesting date occurs.

 

5.                                       Termination of Employment.

 

5.1                                 Termination—Generally.  Subject to Sections 5.2 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 Performance 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 under this Agreement.

 

5.2                                 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 Performance 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 Shares which otherwise would have vested and become payable pursuant to Section 4 hereof had the Grantee remained employed to the end of the Performance 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 following the completion of the Performance Period, based on actual performance achieved, in accordance with Section 4 of this Agreement.

 

5.2.1                        death

 

5.2.2                        Disability (as defined in the Plan)

 

5.2.3                        Redundancy (as defined below)

 

5.2.4                        Retirement (as defined below)

 

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

 

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

 

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

 

5.3                                 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 5 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.

 

6.                                       Adjustments.  In the event of a Change in Capitalization, the Committee shall make equitable adjustments to the number and class of Shares 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 of shares 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.

 

7.2  Termination Following a Change in Control.  If there is a Change in Control 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 the total number of Shares which otherwise would have vested and become payable had he or she remained employed to the end of the Performance Period, based on actual performance achieved, in accordance with Section 4 of this Agreement.

 

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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”), if any, upon the vesting of Performance Share Units and delivery of the Shares.  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 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.                                 Dodd-Frank Clawback Policies.  This Agreement is subject to any clawback policies the Company may adopt in order 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. These clawback policies may subject the Grantee’s rights and benefits under this Agreement to reduction, cancellation, forfeiture or recoupment if certain specified events occur, including, but not limited to, an accounting restatement due to the Company’s material noncompliance with financial reporting regulations.

 

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.

 

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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.

 

17.                                 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.

 

18.                                 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.

 

19.                                 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 Grantees rights to pursue and protect his legal rights in a court of competent jurisdiction.

 

20.                                 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:
    	
 
    	
Print   Name:
    
	
Title:
    	
 
    	
 
    

 

 

Appendix A

 

Cloud Peak Energy Inc. 
 Performance Share Plan
 FY2012 through FY2014

 

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.

 

(1) For purposes of calculating the dividend element of TSR, the Committee will assume the reinvestment of dividends paid in the applicable shares during the performance period as of the last trading day of each applicable fiscal quarter in which dividends are paid.

 

	
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
    
	
Vesting
    	
 
    	
3-year cliff vest from Grant Date
    
	
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 delivered will be reduced to 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

 

2.             Alpha Natural Resources

 

3.             Arch Coal

 

4.             Berry Petroleum

 

5.             Cabot Oil & Gas

 

6.             Consol Energy

 

7.             EQT Corp.

 

8.             Forest Oil Corp.

 

9.             James River Coal

 

10.           Newfield Exploration Co.

 

11.           Noble Energy

 

12.           Patriot Coal

 

13.           Peabody Energy

 

14.           Penn Virginia Corporation

 

15.           Sandridge Energy

 

16.           SM Energy

 

17.           Walter Energy

 

18.           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.  For the 2012-2014 performance cycle, International Coal and Massey Energy have been removed from the peer group.

 

2

 

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).

 

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

 

·                                          Irrespective of where the Company’s TSR is in relation to its Performance Peer Group, if the Company’s TSR is negative during the Performance Period, then the payout shall be reduced by 50% compared to what it otherwise would have been pursuant to this Appendix A.

 

The Committee, in its sole discretion, will determine 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.

 

3

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